TMI Blog1998 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the submissions made by the learned representative of the parties and have perused the orders of the Departmental authorities and the details of those two trading accounts submitted at pp 1 and 2 of the compilation. It was explained on behalf of the assessee before the Departmental authorities that these commodities may be damaged by insects despite best efforts. Some shortage may also occur on account of loss of weight due to lapse of time and during storage of such goods. Since the declared trading results are supported by regular books of accounts and AO has failed to point out any specific mistake or discrepancy in the books of accounts, we are of the view that addition of Rs. 2,250 and Rs. 750 deserves to be deleted. We accordingly direct the AO to delete the same. 3. In ground No. 3, the assessee has challenged the confirmation of the addition of Rs. 10,000 made in the hands of the firm for alleged low drawings by the partners for meeting their household expenses. 3.1. The AO made an addition of Rs. 10,000 on the ground that the withdrawals made by the partners for household expenses are very nominal. The assessee has furnished unsatisfactory explanation. Looking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partners for meeting their respective household expenses. It is true that the withdrawals made by the partners from the firm are grossly inadequate for meeting their household expenses but any addition in respect of such matter can be made only in the hands of the partners and not in the case of the firm unless there is a positive material on records to prove that the firm, in fact, had given such amount. We, therefore, direct the AO to delete the addition of Rs. 10,000 made in the hands of the firm. 4. In ground Nos. 4, 5 and 6, the assessee has challenged the confirmation of the addition of unexplained deposit of Rs. 40,000 and Rs. 20,000 in the account of Smt. Bimla Devi w/o one of the partners, Shri Om Prakash. The assessee has also challenged the confirmation of an addition of Rs. 29,135 made in respect of profit allegedly earned by Smt. Bimla Devi on purchase and sale of Sarson made through the appellant firm on her behalf in its capacity as commission agent. 4.1. The AO has discussed the facts relating to the aforesaid ground in para 3 at pp. 2 to 4 of the assessment year. The AO required the assessee to explain the deposit of Rs. 40,000 on2nd April, 1987, and Rs. 20,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 15,000 in the year 1979, Rs. 15,000 in the year 1982 and thereafter her earnings came down, presently it may be Rs. 100 to Rs. 200 per month. She also admitted in para 6 of her statement that she did work of preparing papads, mangodi in Ateli Mandi about 12 months back and earned about Rs. 1,000 in that period from this work. She also admitted to have maintained the bank account but denied to have any knowledge about the name of the bank. She also admitted that the banking work relating to her funds was being done by her husband, Shri Om Prakash. She further confirmed that she deposited a sum of Rs. 60,000 with the firm last year but was not able to mention the name of the firm. She further deposed that with the help of this amount her husband, Shri Om Prakash purchased Sarson (about 100 bags) on her account on which she earned an estimated profit of Rs. 28,500. 4.4. The AO deeply scrutinised the statement of Smt. Bimla Devi and pointed out certain glaring contradictions. He has observed that the quantum and reality of the professional income shown by her in the returns of income did not stand on the anvil of evidence. She has stated that she earned Rs. 15,000 in 1979 and Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Amnesty Scheme were filed only to form capital to be introduced in the books of the firm. The donor had no income for giving the gift of Rs. 20,000 to Smt. Bimla Devi as claimed. He, therefore, made an addition of Rs. 20,000 under s. 68. 4.7. The CIT(A) confirmed the view taken by the AO in view of the elaborate reasons discussed in the order passed by him. 4.8. The learned counsel for the assessee vehemently submitted that the facts of the present case relating to the aforesaid grounds are exactly similar with the facts of the case of one M/s Ramjas Mal Nathu Ram, Mandi Ateli, Narnaul, where the Tribunal has deleted an addition of Rs. 49,000 being the addition made on account of alleged unexplained cash credit in the name of Smt. Santra Devi wife of Shri Ramjas Mal, one of the partners of that firm, as well as the addition of Rs. 25,012 made on account of profit earned by Smt. Santra Devi on sale of Sarson through M/s Ramjas Mal Nathu Ram in their capacity as commission agent. The learned lawyer read the entire order passed by the Tribunal in that case with a view to convince us that the facts are exactly identical and, therefore, the Bench should respectfully follow the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit has been accepted as genuine deposit and no addition has been made in respect of the said amount. He also drew our attention towards the copy of bank account of Smt. Bimla Devi of her S.B. A/c No. 2407 