2005 (1) TMI 77 - HC - Income Tax

Additions on account of cash credits including interest thereon, disallowance of losses, etc. - assessee, submitted that his client had discharged the onus which lay upon it to prove the genuineness of the deposits and, therefore, the additions are liable to be deleted. He further submitted that the evidence produced by the assessee clearly established the source of income of the depositors and the genuineness thereof and the Assessing Officer committed a grave illegality by rejecting the same. - Assessing Officer, the CIT (Appeals) and the Tribunal have elaborately dealt with each and every issue raised before them and have given detailed reasons in support of their respective conclusions. The findings recorded by them on the genuineness of the deposits and the undisclosed profits earned in the sale and purchase of sarson are essentially findings of fact based on appreciation of evidence and none of the questions framed by the assessee can be treated as a question of law requiring determination by this court. petition is dismissed

Issues Involved:
1. Addition of Rs. 60,000 and Rs. 29,135 representing credits in the account of Smt. Bimla Devi.
2. Burden of proof regarding the source of investment by Smt. Bimla Devi.
3. Distinguishability of the case from M/s. Ramjasmal Nathuram.
4. Non-confrontation of inquiries made through the Inspector.
5. Justification of the accumulation of funds by Smt. Bimla Devi.
6. Tribunal's upholding of additions despite non-confrontation of inquiries.
7. Impact of non-confrontation on the Tribunal's conclusion.
8. Alleged colorable device for capital formation.
9. Burden of proof for benami transactions.
10. Burden to prove the capacity of Shri Prabhu Dayal to make a gift.
11. Unexplained credits and interest in the accounts of Shri Puran Mal and Shri Ram Parshad.
12. Burden to prove the source of deposits.
13. Arbitrary finding regarding Smt. Bimla Devi's status as an existing assessee.
14. Assessment of credits and interest as income from undisclosed sources.
15. Levy of interest under section 215 of the Income-tax Act.

Detailed Analysis:

1. Addition of Rs. 60,000 and Rs. 29,135 Representing Credits in the Account of Smt. Bimla Devi:
The Tribunal upheld the additions made by the Assessing Officer, stating that the assessee failed to discharge the onus of proving the capacity and genuineness of the deposits. The Tribunal noted inconsistencies in Smt. Bimla Devi's statements regarding her income and savings, making her claims highly improbable.

2. Burden of Proof Regarding the Source of Investment by Smt. Bimla Devi:
The Tribunal held that the burden lay on the assessee to explain the source of investment by Smt. Bimla Devi. The Tribunal found that the assessee failed to provide credible evidence to prove the source and genuineness of the deposits.

3. Distinguishability of the Case from M/s. Ramjasmal Nathuram:
The Tribunal distinguished the present case from M/s. Ramjasmal Nathuram, noting that the facts were different and did not warrant following the precedent set in that case. The Tribunal emphasized that the circumstances in the two cases were not identical.

4. Non-Confrontation of Inquiries Made Through the Inspector:
The Tribunal acknowledged that certain inquiries made through the Inspector were not confronted to the assessee. However, it held that this did not adversely affect the conclusion derived by the Tribunal.

5. Justification of the Accumulation of Funds by Smt. Bimla Devi:
The Tribunal found that Smt. Bimla Devi's claims about her income and savings were mutually contradictory and lacked credibility. It held that the assessee failed to justify the accumulation of funds, making the deposits appear improbable.

6. Tribunal's Upholding of Additions Despite Non-Confrontation of Inquiries:
The Tribunal upheld the additions, stating that the non-confrontation of inquiries did not affect the overall conclusion. The Tribunal found sufficient grounds to sustain the additions based on other evidence and inconsistencies in the statements provided by the assessee.

7. Impact of Non-Confrontation on the Tribunal's Conclusion:
The Tribunal concluded that the non-confrontation of inquiries did not adversely impact its findings. It emphasized that the assessee's failure to provide credible evidence was the primary reason for upholding the additions.

8. Alleged Colorable Device for Capital Formation:
The Tribunal rejected the theory of a colorable device for capital formation, stating that the transactions did not represent real transactions according to the test of normal human probability. It found that the assessee failed to prove the genuineness of the deposits.

9. Burden of Proof for Benami Transactions:
The Tribunal held that the burden to prove the benami nature of transactions lay on the assessee. It found that the assessee failed to discharge this burden, leading to the upholding of the additions.

10. Burden to Prove the Capacity of Shri Prabhu Dayal to Make a Gift:
The Tribunal concluded that the burden to prove the capacity of Shri Prabhu Dayal to make a gift of Rs. 20,000 to Smt. Bimla Devi was on the assessee. The Tribunal found that the assessee failed to provide credible evidence to prove Shri Prabhu Dayal's capacity.

11. Unexplained Credits and Interest in the Accounts of Shri Puran Mal and Shri Ram Parshad:
The Tribunal upheld the additions of Rs. 12,900 and Rs. 10,560, stating that the assessee failed to prove the creditworthiness of the depositors. It found that the assessee did not provide sufficient evidence to explain the source of the deposits.

12. Burden to Prove the Source of Deposits:
The Tribunal held that the burden to prove the source of deposits in the bank accounts was on the assessee. It found that the assessee failed to discharge this burden, leading to the upholding of the additions.

13. Arbitrary Finding Regarding Smt. Bimla Devi's Status as an Existing Assessee:
The Tribunal rejected the claim that its finding regarding Smt. Bimla Devi's status as an existing assessee was arbitrary or biased. It found that the assessee failed to provide credible evidence to support its claims.

14. Assessment of Credits and Interest as Income from Undisclosed Sources:
The Tribunal upheld the assessment of credits of Rs. 1,00,000 and interest thereon as income from undisclosed sources. It found that the assessee failed to prove the genuineness and source of the deposits.

15. Levy of Interest Under Section 215 of the Income-Tax Act:
The Tribunal restored the issue regarding the levy of interest under section 215 to the Assessing Officer for reconsideration. It found that the assessee had not been given an opportunity of being heard on this issue, warranting a reconsideration.

Conclusion:
The petition was dismissed, with the Tribunal's findings and conclusions being upheld. The Tribunal's detailed reasoning and reliance on legal precedents were found to be sound, and none of the questions raised by the assessee were deemed to require determination by the court.

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