9911796707
TMI Blog1954 (11) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under section 26A of the Income-tax Act, the registration taking effect from the assessment year 1946-47. On total sales of ₹ 5,79,143 the assessee showed a profit of ₹ 24,191 that is below 4% which was regarded as extremely low. The Income-tax Officer after scrutinising the ledger accounts of various parties in the books of the assessee felt doubtful about the genuineness of certain deposits in the personal account of persons staying in Marwad. As these deposits formed an important factor in the matter of the present assessment he called for the assessee to show that the deposits were actually received from the creditors in whose names they appeared in the assessee's account books. The accounts in which such deposits a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the creditors. The assessee also filed affidavits executed by Ramgopal Kejriwal, Sawitribai Kejriwal and Sitabai, in support of his contention that the deposits were genuine. In proof of the genuineness of the above deposits the assessee relied on the following: (i) affidavits filed before the Income-tax Officer, (ii) the deposits were received by cheques or drafts on banks in British India and the same were repaid by cheques or drafts and (iii) interest on these was also stated to have been paid by cheques or drafts. The Income-tax Officer was of the opinion that the letters by creditors Sawitribai, Sitabai, Setib and Bhimraj Duggad were not genuine although affidavits were filed in support of the deposits by Ramgopal Kejriwal, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer felt doubtful about the genuineness of the loans and he wanted to cross-examine the parties but the petitioner did not show his willingness to produce them. I am given to understand that some of the non-residents carry on business at Fatehpur and if the petitioner was serious in the matter he could have easily called them or produced the account books of those persons for examination before the Income-tax Officer. He failed to do so. The burden of proving the nature of the cash credits in doubtful accounts lies with the petitioner and not on the department. Previous records also go to show that substantial amounts were credited in the names of the ladies from Fatehpur in the account books of Seth Bachhraj Amolakchand and these depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wal ₹ 12,000, Sagarmal Agarwal ₹ 10,000, Sitabai Modi two items, each of ₹ 4,168 and 1,700, Ramgopal Kejriwal ₹ 5,000, Bhimraj Duggad ₹ 9,500 and Bhagirathi Bai ₹ 1,500. The above credit entries do not appear to be fictitious. The question that arises for our consideration is whether on the evidence on record it was legitimate to draw an inference that these amounts represented undisclosed profits of the firm. 8. It was contended on behalf of the applicant that the depositors could not be compelled by the Income-tax Officer to appear before him for giving evidence as they resided at a distance of more than 200 miles from Nagpur, and as the assessee had offered to examine them on commission the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case could not be compelled by the Income-tax Officer to appear before him in person for giving evidence as they resided more than 200 miles away from Nagpur. In our opinion, the Income-tax Officer could not have refused to issue such a commission for their examination when the assessee applied for it. The appellate order passed by the Appellate Assistant Commissioner of Income-tax, Nagpur, shows that a grievance, that the request for commission was not granted, was made before him in appeal. The Appellate Assistant Commissioner made a grievance of the fact that the assessee did not produce the accounts of the non-resident depositors to prove the loans. This grievance of the Appellate Assistant Commissioner is unreasonable when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed by the assessee before the Income-tax Officer for examining the creditors on commission should have been taken into consideration in determining his objection to the addition of the sum of ₹ 43,868 to his income. Affidavits and letters were filed by the assessee in support of the deposits; if the Department was not satisfied, it should have allowed the assessee to examine the creditors on commission. On the facts actually found and strictly confining our decision to the facts of this case we are of the opinion that the material is not sufficient on which the Department could have come to the conclusion that these credits represented undisclosed profits of the firm. 13. The statement of the case prepared by the Income-tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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