to show that a sum of Rs. 3,020 was deposited in her bank account on 19th March, 1986, which falls in the preceding year. 4.11. The learned counsel invited our attention towards the statement of Shri Prabhu Dayal, grandfather of Shri Om Prakash (husband of Smt. Bimla Devi) to corroborate his contention that the deposit of Rs. 20,000 was made by her out of gift of Rs. 20,000 given by Shri Prabhu Dayal to Smt. Bimla Devi. He has clearly confirmed in the said statement that he made a gift of Rs. 20,000 to Smt. Bimla Devi (wife of his grandson). A perusal of the copy of the statement of Shri Prabhu Dayal recorded on25th Jan., 1989, submitted at pp. 12-13 of the paper-book reveals that the AO had put a specific question to Shri Prabhu Dayal as to whether he has made any gift in last 10 years. In reply to this question, appearing at p. 13 of the paper-book, Shri Prabhu Dayal stated that Rs. 20,000 was given to Shri Om Prakash in the year 1987 and Rs. 20,000 to Smt. Bimla Devi (wif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 from her income from sewing, preparing mangori, etc. The assessee has not produced any evidence to prove the existence of such income in the hands of Smt. Bimla Devi. The mere furnishing of return of income of Smt. Bimla Devi under the Amnesty Scheme cannot help the assessee-firm to prove the genuineness of the credit in question in any manner. He invited our attention towards judgment of Hon ble Supreme Court in the case of Jamna Prasad Kanhaiyalal vs. CIT (1981) 23 CTR (SC) 146 : (1981) 130 ITR 244 (SC) in which it was clearly held that disclosure made by sons under Voluntarily Disclosure Scheme does not preclude enquiries into genuineness of cash credit in the hands of the firm. The immunity available under the Voluntarily Disclosure Scheme is available only to the declarant and none else. 4.16. The learned Departmental Representative submitted that the entire transactions in the account of Smt. Bimla Devi represents bogus and sham transactions. The returns under the Amnesty Scheme were filed to create bogus capital formation in the hands of Smt. Bimla Devi with a view to divert the funds and income belonging to the assessee-firm in the name of wife of one of the partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h June, 1996. There cannot be any precedent as to a question of fact. The facts of each case have to be carefully and deeply scrutinised before one can arrive at the conclusion that the facts of the two cases are exactly similar and identical. The AO in the present case has pointed out various glaring contradictions in the facts recorded in the statement of Smt. Bimla Devi and the facts as disclosed in the statement annexed with the return of income submitted under the Amnesty Scheme. It is not known whether such glaring contradictions were found by the AO in relation to the deposits in the name of Smt. Santra Devi w/o Shri Ramjas Mal, one of the parts of M/s Ramjas Mal Nathu Ram. The decision on such a point will depend on the facts and circumstances of the each case. 4.20. A perusal of the statement of Smt. Bimla Devi recorded on28th Dec., 1988, reveals that she was married in the year 1980 to Shri Om Prakash who is one of the partners of the appellant firm. The contents of her statement dt.28th Dec., 1988, are reproduced hereunder: "1. That I was married in the year 1980 to Shri Om Prakash who is doing arhat business under the name of M/s Prabhu Dayal Lallu Ram, Ateli. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of her income have been given for the intervening years nor for the subsequent years. The AO has observed in the assessment order that along with the return of income for asst. yr. 1984-85 submitted under the Amnesty Scheme, it has been mentioned that she could accumulate only a sum of Rs. 6,000 upto31st March, 1983, from such work and her income upto31st March, 1983, never exceeded the taxable income. The facts so stated in the documents annexed with the return of income for asst. yr. 1984-85 are clearly contrary to the facts stated in the statement dt.28th Dec., 1988, where she claimed to have earned Rs. 15,000 in 1979 and Rs. 15,000 in 1982. Such contradictory facts destroys the reliability and correctness of the facts stated in both the aforesaid set of documents. (iii) It has been claimed that she could accumulate only a sum of Rs. 6,000 upto31st March, 1983. If the ratio of savings as compared to income from sewing and embroidery, as claimed, is considered, it will be found that the ratio of savings was very nominal and small. On the income of Rs. 15,000 + Rs. 15,000 earned in 1979 and 1982 i.e. on total income of Rs. 30,000 of only 2 years, Smt. Bimla Devi could accumula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and commission agent of agricultural produce, would have spared no efforts to utilise such amount in business, as and when earned by Smt. Bimla Devi by taking the deposits from her from time to time rather than allowing the accumulated amount to be kept idle in home-chest. This claim of the assessee is also highly improbable. 