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TMI Blog2006 (6) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on 10th January 1994. In the course of search the assessee had admitted an investment of Rs. 37,00,000 in money lending business. In the light of the promotes seized in the course of search, it was found that the amounts were advanced during the previous year period relevant to the assessment years 1992-93 and 1993-94. On the basis of the above findings, an addition of Rs. 26.85 lakhs was made in the hands of the assessee for the assessment years 1992-93 and 1993-94 and corresponding interest income was also estimated thereon. In the light of the above case history, the Assessing Officer asked the assessee in the course of the impugned assessment proceedings that what would be the interest earned by the assessee on the above stated investment in money lending business. The assessee replied that those additions made by the Assessing Officer are being contested before the Appellate Authorities and he did not have any income as presumed by the Assessing Officer and the proposed addition was quite unjustified. But the Assessing Officer relying on the materials and statements collected in the course of search came to an adverse conclusion and made the said addition of Rs. 12,18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessment year 1994-95. ( b ) The ld. CIT(A) failed to appreciate that no interest was earned or received by the Deceased on so called investment in money lending business which could be brought to tax. ( c ) In reaching to the conclusion and making such huge addition, the ld. lower authorities omitted to consider relevant factors, considerations, principles and evidences while they were overwhelmed, influenced and prejudiced by irrelevant considerations and factors. 4. The ld. CIT(A) erred in holding that the ground railed against levy of interest under sections 234A and 234B of the Income-tax Act, 1961 is not maintainable. The Appellant denies his liability for such interest. 5. The ld. Assessing Officer erred in holding that the ground raised against initiation of penalty proceedings under section 271(1)( c ) of the Income-tax Act, 1961 is premature. The Appellant denies his liability for such penalty." 7. Shri F.V. Irani, the learned counsel appearing for the assessee argued the case at length. He invited our attention to the factum of the search conducted on 10th January 1994 and the fate of the consequent assessment completed for the connected assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( iii ) the assessee is not prepared to file a wealth statement wherein he will have to disclose the entire capital whether liquid or fixed; and ( iv ) large sums were drawn out of this business as well as out of sums lying to assessee s credit with Chaturbhuj Piramal of Bombay. Past history being what it is, interpolation in books being an easy affair and business opportunities for a capitalist in the previous year being almost unbounded, I add for undisclosed income indicated by the above facts and on the basis of past records a sum of Rs. 10,291." (Page 359) 10. The learned counsel submitted that the above addition made by the Assessing Authority was confirmed by the First Appellate Authority as well as by the Tribunal in which context the Orisa High Court held as follows : "For the assessment years 1944-45 and 1945-46, the Income-tax Officer added Rs. 10,291 and Rs. 10,000 respectively as income from outside the books. In the preceding year, viz., assessment year 1943-44, the Tribunal held that the assessee had income which was not brought into the books and that it justified an addition of Rs. 13,000. The Appellate Assistant Commissioner confirmed the additions and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or bare guess, but on legitimate material from which a reasonable inference of income having been earned during the accounting year in question can be drawn, and that the initial burden of finding such material, however slight, is on the Income-tax authorities and not on the assessee. In the present case all the materials before the Income-tax authorities are ( i ) the existence of "past capital" and ( ii ) the fact that the assessee has not filed a wealth statement for the accounting year though called upon to do so. We do not think that these facts are sufficient to shift the burden of proof on to the assessee. The facts do not necessarily justify and prima facie inference that the past capital produced income during the accounting year." (Pages 360 361) 11. The learned counsel, therefore, submitted that the additions made by the revenue Authorities are necessarily to be deleted. 12. Shri K.C.P. Patnaik, the learned senior Departmental Representative appearing for the Revenue contended that it was found in the course of search that the assessee had invested capital in his unaccounted money lending business and additions were made on that ground for the immediate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned previous year have been brought on record. The interest income have been estimated by the Assessing Authority and added to the income of the assessee solely on the ground that the assessee was implicated in a case of unaccounted income for the earlier assessment years 1992-93, 1993-94 and 1994-95. Therefore, the pertinent question to be considered is whether the Assessing Authority is justified in making an estimation on interest income based on a presumption that additions were made in the hands of the assessee for the earlier assessment years on account of the unaccounted business. In this context we find that the decision relied upon by the learned counsel in the case of Banshidhar Onkarmall v. CIT 23 ITR 353 is relevant and highly persuading. The facts of that case are exactly similar to the facts available in the present case. There also income was estimated outside the books for earlier assessment years. On the basis of that past history the Assessing Authority made additions for subsequent assessment year also. In this context the court held that "past history might be legitimate material, but that was not sufficient by itself, without more, to justify assessment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnite suspicion in the mind of Assessing Authority which should prompt him to carry out necessary investigations. But the past history as such cannot take the role of evidence. If the reasoning of the revenue is accepted, as held by the Hon ble Prissa High Court, this sort of additions by way of profit must go on ad infinitum, the revenue not being a any time able to say when the supposed undisclosed source will come to an end. 19. It is the case of revenue that the onus is on the assessee to prove that he had no income from his past source. In fact the revenue is asking to prove the negative. The negative could be proved only by denial or at the maximum by the denial through an affidavit. The assessee cannot be called upon to prove the negative beyond that. It is against the basic rules of Evidence; because it is impossible. Rather taking clue from the past history it was for the Assessing Officer to show at least in a slightest manner that the assessee still enjoyed interest income from the capital deployed in the past for carrying on unaccounted money lending business. 20. In the facts and circumstances of the case and most particularly in the light of the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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