TMI Blog2006 (9) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... ulturist, that he owns 6 acres of land and is also cultivating 20 acres of land owned by his brothers, that English vegetables such as asparagus, broccoli, etc., were grown fetching an income of about Rs. 2,00,000 per acre, that in the rest of the land wheat and paddy were cultivated and the income from this activity was around Rs. 25,000 per acre, that the vegetables were being grown since the financial year 1991-92, when it was started in a small way but was later increased substantially and that, thus, Maha Singh had sufficient sources from which he had advanced the money to the assessee-firm. Veer Singh also produced the copy of the bank account which stood in the names of Maha Singh and Veer Singh jointly. The account was with Sonipat Central Co-operative Bank Ltd. The Assessing Officer noticed that it was opened on 3-7-1986 and that during the period 1989-90 there was a cash deposit of Rs. 11,300 and thereafter till 4-8-1997 (for about 7 years) there was no operation and all of a sudden on 6-9-1997 there was a cash deposit of Rs. 8,50,000, another cash deposit of Rs. 5,00,000 in January 1998 and yet another cash deposit of Rs. 5,30,000 in March, 1998. When asked to explain th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two amounts were also added under section 68. 5. On appeal, the CIT(A) substantially agreed with the Assessing Officer. In respect of the credit in the name of Maha Singh, he however thought it fit to give credit for the income received by Maha Singh from the sale of paddy and wheat. He estimated such income at Rs. 1.5 lakhs per annum and after deducting the personal expenses and the agricultural expenses he estimated the income at Rs. 1 lakh from the six acres of the land. He, accordingly, estimated the total savings available with him in cash at Rs. 2 lakhs. The CIT(A), therefore, held that a sum of Rs. 2 lakhs might have come out of such savings and, thus, reduced the additional to Rs. 13,50,000 as against Rs. 15,50,000 made by the Assessing Officer. As regards the credit in the names of Ramesh Duggar and Sohan Singh, the CIT(A) held that Sohan Singh was not produced by the assessee. He, therefore, confirmed the addition, agreeing with the Assessing Officer. As regards credit in the name of Remesh Duggar, again the CIT(A) agreed with the Assessing Officer. He further found that no evidence was filed regarding the sale proceeds of agricultural produce or to substantiate the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the last question ought to have been accepted by the departmental authorities. He also pointed out that a sum of Rs. 5 lakhs was repaid to Maha Singh in the next year. 8. As regards the credit in the name of Ramesh Duggar, the arguments of the Ld. Counsel for the assessee were substantially the same as in the case of the credit in the name of Maha Singh. In addition, it was argued that the creditor was not asked to produce copies of the sale bills for which the assessee-firm cannot be faulted and if the Assessing Officer had asked the creditor to produce the sale bills he would have done so. Our attention was drawn to the fact that the cheque received from the creditor in the first instance was dishonoured and thereafter another cheque was given by him as loan. It was pointed out that the creditor appeared before the Assessing Officer in response to the summons and confirmed the loan and also stated that he gave the loan out of his agricultural income. The claim of the creditor regarding the agricultural holding and income is supported by the tehsildar certificate and the revenue records which show that land was irrigated. 9. With regard to the credit in the name of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or shows a particular modus operandi and a design to introduce the assessee s own monies in the guise of credits. The explanation of the creditors that they had kept the cash partly at home and partly with the commission agent is inherently improbable and does not deserve to be accepted. The Ld. Sr. DR, besides the above submissions, also placed strong reliance on the findings of the income-tax authorities. Insofar as ground No. 1( a ) in the appeal of the department is concerned, which is against the relief granted by the CIT(A) in the case of the credit in the name of Maha Singh, the Ld. Sr. DR submitted that the CIT(A), having held that the creditors explanation that he kept the huge cash out of the agricultural income partly at home and partly with the commission agent was improbable was not justified in giving credit of the agricultural income of Rs. 2 lakhs. 12. In reply, the Ld. Counsel for the assessee submitted that the creditors statement were made on oath and, therefore, they were not bound to produce evidence in support of the statement unless called for. With regard to the sources of Maha Singh, he further submitted that he was in receipt of salary of Rs. 40,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the creditor s statement rather the statement of his son that Maha Singh was also cultivating 20 acres of land belonging to his brothers, there is no evidence to support the claim. The CIT(A) has recorded a finding that there is nothing to show that the brothers of Maha Singh even owned any agricultural land. The sale bills produced by Veer Singh to support the income from sale of vegetables have been examined and discussed by the CIT(A) in para 4.2 of his order. He has tried to demonstrate that the English vegetable cannot be grown in hot season and has thereby discredited the version of the creditor. The