TMI Blog2022 (1) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... nd identity of the transactions would have to adapt to the circumstances obtaining in the present case. As noticed in the instant matter, the Tribunal found that it was the assessee s money which was routed back to it, albeit, through banking channels. The director of the assessee i.e., Mr Arpesh Garg retracted his statement, within 48 hours - there is no finding by the Tribunal that the money which was received by the assessee in form of share capital/share premium constituted the assessee s unaccounted income. As noted by the AO in the deviation report, in AY 2012-13, the revenue attempted to make an addition on account of share capital/share premium which was reversed by the CIT(A). The revenue did not carry the matter further, and, therefore, what is important to underscore in this case is the finding of fact returned by the Tribunal that it was the assessee s own money which was routed back to it, and not that these were paper entries, where there was no banking trail. In the context of M/s Mahalaxmi Traders, the submission advanced on behalf of the revenue that because Mr Manoj Gupta had, in his statement, said that he had not made any investment, and, therefore the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 145 (3) of the income tax act by rejecting the books of accounts of the assessee partially, without even looking at the books of accounts is also incorrect. Cash deposits made post demonetization represented unaccounted income of the assessee qua AY 2017-2018 - Tribunal held that it could not be said that the assessee had booked non-existing sales in its books post demonetization - HELD THAT:- In sum, it was the Tribunal s assessment of the material placed on record that cash deposits made by the assessee with its bankers, as noticed above, more or less compared with the cash sale transactions entered into by it with its customers. The Tribunal s view was that given the fact that there was no allegation made by the revenue that the assessee had backdated its entries to enhance its cash sale figures, one could only conclude that there was a growth in the assessee s business. Tribunal also took note of the fact that one of the reasons furnished by the A.O., in support of the impugned addition, was that physical stock was short by ₹ 450 crores - the stock register represented a higher figure, as against that which was found physically. This conclusion arrived at by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] and are directed against a common order dated 31.10.2019, passed by the Income Tax Appellate Tribunal [in short the Tribunal ]. 1.1 The Tribunal, via the impugned order, rendered a decision in twelve appeals out of which six were preferred by the respondent i.e., Agson Global Pvt. Ltd. [hereafter referred to as assessee ], while the remaining six appeals were preferred by the appellant [hereafter referred to as revenue ]. 1.2 The impugned order concerned six assessment years [in short AYs ] i.e., 2012-2013, 2013-2014, 2014-2015, 2015-2016, 2016-2017 and 20172018. 2. The record shows that the Tribunal was, principally, grappling with three broad issues. These issues concerned additions/deletions made to the declared/returned income of the assessee under the following broad heads: (i) Additions qua amounts received by the assessee in the form of share capital/share premium under Sections 68 of the Act. (ii) Deletions made on account of alleged bogus purchase transactions. Under this head, the Assessing Officer ruled that 25% of the bogus purchases in value should be added to the assessee s declared/returned income. (iii) Addition made, under Section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returns filed by the assessee were pending assessment, a search and seizure operation was carried out qua the assessee on 21.03.2017. For ease of reference, as regards these three AYs, the details as to when returns were filed and the amount which was declared as income by the assessee is set forth hereafter: AY Date of return of income Amount Declared/Returned as Income 2015-2016 30.03.2017 ₹ 15,87,75,950/- 2016-2017 29.12.2017 ₹ 35,50,09,894/- 2017-2018 29.12.2017 ₹ 68,18,55,980/- 3.4. Thus the position which emerged qua each of the six AYs, once additions/deletions were made by the AO, and thereafter, when some of these were deleted/scaled down by CIT(A), is set forth hereafter: Particulars Assessment Years 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56,58,69,888 53,28,35,658 Disallowance of alleged bogus purchases (being 25% of purchases from alleged related parties) (2) 88,31,23,282 65,25,24,882 179,46,43,207 2,67,93,04,397 2,99,56,36,930 1,21,763 Addition u/s 68 on a/c of cash deposited in bank a/c post demonetisation (3) NA NA NA NA NA 150,53,24,000 Total Additions (1+2+3) 1,55,05,64,056 1,16,24,73,882 2,62,44,58,087 3,05,07,37,295 3,56,15,06,818 2,03,82,81,421 Income as per Return (4) 6,02,85,750 7,22,89,816 13,16,41,113 15,87,75,950 35,50,09,894 68,18,55,980 Assessed Income (1+2+3+4) 1,61,08,49,806 123,47,63,698 275,60,99,200 3,20,95,13,245 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Investigation Wing had submitted a written appraisal report on 04.01.2018. Despite the stand taken by the Deputy Director (Investigation) in the appraisal report and the communication dated 24.12.2018, at the meeting held on 28.12.2018, the AO and the Assistant Commissioner of Income Tax (ACIT) reiterated the position taken in the deviation report. 