9911796707
TMI Blog1996 (4) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... the said amount was lying in his custody. Some of the persons deposed in support of his version before the ITO. Similar is the case regarding confirmation of Rs. 25,000 having deposited by the assessee's daughter Mrs. Priya Jaggi, She has confirmed having deposited the said amount with the assessee and the assessee's contention is that he was in custody of the said amount as a trustee of his daughter. In regard to the ground No. 3 also, identical explanation is given by the assessee that one Balvantsing Juneja and another Nanaksing Chug had deposited with him Rs. 15,000 each and he was holding the said amount as trustee for them. The assessee has tried to establish their credibility of having the amount of Rs., 15,000 saved by them and deposited with the assessee. Both these persons have confirmed having deposited these amounts with the assessee. 3. In the light of the assessee's contentions and the evidence brought on record in respect of the additions confirmed by the CIT(A), the issues which have arisen for our consideration are whether the assessee's version of having in possession of the funds collected by the building fund committee of Gurudwara Gurusing Sabha, Shrirampur, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm's name is M/s Ramchandra Sons. He also accounted for the construction of the house. This statement was recorded on the same day after the search and seizure was over. He holds 60% share in the profits of the firm and he has been assessed to income-tax since 1961. He has been also assessed for wealth-tax about 8 years prior to the search and seizure. He had disclosed Rs. 50,000 under Voluntary Disclosure Scheme in Oct., 1975, much prior to the search and seizure. 7. On the day of search and seizure, i.e., on 6th Aug., 1976, cash of Rs. 2,23,400 was found in his house. He has stated that the amount of Rs. 50,000 disclosed under the Voluntary Disclosure Scheme in October, 1975, also included in Rs. 2,23,400 found in his house. His wife also had disclosed Rs. 40,000 under the said Scheme. He showed his incapability to explain regarding the balance of Rs. 1,33,400 at that stage and told the officer that he will explain later on. Thereafter, he wrote a letter dt. 28th Oct., 1976, to the ITO, A Ward, Ahmednagar. 8. What is required to consider at this stage is two important points. The first point is whether the assessee was in a disturbed mental condition before starting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Personal cash balance of Gobindram Oberoi 2,200 5. Personal cash balance of Mrs. Bimlawanti 840 6. Cash belonging to Shri Gobindram (out of sub-contracts) 51,060 7. Deposit received from assessee's two friends Rs. 15,000 each 30,000 . 2,23,400 The ITO has accepted the explanation in respect of Item No. 3 being Rs. 4,300 belonging to the assessee's mother, Item No. 14 being Rs. 2,200 belonging to the assessee himself, Item No. 5 being Rs. 840 belonging to Mrs. Bimlawanti and Item No. 6 belonging to the assessee himself out of sub-contracts of Rs. 51,060. The ITO did not accept the explanation in respect of (1) Rs. 25,000 cash deposit kept by Mrs. Priya Krishanal Jaggi, assessee's married daughter, (2) Rs. 1,10,000 cash deposit received from Gurudwara Gurusingh Sabha, Building Fund Committee, and (3) Rs. 30,000 being deposits received from the assessee's two friends of Rs. 15,000 each. 10. The assessee's explanation regarding Rs. 2,200 is that he had his cash from his personal savings out of withdrawals made for household expenses from the firm of M/s Ramchandra Sons, Shrirampur. An amount of Rs. 840 is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of the deposit of Rs. 25,000 kept by his daughter with him requires to be accepted as his daughter also gave explanation regarding the source of income and her savings. Therefore, we are satisfied to accept the said explanation and to delete the addition of Rs. 25,000. 12. The second item is of Rs. 1,10,000 pertaining to Gurudwara Gurusingh Sabha Building Fund Committee. The assessee's case, though in the later statement, is that the members of the Gurudwara Gurusingh Sabha Building Fund Committee had gone to different villages to collect funds and they had collected it. They brought this amount and kept with the assessee on 5th Aug., 1976. Two members of the said Sabha have signed the letter and stated that they had gone to collect these funds from different villages and came to Shrirampur in the evening and kept the same amount with the assessee. Gurudwara Gurusingh Sabha Building Fund Committee is registered under s. 12A of the IT Act and it is granted registration certificate. In this connection, the assessee was cross-examined to a great length by the ITO. 13. The assessee has filed the list of the donors from pages 43 to 50 of the compilation. Names of 200 donors have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely on the ground that it is an afterthought and the story is created or concocted by the assessee. We hold that the assessee's explanation is quite reasonable and acceptable. We are satisfied to delete the addition of Rs. 1,10,000. The assessee succeeds on this ground of appeal. 