Income Tax Appellate Tribunal - Mumbai
Mrs. Malini Ramnath Rele vs Third Income-Tax Officer on 8 September, 1993
Equivalent citations: [1994]49ITD43(MUM)
ORDER
G.K. Israni, Judicial Member
1. By this appeal, the assessee has challenged the order of the learned Commissioner of Income-tax (Appeals) dated November 6, 1986, for the assessment year 1985-86.
2. The arguments of learned counsel for the assessee and the learned Departmental Representative were heard.
3. The solitary question raised in this appeal relates to the addition of Rs. 4,10,000 being the cash found in the possession of the assessee at the time of the search and treated as income from undisclosed sources. On January 22, 1985, a search was conducted at the residential premises of the assessee. During the search operations, cash of Rs. 4,15,000 was seized from two bank lockers and a fixed deposit receipt for Rs. 55,000 was also found. During the search operations, a statement of the assessee was recorded under Section 132(4) of the Act. In that statement, she disclosed that she had sold her house property to one Shri V.D. Maru for a price of Rs. 5,00,000. Out of this, the sale deed was signed for a consideration of Rs. 1,00,000 on December 17, 1984, between the assessee and Shri Maru in the presence of one Shri L. P. Patil. Out of the sale price of Rs. 1,00,000, an amount of Rs. 10,000 was received as earnest money on November 19, 1984, and the balance of Rs. 4,00,000 was received in cash on December 17, 1984. She further disclosed that the sum of Rs. 1,00,000 was deposited with the Central Bank of India and the balance of Rs. 4,00,000 was kept in lockers. According to her, the sale price was delivered at her residence by Shri Vadilal Maru in the presence of her grandson on December 17, 1984, before they went to the Registrar's office to complete the formalities of the transfer of property. During the investigation, Shri Vadilal Maru was also examined and cross-examined on March 21, 1984. During that examination Shri Maru denied the suggestion that he had paid Rs. 4,00,000 in addition to the stated price of Rs. 1,00,000 to the assessee. On the basis of the material available before him, the Income-tax Officer came to the conclusion that the entire unexplained cash of Rs. 4,10,000 found in her possession is to be treated as income from undisclosed sources. On the basis of this finding, he made an addition of this sum as income from undisclosed sources. The assessee's appeal before the learned Commissioner of Income-tax (Appeals) has failed.
4. During the course of the arguments, learned counsel for the assessee made a reference to the following circumstances :
(i) The assessee has never been a taxpayer either before or after the raid. She is not shown to be connected with any business and there was no known source of her income.
(ii) The assessee was an old widow of about 68 years of age and was not physically fit to earn any income.
(iii) The property which was valued by the architect at Rs. 2.4 lakhs could not have been sold by the assessee for a mere sum of Rs. 1,00,000,
(iv) The assessee could not have suffered any loss or disadvantage by stating the full price of Rs. 5,00,000 in the sale deed. The understatement of the sale price in the sale deed could have been done at the instance of the buyer and, therefore, the testimony of the buyer should not be given any credence.
5. On the basis of the above circumstances, it was submitted by learned counsel for the assessee that the assessee's explanation that she acquired this sum of Rs. 4,10,000 out of the sale proceeds of the house property should have been accepted by the two Revenue authorities. In support of his argument, learned counsel for the assessee placed reliance upon the decision of the Kerala High Court in the case of CIT v. Smt P. K. Noorjehan [1980] 123 ITR 3 and the decision of the Calcutta High Court in the case of Tara Devi Goenka v. CIT [1980] 122 ITR 14.
