TMI Blog1996 (4) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... ding fund committee was deposited with him and the said amount was lying in his custody. Some of the persons deposed in support of his version before the ITO. Similar is the case regarding confirmation of Rs. 25,000 having deposited by the assessee's daughter Mrs. Priya Jaggi. She has confirmed having deposited the said amount with the assessee and the assessee's contention is that he was in custody of the said amount as a trustee of his daughter. In regard to the ground No. 3 also, identical explanation is given by the assessee that one Balvantsing Juneja and another Nanaksing Chug had deposited with him Rs. 15,000 each and he was holding the said amounts as trustee for them. The assessee has tried to establish their credibility of having the amount of Rs. 15,000 saved by them and deposited with the assessee. Both these persons have confirmed having deposited these amounts with the assessee. 3. In the light of the assessee's contentions and the evidence brought on record in respect of the additions confirmed by the CIT(A), the issues which have arisen for our consideration are whether the assessee's version of having in possession of the funds collected by the building fund comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of motor spare parts and petrol pump. The firm's name is M/s. Ramchandra Sons. He also accounted for the construction of the house. This statement was recorded on the same day after the search and seizure was over. He holds 60% share in the profits of the firm and he has been assessed to income-tax since 1961. He has been also assessed for wealth-tax about 8 years prior to the search and seizure. He had disclosed Rs. 50,000 under Voluntary Disclosure Scheme in October 1975, much prior to the search and seizure. 7. On the day of search and seizure, i.e., on 6-8-1976, cash of Rs. 2,23,400 was found in his house. He has stated that the amount of Rs. 50,000 disclosed under the Voluntary Disclosure Scheme in October 1975 also included in Rs. 2,23,400 found in his house. His wife also had disclosed Rs. 40,000 under the said Scheme. He showed his incapability to explain regarding the balance of Rs. 1,33,400 at that stage and told the Officer that he will explain later on. Thereafter, he wrote a letter dated 28-10-1976 to the ITO, A-Ward, Ahmednagar. 8. What is required to consider at this stage is two important points. The first point is whether the assessee was in a disturbed menta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oberoi 2,200 5. Personal cash balance of Mrs. Bimalwanti 840 6. Cash belonging to Shri Gobindram (out of sub-contracts) 51,060 7. Deposit received from assessee's two friends Rs. 15,000 each 30,000 --------------------------- 2,23,400 --------------------------- The ITO has accepted the explanation in respect of Item No. 3 being Rs. 4,300 belonging to the assessee's mother, Item No. 4 being Rs. 2,200 belonging to the assessee himself, Item No. 5 being Rs. 840 belonging to Mrs. Bimalwanti and Item No. 6 belonging to the assessee himself out of sub-contracts of Rs. 51,060. The ITO did not accept the explanation in respect of (1) Rs. 25,000 cash deposit kept by Mrs. Priya Krishanlal Jaggi, assessee's married daughter, (2) Rs. 1,10,000 cash deposit received from Gurudwara Gurusingh Sabha, Building Fund Committee and (3) Rs. 30,000 being deposits received from the assessee's two friends of Rs. 15,000 each. 10. The assessee's explanation regarding Rs. 2,200 is that he had this cash from his personal savings out of withdrawals made for household expenses from the firm of M/s. Ramchandra Sons, Shrirampur. An amount of Rs. 840 is the personal balance of his wife Mrs. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 25,000 kept by his daughter with him requires to be accepted as his daughter also gave explanation regarding the source of income and her savings. Therefore, we are satisfied to accept the said explanation and to delete the addition of Rs. 25,000. 12. The second item is of Rs. 1,10,000 pertaining to Gurudwara Gurusingh Sabha Building Fund Committee. The assessee's case, though in the later statement, is that the members of the Gurudwara Gurusingh Sabha Building Fund Committee had gone to different villages to collect funds and they had collected it. They brought this amount and kept with the assessee on 5-8-1976. Two members of the said Sabha have signed the letter and stated that they had gone to collect these funds from different villages and came to Shrirampur in the evening and kept the same amount with the assessee. Gurudwara Gurusingh Sabha Building Fund Committee is registered under section 12A of the Income-tax Act and it is granted registration certificate. In this connection, the assessee was cross-examined to a great length by the ITO. 13. The assessee has filed the list of the donors from pages 43 to 50 of the compilation. Names of 200 donors have been mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be discarded merely on the ground that it is an afterthought and the story is created or concocted by the assessee. We hold that the assessee's explanation is quite reasonable and acceptable. We are satisfied to delete the addition of Rs. 1,10,000. The assessee succeeds on this ground of appeal. 