4.4. Briefly, in the deviation report, the AO concluded that since the source of the cash movement concerning receipt of money by the assessee in the form of share capital/share premium amounting to ₹ 365.28 crores was traceable directly to the assessee s bank accounts, the addition of the said sum was not justified. 4.5. Likewise, insofar as the issue concerning addition of ₹ 941.86 crores qua bogus purchases was concerned, the AO in the deviation report made the following significant observations: (i) Contrary to what the appraisal report had held, all purchases made by the assessee were not bogus. (ii) 50% of the purchases were verified by issuing notices under Section 133(6) of the Act. Qua them, confirmatory letters, as well as copies of the ledger accounts, were presented by the assessee. In respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see paragraph 51 of the impugned order passed by the Tribunal). 5.1. Furthermore, the Tribunal, in paragraph 92 of the impugned order, after perusal of the appraisal report prepared by the Investigation Wing, has made the following observations : Appraisal report was produced before the bench and it was found that in para no.4.3.7, the Investigation Wing has mentioned that the above addition made with respect to bogus purchases is required to be made in order to protect the interest of the revenue.... 5.2. The Tribunal, however, via the impugned order, even deleted the scaled-down addition made by the CIT(A) of ₹ 73.13 crores concerning AY 2017-2018 in respect of cash deposits made with the bank during the demonetization period. Consequently, the Tribunal partially allowed the six appeals filed by the assessee while dismissing the six appeals preferred by the revenue. 6. It is in these circumstances that the revenue has preferred the instant appeals. 7. Submissions on behalf of the revenue were advanced by Mr Ajit Sharma, learned senior standing counsel, while insofar as the assessee is concerned, arguments were advanced by Mr Mukul Rohtagi, learned senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to account for ₹ 99.04 crores which had been deposited by it, in the wake of demonetization. (vii) Likewise, the Tribunal also failed to take note of the observations made in the deviation report that instead of adding the entire share premium received by the assessee, only that share premium ought to be added under Section 68 of the Act where money was not sourced from the assessee. In support of this plea, reliance was placed on paragraph 3(ix) of the deviation report. (viii) The deviation report categorically rejected the assessee s books of accounts while considering the issue regarding bogus purchases. In this context, the deviation report also emphasized the fact that stock worth ₹ 450 crores, was short, as against that which was recorded in the assessee s books of accounts. (ix) The Tribunal failed to consider that the CIT(A), while discussing the issue concerning bogus sales had reached the following conclusions (even while reducing the addition made by the A.O. in this respect) : (a) that the assessee had booked a loss when it traded with related parties, however, when it was trading with non-related parties, the assessee had reported a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Palaniswami v. Shri Ram Popular Service (P) Ltd. Anr., (1974) 1 SCC 197.] (iii) In this context, it is important to note that the A.O. had prepared the deviation report dated 20.12.2018, after perusing the appraisal report generated by the investigation wing pursuant to the search and seizure operation carried out vis-a-vis the assessee on 21.03.2017. The deviation report prepared by the A.O. had received the approval of the ACIT, despite which the A.O. reversed its position while passing the assessment orders, as alluded to above, at the say-so of his superiors who were part of the investigation wing. In this context, reliance was placed on the letter dated 24.12.2018 addressed by the Deputy Director of Income Tax (Investigation) to the ACIT. (iv) Insofar as the merits of the matter are concerned, it was submitted that the addition made by the A.O. on account of share capital/share premium (along with supposed commissions paid by the assessee), was rightly deleted by the Tribunal as it concluded that the monies invested in the assessee were its own money, which had been advanced to the investor entities, who, in turn, had invested the same in the assessee in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrency notes bearing the denomination of ₹ 100/-, ₹ 50/-, ₹ 20/- and ₹ 10/-; which had not been demonetized. The Tribunal also noted, in this context, that the A.O. had failed to take into account that the period in issue spanned between 9.11.2016 and 30.12.2016, and, therefore, the total amount worked out to ₹ 175.57 crores and not 180.53 crores, which was the sum that the A.O. sought to add to the assessee's declared/returned income. Thus, in effect, the Tribunal concluded that no addition could be made even under this head. Analysis and Reasons:- 10. We have heard the learned counsel for the parties and perused the record. 