6. We have considered the facts and circumstances of the case and studied the two rulings with great care, but do not feel persuaded to accept the contention of learned counsel that the amount of the undisclosed income should be treated as a capital gain. At the very outset, learned counsel candidly conceded that the recovery of the amount and the liability of its being treated as undisclosed income cannot be disputed. He confined his arguments only to the question as to under what head of income this undisclosed income is liable to be taxed. On this point, learned counsel urged that the explanation offered by the assessee, an old widow of 65 years, is reasonable and probable and there is no reason why the same should not be accepted. We have given our careful thought to this aspect of the matter, but here again we do not find ourselves in agreement with learned counsel. Except the statement of the assessee herself, there is no other evidence to substantiate the assessee's claim. On the other hand, the assessee's explanation stands contradicted not only by the sworn testimony of the buyer, viz., Mr, Vadilal Maru, but also by the sale deed executed by the assessee herself. According to the assessee, one Mr. L.P. Patil was present at the time of the payment of the sale consideration. The lady has further stated that her grandson, Sunil Rele, was also present at the time of the payment. But none of these two persons has been produced by the assessee as witness. The buyer, Shri Vadilal Maru, has been cross-examined by the assessee and during that cross-examination, he has denied the suggestion that he had paid Rs. 4,00,000 in addition to the stated price of Rs. 1,00,000 to the assessee. So far as the two rulings are concerned, here again we find that they do not offer any material assistance to the assessee's case. In the case before the Kerala High Court, the explanation offered by the assessee was accepted on the basis of the surrounding circumstances. But then, in that case there was no evidence to speak to the contrary. In the case in hand, there is not only the oral evidence of Shri Vadilal Maru but also the documentary evidence in the form of the sale deed which contradicts the alleged fact of payment of the sale consideration of Rs. 5,00,000. In the case before the Calcutta High Court, it had been observed that, since there was no reason to disbelieve the explanation offered by the assessee, such explanation could validly be accepted. In the case before us, the oral testimony of the buyer, Shri Vadilal Maru, and the documentary evidence consisting of the sale deed do constitute a reason to disbelieve the explanation of the assessee. The above circumstances, to which reference had been made by learned counsel, could have possibly proved helpful to the assessee had there been no positive evidence to the contrary. Rather, the evidence which proves the contrary is more preponderant than the solitary uncorroborated statement of the assessee herself. The failure of the assessee to produce Shri L.P. Patil and Shri Sunil Rele also justifies the presumption to the effect that had these witnesses been produced, their testimony would have been adverse to the interest of the assessee. Looking to all these facts and circumstances, we hold that the two Revenue authorities were not unjustified in not accepting the assessee's explanation to the effect that the cash of Rs. 4,10,000 found in the assessee's lockers represented part of the sale proceeds of the house property and, therefore, should be treated as a capital gain for the purpose of taxation. In this view of the matter, we do not find any force in this appeal and dismiss the same.
7. V. dONGZATHANG (Accountant Member). --I fully agree with my learned brother that the amount has to be assessed as income of the assessee. The assessee herself did not deny the fact and had conceded to that extent right from the beginning. The only further issue is under which head the income is to be assessed.
8. The facts have been fairly brought on record and need not be repeated here. It has been the case of the assessee right from the date of search that the money came out of the sale proceeds of the property. According to the assessee, Rs. 10,000 was received on November 19, 1984, as earnest money. The balance of Rs. 90,000 was received by cheque on December 17, 1984, along with cash of Rs. 4 lakhs when the agreement was signed. It was further deposed at the time of cross-examination that this Rs. 4 lakhs was kept in lockers, Rs. 1.5 lakhs at Oriental Bank of Commerce and Rs. 2.5 lakhs at State Bank of India, Dadar.
9. It was, therefore, claimed that the said income should be assessed as income arising out of the transfer of the property as the assessee had no other source of income. She claimed that she was not assessed to income-tax either before or after the raid. She was an old widow of about 65 years and was physically unfit to run any business for earning income.
10. Learned counsel before us submitted that the search itself was actuated by the very sale transaction and the officer issued authorisation for search under Section 132 in consequence of information in his possession regarding this transfer of property. If it was not so and if there was material information which could lead to any other inference, it was on the Revenue to produce such evidence. In the absence of such evidence, it was submitted that the income should be assessed as capital gains arising out of the sale of the property.
