TMI Blog1997 (2) TMI 176X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounts of minor sons of some of the partners. The details of the credit in the account of minors as mentioned by the Assessing Officer, in para 5 of his order reads as under :-- Name Gross Tax deposited Net amount Amount under the credited in Amnesty Scheme the books of assessee firm 1 . Sarjitkumar S/oNandlal. 85,000 24,635 60,365 2. Shashank Shekhar S/o Nandlal. 90,000 26,811 62,639 3. P-alm Kumar S/o Kundanlal. 90,000 26,811 61,975 4. Dharamveer S/o Nandlal. 80,000 22,635 57,365 5. Rakesh Kumar S/o Subhaschandra. 90,000 26,811 61,975 6. Hari Om S/o Subhaschandra. 81,000 24,073 56,927 ------------------------- Rs. 3,61,246 ------------------------- The assessee was required to prove the genuineness of the credit appearing in the name of above minors. The assessee firm filed a written reply dated 23-3-1988, which reads as under :-- "... the persons through their guardians deposited the amounts with the firm. This deposit is out of disclosure made by them, under the Amnesty Scheme. The disclosure have been accepted by the Department. The orders have been also received by the respective persons. That since the declaration under the amnesty scheme in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the amnesty scheme. (b) That the children do receive some gifts from relatives and family friends. However, the quantum of such gifts depends upon the status of the guardian of the child. In this case, each minor is said to have accumulated the huge amounts out of such gifts, which is not possible, specially keeping in view the meagre withdrawal for household expenditure by the guardian of such minors. He submitted that the receipt of gift is not a one way transaction, but when the gifts are received by the children, they are reciprocated by the guardians of such children, to the sons/daughters of the donees. Keeping in view the meagre withdrawal of the guardians of the minors, which is around Rs. 15,000 per annum, it can be very well inferred that the receipt of gift by their children would be very very nominal. (c) That the amount of gift received by the minors would be normally consumed/spent by such minors. Even if it is saved by them, it will be deposited in their Bank account or in their account with the firm. The claim of the assessee that such minors accumulated and kept the huge sums in cash at home is beyond human probabilities. (d) That the amnesty scheme was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oving the cash credits. In support of this contention, he relied upon the decision of the ITAT, Pune Bench in the case of the ITO v. Suresh Kalmadi [1988] 73 CTR (Pune-Trib) 80 (TM). (E) That the purpose of the amnesty scheme would be defeated, if the source of the source is examined in a case, where the money is deposited. This will frustrate the objective of the entire amnesty scheme. The amnesty scheme was to encourage the people to disclose their undisclosed income and, therefore, there is promissory estoppel for the revenue to ask for the details or the proof of the income in the case where the money is deposited. In support of this contention, he relied upon the following decisions :-- (i) MST Anisa Bano v. ITO [1989] 177 ITR 368 (MP). (ii) Taiyabji Lukmanji v. CIT [1981] 131 ITR 643/7 Taxman 211 (Guj.). In view of the totality of the above facts and submissions, the ld. counsel for the assessee submitted that the order of the CIT(Appeals) is perfectly justified and the same be upheld. 8. We have carefully considered the arguments of both the sides and have perused the materials placed before us. The controversy raised in this appeal can be formulated in the form of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right apart, the question was required to be examined from the stand point. of the credibility of the department. It would cause greater harm to the department itself if assessees, who respond to its appeal and desire to cleanse themselves of past sins, are deterred from doing so." From the above observations, it can be inferred that their Lordships were of the view that any assurance given by the CBDT has to be adhered to, so as to maintain the credibility of the Department. Now the question remains what was the assurance given under the amnesty scheme under which the creditors have filed the returns. The CBDT has issued following circulars which are the basis of the amnesty scheme :-- (i) Circular No. 423, dated 26th June, 1985. (ii) Circular No. 432, dated 20th September, 1985. (iii) Circular No. 439, dated 15th November, 1985. (iv) Circular No. 440, dated 15th November, 1985. (v) Circular No. 441, dated 15th November, 1985. The subject of circular No. 423, dated 26th June, 1985, was-- "Effect of higher estimate of income for purposes of advance tax in Financial Year 1985-86 on assessments in relation to the earlier years clarification regarding." It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer from making the inquiry in the case of the borrower does not arise. 9. The ld. counsel for the assessee had also relied upon the decision of the Hon'ble High Court of Madhya Pradesh in the case of Mst. Anisa Bano. In this case, their Lordships have held as under :-- "While making the assessment under the Amnesty Scheme, the declaration made by the declarant has to be accepted and the declarant is to be assessed on the basis of the declaration made by him/her. At that time, the question of asking the source of the income to be assessed would not arise because if the declarant is asked to declare the source of income while making declaration under the Amnesty Scheme, then the whole purpose of the scheme will be frustrated. The Amnesty Scheme is actually formulated to unearth undeclared money and to afford an opportunity to the tax evaders to voluntarily declare the money and to pay the tax under the scheme. There is a distinction between the amount in the hands of the declarant and the amount so declared in the hands of another assessee. As soon as that income, which is assessed to income-tax is used by any other person after the declaration by such declarant fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question, creditworthiness is established. The creditor being assessed to income-tax is certainly an important factor to establish the creditworthiness, but it is not conclusive. Now we revert back to the facts of the case under appeal before us. 12. We have already mentioned earlier that all the six creditors are minors. Admittedly, they had no source of income. It has been claimed that the said minors had received gift from time to time. Amount of such gift was accumulated, and then declared in the return of income filed on behalf of the minors under the amnesty scheme. Assessments were also completed accepting income declared. After considering the entire facts, surrounding circumstances and evidences brought on record, we are of the opinion that the creditworthiness of the creditor is not established. Reasons for our conclusion are us under :-- (a) The minors have filed the return of income for assessment year 1986-87 disclosing huge income to the tune of Rs. 80,000 to Rs. 90,000 in each case. During the course of assessment of firm, statement of guardian of minors was recorded. All of them stated that the accumulated amount was out of the saving of the gift received by mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The claim of keeping cash to the tune of Rs. 90,000 by one child is beyond human probabilities. Moreover, if we consider the Statement of Subhash Chand, we find that six children from the family declared amount under amnesty scheme. The amount declared by all of them totalled to Rs. 4,86,000. It is unbelievable that such huge cash can be accumulated by petty gift received by minors and keeping of such huge cash of minors at home is also improbable. Similar was the position with regard to Nandlal and Kundanlal. Amount declared by their family members were Rs. 3,45,000 and Rs. 2,70,000 respectively. In view of the totality of the above fact, we are of the opinion that the assessee could not establish the creditworthiness of minor creditors. 13. The third and last question is whether the addition has to be made for the amount disclosed by the minors under the Amnesty Scheme or for the amount credited in the books of the assessee firm. In para 5 of the assessment order, the Assessing Officer has recorded that the six minors have declared certain amount totalling to Rs. 5,16,000 as income under the amnesty scheme, out of which after the payment of taxes, a sum of Rs. 3,61,246 is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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