16. Now the next item is regarding addition of Rs. 30,000 being deposit received from two friends of the assessee of Rs. 15,000 each. The assessee's evidence and explanation is on record that one Shri Balwant Sing S. Juneja kept Rs. 15,000 as a deposit with the assessee. The manager of the Bank of Baroda, Shrirampur Branch, to whom a letter was written by the ITO replied by letter dt. 10th Feb., 1979, that this Balwant Sing S. Juneja had an account from 31st Dec., 1975, and he was having balance of Rs. 1,205 on that day. There was a balance of Rs. 873 as on 31st Dec., 1976, and on 31st Dec., 1977, the account was closed. There was also an account in the State Bank of India, Shrirampur, and the branch manager by letter dt. 17th Feb., 1979, replied that this account held by Shri Balwantsing S. Juneja was transferred to Aurangabad branch in 1977. Shri B.S. Juneja was serving in LIC. The assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was also having Rs. 50,000 as bank balance. Her financial position was quite good to deposit Rs. 25,000 with her father. The ITO has merely suspected the deposit and there is no basis for such suspicion. It was not necessary to take receipt from her own father for the deposit kept with him to show that she had kept the said deposit with her father. She filed the return of income. It would be incorrect to say that she did not claim the said amount at the time of raid and, therefore, it should be presumed that the amount belongs to the assessee. 21. In this respect, Shri Roy has submitted that Smt. Priya K. Jaggi was present in Shrirampur and she did not come forward claiming Rs. 25,000 as belonging to her. There is an inconsistency in her evidence. According to him, there is no evidence in respect of her savings and her conduct appears to be unnatural. He has pointed out certain statements from her evidence from pages 19, 21 and 22 of the Department's paper book. The balance sheet is on page 29. He has urged that she has gold ornaments only of Rs. 1,600 and, therefore, she could not have deposited the sum of Rs. 25,000 with her father and the presumption drawn by the lower auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts. The ITO has seen the receipts. This amount was to be credited to the Building Fund Corpus. Evidence regarding the building fund is at pages 116, 117 and 118 of the assessee's paper book. He has pointed out that Shri S.V. Harhare has filed his affidavit on page 24 and he has also tried to rely on the evidence of the ITO Shri N.G. Thite. We have already stated above that we are very much reluctant to take the evidence of authorised staff members who have made the search and seizure at the assessee's premises. He has also contended that the Department is not at all sacrosanct to be treated every assessee as a dishonest one. 24. Shri Bhojwani contended that it would be incorrect to say that the assessee was all along in a good and peaceful mental condition and he was not puzzled. It is against the nature of a person to be unpuzzled when a raiding party comes to his house. Shri Saran Singh is one of the trustees and his statement does not require to be rejected. CIT(A)'s order is merely mechanical and he has simply agreed with the ITO without applying his mind. Inspector's report cannot be relied on, because no chance was given to the assessee to controvert it. It cannot be beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... going through the order of the lower authorities and the entire evidence on record, we are satisfied to come to the conclusion that there is explanatory evidence, though the explanation given is not right from the original statement of the assessee, but the explanation with evidence given by the assessee vide his letters and statements and the supporting evidence of another trustee of the Gurudwara Gurusingh Sabha Building Fund Committee are acceptable. Secondly, the presumptions raised by the Department are also not out of doubt. Under such a circumstance, and when doubt cannot be removed, it would be always safer to give the said benefit of doubt to the assessee. Hence, we feel that the explanations given by the assessee in respect of the items of additions appear to be reasonable and if reasonableness is so straightforward, there is nothing wrong to allow the assessee's claim. We reverse the orders of the authorities below. 29. In the result, the assessee succeeds and the appeal is allowed. V.S. GAITONDE, A.M.: I have carefully studied the facts and the arguments and tried my level best to persuade myself to agree with the conclusion proposed by my learned brother. In conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness (sub-contract) but from some other undisclosed sources. Strictly speaking, since the tax liability is the same whether the income is from contract business or from undisclosed source, the issue would be academic and this is what the CIT(A) stated in para 20 of his order. The issue, however, is not academic and has a direct bearing on the remaining addition of Rs. 1,65,000 from undisclosed sources. The ITO asked some searching questions regarding the activity which fetched the alleged sum of Rs. 51,060 held in cash. There are no books of accounts or other evidence. The assessee in his sworn statement on 12th July, 1978, could not remember the details or even the name of the highest bidders. All that he could say was that the total profit was Rs. 1,50,000 and that his share was Rs. 30,000. Whilst volunteering to produce evidence regarding auction he did not in fact do so. He did not also know the amount of deposit to be made in the auction. Whilst claiming to have formed a syndicate or a ring with three other contractors in the auction at Dehu Road, the assessee could not give even the names of contractors. Again whilst stating that the auction was for automobile parts he coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luntary