11. On careful consideration of the rival submissions and keeping in view the findings recorded by the Assessing Officer and the Commissioner of Income-tax (Appeals), it is seen that the contentions of learned counsel have much force. Firstly, the assessee in this case was an old lady of about 65 years who was not having any known source of income. The only financial transaction entered into by the assessee so far appears to be the sale of the property stated above. If there is any other financial transaction or business on the basis of which the search was authorised and conducted in her premises, the Revenue has not brought any material on record. In the absence of any material on record to prove otherwise, the explanation of the assessee cannot be rejected outright. While admitting that the said money was to be assessed as income, it is necessary that the head of income under which the same is to be assessed has to be considered in the light of the explanation offered by the assessee. The reference of learned counsel of the assessee to the decision of the Kerala High Court in the case of CIT v. Smt. P. K. Noorjehan [1980] 123 ITR 3 and the decision of the Calcutta High Court in the case of Tara Devi Goenha v. CIT [1980] 122 ITR 14 support the claim of the assessee. Similarly, the Kerala High Court, in its earlier decision in the case of K.S. Kannan Kunhi v. CIT [1969] 72 ITR 757 and the jurisdictional High Court in the case of CIT v. Deviprasad Khandelwal and Co. Ltd. [1971] 81 ITR 460 (Bom), held that it is quite legitimate in the case of an assessee who is known to be carrying on several activities of an income-earning character or who can reasonably be found to be involved in such activities, to draw the inference that the amounts found with him constitute income from undisclosed sources, in the absence of satisfactory explanation regarding their source. Such an inference should not be readily made in the case of a person who has no known business or other source of income or who cannot even be reasonably suspected to be engaged in any income-earning activities. In the latter case, there must be more substantial reasons to reject the assessee's explanation and draw the inference that the amounts found with him constitute income. Since, on the facts of the present case, there is no other possible source from which the assessee can derive the income, the only irresistible conclusion is that it is through the sale of the property.
12. This view which I am adopting is all the more apposite in view of the fact that the Revenue has not come forward with the information in its possession which impelled the action under Section 132 of the Act. Adverse inference against the Revenue can reasonably be drawn in this regard as the failure appears to be deliberate.
13. The next question for our consideration is whether the Tribunal can ignore the contents of the documentary evidence in the form of sale deed which specified the sale consideration and hold that the assessee received an amount over and above the one recorded in the instrument ? In this regard, the decision of the Patna High Court in the case of CWT v. Rohtas Industries Ltd. [1968] 67 ITR 283 is directly on this point. In that case, it was held that, in the absence of any direct evidence, a judicial or quasi-judicial Tribunal can base its conclusions on the basis of what are known as notorious facts bearing in mind the principles of Section 114 of the Evidence Act. Only a court may assume the existence of any fact which it thinks likely to have happened in the course of normal conduct of public and private business. It is, therefore, in the fitness of things that the Tribunal should take an overall view and take into account the notorious facts. As to the notorious fact and existence of such practices in property dealings, it is not necessary for us to lead any evidence and ask the parties to highlight any instances. The provisions of Chapters XXA and XXC of the Income-tax Act are monumental testimonies of the prevalance of the practice and steps taken by the Legislature to combat these forms of tax evasion by understatement of sale consideration.
14. It is true that there is no equity about a tax. And it would not shock us in the least to find that the Legislature has determined to put an end to the problem by imposing the severest of penalties. It scarcely lies in the mouth of the tax payer who plays with fire to complain of burnt fingers. But, at the same time, the Revenue authorities cannot act arbitrarily and reject the claims of the assessee summarily and without any valid reasons. That the amount cannot be assessed in the hands of the other party or that it is already barred by limitation for initiating proceedings against the other party cannot be a valid ground for inflicting taxes more than otherwise would be lawfully payable by the assessee.
15. Having regard to all these peculiar facts and circumstances of the case, I hold that the assessee is entitled to the benefit of being assessed on the income under the head "Income from capital gains". The Assessing Officer will recompute the income on this basis. In doing so, reasonable opportunity should be given to the assessee.
