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TMI Blog1988 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ad claimed management service charges amounting to Rs. 1,30,606. In support of this claim the case of the assessee was that upto the month of April, 1975 the assessee was carrying on its business by employing its own office staff for management and secretariat services like accountancy, administration and sales-purchases services. Looking to the problems arising in those areas the assessee thought it fit and proper to entrust the said duties to an independent and separate concern. The assessee, therefore entered into an agreement with Hira Lal Poonjabhai Children Trust on 24th April, 1975 for the purpose and the said Trust agreed to render necessary services to the assessee in the field of management and secretariat w.e.f. 1st May, 1975 against a consideration of 5 per cent commission on yearly sales turnover of the assessee. In pursuance to this agreement the said Trust began to render management services to the assessee through its proprietary concern known as Panchal Management Services. According to the assessee, right from asst. yr. 1976-77 and upto asst. yr. 1980-81 the Department had continuously allowed service charges in the assessments of the assessee and there were no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as incurring no separate expenditure on items like salaries to employees and motor cars as in those fields the said Management Service has rendered services to the assessee. Mr. Shah thus submitted that the claim of the assessee should have been accepted this year too and in support of his arguments relied upon the following cases: 1. CIT vs. Chandulal Keshavlal Co. (1960) 38 ITR 601 (SC) 2. CIT vs. Malayalam Plantations Ltd. (1964) 53 ITR 146 (SC) 3. CIT vs. Dhanrajgiriji Raja Narasinghirji (1973) 91 ITR 544 (SC) 4. Sassoon. J. David Co. P. Ltd. vs. CIT (1979) 10 CTR (SC) 383 : (1979) 118 ITR 261 (SC) 3.4. On the other hand, supporting the order under appeal, Mr. A.K. Hajela, the learned Departmental Representative submitted that in the instant case expenses were claimed under s. 37 of the Act and, therefore, in view of the principle laid down in the case of Amrit Lal Co. (P) Ltd. vs. CIT (1977) 108 ITR 719 ((Bom)), the ITO had a right to call for the details of particulars of the expenditure wholly and exclusively laid out or expended in the course of and for the purposes of the business of the assessee. Mr. Hajela further submitted that irrespective of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable as such to the proceedings under the Act. The reason for its non-applicability is that each assessment is quite independent of and separate from the other. But when a point or matter had been considered and adjudicated upon in a year and the same point or matter, with no change of facts and circumstances and also in law, arises for consideration in a subsequent year, following the decision recorded on or treatment given to that point or matter at the earlier occasion, would not involve adherence to the doctrine of res judicata in tax proceedings. It would simply be a step in the direction of bringing uniformity in the view of the Tribunal on the same point of issue and thus stabilising the position of the parties vis-a-vis such point or issue. And where the position of the parties on a matter, point or issue has remained settled for considerable length of time, such position should, normally, be not disturbed without compelling reasons evidenced by material change in facts and/or in law. 3.8. Coming to the merits of the point under consideration, we find that it is an undisputed fact that right from asst. yr. 1976-77 and upto asst. yr. 1980-81 the Department allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and the assessee had made payment of that much of amount to the said Management Services. We accordingly vacate the CIT(A)'s order in this behalf. 4. Sundry Expenses: Rs. 1,000: Though Mr. Shah tried to agitate this point before us yet for the order of the learned CIT(A) we find that the issue relating to this point was not pressed before CIT(A). We are not prepared to accept that the issue was pressed by the assessee but the learned CIT(A) stated a wrong fact in his order. The ground is dismissed. 5.1. I: Out of the total travelling expenses amounting to Rs. 38,801 the ITO disallowed a sum of Rs. 2,781 and in appeal the CIT(A) confirmed the disallowance on the ground that the claim of daily allowance was in excess to that allowable under r. 6 D of the IT Rules, 1962 (the Rules) framed under the Act. 5.2. The contention of Mr. Shah is that the words "any person" used in the language of r. 6-D should not include the partners of the firm and since the tours were undertaken by the partners no disallowance of any amount should have been made. Reference in this behalf was made to the Delhi Bench 'B' decision in the case of CIT vs. Desh Rakshak Aushadhalaya (P) Ltd. (198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia vs. Second ITO. 6.1. Cash Credits: On scrutiny of the Interest Account and the Balance Sheet, as maintained by the assessee for the year under consideration, the ITO found the following sums credited in the names of the persons noted against them: S. No. Date of Deposit Amount of Deposit Name of Creditor or depositor . . Rs. . 1. 1st Jan., 1980 30,000 Jashwant Lal K. Vaidya (son) 2. 