9911796707
TMI Blog1987 (1) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of his inquiry the ITO had summoned the assessee on22-10-1982and then for26-10-1982. According to the assessee, he appeared before the ITO on26-10-1982at2 p.m.but the ITO called him for recording his statement at6 p.m.In the course of the statement the assessee had stated that he had appeared a few days earlier also and on that day he was waiting for quite some time. He stated that he was tired. When asked about the source of purchase of 22 m. tonnes of stock the assessee stated that it was purchased out of the savings. In reply to one question, he said that on1-4-1982the amount of savings was Rs. 1,40,000. The assessee had also stated that besides an amount of Rs. 35,000 which was invested with Avinash Udyog the balance was held as cash. The assessee had also stated that he had advanced an amount of Rs. 1,10,000 to Shri Bhajan Lal in the beginning of September 1981 in cash. In reply to another question, he said that the money was unaccounted and, therefore, all the transactions were in cash. Towards the end of his statement the assessee was asked as to whether this money was held by him on31-3-1981and the assessee replied that on that date also this was held by him. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the amount in question was assessable in the assessment year 1982-83 and for that purpose the assessee had not only written to the Commissioner but had also paid advance tax. It was also submitted that the ITO could not reopen the assessment merely on the basis of a statement extracted from the assessee when the assessee was not in a proper frame of mind and had requested for not being examined so late in the evening. The Commissioner (Appeals), however, was of the view that the reopening of the assessment could be justified on the basis of the assessee's own statement and as the assessee had admitted the existence of mind on31-3-1981the amount had rightly been added by the ITO. 6. Before us the assessee has challenged the order of the Commissioner (Appeals) on the ground of the validity of the reopening of the assessment as well as the correctness of the addition in the assessment year 1981-82. It was stated that the assessment had been reopened on the basis of the answer to one question only and the statements had been recorded against the wishes of the assessee when he was completely tired and could not appreciate what he was saying. It was further submitted that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could also be rightly made. 8. We have considered the facts of the case and the arguments advanced by the representatives of both the sides. There are two issues to be decided by us. One relates to the validity of the reassessment proceedings and the other relates to the addition made by the ITO. From the facts given in the beginning of this order it would appear that the ITO recorded the statement of the assessee on26-10-1982and notice under section 148 was issued on27-10-1982. Thus, the reopening of the assessment was based on the inference which the ITO drew from some of the replies given by the assessee in the course of his statement. While a few questions related to the source of investment in the stock, the ITO had also asked some questions which were replied by saying that on31-3-1981also the assessee held the amount of Rs. 1,40,000. It is on the basis of this statement alone that the ITO has initiated proceedings under section 148 in order to assess this amount in the year 1981-82. It was with a reference to this cash holding that the later investment was explained and, therefore, the ITO wanted to take action for the year 1981-82 to assess the amount on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-82 merely on the basis of the statement or answers to some questions put to the assessee. It is an admitted position that the thing which started the proceedings was the discovery of stocks which had been stated to be acquired by the assessee in the accounting period ending on31-3-1982. At the time of the discovery of the stock the assessee had stated that he was not in a position to explain the source of this stock and it may be treated as his income from undisclosed sources and should be assessed in the assessment year 1982-83. For this he paid advance tax also. Thus, according to the assessee, his case was covered under section 69B. It is a question of fact as to when and from what source an investment was made. The making of an actual investment is an established fact but there may be materials on record which may establish that the money from which such an investment is made was acquired by the assessee in an earlier year. Section 69A requires that where the assessee is found to be the owner of any money and his explanation about the same is not found to be satisfactory, the money may be deemed to be the income of the assessee for such financial year. Now the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount shown to have been invested was actually in possession of the assessee on an earlier date. In the circumstances of the present case, the ITO should not have merely relied on one answer given by the assessee to come to the conclusion that the amount in question was held by the assessee as on31-3-1981. We find that some protective assessments had been made for the assessment year 1982-83 as well. The addition made in this year and the year 1982-83 cannot stand simultaneously. In order to come to a definite inference, it appears to be necessary that the ITO should put it to the assessee to explain the source of the investment and the availability of cash in the year in question or in an earlier year. On the basis of some definite information about the availability of cash the ITO can proceed to make the assessment in accordance with law. The present assessment, according to us, is not sustainable and deserves to be set aside for a fresh assessment after giving an opportunity to the assessee to explain the whole position. It will, of course, be open to the ITO to put the assessee's statements to test. With these directions, we set aside the order of the ITO and direct him to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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