9911796707
TMI Blog1976 (2) TMI 63X X X X Extracts X X X X X X X X Extracts X X X X ..... d letter heads of the assessee in the hand writing of his Munim Nawal Kishore Mishtra. (3) Unaccounted transactions of pawning business amounting to Rs. 1,186. (4) Unaccounted transactions disclosing interest income from Abhaikumar Jain & Sankar Prasad Ishwardin to the extent of Rs. 5,700. From the residence of the assessee's Munim Nawal Kishore Mishra :-- (1) Copies of accounts of Sukritilal Sitaram Agarwal, Radhakishan Kanodiya, Gopi Nath Tiwari and Chhotelal Singh on plain paper showing transactions of advances to these parties. 2. Some Indu Talab Rukks for advances made by Shri Nawal Kishore Mishra to various parties. On the basis of the searches the ITO conducted very extensive enquiries and recorded voluminous statements from the assessee, from his Munim Nawal Kishore Mishra, from Radheshyam, father of Nawal Kishroe Mishra and the various alleged debtors of the assessee. It was found that a house was purchased in the name of Nawal Kishore Mishra on 15th June, 1962 for an amount of Rs. 25,000 from Laxmichand Mangal Prasad of Rewa. The ITO recorded the statements of the vendores Laxmichand as well as Mangal Prasad. 3. Some of the person who had taken lands from Nawal Kis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions were actually advanced by the assessee were persons who had a grievance against him for having proceeded against them in Courts of law for realisation of loans give to them by the assessee on earlier occasion. According to him, these persons had deliberately given false statements not only before the ITO but also, in some cases, before Courts and their evidence in this connection was entirely unworthy of belief. 5. The above statements of the assessee were also corroborated by both Nawal Kishore Mishra as well as by his father Radheshyam. It was stated by them that the funds required for the purpose of the property as also for carrying on the money lending business in the name of Nawal Kishore came partly out of the earnings of Radheshyam and partly out of the earning of Nawal Kishore. Radheshyam was originally a musician by profession who used to give performances before various princely house since 1939 or so, when he left his native village of Unchehra. Nawal Kishore is his son by his first marriage and he had studied only upto the 7th standard when he apparently got into undesirable company and started neglecting his studies. His father then sent him to work for Shri H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO also disbelieved the statement of Hairall regarding the purchase of the house in the name of Nawal Kishore. Relying on the statements of the vendores, he held that as it was Hiralal who handed over the cash representing the purchase consideration to the vendors the property must have been purchased by him in the benami name of Nawal Kishore. Accordingly he treated the investment of Rs. 26,000 in this property as the income of the assessee from undisclosed sources. He also estimated the income from this property at Rs. 3,000 and included the same in the assessee's total income. 8. With regard to the 44 sale vouchers showing transaction in silver ornaments the ITO held that these also related to clandestine transactions carried out by the assessee. Accordingly he estimated the income from this business and included the same in the total income of the assessee. 9. The ITO also treated the various money lending transactions in the name of Nawal Kishore as belonging to the assessee and included the same in the total income of the assessee. Further, he also estimated the accrued interest in respect of such transactions and included it in the total income of the assessee for the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, he deleted the addition made by the ITO on that account for the asst. yr. 1964-65. He also deleted from the total income of the assessee, for the other years, the interest in respect of such transactions included in the total income of the assessee. 14. In taking the view that the transactions of money lending in the name of Nawal Kishore as well as purchases and sales of ornaments really belonged to the assessee, the Department has proceeded on the basis that neither Nawal Kishore nor his father Radheshyam could have been in possession of enough capital to finance such transactions. In fact, the Department has taken the extreme view that these two persons were men of no means and that they were mere dummies in the hands of the assessee. The assessee himself had a rather colourful back ground. Though coming of a money lending family, he interest himself, at an early age, in activities which are far removed from money lending or any other kind of business. He turned to political activities at a time when politics were strictly taboo in the erstwhile "Native States" of India. Being a "Native State Subject", his activities were severely frowned upon by the State and he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kishore, that the property purchased on 15th June, 1962 was purchased by him, partly out of his own resources and partly by taking a loan of Rs. 15,000 from the assessee Shri Hiralal. We have also come to the finding in that case that the transactions represented by the 44 sale vouchers seized from the assessee's premises, really represented transactions of Nawal Kishore and that any income arising therefore has to be considered in his hands and not in the hands of the assessee. The persons who gave statements before the ITO that such loans were actually advanced by Shri Hiralal, even though the pronotes were executed in the name of Nawal Kishore, were people against whom the assessee had to file suits in the past for recovery of amounts advanced to them earlier. One of them, namely, Shri Abhaikumar Jain went to the extent of tendering false evidence before the Court that a pronote held by the assessee for Rs. 14,000 against him represented usurious interest charged by the assessee on an earlier loan. One the basis of that statement of Abhaikumar Jain an amount of Rs. 14,000 was added by the ITO to the total income of the assessee for the asst. yr. 1965-66. However, the