TMI Blog2006 (11) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... ummon was also issued on November 21, 1990. In response to the said notice one Sri Appa Rao appeared and his submission was recorded. On December 19, 1990, a notice under section 143(2) of the Income-tax Act was issued to the assessee. Thereafter other notices dated October 1, 1991, and January 31, 1992, were issued. There was no response by the assessee. An assessment order was passed on March 5, 1992, under section 143(3) of the Act. Aggrieved by the same, an appeal was filed before the Appellate Commissioner. The Appellate Commissioner upheld the addition and the business income assessed by the Assessing Officer. A second appeal was filed before the Tribunal. The Tribunal deleted the addition of cash credit of Rs. 61,85,000 and redetermined the business income at Rs. 1 lakh as against Rs. 5 lakhs assessed by the assessing authority. It is in these circumstances, the Revenue is before us. The following questions of law are raised: "(a) Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal is correct in law in directing the deletion of the income assessed in the respondent-assessee's case under section 68 of the Income-tax Act, 1961, for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts of this case. After hearing, we have carefully perused the material on record. Admittedly, the assessee is an excise contractor. A return was filed claiming a net loss of Rs. 9,223. The same was reopened after notice to the assessee. Several notices have been issued on several dates. Notices dated December 2, 1989, January 10, 1990, February 2, 1990, February 26, 1990, February 26, 1990, July 2, 1990, November 1, 1990, November 21, 1990, December 19, 1990, October 1, 1991, January 31, 1992, were issued under section 143 of the Act. There was no response by the assessee. Summons were issued to the so-called lender by name Sri Appa Rao, in whose name there were credits in the books to the extent of Rs. 61,85,000. His statement was recorded. His statement would show that he was employed in toddy business. His salary will be in the range of Rs. 500 to Rs. 1,000 per month. His previous employer was one Sri Renukasri and Co. and M/s. Devi Enterprises. He was staying in a rented house. His source of loan is from S. Ramamurthy and Co. No written document was produced. He is not aware of any interest. After noticing the statement, the Assessing Officer was of the view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contracts in the name of their hench-men and carry on business for a year or so in the names of such hench-men, and appropriate the profits for themselves paying only paltry amounts to the front persons. Such might have been the case of Sri Appa Rao. Excise business running into lakhs of rupees in the districts of Gulbarga and Raichur, in the name of Sri Appa Rao, cannot at all be considered to be non -existent. On paper, the assessee-firm is shown to have received the money from Sri Appa Rao. Actually, however, such money has come from the excise business run in the name of Sri Appa Rao. The source of money is easily explained from the books of account maintained with regard to that business. It is an acknowledged fact that in excise business, huge amounts of cash loans are transacted between different contractors for short periods by way of accommodations without charging any interest. Such seems to be the case with regard to the loan accommodated by Sri Appa Rao to the present assessee. Sri Appa Rao was simply a front man of other business persons running the excise contracts. With this finding, the Tribunal accepts the genuineness of the transaction. In the light of various f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achala, learned counsel places before us the judgment of the Supreme Court in Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244. The Supreme Court notices the material on record in that case and thereafter has ruled that a disclosure made by sons under the Voluntary Disclosure Scheme does not preclude enquiry into the genuineness of cash credits and their assessment as the firm's income from undisclosed sources in the light of section 68 of the Act. The Supreme Court in the case of A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 has chosen to say that where the assessee fails to prove satisfactorily the source and nature of certain amounts of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature. In Sumati Dayal v. CIT [1995] 214 ITR 801, the Supreme Court has ruled that the burden is on the assessee to prove that amounts credited in accounts did not represent income in terms of section 68 of the Act. In the case on hand, we are satisfied that the assessee has failed to prove the cash transaction in the case on hand in terms of case law. The findings of the Tribunal to our mind are n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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