4.22. Smt. Bimla Devi did not know the name of the bank, where she had the bank account. She also did not know the details of purchase price and sale price of Sarson, which was claimed to have been purchased and sold through the assessee-firm on her behalf. She was also not aware as to when or whether her IT returns were filed. 4.23. The aforesaid inconsistencies and contradictions and the ignorance of Smt. Bimla Devi relating to some of the vital facts clearly indicate that the stand taken by the assessee that a sum of Rs. 40,000 was deposited out of her income from sewing and embroidery, etc. which was kept in home-chest prior to making of the deposit in cash in the bank account immediately preceding the issue of cheque in favour of the assessee-firm, does not accord with human probabilities. Its acceptance would result in ignoring the facts of life. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifice or a device planned by some intelligent brain apparently with a view to show the amount as income belonging to the ladies, which, in fact, is the amount of income or funds belonging to the firm. The colourable device of such capital formation is the brainchild of a common intelligent mind and does not represent real transactions according to the test of normal human probability. Had it been brought to the notice of the Tribunal while hearing the appeal of M/s Ramjas Mal Nathu Ram that the various other dealers and commission agents of agricultural produce represented by the same counsel have also resorted to similar kind of device of introducing credits in similar manner and had there been such significant contradictions and inconsistencies in the statement of the lady depositors in that case also, perhaps, a view different than the one taken by the Tribunal in that case might have been taken. The various significant inconsistencies and contradictions revealed from the scrutiny of the statement of Smt. Bimla Devi as compared to the facts disclosed in the various returns of income filed under Amnesty Scheme coupled with the aforesaid facts that such a planning has been made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been discharged or not. It all depends on the facts and circumstances of each case. In some cases, the onus may be heavy whereas, in others, it may be nominal. There is nothing rigid about it. Herein the assessee was receiving some income. He says that it is not his income but his wife s income. His wife is supposed to have had two lakhs of rupees neither deposited in banks nor advanced to others but safely kept in her father s safe. Assessee is unable to say from what source she built up that amount. Two lakhs before the year 1940 was undoubtedly a big sum. It was said that the said amount was just left in the hands of the father-in-law of the assessee. The Tribunal disbelieved the story, which is, prima facie, a fantastic story. It is a story that does not accord with human probabilities. It is strange that the High Court found fault with the Tribunal for not swallowing that story. If that story is found to be unbelievable as the Tribunal has found, and in our opinion rightly, then the position remains that the consideration for the sale proceeded from the assessee and, therefore, it must be assumed to be his money. It is surprising that the High Court has found fault with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Jamnaprasad Kanhaiyalal vs. CIT held as under: "The scheme of the Act makes it abundantly clear that it was to protect only those who preferred to disclose the income they themselves had earned in the past and which they had failed to disclose at the appropriate time. It is undoubtedly true that the Act was brought on the statute book to unearth the unaccounted money. But there is no warrant for the proposition that by enacting the same, the legislature intended to permit, or connive at, any fraud sought to be committed by making benami declarations. If the contentions were to be accepted, it would follow that an assessee in the higher income group could, with impunity, find out a few near relatives who would oblige him by filing returns under s. 24 of the Act disclosing unaccounted income of the assessee as their own and claiming that the said income was kept by them in deposit with the assessee." "The immunity under s. 24 of the Act was conferred on the declarant only, and there was nothing to preclude an investigation into the true nature and source of the credits " "The next question that call for determination is whether the non obstante clause contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had failed to discharge the onus of explaining the sources of deposit of Rs. 90,000. 