criticism of the Ld. Counsel for the assessee that the CIT(A) was not technically competent to say anything about the conditions required to cultivate and grow English vegetable is not justified. The CIT(A) may not be a qualified agriculturist. Even we are not qualified agriculturists. The point, however, is that these are matters of common sense and anybody curious enough and who takes some interest in such matter would be able to say whether such vegetables could be grown in hot season or not. In any case, the assessee has not brought in any evidence to show that such vegeta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s open to a person to keep all the cash with him at home but we have to take into account the human probabilities and the normal course of human conduct. In the case of CIT v. Durga Prasad Morey [1971] 82 ITR 540, the Supreme Court held that the Courts and Tribunals have to judge the evidence before them by applying the test of human probabilities since science has not yet invented any instrument to test the reliability of the evidence placed before the Court or a Tribunal. It is significant to note that in that case also the assessee was receiving certain monies which he claimed to be his wife s income. The amount in question was Rs. 2 lakhs. The assessee had also stated that the wife was keeping the monies safely with her father. The Tribunal disbelieved the assessee s story. With regard to this, the Supreme Court observed as follows : "Herein the assessee was receiving some income. He says that it is not his income but his wife s income. His wife is supposed to have had two lakhs of rupees neither deposited in banks nor advanced to others but safely kept in her father s safe. Assessee is unable to say from what source she built up that amount. Two lakhs before the year 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not appear before the Assessing Officer in response to the summons and it was his brother Ramesh Duggar who had given a statement on behalf of Sohan Singh. In addition to these facts, there is also the inherent improbability in the claim of the creditors that all of them had kept the cash partly in their houses and partly with the commission agents. 15. We further find force in the contention of the learned Sr. DR Mr. Badhok that it is the duty of the assessee to adduce all the evidence in support of the credits without waiting for the Assessing Officer to call upon it to adduce the same. It is the assessee who claimed that the creditors are in receipt of huge amounts of agricultural income. Therefore, it is the duty of the assessee, support the claim with evidence. In the case of Ramesh Duggar, it was argued that had the Assessing Officer asked him to produce the bills he would have done so. In our view, that is not the proper approach to the discharge of the burden under section 68. The requirement of the law is always that the assessee should adduce all the evidence and at the earliest point of time. Section 106 of the Evidence Act also supports the view that it is the bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpers there is evidence to show in the shape of bills that they were put to use for the assessee s business and bills were raised against those who have hired them (page 81 of the paper book). In respect of these two dumpers, depreciation has to be allowed for the full year as they have worked for more than 180 days during the year. The Ld. Sr. DR submitted that the bill dated 31-8-1997 shows that 240 trips were made by the dumpers which is improbable as they were delivered to the assessee only on that day. However, the amount raised by the bill having been assessed, we have to take it that the dumpers were used on and from 31-10-1997. Further, it was explained before us that a trip is not necessarily a long distance, but even short movements for a few 100 feet are taken as one trip and charged accordingly. We accept the explanation. Further, the only objection of the Assessing Officer is that the dumpers are prohibited by law from being used before registration. It is difficult to imagine that the assessee took delivery of the dumpers on 31-8-1997 and waited till the registration almost two months later to put them into use. It is possible that there might have been a violation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1998. The CIT(A) also noted that Satbir Singh was running a contract business from 1990 to 1998 that he has appeared before the Assessing Officer and confirmed the loan that there were no cash deposits in his bank account prior to the transfer of funds to the assessee s (as was the case in the case of the credits in the name of Maha Singh, Ramesh Duggar and Sohan Singh) and, therefore, there was no justification for treating the credit as bogus. He, therefore, deleted the addition. 26. We have heard the rival submissions. The Ld. Sr. DR was not able to point out any material or evidence to dispute the factual finding of the CIT(A). We are therefore, satisfied that the decision of the CIT(A) is correct. We agree with him and dismiss the ground. 27. Ground No. 2 is that the CIT(A) erred in deleting the addition of Rs. 1 lakh. While completing the assessment, the Assessing Officer found that the assessee did not disclose any closing stock, though it purchased materials for Rs. 1,02,410 and Rs. 3,98,924 in February, 1998 and March, 1998 respectively. Labour charges of Rs. 2,94,040 and Rs. 4,28,330 respectively were paid in these months. Expenses were also incurred in digging. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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