TMI Blog2004 (9) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 47,294 was claimed to be of the assessee's wife Smt. Savitri Devi and the balance of Rs. 2 lakhs as the amount belonging to M/s. Vaishali Enterprises. The Assessing Officer did not accept the explanation with respect to amount of Rs. 2 lakhs and treated the same as income from other sources. In the original assessment, the ld. Commissioner of Income-tax (Appeals) vide his order dated 5-3-1990 remanded the matter back to the Assessing Officer with a direction to re-examine the case and give a fresh finding by observing as under: - "I feel that the matter needs to be examined once again by the ld. Assessing Officer in the light of the above facts and then a fresh finding is to be recorded. Obviously, the Department is not able to make out a case that either the on money earned by the appellant itself as its own share amounting to Rs. 1,22,659 and taxed in that case for assessment years 1984-85 to 1986-87 has been utilized prior to 9-1-1986 or adjustment has been demanded and allowed for the same against seized cash in any other assessee of this group, then certainly the adjustment of Rs. 1,00,000 demanded in the appellant's case is to be allowed and thus, in my view, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t off for the amount of Rs. 4,635 has already been given and the balance of Rs. 1,18,000 was available with the assessee, out of which the assessee claims that Rs. 1 lakh needs to be set off from the cash of Rs. 2 lakhs found from him. The authorities below have erred in not accepting the said explanation. 4. The second portion is claimed to be on account of Rs. 1 lakh which is available out of the amount collected for its Principals GPL A statement of account was also found at annex. G-2/90 91. The account was from April to October and this reveals that the assessee collected Rs. 1,64,924 for the month of Sept., 1985. This amount of collection which was yet to be remitted was available with the assessee. Reference has also been made to a certificate dated 13-1-1992 which shows that GPI has not received any payment from Vaishali Enterprises over and above the sale price of cigarettes as per invoice and debit note raised by the company in that regard during the period September, 1985 to March, 1986 or any other party. Under the circumstances, it was contended that the whole amount of cash found and seized stood explained but the authorities below have erred in not accepting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is not able to make out a case that either the 'on money' is earned by the appellant itself as his own share amounting to Rs. 1,22,659 and taxed for the assessment years 1984-85 to 1986-87 and has been utilized prior to 9-1-1986 or adjustment has been demanded and allowed for the same against seized cash in any other assessee of this group, then certainly the adjustment of Rs. 1 lakh demanded in the appellant's case is to be allowed. From such observation of the ld. Commissioner of Income-tax (Appeals) it is revealed that a fresh finding was to be recorded by the Assessing Officer to the fact that as to whether the amount of Rs. 1,22,659 was his own share of the appellant or otherwise and also whether any adjustment in the group was given, then certainly the assessee was entitled for set off of the amount. The Tribunal in the case of Vaishali Enterprises the partnership firm of the assessee, recorded a finding at page 16 of its order as under: - "However, we find some force in the argument of Shri Sogani that some weightage should be given to the additions made by the revenue on account of 'on money' in the preceding years and in the current year." The Assessing Officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 7. The assessee has also claimed that the balance of Rs. 1,00,000 belongs to M/s. GPI Ltd. as per letter placed at APB 112. This letter reads as under: - "M/s. Vaishali Enterprises, Opp. Plaza Cinema, Ajmer-305 001. Dear Sir: This has reference to your letter dated 7-1-1992 requesting us to certify the payments received during September, 1985 to March, 1986. We hereby certify that the company has not received any payment from M/s. Vaishali Enterprises over and above the sale price of cigarettes as per invoices and debit notes raised by the company in that regard during the period September, 1985 to March, 1986 or any other period. Thanking you, Yours faithfully, for Godfrey Philips India Ltd. Sd/- Regional Sales Manager." The assessee has contended that an amount of Rs. 1,64,924 was collected as 'on money' of the share of M/s. GPI Ltd. and the complete account upto beginning of November is placed at APB 110-111, which were seized from the appellant's premises and inventorised as G-2/90-91. It has also been admitted before us that an amount of Rs. 2 lakhs was paid to M/s. GPI on 28-9-1985. The perusal of the contents of the letter shows that the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarbatti under the name and style of M/s. Bharosa Agarbatti Works, Ajmer and share income from two Registered Firms. There was a search on Godfrey Philips India Ltd. (GPI for short) group of companies and their associates on 9-1-1986 and assessee being one of the partners in M/s. Vaishali Enterprises, Ajmer, the wholesale dealers of GPI was also covered. During the course of search, a sum of Rs. 2,56,689 was found in cash. Out of this the credit for cash of Rs. 9,395 belonging to M/s. Bharosa Agarbatti Works, was allowed. Out of the balance amount of Rs. 2,47,294, it was explained by the assessee that a sum of Rs. 47,294 was claimed to be of the assessee's wife, Smt. Savitri Devi and the balance of Rs. 2 lakhs was belonging to M/s. Vaishali Enterprises of which the assessee is one of the partners. It was further explained by the assessee that out of Rs. 2 lakhs, Rs. 1 lakh was out of receipt of share of 'on money' collected in the last three years, i.e., in assessment year 1984-85 Rs. 12,918, assessment year 1985-86 Rs. 57,568 and assessment year 1986-87 Rs. 52,173, aggregating to Rs. 1,22,659 and the remaining amount Rs. 1 lakh was claimed to be out of amount collected for its P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince we have got no definite information about the fate of those additions, particularly for the preceding years we direct the Assessing Officer to verify if those additions have become final or not. In case they have become final, the assessee may be allowed a deduction from these additions for amount upto Rs. 1,18,000 depending as to how much additions have been finally sustained out of those additions." 