TMI Blog2009 (6) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... rrender can be accepted on proper explanation the rest can also be allowed to be explained. - The assessee's claim that balance was from cash withdrawals from cash book has to be tested on the facts appearing in the case. - AO directed to verify if the amount of Rs. 12,33,799 invested in purchase of draft was withdrawn from the regular cash book after verification of entries of cash withdrawals. In the peculiar facts of the case it would first be necessary to establish availability of funds in the cash book. - - - - - Dated:- 30-6-2009 - Member(s) : R. P. GARG., B. L. KHATRI., DIVA SINGH. ORDER-B.L. KHATRI, A.M.: June, 2006 This is an appeal filed by the assessee against the order dt. 2nd May, 2000 of CIT(A), Agra for the asst. yr. 1998-99. 2. Ground No. 1 relates to sustenance of disallowance of Rs. 23,100 being interest paid to Shri Sanjeev Sarin. 3. Ground No. 2 is against sustenance of addition of Rs. 37,480 as accrued interest on loan given to Shri Arun Kumar Jain. 4. The brief facts of the case are that the appellant had taken a loan of Rs. 35,000 from Shri Sanjeev Sarin @ 18 per cent interest. The interest was not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sugar Mills Co. Ltd. is of no help to the appellant. The facts of the case are different. The AO has rightly assessed the income as per amended provisions of law. Reasonable cause can be seen only in the penalty proceedings. The learned Authorised Representative submitted that reasonable cause should be taken into consideration as held by Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. We are of the opinion that while interpreting the amended provisions of law, the principle of reasonable cause does not apply, as the appellant is assisted by a lawyer. It was held in the case of CCE vs. Kisan Sahkari Chinni Mills Ltd. (2002) 255 ITR 57 (SC) as under: "In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." However, we are of the opinion that the AO cannot resort to double taxation if he finds that the assessee had disclosed the income to this extent in the subsequent year. The income, if any, included in the subsequent year, may be excluded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,799, which were obtained after withdrawal from the cash book had not been accepted by the AO and the AO had made the addition of Rs. 12,33,799 under s. 69 of the IT Act. The AO had not accepted the veracity of the cash book on the ground that the books of account had been rejected under s. 145 of the IT Act. 14. The learned CIT(A) had confirmed the action of the AO as discussed at p. 6, para 6.4. The learned CIT(A) brought additional reasoning on record that in the computerized cash book, which was shown at the time of assessment proceedings, the opening balance of Rs. 7,04,684 was claimed but the same appeared to have continued till 20th November after which on 24th Nov., 1997, 5th Dec., 1997, 12th Dec., 1997 and finally on 16th Dec., 1997 cash is claimed to be withdrawn from cash book to make various drafts. The arguments of the appellant were rejected for the reason firstly, no reference was made about cash book withdrawals used (cash) to make the drafts during statement recorded on 24th March, 1998 by the Investigation Wing and secondly it could not be expected that an amount of approximately Rs. 7 lakhs cash claimed to be on the opening day of the year would be idle and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make a surrender; (c) The surrender was not made in the course of any statement under s. 132(4), and therefore, the letter written by the assessee cannot be treated as voluntary surrender or evidence against the assessee. (d) The ADI is not legally competent to accept any surrender or disclosures. This power vests either with the CIT or the AO, subject to the provisions of s. 273A. (e) Even in respect of search and survey, the Board directed in letter F. No. 286/2/2003-IT(Inv.), dt. 10th March, 2003 that no attempt should be made to obtain confession and assessment should be based on the basis of material gathered. In the assessee's case, there is no material or evidence against the assessee with the AO except the ADI's letter. (f) The Hon'ble Allahabad High Court in Abdul Qayume vs. CIT (1990) 86 CTR (All) 66 : (1990) 184 ITR 404 (All) has held that erroneous admission by assessee cannot be a foundation for assessment. (g) The Hon'ble Allahabad High Court in Union of India Ors. vs. Sheo Shanker Sitaram Anr. (1974) 95 ITR 523 (All) has held that the assessment proceedings are judicial in nature and AO has to apply his own mind and he cannot act on the advice of any au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough any statement recorded under s. 132(4) of the IT Act. Reliance can be placed on the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Anr. 