16. Now the next item is regarding addition of Rs. 30,000 being deposit received from two friends of the assessee of Rs. 15,000 each. The assessee's evidence and explanation is on record that one Shri Balwant Singh S. Juneja kept Rs. 15,000 as a deposit with the assessee. The Manager of the Bank of Baroda, Shrirampur Branch to whom a letter was written by the ITO replied by letter dated 10-2-1979 that this Balwant Singh S. Juneja had an account from 31st December, 1973 and he was having balance of Rs. 1,205 on that day. There was a balance of Rs. 873 as on 31-12-1976 and on 31-12-1977 the account was closed. There was also an account in the State Bank of India, Shrirampur and the Branch Manager by letter dated 17-2-1979 replied that this account held by Shri Balwantsing S. Juneja was transferred to Aurangabad Branch in 1977. Shri B.S. Juneja was serving in LIC. The assessee did not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 as bank balance. Her financial position was quite good to deposit Rs. 25,000 with her father. The ITO has merely suspected the deposit and there is no basis for such suspicion. It was not necessary to take receipt from her own father for the deposit kept with him to show that she had kept the said deposit with her father. She filed the return of income. It would be incorrect to say that she did not claim the said amount at the time of raid and therefore it should be presumed that the amount belongs to the assessee. 21. In this respect, Shri Roy has submitted that Smt. Priya K. Jaggi was present in Shrirampur and she did not come forward claiming Rs. 25,000 as belonging to her. There is an inconsistency in her evidence. According to him, there is no evidence in respect of her savings and her conduct appears to be unnatural. He has pointed out certain statements from her evidence from pages 19, 21 22 of the department's paper book. The balance sheet is on page 29. He has urged that she has gold ornaments only of Rs. 1,600 and, therefore, she could not have deposited the sum of Rs. 25,000 with her father and the presumption drawn by the lower authorities is correct. 22, Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was to be credited to the Building Fund corpus. Evidence regarding the building fund is at pages 116, 117 and 118 of the assessee's paper book. He has pointed out that Shri S.V. Harhare has filed his affidavit on page 24 and he has also tried to rely on the evidence of the ITO Shri N.G. Thite. We have already stated above that we are very much reluctant to take the evidence of authorised staff members who have made the search and seizure at the assessee's premises. He has also contended that the department is not at all sacrosanct to be treated every assessee as a dishonest one. 24. Shri Bhojwani contended that it would be incorrect to say that the assessee was all along in a good and peaceful mental condition and he was not puzzled. It is against the nature of a person to be unpuzzled when a raiding party comes to his house. Shri Saran Singh is one of the trustees and his statement does not require to be rejected. CIT(A)'s order is merely mechanical and he has simply agreed with the ITO without applying his mind. Inspector's report cannot be relied on, because no chance was given to the assessee to controvert it. It cannot be believed which does not relate to the donation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities and the entire evidence on record, we are satisfied to come to the conclusion that there is explanatory evidence, though the explanation given is not right from the original statement of the assessee, but the explanation with evidence given by the assessee vide his letters and statements and the supporting evidence of another trustee of the Gurudwara Gurusingh Sabha Building Fund Committee are acceptable. Secondly, the presumptions raised by the department are also not out of doubt. Under such a circumstance, and when doubt cannot be removed, it would be always safer to give the said benefit of doubt to the assessee. Hence, we feel that the explanations given by the assessee in respect of the items of additions appear to be reasonable and if reasonableness is so straightforward, there is nothing wrong to allow the assessee's claim. We reverse the orders of the authorities below. 29. In the result, the assessee succeeds and the appeal is allowed. Accountant Member 1. I have carefully studied the facts and the arguments and tried my level best to persuade myself to agree with the conclusions proposed by my learned brother. In conformity with the well-established principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed sources. Strictly speaking since the tax liability is the same whether the income is from contract business or from undisclosed source, the issue would be academic and this is what the CIT(A) stated in para 20 of his order. The issue, however, is not academic and has a direct bearing on the remaining addition of Rs. 1,65,000 from undisclosed sources. The ITO asked some searching questions regarding the activity which fetched the alleged sum of Rs. 51,060 held in cash. There are no books of account or other evidence. The assessee in his sworn statement on 12-7-1978 could not remember the details or even the name of the highest bidders. All that he could say was that the total profit was Rs. 1,50,000 and that his share was Rs. 30,000. Whilst volunteering to produce evidence regarding auction he did not in fact do so. He did not also know the amount of deposit to be made in the auction. Whilst claiming to have formed a syndicate or a ring with three other contractors in the auction at Dehu Road, the assessee could not give even the names of contractors. Again whilst stating that the auction was for automobile parts he could not state what was the deposit