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TMI Blog2005 (1) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed - - - - - Dated:- 20-1-2005 - Judge(s) : G. S. SINGHVI., VINEY MITTAL. JUDGMENT The judgment of the court was delivered by G.S. Singhvi J.- In this petition filed under section 256(2) of the Income-tax Act, 1961 (for short "the Act"), the assessee has prayed for issuance of a direction to the Income-tax Appellate Tribunal, Delhi Bench "E", New Delhi (for short "the Tribunal"), to make a reference of the following questions of law for the opinion of this court: "1. Whether the Income-tax Appellate Tribunal has not misdirected itself in law in not deleting the addition of Rs. 60,000 representing the credits in the account of Smt. Bimla Devi as also the addition of Rs. 29,135 being the alleged profit earned on the sale and purchase of sarson, disregarding that Smt. Bimla Devi has been assessed on the income derived from the purchase and sale of sarson and further the credit in the books of the assessee represented the purchase price of sarson, i.e., investment made by Smt. Bimla Devi? 2. Whether, in sustaining the aforesaid additions of Rs. 60,000 and Rs. 29,135 has not the Income-tax Appellate Tribunal misdirected itself in law in holding that the burden la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was on the assessee? 11. Whether the learned Income-tax Appellate Tribunal was correct in law in upholding the addition of Rs. 12,900 being the alleged unexplained credit and interest thereon in the account of Shri Puran Mal and Rs. 10,560 being the alleged unexplained credit and interest thereon in the account of Shri Ram Parshad, holding that the assessee failed to prove the creditworthiness of the depositor? 12. Whether the learned Income-tax Appellate Tribunal has not misdirected itself in law in holding that the burden to prove the source of deposit in their bank account was on the assessee? 13. Whether the finding of the Income-tax Appellate Tribunal that Smt. Bimla Devi was not the existing assessee like Smt. Sanara Devi (in the case of M/s. Ramjas Mai Nathu Ram) is not an arbitrary, biased finding and as such the order is not vitiated in law? 14. Whether on the material on record, the Tribunal was justified and right in law in holding that the credits of Rs. 1,00,000 and interest thereon aggregating to Rs. 38,755 including the profits derived by Smt. Bimla Devi had rightly been assessed as the income of the assessee from undisclosed sources? 15. Whether the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the additions made by the Assessing Officer are liable to be deleted. He further submitted that the evidence produced by the assessee clearly established the source of income of the depositors and the genuineness thereof and the Assessing Officer committed a grave illegality by rejecting the same. Shri Rajesh Bindal, learned counsel for the Revenue, supported the order of the Tribunal and argued that none of the questions framed by the assessee can be treated as a question of law requiring determination by this court. We have given serious thought to the respective arguments. In his detailed order passed under section 143(3) of the Act, the Assessing Officer gave cogent reasons for disallowing the deposits made by Smt. Bimla Devi and Sarv Shri Prabhu Dayal, Puran Mal and Ram Parshad and the undisclosed profit earned in the purchase and sale of sarson. He also made addition on account of the alleged excess shortage in gram and barley accounts and low household withdrawals. The Commissioner of Income-tax (Appeals) independently examined the entire matter and upheld the additions and disallowances. He, however, quashed the assessment order to the extent of charging of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March 31, 1983. If the ratio of savings as compared to income from sewing and embroidery, as claimed, is considered, it will be found that the ratio of savings was very nominal and small. On the income of Rs. 15,000 + Rs. 15,000 earned in 1979 and 1982, i.e., on the total income of Rs. 30,000 of only 2 years, Smt. Bimla Devi could accumulate a sum of Rs. 6,000, which gives a ratio of 1/5th of income. However, the income in the assessment years 1984-85 to 1986-87, shown at Rs. 15,300, Rs. 15,300 and Rs. 18,200 aggregating to Rs. 48,800, a sum of Rs. 40,000 is claimed to have been deposited in cash in the bank account on March 10, 1987, which prima facie appears to be highly improbable. A lady of respectable family belonging to a rich business family is not likely to engage herself in the work of preparing paper, mungeri or doing sewing and embroidery work unless the family needs funds. In case the lady would have actually been doing such work on such a large scale as claimed, a substantial amount would have been utilised for meeting the necessities of the family and the ratio of savings out of such income would have been quite limited, and it is impossible to believe that the