10.1. According to us (as noted at the very outset), there are three heads under which the authorities below have dealt with the assessee s case concerning the six AYs, in issue. But before we move further, as noted by us right at the beginning of our discussion, amongst the six AYs, in three AYs i.e., 2012-2013, 2013-2014 and 2014-2015, assessment orders were passed under Section 143(3) of the Act. Insofar as AY 2012-2013 was concerned, the A.O. had sought to add ₹ 18.50 crores towards unexplained share c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of (blank) share transfer forms, (blank) signed receipts, (blank) signed power of attorney and other documents necessary for the transfer of shares was concerned- that the said documents constituted incriminating material, the Tribunal noted the following : (i) Firstly, out of the 36 shareholders, photocopies were found only qua 12 shareholders. (ii) Secondly, that such transfer forms and documents even when recovered in original, as per its [i.e., the Tribunal] own precedents 1 , had not been considered as incriminating material to unravel a concluded assessment. (iii) Thirdly, photocopies do not constitute primary evidence and, in the absence of any other material, it could not be treated as secondary evidence as well. Importantly, it was not the stand of the revenue that the photocopy had been made from an original document. (iv) Lastly, the revenue ought to have summoned all those investors who ostensibly had executed the documents, whose photocopies were produced, to substantiate its stand that they constituted incriminating material. 10.7 Based on the aforesaid, the Tribunal concluded that since for AYs 2012-2013, 2013-2014 and 2014-2015, no incrim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the view of the Tribunal that assessments concluded in respect of AYs 2012-2013, 20132014 and 2014-2015 under Section 143(3) of the Act could not be disturbed, as no incriminating material was found. 11.4. Besides this, on merits, the Tribunal, after detailing out in paragraph 76 of the impugned order the trail of the money received from various entities in the form of share capital/share application money, concluded that the assessee had been able to place before the A.O. sufficient documentary evidence which established that the money which the assessee had paid to the investor entities was routed back to it in the form of share capital/share premium. 11.5. That being the position, the Tribunal concluded that the assessee had been able to prove the identity of the investors, their creditworthiness and genuineness, which are the ingredients of Section 68 of the Act. The relevant observations made in paragraph 86 by the Tribunal read as follows : 86. Considering the facts of the case in the light of material on record in voluminous paper books and confirmations of the parties and the summary of transfer of funds reproduced above, it is clear that assessee produced suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remium or any other amount by whatever name called, engrafted a deeming section as to when the explanation would be considered satisfactory. Pertinently, motivation of the assessee in routing its own money (which was given to the investor entities in the form of loan, etcetera) as an investment in share capital/share premium has not been adverted to therein. That motivation is not the basis for attracting the provisions of the Income Tax Act, if otherwise, an assessee does not fall within its net, is a well-established principle. This principle, in our view, should also apply to Section 68 of the Act. [See Aruna Group of Estates, Bodinayakanur v. State of Madras, 1961 SCC OnLine Mad 252 2 ; Commissioner of Income-tax v. A. Raman Co. [1968] 67 ITR11 (SC) 3 ; Commissioner of Income-Tax v. T.K.E. Ibrahimsa Routher, 1928 SCC OnLine Mad 21 4 ; S. Raghbir Singh Sandhawalia v. Commissioner of Income-tax [1958] 34 ITR 719 (Punjab Haryana) 5 .] 11.8. It may well be that the assessee, by wrongly padding his accounts, has violated other Statutes but that by itself cannot be the reason to make addition under section 68 of the Act. Mr Sharma was not able to demonstrate as to how su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the entire investment was bogus and that blank receipts were obtained from shareholders as also signatures were obtained on blank share transfer forms. Pertinently, this statement made by the director of the assessee was not retracted. 