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC), wherein it was held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. The assessee on the basis of documents had proved that the admission made before the Investigation Wing through letter was incorrect on the basis of documentary evidence in the shape of cash book. The appellant had filed complete details of withdrawals from cash book before purchasing drafts. However, the AO is directed to verify whether the amount invested in purchase of drafts was withdrawn from the regular cash book. If he finds that the cash has been withdrawn from the cash book maintained by the appellant before purchase of drafts, no addition is called for. Therefore, the AO is directed to allow necessary relief after verification of entries of cash withdrawals, which are considered correct. Genuineness of withdrawals from regular cash book cannot be doubted on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee before the AO that his account in Nova-Scotia Bank, New Delhi Branch was not undisclosed. If was submitted that amounts were deposited in the said bank by way of drafts deposited from his disclosed bank account and of his family members. However, when the details were called for by the AO it was observed that the deposits by way of these drafts were only to the extent of Rs. 15,19,600. These facts were confronted by the AO to the assessee. 4. Accordingly to this extent the claim of the assessee was accepted by the AO without examining the sources of these drafts. No other reasoning for accepting the same or discussion in the assessment order with regard to this acceptance has taken place. Thus on facts the AO was more than reasonable. However, this acceptance cannot be understood to mean that the surrender by way of a letter before the Investigation Wing had no basis. The generalistic arguments advanced found recorded in pp. 6 to 7 sub-paras (a) to (g) in the leading draft order do not erode the case of the Department in any manner. At best it leads to the conclusion that the AO chose not to examine the veracity of the bank to bank transactions which he may have been o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urning a meager income of Rs. 1,20,214 and Rs. 29,160 from agricultural income also needs consideration. 9. It is seen that the assessee has returned income from profession to the tune of Rs. 1,20,214 out of the total income returned for the year under consideration of Rs. 2,25,540 which includes agricultural income of Rs. 29,160. Before the CIT(A) the following submissions were made: "(6.2) It is submitted that the AO has rejected the cash withdrawals of Rs. 12,33,799 from cash book on the ground that books had been rejected under s. 145. The appellant submits that provisions of s. 145 were not applicable in his case because no defect was found in the books of account. Moreover, since no deposits had been found credited in the books of account, provisions of s. 68 were not applicable either. It is the case of the appellant that at the time of assessment proceedings extract of relevant dates on which cash was available in the cash book and was deposited with Nova-Scotia Bank, New Delhi through bank drafts, was filed before the AO. Therefore, it is prayed that addition made on this account may be deleted." 10. The reply of the AO in the context of the submissions made reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be made under duress. The appellant's claim now cannot be taken on its face value in view of absence of any reference in his statement that cash used for making the drafts was from his cash book. Even a minute perusal of various entries in the computerized cash book maintained by the assessee does not inspire confidence to support the claim because even though according to this computerized cash book which was shown during the course of appellate proceedings, opening balance of Rs. 7,04,684 was claimed but the same appeared to have continued till 20th November after which on 24th Nov., 1997, 5th Dec., 1997, 12th Dec., 1997 and finally on 16th Dec., 1997 cash is claimed to be withdrawn from cash hook to make various drafts. The argument of the appellant is unacceptable for the reasons that firstly no reference was made about cash book withdrawals used (cash) to make the drafts during statement recorded on 24th March, 1998 by the Investigation Wing and secondly it could not be expected that an amount of approximately Rs. 7 lakhs cash claimed to be on the opening day of the year would be idle and intact in the books of account to be used for purchasing bank drafts from such balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the assessee claimed that cash of Rs. 12,33,799 odd was withdrawn from the cash book to purchase drafts on various dates what to say producing the cash book during the statement." 14. He has gone to observe that "it has been later on claimed so during the course of assessment proceeding before the AO on the basis of a computerized cash book and also during the course of appellate proceeding". The CIT(A) has also observed that after two days of the recording of the statement on 24th March, 1998 the assessee has addressed a letter to ADI, Investigation Wing surrendering the amount of Rs. 27,53,399 as undisclosed income. In these circumstances, he has ruled out the possibility that surrender cannot in the circumstances be considered to be made under duress. Even in the leading draft order said finding has not been upset. Moreover, he has also referred to the fact that there was no reference in the statement before the Investigation Wing that funds were available in the cash book. Referring to these various facts and circumstances the CIT(A) was of the view that the computerized cash book showing the opening balance of Rs. 7,04,684 does not inspire any confidence. 