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TMI Blog2015 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... w permits the A.O. to draw an adverse inference of it as representing the assessee’s income. As regards the year, there can again be little doubt in the matter. The impugned credit/s, which we have found as a fresh credit/s, is during the current year. The liability was accepted as genuine for and up to the immediately preceding year, while it is no longer payable as at the year-end. The taxable event, in terms of gain, thus, has taken place during the year, even if one considers the passing of the journal entry, recording so, on a particular (single) date in the books, to be a matter of convenience only. It is for these reasons that we find the impugned credit as corresponding and answering to the concept of income under section 2(24) and, further, as standing to fall to be assessed u/s. 56(1) and 56(2), finding strong support in the decision in the case of T.V. Sundram Iyengar [1996 (9) TMI 1 - SUPREME Court]. - Decided against assessee. Addition being the write back of earlier year expenses to the assessee’s capital account for the year - Held that:- . No taxable event has taken place in the current year, as well as, as it appears, in the past. A reversal of a wrong entry, havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. Name Amount (Rs.) 1 Diseto Tools Company 6,06,000 2 Balkishan & Son 1,95,000 3 Vinod Corporation 80,000 4 Manisha Trading Company 1,00,000 5 Desai Corporation 1,00,000 6 Kinner Textile 95,000 7 Samir Trading Company 1,00,000 8 Shantilal Lalchand & Sons 1,71,500 9 V. Navbheram & Company 1,95,000 10 N Vasantrai & Company 1,00,000 11 Dhanji Shivaji Bhanushali 1,50,000 12 Dhanji Bhaga Patel 2,50,000 13 Pravin Shivaji Furia (HUF) 1,50,000 14 Onida Enterprises 1,75,000 15 Manji Ladha Patel 1,25,000 16 Harilal Kuvarji Gala 1,50,000 17 Bombay Textile 3,00,000 Total 30,42,500 The assessee being unable to substantiate her claim, furnishing no more than the names of the parties, nor even not the reason for the write back, the same was treated as income from other sources, i.e., under the residuary head of income. In appeal, it was pleaded that the parties being not traceable, confirmations from them could not be obtained. In view of the ld. CIT(A), upon considering the Assessing Officer's (A.O.) report and the assessee's comments thereon, the ratio of the decision in the case of CIT v. T.V. Sundram Iyengar [1996] 222 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal receipts are excepted. The reason is, again, simple. Income, by definition, is always conceived in terms of accretion to capital. When, therefore, what is received stands established as capital, there is no question of it being considered as accretion thereto and, hence, as income. However, here again there are exceptions, which are essentially rules of evidence, coming into play where the receipt or the credit is not established as a capital receipt. Accordingly, section 68 deems any credit, nature and source of which is not satisfactorily explained, as income for the year of such credit. The same does not violate the principle or breach the scope of the term 'income', but mandates a statutory presumption of it representing the assessee's income, where its nature and source is not satisfactorily explained, even where the credit is to the account of another, or not on revenue account; the receipt being itself an evidence of income. Where, therefore, the genuineness of a 'loan' or 'gift', both forms of capital transfers, is not satisfactorily proved, the same is liable to deemed as income, the second aspect of which relates to the year for which it is to be brought to tax. The R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count maintained by the assessee are to be duly taken into consideration by the Revenue authorities. Reference was also made by it to the decision in the case of Vijay Kumar Talwar vs. CIT [2011] 330 ITR 1 (SC) (at pg. 478 of the reports) to reiterate the same principle, i.e., that in the absence of a satisfactory explanation, as where the assessee does not produce any evidence about the nature and source of the credit rebutting the presumption of section 68, the same would hold, attracting charge to income tax. In P. Mohanakala (supra), to which again reference stands made by the hon'ble court (at pg. 447 of the reports), the apex court clarified that the expression 'the assessee offers no explanation' occurring in section 68 means where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by it. Further, the satisfaction, or as the case may be, non-satisfaction of the A.O. is required to be formed objectively with reference to the material available on record, signifying an application of mind, which is the sine qua non forming the opinion. In our clear view, this is the case of no explanation being offere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured loans, i.e., in the absence of confirmations to that effect, how would it assist the assessee's case in-as-much as these are admittedly no longer loans, i.e., do not represent the assessee's liability as at the year-end, that being the rationale or the raison de'tre for their write back as equity. Unless and until, therefore, the assessee shows them to be 'gifts', transmitting the property in the impugned sums to the assessee, establishing genuineness thereof, section 68 would apply. In fact, that these are not gifts is patent from the fact that the remitters (donors) are not traceable. In Major Metals Ltd. (supra), the hon'ble court found the conversion of the loans into share application money, including the extent of premium at which the shares were allotted, i.e., at ₹ 990/- per share of a face value of ₹ 10/-, as a valid basis for enquiry by the Settlement Commission into the genuineness of the loan/share application money. Continuing further, section 68 would hold even if the impugned sums represent, as contended by the Revenue, the assessee's liabilities, assumed in the past, on whatever count. The same no longer representing a liability, there is admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e accounts for the last 15 years or so. The amount stands credited in the books to her capital account. The same is a credit, separate and distinct from that made earlier, i.e., on the receipt of money or, as the case may be, incurring of the liability in relation to the payable/s. The ingredients of section 68 are satisfied. One may argue that the Revenue has not invoked the said provision. That, to our mind, is of little consequence. As long as the assessing authority has a requisite power for a particular act, invocation of a wrong section is not material (refer: L. Hazari Mal Kuthiala vs. ITO [1961] 41 ITR 12 (SC)). In fact, as we have seen, it is even not a case of wrong section in-as-much as the other sections are equally applicable. The purview of the Tribunal is to decide the matters in accordance with the law. It is the correct legal position that is relevant, and not the view that the parties may take of their rights in the matte (refer: CIT v. C. Parakh & Co. (India) Ltd. (1956) 29 ITR 661 (SC); Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363 (SC)). Again, we are not advocating that the credit should be construed as income only on the basis of the rules of evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) confirmed the addition in view of the assessee having failed to clarify her claim with reference to the entries passed in her accounts. Aggrieved, the assessee's is in appeal. 7. We have heard the parties, and perused the material on record. We are clearly unable to appreciate the Revenue's stance. The assessee clearly states of neither owning any godown nor of, consequently, any godown rent being payable to her by Khatau Makanji Spg. and Wvg. Co. Ltd. (KMSWL) or any other, which was in fact payable by the said company to a third party. The payment (Rs.1,51,712/-) was, however, made on its behalf by one, Kedar Kiran Investment Pvt. Ltd. KMSWL, however, instead of crediting the latter in its accounts, credited the assessee's account on account of rent. The assessee, as it stated, responded by debiting KMSWL while crediting the payer-company, even as no entry was required to be passed in her books. Again, as explained during hearing, instead of passing a reversal entry, by mistake the same entry was repeated, resulting in a fictitious credit of ₹ 3,03,424/- (Rs.1,51,712/- x 2) in her accounts. It is this that was sought to be neutralized by the write back thereof in its acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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