TMI Blog1997 (11) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... t the source of investment in the purchase of draft that the same was purchased out of the funds of the respondent-firm but relevant entry in the books of account was not recorded inadvertently. The ITO initiated proceedings under section 148 with a view to assess the 'unexplained investment' the purchase of draft. In response to notice under section 148, the assessee filed its return of income declaring the income originally assessed. 3. In the course of reassessment proceedings, Sh. Subash Gupta was specifically confronted with the facts pertaining to the purchase of the draft in question and at this stage he contended that the draft had been purchased from the funds belonging to Sh. GuIshan Kumar Gupta. It may be mentioned that the statement of Sh. Gulshan Kumar Gupta was also recorded by the ADI on 16-8-1989, during the course of which he stated that the drafts of Rs. 3.00 to Rs. 3.50 lakhs had been purchased by Sh. Subash Gupta and one Sh. Navin Kumar on his behalf with his money, the latter representing the sale proceeds of onions and other scrap items. According to the ITO, Sh. GuIshan Kumar Gupta had nowhere pointed out any of the drafts purchased by Sh. Subash Gupta or S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended before the DC(A) that the statement of Sh. Subash Gupta had been made under confusion and tension and it was ample justification to change the stand subsequently by relying upon the statement of Sh. Gulshan Kumar Gupta. It was further stated that the items in which Sh. Gulshan Kumar Gupta dealt with were not at all related to the business of the firm. In support of various arguments, reliance was placed on the decision of the Hon'ble Supreme Court in Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 and a judgment of Hon'ble Punjab and Haryana High Court in Krishan Lal Shiv Chand Rai v. CIT[1973] 88 ITR 293. A decision of the Hon'ble Himachal Pradesh High Court in Satinder Kumar (HUF) v. CIT [1977] 106 ITR 64 was also relied upon. 5. It may be mentioned that the DC(A) also allowed an opportunity to the ITO to state the revenue's case and this is brought out in para 4 of the appellate order. The ITO relied upon the reasoning recorded in the assessment order and referred to the statement of Sh. Subash Gupta, wherein he had categorically stated that the draft had been purchased out of the funds of the respondent-firm but which had inadvertently not been r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave any business transaction with Sh. Gulshan Kumar Gupta also supports the contention of the appellant that Rs. 50,000 could not be treated as the income of the assessee for the year under reference. I, therefore, after considering the factual and legal position, delete the addition of Rs. 50,000." 6. Before me, Id D.R. on behalf of the revenue strongly supported the order of the ITO and the subsequent arguments advanced by her were a reiteration of the reasons recorded by the ITO in making the impugned addition. According to her, the assessee had changed its stand after a categorical admission by the partner Sh. Subash Gupta in his initial statement recorded on oath. It was contended that even the statement of Sh. Gulshan Kumar Gupta was not supported by any evidence, in spite of specific opportunity given for that purpose by the ITO. It was pointed out that the assessee had not been able to adduce any evidence about the sale of goods purported to have been belonging to Sh. Gulshan Kumar Gupta as also the purchase of specific drafts out of the sale proceeds and forwarding these to Sh. Gulshan Kumar Gupta. Ld D.R. also referred to the non-furnishing of any cogent reasons by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the assessee to show subsequently that the entries were incorrect and that the books of account did not disclose the correct state of facts. In the matter before their Lordships of Hon'ble Punjab and Haryana High Court in the case of Krishan Lal Shiv Chand Rai , the question was one of penalty under section 271 (1)(c), the assessee having surrendered certain credits in his books of account in the course of proceedings under section 143(3)/148-and the ITO accepting the surrender and framing orders of reassessment. In the penalty proceedings, the assessee contended that the amounts surrendered were in fact credits of genuine parties and sought opportunity to prove his case. The IAC refused to give such opportunity and levied penalty and the further appeals filed by the assessee were dismissed by the Tribunal. On the matter being carried to Hon'ble High Court, their Lordship took the view that the levy of penalty was not justified inasmuch as it was an established principle of law that an assessee was entitled to show and prove that an admission made by him previously was in fact not correct and true. Even on the presumption that the surrender tantamounted to an admission of conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove that the income did not belong to the family but to the assessee as an individual. The observation of their Lordships, reproduced by the DC(A) in his appellate order, was made in the light of the aforsaid facts. 11. In case facts of the present case are looked into, then what one finds is that these are entirely distinguishable and none of the aforesaid judgments would apply. An entry in the books of account, an admission made during the course of assessment proceedings, vis-a-vis penalty proceedings under section 271(1)(c) and a stand about the source of income taken in one assessment year as compared to another assessment year cannot be put at the same level or equated with the statement made on oath by a person who is closely involved in managing the day-to-day affairs airs of a business either in the capacity of a partner of a registered firm or in any other capacity. It needs no long deliberation to state that the initial statement made by a person about a particular state of affairs carries more weight and a subsequent statement made retracting from the earlier position should be on good ground, supported by cogent and relevant evidence. It may be another case that a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sh. Gulshan Kumar Gupta is not at all categorical and does not support the changed stand of the assessee. The ITO even on the basis of the statement of Sh. Gulshan Kumar Gupta allowed due opportunity to the assessee to prove that the sum of Rs. 50,000 represented the sale proceeds of the goods/ items which were being dealt with by Sh. GuIshan Kumar Gupta but as the orders of the tax authorities show no such evidence was tendered and the position before the Tribunal remains the same. In my opinion, the onus which lay on the department stood fully discharged. Before me it is for the first time that an argument has been raised by Id. counsel that the other partner of the firm should have also been examined. In my opinion, it is a little late in the day to come up with such an argument and that apart Sh. Subash Gupta is found to be a partner holding 7596 share and obviously in control of the things. He made the statement knowing fully well the implications and it has been rightly argued by Id. D.R. before me that a statement made on oath carries sanctity and subsequent retraction should not be treated lightly. In the final analysis, I set aside the order passed by the DC(A) and resto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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