9911796707
TMI Blog2008 (7) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... e that during the course of assessment proceedings for assessment year 1987-88, the Assessing Officer called for the copy of account of the assessee as appearing in the books of Gujarat Mineral Development Corporation (GMDC) and compared with the copy of account of assessee. The Assessing Officer observed that certain drafts allegedly sent to GMDC by the assessee totaling to Rs.1,92,161 had not been accounted for in the books of the assessee but the entries in respect thereof appeared in the account of the assessee in the books of GMDC. The assessee replied that the accounts of GMDC could not be reliable and the assessee had not sent the above drafts. The Assessing Officer was not satisfied with the explanation furnished by the assessee and he made the impugned addition of Rs.1,92,161. 3. Being aggrieved by the said addition, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Ahmedabad who vide his order dated 20.01.1994 confirmed the addition of Rs.1,92,161. 4. Being further aggrieved by the order of the learned Commissioner of Income Tax (Appeals), the assessee preferred second appeal before the Income-Tax Appellate Tribunal, Ahmedabad. While confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that entries in books of accounts shall not alone be sufficient evidence to charge any person with liability. Entries even if relevant are only corroborative evidence. Independent evidence as to trustworthiness of those entries are necessary to fasten liability. He has further submitted that burden is on the revenue to prove that the assessee has made unexplained expenditure and simply on the basis of the entries found in the books of accounts of GMDC, it cannot be said that the said burden has been discharged by the revenue. In support of his submissions, he relied on the decision of the Hon'ble Supreme Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713 and the decision of the Calcutta High Court in the case of Bimal Kumar Damani v. CIT [2003] 261 ITR 635. 8. As far as alternative contention which gives rise to question No.2 is concerned, Mr. Shah has submitted that as per the provisions contained in Section 69C of the Income Tax Act 1961, even if it is assumed that the assessee has incurred expenditure to the extent of Rs.1,92,161 and even if it is assumed that the assessee has not offered any satisfactory explanation and it is deemed to be the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Income-tax (Appeals) as well as Tribunal is required to be upheld. 10. As far as alternative contention is concerned, Mrs. Bhatt has submitted that the revenue authorities have rightly held that the assessee has failed to prove that the alleged expenditure was incurred by the assessee for business purposes and hence, the provisions of Section 69C for taking benefit of deduction as business expenditure under Section 37 of the Act cannot be invoked. 11. She has further submitted that the source of income not being known, such deemed income will not fall even under the head 'Income from other sources' and hence, the corresponding deductions which are applicable to the income under any of heads, will not be attracted in the case of deemed incomes which are covered under the provisions of Section 69, 69A, 69B & 69C of the Act in view of the scheme of those provisions. In support of her submission, she relied on the decision of this Court in the case of Fakir Mohmed Haji Hasan v. CIT [2001] 247 ITR 290. 12. She has further submitted that what was implicit prior to 1999 was made explicit by inserting the proviso to Section 69C of the Act by the Finance (No.2) Act, 1998 wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proving that fact is upon him. The learned CIT (Appeals) as well as the Tribunal are also of the view that the burden is on the assessee to prove the source of the said demand drafts. This stand of the revenue is, however, contrary to the decision of the Hon'ble Supreme Court in the case of Kishinchand Chellaram v. CIT [1980] 125 ITR 713. In that case, the assessee had an office in Bombay and one in Madras. On receiving information that a sum of Rs.1,07,350 was remitted by the assessee by two telegraphic transfers from Madras to Bombay through a bank, the ITO wrote two letters to the manger of the bank dated January 14 and February 10, 1955, making inquiries about the remittance. These two letters were neither disclosed to the assessee nor brought on record. The manager replied, by a letter dated February 18, 1955, to the effect that a telegraphic transfer of Rs.1,07,350 sent by the assessee from Madras was received by the Bank at Bombay on October 16, 1946, and the amount was paid to N, an employee of the respondent, on the same day. This letter also was not disclosed to the assessee. The application for the telegraphic transfer was signed by one T describing himself as : "T c/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence on the basis of which the Tribunal could come to the finding that the sum of Rs.1,07,350 was remitted by the assessee and that it represented the undisclosed income of the assessee. 15. The above decision of the Apex Court would certainly help the assessee. The burden is on the department to show that the amount of demand drafts found to be credited in the assessee's account from the books of accounts of GMDC, belonged to the assessee, by bringing proper evidence on record and the assessee could not be expected to explain the source of income or to call responsible officers of GMDC or bank to discharge the burden that lay upon the department. We could have remitted this matter to the Income-Tax Officer to make further inquiry in the matter. However, looking to the matter being very old which is pertaining to assessment year 1987-88 and also having found force in the alternative contention raised by the assessee, we do not think it just and proper to make any further inquiry in the matter and we are of the view that the Assessing Officer has failed to discharge his burden to prove that the amount in question is the income of the assessee. 16. Relying on the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were made for purchases of raw materials like coal, lignite etc. It is an admitted position that the assessee was purchasing raw materials from GMDC and various payments were made by the assessee which were duly reflected in the books of accounts of GMDC. The Tribunal has rejected this contention only on the ground that in absence of any evidence, it cannot be presumed that the payments were made for business purposes. There is no relationship other than the business relationship between the assessee and GMDC. The Assessing Officer could have asked GMDC as to on what count, the said payments were made by the assessee. As a matter of fact, it has come on record that in lieu of the said payments, certain materials were dispatched by GMDC through their agents. Thus, there is no doubt about the fact that if the payments are made, such payments are only for business purposes. 21. Since there is an admitted position that the assessee was carrying on the business of coal and lignite and purchases were made from time to time from GMDC, in that case, even if any addition is required to be made under Section 69C, the entire expenditure towards it has to be allowed as a deduction under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
