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TMI Blog1998 (9) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... by Asstt. Director of Inspection (ADI)(Int.)-II, Bangalore under s. 132A of the IT Act by the Dy. Revenue (Int.). During the proceedings under s. 132A it came to light that the assessee was doing business at Madras, where he normally resides. The assessee was stated to have given a statement before the customs authorities on 5th Nov., 1985 in which he was stated to have confessed that he had exported cotton and silk fabrics worth more than 7 to 8 lakhs to Sri Lanka with the help of S/Shri S. Rajendran and S. Paramanathan. But it was seen that there was no mention of any such business activity either at Madras or anywhere as per the returns filed. No accounts reflected such business activity as per return nor any satisfactory explanation was given by the assessee at the time of assessment proceedings. The Asstt. CIT therefore concluded that the assessee/s business activities at Madras was entirely outside the books of accounts and, therefore, an estimated addition of Rs. 1 lakh was made to the returned income of the assessee as income from undisclosed sources. 4. Aggrieved the assessee went on appeal before the CIT(A) who deleted the addition as uncalled for one. Aggrieved now th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural justice. He relied on the Supreme Court decision in the case of Dakeshwari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC). 5.2. We have considered the rival submissions, facts and materials on record including the detailed paper book submitted by the assessee s counsel. While deleting the addition the learned CIT(A) had observed as follows: "I have carefully considered the facts and circumstances centre round the whole issue of the seizure of the sum of Rs. 2,75,800 by the ADI when the same was released by the customs on 15th Jan., 1987, when they were satisfied that the appellant was innocent and had nothing to do with the alleged export transactions along with two others viz. S/Shri S. Rajendran and S. Paramanathan, who were not examined by the Asstt. CIT to find out the truth of the matter as to what was the extent of involvement if any, of the appellant in the so-called deal. Without doing any original work of the preliminary investigation, the Asstt. CIT had arbitrarily estimated an ad hoc sum of Rs. 1 lakh as the unaccounted income of the appellant from this deal by simply stating in his order that looking to the overall facts and circumstances which is a very va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1972) 84 ITR 788 (Mad). 6.2. We have considered the rival submissions, facts and materials on record. While deleting the impugned addition the learned CIT(A) had observed as follows: "I have carefully considered the submissions of the assessee s representative. It is for the assessee to conduct his business affairs in the business or commercial expediency of his own and not according to the whims of the AO who cannot step into the shoes of the appellant in planning the way of business. The Asstt. CIT had failed to establish any irregularity either in the quantum of interest paid or the nature of accounts maintained. In these circumstances there is no justification for adding something on surmises without there being any real interest received. Hence the addition of Rs. 22,779 is deleted as unnecessary." In our opinion, after careful consideration of the facts of the case in the light of the above discussion, the AO had not proved any nexus between the payment of interest to debtors and the non-charging of interest on loan/credit advanced by the assessee. Hence we are inclined to agree with the first Appellate Authority in the deletion of the impugned addition of Rs. 22,779 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) has erred in law and on facts in directing to delete the additions in respect of undisclosed income earned from unrecorded business activities at Madras." This issue has already been decided in favour of the assessee by us in appeal No. 3912/1990, asst. yr. 1986-87. On the same line we uphold the decision of the CIT(A) for this year also. For the same reasons recorded in our order for the asst. yr. 1986-87. 11. The second ground of appeal reads as follows: "The learned CIT(A) has erred in law and on facts in confirming only a token addition of Rs. 10,000 as against Rs. 67,265 made by the AO." During the course of assessment proceedings the AO made an addition of Rs. 67,265 to the total income returned by the assessee (estimating the GP at 25 per cent). The AO has observed that the assessee had dealt in sarees under the name Mahchand Bapa Textile at Jetpur and disclosed GP at 13 per cent only whereas the same should be normally about 25 per cent. As 2/3rd of the sales were not verifiable and the turnover fell down considerably an estimated GP was called for in view of the comparable cases quoted. Accordingly the AO made an addition of Rs. 67,265, estimating the