Disclosure Scheme was Rs. 50,000. Thus, the assessee tried to explain Rs. 90,000 as having their origin in the voluntary disclosure made by him. But soon after the search was over the assessee realised the futility of pursuing the same possibly because he found that these disclosed amounts have already had their destination fixed somewhere else and would not therefore be available to explain the whole or part cash of Rs. 2,23,400. Having given up this explanation, purporting to act on his promise, by letter dt. 28th Oct., 1976, the assessee gave the following break-up for Rs. 2,23,400. . Rs (1), Cash deposit kept by Mrs. Priya Krishanlal Jaggi of Bombay (married daughter) 25,000 (2) ash deposit received from Gurudwara Gurusingh Sabha (building fund committee) 1,10,000 (3) Amount belonging to my mother Mrs. Jeevanadevi Mangalsen Oberoi (removed from separate purse), 4,300 (4) Personal cash balance of Gobindram Oberoi 2,200 (5) Personal cash balance of Mrs. Bimalwanti 840 (6) Cash belonging to Shri Gobindram (out of sub-contracts), 51,060 7) Deposit received from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee himself have developed such an acute amnesia? If the contention had any element of truth the same would have come out at least within a reasonable time after the search. Between 7th Aug., 1976, and 18th Oct., 1976, there was no communication from the assessee. Confirmatory letter dt. 24th Oct., 1976, from the daughter was filed only on 24th Oct., 1976; (2) the assessments made by the ITO, Bombay, do not show the destination of the funds derived out of such income. There is no explanation as to how and why such amounts, if any, were held in cash when the amounts inherited from her husband were already in bank; (3) There was no satisfactory evidence as to how and when the amounts were brought from Bombay to Shrirampur; (4) The returns of income filed with ITO, Bombay, showed that these returns had little evidential value. All that can be said from the returns is that the capital build-up returns which were possibly intended to benefit somebody were diverted for the benefit of the assessee. The ITO's records in Bombay showed that the original returns for 1976-77 did not have the statement regarding handing over the money to the assessee. According to the ITO these statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any aspect of this alleged custody. Shri Juneja claimed to have kept the same amount earlier at his home out of his own savings. He had not taken any acknowledgment, etc. Whilst asserting that he had asked for the return of money orally, he admitted that he has not pursued the matter. The ITO held that it is unbelievable that Shri Juneja would be keeping substantial amount idle out of his own savings. It would also be a very curious thing to keep the amounts in this way. In fact, Shri Juneja had two savings bank account one of Bank of Baroda and the other in State Bank of India at Shrirampur. The Bank of Baroda account was opened in August, 1975 when he was transferred from Sitapur in U.P. to Shrirampur. This account was maintained even till June, 1977 when he was transferred from Shrirampur to Aurangabad. During the period December, 1975 to June, 1977, the balance in account was nominal say, Rs. 800 to Rs. 1,300. The State Bank of India account position was also similar. 7. The ITO critically analysed the sworn statement given by Shri Juneja on 24th July, 1979. As mentioned in paras 20 and 21 of the ITO's order, Shri Juneja was asked as to the reasons for keeping such large am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... getting some tyres in which the assessee was dealer. The assessee was certainly not in a proprietary business and if these facts were correct the amount should have reached the coffers or the firm as advance from Shri Nanaksingh. Shri Nanaksingh did not even purchase the tyres from the assessee or the firm. He got them from another concern M/s Vikas Cycles which would show that his version regarding giving an advance to the assessee was not correct. Shri Nanaksingh made further statement that the sum paid as an advance to the assessee could be traced to a receipt by him from Maharashtra Sugar Mills as transport commission, etc. The ITO pursued the matter with Maharasthra Sugar Mills and found that Nanaksingh has actually received Rs. 18,035 on 23rd June, 1976, by cheque which was credited by Nanaksingh into his bank account in State Bank of India. Thus, the version regarding receipt from Maharashtra Sugar Mills for identifying the alleged cash payment to the assessee stood disproved. Further, the ITO took the trouble of examining the partner of M/s Vikas Agency who had, according to Shri Nanaksingh, supplied tyres to Nanaksingh. The partner Shri Ganghan was examined on oath and ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shrirampur, simultaneously as the assessee was having 60 per cent share therein. Both these brothers whilst confirming the assessee's version had some explanations which were rather odd. Shri Saransingh was also present as panch throughout the search. He claimed to have pointed out to the officials that the amount belonged to the Gurudwara and that the authorised officers, at the time of search, as he was panch. He claimed to have made a statement to the authorised officers, curiously at a time when the assessee himself was not present in the room as he was called upon the shop where search was going on. It is surprising how Shri Saransingh chose this particular moment for the alleged