15. Before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh book after verification of entries of cash withdrawals or not?" Questions referred to by Smt. Diva Singh, J.M.: Question No. 1: "Whether in the peculiar facts of the case it is first necessary to establish availability of funds in the cash book or is availability of funds in cash book be accepted by the Tribunal in the assessee's appeal without giving any specific reason or finding thereon?" Question No. 2: "Whether for deleting addition made on account of professional income in the peculiar facts and circumstances past history of the assessee is required to be considered or not?" 2. The assessee had surrendered Rs. 27,53,939 as undisclosed income on 10th June, 1998, before Investigation Wing, Agra. On being asked to file the details of this undisclosed income the assessee submitted that the surrender was made under duress. The assessee had deposited the sum of Rs. 27,53,339 in Nova-Scotia Bank, New Delhi by way of drafts-one for Rs. 15,19,600 as obtained after withdrawal from the bank account and the balance drafts of Rs. 12,33,799, as obtained after withdrawal from the cash book. The first was accepted by the AO but the second one was not accepted as he had not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd had also produced the cash book before the lower authorities; that the CIT(A) has also erred in giving his finding without any basis and by referring to the surrender made by the assessee under duress before the Investigation Wing, which surrender was not made through any statement recorded under s. 132(4) of the IT Act. Reliance was placed on the case of Pullangode Rubber Produce Co. Ltd. vs. State of Kerala Anr. 1972 CTR (SC) 253 : (1973) 91 ITR 18 (SC), wherein it was held that though an admission is an extremely important piece of evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect; that the assessee on the basis of documents had proved that the admission made before the Investigation Wing through letter was incorrect on the basis of documentary evidence in the shape of cash book; that the assessee had filed complete details of withdrawals from cash book before purchasing drafts; that the genuineness of withdrawals from regular cash book cannot be doubted on the ground that books were rejected under s. 145 or cash withdrawn might have been utilized elsewhere without bringing any material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds were available in the cash book especially taking note of the fact that these funds were supposedly available from professional income or loans etc., the existence of the same still needs to be established, this fact first has to be established as the verification as set out in the leading draft order would follow subsequently if the assessee is able to meet the first hurdle. The stand of the assessee throughout the proceedings has to be taken into consideration and finding arrived at thereon only thereafter the drafts deposited Jo the tune of Rs. 12,23,799 supposedly from the cash book in the Nova-Scotia Bank, Delhi Branch can be accepted on verification. Accordingly, though agreeing with the finding, that the issue should be restored for verification, I am of the opinion that it is necessary to restore with the direction to first verify the availability of funds at the relevant point of time in the cash book and thereafter verification as directed in the leading draft order is to be made. 7. The learned Authorised Representative submitted that there were no defects in the books of account so as to warrant the invocation of s. 145; that the entries in the cash book, in any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding cash withdrawals can only be on the basis of cash book. 8. The learned Departmental Representative relied upon the orders of the lower authorities and submitted that on the facts and circumstances there was no necessity to set aside the matter for verification particularly when the assessee surrendered this amount as undisclosed income. That cash book was not reliable and rejected under s. 145. therefore, has no probative value. 9. On consideration of the facts and the circumstances of the case the surrender alone as such cannot be the basis of making the addition and even the AO has not proceeded on that basis and made addition only of the amount which was not explained and (sic-not) the surrender to the extent explained to be from withdrawals from bank for purchase of drafts. The surrender on which assessment is based has no conclusive evidentiary value or binding force as the AO himself did not accept the amount of surrender and reduced it to Rs. 12,33,999 from Rs. 27,53,993. The surrender was not made in the course of any statement under s. 132(4), and therefore, the letter written by the assessee by itself may not be treated as representing the income unless supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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