(1) THESE appeals have been filed against the judgment of the Keral High court dated 21/11/1979 in ITRs Nos. 137 and 138 of 1977 whereby the following question has been answered by the High court in favour of the assessee and against the Revenue:

"WHETHER on the facts and in the circumstances of the case and on a true interpretation of Section 69 of the Income Tax Act, 1961, the Income Tax Appellate tribunal is right in law in holding that Section 69 of the Act cannot be invoked in respect of the investments of the assessee and that therefore the addition made for the Assessment Year 1968-69 or as the case may be 1969-70 should be deleted?"

(2) THE appeals relate to the Assessment Years 1968-69 and 1969-70. The assessee is a Muslim lady who was aged about 20 years during the previous year relevant for the Assessment Year 1968-69. On 15/11/1967 she had purchased 16 cents of land in Emakulam and the amount spent by her, inclusive of stamp and registration charges, for this purchase was Rs. 34,628.00. On 27/11/1968, she purchased another 12 cents of land at Emakulam and the total investment for this purchase was Rs. 25,902.00. The explanation of the assessee regarding the source of the purchase money for these investments was that the same were financed from out of the savings from the income of the properties which were left by her mothers first husband. The said explanation offered by the assessee was rejected except to the extent of Rs. 2,000.00 by the Income Tax Officer who made an addition of Rs. 32,628.00 as income from other sources in the Assessment Year 1968-69 and an addition of Rs. 25,902.00 in the Assessment Year 1969-70. The said orders were affirmed in appeal by the Appellate Assistant Commissioner. The Income Tax a Appellate tribunal (hereinafter referred to as "the tribunal"), however, held that even though the explanation about the nature and sources of the purchase money was not satisfactory but in the facts and circumstances of the case it was not possible for the assessee to earn the amount invested in the properties and that by no stretch of imagination could the assessee be credited with having earned this income in the course of the assessment year or was even in a position to earn it for a decade or more. The tribunal took the view that although the explanation of the assessee was liable to be rejected. Section 69 of the Act conferred only a discretion on the Income Tax Officer to deal with the investment as income of the assessee and that it did not make it mandatory on his part to deal with the income as income of the assessee as soon as the latters explanation happened to be rejected. On that view the tribunal allowed the appeals of the assessee and cancelled the assessment made by the Income Tax Officer. Thereafter the tribunal at the instance of the Revenue referred the question above-mentioned to the High Court for its opinion. The High court has agreed with the said view of the Tribunal and has held that in the instant case it could not be said that the Tribunal was wrong in having differed from the Income Tax Officer and the Appellate Assistant Commissioner in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. According to the High court, the tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances the tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee.

(3) SHRI Ranbir Chandra, the learned counsel appearing for the Revenue, has urged that the tribunal as well as the High court were in error in their interpretation of Section 69 of the Act.