paid by the highest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee under the voluntary disclosure scheme was Rs. 50,000. Thus the assessee tried 9 to explain Rs. 90,000 as having their origin in the voluntary disclosure made by him. But soon after the search was over, the assessee realised the futility of pursuing the same possibly because he found that these disclosed amounts have already had their destination fixed somewhere else and would not therefore the available to explain the whole or part cash of Rs. 2,23,400. Having given up this explanation, purporting to act on his promise, by letter dated 28-10-1976 the assessee gave the following break-up for Rs. 2,23,400 : Rs. (1) Cash deposit kept by Mrs. Priya Krishanlal Jaggi of Bombay (married daughter) 25,000 (2) Cash deposit received from Gurudwara Gurusingh Sabha (Building Fund Committee) 1,10,000 (3) Amount belonging to my mother Mrs. Jeevanadevi Mangalsen Oberoi (removed from separate purse) 4,300 (4) Personal cash balance of Gobindram Oberoi 2,200 (5) Personal cash balance of Mrs. Bimalwanti 840 (6) Cash belonging to Shri Gobindram (out of sub-contracts) 51,060 (7) Deposit received from friends (my two friends have kept deposit of Rs. 15,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cute amnesia? If the contention had any element of truth the same would have come out at least within a reasonable time after the search. Between 7-8-1976 and 18-10-1976, there was no communication from the assessee. Confirmatory letter dated 24-10-1976 from the daughter was filed only on 28-10-1976; (2) The assessment made by the ITO Bombay do not show the destination of the funds derived out of such income. There is no explanation as to how and why such amounts, if any, were held in cash when the amounts inherited from her husband already in bank; (3) There was no satisfactory evidence as to how and when the amounts were brought from Bombay to Srirampur; (4) The returns of income filed with ITO Bombay showed that these returns had little evidential value. All that can be said from the returns is that the capital build-up returns which were possibly intended to benefit somebody were diverted for the benefit of the assessee. The ITO's records in Bombay showed that the original returns for 1976-77 did not have the statement regarding handing over the money to the assessee. According to the ITO, these statements were interpolated much after the search (vide para 7 of the ITO's order) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Shri Juneja claimed to have kept the same amount earlier at his home out of his own savings. He had not taken any acknowledgment etc. Whilst asserting that he had asked for the return of money orally, he admitted that he has not pursued the matter. The ITO held that it is unbelievable that Shri Juneja would be keeping substantial amount idle out of his own savings. It would also be a very curious thing to keep the amounts in this way. In fact, Shri Juneja had two savings bank accounts --- one in Bank of Baroda and the other in State Bank of India at Shrirampur. The Bank of Baroda account was opened in August 1975 when he was transferred from Sitapur in U.P. to Shrirampur. This account was maintained even till June '77 when he was transferred from Shrirampur to Aurangabad. During the period December 1975 to June 1977 the balance in account was nominal say Rs. 800 to Rs. 1,300. The State Bank of India account position was also similar. 7. The ITO critically analysed the sworn statement given by Shri Juneja on 24-7-1979. As mentioned in paras 20 and 21 of the ITO's order, Shri Juneja was asked as to the reasons for keeping such large amounts and that too with an outsider when Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aler. The assessee was certainly not in a proprietary business and if these facts were correct the amount should have reached the coffers of the firm as advance from Shri Nanaksingh. The assessee would have stated this fact. Shri Nanaksingh did not even purchase the tyres from the assessee or the firm. He got them from another concern M/s. Vikas Cycles which would show that his version regarding giving an advance to the assessee was not correct. Shri Nanaksingh made further statement that the sum paid as an advance to the assessee could be traced to a receipt by him from Maharashtra Sugar Mills as Transport Commission etc. The ITO pursued the matter with Maharashtra Sugar Mills and found that Nanaksingh has actually received Rs. 18,035 on 23-6-1976 by cheque which was credited by Nanaksingh into his bank account in State Bank of India. Thus, the version regarding receipt from Maharashtra Sugar Mills for identifying the alleged cash payment to the assessee stood disproved. Further the ITO took the trouble of examining the partner of M/s. Vikas Agency who had, according to Shri Nanaksingh, supplied tyres to Nanaksingh. The partner Shri Ganghan was examined on oath and came out with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly as the assessee was having 60% share therein. Both these brothers whilst confirming the assessee's version had some explanations which were rather odd. Shri Saransingh was also present as panch throughout the search. He claimed to have pointed out to the officials that the amount belonged to the Gurudwara and that the authorised officers, at the time of search, as he was a panch. He claimed to have made a statement to the authorised officers, curiously at a time when the assessee himself was not present in the room as he was called upon to the shop where