13.1. As noticed in the instant matter, the Tribunal found that it was the assessee s money which was routed back to it, albeit, through banking channels. The director of the assessee i.e., Mr Arpesh Garg retracted his statement, within 48 hours. More importantly, the AO in the deviation report, inter alia, made the following observations : b) About 50% of the purchases made by the assessee from different persons have been verified by issuing notices u/s 133(6) of the IT Act and on account of confirmatory letters as well as copies of ledger accounts presented by the assessee and no any variation has been found so far. 13.2. In the backdrop of this, the Tribunal made the following observations: 86. Considering the facts of the case in the light of material on record in voluminous paper books and confirmations of the parties and the summary of transfer of funds reproduced above, it is clear that assessee produced sufficient docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted at that stage. ii) It has been noticed that the AO had added an amount of ₹ 18.50 Crs to the total income of Assessee Company for AY 2012-13 on account of share application premium. The above addition of ₹ 18.50 Crs was later on deleted by the Ld. CIT (A) after examination of the details filed by the assessee. Since the Ld. CIT (A) being a higher authority had duly examined the amount of Share Capital of ₹ 18.50 Crs and allowed relief thereof against which no appeal was preferred by the department before the Income Tax Appellate Tribunal. Therefore, the addition of this amount on the grounds of bogus share capital/premium can only be made in the light of incriminating seized material. iii) On verification from the balance sheet, the chart prepared is factually incorrect since it has been prepared on the basis of Share Capital allotted in each year in respect of the share capital received for such allotment. After verification the corrected Share application details and share capital received covered during the period are as under: Assessment Year Amount 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosed sources of the assessee itself. The transactions are verifiable from the bank accounts of the both the parties. vii) In some cases Assessee Company has routed its own fund directly through the share application money transactions; in those cases sources are apparently proved. viii) It has also been observed that the assessee company has routed its funds through different intermediaries persons who are closely associated and under the control of the assessee company, therefore, the commission payments @2% of the transaction value is not likely. However the assessee may make some payment to oblige them. Commission payment @2% is to be restricted only to cases where share capital/premium is held to be bogus. ix) As the source of share capital/premium can be traced directly to the bank account of the assessee company and there is no cash movement, addition of entire share capital/premium of ₹ 365.28 Crs is not justifiable and may lead to allegation of high pitch assessment. Only where there is no direct trail of money being sourced from the bank account of the assessee, the introduced share capital/premium needs to be added to the income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd report, the A.O. had adverted to the fact that 50% of the purchases had been sourced by the assessee from third parties i.e., nonrelated parties. These transactions were verified, and in furtherance thereto notices under Section 133(6) of the Act were issued to the concerned persons. The assessee had filed confirmation letters of the third parties. The reply received from the third parties, in response to the notice issued under Section 133(6) of the Act, did not reveal any variation. (iii) Since no variation was found between the responses received from the third parties and purchases, as recorded in the assessee s books, the addition made on account of bogus purchases was not sustainable. (iv) In the remand report, the A.O. had dropped the issue concerning the purported shortage of the stock of the assessee amounting to ₹ 450 crores. (v) Because there was dissonance in the AO s views, as recorded in the deviation report and the remand report when compared to the additions/disallowance made in the assessment orders, the appraisal report generated pursuant to the search and seizure action was called for by the Tribunal and perused. A perusal of the report by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were genuine. 