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1987 (3) TMI 166

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..... of Rs. 83,000 as stated by Phoolchand. The Assistant Director of Inspection on an inspection of the books of accounts found that there was no entry of this transaction in the books. An explanation was given that the books are maintained by the part-time accountant who makes the entries in the evenings when he comes to the premises. As a matter of fact entries were made on the next day to this effect. The amount was said to be received as loan from three persons through one Sohanlal Jain. Later on in the course of assessment proceedings farther investigations were taken up. Although Sohanlal Jain had supported initially the statement of Veerchand, later on he retracted and admitted that he had not given a loan to the assessee and the entries were only havalas. The partner Veerchand also accepted that the entries were havalas. He further admitted that the moneys belonged to the firm itself in answer to a question he stated that this money " was accumulated over a period of one week out of sale of the goods ". 4. From the above facts, the Income-tax Officer made the following inferences : (i) The cash of Rs. 83,000 belonged to the firm and it was its undisclosed income. (ii) The .....

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..... ferent matter that the persons in whose names the credit was entered had denied the credit and the assessee also had accepted that the credit is not genuine. But so long as there was a cash credit entry in the books it has to be assessed only under section 68. The fact that there was a search on 14-12-1982 was not relevant. He then submitted that the findings of the Commissioner (Appeals) on this point are contradictory. At the earlier part he had given the finding that the amount represented the income of several years. At later part of the order he had stated that the assessee was not able to explain this cash with any of its business transactions. These are two contradictory statements. He then relied on a decision of the Patna High Court in the case of CIT v. Meghu Sao Jhandhu Sao [1955] 27 ITR 371 and the decision of the Supreme Court in the case of Baladin Ram v. CIT [1969] 71 ITR 427. Shri Santhanam for the department pointed out that according to the statement of the partner, the cash was in the cash box on 13-12-1982 itself. He farther pointed out that the entry for receipt of Rs. 83,000 was in a different handwriting and therefore is a case of clear interpolation. The cas .....

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..... if any, maintained by him for any source of income, and the assesses offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." The ingredients of the section which are cumulative, are as follows : (i) In any financial year the assessee should be found to be the owner of money, bullion etc. (ii) Moneys, bullions etc. are not recorded in the books of account. (iii) The assessee offers no explanation about the nature and source of acquisition of money etc. or the explanation, offered is not satisfactory. Now the first ingredient is satisfied. The assessee was found to be the owner of the sum of Rs. 83,000. We also agree that the second ingredient is satisfied, i.e., it is not recorded in the books maintained by it. The recording on 14-12-1982 is clearly to give a veneer of genuineness and does not represent the correct state of affairs. 11. However we are not satis .....

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..... initially wanted to suppress the sales such direct nexus may not be available. What one has to see is whether the cash would in the normal course represent the suppressed sale proceeds of the assessee. We are of the opinion that there is enough evidence to show that this amount would represent the suppressed sale proceeds. The first point we must note is that the assessee is a registered firm. Therefore its income normally would be business income. This particular firm would have only sources to which these persons subscribed. In the case of an individual or an HUF it may be possible to have many other sources of income not disclosed to the department. But in the case of a firm which has an established business the normal likelihood is that the concealed income would refer to their existing business. We may say that it is not necessary to emphasise this point because that is also the finding of the Income-tax Officer and the Commissioner of Income-tax (Appeals). Secondly all the persons connected with the business transactions have stated that the amount has come out from the disclosed business. In other words, it is an undisclosed receipt of a disclosed business. There had been n .....

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