search was going on. It is surprising how Shri Saransingh chose this particular moment for alleged revelation. One would naturally expect, if the assessee's version is true, a claim coming from Saransingh or from the assessee within a few minutes of the commencement of the search. Shri Saransingh claimed to have again told the authorised officers at the time of seizure and counting of the cash and stated that at this time, i.e., on the second occasion in the evening the assessee was present in the room when he said so. The other brother Jagjitsingh Chugh in his statement stated that he also knew from brother Saransingh that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor brought out the hard truth that none of these donors had any evidence or any record about such payments. The assessee had by then succeeded in persuading some persons to admit having given some amounts in vague terms. The Inspector's enquiries at Kopargaon and Rahata where collections were claimed to have been made revealed that in many cases there are no persons at all whose names were furnished by the assessee. The enquiries with old sikh residents at Kopargaon showed that they were also not aware of the whereabouts of such persons. When the assessee was confronted with this, he failed to avail of this opportunity and preferred to take an extraordinary plea that as he was not himself in the party of persons who collected that donations he could not throw light on the whereabouts of such persons. A guess was hazarded that many of these persons are truck operators who move from place to place. Putting his finger on some of the amounts, the ITO tried to locate one Shri Kirpalsingh Kanhyalalsingh of Rahuri who it was claimed to have paid Rs. 1,001 on 4-8-1976. Once again the ITO noticed that there were no such persons at Rahuri. There were however, two persons, viz., Kirpalsingh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention that the cyclostyled letter now shown to him was actually in existence on the date mentioned therein. Ante-dating is a common feature of such attempts to produce fabricated evidence. The ITO also rejected the contention that since the books of account of Gurudwara have been audited and that the auditors have also confirmed the assessee's version the same should be accepted. The ITO held that the auditors were not going beyond what was stated to them by the parties concerned, the audit itself having taken place after the raid. The auditors were never called upon to scrutinise the genuineness of the receipts, etc., and therefore, the auditor's letter or report had little evidential value. The ITO then examined the claim regarding the manner of travelling by the alleged members. Shri Jagjitsingh claimed to have travelled in his car which he was himself driving. His statement recorded on 27-4-1979 showed that he claimed to have had sufficient petrol in the car as he had taken petrol 2/3 days earlier. He had to take a stand because on the date in question he had no vouchers regarding purchase of petrol. He could easily come forward with the claim that prior to 4-8-1976 the tank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n car. A peculiar stand was taken that the evidence thus gathered is not sufficient to disbelieve Jagjitsingh who, examined twice on oath, had confirmed that he did actually travel at various places in his own car and driven by himself. Linking this piece of material with further evidence gathered, the ITO held that either collections were not made as alleged or that the collections if made had no link whatever with the cash found at the residence of assessee. The ITO found that every time the assessee was confronted, he had some other card up his sleeve. A new twist was given asserting that the impugned car belonged to uncle of Jagjitsingh. Lastly, the ITO noticed that the places claimed to have visited Sangamner, Rahata, Kopargaon, Yeola, Manmad and Vaijapur on one day are too far away from each other even for a whirlwind tour. In fact, the assessee claimed to have made collections even from farther of places like Aurangabad, Jamkhed, Belapur, etc., in one day. When physical impossibility of such trips was pointed out once again an extraordinary plea was taken. ITO wondered how such persons could have made contributions when they could not have been aware of the impeding visit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Shri Saransingh might at best have got some ideas to put a claim only at the end of search. Obviously Saransingh's mental faculty must have been working very fast throughout the search but could manufacture very late a plausible explanation which had a chance of getting some confirmation in the form of other make-believe evidence which would be prepared later. If Shri Saransingh had himself come with cash at 9.00 p.m. previous night why did he take such a long time to whisper into the ears of the authorised officer, carefully choosing a moment when the assessee was out of hearing distance? The ITO held that the big time gap between the date of search, i.e., 5-8-1976 and the actual production of evidence i.e., 27-10-1976 revealed a lot. He thus held that there was hectic activity on the part of the assessee and his friends to concoct and fabricate evidence. It may also be mentioned here that the ITO enquired with the authorised officers whether they had soon any receipt books of the Gurudwara funds. Only Shri Thite claimed to have seen some receipts. If the statement of Jagjitsingh is correct they had obtained the receipt of the assessee on the back side of their book and taken b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund in the cash seized from the assessee's premises. It is strange that the necessity of making such an affidavit about the so-called claim of Gurudwara funds arose nearly one and half years after the raid. This inordinate time between making the affidavit and the date of raid certainly goes to disprove the claim sought to be made on behalf of the assessee. It will thus be seen that the ITO had marshalled all facts and ultimately held that the explanation on this part also deserves to be rejected because of the insufficient and unreliable evidence produced in support of the claim. 