15.3. Furthermore, according to the Tribunal, the A.O. had not placed on record any material to justify the disallowance of 25% of the purchases on the ground that they were bogus without carrying out any inquiry or investigation. In particular, the Tribunal also flagged the issue that the purported shortage of stock amounting to ₹ 450 crores was based on a reference made qua that aspect in the appraisal report which, as noted above, did not find mention in the remand report, as during the search it was found that the stock worth the aforementioned value was lying at the assessee s warehouse in Sonipat; something which was completely ignored. This position, according to the Tribunal, was fortified by the fact that no addition in respect of any excess or shortage of stock had been made in the assessment orders of any of the years. In effect, according to the Tribunal, the stock found in the books reconciled with the stock which was found physically. 15.4. Insofar as the CIT(A) s approach with regard to bogus purchases was concerned, the Tribunal noted that it had concentrated on related parties and attempted to quantify the disallowance by applying the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been recorded by the Tribunal, that the CIT(A) did not call for the books of accounts i.e., to examine the same. Furthermore, the Tribunal records that the A.O., in the remand report, did not advert to the fact that the books of accounts were either incorrect or incomplete. According to the Tribunal, the books of accounts could not have been rejected till such time the revenue found patent, latent and glaring defects in the books of accounts . The revenue, according to the Tribunal, made no such attempt and simply relied upon the statement of the Managing Director, which was retracted and in any event, did not relate to the booking of bogus expenditure . Therefore, insofar as the Tribunal was concerned, the rejection of books of accounts by the CIT(A) did not meet the legal standards. 15.7. Given this background, thus, in effect, the Tribunal held that the books of accounts were rejected without crystalizing the defect in the books of accounts, which could have been done only after examining the same. Furthermore, according to the Tribunal, even if it is assumed that the books of accounts could be rejected, the profit had to be estimated based on proper material. As noted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. In 1 of the years, he adopted the gross profit rate being average of gross profit of 2 preceding years on by the assessee from other parties and applied the same rate to the sales from allegedly bogus parties. We fail to understand that how the gross profit ratio of one year can be applied to another year for determining the profit of some of the transactions of another year. 107. In view of the above discussion, we are of the opinion that the learned assessing officer has incorrectly disallowed 25% of the purchases from the alleged bogus parties without finding any evidence and ignoring the sales paid by them to the assessee. Further, the learned CIT A applied the provisions of section 145 (3) of the income tax act by rejecting the books of accounts of the assessee partially, without even looking at the books of accounts is also incorrect .. Third Issue 16. Insofar as the third issue is concerned, the revenue s stand has been that the cash deposits made post demonetization represented unaccounted income of the assessee qua AY 2017-2018. 16.1. According to the revenue, the average cash deposited by the assessee with its bankers before demonetization was, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 13.99 crores and ₹ 63.41 crores [i.e., (180.53 crores 30 crores) i.e., 150.53 crores-13.99 crores- 63.41 crores]. 16.5. It is in this background that the Tribunal examined the merits of the case put up by both sides. In this context, the Tribunal analysed the data pertaining to cash sales and cash deposits made in the financial year in issue i.e., FY 2016-2017 (relevant AY 2017-2018), as against FYs 2014-2015 and 2015-2016. The analysis made by the Tribunal showed that, in the three financial years, the total cash deposits more or less corresponded with the cash sales. A relevant part of the table extracted in paragraph 126 of the impugned order is set forth hereafter : F.Y.2014-2015 F.Y.2015-2016 F.Y.2016-2017 Cash Sales Cash Deposits Cash Sales Cash Deposits Cash Sales Cash Deposits Total Rs.(Cr.) 237.44 242.65 412.52 428.19 633.86 633.74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rease in sales between December 2014 and December 2015 was 337.33%, whereas, in December 2016, cash sales decreased by 28.27%. This again demonstrated, according to the Tribunal, that assessee had not attempted to book cash sales that had not taken place, as alleged by the revenue. 16.9. In sum, it was the Tribunal s assessment of the material placed on record that cash deposits made by the assessee with its bankers, as noticed above, more or less compared with the cash sale transactions entered into by it with its customers. The Tribunal s view was that given the fact that there was no allegation made by the revenue that the assessee had backdated its entries to enhance its cash sale figures, one could only conclude that there was a growth in the assessee s business. 