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TMI Blog1975 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is a registered firm. It carries on business as watch dealer. On6th Sept., 1966the assessee's business premises as well as the residential premises of both its partners viz., Ram Chand and Ganga Ram, were raided by the Custom Authorities. They noticed cash of Rs. 30,000 at the residence. They, however, came across a day book maintained by the assessee. The day book contained entries upto1st Sept, 1966only, on the date the raid took place i.e.,6th Sept., 1966. The entries upto1st Sept., 1966, however, showed receipt of Rs. 30,000 from one Bhagwan Das but no date was indicated for such receipt. This day book was seized by the Custom Authorities and later on assessee prepared its cash book and recorded entries from1st Sept., 1966to7th Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,New Delhi. 5,000 Tulsi Das Pokhar Das,TulsiBuildingDarya Gnaj,Delhi 10,000 Shagoofa Restaurant, South Extension Part II,New Delhi. 25,000 . 4. The ITO rejected the above evidence. He completed the assessment on22nd Feb., 1972brining to tax the entire sum of Rs. 30,000 as income from undisclosed sources for the following reasons, mainly : (i) On the date the raid took place (6th Sept., 1966) the cash-book was incomplete, Entries were made therein later at one sitting from 1st Sept., 1966 to 7th Sept., 1966 showing the receipt of Rs. 30,000 from Bhagwandas and also the repayment to Bhagwandas. This book had not been written day to day and hence no reliance could be placed on it. No doubt Ramchand, one of the partners stated that he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger plot, especially so as he had not purchased any plot till now. (vii) In any case if Bhagwandas had taken the loan for the purchase of plot he would not have entered it in his cash book as it was not a business transaction. This also shows that the entries in the books of Bhagwandas are nothing but collusive entries. (viii) According to the explanation of Bhagwandas, he had taken a loan of Rs. 15,000 from Ram Chand and Tulsidas Pokhar Dass. He had also claimed to have Rs. 5,000 as cash lying at home. That is to say, he had in all Rs. 20,000 lying at home. It is therefore, not possible that he gave Rs. 30,000 for safe custody as claimed by him to the assessee firm and that too for a period of only 3 or 4 days. The whole story was improb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Restaurant, this again was confirmed by the creditor by an affidavit and also with reference to the books of accounts maintained which were produced for inspection. (c) There was no satisfactory explanation for the remaining amount of Rs. 5,000 from Tulsidas Pokhardas and cash of Rs. 5,000 lying at home. In the above view the AAC sustained the addition of Rs. 10,000. It is submitted for the assessee in second appeal that the AAC has missed the essential point. That is, so far as the assessee is concerned. It is the duty of the assessee to show that Bhagwandas has a genuine existence and also had the capacity of funds to advance Rs. 30,000 to the assessee. It is stressed that so far as Rs. 20,000 is concerned the AAC has accepted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Bhagwandas in to the picture. 6. The Department Representative relied on the order of the ITO. He stressed the fact that Bhagwandas himself admitted that he had borrowed only for the purchase of immovable property. This was clearly a non-business transaction and hence should not have been entered in the cash-book in the normal course; that he entered it in his books is in itself a suspicious feature. Secondly, the claim in that the sum of Rs. 30,000 was given for safe custody. This action was a non business transaction so far as the assessee was concerned and the assessee should not have recorded it in its books. There was also no date at all of the so called negotiations which Bhagwandas had for purchase of property. The Departmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e address of Tulsidas Pokhardas was given to the ITO. In his statement he mentioned that the loan was taken on pronote and interest. Here against the ITO failed to summon the party for further examination. He has discussed this loan as not genuine because some parties had admitted before the Department that Tulsidas Pokhardas were only namelenders. This is a very vague assertion and in any case it was not put to the assessee or to Bhagwandas so that Tulsidas Pokhar Das could have been properly examined by the assessee or Bhagwandas on their transaction with Bhagwandas. Thus with regard to the sum of Rs. 22,500 representing loans taken by Bhagwandas the ITO's action. (in disbelieving it) is based on suspicion and nothing more. As regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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