1984 (9) TMI 94 - AT - Income Tax

Summary

Issues Involved:
1. Inclusion of Rs. 1,02,000 as income from undisclosed sources.
2. Validity of the explanation provided by the assessee regarding the source of high denomination notes.
3. Reliability of the firm's certificate and other supporting documents.
4. Consistency and credibility of the assessee's statements.

Issue-wise Detailed Analysis:

1. Inclusion of Rs. 1,02,000 as income from undisclosed sources:
The main contention in this appeal was the inclusion of Rs. 1,02,000 as income from undisclosed sources. The Income Tax Officer (ITO) was not satisfied with the assessee's explanation regarding the source of the high denomination notes and made a draft order under section 144B of the Income-tax Act, 1961. The Inspecting Assistant Commissioner (IAC) upheld the ITO's addition, treating the reasons submitted by the assessee as a made-up affair. The Commissioner (Appeals) also dismissed the assessee's appeal, stating that no positive proof was produced to explain the source of the high denomination notes.

2. Validity of the explanation provided by the assessee regarding the source of high denomination notes:
The assessee claimed that the high denomination notes were received from Tulshan Enterprises, a firm in which he was a partner, on 13-1-1978. The assessee stated that the cash was withdrawn for depositing in Navrang Cine Centre (P.) Ltd., where he was a managing director. However, the IAC noted inconsistencies in the assessee's statements and observed that the explanation was only an afterthought. The IAC pointed out that the assessee retained the cash for six days before depositing it with the State Bank of India and another six days before depositing Rs. 1 lakh with Navrang Cine Centre (P.) Ltd.

3. Reliability of the firm's certificate and other supporting documents:
The assessee submitted a certificate from Tulshan Enterprises stating that Rs. 1,25,000 was given to the assessee on 13-1-1978, which included 102 notes of Rs. 1,000 each. However, the certificate was undated and issued by a partner in Bangalore, whereas the assessee was the partner-in-charge of the Bombay office. The IAC and the Commissioner (Appeals) found the certificate to be unreliable and self-serving. The Tribunal also noted that the firm's account books, kept by the assessee, did not support the claim that the high denomination notes came from the firm's cash balance.

4. Consistency and credibility of the assessee's statements:
The Tribunal observed clear contradictions in the assessee's statements. On 19-1-1978, the assessee stated that the high denomination notes were held for business contingency requirements and came into possession during past business transactions. However, on 23-9-1980, the assessee claimed that the notes were withdrawn from Tulshan Enterprises on 13-1-1978. The Tribunal found that the assessee was unable to provide a valid or reasonable explanation for these contradictions. The Tribunal concluded that the high denomination notes were not part of the firm's cash and that the assessee failed to establish this fact with cogent and unimpeachable evidence.

Conclusion:
The Tribunal dismissed the assessee's appeal, confirming the decision of the Commissioner (Appeals) and upholding the inclusion of Rs. 1,02,000 as income from undisclosed sources. The Tribunal found that the assessee's explanations were inconsistent and unsupported by reliable evidence, and the firm's certificate was deemed self-serving and unreliable.