14. One can come now to Dr. Bhojwani's submissions. Dr. Bhojwani was aware of all the factual position marshalled by the ITO in his assessment order and confirmed by the CIT(A) in his appellate order. He, however, submitted that whilst the basic facts may be true, the conclusion is totally unwarranted. He saw no reason for disbelieving the assessee's version particularly when the assessee has himself come out with a statement regarding auction contract business which fetched him Rs. 51,060 for the first time this year. It may be that the assessee has no contracts or other evidence about the auction and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was cash in hand of about Rs. 25,000. Smt. Priya knew that her father was trying to rehabilitate her through a second marriage and she also knew that for this purpose she would have to keep money in cash without the knowledge of her in-laws. Thus, whereas, she kept Rs. 18,000 inherited from her husband in Bank she thought it wiser to keep Rs. 25,000 with her father. She visited the assessee about two months before the raid. Secondly possibly the assessee was not sure whether this Rs. 25,000 was part of the cash at home or had already been taken to the shop. This is the reason why the assessee in his preliminary and final statement did not refer to Priya's funds being in his custody. Referring to the statement of Priya Dr. Bhojwani submitted that the ITO has drawn unnecessary adverse inference regarding her capacity to earn income. ITO has also laid undue stress on the fact that the diary in which she had made such entries was lost or mislaid or could not be produced before the ITO. According to Dr. Bhojwani, the returns themselves filed by Smt. Priya in Bombay, show clearly that she did have requisite cash. During the search, she could not have made any statement as none was asked ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other piece of evidence may be accepted or rejected in a subsequent year depending on the facts and circumstances of the particular case. There is no doubt that the finding in earlier assessment year should not be ignored on flimsy ground. But in this case there are not even findings of cash savings in the earlier years. The earlier years' returns were obviously capital build-up returns. It is indeed an extraordinary feature that anyone would file generously voluntary returns showing marginally above taxable income. Such returns are always filed by persons who want to have capital build-up and to lend their names for hawalas or on commission. The returns filed prior to the raid were thus obviously intended to give hawalas possibly to some unknown parties. After the raid the assessee thought that he could himself as well take the advantage of the hawala. The observations of the ITO show clearly that the returns of Priya were motivated. There is no evidence regarding the existence of activity giving the alleged income or existence as cash without any outgoing. There is also no indication that such cash could have been kept with the assessee without the knowledge of the assessee. Las ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipt from Maharashtra Sugar Mills. Referring to page 79 of his compilation, Dr. Bhojwani highlighted the fact that the amount has been repaid on 29-10-1979 by adjustment of dues against sale of diesel. Thus, the material on record is quite sufficient to warrant acceptance of the explanation regarding the origin of funds found at the time of search. 20. In reply, the DR highlighted the facts that for nearly two years from the date of search, Shri Juneja and Chug had not surfaced. The evidence thus clearly points the fact that these persons have been bought over by the assessee to make false statements in his favour. The question really is not whether these people could have mustered the funds but whether they did really so muster them and hand them over. The material on record shows clearly that Shri Juneja is either vague or inconsistent. The subsequent return is clearly a made-up affair to give colour of credibility to a transaction which never took place in the form claimed by the assessee. Thus, a mere claim of return is no evidence to support the contention that original amounts were actually received and did form actual part of the cash found at the time of search. Rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers only the addresses as given by the drivers were noted. The receipt books etc., have been duly found. Auditors have duly accepted the contention of the trustees and the assessee about the sum of Rs. 1,10,000 lying with the assessee at the time of search. Referring to page 123 of the compilation, Dr. Bhojwani submitted that the letter from the trustees dated 27-10-1976 is sufficiently eloquent and should leave no doubt about the origin of the funds. Here again, the fact that the assessee