1st Jan., 1980 45,000 Prakash Chandra P. Arya (son-in-law) . . 75,000 . On being required to explain the above deposits the assessee explained that one Sri Krishna Lal Shankarbhai Vaidya alias Kacharabhai Shankar Lal Nai of Village Veda, Taluka Vijaypur, presently residing at Ahmedabad, had deposited the above-mentioned two sums with the assessee firm on one and the same day in the names of his son and son-in-law, as mentioned above. An affidavit dt. 12th Dec., 1983 from the said Krishna Lal Vaidya, wherein the deponent had testified to have deposited the sums in question with the assessee-firm, was also filed. The ITO examined the said Krishnalal Vaidya who stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arguments advanced on behalf of the parties and to the material on record we have been left in no doubt that the cash credits in question are certainly bogus and as such they have been rightly given a befitting treatment by the authorities below. 6.5 A study of the cases relied upon by Mr. Shah discloses that they lay down the general principles underlying s.68. such principles can hardly be subject matter of any dispute. It is the clear mandate of s.68 of the Act that the initial burden of explaining the sum found credited in his books lies on the assessee. But once the assessee has offered an explanation, satisfactorily explaining the nature and source of the credit entry in dispute, the sum so credited cannot be charged to tax. Let us take note of the language of that section which runs as under: "68. 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 ITO, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year". It may be noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dited in the names of two such persons who, according to the assessee itself, had not deposited the said sums with it. Neither, either of the two creditors were produced before the ITO nor any confirmatory letter from them was ever brought on record. On the face of it therefore, according to the assessee itself, the two sums of cash credits finding place in its books represented benami transactions. We say so on the strength of our discussion to follow. 6.7. We do not intend here to lay down a proposition that a deposit under s. 68 is necessarily required to be made in the name of the owner of the sum deposited. A father may well act as the natural guardian of his minor children, a husband may act as an authorised agent for his wife, a third person may, under given circumstances, act as next friend or guardian for a lunatic or person of unsound mind, and an agent may, within the limits of the authority under his agency, act for and on behalf of his principal. In all such cases the actual doer of the act works for and on behalf of the other. He acts for the benefit of the person represented by him. The benefit of his act is to go to the person represented by him. But if the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had saved that much of amount from his income "from Vaidya profession and agricultural land and its income". No specific reference was made in the affidavit that any amount had come to him by way of part consideration of his agricultural land agreed to be sold by him. 6.10. With regard to his income form Vaidya profession he claimed to be earning about Rs. 7,000 a year, though he declared an income of Rs. 3,000 only from that source in his return for asst. yr. 1981-82. That itself belies his statement regarding his income from his profession as a vaidya. Be that as it may, according to him he was saving an amount of Rs. 3,000 or 4,000 yearly out of his agricultural income from 2 acres and 21 gunthas of land, which he himself did not cultivate. He further claimed that his family (at the time of recording his statement on 27th March, 1984) consisted of himself, his aged wife and a daughter, necessitating yearly expenses of Rs. 8,000 approximately. He stays in a rented house carrying monthly rent of Rs. 12 and carries on his professional pursuit in a rented shop of equal rent. It this statement of Sri Vaidya with regard to his income from his practice as a vaidya and his capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards such an intended transaction and would not like to get the sale-deed registered at that very time by paying the remaining paltry sum of Rs. 1,000. it is difficult to believe that a person paying almost the full consideration of a sale transaction would not like to get the possession of the property intended to be purchased by him as part performance of the contract by the seller. Again, it is unbelievable that in the eventuality of breach of contract by the seller the purchaser would not insist upon repayment of the amount paid by him to the seller, as is stated to be the position in the present case. The version, on the face of it, inspires on confidence in us. The version has rightly been rejected by the authorities below. 6.14. It is not any sort of explanation offered by an assessee under s. 68 that would and should meet the satisfaction of the ITO. It must inspire confidence and must be reasonably appealing to prudent mind. Under s. 68 the assessee is required, prima facie, not only to prove the identity of the depositor but his capacity to advance, deposit or invest that much of amount as is shown standing to his credit in the books of the assessee. No doubt the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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