9911796707
TMI Blog1975 (7) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... ,748.00 53,790.00 -do- 1968-69 6,000.00 7,070.00 3,35,789.00 -do- 1969-70 6,500.00 8,400.00 93,421.00 -do- 1970-71 7,000.00 10,136.00 6,37,453.00 -do- 1971-72 7,000.00 12,500.00 3,53,910.00 Under consideration by the Tribunal He also observed that the assessee has not maintained any accounts for biri, cigarette business. All the assessments for the earlier years have been framed on no account basis. During the accounting year relevant to the asst. yr. 1963-64 the assessee started money lending business and introduced in the month of June, 1963 the various cash credits in the books. The books were started for the first time in the money lending business only. Summons were issued to all the creditors where the assessee had supplied the address. Out of these 17 notices were received back unserved. The assessee has filed affidavits of some of these creditors. But the ITO in order to verify the genuineness of the money-lending business examined 24 creditors and studied the debtors' accounts. He also went through the transactions in the back account of the assessee. He ultimately observed that neither the creditors are genuine nor debtors are genuine. Receipts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... important details of bank as well as cash transactions and observed that cheques are issued in advance and the cash is deposited in the bank a day or two later. This clearly indicates that the assessee had no funds available with him. According to the ITO the Hawala purchaser's man goes to the bank and deposits the amount in the assessee's bank account so that the cheque issued earlier is encashed. In respect of the cash transactions, the ITO discussed the details of the following parties :-- 1. Bhartiya Ispat Udyog,Faridabad. 2. Bajrang Lal Bhawan Das. 3. Bhartia Ispat Udyog,Delhi. 4. Bharat & Co., 5. Beg Raj Bharat Singh, Narela. 6. Bodh Raj Bharat Bhushan. 7. Durga Conduit Pipe Works. 8. Gupta Tin Supply Co. 9. International Mfg. Syndicate. 10. Siwan Ram Nathu Ram. 11. Kishore Textiles Mills. 12. Kidar Nath Ishwar Chander. 13. Loha Udyog. 14. Manage RamOmParkash. 15. Mohan Lal Bubna & Bors. 16. Mohan Chitrlok,Ghaziabad. 17. Onkar Nath & Sons. 18. PunjabOil Expeller. 19. S. Partap Singh. 20. Raunaq & Co. (P) Ltd. 21. Sukh Deo Singh Gur Pershad. 22. Raja (Iron) Foundry. 23. Sugan Engineering Works. In the Tajori Account the ITO exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o act as a conduit pipe to help them to invest their own black money in the business and the assessee started Hawala business and charges certain premium in the shape of interest. The assessee's creditors included pedlars petty shop-keeper, peons, clerks, teachers an agriculturists. These petty creditors were never in a position to advance money to the assessee. Most of the creditors could not be identified by the assessee. Some of the creditors were produced and their statement on solemn affirmation have been recorded. It has been found by the ITO that most of the creditors are his family members and near relatives. Smt. Sampati Devi, mother of the assessee mortgaged her house on28th Aug., 1937for a sum of Rs. 10,000. She could not repay this amount as the financial position was not happy and finally the house was sold on29th June, 1960for a sum of Rs. 14,000 only. Only then the loan was repaid with interest after realising the sale proceeds of the house. The ITO further observed that no family member of the assessee was in a position to clear off the debt of Rs. 10,000. This reflects the financial position of the assessee. Inspite of this as many as 20 members of the assessee fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se parties as genuine. In respect of accounts of 23 parties in whose cases disclosures made under the Voluntary Disclosure Scheme and their disclosure amounted to Rs. 2,30,000 and since according to the ITO the assessee had not been able to show that there has been any agreement for payment of interest, he held that there is no accrued liability for payment of interest and hence he disallowed the entire claim of interest referred to above. Thus ultimately the ITO held as under :-- "The assessee is doing Hawala business and accommodated the influential persons in their nefarious activities. No money has actually passed nor the assessee possessed any funds as discussed above. The assessee's bank account with State Bank of Bikaner and Jaipur shows the opening balance of Rs. 309.50 on 1st April, 1970 and balance as on 31st March, 1971 shows at Rs. 170.72 and other bank account with Syndicate Bank which was opened on 3rd Oct., 1970 shows a credit of Rs. 500 on the opening day and credit of Rs. 168.08 on the closing day that is on 31st March, 1971, whereas the assessee's Tizouri account shows a deposit of Rupees in lakhs. If the assessee had funds available with him as indicated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of hearing both before him as well as in appeal clearly point out to the fact that the only conclusion he could draw was that as far as the year of account is concerned there was no material in the possession of the assessee to prove that the transactions entered into by the assessee in respect of the alleged money-lending transactions