HIGH COURT OF MADRAS

Commissioner of Income-tax

v.

S. Kannaiyan

P.D. Dinakaran and P.P.S. Janarthana Raja, JJ

T.C. Appeal No. 852 of 2004 and T.C.M.P.No. 594 of 2004

January 24, 2006

Section 69 of the Income-tax Act, 1961 - Unexplained investments - Assessment year 1992-93 - A search was conducted at premises of a firm wherein certain sums was seized - Firm was not able to furnish source of that sum - Assessing Officer treated that sum as undisclosed income and made individual assessments in hands of persons including assessee in whose names sum stood invested in banks - However, Tribunal held that since there were claims by public, it was not proper to treat amounts as income from undisclosed source of various assessees and directed Assessing Officer to examine all aspects of matter including criminal proceedings - Whether substantial question of law arose out of order of Tribunal - Held, no

FACTS

A search was conducted at premises of a firm and a sum was seized. The firm was not able to explain the source of deposits. The Assessing Officer treated the sum as undisclosed income and made individual assessments in hands of those persons including assessee in whose names sums appeared in various banks. On appeal, the Commissioner (Appeals), upheld the order of assessment. On further appeal, the Tribunal held that wherever amount could not be linked with the accounts of the firm, but such amounts were found in the names of various other persons, it would be necessary for such persons to offer explanation. The Tribunal also held that since there were claims by public, it was not proper to treat the amounts as income from undisclosed source of various assessees and directed the Assessing Officer to examine all the aspects of the matter including, the criminal proceedings.

On revenue’s appeal under section 260A:

HELD

A perusal of the observations made by the Tribunal made it clear that none of the observations would affect the interest of the revenue. Further no observation of the Tribunal attracting a substantial question of law was pointed out by the revenue. Therefore, no question of law much less a substantial question of law arose out of the order of the Tribunal for consideration. Accordingly, the appeal failed and the same was to be dismissed. (Para 4)