TMI Blog1979 (3) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal justified in sustaining the addition of Rs. 49,700 for all or any of the reasons stated in the appellate order ? 2. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal to the effect that (in I.T.A. No. 12037 of 1959-60) they (the Tribunal) have rejected the assessee's claim that intangible addition of Rs. 48,000 for the year 1948-49 was available for set-off in 1950-51 is justified in law ? Is the interpretation placed on the earlier order of the Tribunal dated November 21, 1961, proper and valid ? 3. Was the Appellate Tribunal justified in law in holding that the assessee is precluded from claiming a set-off of Rs. 48,000 or disabled from claiming set-off of Rs. 7,150 for all or any of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, the Tribunal, from whose order this reference arises, held that the earlier order of the Tribunal had rejected the claim for set-off. The ITO reopened the assessment for a second time. The second reopening was occasioned against the following background. The assessee was a partner in two firms. One of them was Paul Perincherry M. I. Chakkoru. In the books of accounts of the firm there were unledgerised cash credits in the name of the assessee. These were disclosed in the course of certain litigations between the assessee and Shri Chakkoru, the partner of the firm. The ITO held that the total of such unledgerised cash credits amounted to Rs. 1,29,700 and that the amount stood divided between two years as Rs. 68,200 for 1950-51 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made in the earlier years, it is for the assessee to prove the same. It was ruled that no onus was cast on the department. In the light of the decision, the Tribunal found that part of the intangible additions of the earlier years had already been used up in explanation for the credit of Rs. 65,080 considered in the first reopened assessment. The intangible addition of Rs. 48,000 could not be set off against the credit of Rs. 65,000 in the same year. It was noticed that the assessee must have explained before the Tribunal in the earlier proceedings that as regards the addition of Rs. 68,060 for the year 1948-49 it was re-introduced as a credit in the books, and ledgerised as against the present credits, unledgerised. In view of these fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in the account books of the assessee for the relevant period of account it is the assessee who should give a satisfactory explanation in regard to those entries and if the explanation furnished by the assessee is found to be not acceptable those cash credit entries may be taken to represent the income that had accrued to the assessee during that year of account. This principle is in no way rendered inapplicable merely because it is found that the assessee had earned some undisclosed income in some year anterior to the period of account in respect of which an admission had been made in the course of his assessment for that year. If the assessee has a case that the cash credits noticed during the relevant accounting period have come out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h then referred with approval to the previous ruling of this court in M. I. Chakkoru v. CIT [ITR No. 61 of 1965--since reported in [1980] 121 ITR 440 (Ker) (Appendix) infra] and recorded complete agreement with the principle of that decision. The principle approved was stated thus : " We have been referred to two decisions of the Madras High Court in S. Kuppuswami Mudaliar v. CIT reported in [1964] 51 ITR 757 and B. Abdul Qadir v. CIT reported in [1964] 52 ITR 364. We do not understand these decisions as laying down a principle that whenever an estimate had been made of income for any particular year the amount added by that estimate as income from the business disclosed and additions to income from undisclosed sources because of unexplai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e credits in the capital account, and then again against unledgerised cash credits in the cash books. Attention was also called to the Tribunal's finding at page 22 of the statement of the case that on the material on record no such fund of the intangible additions of Rs. 55,210 (for the years 1948-49 and 1949-50) could have been available to the assessee for re-introduction in the accounting year relevant for the assessment year 1950-51. On these materials on the record we think the Tribunal was right in holding against the assessee. We answer the first part of question No. 4 in the negative ; and, therefore, the second part of that question would not arise for consideration. Question No. 1 : This question is directly covered in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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