were true and complete. Having come to this conclusion. I am unable to interfere with the assessment made by the Tio for the asst. yr. 1971-72. However the learned counsel pointed out the there are certain double additions made in the assessment which may be through and after satisfying himself rectify the same. Before parting with this order I must put on record the extensive materials gathered by the ITO in the face of several handicaps and difficulties set by the assessee and brining to tax a sizeable portion of the unaccounted money. The labour put in and the perseverance with which the ITO set about on this job inspite of his other assessment activities is something praise worthy. The assessment made by the ITO is therefore confirmed." Hence this appeal by the assessee before us. 3. Heard both the learned counsels for the assessee, Shri A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of anyone else. If the declared amount becomes under the Finance (No. 2) Act the total income of the declarant for the purpose of charging income-tax on it, it cannot be the income of someone else also for the same purpose of again charging income-tax on it. The legal fiction created by sub-s. (3), therefore, finally imprints on the sum declared of "total income" of the declarant and the finally is achieved by enacting that the income-tax paid as a result of he declaration shall not be refunded in any circumstances. The Legislature has nowhere sanctioned in the Finance (No. 2) Act, 1965, the imposition of double taxation, whether by express or by implied words, and the Act cannot be interpreted to as to tax the subject on the same income twice over. Sec. 24 of Finance (No. 2) Act, 1965, is a provision overriding s. 68 of the IT Act, 1961, and the latter has to yield place to the former. The provisions of s. 24, by non obstante clause in sub-s. (3), have specifically been made to override the provisions of the 1922 Act and the 1961 Act. The amount which becomes the total income of the declarant under the Finance Act cannot, therefore, be included in the total income of any other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in G.I. Pipes where the position is exactly the same as in the case of Iron & Steel Dealers. One of the major debtors is controlling the same as well as agent of Bharat Steel Tubes Limited, where the goods are sold at company's fixed price and whatever extra price is available according to the market rates that is recorded by the selling agent and reintroduced in the above manner. This is very clearly that in other to introduce their own secret funds the assessee's services were procured and he helped them by lending his own name which is evident from the fact that the assessee has credited the interest to the above party on adhoc basis. The assessee's creditors included pedlars, petty shopkeepers, peons, clerks and agriculturists and these petty creditors were never in a position to advance money to the assessee. Most of the creditors could not be identified by the assessee. Thus it is apparent that the assessee being a party to this sort of conspiracy by the tax dodgers and evaders, he must also burn his hand and the authorities below have rightly disbelieved the genuineness of the various cash credit entries in the names of the various depositors. In support of his contention h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on we have already quoted in para 3 above the decision of their Lordships of the Delhi High Court in the case of Ratan Lal & Ors. reported in 98 ITR 681 (Del), which is on all fours to the case of the assessee and since the assessee belongs to Delhi, we do not think the other authorities reported in 98 ITR 657 and 95 ITR 624 could be of any help to the Revenue. Moreover we have seen that all the seventeen depositors have confirmed the deposits as genuine by way of affidavits, we do not think the authorities below were right in adding back the amounts in the names of the above depositors to the income of the assessee. 6. Besides the above, in respect of the following depositors the deposits have been made since the asst. yr. 1963-64 :-- Shri Om Prakash, Shri Ram Rikh, Smt. Sampati Devi, Pt. Munci Ram, Ch. Ram Singh, Ch. Dharam Singh, Sh. Pirbhu Kumar, Ch. Parbh Ude Singh, Shri Raghunath Singh, Shri Rati Ram, Shri Raghubir Singh, Shri Raja Ram, Shri Raghubir Singh, Shri Raja Ram, Shri Bishan Lal, Shri Hari Singh, Sh. Babu Ram, Shri Harbans Lal, Shri Alamgir, Ch. Ram Mehar, Shri Jagan Nath, Shri Bhoop Singh, /Shri Jagmohan Aggarwal, Shri Padam Singh, Shri Suraj Bhan, Shrimati Chande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e most of the deposits belong to the asst. yr. 1963-64 and no assessment has been made in the case of the assessee for the asst. yr. 1963-64, it will be presumed that the revenue has admitted the genuineness of the deposits. Secondly, we may observe that the assessee filed the return for the asst. yr. 1963-64 but no assessment has been made and this fact has not been disputed by the ITO. In such circumstances the assessment for the asst. yr. 1963-64 will be deemed to have been made as declared by the assessee. If the ITO has chosen not to pass regular assessment order in the said assessment year, the assessee is not to be blamed for the same. The allegation of the ITO