Law:

Section:

Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 1973-74 - Whether entry 82 in Union List should be read not only as authorising imposition of tax but also authorising enactment which prevents tax imposed being evaded and as such, Legislature was competent to enact provisions of section 69 creating fiction that amount source of which was not properly explained, is liable to be taxed as deemed income - Held, yes - Whether, where assessee committed that she had invested certain amount in a property during relevant accounting year and failed to explain its source satisfactorily, such investment was to be deemed as income of assessee - Held, yes FACTS The assessee, during the assessment year 1973-74, claimed to have invested Rs. 1,62,000 in the construction of a house out of which, according to her, an amount of Rs. 78,000 was advanced to her by her husband out of HUF fund. The assessee's husband during examination disclosed that the HUF earned income from business of timber during the past five assessment years and out of the income the amount of Rs. 78,000 was advanced to the assessee. But he failed to give details of timber business and the amount of Rs. 78,000 was added in the hands of HUF by taking appropriate proceedings. On appeal by the HUF, the AAC held that the HUF could not and did not advance any money to the assessee. Accordingly, the addition of the amount in HUF was deleted. In the above circumstances, the Assessing Officer added the amount of Rs. 78,000 in the hands of the assessee under section 69. Both the first and second appellate authorities confirmed the Assessing Officer's order. The assessee preferred reference and also filed writ challenging the constitutional validity of section 69 on the ground that under entry 82 of List I of the Seventh Schedule to the Constitution tax can be levied by the Parliament only on actual or real income and no tax can be levied on a deemed or fictional income as has been sought to be done under the statutory provision like section 69. HELD As regards the addition, in the instant case, as per the assessee's own case, she had made an investment of Rs. 1,62,000 during the…

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