4.33. The Hon ble Andhra Pradesh High Court in the case of Radio Instruments Associates (P) Ltd. vs. CIT (1987) 64 CTR (AP) 317 : (1987) 166 ITR 718 (AP) has held that under the Voluntary Disclosure Scheme, the CIT is not required to make an enquiry into the correctness or otherwise of the voluntary disclosure made by an assessee. It is, therefore, necessary that for proving the genuineness of a cash credit in accordance with the s. 68 of the Act, the assessee should establish the nexus between the voluntary disclosure and the amount of cash credit in question. Unless this burden is discharged, it cannot be said that mere filing of voluntary disclosure automatically absolves the assessee from discharging the obligation that is otherwise cast on him. 4.34. In the present case, the assessee has not produced any evidence to prove that Smt. Bimla Devi had really earned income to the extent as disclosed by her in the returns furnished under the Amnesty Scheme. It has also failed to prove that the entire amount so claimed to have been earned was accumulated and nothing was spent out of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statement dt.25th Jan., 1989, has stated that he is doing the business of cloth for last 3-4 years at the payment outside the shop of the assessee firm. He did not have any bill for purchase of cloth nor in respect of sale of cloth. He stated that his sales was Rs. 16,000 and sometimes it was extended upto Rs. 29,000. It is not known whether the aforesaid figures of sale were for one year or for one month or for one day. He stated that he was selling Rajai , Gadra and Tehmat . He was however not able to say as to what was the normal length and size of a Rajai , Gadra and Tehmat sold by him. He was also not able to tell as to what was the rate of purchase and sale of such material/items. He also stated in the said statement that due to health problem, he has not carried on any business in the last 3/4 years from the date of said statement recorded on25th Jan., 1989. It was also admitted by him that he resides with his grantson, Shri Om Prakash who meets the entire expenses. Since Shri Prabhu Dayal could not even tell the normal length and size of Rajai , Gadra and Tehmat nor could he state the normal purchase price or selling rate of those commodities, it is not beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income under s. 68 in the hands of the appellant firm. As a result of the aforesaid findings, the transactions of purchase and sale of Sarson made by the AO, which are said to have been made on behalf of Smt. Bimla Devi, is not based on any commercial consideration. A perusal of the statement of Smt. Bimla Devi clearly indicates that she did not even know the approximate rate of purchase and sale of Sarson made by the assessee-firm on her behalf. She has also admitted that the work of purchase and sale of Sarson has been done by her husband. Shri Om Prakash, who is one of the partners of the assessee-firm. The appellant firm is carrying on the business of dealer and commission agent of agricultural produce. The assessee has failed to discharge the burden of proving that transactions of purchase and sale of Sarson were made on behalf of Smt. Bimla Devi, pursuant to any oral or written contract between Smt. Bimla Devi and the assessee-firm. Mere debit of certain entries of purchases in the account of Smt. Bimla Devi and crediting the amount of sale proceeds thereof in her account in the books of the firm will not result in diversion of profits which really accrued to the assessee on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revised under s. 263. The facts of the decision reported in Debi Chand Mohanlal vs. ITO is clearly distinguishable as in that case the capacity of the creditor and the genuineness of the transactions was established by the assessee. The donor has also confirmed the gifts and explained the sources of making the gifts. However, in the instant case, the capacity of Smt. Bimla Devi as well as the donor, Shri Prabhu Dayal have not been proved nor the genuineness of the transactions has been established. Likewise, the facts of the judgment reported in (1997) 224 ITR 180 (P H) are also clearly distinguishable because the Tribunal after taking into consideration the entire evidence, came to the conclusion that cash credits stood duly explained by sufficient evidence. The Hon ble High Court held that no question of law arises from such findings given by the Tribunal. This is clearly distinguishable from the facts of the present case. 4.40. In view of the aforesaid facts and discussion, the view taken by the CIT(A) of confirming the additions of Rs. 40,000 + Rs. 20,000 + Rs. 29,135 i.e. an aggregate addition of Rs. 89,139 in relation to Smt. Bimla Devi, is held to be valid, reasonable an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Del) 159 : (1985) 152 ITR 583 (Del). The Hon ble Delhi High Court in the said case has observed that the assessee s wife had disclosed on30th March, 1966a sum of Rs. 10,000 as her income under VDS. Credit for this amount was made in assessee s accounts books on4th April, 1966. The assessee s explanation was that this amount represented the money which was available with his wife on30th March, 1966. It was held by the Hon ble High Court that amount disclosed by assessee s wife could be assessed as income of the assessee. Since the Tribunal had accepted the explanation to the extent that the amount was available on30th March, 1966, it was held that the amount could not have been earned in the accounting period relating to asst. yr. 1967-68 but same was directed to be taxed in the correct year, namely, asst. yr. 1966-67. The facts of that case are clearly distinguishable. In the present case, it has been held that no income was really earned by Shri Prabhu Dayal. He did not carry on any business of