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TMI Blog1996 (4) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... sed's share in the unaccounted profits of the firm of South India Steel Rolling Mills for the assessment years 1962-63 to 1967-68 could not be included in the principal value of the estate of the deceased ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the possession of the deceased's share of undisclosed profits in the firm, South India Steel Rolling Mills, was not proved in this case ? " The deceased died on March 3, 1968. The deceased was a partner in the firm, South India Steel Rolling Mills. At the time of the death, the deceased, Shri M. S. Bedi, was the proprietor of Dily White Launderers and Dry Cleaners and a partner in three firms and especially in South India S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax assessment an addition was made on the ground that such amount represented the undisclosed profits, it cannot be stated that the Department has proved that such amounts remained with the deceased on his death to be passed on to the accountable person. Learned counsel relied on the decision of the Income-tax Appellate Tribunal, Cuttack Bench, Camp at Madras, in E. D. A. No. 88/Mad. of 1972-73 decided on March 3, 1975, wherein it was held that simply because the intangible additions were made, it does not follow that the deceased had obtained the share of such undisclosed profits. It was further pointed out that there was no material to come to the conclusion that the deceased was in possession of such intangible additions at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that there is no evidence on record to show whether the amounts spread over for six years still remained in the hands of the firm so as to enable the Department to say that these undisclosed profits belonged to the deceased on the date of his death. For this purpose, learned standing counsel pleaded to remit back this appeal to the file of the Tribunal for gathering materials on this aspect and dispose of the same on the merits. On the other hand, learned counsel appearing for the accountable person submitted that the deceased was a partner with a 50 per cent. share of profits in the firm, South India Steel Rolling Mills. The deceased died on March 3, 1968. On the date of his death, this sum of Rs. 3,09,933 was not available in the ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that some amount could have been spent by the deceased. The Appellate Controller, on appeal, in effect confirmed this order. The Tribunal, however, held that the actual existence of assets to the extent of the additions made had to be established and the mere fact that the accountable person had agreed to an order under section 271(4A) including the amounts as undisclosed income could not be taken as an admission on their part that cash or investment of that value existed on the date of death of the deceased. The Tribunal, accordingly, deleted the addition on the ground that there was no material to support the addition, On these facts, a question arose whether the Tribunal was right in holding that the unproved hundi credits offered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income which has been assessed as a result of the settlement arrived at under section 271(4A) continued to exist in the form of cash or other asset till the date of the death of the deceased, and unless the existence of such an asset is established by the Revenue, which is its duty, the onus does not shift to the accountable persons to explain as to what had happened to the assets. If the assets have continued to exist on the death of the deceased, then, of course, the onus will shift to the accountable persons to explain as to what had happened to the assets and how they had been dealt with. On the facts of this case, we are not able to say that the existence of the assets at the time of the death of the deceased has been duly establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly it had only two partners. Therefore, the Tribunal pointed out that even if the intangible additions were to be made, only 1/4th of the amount said to be the undisclosed profit alone can be added in the principal value of the estate. It remains to be seen that six years after the death of the deceased in the assessment of the firm intangible additions were made since the firm failed to disclose the profits for those years. Accordingly, the profits estimated by the Department were spread over for the six years backwards. Under such circumstances, it is doubtful whether the deceased would have had any cash or any investment on the date of his death as shown in the firm's assessment belonging to the partners which additions were made on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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