ORDER OF REFERENCE TO THIRD member
16. Since there is a difference of opinion between the learned Judicial Member and the learned Accountant Member on the point raised in this appeal, we hereby frame the point of difference for the opinion of the President under Section 255(4) of the Income-tax Act as under :
"Whether on the facts and in the circumstances of the case, the cash amount of Rs. 4,10,000, which under Section 69A is deemed to be the income of the assessee for the financial year under appeal, should be treated and taxed as capital gain ?"
ORDER OF THIRD MEMBER
17. CH. G. kRISHNAMURTHY (President).--The assessee in this appeal is agitated by the imposition of tax treating the amount found on a search of her bank lockers as income from undisclosed sources negativing her claim that that sum was nothing but an accretion to the capital cost of her residential premises and, therefore, a capital gain and should be assessed as such.
18. The learned Members of Bombay Bench 'E' who heard this appeal differed on this issue. While the learned Judicial Member took the view that it was income from undisclosed sources, i.e., supported the Revenue's stand, the learned Accountant Member supported the assessee's stand holding that it was income from capital gains and should be assessed as such. It was to resolve this dispute that this point of difference of opinion has come up before me as a Third Member.
19. The relevant facts are not too many to assimilate or too difficult to grasp. The assessee is the widow of R.C. Rele, 68 years old, and first became an income-tax assessee on the death of her husband as a successor to the estate left by her husband. Her husband was an income-tax assessee and his income consisted of income from property, income from shares and income from fixed deposits. Her husband died on November 16, 1983, and she inherited the immovable property known as "RELE NIWAS" at 22, D.L. Vaidya Road, Dadar, Bombay-28. This property was partly rented and partly self-occupied. This property was sold to one Vadilal Maru for a consideration of Rs. 1 lakh as stated in the document of sale. This sale took place on December 17, 1984. According to the story of the assessee, out of this Rs. 1 lakh, an amount of Rs. 10,000 was received by cheque as earnest money on November 19, 1984, and the balance of Rs. 90,000 was received by cheque on the date of registration, i.e., December 17, 1984. Now, the story of the assessee further goes on to say that although the stated sale consideration was only Rs. 1 lakh over and above that, a sum of Rs. 4 lakh was paid in cash as part of the sale consideration without stating it in the deed of sale. That sum along with another sum of Rs. 15,000 accumulated out of savings was kept in two bank lockers, i.e., Oriental Bank of Commerce and State Bank of India. The issue in this case is as to the nature of the sum of Rs. 4,10,000 as to whether it constituted income from undisclosed sources or income from capital gains.
20. On January 22, 1985, the Department conducted a search and, having found a sum of Rs. 4,15,000 in the bank lockers, seized the same by passing an order on May 14, 1985, under Section 132(5) of the Income-tax Act. In response to the inquiries conducted by the Department, the assessee stated on oath that she sold the immovable property known as "Rele Niwas" for a total consideration of Rs. 5 lakhs, out of which Rs. 1 lakh was paid in cheque and the balance Rs. 4 lakhs in cash, though there was reference made to the payment of only Rs. 1 lakh in the deed. In other words, the sale consideration was understated in the sale deed. But, all the same, it represented the sale proceeds received on the sale of the house and, therefore, that must be treated only as a capital receipt liable to tax as capital gain. That the sum was liable to tax as capital gain was not denied by the assessee at any stage. But, the Income-tax Officer took a totally different view. According to him, since only Rs. 1 lakh was stated in the sale deed, that amount alone should be taken as the sale consideration and the balance of Rs. 4 lakhs must represent income from undisclosed sources. He did not accept the explanation offered by the assessee that the purchaser, Vadilal Maru, offered to buy this property under the condition that only Rs. 1 lakh would be stated as consideration in the sale deed and the balance Rs. 4 lakhs would be paid in cash. The Income-tax Officer examined Vadilal Maru, the purchaser, by summoning him under Section 131 of the Income-tax Act and recorded his statement on oath. He flatly denied having paid to the assessee anything more than Rs. 1 lakh. On account of this contradiction and denial by the purchaser, Vadilal Maru, the Income-tax Officer treated the sum of Rs. 4,10,000 out of the sum of Rs. 4,15,000 as income from undisclosed sources and brought the same to tax as such with the following observations :
"It was, therefore, considered necessary to allow the assessee to cross-examine Shri Vadilal Maru and accordingly an opportunity was allowed to the assessee, vide this office letter No. G/9-M(3)/85-86, dated March 17, 1986. Here again the assessee could not come out with any concrete evidence or convincing statement to establish that the sum of Rs. 4,15,000 seized during the search operation under Section 132 represented the amount received from Mr. Vadilal Maru.