revelation. One would naturally expect, if the assessee's version is true, a claim coming from Saransingh or from the assessee within a few minutes of the commencement of the search. Shri Saransingh claimed to have again told the authorised officers at the time of seizure and counting of the cash and stated that at this time i.e., on the second occasion in the evening the assessee was present in the room when he said so. The other brother Jagjitsingh Chugh in his statement stated that he also knew fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cross-verify with the donors through the Inspector (sic-who) brought out the hard truth that none of these donors had any evidence or any record about such payments. The assessee had by then succeeded in persuading some persons to admit having given some amounts in vague terms. The Inspector's enquiries at Kopargaon and Rahata where collections were claimed to have been made revealed that in many cases there are no persons at all whose names were furnished by the assessee. The enquiries with old Sikh residents at Kopargaon showed that they were also not aware of the whereabouts of such persons. When the assessee was confronted with this, he failed to avail of this opportunity and preferred to take an extraordinary plea that as he was not himself in the party of persons who collected the donations he could not throw light on the whereabouts of such persons. A guess was hazarded that many of these persons are truck operators who move from place to place. Putting his figure on some of the amounts, the ITO tried to locate on Shri Kripalsingh Kanhyalalsingh of Rahuri who it was claimed to have paid Rs. 1,0001 on 4th Aug., 1976. Once again the ITO noticed that there were no such persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made after the search to support the assessee's claim. The ITO did not also accept the contention that the cyclostyled letter now shown to him was actually in existence on the date mentioned therein. Ante-dating is a common feature of such attempts to produce fabricated evidence. The ITO also rejected the contention that since the books of accounts of Gurudwara have been audited and that the auditors have also confirmed the assessee's version that same should be accepted. The ITO held that the auditors were not going beyond what was stated to them by the parties concerned, the audit itself having taken place after the raid. The auditors were never called upon to scruntinise the genuineness of the receipt, etc. and therefore, the auditors letter or report had little evidential value. The ITO then examined the claim regarding the manner of travelling by the alleged members. Shri Jagjitsingh claimed to have travelled in his car which he was himself driving. His statement recorded on 27th April, 1979, showed that he claimed to have been sufficient petrol in the car as he had taken petrol 2/3 days earlier. He had to take a stand because on the date in question he had no vouchers regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fronted with this, once again an extraordinary plea was raised that it was a slip on the part of Jagjitsingh in stating that he was travelling in his own car. A peculiar stand was taken that the evidence thus gathered is not sufficient to disbelieve Jagjitsingh who examined twice on oath had confirmed that he did actually travel at various places in his own car and driven by himself. Linking this piece of material with further evidence gathered, the ITO held that either collections were not made as alleged or that the collections, if made, had no link whatever with the cash found at the residence of the assessee. The ITO found that every time the assessee was confronted, he had some other card up his sleeve. A new twist was given asserting that the impugned car belonged to uncle of Jagjitsingh. Lastly, the ITO noticed that the places claimed to have visited Sangamner, Rahata, Kopargaon, Yeola, Manmad and Vaijapur on one day are too far away from each other even for a whirlwind tour. In fact, the assessee claimed to have made collections even from farther of places like Aurangabad, Jamkhed, Belpur, etc. in one day. When physical impossibility of such trips was pointed out once again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,10,000 was so included in the seized cash." Even the most favourable part of the statement of authorised officer would suggest that Shri Saransingh might at best have got some ideas to put a claim only at the end of search. Obviously Saransingh's mental faculty must have been working very fast throughout the search but could manufacture very late a plausible explanation which had a chance of getting some confirmation in the form of other make-believe evidence which would be prepared later. If Shri Saransingh had himself come with cash at 9.00 p.m. previous night why did he take such a long time to whisper into the ears of the authorised officer, carefully choosing a moment when the assessee was out of hearing distance? The ITO held that the big time gap between the date of search i.e., 5th Aug., 1976, and the actual production of evidence i.e. 27th Oct., 1976, revealed a lot. He thus held that there was hectic activity on the part of the assessee and his friends to concoct and fabricate evidence. It may also be mentioned here that the ITO enquired with the authorised officers whether they had seen any receipt books of the Gurudwara funds. Only Shri Thite claimed to have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry late, that is, only on 3rd Jan., 1978, when for the first time, he brought out this aspect of having pointed out to the authorised officers about the existence of Gurudwara fund in the cash seized from the assessee premises. It is strange that the necessity of making such an affidavit about the so-called claim of Gurudwara funds arose nearly one and half years after the raid. This inordinate time between making the affidavit and the date of raid certainly goes to disprove the claim sought to be made on behalf of the assessee. It will thus be seen that the ITO had marshalled all facts and ultimately held that the explanation on this part also deserves to be rejected because of the insufficient and unrealiable evidence produced in support of the claim. 