TMI Blog1990 (12) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... otal expenses. 5. The learned counsel for the assessee Shri C.S. Aggarwal pointed out that the facts in the present case are identical to the facts in the case of M/s Mahavir Iron Foundry wherein the disallowance was reduced to 1/12th in the asst. yr. 1982-83. Therefore, there is no justification for restricting it to 1/6th of the total expenses. The learned Departmental Representative Shri Amitabh Kumar supported the action of the CIT(A). 6. We have considered the rival submissions. Keeping in view the fact that in the case of the assessee's sister concern M/s Mahavir Iron Foundry, in the asst. yr. 1982-83, the disallowance was reduced to 1/12th by the CIT(A), we modify the order of the CIT(A) and restrict the disallowance to 1/12th of the total expenses. 7. Now, we come to main ground of the assessee's appeal where the assessee has challenged the confirmation of addition in the following names: (a) Rs. 18,000 cash credit in the account of Smt. Madhu Bala Jain. Rs. 7,746 credited in her account as interest as well as the old balance in her account. (b) Rs. 54,000 cash credit in the account of Smt. Kanchan Jain. Rs. 6,808 credited as interest as well as the old balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Canara Bank issued to Paras Foundry,Agra. Rs. 10,000 . 26.10.1983 To cheque No. 04935 of Canara Bank issued to Paras Foundry. Rs. 8,000 . . . Rs. 18,000 . Smt. Kanchan Jain: 7.4.1983 By cheque No. 719 amount received back from M/s Indian Ceramic House(Potteries). . Rs. 15,000 7.6.1983 By cheque No. 749 amount received back from M/s Indian Ceramic House(Potteries). Rs. 10,000 26.6.1983 By amount received back from Munni Agarwal,Agra, cheque No. 1347. . Rs. 9,000 8.4.1983 By amount deposited in Canara Bank loans amount received back with interest and work done. . Rs. 20,000 12.4.1983 To cheque No. 053061 Canara Bank issued to Paras Foundry,Agra Rs. 35,000 . 25.6.1983 To cheque No. 050062 Canara Bank issued to Paras Foundry Rs. 10,000 . 26.10.1983 To cheque No. 053063 Canara Bank issued to Paras Foundry,Agra. Rs. 9,000 . In view of the reply given by the assessee, the ITO issued summons under s. 131 of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a sum of Rs. 8,000 but the ITO disbelieved the confirmation given by Smt. Munni Devi Agarwal on the basis that there is a difference in mode of payment and one side it was said that the amount is still outstanding whereas Shri K.K. Goyal has told that this amount was received back by pay order dt.26th Oct., 1983. Shri K.K. Goyal in his statement recorded on 25th July, 1985 that he has not kept any account or any diary of the Dalali work though he has been doing this business for more than 6-7 years back and has done Dalali for the assessee as well as for the firm M/s Mahavir Iron Foundry and he obtained money for them from outside parties. But he has denied to have arranged lending out of money by these firms or persons belonging to these firms to outside parties. He has also shown his ignorance regarding transaction entered into between Smt. Munni Devi Agarwal and Smt. Madhubala Jain. Smt. Madhubala Jain in her statement mentioned that she has lent money to Smt. Munni Devi Agarwal through Shri K.K. Goyal, Dalal. The ITO doubted the genuineness of these transactions because Shri Darshan Lal, partner did not produce letter dt.19th April, 1985addressed to ITO (SIC),Agrafrom Shri K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The genuineness of the transaction was further proved from the fact that in the next year the amounts had been returned to these ladies. Regarding discrepancy pointed out in the statement, it was submitted that this discrepancy has no meaning. This is based only on doubts, suspicions and surmises. It was pointed out that the statement of witness Shri R.S. Garg, was recorded in the absence of the assessee and it was never confronted with the same. It was also pointed out that the Inspector's report was never shown to the assessee. However, the CIT(A) did not agree with the submissions of the assessee and he confirmed the order of the ITO, for the same reasons as given in the case of M/s Mahavir Iron Foundry,Agra. The assessee is aggrieved. 9. The learned counsel for the assessee Shri C.S. Aggarwal pointed out that there are two sets of partners in the firm, Group 'A' consists of S/Shri D.K. Jain, R.K. Jain and I.K. Jain whereas Group B consists of S/Shri K.L. Jain, Praveen Jain and Shri A.K. Jain. But, there is no direct relationship of these ladies and the partners in whose names cash appeared in the books of account. It is pointed out that these ladies are income-tax assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was not considered in right perspective. It was pointed out that in a similar case, the Tribunal in ITA No. 494/Del/1989 vide order dt.11th Jan., 1990has clearly mentioned that in such circumstances, the assessee is not required to prove the source of such cash credits. Therefore, it was submitted that the Revenue authorities had gone wrong in disbelieving the evidence of the assessee and had wrongly pointed out the inherent weakness in the explanation of the assessee. Our attention was also invited to the fact that the report of the Income-tax Inspector which was the main basis for the infirmity in the statement was never supplied to the assessee. As against this, the learned departmental representative Shri Amitabh Kumar submitted that if there is an entry in the account book of the assessee which shows cash credit in the names of certain person, it is necessary for the assessee to establish the source of that money. The burden of proof lies upon him. The Department can reject the evidence of the assessee on the point of inherent weakness in the explanation or it can rebut it by putting to the assessee some information or evidence which came in its possession. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence, because the fact that, there was receipt of money is itself evidence against the assessee. There is thus, prima facie, evidence against the assessee which he fails to rebut, and being unrebutted, that evidence can be used against him by holding that it was a receipt of an income nature. The very words "an undisclosed source" show that the disclosure must come from the assessee and not from the Department. In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee, prima facie, discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the Department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The Department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof. When proceedings are validly commenced under s. 34 of the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Therefore, the source of income stated by these ladies is not at all believable, because of this infirmity and inherent weakness in the explanation of these ladies. There is no proof to substantiate this source of income. Therefore, the affidavit and the explanation given by these ladies can at the most be a self-serving statement or a self-serving document which cannot be made the basis of proof of their source of income. It is pertinent to mention here that the CIT(A) brought out in his discussion in paragraph 3.29 of his order the relationship of these ladies with the partners of M/s Paras Foundry and M/s Mahavir Iron Foundry and in the absence of proof, he has doubted the very source of earning of this amount which to our mind is a correct conclusion when these ladies had failed to stand the test of cross-examination regarding their original source of income from private tuition, coaching and money lending business. The learned counsel for the assessee strongly relying upon the decisions of the Patna High Court in the cases of Hanuman Agarwal and Bahri Brothers (P) Ltd., contended that these ladies who made investment in the assessee firm are income-taxpayers. In the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income so far as the present case is concerned. It may be a good escape for the cases of ladies but when it comes to verification the Department is at liberty to examine the source. Hence, we are of the opinion that the assessment orders passed in the ladies' cases are not the conclusive proof of their source of income specifically when the Department has not given any decision about their sources on merit. So the assessee cannot take benefit of these assessment orders. So far as the case law referred by the assessee's counsel is concerned, every case stands on its own footing on the given facts and circumstances of the case. The ratio laid down in those cases cannot be mechanically applied in another case where the facts are different as this is a case before us. Therefore, the Department has every right to point out the inherent weakness in the explanation given by the assessee regarding source of income and come to the conclusion that the assessee had miserably failed to discharge the onus of proving creditworthiness of these creditor ladies and their capacity to advance loan to the assessee firm. This view is supported by the decision of the Hon'ble Supreme Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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