1981 (11) TMI 98 - AT - Income Tax

Summary

Issues: Difference of opinion between Members on addition of cash credit as income from undisclosed sources and disallowance of interest claimed by assessee.

The judgment by the Appellate Tribunal ITAT Jaipur involved a difference of opinion between the Members of the Jaipur Bench regarding the treatment of a cash credit of Rs. 15,000 as income from undisclosed sources and the disallowance of interest claimed by the assessee. The ld. Accountant Member believed the addition and disallowance should be confirmed, while the ld. Judicial Member disagreed, stating that the genuineness of the cash credit had been established by the assessee.

The cash credit in question appeared in the books of account for the assessment year 1972-73. The Income Tax Officer treated it as income from undisclosed sources due to lack of evidence establishing its genuineness and also disallowed the interest payment claimed by the assessee. The matter was appealed before the AAC, who remanded it to the ITO for further evidence. The ITO's report stated that the lady creditor could not be traced, making verification difficult.

The CIT (A) later called for the creditor to be produced again, but the assessee claimed she could not be located and was rumored to be deceased. Consequently, the CIT (A) confirmed the addition of the cash credit as income from undisclosed sources and disallowed the interest claimed by the assessee. The Tribunal then heard the appeal, with the Accountant Member supporting the CIT (A)'s decision, while the Judicial Member believed the genuineness of the credit had been established by the assessee.

The third Member noted that the ITO's report confirmed the lady creditor had previously acknowledged depositing the amount with the assessee. Despite her unavailability later, the assessee had made reasonable efforts to produce her. The third Member agreed with the Judicial Member that the genuineness of the credit had been proven by the assessee, and the ITO's treatment of the credit as undisclosed income was unjustified.

Ultimately, the case was directed back to the Bench for final disposal in accordance with the third Member's opinion, which supported the assessee's position on the genuineness of the cash credit and the interest claimed.