GP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sum of Rs. 2,75,800 under s. 132A from the Dy. Director of Revenue Intelligence, Bangalore. In the order passed under s. 132(5) on 12th May, 1987, the sum was treated as unexplained cash and added as concealed income of the assessee on the strength of some statement recorded by the Revenue Intelligence for asst. yr. 1987-88. During the course of hearing opportunity was given to the assessee to explain the source of the said cash of Rs. 2,75,800. The assessee contended that the said amount did not belong to him but belonged to some other persons and also copy of wealth-tax return and statement of wealth and income of the said persons were submitted before the AO. However, the AO came to the conclusion that the assessee failed to prove the source and nature of the said amount, for the reasons recorded in the assessment order on p. 5 onwards. Accordingly he made an addition of Rs. 2,75,800 as income from undisclosed sources. 12.1. Aggrieved the assessee took the matter before the CIT(A) who deleted the entire addition of Rs. 2,75,800. Now it is the turn of the Department to come on second appeal before us with its grievance. 12.2. The learned Departmental Representative heavily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the course of argument the learned counsel took us through the various pages of his detailed paper book which was placed on record before us. 12.4. We have considered the rival submissions, facts and materials. It is true that at the first instance the assessee, before the customs authorities confessed that the amount belonged to him but later on it was retracted by the assessee. In our opinion the assessee had also brought on record materials to show that the amounts belonged to Shri S. Rajendran and S. Paramanathan from whom he had taken loan. In the written submission dt. 5th Sept., 1986 addressed to the Collector of Customs, Bangalore by the assessee, the following submissions were made: "This is a vital and crucial document. To be precise it is the basic document, relied upon by the Department to sustain and substantiate their case. It is positively admitted that barring this statement there is no other incriminating/clinching evidence on record. This statement has been retracted and time and again it has been stressed/emphasised that: (a) it is not voluntary; (b) was not given or recorded from a free person; (c) it was secured under coercion compulsion (d) it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner and method adopted/followed for recording this statement in English is not satisfactory and free from doubt. It does not appear to be bona fide and realistic. If all parties i.e. K.S. Bhatt, who had recorded the statement, Shri N.R. Bhatt who had written it and Doshi, who had, it is claimed deposed all knew Hindi, it is too artificial and quite illogical to accept why cumbersome and roundabout method was adopted i.e. to ask question in Hindi, reply in Hindi and the over-hearing officer to then and there translate it into English. It is not known (especially by Doshi) whether true, complete and proper translation was done or not. Genuine possibilities of certain exclusions or inclusions, etc. cannot be ruled out, especially because whatever Asstt. Director wanted was only translated and recorded. Kind attention is drawn following question and answer (N.R. Bhatt s evidence). Question: I put it to you sir, that you have not written all the questions and answers which transpired between your Asstt. Director and Doshi? Answer: Whatever my A.D. wanted to record was translated and written by me in English. It is claimed that this English statement version in Hindi was read o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lanka and that currency in question represents sale proceeds of the same. It is of utmost significance to note that there is no fota of evidence on record, as to when, by whom, from which place, port, or customs area alleged illegal export of fabrics to Sri Lanka was performed." Thus this crucial and basic proof is totally lacking. Further more, if the amount in question represents sale proceeds, it is to be known how many time by whom all, from which place or places, illegal export to Sri Lanka was made, so also of what quantity, quality, value and who had received the payment or made counter-payment in India, etc., Department has thus failed to prove their case, beyond doubts on the basis of positive proof, concrete materials and clinching incriminating evidence. Based on the consideration of the above submissions, the Collector of Customs dropped the proceedings against the assessee and ordered return of the currency amounting to Rs. 2,75,800 to the assessee. To sum up the statements of the assessee was recorded in English though the questions were put to him in Hindi and such recordings were also not the same in totality as questioned by the customs authorities. The Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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