cloth as shown in the returns filed under Amnesty Scheme. The deposits in the bank account of Shri Prabhu Dayal made in the month of February, 1987, have been debited in the said bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the AO. The deposit of Rs. 20,000 was made by cheque on9th April, 1987. This amount was received by Shri Puran Mal by way of gift from his grandfather (Nanaji), Shri Ram Prasad. He invited our attention towards the pass book of Shir Puran Mal with a view to show that deposit of Rs. 20,500 was made in his bank account on4th April, 1986. The deposits made in the preceding year have surfaced in the year under consideration. He relied upon the judgment of Hon ble Delhi High Court in the case of Om Prakash Mahajan Sons. He also drew our attention towards the statement of Shri Ram Prasad recorded by the AO on31st Jan., 1989in which he had confirmed the fact of making the said gift of Rs. 20,000 to Shri Puran Mal on9th April, 1987. Shri Ram Prasad had also submitted returns for asst. yr. 1984-85 to asst. yr. 1986-87 under the Amnesty Scheme. 6.2. The CIT(A) has discussed the facts relating to the aforesaid deposit in the account of Shri Puran Mal at pp. 9 to 11 of his order. The findings have been given by the CIT(A) on pp. 14 to 16 of the order passed by him. 6.3. We have carefully considered the submissions made by the learned representative of the parties and have perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otpath at Tri Nagar Bazar and Cantt. Bazar. He has not maintained any books of accounts. Vouchers for purchase and sale were also not maintained. He has stated that such work was done atDelhifor 3 years and thereafter he stopped work on account of weak eye-sight. His eye s operation was also conducted at Bhiwani four five years ago. He stated that a bank account was opened by him with New Bank ofIndia, Ateli Mandi. It was also admitted by him that whatever funds were deposited in the said bank account, were wholly spent on the death of his wife. His wife died 4/5 years ago. In the subsequent para, he has taken a different stand that whatever amount was earned by him atDelhi, that was given by him to his daughter who resides at Ateli Mandi. A gift of Rs. 20,000 was given on4th April, 1986, to Smt. Narbada and another Puran Mal on9th April, 1987. A deposit of Rs. 9,000 was also stated to have been made with the assessee-firm. He further stated that he lived atDelhisince 1986. A statement of Shri Puran Mal was also recorded by the AO on16th Jan., 1989. In this statement, he stated that he received a gift of Rs. 20,000 from his Nanaji who was doing some work atBombay. At present he is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the facts and circumstances of the present case. The mere furnishing of the returns of income under Amnesty Scheme by these close relatives cannot absolve the assessee from discharging its burden of proving the genuineness of the cash credits, capacity of the respective creditors in conformity with the s. 68 of the IT Act, 1961. The assessee in the present case has failed to discharge such a burden. 6.8. On a careful consideration of the entire relevant facts, we are of the view that the CIT(A) has rightly held that the deposit in the account of Shri Puran Mal remained unexplained. The CIT(A) has also rightly held that Shri Ram Prasad did not carry on any business of cloth and had no capacity to give any gift of Rs. 20,000 to Shri Puran Mal, as claimed by him. In our view, the ground No. 8 raised by the assessee has also no merit. The addition of Rs. 26,160 in respect of the credit in the account of Shri Puran Mal on account of deposit and interest has rightly been confirmed by the CIT(A). Ground No. 8 is accordingly rejected. 7. Ground No. 9 relates to confirmation of the deposit of Rs. 10,560 in the account of Shri Ram Prasad. We have already discussed the facts relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid in various judgments, such as, the one reported in CIT vs. Hindustan Sanitary Ware Industries Ltd. (1989) 180 ITR 21 (Cal). We are, therefore, of the view that the CIT(A) ought to have cancelled the levy of interest under s. 216. We accordingly direct the AO to cancel the interest charged under s. 216 of the Act. 9. In ground No. 11, the assessee has challenged the finding given by the CIT(A) of restoring the matter relating to levy of interest under s. 215 amounting to Rs. 4,745. The CIT(A) has restored back this issue to the AO with a direction to examine all the circumstances including waiver or reduction of interest before charging such interest. The assessee will also be entitled to submit all other relevant judgments including the judgment of Hon ble Gujarat High Court reported in CIT vs. Bharat Machinery Hardware Mart (1982) 136 ITR 875 (Guj) mentioned in ground No. 11, for consideration of the AO. The restoration of such a matter back to the AO for deciding the same afresh in accordance with the provisions of law and after giving an opportunity to the assessee cannot give any valid cause of grievance to the assessee. Hence, ground No. 11 raised by the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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