High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, we would now proceed to consider each of the appeals filed by the assessee and by the ITO, as follows :-- ITA No, 851(Jab)/1972-73 (Asst. yr. 1963-64) (Assessee's appeal) (1) Addition of Rs. 11,000 confirmed by the AAC as income from undisclosed sources. As the house property purchased on 15th June, 1962 has been held to belong to Nawal Kishore and the amount of Rs. 15,000 given by the assessee to Nawal Kishore was a loan for the purchase of the house, there was no question of treating the balance of Rs. 11,000 invested by Nawal Kishore in the purchase of the house as the assessee's income from undisclosed sources. Accordingly we delete this addition of Rs. 11,000. (2) Income from the above house property Rs. 3,000 As the above house property has been held to belong to Nawal Kishore, there is no question of including the income from that property in the total income of the assessee. Accordingly this addition is also deleted. (3) Loans given to Tarachand Ramnivas in the name of Nawal Kishroe Rs. 6,500 As such loans for which the pronotes stood in the name of Nawal Kishore have been held to have been advanced by Nawal Kishore himself and not by the assessee, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disclosing such investment or income. The penalty levied on the assessee under s. 271(1)(c), on the above grounds, is therefore unjustified and is accordingly cancelled. ITA No. 3030 (Bom)/1969-70 is allowed. ITA No. 1757(Jab)/1972-73 (Asst. yr. 1964-65)(Departmental appeal) 20. This is an appeal by the ITO against certain deductions allowed by the AAC from the total income as computed by him for the asst. yr. 1964-65. (1) An amount of Rs. 11,000 advanced by Nawal Kishore to one Mudrika Prasad was treated by the ITO as a transaction belong to the assessee and treated as his income from undisclosed sources. We have already held that the transaction evidenced by a pronote in the name of Nawal Kishore really belonged to Nawal Kishore and not to the assessee. In fact, the contention taken up by Mudrika Prasad before the Civil Court that the loan was actually advanced by Hiralal was rejected by the Court and a decree was granted in favour of Nawal Kishore. Accordingly the AAC rightly deleted this amount from the total income of the assessee. (2) An amount of Rs. 1,500 advanced by Nawal Kishore to Kashinath Mishra This amount was similarly treated by the ITO as the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for recovery, set up the claim that this was usurious interest charged by the assessee on an earlier loan given to him. On this ground Shri Abhaikumar sought to challenge the action for recovery taken by Hiralal. Both the District Judge as well as the High Court found the above statement of Abhaikumra Jain to be false. Accordingly the suit was decreed in favour of the assessee. In the light of these facts, there is no justification for the ITO to accept the statement of Abhaikumar Jain that the amount represented income due to the assessee and to include the same in the total income of the assessee. The AAC was therefore, right in deleting that addition. (2) Accrued interest in respect of Mudrika Prasad and Kashinath deleted by the AAC : Rs. 1,500. We have already held that the loans to these two persons were advanced by Nawal Kishore and there was no question of taking any interest in respect of such loans as the income of the assessee. The AAC was therefore, right in deleting this addition. (3) Income from property deleted by the AAC : Rs. 2,615. This is in respect of the property purchased by Nawal Kishore on 15th June, 1962. We have already held that this property belonge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." "5. The learned AAC erred in deleting the addition of Rs. 23,000 made by the ITO as assessee's income from undisclosed sources on account of unexplained cash discovered during the course of a search on assessee's shop and residence." 23. However, while filing the grounds of appeal, the ITO committed an inadvertent error and, instead of filing ground Nos. 4 & 5 as above he filed ground NO. 4 as under :-- "4. The learned AAC erred in deleting the addition of Rs. 2,600 made by the ITO as assessee's income from undisclosed sources on account of unexplained cash discovered during the course of a search on assessee's shop and residence." The learned Departmental Representative requested that the correct grounds, as authorised by the CIT may be permitted to be raised and argued. An affidavit of the ITO pointing out he circumstances in which the above inadvertent error was committed in the filing of the grounds of appeal has also been filed before us. 24. The learned counsel for the assessee did not agree to the correction of the grounds of appeal, as requested by the learned Departmental Representative. 25. A perusal of the provisions of s. 253(2) of the IT Act would go to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ramani Prasad and one Tejbhan who stated that they had purchased ornaments for Rs. 4,500 from the assessee. The ITO found that the assessee had opened a bank account on 1st June, 1966 and had deposited an amount of Rs. 9,000 in that account prior to the date of raid. He was of the view that if the amount of Rs. 27,549 really represented sale proceeds of ornaments sold previously, the assessee would have deposited that amount in the bank account or would have utilised it in his money lending business. As the amount was not reflected either in the bank account or in the books of account maintained by the assessee, the ITO gave the assessee credit for Rs. 4,500 towards sale proceeds of ornaments, in the light of the evidence given by the two witnesses and treated an amount of Rs. 23,000 as income from undisclosed sources. On appeal by the assessee, the AAC deleted the addition on the ground that the assessee was known to be a man of high ideals, who had undergone great suffering by joint the political movements in the old Maihar State and that he was not likely to have concealed his income to the extent of Rs. 23,000 as held by the ITO. On the other hand, the AAC held that the probabi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