17. The Tribunal also took note of the fact that one of the reasons furnished by the A.O., in support of the impugned addition, was that physical stock was short by ₹ 450 crores. In other words, the stock register represented a higher figure, as against that which was found physically. This conclusion arrived at by the A.O. was found by the Tribunal to be erroneous, inasmuch as the A.O. had failed to notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search party were shown to us, which suggested that there is a shortage of stock after considering stock lying at Sonipat. 17.1. The Tribunal also seems to have accepted the explanation that the gross profit ratio for the AY in issue i.e., AY 2017-2018 (relevant F.Y.20162017) was in line with the earlier years. In this context, the Tribunal took note of the fact that, at the time when the search and seizure action had taken place, the data had not been finalized as adjustments towards depreciation, interest and provisions for expenses could be made only after the end of the relevant financial year. 17.2. Besides this, the Tribunal also appears to have accepted the explanation given by the assessee that the purported misalignment of the gross profit ratio occurred, as unaudited data of the year in issue was compared with the audited data of the previous years. It is in this context that the Tribunal took note of the gross profit percentage of AYs 2015-2016 (6.14%), 2016-2017 (4.19%) and 2017-2018 (5.85%), as also the respective net profit ratio for the very same years, which, according to the assessee, were 0.72% 0.81% and 1.35% respectively. The sense that the Tribunal der ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our opinion, the Tribunal correctly found in favour of the assessee and deleted the addition made by CIT(A) of ₹ 73.13 crores, under Section 68 of the Act. 18. Before we conclude let us deal with the submissions advanced by Mr Sharma in the context of the three issues discussed The submission made by Mr Sharma that because there was a huge variation in the share premium i.e., the rate at which share premium was paid by the investor entities and the rate at which it was sold, and therefore addition concerning amount received as share capital/ share premium, should be sustained, is not tenable. The answer, to our minds, lies in what has been held by the Tribunal, which is, that at the end of the day it was found that it was the assessee s own money, which had been routed through the investor entities. As indicated above, as a matter of fact, in AY 2012-2013, addition on this account was sought to be made by the A.O., which was deleted by CIT(A) in appeal. The revenue, for reasons best known, did not carry the matter in appeal. 18.1. We agree with the Tribunal, as observed above, that since no incriminating material was found qua AYs 2012-2013 to 2014-2015 vis- vis shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . in the assessment proceedings concerning the assessee. Nothing was shown to us, which could establish that the A.O. conducted an independent enquiry to test the veracity of the statement made by Mr Praveen Agarwal. 18.3. Therefore, given the aforesaid circumstances, we are of the view that no cognizance can be taken of the statement made by Mr Praveen Agarwal. 18.4. As regards Mr Sharmas s contention that although the Tribunal has relied upon the deviation report in support of certain conclusions arrived at by it, it has ignored certain other parts of the deviation report. For instance, reference is made to the fact that the deviation report prepared by the A.O. concluded that the assessee had introduced unaccounted cash to the extent of ₹ 99.04 crores, which is liable to be added to its total income for AY 20172018. We have already discussed this aspect at length in the earlier part of the judgment. Suffice it to reiterate that the assessee s explanation that the banks had advised deposit of money in tranches, does not appear to be unreasonable. 18.5. Besides this, as noticed above, the Tribunal, after a detailed analysis, has concluded that the cash deposits mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.1. The result of the appeals filed before the Tribunal was turned on appreciation of evidence placed before the Tribunal. The Tribunal is the final fact-finding authority. We have not been able to conclude that the findings returned by the Tribunal are perverse. Importantly, neither in the grounds nor in the questions of law as suggested in the appeals, the revenue has averred that the findings of the Tribunal are perverse . This fact imposes a limitation on this court while entertaining an appeal under Section 260A of the Act. In a nutshell, this court cannot revaluate the findings of fact returned by the Tribunal, except on the limited ground of perversity/complete lack of evidence. [ See K. Ravindranathan Nair v. CIT, (2001) 1 SCC 1358.] 