Considering this above facts, the said sum of Rs. 4,00,000 + Rs. 10,000 alleged to have been received as on money is considered as assessee's income from undisclosed sources."
21. On appeal, this decision was confirmed by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) held that the assessee stated in her statement recorded on January 22, 1985, that the money of Rs. 4 lakhs was delivered to her at her residence by Shri Maru in the presence of her grandson, Sunil Rele, but Sunil Rele was not examined by the assessee and was not produced as a witness. She also did not want to examine the brother of Shri Maru, in whose presence the sum of Rs. 4 lakhs was alleged to have been paid as consideration for the property sold. He was, therefore, of the opinion that the assessee failed to offer any satisfactory explanation for the sum found in her possession during the search proceedings. It was thus that he held that the explanation offered by the assessee was not supported by any evidence. In further appeal against that order, as I stated earlier, the learned Judicial Member took the view that the action of the Department was justified, while the learned Accountant Member took the view that the action of the Department was not justified.
22. I have heard the parties at great length and perused the orders passed by my learned brothers, the Departmental officers and the paper book. This is a case where the issue involved is to be decided on the basis of probabilities, i.e., if I may put it that way, circumstantial evidence, because direct evidence of a clinching nature is not available. First and foremost, it is to be considered whether the old lady of 68 years of age had at any time embarked upon any business dealings of any kind including speculation in shares or did her husband at any point of time engage himself in business. It is an admitted fact that the income of the assessee was not different from the income of her husband except variations in the quantum. From the assessment order, it is seen that the income of the assessee consisted of a meagre sum of interest on bonds, another meagre income from property, dividend income, interest on fixed deposit receipts and bank interest, dividend income and interest on fixed deposit receipts being a little more at Rs. 18,000 and Rs. 22,000, respectively (leaving the 100s). Can an assessee with this structure of income be said to have any income from undisclosed sources, in the sense that that income could be attributed to anyone of these sources or business sources ? The income from interest on bonds and the income from property are so small being Rs. 430 and Rs. 1,616, respectively, as to even remotely suggest that any income would be accumulated to be kept as income from undisclosed sources aggregating to the magnitude of Rs. 4 lakhs either separately or in conjunction with income from other sources.
23. The income from dividends is always confined to the shareholdings. It may be possible to keep the shareholdings undisclosed for a short time or a long time. But, the income from dividends is next to impossible to be kept undisclosed unless these dividends relate to undisclosed shareholdings. In order that the income may be relatable to dividends from undisclosed shareholdings, the shareholdings must be quite huge and so too the dividends. Is it possible to keep the shareholdings undisclosed to the Department for a length of time ? Is it possible for an assessee not to take advantage of the tax deducted at source by filing returns at one time or the other ? The possibilities, in my opinion, are not only remote but almost extinct. Therefore, the dividend income, in my opinion, is not such as to give scope for concealing it so as to accumulate it to the extent of Rs. 4 lakhs either separately or in conjunction with other sources. Now I go to the interest on fixed deposit receipts. How is it possible to conceal the fixed deposit receipts which are always in a bank ? What applies to dividends should apply mutatis mutandis to the interest on fixed deposit receipts also. When the possibilities for concealing the shareholdings or the fixed deposit receipts in banks from the gaze of the ever watchful eye of the Income-tax Department and the Revenue officials are so remote or even nil, can we say by implication or in theory that the assessee would have concealed the dividend income and accumulated it to the extent of the sum found in the lockers ? I see the possibilities are remote or even nil. It is, no doubt true that it is not for the Department to show from which source the assessee derived the income which was found on search and the obligation to explain the source and nature of the money so found on search to the satisfaction of the Department is always squarely upon the assessee, but yet one has to look to the probabilities. As I endeavour to explain the probabilities, I am of the opinion that it is quite probable that this income could not relate to any of the incomes assessed in the hands of the assessee from regular sources shown or even by her husband when he was alive.
