9911796707
TMI Blog1990 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... d he started maintaining books w.e.f., Kartak Sud 1, S.Y 2038, relevant to the asst. yr. 1983-84. He filed return of income for asst. yr. 1983-84 on 29th Aug., 1983 disclosing total income of Rs. 9,631. In the account books for S.Y. 2038, the assessee on the very first day i.e., on 29th Oct., 1982 made a cash credit entry of Rs. 44,000 stating that the cash was introduced from the past savings. it is regarding this entry that the ITO has made addition. 4. It may be stated here that the assessee was resident of Surat and had gone to Bombay in Aug., 1982 and that on 6th Aug., 1982 he was staying in Bombay in a room of National Hindu Lodge, Near Prathna Samaj, V.P. Road, Bombay. On that date in the morning, a search took place. The assessee was found with one plastic box containing packets of diamonds. That box was not opened at that time. It was sealed and taken away by the raiding party. On 4th Sept., 1982 the assessee filed reply stating that he had polished diamonds weighing 109.33 cts. (gross weight of unpolished diamonds weighing 368.30 cts.) which belonged to M/s. Rajnikant Bros. of Bombay. On 16th Oct., 1982 the said sealed box was opened in the presence of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be returned to the said party because the senior partner of the said party was not present in the office and that accountant did not take delivery of the diamonds till they were checked by the senior partner and that the assessee had no alternative but to return to the lodge where he was staying for the night. 5. The assessee further submitted in the petition under s. 132(11) of the Act to the CIT that out of the total 172.98 cts. of diamonds, 109.17 cts of diamonds belonged to M/s. Rajnikant Bros, and the balance of 63.81 cts of diamonds belonged to five different parties whose names and addresses were furnished by the assessee and the weight of diamonds pertaining to each party was also furnished. It was further mentioned by the assessee in that petition that M/s. Rajnikant Bros., had confirmed the ownership of the diamonds and that the five other parties were sought to be examined by the assessee before the ITO in proceedings under s. 132(5) of the Act. 6. The learned CIT, Surat passed order under s. 132(12) of the Act on 17th May, 1982. In the order he observed that since ownership of 109.17 cts had been accepted by M/s. Rajnikant Bros, of Bombay, there was no case whatsoev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition regarding value of these diamonds could not be made in the income of the assessee. The Department is in appeal before us. 9. As far as the first ground is concerned, as already stated it relates to cash credit entry of Rs. 44,000 on the very first day of the accounting year (S.Y. 2038). The plea of the assessee was that the said amount represented the past savings. The ITO examined the question whether the assessee could have saved the said amount. The ITO perused all the materials produced by the assessee and disbelieved the version that the assessee had saved the said amount. It is not necessary to give details of the reasons given by the ITO. The CIT(A) has deleted the addition on the sole ground that no addition could be made because the entry was of the first day of the accounting year that was the sole ground on which the addition has been deleted. The CIT(A) has not applied his mind to the facts placed by the assessee before the ITO and has not given any finding whether the assessee had really saved Rs. 44,000. We find that the learned CIT(A) was under an erroneous impression that no addition under s. 68 could be made when the cash credit entry had been made on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same in accordance with law, after giving reasonable opportunity of being heard to the assessee as well as to the ITO. 11. As regards the second ground, we find that the assessee had given the names and addresses of the five parties to whom the five packets of the diamonds belonged in the proceedings under s. 132(5) of the Act. It is true that the assessee did not give their names in reply filed in Sept, 1982. However, the learned CIT in his order under s. 132(12) has recorded that the said omission was due to the fact that the assessee was in confused state of mind. Proceedings under s. 132(11) had commenced soon after the search and the learned CIT had opportunity to properly appreciate the circumstances in which the search had taken place and the circumstances in which the assessee had given his statement. Since in the proceedings under s. 132(11) itself the learned CIT was satisfied that the assessee was in confused state of mind and it was the confused state of mind which was the cause of the omission to mention the names of those persons in reply dt. 4th Sept., 1982, much weight cannot be attached to the fact that the assessee had omitted to mention the names of those ..... X X X X Extracts X X X X X X X X Extracts X X X X
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