R. Kanakammal v. Commissioner of Income Tax — 1998 DIGILAW 438 (MAD)

Judgment :- R. JAYASIMHA BABU, J. At the instance of the assessee, the following common question has been referred to us for our consideration for the assessment years 1971-72 and 1972-73, "Whether, on the facts and in the circumstances of the case, there was any link between the withdrawals in Singapore from the assessee's husband's accounts of Rs. 72, 950 and whether such withdrawals were remitted through illegal channels to India during the assessment years 1971-72 and 1972-73. (Rs. 21, 450 during 1971-72 and Rs. 51, 500 during 1972-73) for the purpose of investment in India during those two years ?" The only link which the assessee was able to show was the fact that the assessee's husband was residing and working at Singapore. The Income-tax Officer found that there was no evidence whatsoever placed before him to show that the money had been brought in from Singapore to the extent mentioned in the order of reference, either by normal banking channels or by any other channels. He observed in the course of his order that, "the assessee has not produced any evidence to show that she brought in money from Singapore from out of above drawings" . The assessee had only filed a statement of the drawings by her husband in Singapore between the years 1968 to 1971. The Income-tax Officer had called upon the assessee to file the statement of the drawings from the years 1964 to 1967 and had found that the drawings in those years though more than the drawings in between the years 1968 and 1971, it was not the case of the assessee that any part of those drawings had been remitted to India and that there was nothing at all to show that though the husband of the assessee was employed in Singapore, he had remitted some art of it to India. The Tribunal has agreed with those findings of the Income-tax Officer and has set aside the order that had been passed by the Appellate Assistant Commissioner holding that the assessee had established a link between the expenditure incurred in India and the earnings of her husband in Singapore. There was no more material before the Appellate Assistant Commissioner than there was before the Income-tax Officer or the Tribunal. There was no more material before the Appellate Assistant Commissioner than there was before the Income-tax Officer or the Tribunal. That appellate authority had merely drawn an inference unsupported by evidence, and had speculated that the money spent by the assessee in India had in fact been transferred to India from out of earnings of her husband in Singapore. The case of the assessee in the first instance was not that any part of these amounts had been remitted to her from Singapore. She had stated in her letter dated March 30, 1972, that the amount of Rs. 72, 950 for which there is no proof regarding the source, may be treated as her income and assessed for the years 1967-68 to 1971-72 on spread over basis. She had tried to give a different version by a subsequent letter in November, 1973, wherein it was claimed that her husband had sufficient income in Singapore from out of which the monies could have been remitted, to India. However, she did not produce any document to establish that there was, in fact, a remittance from Singapore to India whether through banking channels or by channels outside the normal banking channelsThe Tribunal has, in the course of its order, rightly held that the onus was heavy on the assessee to establish that the monies had been received from Singapore and for that absolutely no evidence was forthcoming. The Tribunal has also rightly observed that without any proof of the alleged clandestine and illegal remittances, the case of the assessee that the amount of Rs. 72, 950 had actually been received by her from her husband could not be accepted. A finding was recorded by the Tribunal that there was no proof to show as to who had brought the amounts and in what manner the remittances were received by the assessee. That finding cannot be said to be erroneous or perverse. In the absence of any evidence regarding the alleged remittances from abroad, the assessee was not entitled to claim that the amount had, in fact, been received from outside the country and during the years for which she wanted the amounts to be spread over. That finding cannot be said to be erroneous or perverse. In the absence of any evidence regarding the alleged remittances from abroad, the assessee was not entitled to claim that the amount had, in fact, been received from outside the country and during the years for which she wanted the amounts to be spread over. It is not necessary in this matter for us to go into the question as to whether it is permissible for the assessee to have illegal remittances from abroad, taken into consideration for the purpose of explaining the source for the acquisition of an asset in India. The assessee had placed reliance on a circular issued by the Central Board of Direct Taxes dated August 28, 1970, in which it is stated that in the absence of direct evidence regarding the transfer of money from abroad, the assessee's statement would be accepted, provided, the assessee produces adequate evidence to show that he has sufficient wealth in the country from which the money is claimed to have been repatriated, and there was evidence in the form of maintenance of bank accounts in the other country and copies of the assessment orders passed in the assessee's case by the authorities of that country, subject to the condition that the assessee/migrant will be required to prove that the amount brought into India can directly be linked with the funds which the assessee had possessed in that countryThis circular required the assessee to show her bank accounts in the country from which the money was claimed to have been repatriated, that assessment orders had been passed in respect of the income in that country; and that there was proof of linkage with the funds possessed by the assessee in the other country and the amount spent in India. The Income-tax Officer has found that such a link had not been established even though, apparently, the bank accounts had been furnished as the amounts of withdrawal have been stated in the order of assessment. The Income-tax Officer was of the view that there was no surplus available from which the monies could have been repatriated to India and also the assessee had failed to establish the link. That is also the finding of the Tribunal. The Income-tax Officer was of the view that there was no surplus available from which the monies could have been repatriated to India and also the assessee had failed to establish the link. That is also the finding of the Tribunal. In the absence of any proof of linkage between the funds earned abroad and the amounts spent in India, the mere fact that there is proof of earning outside India will be insufficient to hold that the monies spent in India are, in fact, from the amount earned abroad and remitted into India. We, therefore, hold that the Tribunal was right in its holding that the assessee had not established that there was a link between the withdrawals in Singapore from the assessee's husband's accounts and the investment made in India and the question referred to us, is, therefore, answered in the negative, in favour of the Revenue and against the assessee. Parties to bear their respective costs.