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TMI Blog1969 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of the assessee, a cash deposit of Rs. 6,531 in the name of his son, Krishna Mohan. The Income-tax Officer rejected the explanation of the assessee that the amount represented the aggregate of gifts received by his son, Krishna Mohan, at the time of his tilak ceremony and he added the sum of Rs. 6,531 to the total income of the assessee as his " income from an undisclosed source ". It may be stated here that there was another item of deposit amounting to Rs. 7,329 which also was treated by the Income-tax Officer as the assessee's income from an undisclosed source. I am not required to give any opinion in point as both Sahai and Beg. JJ. have agreed that the amount should be excluded from the assessment. The addition of Rs. 6,531 made by the Income-tax Officer was maintained by the Appellate Assistant Commissioner along with the addition of Rs. 22,634 in the trading account. The assessee then came to the Appellate Tribunal in second appeal contending, inter alia, that the additions made by the Income-tax Officer, and confirmed by the Appellate Assistant Commissioner, as aforesaid, were unwarranted and should be deleted. The Tribunal, after a consideration of the various aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations in that case which were quoted by Sahai J. are as follows : " The assessee had recourse to the several entries of cash credits only for the purposes of balancing the accounts with a view to reducing the rate of gross profits. If once the income-tax authorities have rejected the books, they cannot have it both ways, namely, adopting a flat rate to compute gross profit as well as rely on the books for the purposes of adding unexplained cash credits which were part of the scheme of balancing the accounts." Sahai J. then observed : " From the statement of the case, therefore, it is clear that the deduction of Rs. 6,531 from the assessable income of the assessee was made on the basis of the Andhra Pradesh High Court decision and not on a finding of fact that the amount represented the business profits of the assessee." The learned judge, in these circumstances, was of the opinion that the order of the Tribunal excluding the sum of Rs. 6,531 from the assessable income of the assessee, could not be said to be legally correct. Brother Beg, however, was unable to share the view taken by Sahai J. on the interpertation of the findings of the Tribunal in point. He was of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner, but reduced to Rs. 18,000 by the Appellate Tribunal. If the order of the Tribunal in point, which has been quoted above, is analysed, it would be seen that the Tribunal categorically rejected the explanation of the assessee with regard to the amount in question and agreed with the Income-tax Officer in the view he had taken thereon. The Tribunal, however, accepted the submission of the assessee's advocate that since the profits disclosed by the assessee in his books had been rejected, and the assessment entailed an addition of Rs. 18,000 as extra profit of the business, no further addition should be made in respect of the cash credit of Rs. 6,531. Having accepted the submission of the assessee's advocate in point, the Tribunal referred to the decision of the Andhra Pradesh High Court, evidently, in support of the course it had taken. At all events, the rule laid down by the Andhra Pradesh High Court in the above case is a rule of commonsense, not of law. A similar rule was expressed by the Supreme Court when it said in Lakhmichand Baijnath v. Commissioner of Income-tax, that if an amount is found credited in the business books of the assessee, it is open to the income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the two years additions to the books profits had been made in excess of the amounts of the cash credits separate additions of the cash credits " had become redundant ". In that case, as in the present one, there was no plea in the memorandum of appeal that the cash credits in question represented undisclosed profits from the business. It was for the first time at the hearing of the appeals before the Tribunal that the counsel for the assessee urged that when the profits of the business had been estimated and additions made to the trading account, separate additions for cash credits were redundant. The questions which came in for consideration of the Supreme Court were : (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition to the extent of Rs. 19,796 and Rs. 32,700 in the assessment? (ii) Whether the Tribunal is right in law in making out a new case for the assessee inconsistent with the assessee's own plea and interfering with the assessment ? " Shah J. who delivered the judgment of the court upheld the order of the Tribunal and observed as under : In hearing an appeal the Tribunal may give leave to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered by the addition of Rs. 18,000 to the business profits of the assessee ? " If the answer to the question No. 1 is in the negative. " 2. Whether, in any case, the said deposits of Rs. 6,531 and Rs. 7,329 could still be rightly deleted from the income of the assessee on the ground that the said amounts appeared to the credit of third parties and, therefore, the onus of proof was not upon the assessee to show the source or nature of cash deposits? " We wrote different judgments. The view taken by both of us was that the assessee is entitled to the exclusion of the sum of Rs. 7,329. We, however, disagreed on the question relating to the exclusion of the sum of Rs. 6,531. Whereas one of us (Jagdish Sahai J.) took the view that the order of the Appellate Tribunal excluding the sum of Rs. 6,531 from the income of the assessee cannot be said to be correct and for that reason answered question No. 1 in the negative against the assessee and in favour of the department, the other learned judge (Beg J.) constituting the Bench took a contrary view. In view of this difference of opinion, the matter was referred to the third judge, T. P. Mukerjee J., and the following question was refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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