did not make any reference to this aspect in his preliminary and final statement at the time of search need not lead to a conclusion against the assessee. Even the delay between 5-8-1976 and 27-10-1976 is attributable to the circumstances beyond the control of the parties. It was thought that the information could as well conveniently be given at the time of hearing before the ITO under section 132(5). Regarding the doubt raised about the actual travelling (page 128 of the compilation), Dr. Bhojwani contended that although the receipts were passed on 4-8-1976 and 5-8-1976 the actual collections reached Shrirampur only on 5-8-1976 and ultimately reached the assessee's premises at 9.00 p.m. on 5-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residence of the assessee to hand over the amount as per the directions of "Sangat". Shri Somsingh has also confirmed having taken receipt. Shri Juneja was not present on 5-8-1976 when the party visited outside places. There is thus no question of contradicting the statement of Shri Juneja driving his own car, etc., Shri Somsingh has further stated that the receipts were issued on the spot by Shri Jagjitsingh. Finally he has given a figure of the amount given to the assessee as Chief Trustee exactly at Rs. 1,10,000 and has also given the reasons why the amount was given to the assessee. Dr. Bhojwani referred to the statement of Shri Juneja (page 135 of the compilation) and Shri Gurubachansingh (page 19 of the compilation). 22. Summing up his arguments Dr. Bhojwani contended that the assessee's various explanations deserve to be accepted. CIT(A)'s order is mechanical and does not indicate an application of mind objectively. The Inspector's report on which so much reliance is placed cannot be relied upon because the collections were made during a drive and the drivers may not have remembered all the details or preserved receipts. The assessee does not have the report. It was howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h too would not have taken such a long time till evening to say this at the end of search. Assuming for the sake of argument that some amounts from Gurudwara fund did reach the assessee's premises the same must have been kept somewhere else and did not catch the eyes of search party. Such cash would normally have been kept in earmarked labelled packet. No such thing was found. Thus, the cash seized at the time of search had nothing to do with the Gurudwara fund and the evidence regarding Saransingh's statement is a cooked up affair in an effort to wriggle out of the uncomfortable situation. Even the statements of Shri Kathuria, Juneja and Gurbachansingh do not show that the cash found at the time of search had any link with the collection, if any. Referring to page 123 of the assessee's compilation, the DR pointed out an inconsistency, viz., Juneja had at one time said that he was away on 4-8-1976 but later contended that he was away on both days. Referring to page 124 of the compilation, the DR wondered how Saransingh could have even imagined that the said cash included a sum of Rs. 1,10,000 for raising a doubt before the authorised officers. The normal course would have been for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddl. CIT v. Noor Mohd. Co. [1974] 97 ITR 705 (Raj.)]. The provisions of Indian Evidence Act do not apply to income-tax proceedings. The ITO is not bound by any technical rules of law of evidence and may rely on circumstantial evidence. In matters like cash credits or explanations regarding assets, it is not always possible to have positive and conclusive evidence. It is also not always necessary to produce counter evidence to draw an adverse inference against the party on whom the burden of proof lies. The legal position was explained in Assam High Court in Chowkchand Balabux v. CIT [1961] 41 ITR 465. It was observed as under, relying on Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) : "It is not necessary in all cases that the department should come with some rebutting evidence of its own, but the parties concerned are entitled to make out a case on the material as they are before the officer concerned. It would depend always on the circumstances of each case as to whether an affidavit commands credit, irrespective of the fact as to whether deponent turns upon for examination or not. No limit can be put to the discretion of the officer as to whom or what document h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rightly pointed out by the DR when the assessee could give some details of insurance etc., from the mere fact that he made a small mistake regarding the extent of gold ornaments or from his reference to voluntary disclosures which, in fact, was later found to be of no help to the assessee and was withdrawn, does not lead one to the conclusion that the assessee was disturbed or had lost his faculties to such a great extent that he could not have remembered even the previous night's incidents. It is common knowledge that every assessee when cornered taken his time to explain in the hope the concocted evidence prepared later regarding the origin of the funds may come to his rescue. In such cleverly camouflaged matters one can see through the game only through the slips committed. Thus, the explanation given by the assessee as also the evidence produced is to be examined in the light of this background. It is to be noted that the assessee at an early stage of the hearing gave up all hopes of explaining the entire amount of Rs. 1,65,000 and came with an extraordinary explanation