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TMI Blog1954 (11) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... are Messrs. Babulal and Niranjanlal. It was registered under section 26A of the Income-tax Act, the registration taking effect from the assessment year 1946-47. On total sales of ₹ 5,79,143 the assessee showed a profit of ₹ 24,191 that is below 4% which was regarded as extremely low. The Income-tax Officer after scrutinising the ledger accounts of various parties in the books of the assessee felt doubtful about the genuineness of certain deposits in the personal account of persons staying in Marwad. As these deposits formed an important factor in the matter of the present assessment he called for the assessee to show that the deposits were actually received from the creditors in whose names they appeared in the assessee's ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits were received by cheques or drafts on banks in British India and the same were repaid by cheques or drafts and (iii) interest on these was also stated to have been paid by cheques or drafts. The Income-tax Officer was of the opinion that the letters by creditors Sawitribai, Sitabai, Setib and Bhimraj Duggad were not genuine although affidavits were filed in support of the deposits by Ramgopal Kejriwal, Savitribai and Sitabai. The Income-tax Officer felt doubtful about the genuineness of the loans and directed Babulal that unless the deponents came forward and were prepared to be cross-examined in respect of the transactions which are alleged to have been made, he was not prepared to accept the affidavits at their face value; the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or produced the account books of those persons for examination before the Income-tax Officer. He failed to do so. The burden of proving the nature of the cash credits in doubtful accounts lies with the petitioner and not on the department. Previous records also go to show that substantial amounts were credited in the names of the ladies from Fatehpur in the account books of Seth Bachhraj Amolakchand and these deposits were made through Babulal and were also withdrawn through him when he left the firm on Dewali 1944 and the amounts were credited in the account books of the petitioner. It is, therefore, clear that the petitioner was in possession of sufficient funds and he did not stand in need of deposits or loans. As the cash credits were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e evidence on record it was legitimate to draw an inference that these amounts represented undisclosed profits of the firm. 8. It was contended on behalf of the applicant that the depositors could not be compelled by the Income-tax Officer to appear before him for giving evidence as they resided at a distance of more than 200 miles from Nagpur, and as the assessee had offered to examine them on commission the Income-tax Officer could not have refused to issue a commission for their examination. A grievance of this refusal was made to the Appellate Assistant Commissioner of Income-tax, but he did not pass any order. It is, therefore, contended that as the assessee was refused an opportunity to examine the depositors on commission, the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder passed by the Appellate Assistant Commissioner of Income-tax, Nagpur, shows that a grievance, that the request for commission was not granted, was made before him in appeal. The Appellate Assistant Commissioner made a grievance of the fact that the assessee did not produce the accounts of the non-resident depositors to prove the loans. This grievance of the Appellate Assistant Commissioner is unreasonable when no opportunity was given to the assessee to examine these persons on commission. 11. The same grievance appears to have been repeated before the Appellate Tribunal who called upon the assessee to produce the drafts of two major depositors said to have been received by the assessee. Those drafts were produced. They were drawn by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied, it should have allowed the assessee to examine the creditors on commission. On the facts actually found and strictly confining our decision to the facts of this case we are of the opinion that the material is not sufficient on which the Department could have come to the conclusion that these credits represented undisclosed profits of the firm. 13. The statement of the case prepared by the Income-tax Appellate Tribunal and submitted to the High Court for its opinion was not perused by the assessee. He had no opportunity to make suggestions in respect of the same. It cannot be said that the statement of the case was settled with the knowledge and approval of the assessee. On behalf of the assessee no one was present either at the first ..... X X X X Extracts X X X X X X X X Extracts X X X X
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