1989 (10) TMI 231 - AT - Income Tax

Summary

Issues Involved:
1. Legitimacy of the cash found in the assessee's possession.
2. Credibility of the sources of the cash.
3. Justification of the addition made by the Income Tax Officer (ITO).

Issue-wise Detailed Analysis:

1. Legitimacy of the Cash Found in the Assessee's Possession:
The assessee was found with Rs. 9,85,000 in cash at Bombay Airport on 5th April 1984. Initially, the assessee claimed the money was given by his father for purchasing lubrication oil and clothes. However, his father denied giving him any money. Subsequently, the assessee changed his statement, claiming the money belonged to his brother, Kailash Chand, who needed it to purchase oil tankers for a transportation contract with Ralso Cycles Ltd. The ITO inferred that the assessee had changed his stand and concluded that the amount represented the assessee's income from undisclosed sources.

2. Credibility of the Sources of the Cash:
The assessee's brother, Kailash Chand, allegedly obtained the money from P.S. Jain Motors and several agriculturists. The ITO disbelieved this, noting discrepancies such as the bank slips on the cash bundles not matching those of P.S. Jain Motors and the improbability of the agriculturists giving loans without securities. The ITO also noted the suspicious behavior of the assessee during the search, including eating a bill from Munish Lubricants. However, the Commissioner (Appeals) found the assessee had sufficiently discharged his burden by producing Kailash Chand and the parties who advanced the loans, along with their affidavits and statements. The Commissioner (Appeals) concluded the ITO was not justified in treating the amount as the assessee's undisclosed income.

3. Justification of the Addition Made by the ITO:
The ITO's addition of Rs. 9,85,000 as the assessee's income from undisclosed sources was based on suspicion and discrepancies in the assessee's statements. The Commissioner (Appeals) disagreed, finding the evidence provided by the assessee credible. The Appellate Tribunal noted that suspicion cannot replace legal proof and emphasized the importance of evaluating oral evidence without presumption of perjury. The Tribunal found the assessee's story, though initially appearing inconsistent, was reconcilable and supported by credible evidence, including correspondence and statements from P.S. Jain Motors and the agriculturists.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s decision to delete the addition, finding no justification to doubt the evidence provided by the assessee. The appeal filed by the department was dismissed.