14. One can come now to Dr. Bhojwani's submissions. Dr. Bhojwani was aware of all the factual position marshalled by the ITO in his assessment order and confirmed by the CIT(A) in his appellate order. He, however, submitted that whilst the basic facts may be true, the conclusion is totally unwarranted. He saw no reason for disbelieving the assessee's version particularly when the assessee has himself came out with a statement rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that there is really no basis whatever for such an allegation that the same is given after search. Even without such a statement, it could have easily been seen from the return that there was cash in hand of about Rs. 25,000. Smt. Priya knew that her father was trying to rehabilitate her through a second marriage and she also knew that for this purpose she would have to keep money in cash without the knowledge of her in-laws. Thus, whereas she kept Rs. 18,000 inherited from her husband in bank, she thought it wiser to keep Rs. 25,000 with her father. She visited the assessee about two months before the raid. Secondly, possibly the assessee was not sure whether this Rs. 25,000 was part of the cash at home or had already been taken to the shop. This is the reason why the assessee in his preliminary and final statement did not refer to Priya's funds being in his custody. Referring to the statement of Priya, Dr. Bhojwani submitted that the ITO has drawn unnecessary adverse inference regarding her capacity to earn income. ITO has also laid undue stress on the fact that the diary in which she had made such entries was lost or mislaid or could not be produced before the ITO. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that whereas the assessment order is final as far as particular year of assessment is concerned, it merely constitutes a piece of evidence in subsequent year of assessment. An earlier assessment year (sic) like any other piece of evidence may be accepted or rejected in a subsequent year depending on the facts and circumstances of the particular case. There is no doubt that the finding in earlier assessment year should not be ignored on flimsy ground. But in this case there are not even findings of cash savings in the earlier years. The earlier years' returns were obviously capital build-up returns. It is indeed an extra-ordinary feature that anyone would file generously voluntary returns showing marginally above taxable income. Such returns are always filed by persons who want to have capital build-up and to lend their names for hawalas on commission. The returns filed prior to the raid were thus obviously intended to give hawalas possibly to some unknown parties. After the raid the assessee thought that he could himself as well take the advantage of the hawala. The observations of the ITO show clearly that the returns of Priya were motivated. There is no evidence regarding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's and Sri Nanaksingh Chug's version regarding the custody of the sum of Rs. 15,000. Shir Nanaksingh Chug is blind and, therefore, may have made a small mistake regarding the date and the manner of receipt from Maharashtra Sugar Mills. Referring to page 79 of his compilation, Dr. Bhojwani highlighted the fact that the amount has been repaid on 29th Oct., 1979, by adjustment of dues against sale of diesel. Thus, the material on record is quite sufficient to warrant acceptance of the explanation regarding the origin of funds found at the time of search. 20. In reply, the Departmental Representative higlighted the facts that for nearly two years from the date of search, Shri Juneja and Chug had not surfaced. The evidence thus clearly points the fact that these persons have been bought over by the assessee to make false statements in his favour. The question really is not whether these people could have mustered the funds but whether they did really so muster them and hand them over. The material on record shows clearly that Shri Juenja is either vague or inconsistent. The subsequent return is clearly a made up affiars to give colour of credibility to a transaction which nev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntributed by individuals were nominal, it would be futile to expect these donors to keep a detailed account or to identify these amounts with their account version. Regarding the addresses, since many of the contributories were many persons in transit or truck drivers only the addresses as given by the drivers were noted. The receipt books, etc. have been duly found. Auditors have duly accepted the contention of the trustees and the assessee about the sum of Rs. 1,10,000 lying with the aassessee at the time of search. Referring to page 123 of his compilation, Dr. Bhojwani submitted that the letter from the trustees dt. 27th Oct., 1976, is sufficiently eloquent and