TMI Blog1992 (6) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... l receipts from the firms, Sreedharan Co. and Kavitha Trading Company, during the assessment year 1976-77 and that the cash credits came out of those receipts. In fact, an application had been made to the Settlement Commission which was admitted on July 30, 1979, offering further amounts for assessment for that year. The final order of the Settlement Commission was passed on June 22, 1984, as per annexure F, making still further additions to the income offered for assessment. Thus, the firm, Sreedharan and Co., had offered an amount of Rs. 7 lakhs for assessment, over and above the amount of Rs. 11,70,460 disclosed and returned, of which the assessee's 50% share amounted to Rs. 3,50,000. The Settlement Commission made a further addition of Rs. 5,57,000 as additional income, of which the assessee's share came to Rs. 2,78,500. The firm, Kavitha Trading Company, had offered for assessment an amount of Rs. 11 lakhs as against Rs. 10,00,850 disclosed and assessed. The assessee's 25% share of the additional amount offered was Rs. 24,785. The Settlement Commission made further addition of Rs. 1,04,000 as additional income and disallowance of excess depreciation of which the assessee's s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of law as arising out of its order: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs. 3 lakhs made under other sources ? " The challenge to annexure C is based on two grounds. One is that there was a shift in the case of the assessee in that he had referred the source of the investment to the additional amount offered for assessment in the application for settlement, but the finding of the Tribunal is based on the availability of the entire intangible additions made by the Settlement Commission, namely that offered, and that added by the ultimate order annexure F. Secondly, it is contended that, even if the amount as found by the Tribunal was available with the assessee in the year 1976-77, there was nothing to indicate that it remained unspent and was available for investment in the assessment order 1980-81. On the first aspect, standing counsel, inter alia, referred to the computation made by the Tribunal that out of the assessee's share of Rs. 3.5 lakhs offered by Sreedharan and Co. before the Settlement Commission, only an amount of Rs. 59,248 was actually available after providing for the firm's tax liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certained from an overall consideration of the particular facts and circumstances of the case. Evidence may exist to show that reliance cannot be placed completely on the availability of a previously earned undisclosed income. A number of circumstances of vital significance may point to the conclusion that the cash deficit or cash credit cannot reasonably be related to the amount covered by the intangible addition but must be regarded as pointing to the receipt of undisclosed income earned during the assessment year under consideration. It is open to the Revenue to rely on all the circumstances pointing to that conclusion. " In J. K Cotton Manufacturers Ltd.'s case [1984] 146 ITR 552 (SC), the court was concerned with an assessment to wealth-tax as on the valuation dates, June 30, 1956, and December 31, 1956. The matter related to the secret profits admittedly earned by the assessee prior to September, 1948. The question was whether any presumption could be raised that these secret profits were retained by the assessee on the aforesaid valuation dates. In that context, the Supreme Court approved the decision of this court in Annamma Paul Perincherry v. CWT [1973] 88 ITR 204 and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of the case. The assessee's share of the amounts offered for assessment by Sreedharan Co. and Kavitha Trading Company as well as the amounts added by the Settlement Commission by its final order, annexure F, must, having regard to the decision in Anantharam Veerasinghaiah [1980] 123 ITR 457 (SC) be deemed to be available to the assessee for investment in the years subsequent to 1976-77. This would relate not only to the income offered for assessment but also to the income added by the Settlement Commission by the final order, annexure F. The contention that the amounts added additionally by the final order, annexure F, could be deemed to be available only on and after June 22, 1984, is untenable and raised without taking note of the real character of the intangible addition as the real income of the year in which the addition was made as held in Anantharam Veerasinghaiah's case [1980] 123 ITR 457 (SC). Thus the assessee had an amount of Rs. 24,785 plus Rs. 26,000 as his share of the income of Kavitha Trading Company and an amount of Rs. 3,50,000 and Rs. 2,78,500 as his share from Sreedharan and Co. These intangible additions enure to his benefit and must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed not be in lump merely because it was being drawn from a consolidated fund. This strand of reasoning adopted by the assessing authority and the Inspecting Assistant Commissioner does not appeal to us. We are not thus impressed with the first contention of counsel for the Revenue that there was a shift in the stand taken by the assessee regarding the source of the amounts covered by the cash credit. We are of the view that the assessee had traced the source to the amounts of undisclosed income of Sreedharan and Co. and Kavitha Trading Company. In this view of the matter, the decision of the Delhi High Court in CIT v. Kulwant Kaur [1980] 121 ITR 914 holding that the question regarding source of an investment was essentially one of fact which could not be raised as a legal argument in the alternative, (on which heavy reliance was placed by standing counsel ) does not arise for consideration. The next question is whether the amount of the intangible addition was still available with the assessee for investment in January-March, 1980. The initial onus of proving that the amount was available is no doubt on the assessee, for the reason that it is for him to prove the source of his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1980-81. On the other hand, the fact that the assessee offered a large amount for settlement with readiness to make payment of a large amount by way of tax any time the Settlement Commission passed its order, is itself indicative that the assessee did have sufficient amounts with him. The Tribunal has found as a fact that the assessee could in any event have an amount of Rs. 3,87,544 with him available for investment in January/March, 1980. The period of four years between 1976-77 and 1980-81 is not so long a period as to rebut the presumption regarding the continued availability of the amount. We are, therefore, of the view that, on the facts of the case, the assessee has discharged the burden that lay on him to prove the source of the amounts of the cash credit entries made in January/March, 1980. Counsel for the assessee contended that the findings rendered by the Tribunal are findings of fact based on the evidence in the case. Counsel for the Revenue would, however, contend that the said findings of fact have been arrived at by misplacing the burden of proof on the Department. In the view that we have taken, it is unnecessary to go into this question and decide whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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