that for the first time in the accounting period he entered into some auction transactions with some anonym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfactory. The assessee has never explained satisfactorily how these persons could not be mentioned by name for nearly one year after the search. It is quite clear, the assessee was himself in frantic search of such persons who could give some credible material to support the assessee's contention regarding the holding of cash. Shri Juneja an employee of LIC with two bank accounts at Shrirampur cannot be said to have taken the steps of holding some cash giving to his mother and ultimately passing it on to the assessee for safe custody. The actual date of alleged delivery is not known with the precision required. The ITO has brought enough material to show that the story does not deserve acceptance. It is quite clear that the return by cheque long after the search has been made only to support the assessee's explanation. If as alleged the amount was received on cash, the same could as well have taken returned in cash. The fact that the amount was returned to Juneja by cheque therefore, does not improve the assessee's case. Regarding Nanaksingh Chug who remained unidentified for nearly a year after the search, the explanation and the statement given are woefully inadequate as the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o explanation as to why such a statement was made so late in the evening. There is also no explanation as to how Shri Saransingh could have arrived at the figure with such a precision. Thus, as pointed out by the DR although some amounts might have been collected by the Gurudwara Committee from the inception of the Trust in 1974 from time to time, there is no link established between such funds and the cash found at the time of search. The totality of the evidence in the form of statements of the party collecting funds thus indicates that there was a nominal collection and that even such collection had no link with the cash seized at the time of search. The auditors report being based on self serving explanation given to them does not improve the assessee's case. Adverse inference is thus fully justified. 31. On the question of benefit of doubt on facts, it is not settled that whilst there may be some case in penalty and prosecution, there is no question in assessment proceedings where the ITO is merely expected to show how the evidence is insufficient or unreliable on the special circumstances. The authorities below have done this part of the job ably. The benefit of doubt can a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by my wife under the above scheme. I cannot explain the balance of the amount of Rs. 1,33,400 at this stage. I will explain the same later on. The gold ornaments found in my house weigh about 25 tolas. In my earlier statement it was wrongly stated as 75 tolas, as I was puzzled." 5. In the course of the proceedings under section 132(5) of the Act, apropos the cash, the following explanation was offered by the assessee vide his letter dated 28-10-1976 : "(5) Cash amount of Rs. 2,23,400 Regarding cash of Rs. 2,23,400 found in the house premises I have to submit as under : Rs. (1) Cash deposit kept by Mrs. Priya Krishanlal Jaggi of Bombay (Married daughter) 25,000 (2) Cash deposit received from Gurudwara Gurusingh Sabha (Building Fund Committee) 1,10,000 (3) Amount belonging to my mother Mrs. Jeevandevi Mangalsen Oberoi (removed from separate purse) 4,300 (4) Personal cash balance of Gobindram Oberoi 2,200 (5) Personal cash balance of Mrs. Bimalwanti 840 (6) Cash belonging to Shri Gobindram (Out of sub-contracts) 51,060 (7) Deposit received from friends (my two friends have kept deposit of Rs. 15,000 each total Rs. 30,000) 30,000 --------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the no concern. This amount Pancha had made was taken out by the any claim about the other officials in our amount or any part party from a separate of the (sic) as cupboard from his belonging to any daughter's room and for person and if so, this amount the assessee whether you remember claimed that the amount in whose name such belonged to her with amount was claimed? which he had no concern. 5. Besides this amount, No. Only this much about was there any other the daughter's claim. claim regarding any part of the amount from the seized cash belonging to anybody else? 11. Opportunity was given to the assessee to cross-examine Mrs. Deshpande. But he declined to ask any question. Dr. Pathak adverting to the words 'Normal human behaviour' as used by Dr. Bhojwani in the course of his arguments stated that Mrs. Jaggi is an educated lady. She could have deposited the money with the bank. Earlier she did not file any balance sheet. Why consequent upon the search the Balance Sheet was filed. Her income was very meagre. According to Dr. Pathak, there also appears some contradiction in the statements given. On 13-7-1978, Shri S.M. Oberoi, in reply to a qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of truck plying business. I had two trucks bearing Nos. MHS 5107 TMB 1970 model and MHF 6646 TMR model. I am assessed to income-tax under GIR No. DW/N-718 since 1966-67. I further declare that I have voluntarily kept this amount with Shri Gobindram and have not received any interest." Shri Chugh was stated to be a blind truck operator. ITO examined Shri Chugh on 27-4-1979. He could not sufficiently demonstrate the exigency for making the deposit with the assessee. The veracity of his statement was found to be dubious. 