should leave no doubt about the origin of the funds. Here again, the fact that the assessee did not make any reference to this aspect in his preliminary and final statement at the time of search need not lead to a conclusion against the assessee. Even the delay between 5th Aug., 1976, and 27th Oct., 1976, is attributable to the circumstances beyond the control of the parties. It was thought that the information could as well conveniently be given at the time of hearing before the ITO under s. 132(5). Regarding the doubt r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned on 5th August. He had also made it clear that the amounts collected on 4th August were kept with Jagjit. On 5th Aug., 1976, the party returned from Vaijapur and pooled all the cash collections including the previous day's cash and along with Saransingh went to the residence of the assessee to hand over the amount as per the directions of "Sangat". Shri Somsingh has also confirmed having taken receipt. Shri Juneja was not present on 5th Aug., 1976, when the party visited outside places. There is thus no question of contradicting the statement of Shri Juneja driving his own car, etc. Shri Somsingh has further stated that the receipts were issued on the spot by Shri Jagjitsingh. Finally he has given a figure of the amount given to the assessee as chief trustees exactly at Rs. 1,10,000 and has also given the reasons why the amount was given to the assessee. Dr. Bhojwani referred to the statement of Shri Juneja and Shri Gurubachansingh. 22. Summing up his arguments Dr. Bhojwani contended that the assessee's various explanations deserve to be accepted. CIT(A)'s order is mechanical and does not indicate an application of mind objectively. The Inspector's report on which so much rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no ground for holding that such amount also reached the assessee on 5th Aug., 1976, particularly because if it had reached only about 10 hours before the commencement of the search no man would normally forget existence of such a large amount. Shri Saransingh too would not have taken such a long time till evening to say this at the end of search. Assuming for the sake of argument that some amounts from Gurudwara fund did reach the assessee's premises the same must have been kept somewhere else and did not catch the eyes of search party. Such would normally have been kept in earmarked and laballed packet. No such things was found. Thus, the cash seized at the time of search had nothing to do with the Gurudwara fund and the evidence regarding Saransingh's statement is a cooked up affair in an effort to wriggle out of the uncomfortable situation. Even the statements of Shri Kathuria, Juneja and Gurbachansingh do not show that the cash found at the time of search had any link with the collection, if any. Referring to page 123 of the assessee's compilation, the Departmental Representative pointed out an inconsistency viz., Juneja had at one time said that he was away on 4th Aug., 1976, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts are primarily to be proved by the assessee. The evidence may be direct or circumstantial or both. In some instances even a mere statement of the assessee may be enough but in some other cases such self-exculpatory statement or explanation may not be enough. The cumulative impact of all the facts must be taken into account [Addl. CIT vs. Noor Mohd. Co. (1974) 97 ITR 705 (Raj)]. The provisions of Indian Evidence Act do not apply to income-tax proceedings. The ITO is not bound by any techincal rules of law or evidence and may rely on circumstantial evidence. In matters like cash credits or explanations regarding assets, it is not always possible to have positive and conclusive evidence. It is also not always necessary to produce counter-evidence to draw an adverse inference against the party on whom the burden of proof lies. The legal position was explained in Assam High Court in Chowchand Balabux vs. CIT (1961) 41 ITR 564 (Assam). It was observed as under, relying on Dhakeshwari Cotton Mills Ltd. vs. CIT (1954) 26 ITR 775 (SC). "It is not necessary in all cases that the Department should come with some rebutting evidence of its own, but the parties concerned are entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siderable force in the arguments of the Departmental Representative that when the evidence later produced by the assessee is looked into the background required in this case, there would be no difficulty in arriving at a conclusion against the assessee. The explanation now given regarding the assessee's conduct at the time of search is not at all satisfactory. As rightly pointed out by the Departmental Representative, when the assessee could give some details of insurance, etc. from the mere fact that he made a small mistake regarding the extent of gold ornaments or from his reference to voluntary disclosures which, in fact, was later found to be of no help to the assessee and was withdrawn, does not lead one to the conclusion that the assessee was disturbed or had lost his faculties to such a great extent that he could not have remembered even the previous night's incidents. It is common knowledge that every assessee when cornered take his time to explain in the hope the concocted evidence prepared later regarding the origin of the funds might come to his rescue. In such cleverly camouflaged matters one can see through the game only through the slips committed. Thus, the explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf could have failed to bring on record all these important aspects which could be in his favour. The inevitable conclusion is that no cash of Priya formed part of Rs. 2,23,000 seized. Thus, on a proper analysis of all these facts, the ITO and the CIT(A) can be considered to have acted reasonably in arriving at an inference against the assessee. 