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TMI Blog2007 (5) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees and against the Revenue: "(a) Whether, in the facts and circumstances, the Income-tax Appellate Tribunal was correct in law to accept the principle of preponderance of probabilities in holding that the claim of the appellant that the sum of Rs. 15,62,500 received him by way of gifts through normal banking channels was not genuine and that it was liable to be assessed under section 68 of the Income-tax Act, 1961? (b) Whether, in the light of the law established and based on the facts and in the circumstances of the case, the learned Income-tax Appellant Tribunal is legally justified in concluding that burden of proof cast on the appellant under section 68 of the Income-tax Act, 1961 has not been discharged and the ingredients for invoking section 68 of the Income-tax Act are present? (c) Whether in the facts and circumstances of the case, the conclusion of the Tribunal that the claim of gift is not genuine is reasonable and based on relevant material and not perverse?" These appeals relate to the assessment years 1995-96 and 1996-97. The dispute in all these appeals essentially relates to the addition made by the Assessing Officer in respect of several foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hkumar prior to 1985 by paying Rs. 100 to 200 every month as he had no source of income to get himself educated. There are material inconsistencies in the statements made by other assessees which we are not required to notice in detail. Sampathkumar in his own statement stated that he was in Indonesia up to the year 1992 and employed as an engineer. Thereafter, he shifted to England and started consultancy profession there. Later in the end of the year 1994-95, he joined New Century Machinery Ltd., Cheshire, SK 16 4xS and became its director in 1996. It is in his statement that he is paying taxes in England from his income earned in England. As far as his Indian income is concerned' he stated that he filed the returns for the assessment years 1996-97 and 1997-98 before the Income-tax Officer, Ward 1(4), CBE only on October 23, 1997. His investment in Indian companies according to him will be around Rs. 5 crores and made out of his income earned in the foreign countries. He did not reveal the details of his bank account in India and stated that he would be submitting the details through his auditor which he did not. Except the self serving statement there is no material evidence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion the Tribunal (through its Senior Vice President) re-appreciated the entire material available on record and reheard the matter. The Senior Vice President concurred with the findings and conclusions arrived at by the Assessing Officer and the Commissioner of Income-tax. The Tribunal noticed that the letters exchanged "by the person who had sent foreign exchange to the assessees only indicate that there is no love and affection between them and that he is clearly materialistic and his statement of accepting a reciprocation is also an indication to the fact that he is not doing anything free but clearly the compensation was a round about manner of showing of he having been compensated either in India or abroad." The Tribunal also took note of the various other attending circumstances and found it difficult to accept the explanation offered by the assessees. We may at this stage profitably note that the Assessing Officer, the Commissioner of Income-tax (Appeals) and the Tribunal in one voice held that the explanation offered by the assessees as regards cash credit entries is not acceptable. The material and the evidence available on record according to each one of the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an income in the hands of the assessees unless such a question is framed and answered that unexplained cash credit was the income of the assessees. In order to appreciate the contentions urged before us it would be appropriate to notice section 68 of the Act which is re-produced : "68. Cash credits.-Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of the Act come into play? A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessees offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessees in the opinion of the Assessing Officer is not sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he majority opinion of the Settlement Commission based on surrounding circumstances and applying the test of human probabilities. This authoritative pronouncement in our considered opinion is the complete answer to reject the submissions made by the learned senior counsel on behalf of the respondents. In CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570, this court while construing section 69 of the Act observed that the intention of Parliament in enacting section 69 was to confer a discretion on the Income-tax Officer in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or ,not under section 69 has to be considered in the light of the facts of each case. The contention of Shri Iyer was that the ratio of the decision would equally be applicable to interpret section 68 of the Act. There is no dispute about the same but the assessees in no manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC), the Income-tax Officer did not accept the assessee's accounts showing cash credits which were shown to have been received by way of loans from three individual creditors. The Income-tax Officer treated the entire amount as unproved cash credit and added the same to the income of the assessee. On appeal the Tribunal took the view that the assessee could not produce those persons alleged to be creditors, but it did not follow automatically and an adverse inference should be drawn that the amount represented undisclosed income of the assessee. The creditors were themselves income-tax assessees and while being assessed, they had made statements before the respective Income-tax Officer admitting that they were allowing their names to be lent without giving loans as creditors of different asses sees. In those circumstances, the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him. This court held that the Tribunal's conclusion was not unreasonable or perverse or based on no evidence and accordingly further held that no question of law as such had arisen for consideration. In CIT v. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not acceptable the material and attending circumstances available on record do not justify the sum found credited in the books to be treated as a receipt of an income nature. The burden in this regard was on the assessees. No such attempt has been made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995] Supp 2 SCC 453. Whether the High Court was justified in interfering with the concurrent finding of fact arrived at by all the authorities including the Tribunal? The Assessing Officer found that all the so-called gifts came from Ariavan Thotan and Suprotoman. The assessees did not declare that they are the aliases of Sampathkumar. It is only an afterthought they have come forward with the said plea. The Assessing Officer also found that the gifts were not real in nature. Various surroundings circumstances have been relied upon by the Assessing Officer to reject the explanation offered by the assessees. The Commissioner of Appeals confirmed the findings and conclusion drawn by the Assessing Officer. The Tribunal speaking though its Senio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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