ladie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of Rs. 40,000 was deposited out of her income from sewing and embroidery, etc., which was kept in home chest prior to making of the deposit in cash in the bank account immediately preceding the issue of cheque in favour of the assessee-firm, does not accord with human probabilities. Its acceptance could result in ignoring the facts of life. The story cannot be treated as believable. The assessee has thus failed to discharge the onus of proving the capacity of Smt. Bimla Devi and the genuineness of the transactions, which clearly lay on the assessee under section 68 of the Income-tax Act, 1961." The Tribunal buttressed the aforementioned conclusions by making reference to the judgments of the Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 ; Sumati Dayal v. CIT [1995] 214 ITR 801 and of this court in CIT v. Meera and Co. [1986] 161 ITR 31 and of the Andhra Pradesh High Court in Radio Instruments Associates P. Ltd. v. CIT [1987] 166 ITR 718. The Tribunal also rejected the theory of alleged gift made by Prabhu Dayal by assigning detailed reasons in paras. 4.35 and 4.37 which are reproduced below: "4.35 The sources of a deposit of Rs. 20,000 in the account of Smt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of purchase and sale of such material/items. He also stated in the said statement that due to health problem, he has not carried on any business in the last 3/4 years from the date of the said statement recorded on January 25, 1989. It was also admitted by him that he resides with his grandson, Shri Om Parkash who meets the entire expenses. Since Shri Prabhu Dayal could not even tell the normal length and size of rajai, gadra and tehmat nor could he state the normal purchase price or selling rate of these commodities, it is not believable that he really carried on such business of cloth in the assessment year 1984-85 to the assessment year 1986-87 for which returns of income were submitted under the amnesty scheme. The Assessing Officer has observed that Shri Prabhu Dayal admitted in the statement that total sales of cloth made by him was about Rs. 16,000 to Rs. 29,000 during the last 3-4 years. He could not earn an income of Rs. 15,000 to 18,000 per annum on such meagre amount of sales. Such conclusions derived by the Assessing Officer have not been challenged by the assessee by bringing any material in rebuttal thereof. The assessee has not produced any evidence to show t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to the extent that the amount was available on March 30, 1966, it was held that the amount could not have been earned in the accounting period relating to the assessment year 1967-68 but the same was directed to be taxed in the correct year, namely, the assessment year 1966-67. The facts of that case are clearly distinguishable. In the present case, it has been held that no income was really earned by Shri Prabhu Dayal. He did not carry on any business of cloth as shown in the returns filed under the amnesty scheme. The deposits in the bank account of Shri Prabhu Dayal made in the month of February, 1987 have been debited in the said bank account on March 2, 1987, by an amount of Rs. 20,000. Thereafter, Rs. 25,000 was deposited in his bank account on March 10, 1987. On April 6, 1987, a debit entry of Rs. 20,000 appears in the said bank account. In the statement, Shri Prabhu Dayal stated that he made a gift of Rs. 20,000 to Shri Om Parkash in the year 1987. There are two debit entries in the said bank account of Shri Prabhu Dayal, one on March 2, 1987 and the other on April 6, 1987. In the statement Shri Prabhu Dayal had stated that the gift to Smt. Bimla Devi was made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was also conducted at Bhiwani five years ago. He stated that a bank account was opened by him with New Bank of India, Ateli Mandi. It was also admitted by him that whatever funds were deposited in the said bank account, were wholly spent on the death of his wife. His wife died 4/5 years ago. In the subsequent para, he has taken a different stand that whatever amount was earned by him at Delhi, that was given by him to his daughter who resides at Ateli Mandi. A gift of Rs. 20,000 was given on April 4, 1986 to Smt. Narbada and another gift of Rs. 20,000 is claimed to have been given to Shri Puran Mal on April 9, 1987. A deposit of Rs. 9,000 was also stated to have been made with the assessee-firm. He further stated that he lived at Delhi since 1986. A statement of Shri Puran Mal was also recorded by the Assessing Officer on January 16, 1989. In this statement, he stated that he received a gift of Rs. 20,000 from his Nana Ji who was doing some work at Bombay. At present he is not doing any work. Shri Puran Mal has not stated anything about his Nana Ji's cloth business at Delhi." The Tribunal also upheld the rejection of the deposits allegedly made by Ram Parshad by observing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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