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Issues Involved:
1. Validity of taxation of cash credits of Rs. 90,000 for the assessment year 1962-63. 2. Validity of taxation of cash credits of Rs. 91,000 for the assessment year 1963-64. Issue-wise Detailed Analysis: 1. Validity of taxation of cash credits of Rs. 90,000 for the assessment year 1962-63: The primary issue was whether the cash credits of Rs. 90,000 shown in the books of the assessee for the assessment year 1962-63 could be validly taxed as profits from other sources. The court examined the materials and explanations provided by the assessee for each creditor. Gajanand Agarwal: - The assessee claimed that Gajanand Agarwal advanced a sum of Rs. 30,000 (Rs. 20,000 in 1962-63 and Rs. 10,000 in 1963-64). - The ITO found the credits to be non-genuine based on several factors: Gajanand's claim of starting with a capital of Rs. 5,000 and showing a 100% return in the first year was deemed unrealistic; returns for five years were filed on a single date, close to the date of the credits; the registers produced were similar in size and color to those of other creditors, suggesting they were prepared by the assessee; and the personal expenses claimed were too low to be credible. - The AAC and Tribunal supported the ITO's findings, noting inconsistencies in Gajanand's business activities. - The court found no error or perversity in the authorities' conclusion that Gajanand was not in a position to advance the sums claimed. Pushker Lal Agarwal: - Pushker Lal Agarwal was claimed to have advanced Rs. 20,000. - The ITO rejected this claim, noting that Pushker Lal's family expenses were understated and that his capital was likely locked up in his business. - The AAC and Tribunal upheld the ITO's findings. - The court agreed with the authorities, finding no error in their conclusion that Pushker Lal could not have advanced the sums claimed. Sita Devi and Jamuni Devi: - Both ladies were claimed to have advanced Rs. 20,000 and Rs. 25,000 respectively. - They did not appear before the ITO but filed affidavits. - The ITO rejected the affidavits due to lack of evidence of savings, simultaneous filing of income-tax returns, and similarity in registers. - The AAC and Tribunal supported the ITO's findings. - The court found the authorities' conclusions reasonable and not perverse. 2. Validity of taxation of cash credits of Rs. 91,000 for the assessment year 1963-64: The issue was whether the cash credits of Rs. 91,000 shown in the books of the assessee for the assessment year 1963-64 could be validly taxed as profits from other sources. The court examined the explanations provided for each creditor. Rukmani Devi and Sarda Devi: - Rukmani Devi (wife of the assessee) and Sarda Devi (wife of the son of the assessee) were claimed to have advanced Rs. 31,000 and Rs. 30,000 respectively. - The ITO rejected these claims, noting the lack of evidence of business activities and simultaneous filing of returns. - The AAC and Tribunal upheld the ITO's findings. - However, the court found that the authorities had made a wrong assumption about the lack of evidence for Rukmani Devi's business activities, as the assessment order for 1958-59 confirmed her involvement in pawn brokering. - The court directed the authorities to re-examine the cases of Rukmani Devi and Sarda Devi. Conclusion: - For the assessment year 1962-63, the court upheld the taxation of cash credits of Rs. 90,000 in favor of the Revenue. - For the assessment year 1963-64, the court partially upheld the taxation of cash credits of Rs. 91,000, directing the Tribunal to re-examine the cases of Rukmani Devi and Sarda Devi. Final Judgment: - The reference for the assessment year 1962-63 was answered in the affirmative and in favor of the Revenue. - The reference for the assessment year 1963-64 was answered partly in favor of the Department and partly in favor of the assessee, with a directive for re-examination of specific cases. - No order as to costs in either of the two cases.
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