TMI Blog1996 (10) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... her, on the facts and in the circumstances of the case, the Income-tax Officer not having made the addition under section 68 of the Income-tax Act, 1961, the Tribunal could have considered the sustained addition under that section, by applying the tests in respect of cash credits to a sum representing advance against sale of scrap ? (IV) In the event the answer to question No. 3 is in the affirmative, whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the appellant had not sufficiently discharged the onus cast upon it ? (V) Whether the applicant was required to establish the source or sources and origin or origins, as is implied by the order of the Tribunal ? (VI) Whether the Tribunal is justified in their finding that the advance received by the seller assessee from its customer against supply of goods be treated as income under section 68 when the sale price of such goods was admitted in its books and reflected in its business profits assessed to tax ?" The above, however, has been raised as grounds seeking reference on a categorical statement that the order of the Tribunal is erroneous on the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that Sri Rajendra Kumar, one of the partners, was looking after the purchase and sale of scrap. Sri Mohan Lal was further asked as to who took delivery of the goods on behalf of Balaji Scrap Traders and he replied that lorry people and representatives of Balaji Scrap Traders took delivery. The Assessing Officer on further examination found that in the statement given for the month of March, 1983, the sale was shown as nil, whereas according to Sri Mohanlal, scrap sale to the extent of Rs. 22,883 was effected to Balaji Scrap Traders. The Assessing Officer deputed an inspector for making enquiries and report and in the report, it was stated that he visited house No. 15-8-225, Basheerbagh, Hyderabad, where Balaji Scrap Traders was supposed to have its business, that there was no firm in existence when he visited, that enquiries with Balaji Scooter Works, a neighbour who was doing repair works for one and half years revealed that there was no scrap business in 15-8-215, Begum Bazar, Hyderabad, that other neighbours vaguely remembered unloading of scrap in autorikshaws and they stated that even if the business was in existence, it was a small business and it may be inferred that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer issued show-cause notice for production and evidence to the effect that the assessee received nearly Rs. 15 lakhs from Balaji Scrap Traders. A similar letter was also addressed to Sri Rajendra Kumar requiring him to produce Sri Prahladrai of Balaji Scrap Traders and accordingly Sri Prahladarai was produced before the Assessing Officer and the Assessing Officer recorded statement from him and the said statement of Sri Prahladarai, inter alia, stated at the time of deposition that he was doing commission business in iron and steel scrap and received commission from purchasers and he stated that he did business in 1983 by name Balaji Scrap Traders. He stated that the business was located in Begum Bazar opposite to Mitti-kaghare near Coal Depot. He also further stated that in 1982 he had invested about Rs. 70,000 to Rs. 80,000 and later he took loans from his friends and relatives of nearly Rs. 7,00,000 without any interest or by giving any promissory note and he did not own any immovable properties. In response to further queries by the Assessing Officer, he stated that the loans were obtained at the rate of 18 per cent. but nothing was given in writing because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, the Income-tax Officer refused to believe this. It is quite evident that the Income-tax Officer in coming to the conclusion that the advances were not actually made was influenced by the following facts. (i) Sri Prahladarai had shown lesser turnover in his sales tax returns; (ii) He had only meagre capital; (iii) He had stated that he had borrowed Rs. 7 lakhs from his friends and relatives, whom he refused to identify. I do not think that the fact that Sri Prahladarai had not disclosed his entire turnover to the sales tax authorities should influence the Income-tax Officer in his conclusion that the advance was not made at all. In fact his sales tax assessments have nothing to do with these transactions with the appellant, which he owned. The possibilities of scrap sale by Sri Prahladarai being made as advance for further supplies were always there. Sri Prahladarai stated that he borrowed about Rs. 7 lakhs from friends and relatives, whom he did not identify. If Sri Prahladarai is not in a position to explain how he managed the sources for making advances to the appellant, I do not see how the appellant can be punished for the same. For Sri Prahladarai's omission to di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to predicate as to what extent the extraneous and irrelevant material has influenced the authority in arriving at the conclusion of fact. For the reasons stated in paragraphs 8.1, 8.2 and 8.3, I hold that there is no justification for the Income-tax Officer to hold that the sum of Rs. 14,12,081 being advances made by Sri Prahladarai to the appellant for supply of scrap was not genuine and adding the same to the income of the appellant. I, therefore, delete the addition of Rs. 14,12,081." The Revenue moved the Tribunal against the above. The Tribunal has allowed the appeal, inter alia, on the principle that the petitioner-assessee was required to prove prima facie the transaction which resulted in a cash credit in its books of account by proof of the identity of the creditor, the capacity and creditworthiness of such creditor and the genuineness of the transaction. Since, the Tribunal has declined to make the reference holding that no question of law arises out of the order of the Tribunal, the instant petition has been filed. Mr. Ravi S., learned counsel for the petitioner, has urged that any enquiry under section 143(3) of the Act in respect of the returns filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce being not genuine-a finding which has been specifically recorded in the proceeding. When the law has given to the Assessing Officer discretion and it is his satisfaction upon which genuineness has to be decided, his inference on the basis of the facts, in our view, is a finding of fact and as held by the Supreme Court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349, findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come ; and this is so even though the High Court would on the evidence have come to a conclusion entirely different from that of the Tribunal. It is well settled that a finding of fact can be reviewed only on the ground that there is no evidence to support it or that it is perverse. Moreover, when a conclusion has been reached on an appreciation of a number of facts, whether that is sound or not must be determined, not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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