5. Following the directions of the CIT(A) as per his order dated 5-3-1990, the Assessing Officer has completed the setting-aside assessment vide order dated 28-2-1992, passed under section 143(3) set aside and has added Rs. 2 lakhs as income from undisclosed sources with the following observations/findings:- "The assessee has stated that neither he nor the firm M/s. Vaishali Enterprises has claimed any adjustment for the on money earned. The above contention of the assessee is not correct. The ITAT in their order in ITA No. 664/JP./1990 dated 24-12-1991 in the case of M/s. Vaishali Enterprises has allowed credit for the on money earned during the assessment years 1984-85 and 1985-86 upto Rs. 1,18,000 with the directions to verify the fact that the additions in three years hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he adjustment of the said amount has not been allowed in any other assessee of this group, then certainly the adjustment of Rs. 1,00,000 demanded in the appellant's case is to be allowed, the Assessing Officer has not allowed the said adjustment and the finding of the Assessing Officer in this regard is not correct as no credit has been given on this amount either to the firm M/s. Vaishali Enterprises or any person, including the assessee in this group of the case. The ld. counsel further submitted that the Tribunal, in the case of Vaishali Enterprises for the assessment year 1986-87, has also observed that a balance of about Rs. 1,18,000 may be available to the assessee for being set off against these additions. However, in the absence of any definite information about the fate of those additions, the Tribunal directed the Assessing Officer to verify if those additions have become final or not. In case they have become final, the assessee may be allowed a deduction from these additions for amount upto Rs. 1,18,000 depending as to how much additions have been finally sustained out of those additions. Thus, from the orders of the CIT(A) and that of Tribunal, the ld. counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal and the CIT(A) dated 24-12-1991 and 5-3-1990 respectively, it is crystal clear that the amount of on money of Rs. 1,18,000 was available with the assessee, who is main partner of the firm M/s. Vaishali Enterprises. Since the ld. CIT D/R has not placed any material as to show that the credit of Rs. 1,18,000 or Rs. 1 lakh, as claimed by the assessee, has already been allowed either to the assessee or to the firm M/s. Vaishali Enterprises or any other assessee of this group, therefore, I am of the view that the Assessing Officer was duty bound to follow the directions of the CIT(A) of his order dated 5-3-1990 and the Assessing Officer should not have tried to distinguish the same on untenable grounds. This view finds support from the various judgments, namely Basudeo Prasad Agarwalla v. ITO [1989] 180 ITR 388(Cal.), CIT v. Mansa Ram Sons [1991] 190 ITR 453 (All.), CIT v. Hope Textiles Ltd. [1997] 225 ITR 993, 996 (MP), CIT v. Nandram Narayandas [1994] 122 Taxation 110, 113 (MP), Bhopal Sugar Industries Ltd. v. ITO [1960] 40 ITR 618, 622 (SC), Tobacco Manufacturers (India) Ltd. v. CST [1961] 12 STC 87 (SC), Bishnu Ram Borah v. Parag Saikia AIR 1984 SC 898, CIT v. S.V. Divakar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are referred: - Question per Shri B.R. Jain, AM: "Whether on the facts, whether the finding that the amount of 'on money' of Rs. 1,18,000 available with the appellant can be held as a correct finding despite the Tribunal already having accepted and directed to set off the same in the hands of partnership firm M/s. Vaishali Enterprises or that the view of the ld, Accountant Member is justified in not accepting the explanation or claim of the appellant that the amount of Rs. 1,00,000 found from the appellant is the same and thereby sustained the addition ?" Question per Shri Dinesh K. Agarwal, JM: "Whether on the facts and in the circumstances of the case and in view of the order of the Commissioner of Income-tax (A) who has set aside the assessment order with certain directions, the Assessing Officer was justified in not allowing the claim of the assessee of Rs. 1 lakh on different grounds despite the fact that the directions of the Commissioner of Income-tax (A) are binding on the Assessing Officer in view of the judgment of the Hon'ble Supreme Court of India in the case of Asstt. CCE v. Dunlop India Ltd. [1985] 154 ITR 172 and recent judgment in the case of Bank of B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 as income from unexplained sources. On appeal, the CIT(A), vide his order dated 5-3-1990, remanded the case back to the Assessing Officer with the following observations: "I feel that the matter needs to be examined once again by the ld. Assessing Officer in the light of the above facts and then a fresh finding is to be recorded. Obviously, the Department is not able to make out a case that either the on money earned by the appellant itself as its own share amounting to Rs. 1,22,659 and taxed in that case for assessment years 1984-85 to 1986-87 has been utilized prior to 9-1-1986 or adjustment has been demanded and allowed for the same against seized cash in any other assessee of this group, then certainly the adjustment of Rs. 1,00,000 demanded in the appellant's case is to be allowed and thus, in my view, the ld. Assessing Officer will re-examine the case on this point from this angle and then give a fresh finding." 