15. For about two years from the date of the search, this amount of Rs. 15,000 + Rs. 15,000= Rs. 30,000 remained as a dark cat. Name of depositors were not disclosed. Explanation offered is riddled with incongruities. Consequent effort goes to show that it is a made-up affair to give pep to the plausibility of explanation in regard to a transaction which never took place in the form claimed by the assessee. I have carefully considered the arguments adduced before me. The explanation offered by the assessee in regard to the deposits of Rs. 15,000 + 15,000 = Rs. 30,000 is not satisfactory. I have perused the reasoning given by the ld. AM. I am inclined to agree wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of the subse- Whatever has been stated by Shri quent hearing of the assessment Saransing R. Chug as above is proceedings in the case of Shri partly true in the sense that at the Govindram, Shri Sarangsing end of Panchnama, he tried to tell R. Chug, one of the Panchas me that some funds belonged to who was present at the time of Gurudwara are also included in the search was examined and the cash that is being seized. Since he has stated in his deposition it was stated too late when the that during the search opera- operations were completed and tions he had pointed out to the panchnama was made, I did not Officers present that the take cognizance of that which he amount of Rs. 1,10,000 belonged stated and advised him to ap- to Gurudwara Fund and that it proach higher authorities. No- should not be seized. He has where did he state at that time that further stated that the officer amount of Rs. 1,10,000 was so in- present asked him to make a cluded in the seized cash. representation afterwards and not to say anything at that time since he was acting as a Pancha. Can you tell me as to what is stated by Shri Saransing as mentioned here is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Fund. At least there is no mention about any such query being made to Govindram? 11. You were also present as one of A cash of Rs. 2,000 was found in the authorized officers during the business premises wrapped up the search of the business pre- in a letter-head of Gurudwara mises of M/s. Ramchand Sabha, and so, it was not taken Sons, of which Shri Govindram possession of. However, during is a partner and in the separate the search operations I did not Panchnama made for the busi- find any receipt book/account ness premises it is mentioned book/documents/registers relat- that cash of Rs. 2,000 was not ing Gurudwara Sabha in the busi- seized as it was stated to be of ness premises. Gurudwara. In the search at the residence In the case of business premises also you came across receipt- there was a clear identity of the book of the Gurudwara but in Gurudwara Funds of Rs. 2,000 the case of the Panchnama of since it was wrapped separately in business premises, there is no the letter-head of the Gurudwara mention in the resident's Sabha. There was no such sepa- Panchnama about the finding rate identity available in respect of of any such b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the Committee Somsingh Kathuria, Balaksingh Chug went in my car for collecting funds from outside places. First, we went to Sangamner, then Rahata, Kopargaon, Yeola, Manmad, Vaijapur (via Yeola) and from Vaijapur we returned to Shrirampur at night at about 8 o'clock. 8. When you had kept the first As per the instructions of the day's amount in your house Gurudwara Committee for the why did you think of handing Building Fund, it was decided to over the amount collected on hand over the amount of Building the second day to Govindram? Fund to Shri Govindram who was the Chief Trustee hence we drove to his residence and handed over the amount to him. We gave the amount at his place at about 9.00 P.M. or so. 10. Did you obtain receipt from We obtained his receipt on the Govindram after handing over back of the last receipt. the amount? 22. Dr. Pathak submitted that the assessee failed to discharge the onus. Assessee alleged the things contradictory to each other. He changed the stand according to the promptings of his private interest. Statement recorded under section 132(4) can be used against assessee as evidence since no sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of Shri Gobindram (assessee) and handed over the amount to him since he was the Chief Trustee of the Gurudwara. 27. Adverting to the statement made under section 132(4). I find that assessee categorically stated that explanation in regard to Rs. 1,33,400 will be given at a later stage. Statement given under section 132(4) can be used as evidence against the assessee. Presumption can be drawn on the basis of such evidence. But this gives rise to a presumption, which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. The statement of Mr. Saransingh is relevant. It is said that attention of Shri Thite was invited in respect of the Gurudwara Fund at the time of search. Dr. Bhojwani submitted that this amount of Rs. 1,10,000 belongs to Gurudwara Sabha. It is to be used for the construction of Gurudwara. The amount is duly reflected in the books of Gurudwara. Construction activities are half-way through due to the paucity of funds. The moment money gets released it shall be used for the completion of the construction work of Gurudwara. In the light of the material adduced, there appears to be some truth in the statement of Dr. Bhojwani. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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