24. But, the probabilities, predominant and preponderant, to hold it as income from capital gains are, therefore, very likely. Again, the search was conducted by the Department closely after the sale of the house. Therefore, the search must have some relation to the proceeds realised on the sale of the house. Under Section 132 of the Income-tax Act, where the officials mentioned therein have, in consequence of information in their possession, reason to believe that a person could not produce, or cause to be produced, any books of account or other documents or omitted or failed to produce, or cause to be produced, such books of account or other documents as required by summons or notice or will not and would not produce any books of account or documents which will be useful for, or relevant to, any proceedings under the Indian Income-tax Act, 1922, or is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922, then they may authorise a search subject to the conditions provided for in the subsequent provisions of Section 132. It is, therefore, possible that the Department has information in its possession that the assessee has money or jewellery which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922, and that such money or jewellery represents either wholly or partly income which has not been, or would not be, disclosed. Unless this information was in the possession of the concerned officers inducing in them the belief that the sum in question would not be disclosed, they cannot authorise the search. I do not know what was the information in consequence of which the search was authorised. Since the search was authorised so close on the sale of the house, the normal expectation would be that it has nexus to the sale of the house. This is one probability. The second probability is that one can take judicial notice of the fact that sales of immovable properties are taking place on a large scale in our country involving change of black money by understating the sale consideration in the documents offered for registration and to the Department. Had it not been for this evil of nefarious activity and the proliferation of black money in this way, the Legislature would not have enacted Chapter XX-C and its predecessor Chapter XX-A for the acquisition of properties raising certain presumptions where the stated consideration in the document should be deemed to be less than the supposed prevailing fair market value. Such being the case, it is common to understate the sale consideration to avoid income-tax payment as capital gains tax, registration fees, stamp duty, etc. Therefore, if the purchaser denies having paid any money over and above the stated consideration, that does not conclusively prove that his statement was sacred and not false and that he was telling the truth. Thirdly, no attempt has been made by the Department to individually value the property sold on December 17, 1984, whether a property consisting of 750 sq. ft. in Dadar would be sold only for Rs. 1 lakh and not for anything more, and that too for delivering vacant possession. The sale value of this property of such a magnitude in such an area, could not have been sold just for Rs. 1 lakh that too with vacant possession. Now, the Department had examined, as now transpired before me, the grandson of the assessee in whose presence it was stated that the sum of Rs. 4 lakhs was paid. He categorically corroborated the statement of the assessee that a sum of Rs. 4 lakhs was paid in cash, but he gave a different date, namely, November 19, 1984, while the assessee gave the date as December 17, 1984. The discrepancy of the variation in the dates apart, the statement of the grandson was corroborative that the sum was being paid by the assessee. It is unfortunate that the discrepancy in the dates was never got clarified by the Department and that shows that the Department has ignored the corroborative part relating to the receipt of cash of Rs. 4 lakhs in toto, relying only on the discrepancy in the dates. One has to remember that these are not memory tests. Either the grandson might have got confused about the date or the old lady. Both are possible. This is another probability. Interesting but telling recollections have come out of cross-examination between the assessee and the purchaser, Vadilal Maru, which were recorded by the Income-tax Officer on March 21, 1986. In response to a question by the assessee whether the purchaser remembered that he had brought cash of Rs. 4 lakhs in a cotton bag along with his brother, S.D. Maru, on November 19, 1984, and that the cash was mostly in Rs. 100 denomination and the cash was counted and found to be in order and that the bundles were tied with rubber band and pinned up, the reply of the vendee, Vadilal Maru, was that there was no question of remembering anything when there was no cash payment. This shows that the cash of Rs. 4 lakhs must have passed to the assessee only on November 19, 1984, and not on December 17, 1984, and, therefore, the statement of the grandson that the money was received on November 19, 1984, could not be discounted as unreliable. May be on account of old age and confusion as a result of prolonged proceedings recording statements after statements, the assessee might have said the date of receipt as December 17, 1984. Secondly, the next four questions are more revealing :
"By Mrs. M. Rele : You are not telling the truth, because you and your brother Shri S. D. Maru, had agreed that this cash would be paid. You have first met me in August, 1984, regarding the dealing of this property, before that I was contemplating to sell this property after the death of my. husband, who expired in the month of November, 1953.