3. It is further established on record that as per direction of GPI, M/s. Vaishali Enterprises was charging 'on money' on sale of cigarettes made by them. In their assessment, addition of Rs. 1,22,659 was made for the 'on money' received as per the following det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee then carried the matter in appeal before the Appellate Tribunal. During the course of hearing of appeal, assessee drew attention to order dated 5-3-1990 of CIT(A) remanding the case back to the Assessing Officer. The assessee further relied upon the order of the Tribunal dated 24-12-1991, referred to above. It was submitted that no credit for addition made in the hands of M/s. Vaishali Enterprises (Rs. 1,22,659) was given in any hand, i.e., either in the hands of firm or its partners. It was, accordingly, submitted that finding recorded by Assessing Officer was factually incorrect. The Department had not disputed that 'on money' was collected by M/s. Vaishali Enterprises and the assessee as main partner of this group was dealing with GPI, as was evident from order-passed under section 132(5) of the Income-tax Act. It was further submitted that credit for Rs. 4,635 was given out of addition of Rs. 1,22,659 and this way, Rs. 1,18,000 was still required to be adjusted towards available cash. The assessee sought adjustment only of Rs. 1,00,000. 6. After considering the submissions of both the parties, the ld. Accountant Member did not find any error in the order of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submissions of the parties and perused the material available on record. We find that the impugned assessment was made as a result of the order of the CIT(A), who has set aside the assessment vide his order dated 5-3-1990 with certain specific directions, which we have already mentioned in para 3 of this order. The CIT(A) has not set-aside the assessment de novo. When the assessment has been set-aside with certain directions, therefore, it was the duty of the Assessing Officer to follow those directions and decide the issue accordingly. Even the Tribunal, in the case of the firm M/s. Vaishali Enterprises, has also directed to allow the deduction of Rs. 1,18,000. On the combined reading of the orders of the Tribunal and the CIT(A) dated 24-12-1991 and 5-3-1990 respectively, it is crystal clear that the amount of on money of Rs. 1,18,000 was available with the assessee, who is main partner of the firm M/s. Vaishali Enterprises. Since the ld. C1T D/R has not placed any material as to show that the credit of Rs. 1,18,000 or Rs. 1 lakh, as claimed by the assessee, has already been allowed either to the assessee or to the firm M/s. Vaishali Enterprises or any other assessee of this gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the ground taken by the assessee is allowed." In the above back-ground, the difference between the two ld. Members has come up for my consideration. 8. I have heard both the parties. The ld. counsel for the assessee brought to my notice that as per instruction of GPI, M/s. Vaishali Enterprises was collecting 'on money' on sale of cigarettes. For above 'on money', addition of Rs. 1,22,659 was made in the hands of the firm of which assessee was a major partner. It is an admitted position that assessee was dealing with GPI on behalf of M/s. Vaishali Enterprises and, therefore, the amount was lying with the assessee at the time of search. The assessee has sought adjustment of Rs. 1,00,000 as above and his case was partly accepted by CIT(A) in his order dated 5-3-1990 and by ITAT in order dated 24-12-1991. The above authorities merely for verification of certain facts have remanded the cases back to the Assessing Officer. The Assessing Officer, by recording a wrong finding that amount in dispute already stood adjusted as per order of ITAT, denied benefit of claim and rejected the explanation of the assessee relating to Rs. 1,00,000 seized in search. But this explanation has right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm was lying with him and was found in the shape of cash at the time of search. A probable case has been established by the assessee and this is evident from orders of the Commissioner of Income-tax (Appeals) and that of ITAT, referred to above and relied upon by the assessee. It is no doubt true that revenue authorities after verification and investigation could not bring material on record to show that claim of the assessee was untenable and factually wrong. Nothing on the lines indicated above was done by the revenue authorities and by recording erroneous findings of facts, the claim was denied. Although no benefit of addition made in the hands of firm was allowed to the firm or any of its partners, yet Assessing Officer recorded erroneous findings to deny the claim to the assessee. The other important reason given by the ld. Accountant Member that assessee, in his preliminary statement, did not state that cash in his house belonged to M/s. Vaishali Enterprises, in my view, is not very material. The assessee, before the raid was concluded, in a statement under section 132(4), had stated that Rs. 2,00,000, out of the cash found belonged to the firm. Subsequently, he restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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