that the assessee has managed to take away surreptitiously the statement of accounts and the return of income for the asst. yr. 1963-64 from the records of the IT Department, is only an attempt of the ITO to save his skin, this allegation is devoid of any material. The assessee has no access to the records and there is absolutely nothing to prove the above allegation of the ITO. As regards the ITO's allegation that the assessee has not done any money-lending business, the assessee has categorically stated that he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the account books of such traders to the credit of the assessee. The account books of none of such traders have been disbelieved by any of their ITO and none of such trader has been considered by any taxation authority as unscrupulous or unreliable as has been observed by the ITO in the case of present assessee. Thus the remarks of the ITO in the above respect are uncalled for as he has made these remarks without any supporting evidence. So far as the claim of the revenue that the assessee is a Benamidar of various other cash creditors, we may observe that no ITO has held that assessee to be Benamidar for any other cash creditors as the ITO has not brought on record any such evidence in the assessment order passed by him in the case of the assessee. The ITO has lost sight of the basic and the elementary principle of law that the burden of proof of benamidari lies on the person who alleges benamidari. It is also a settled law that an ostensible and apparent state of affair is prima facie to be correct unless proved otherwise and since the ITO or the AAC have failed to discharge the burden cast upon the revenue for holding the assessee as benamidar of the creditors, there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then shift on the Department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion however the Department has to be in possession of sufficient and adequate material. Thus in view of the above observation of the High Court we may hold that the burden cast upon the Department has not been fully discharged while on the other hand the assessee has been able to prove identity of the depositors by way of filing affidavits on their behalf and in some cases by producing the depositors before the ITO in some case showing that there are income-tax assessees and in some cases specially in respect of agriculturists by showing that they possess that much of money with them in view of the compensation awarded to them on account of acquisition of their agricultural lands and for that the assessee has also filed the copies of the awards. In respect of the near relations of the assessee, the assessee has explained the source of their income and they were produced before the ITO but it is strange that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITO to communicate the substance and the result of the enquiry to the assessee and should decide the case after considering the explanation of the assessee, if any, Nothing of the sort in the instant case has been done by the ITO and as such the enquiry report relied upon by the ITO is liable to be vitiated. The Tribunal after going through various decisions of the High Courts and the Supreme Court made the following observation :-- "From the above cases it would appear that so far as the principles of law are concerned, there is not must controversy. In the first instance, each case has to be decided on its merits. Secondly, the initial burden is on the assessee to explain the receipts of cash in an accounting year. The nature of the onus is that the assessee should prove that the person from whom he claims to have received the momey is a genuine and not a fictitious person and further that the entry is genuine. In other words the genuineness of the transaction to be proved……When the entry stands in the name of 3rd party and the assessee is liable to produce the 3rd party and also supply such evidence which will show, prima facie, that the entry is not fictitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing principal grounds :-- (a) The assessee was a mere name-lender, not a money-lender. He was obliging mostly dealers of iron and steel goods, who had unaccounted money with them. (b) There was no evidence that the assessee had furnished any securities for raising the huge amounts of loan and it was not conceivable that, having been engaged in a not too prosperous business of dealing in biri and cigarettes, the assessee would have a credit in the market justifying the raising of huge amounts of loan. (c) The source of most of the alleged loans could not be explained satisfactorily. In our view the assessment suffers from at least two major deficiencies. Firstly, the ITO's purpose of making the assessment was admittedly to "break" the assessee for shielding others who were introducing their own money in the garb of accommodation loans arranged through he assessee. If so treating the deposits, which belong to others as the assessee's income was certainly not justified. Secondly, most of the deposits had been explained satisfactorily, barring the 17 cases in which the notices under s. 133 came back unserved. 8. In our view there is a lot of force in the assessee's plea that afte ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
