TMI Blog1995 (5) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is Rs. 6,800. Letters sent to 3 persons were returned. The total amount involved in this type of cases is Rs. 5,740. Though the assessee had furnished addresses in respect of 20 persons, according to the Assessing Officer, the full addresses were not available in relation to these persons. The total amount involved in this type of transaction is Rs. 28,015. One of the creditors was examined and he confirmed that he used to get payments within a few months after the supply of Huqqas. On the above basis, the Assessing Officer held that the credits to the extent of Rs. 2 lakhs was not explained to his satisfaction and, therefore, he made an addition under s. 68 of the IT Act. The addition was confirmed in appeal. The assessee is on further appeal. 3. There is force in the contention of Sri C.K. Nair, the learned counsel for the assessee, that the addition, if at all it is necessary in the facts of the case, could be only under s. 69 of the IT Act and not under s. 68. This is because the credits are not mere cash credits, standing in the name of suppliers of Huqqas purchased by the assessee. The purchases have been accepted, as a matter of fact, by the Revenue, as the purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the statements taken from them were not put to the assessee. We uphold the objection for the reason that the material collected by the Assessing Officer beside the back of the assessee cannot be used to its detriment. The third grievance of the Assessing Officer was that in respect of 20 persons full addresses have not been given. The assessee's contention is that it has supplied the addresses as given to it by the blacksmiths and these blacksmiths are living in villages where they could be easily identified. Further, it is contended that the blacksmiths in the villages are afraid of appearing before Government authorities. Secondly, the blacksmiths in the villages are not educated enough to give the door numbers which is one of the requisites for full address. There is some force in such contentions. The credit in their names are only in small sums and at any rate the Assessing Officer did not call upon the assessee to produce those blacksmiths. Same is the position with regard to the 49 persons in respect of whom the postal authorities have returned the letters with the remark "insufficient address". In our considered opinion, if an assessee wanted to introduce cash credits no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustain an addition of Rs. 10,000 for the asst. yr. 1983-84 and Rs. 5,000 for the asst. yr. 1984-85, on estimate basis. The balance of the additions for each year is deleted. 4. The next point in the appeal of the assessee for the asst. yr. 1983-84 is against the disallowance of a portion of the expenses under the head 'Onam and Vishu Presents' amounting to Rs. 11,795. Onam and Vishu presents to blacksmiths who are not the employees of the assessee amounted to Rs. 26,795. As there were no verifiable vouchers, the Assessing Officer disallowed the entire amount. The learned CIT(A) held that it was customary to make presents to persons who are doing business with the assessee on the occasions of Onam and Vishu festivals in order to facilitate the smooth running of the business and in the absence of vouchers there is possibility of such expenses being inflated and in this view of the matter, he reduced the disallowance of Rs. 11,795. The assessee is on further appeal. 5. Having heard rival submissions we find no justification to interfere with the order of the learned CIT(A). 6. The next ground in the appeal of the assessee for the asst. yr. 1983-84 is against the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1987, the assessee was requested to explain how the stock worth Rs. 9,22,370 was disposed of after 29th Feb., 1984, and before 31st March, 1984." The assessee carried the matter in appeal and contended before the learned CIT(A) that the assessee had declared excess value of stock for getting larger loan facility from bank and there were goods in transit in the month of March, 1984, and further all its sales are export sales. Therefore, the addition towards unaccounted sales was totally uncalled for. The learned CIT(A) held that the assessee has declared its stock to Vysya Bank Ltd. and Union Bank totalling Rs. 13,77,875; so that stock is to be taken as correct. He also noticed that there were no local sales but only exports. Exports were made through the port of Bombay and in the month of March, there was strike in the Bombay port. He also took notice of the photostat copies of the bills of lading bearing invoice Nos. 370 and 371 which proved that the goods covered by these two invoices were accounted for as sales in the month of April, 1984 and they were lying in transit in Bombay port in the month of March, 1984 and were finally shipped out of India only on 17th April, 1984. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Kumaran 12 10. English translation of the statement 13-14 12. We have heard rival submissions and perused the materials placed before us. Vysya Bank Ltd., in its letter dt. 15th Jan., 1987, has stated that Huqqas of different specifications pledged with it as on 29th Feb., 1984, were 3,483 cartons of the value of Rs. 8,41,025 and the date of pledge was 29th Dec., 1982. Union Bank of India in its letter dt. 7th Jan., 1987, has certified that assorted Huqqas made of brass were hypothecated to it in 2,386 pieces valued at Rs. 5,36,850 as on 29th Feb., 1984. Thus, the total number of Huqqas pledged and hypothecated came to 3,483 plus 2,386=5,869 Nos. The total value of stock under pledge as well as hypothecation amounted to Rs. 13,77,875. From the above value, the learned CIT(A) gave credit for 1,256 Huqqas in transit at a value of Rs. 3,72,465 and held that the assessee must be having stock of Huqqas of the value of Rs. 10,05,410, but as per the assessee's books the value of stock was only Rs., 4,46,505. Therefore, the CIT(A) held that the difference represented the value of excess stock held by the assessee. The case of the assessee is that it had 1,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to assorted Huqqas at the average price per piece. Therefore, it can be concluded that the Huqqas lying with the bank either under pledge or under hypothecation are of different qualities and different sizes and it is quite probable that the damaged stock also was given either by way of pledge or shown as having been hypothecated to avail greater loan facilities. The number of damaged Huqqas, according to the assessee, is about 1,600 pieces. The damaged Huqqas also included dismantled Huqqas. Therefore, making allowance for dismantled items we estimate the damaged Huqqas at 1,200 pieces over the years. Considering the total weight of damaged and dismantled Huqqas in 2,000 kgs. the number of such damaged Huqqas as estimated by us is, in our opinion, reasonable. Therefore, the stock of Huqqas as on 31st March, 1984 can be arrived at as follows: Total number of Huqqas under pledge as per CIT(A)'s order and as per bank certificates, 5,869 Nos. Less: Huqqas in transit in March,, 1984 as per CIT(A)'s order and invoice, 1,256 Nos. . 4,613 Nos. Less: Damaged Huqqas 1,200 Nos. . 3,413 Nos. Number of Huqqas h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o another firm called Taj International for the construction of the hotel building. Such amounts were debited to the partners' current accounts in the earlier years. All such drawings were transferred to Taj International's account for the purpose of ascertaining the cost of construction. The assessee furnished the dates on which the drawings were made from the firm and contended that all the partners were separately assessed to income-tax and, if at all, an addition was to be made, it should be only in the individual assessment of the partners. The learned CIT(A) held that it is now well settled law that for taxation purposes firm and its partners are separate entities. The credits and debits are appearing in the accounts of the above four partners. The partners are separately assessed to tax. The same ITO is having jurisdiction over the assessment of the partners. Necessary enquiries as to the nature and source of these credits should be made in the individual assessments of the concerned partners. Accordingly, the learned CIT(A) deleted the addition. The Revenue is in appeal. 17. We have heard rival submissions. It is not as if there was no explanation in respect of the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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