By Mr. V.D. Maru : I am telling the truth. I met you alone in the month of August, 1953, first, and nothing was decided about the cash payment.
By Mrs. M. Rele : You are not telling the truth. Cash payment to this extent was decided because you were not ready to pay more than Rs. 1,00,000 by cheque. Even the architect's valuation is Rs. 2.40 lakhs.
By Mr. V. D. Maru : There is no question of my telling anything false. About the valuation by architect, I am not aware.
By Mrs. M. Rele : How can I sell it for Rs. 1,00,000 only when I had given vacant possession of my own flat at the 4th floor and two rooms on 3rd floor."
25. This shows that, when the valuation of the property by the architect was at Rs. 2.40 lakhs, even though the vendee denied it, which he could not have, in the face of the report of the architect, a property worth Rs. 2.40 lakhs would not have been sold for Rs. 1 lakh.
26. This supports my view that a property of such a magnitude and in such an area would not have been sold for Rs. 1 lakh in 1984, with vacant possession. This aspect of the matter should have been further proved by the Department, which it did not do. It is also pertinent to note that the purchaser, Shri Vadilal Maru, is also an income-tax assessee and in his statement he categorically stated that he withdrew the money from his firm's account. Paying due regard to all the circumstances which probabilised that the money received would only be in connection with the sale of the house and there being nothing in favour of the Revenue's contention other than the document and the statement of the purchaser corroborating his own version, I am of the view that the sum in question could not but be regarded as sale consideration received by the sale of the house and should, therefore, be taxed as income from capital gains, there being very little to support the theory that it could be income from undisclosed sources. Another aspect I would like to refer to in this context, is the provisions of Section 69A under which the sum was brought to tax. This section provides that, where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year. The important ingredients of the section are that the assessee must be found to be the owner of the money, bullion, etc. Either there must be no explanation about the nature and source of acquisition of the money or bullion, etc., or the explanation is not satisfactory, then the money and the value of the bullion, etc., may be deemed to be the income of the assessee for the financial year in which it was found. The expression "may be deemed to be the income" is very relevant for our present purpose. If the explanation is satisfactory, it cannot be deemed as the income of the assessee. Therefore, the use of the phrase "may be deemed to be the income" gives the Income-tax Officer a discretion to exercise judiciously and judicially. The second thing is that it is to be deemed as the income. The income need not necessarily be income from undisclosed sources. Under Section 14 of the Income-tax Act, 1961, the heads of income are salaries, income from house property, profits and gains of business or profession, capital gains and income from other sources, that is to say, that the money, bullion, etc., found, of which the assessee is the owner, for which there was no satisfactory explanation, could be deemed to be the income under any one of these heads which includes capital gains too. I think, the Income-tax Officer also has a share of the burden of the onus, as the case may be, to show as to under what head this income would fall and that the discharge of the burden or onus must be on acceptable material and strong probabilities. I am, therefore, of the opinion that, in this area, the probabilities shown by the Income-tax Officer are not strong enough to justify his conclusion that the sum in question may be treated as income of the assessee from undisclosed sources and the probabilities are more in favour of it treating as income from capital gains. I am, therefore, of the opinion that the view expressed by the learned Accountant Member is more rational, logical and justifiable and I agree with him. The learned Judicial Member has gone only by the document without paying adequate consideration to the other probabilities and also without taking into account the surrounding circumstances of proliferation of black money in the garb of understatement of sale consideration whenever real estate has changed hands in the country, to curb which evil the Legislature have even to intervene.
27. The matter will now go before the regular Bench for disposal of the appeal in accordance with the opinion of the majority.