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TMI Blog2000 (1) TMI 1002X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhatia 47,000 1,10,000 5,000 5. M/s. Acme Sales Corporation 2,00,000 6. Master Deepu Agarwal 75,000 7. Miss Namita Agarwal 1,40,000 8. Miss Puja Agarwal 55,000 Total 7,55,000 3. Out of the above, loans of ₹ 3,15,000 from persons mentioned at serial numbers 4 and 5 were treated as explained. The remaining loans of ₹ 4,40,000 were treated as unexplained. However, in case of late P.S. Bhatia, HUF, only the peak amount of ₹ 50,000 was considered for addition. Accordingly, Assessing Officer made a total addition of ₹ 4,15,000. Out of the total addition of ₹ 4,15,000, additions in case of Deepu, Namita and Puja Agarwal aggregating to ₹ 2,70,000 were made on the basis of the decision of the Supreme Court in the case of Jamnaprasad Kanhaiyalal v. CIT (1981) 130 ITR 244as returns in these three cases had been filed under the Amnesty Scheme. In short, total additions constituted ₹ 1,45,000 in respect of Bhatia family and ₹ 2,70,000 in respect of Agarwal family. 4. In the first appeal, Commissioner (Appeals) deleted the addition of ₹ 1,45,000 in respect of Bhatia family. However, with respect to Agarwal family, after conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ass-books and confirmed having given the loans. However, since the returns of the children were accepted under the Amnesty Scheme, the parents were of the view that they need not give the details. In any case, it was contended by the learned counsel that the assessee had discharged its onus by explaining the source and the Assessing Officer could not go into the sources of source. 7. Distinguishing the case of Jamnaprasad Kanhaiyalal, Shri Rai submitted that in that case the disclosure was in the name of the children of the partners of the assessee firm itself. On the other hand, in the present case, the amnesty returns were filed by outsiders with whom the assessee had no connection at all. It was further contended that in that case, the disclosure was under Voluntary Disclosure Scheme of 1965 wherein if a person made a declaration, the Commissioner was under an obligation to assess him to tax, whereas under the Amnesty Scheme of 1985, there was no such obligation on the Commissioner. Hence, having accepted the returns under the Scheme, the department could not say that the minors had no capacity to advance. Finally, for his various contentions, Shri Rai also relied on the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with section 24(3) of the said Finance Act has an overriding effect over section 68 of the Act, and therefore, the ITO could not make any investigation as to the nature and source of the cash credits. (c) There cannot be double taxation of the same income, once in the hands of the creditors and again in the hands of the assessee. 12. As regards the first contention, the Supreme Court referred to the provisions of section 24(3) of the Finance Act which contained a legal fiction to the effect that Income-tax shall be charged on the amount of the voluntarily disclosed income as if such amount were the total income of the declarant (underline by us). It then observed that neither the Act of 1922 nor the Act of 1961 required a person to return an income not earned or deemed to have been earned by him. It, therefore, followed that declaration under the scheme had to relate to income actually earned by him which was not to be investigated into and which the Commissioner was under an obligation to assess to tax. By the legal fiction referred to above, it followed that even though the income did not actually belong to the declarant it would be treated to be his income for payment of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 985 scheme also it was only his own income which a person was supposed to declare. Hence if a false declaration was made by the person, and such income was found to be the income of some other person, the latter could be taxed on that income even if it was already taxed in the hands of the declarant. 17. This leads us to the second principle laid down by the Supreme Court, and that is, the declaration does not have an over-riding effect over section 68 of the Act. In other words, Assessing Officer can enquire into the genuineness of a credit appearing in the books even if the said credit is the subject of declaration under the Amnesty Scheme. In this regard also there is no distinction between the 1965 scheme and 1985 scheme. 18. The above in turn leads us to the first principle laid down by the Supreme Court and which, according to us, is the most important one, having a direct bearing on the case before us. On the basis of the provisions of section 24 of the Finance Act, Supreme Court held that declaration under the scheme had to relate to income actually earned by him which was not to be investigated into and which the Commissioner was under an obligation to assess to tax. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted money. But there is no warrant for the provision that by enacting the scheme, the Legislature intended to permit, or connive at, any fraud sought to be committed by making benami declarations. If the contentions were to be accepted, it would follow that an assessee in the higher income group could, with impunity, find out a few near relatives who would oblige him by filing returns under section 24 of the Act disclosing unaccounted income of the assessee as their own and claiming that the said income was kept by them in deposit with the assessee." 21. As against the above normal circumstance, in the present case, the assessee has no relationship at all, business or otherwise, with the Agarwal family. This is not to suggest that in all cases where the creditor and the assessee in whose books the credit appears are not related to each other, no addition can be made in the hands of the assessee at all. However, to make such an addition, besides giving a finding that the income does not belong to the creditor, an additional finding will have to be arrived at to the effect that such income belongs to the assessee. In the instant case, the finding that the credits appear ..... 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