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TMI Blog2005 (4) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal have been accepted. We also do not find any error in the order of the Tribunal where the Tribunal held that in case the amount deposited in the bank account of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal are to be treated as the amount belonging to the assessee and the deposits made by the assessee, then it would be a case of investment made by the assessee in the name of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal and the provision of section 69 of the Act would apply and not section 68 of the Act and for that purpose the financial year would be relevant and then such investment may be deemed to be the income of the assessee of such financial years which falls to the assessment year 1986-87 and not 1987-88. Section 68 applies when the amount is found deposited in the books of account of the assessee and not in third party. Deposit in the account of Bank would amount to investment and section 69 would apply and not section 68. Thus, both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... The entry in the pass book was as follows: Date Amount Cr. Dr. 17-3-1986 By cash 60,000 26-3-1986 By cash 13,000 6-8-1986 15,000 16-8-1986 10,000 25-8-1986 20,000 45,000 A.Y. 1987-88 20-10-1986 10,000 11-3-1987 7,000 23-4-1987 11,000 28,000 A.Y. 1988-89 4. The Income-tax Officer added the aforesaid two amounts as the income of the assessee under section 68 of the Act. It was observed that according to Circular No. 451, dated 17th February, 1986, it was clarified that amnesty was not available for introducing black money and benami investment in the names of the ladies. It has been further observed that Hon'ble Supreme Court in the case of Jamunaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244 1 has ruled that the protection under the voluntary disclosure scheme was extended only to the declarant and not to third party. The Assessing Authority was of the view that the assessee introduced his black money by filing voluntary returns of his daughters. 5. Assessee filed appeal before the Commissioner of Income-tax (Appeals). Commissioner of Income-tax (Appeals) allowed the appeal and held as follows : "I have carefully considered the submissions of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make enquiry into ownership of amount disclosed. The revenue is always entitled to assess the amount in the hands of rightful owner of the amount irrespective of disclosure made by somebody else. It is equally true that for purposes of section 68, the assessee has to prove the creditworthiness of the creditor. But above propositions or authorities do not entitle the Revenue to add all credits as income of the assessee. Facts of each case are required to be examined objectively. Turning to the present case, we find that creditors had confirmed deposits on oath in statements recorded by the Assessing Officer. The amount deposited had come from their bank account and source of the deposit was disclosure made under the Amnesty Scheme. The detailed statement of ladies recorded by the Assessing Officer is not available on record. Assuming that the source of disclosure made under the Amnesty Scheme were not explained by the ladies, it does not follow that amount deposited in bank belonged to the assessee. The Assessing Officer has not placed any material on record to show that amounts deposited in bank were assessee's income or that assessee was responsible for making the deposits. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not satisfied with the explanation of the assessee about the genuineness of sources of amounts found credited in his books to add them to the assessee's income amount in spite of these having already been made the subject-matter of the declaration made by the depositors/creditors. There is no quarrel about the preposition of law laid down by the Apex Court which was relating to the case of declaration of the income under the Voluntary Disclosure Scheme introduced by the Finance (No. 2) Act, 1965. 10. Sections 68 and 69 of the Income-tax Act read as follows : "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 years. 69. Unexplained investments.-Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e findings recorded by the Tribunal are perverse. 12. Section 68 came up for consideration before the various High Courts. The Court has held that the assessee has to prove three conditions: (1) identity of the creditor; (2) capacity of such creditor to advance money; and (3) genuineness of the transactions; (vide Shankar Industries v. CIT [1978] 114 ITR 689 (Cal.), C. Kant & Co. v. CIT [1980] 126 ITR 63 1 (Cal.), Prakash Textile Agency v. CIT[1980] 121 ITR 8902 (Cal.), Oriental Wire Industries (P.) Ltd. v. CIT [1981] 131 ITR 688 (Cal.), CIT v. Baishnab Charan Mohanty [1995] 212 ITR 1993 (Ori.), Jalan Timbers v. CIT [1997] 223 ITR 11 4 (Gauhati) and CIT v. Korlay Trading Co. Ltd. [1998] 232 ITR 820 (Cal.). 13. If all the aforesaid three conditions are proved the burden shift on the revenue to prove that the amount belong to the assessee. (vide CIT v. United Commercial & Industrial Co. (P.) Ltd. [1991] 187 ITR 596 5 (Cal.), M.A. Unneerikutty v. CIT [1992] 198 ITR 1476 (Ker.) SLP dismissed 2001 ITR (St) 23, CIT v. Precision Finance (P.) Ltd. [1994] 208 ITR 465 7. 14. It has been held by the various High Courts that the assessee cannot be asked to prove source of source or the orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o called alleged creditors. In those circumstances, the assessee could not do any thing further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence...." (p. 84) 18. The Apex Court in the case of CIT v. Smt. P.K. Noorjahan [1997] 11 SCC 198 while interpreting similar language used in section 69 has held as follows : "Shri Ranbir Chandra, the learned counsel appearing for the Revenue has urged that the Tribunal as well as the High Court were in error in their interpretation of section 69 of the Act. The submission is that once the explanation offered by the assessee for the sources of the investments are found to be unacceptable the only course open to the Income-tax Officer was to treat the value of the investments to be the income of the assessee. The submission is that the word "may" in section 69 should be read as "shall". We are unable to agree. As pointed out by the Tribunal, in the corresponding clause in the Bill which was introduced in Parliament, the word "shall" had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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