28. Regarding Juneja and Chug the explanations given are far from satisfactory. The assessee has never explained satisfactorily how these persons could not be mentioned by name for nearly one year after the search. It is quite clear, the assessee was himself in frantic search of such persons who could give some credible material to support the assessee's contention regarding the holding of cash. Shri Juneja, an employee of LIC with two bank accounts at Shrirampur, cannot be said to have taken the steps of holding some cash giving to his mother and ultimately passing it on to the assessee for safe custody. The actual date of alleged delivery is not known with the precision required. The ITO has brought enough material to show that the story does not deserve acceptance. It is quite clear that the return by cheque long after the search has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to explain why he could not have done this very act earlier and why he chose an occasion to whisper to Shri Thite when no one was raised (sic). All that can be said, is his mind was working fast for some statement in favour of the assessee and he could compose the same to whisper into the ears of Shri Thite in the evening. Even assuming that Shri Thite made a correct statement about the statement made by Shri Saransingh there is no explanation as to why such a statement was made so late in the evening. There is also no explanation as to how Shri Saransingh, could have arrived at the figure with such a precision. Thus, as pointed out by the Departmental Representative, although some amounts might have been collected by the Gurudwara committee from the inception of the Trust in 1974 from time to time, there is no link established between such funds and the cash found at the time of search. The totality of the evidence thus indicates in the form of statements of the party collecting funds that there was at best a nominal collection and that even such collection had no link with the cash seized at the time of search. The auditors report being based on self-serving explanation given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong other things, assessee stated that he had cash of Rs. 20,000 and gold ornaments about 75 tolas. 4. Again, when the raid was over at 6.45 P.M. (6th Aug., 1976), the statement of the assessee was recorded. The relevant portion of the said statement is reproduced here as under: ".....As regards the cash of Rs. 2,23,400 found in my house, today during the search, I have to say that it is out of the amount disclosed by me under the Voluntary Disclosure Scheme and out of the amount of Rs. 40,000 disclosed by my wife under the above Scheme. I cannot explain the balance of the amount of Rs. 1,33,400 at this stage. I will explain the same later on. The gold ornaments found in my house weigh about 25 tolas. In my earlier statement it was wrongly stated as 75 tolas, as I was puzzled." 5. In the course of the proceedings under s. 132(5) of the Act, apropos the cash, the following explanation was offered by the assessee vide his letter dt. 28th Oct., 1976 "(5) Cash amount of Rs. 2,23,400 Regarding cash of Rs. 2,23,400 found in the house premises, I have to submit as under: . Rs (1) Cash deposit kept by Mrs. Priya Krishnlal Jaggi of Bombay (Married daughter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jaggi was present at the time of search. She did not say anything at that point of time. Our attention was revetted on the statement on oath of Miss B.B. Deshpande (member of the search party) recorded before the ITO, A-Ward, Ahmednagar, on 10th May, 1979. Relevant portion is reproduced here as under: "4. Can you tell me whether anybody from the members of the assessee's family, or the assessee himself or the Pancha had made any claim about the amount of any part of the (sic) as belonging to any person and if so, whether you remember in whose name such amount was claimed? Only the assessee Shri Govindram had stated that some small amount belonged to his daughter and with that they had no concern. This amount was taken out by the other officials in our party from a separate cupboard from his daughter's room and for this amount the assessee claimed that the amount belonged to her with which he had no concern. 5. Besides this amount, was there any other claim regarding any part of the amount from the seized cash belonging to anybody else? No, only this much about the daughter's claim." 11. Opportunity was given to the assessee to cross-examine Mrs. Deshpande. But he decline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his account with the bank? Mr. Juneja was with the assessee in the Gurudwara committee. He came forward after a gap of two years to help him. 14. Rs. 15,000 was said to be belonging to Nanak Singh R. Chug. This name was also not given even at s. 132(5) stage. A confirmation dt. 17th July, 1978, was filed wherein it is stated: "....I hereby confirm having advanced a sum of Rs. 15,000 to Shri G.M. Oberoi on 15th July, 1976. This amount represents my personal savings and is of truck plying business. I had two trucks bearing Nos. MHS 5107 TMB 1970 model and MHF 6646 TMR model. I am assessed to income-tax under GIR No. DW/N-718 since 1966-67. I further declare that I have voluntarily kept this amount with Shri Gobindram and have not received any interest." Shri Chugh was stated to be a blind truck operator. ITO examined Shri Chugh on 27th April, 1979. He couldn't sufficiently demonstrate the exigency for making the deposit with the assessee. The veracity of his statement was found to be dubious. 