Law: Income Tax Act, 1961

Section: 69B

Law: Income Tax Act, 1961

Section: 69B

Section 69B of the Income-tax Act, 1961 - Undisclosed investment - Assessment year 1958-59 - Assessee was partner in a registered firm - During assessment proceedings for relevant assessment year, ITO noticed certain amount appearing in personal account of assessee's wife in books of firm - As assessee failed to explain source of deposit in name of his wife, ITO treated said amount as item of income received by assessee from undisclosed source - AAC as well as Tribunal affirmed order of ITO - On instant reference, it was noticed that not only accounts of firm showed that deposits stood in assessee's wife name but also, in addition declaration made by her that money belonged to her and deposits was made by her - Whether, on facts, enquiry as to source form which amount in question was acquired by assessee's wife might be relevant in an investigation into assessment to be made regarding her income and when determining correctness of return submitted by her - Held, yes - Whether, therefore, mere fact that assessee's was unable to satisfy monies which his wife deposited with firm could not be used against assessee - Held, yes - Whether, consequently, impugned order of Tribunal drawing adverse inference against assessee was to be set aside - Held, yes FACTS The assessee was a partner in a registered firm. During the assessment proceedings for the year 1958-59 the ITO noticed an item of Rs. 10,000 appearing in the personal account of the wife of the assessee in the books of the firm, and also that at the end of the accounting year, a sum of Rs. 719 had been credited to said account of towards interest. While making the assessment order, the ITO noted that the assessee was unable to explain the source of that deposit in the name of his wife on being called upon to do so, and thereupon the ITO treated said amount as an item of income received by the assessee from an undisclosed source. On appeal, the AAC as well as the Tribunal affirmed the order of the ITO. On reference: HELD The sources from which the money was realised by the third party were not within the special knowledge of the assessee as the depositor happened to be his wife. Whether he had knowledge at all of…

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