19.2. As has been, repeatedly, noted hereinabove, and as is also observed by the Tribunal, the A.O. shifted his position vis- -vis the assessee. This is clearly evident if one were to compare the deviation report prepared by the A.O. (pursuant to the submission of the appraisal report by the investigation wing) with the assessment order(s) framed by him. 19.3. It is disconcerting to note that the investigation wing directed the A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... title from Suppan Chettiar. It is true that the only evidence on record which enables the sons of Suppan Chettiar to claim his share is the letter already referred to. It is always open to any partner to retire from the firm yielding his place to his nominee or nominees. If all the other partners of the firm agree to this retirement and substitution of the new partner or partners, a new partnership springs into existence. The absence of any valid document of transfer from Suppan Chettiar to his sons, we do not say that the letter of Suppan Chettiar is not enough, cannot really affect the question whether the sons of Suppan Chettiar became partners of the new partnership each holding 1/48 share. The terms of the partnership deed dated 23rd November, 1955, do not indicate that the sons of Suppan Chettiar were mere dummies either for the other partners or for Suppan Chettiar, who was not eo nomine a partner. The formation and constitution of a partnership can in no way be affected by the fact that one of the partners is a benamidar for a stranger or that a partner holds his share as a manager of his joint family, or that a partner has agreed to give a portion of his share to anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to taxation by legal means available to him but for the purpose of avoiding taxation, the court will uphold the changes unless it is satisfied that the changes are not actual, but merely simulated. The question is not whether the motive for the transaction was proper or otherwise but whether what the taxpayer has done actually accomplishes the result anticipated . 6. 13. Section 68 of the Act deals with cash credits. As per Section 68, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. Simply put, the section provides that if there is any cash credit disclosed by the assessee in his return of income for the previous year under consideration and the assessee offers no explanation for the same or if the assessee offers explanation which the Assessing Officer finds to be not satisfactory, then the said amount is to be added to the income of the assessee to be charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as money from unexplained source and added the same to the income of the assessee as unexplained cash credit under section 68 of the Act. 18. In the first appellate proceedings, it was held that assessee had produced sufficient evidence in support of proof of identity of the creditors and confirmation of transactions by many documents, such as, share application form etc. First appellate authority also noted that there was no requirement under section 68 of the Act to explain source of source. It was not necessary that share application money should be invested out of taxable income only. It may be brought out of borrowed funds . xxx xxx xxx 21 Though, assessee was not required to prove source of the source, nonetheless, Tribunal took the view that Assessing Officer had made inquiries through the investigation wing of the department at Kolkata and collected all the materials which proved source of the source. 22. In NRA Iron Steel (P.) Ltd. (supra), the Assessing Officer had made independent and detailed inquiry including survey of the investor companies. The field report revealed that the shareholders were either non-existent or lacked c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in B. Rajagopala Naidu v. State Transport Appellate Tribunal [AIR 1964 SC 1573 : (1964) 7 SCR 1 : (1964) 2 SCJ 570.] had been rendered and by that decision GO No. 1298 dated April 28, 1956, which was the previous direction issued by the State Government under Section 43-A of the Motor Vehicles Act, was set aside. It was held that it was legitimate to assume that the Legislature intended to respect the basic and elementary postulate of the rule of law that in exercising their authority and discharging their quasi-judicial functions, the tribunals constituted under the Act must be left absolutely free to deal with the matter according to their best judgment guided only by the statutory light. It was pointed out that it was of the essence of fair and objective administration of law that the decision of judges or tribunals must be absolutely unfettered by any extraneous guidance by the executive or administrative wing of the State. It was true that Section 43-A empowered the State Government to issue directions to the Regional Transport Authority and the authority was bound under that Section to give effect to all such directions. But since the Government Order purported to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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