2002 (10) TMI 51 - HC - Income Tax

Income from Undisclosed Sources - The issue relates to the addition of a sum of Rs. 2, 13, 982 which was introduced in the accounts of the appellant. The explanation of the appellant was that the said amount came from the partnership firm C.K.G. Agencies of which the appellant is the managing partner. - It is significant to note that the appellant was the managing partner of the firm and he had a duty to see that the day book in which the daily transactions of the firm are recorded is properly maintained and accounts are written properly on the basis of such documents. Since the appellant had not made any efforts towards that direction it cannot be said that the appellant had satisfactorily explained the source for the credits made in the books of account.

Summary

Issues:
1. Addition of unaccounted income in the appellant's assessment.
2. Rejection of appellant's explanation by the Assessing Officer and appellate authorities.
3. Dismissal of appeal by the Tribunal.
4. Failure to establish the source of credits in the appellant's books.
5. Applicability of sections 69 and 68 of the Income-tax Act.

Analysis:

1. The primary issue in this case revolves around the addition of Rs. 2,13,982 as unaccounted income in the appellant's assessment for the year 1989-90. The Assessing Officer proposed this addition after finding no corresponding debit entry in the accounts of the partnership firm, from which the appellant claimed the amount originated.

2. The appellant's explanation, attributing the amount to his partnership firm and citing clerical errors as the reason for discrepancies, was rejected by the Assessing Officer, Commissioner of Income-tax (Appeals), and the Tribunal. They found the appellant's account books to be incomplete and indicative of an attempt to suppress income.

3. Despite the appellant's appeals, the Tribunal upheld the decisions of the lower authorities and dismissed the appeal. The appellant's arguments regarding the origin of the credited amounts and errors in dates were not accepted, leading to the confirmation of the addition of unaccounted income.

4. The Assessing Officer's scrutiny revealed discrepancies between the entries in the appellant's books and those in the partnership firm's accounts. The appellant failed to provide satisfactory explanations or produce primary documents like the day book to substantiate the sources of the credited amounts, leading to the conclusion that the appellant did not discharge his burden of proof.

5. Lastly, the appellant contended that if the sources of the credits were not established, the Assessing Officer should have considered the possibility of the credits originating from additions made in earlier years. However, as the appellant did not raise this claim during assessments or appeals, the courts found no merit in considering this alternative argument, citing relevant legal precedents to support their decision.

In conclusion, the court dismissed the appeal, emphasizing the appellant's failure to substantiate the sources of the credited amounts and the lack of merit in the alternative contentions raised during the proceedings.