TMI Blog1992 (10) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... d the reasons that have been recorded are reproduced below for the sake (sic): "During the course of assessment proceedings for the asst. yr. 1978-79 the following cash credits were noticed: Ranjan Kumar Mehra 15,000 Surinder Mohan Mehra 20,000 Ram Kumar Jaipuria 13,800 Arun Kumar 16,000 5,000 The assessee was required to furnish details of fresh cash credits. In reply it was stated by the assessee that these pertain to the proceeding year and accordingly further investigation, if any, may be carried out in that year. The factual position regarding these cash credits in this that the assessee is maintaining his books of accounts on old and new bahies system and in the preceding year these accounts were closed with the narration carry forward to nai bhai. These were included by me in the assessment of the assessee for the asst. yr. 1978-79 in the draft assessment order under s. 144B but the learned IAC has directed that this amount may be considered in the preceding year as they first appear in the books of the assessee in that year. On scrutiny of the records for the asst. yr. 1977-78, I find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) had concluded that the reopening was valid. The CIT(A) s observation in this regard is reproduced below: "As discussed above, the ITO initiated proceedings under s. 147 of the IT Act on the basis of the appellant s submissions before the IAC under s. 144B and on the basis of the directions issued by the IAC under s. 144B. Accordingly, the ITO s action is upheld." On the point of merits, the observations of the CIT(A) is reproduced below: "A report was called for from the ITO on the aforesaid submissions of the learned authorised representative. He was asked to examine the books of accounts and verify whether the cash credits did not pertain to the asst. yr. 1977-78. The ITO vide his letter dt.4th Dec., 1985informed that the notice server as well as the Inspector reported to him that the appellant was not available at the given address vide his letter dt.4th Dec., 1985. Looking to the ITO s file it appears that the appellant later on appeared before him and took adjournments from time to time. No compliance was made. From the perusal of the ITO s file it is further observed that the learned authorised representative s contentions that the aforesaid cash credits pertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original year of receipts. He submitted with reference to the paper book that was filed by him on23rd Feb., 1981, in the course of proceedings under s. 144B for asst. yr. 1978-79 that there were no fresh credits in that year but represented brought forward balances. He submitted with reference to the balance sheet that was filed in the paper book, which is placed at p. 5 that the account indicates Nai Bhai Khata and the details of the credit and debit balances are reflected in pp. 11 to 21. He submitted that the balance sheet for asst. yr. 1976-77 is also filed at pp. 27 to 33 and at p. 30 the figure of Nai. Bhai Khata at Rs. 1,70,947.90. He submitted that the assessee followed a system of transferring the closing balance treating them as if it is paid and carrying them forward and then in the next year showing them as if they are fresh receipts. 5. Shri Agarwal submitted that the details which are at pp. 22 to 26 in respect of these parties clearly indicate that the amounts were received in 1973, 1974, 1968 and 1969 but there were no receipts from any of these parties in the previous year relevant to the asst. yr. 1977-78. He submitted that the details of the accounts of these p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these facts have been given the AO a belief that the amounts pertain to the year under appeal. Shri Sinha placed reliance on the decisions reported in the case of Indo Aden Salt Mfg. Trading Co. Pvt. Ltd. (1986) 58 CTR (SC) 9 : (1986) 159 ITR 624 (SC), in Biswanath Pasari vs. ITO (1987) 61 CTR (Cal) 143 : (1985) 154 ITR 419 (Cal) and IAC vs. V.I.P. Industries Ltd. (1992) 102 CTR (SC) 1 : (1991) 191 ITR 661 (SC), for the proposition that though the source of information may be the IAC, it would tantamount to fresh facts coming to the notice of the AO and, therefore, the reassessment, was clearly valid. 8. In so far as the merits of the case are concerned, he placed heavy reliance on the statement of M/s Kanshi Nath Sons and submitted that they should be given more weightage. Since the partners of the firm had categorically denied any instructions being issued to the assessee, the assessee s version could not be relied upon and the addition was rightly made. 9. We have given our very careful consideration to the rival submissions. The reply of the assessee during the course of s. 144B proceedings for asst. yr. 1978-79 is reproduced below for the sake of continuity of facts: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions Issue of Vide your letter No. ITO/III-D(4)/10-RO-80-81/79 dt.19th March, 1981you forwarded the draft assessment order of the above assessee for the asst. yr. 1978-79 alongwith the assessee s objections. A formal hearing was given to the assessee. Since the assessee had not complied with the directions issued by you to prove the genuineness of certain cash credits proposed to be added by you, another opportunity was allowed and the assessee was directed to produce necessary evidence in support of its claim. After hearing the party on such evidence placed before you and discussed with me alongwith the assessee the following directions are issued to enable you to complete the assessment. Credit of Rs. 69,800 in the name of four persons: By referring the assessee s letter dt.23rd Feb., 1981produced before you, it is claimed that these credits were appearing in earlier years and there was no justification for its addition in this year. Your contention that they were squared up in earlier years and fresh credits were shown in the year of assessment is replied by the assessee s counsel that the assessee is maintaining accounts Old Bhai Khata and New Bhai Khata accounts. While clo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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