15. For doubt two years from the date of the search, this amount of Rs. 15,000 + Rs. 15,000 = Rs. 30,000 remained as a dark cat. Name of depositors were not disclosed. Explanation offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,10,000 belonging to the trust of its building fund. That the income-tax authorities that time told me that I should make an appeal to the CIT, Poona, for release of the trust amount....". 19. Shri N.G. Tihte (who conducted the search operation) was examined under s. 131 of the Act by the AO. The relevant portion of the statement is reproduced here as under: "3. During the course of the subsequent hearing of the assessment proceedings in the case of Shri Govindram, Shri Sarangsing R. Chug, one of the Panchas who was present at the time of the search was examined and he has stated in his deposition that during the search operations he had pointed out to the officers present that the amount of Rs. 1,10,000 belonged to Gurudwara Fund and that it should not be seized. He has further stated that the officer present asked him to make a representation afterwards and not to say anything at that time since he was acting as a Pancha. Can you tell me as to what is stated by Shri Saransing as mentioned here is true? Whatever has been stated by Shri Saransing R. Chug as above is partly true in the sense that at the end of Panchanama, he tried to tell me that some funds belonged to Gurudw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not find it to question about the books and its connection with the claim of Gurudwara fund. At least there is no mention about any such query being made to Govindram? Since I had not taken cognizance of what Shri Saransing Chug was claiming about Gurudwara funds I did not feel it necessary to seize the receipt books. 11. You were also present as one of the authorized officers during the search of the business premises of M/s Ramchand Sons, of which Shri Govindram is a partner and in the separate Panchanama made for the business premises it is mentioned that cash of Rs. 2,000 was not seized as it was stated to be of Gurudwara. A cash of Rs. 2,000 was found in the business premises wrapped up in a letter-head of Gurudwara Sabha, and so it was not taken possession of. However, during the search operations I did not find any receipt book/account book/documents/registers relating Gurudwara Sabha in the business premises. 12. In the search at the residence also you came across receipt book of the Gurudwara but in the case of the Panchanama of business premises, there is no mention in the resident's Panchanama about the finding of any such books. Do you have to say anything ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on that day was kept by me in my custody. On the next day, i.e., on 5th I along with the other members of the committee Somsingh Kathuriya, Balaksingh Chug went in my car for collecting funds from outside places. First we went to Sangamner, then Rahata, Kopergaon, Yeola, Manmad, Vaijapur (Via Yeola) and from Vaijapur we returned to Shrirampur at night at about 8 o'clock. 8. When you had kept the first day's amount in your house why did you think of handing over the amount collected on the second day to Govindram. As per the instructions of the Gurudwara Committee for the Building Fund, it was decided to hand over the amount of Building Fund to Shri Govindram who was the chief trustee hence we drove to his residence and handed over the amount to him. We gave the amount at his place at about 9.00 P.M. or so. 10. Did you obtain receipt from Govindram after handing over the amount? We obtained his receipt on the back of the last receipt. 22. Dr. Pathak submitted that the assessee failed to discharge the onus. Assessee alleged the things contradictory to each other. He changed the stand according to the promptings of his private interest. Statement recorded under s. 132(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rudwara Sabha, categorically stated in his statement that Shri Saransing went to the residence of Shri Gobindram (assessee) and handed over the amount to him since he was the chief trustee of the Gurudwara. 27. Adverting to the statement made under s. 132(4), I find that assessee categorically stated that explanation in regard to Rs. 1,33,400 will be given at a later stage. Statement given under s. 132(4) can be used as evidence against the assessee. Presumption can be drawn on the basis of such evidence. But this gives rise to a presumption which can be rebutted; statement given at the time of search cannot be treated as sacrosanct. The statement of Mr. Saransingh is relevant. It is said that attention of Sri Thite was invited in respect of the Gurudwara fund at the time of search. Dr. Bhojwani submitted that this amount of Rs. 1,10,000 belongs to Gurudwara Sabha. It is to be used for the construction of Gurudwara. The amount is duly reflected in the books of Gurudwara. Construction activities are half-way through due to the paucity of funds. The moment money gets released it shall be used for the completion of the construction work of Gurudwara. In the light of the material a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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