9911796707
TMI Blog1984 (3) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... unt with Allahabad Bank, Reti Chowk, Gorakhpur. The ITO also received information that the assessee had made several remittances through the above bank to different parties at different places. On the basis of this information and on the basis of the articles found in the search, the ITO was of the view that the income of the assessee had escaped assessment for all the above assessment years by reason of omission and/or failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. He, therefore, initiated proceedings under section 147(a) of the Income-tax Act, 1961 ('the Act'). He served notices under section 148 of the Act on 22-5-1976. Returns were duly filed by the assessee in response to the above notices declaring more or less the income originally assessed. It is not necessary to give their details as they are irrelevant for the present appeals. 4. The ITO also confronted the assessee with details of a number of drafts sent through Allahabad Bank. The drafts were of different amounts and had been sent by different persons to different parties at different places. Out of them, the assessee admitted to have sent six drafts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application was legible and was signed by Shri Parmeshwar Prasad Gupta. The amount of Rs. 15,000 was included in the order under section 132(5) of the Income-tax Act passed in this case on 24-6-1976. (x) Similarly, another draft for Rs. 4,000 was purchased by Shri Parmeshwar Prasad Gupta on 29-3-1973 and draft No. 48/239 was sent to Bombay. The purchase of this draft was also denied. An enquiry was made through the Inspector and it was reported that the signature on the back of the application was legible and was signed by Shri Parmeshwar Prasad Gupta. The Inspector's report was shown to the assessee. The assessee failed to explain the nature and source of the purchase of draft of Rs. 4,000. The amount of Rs. 4,000 was included in the total income of the assessee in the order passed under section 132(5) of the Act on 24-6-1976. (xi) It was found that the assessee had purchased drafts on 26-10-1970 for Rs. 11,282 as under: Rs. 422/358 350 423/359 4,452 429/360 6,480 -------------------- 11,282 -------------------- The assessee was asked to explain as to why these drafts were not debited in the books of the assessee. The assessee came forward with the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittances made from the bank amounted to Rs. 5,81,551. On a monthly basis, the peak of the remittances came to Rs. 1,28,270. The ITO held that the assessee had failed to explain the source of the above amount of Rs. 1,28,270. He treated it as the assessee's income from other sources. On the basis of the remittances made, he estimated the assessee's unaccounted for sales at Rs. 6,40,000. Applying a net profit rate of 10 per cent, he further held that the assessee had made a profit of Rs. 64,000 which had escaped assessment. He included this amount also in the total income of the assessee of the above assessment year. 7. In the assessment year 1973-74, the total of the remittances made worked out to Rs. 5,61,284 with the peak of Rs. 1,15,556. Since this fell short of Rs. 1,28,270 added in the assessment year 1972-73, the ITO did not make any further addition. He, however, estimated the assessee's unaccounted for sales at Rs. 6,24,000. On this, he estimated a net profit of Rs. 62,400 and included it in the assessment. In the assessment year 1974-75, the total remittances worked out to Rs. 7,53,476 with a peak of Rs. 1,50,790. Since this peak fell short of the additions made in the ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signature thereon were of any person connected with the assessee. The assessee has filed on the contrary the certificate before the IAC in section 144B proceedings in which the bank has specifically stated that drafts were not taken as per their record by Ram Nath Optician. According to the assessee, the burden to prove was on the ITO to show that the drafts related to the assessee. This burden has not at all been discharged in any way by the ITO. The very fact that the assessee had bank account with the very same bank and has purchased these drafts from the bank will not in any way link the remaining 98 drafts of the assessee. The assessee has filed following evidence before the ITO and before the IAC in proceedings under section 144B to prove that the drafts did not belong to the assessee :--- i. Affidavit of Parmeshwar Prasad dated 19-8-1981. ii. Sales tax order accepting account books of the assessee. iii. Original order of ITO accepting assessee's account. iv. Letters from bank dated 14-3-1981, 14-8-1981 and 21-8-1981. v. Statement of Parmeshwar Prasad before the ITO dated 17-3-1981. vi. Bank letter dated 13-10-1976 addressed to ITO, C-Ward, Gorakhpur. vii. Affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the proceedings under section 147(a) as also the validity of the service of the notices under section 148 in all these years. 12. The learned departmental representative at fist submitted that the Commissioner (Appeals) had not correctly gone into the ownership of the various drafts and had wrongly held that they did not represent the remittances made by the assessee. In this connection, he invited our attention to the original application dated 26-10-1972 requesting the bank to issue a draft of Rs. 4,000. This application like all other applications, is in the handwriting of some clerk of the bank itself. It no doubt bears the name of Ram Prasad which also happens to be the business name of the assessee. The assessee has denied that it had sent any such draft to Bombay. The learned departmental representative then invited our attention to another application dated 14-5-1973 to point out that the draft in question was issued, amongst others, in the name of one Pradeep Kumar. He submitted that Pradeep Kumar was the son of partner, Parmeshwar Prasad Gupta. He then pointed out that on the applications dated 10-8-1973 and 16-8-1973, requesting the bank for issuing two drafts of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar draft has been denied by the bank to have been purchased by the assessee vide its letter dated 14-8-1981, referred to above. Similarly, we agree with the submission of the learned counsel for the assessee that Pradeep Kumar, the payee for the draft, purchased on 14-5-1973 could not necessarily refer to a son of one of the partners of the assessee-firm. This relates to two drafts of Rs. 10,000 and Rs. 8,000 issued in favour of Pradeep Kumar, Gyan Prakash and Vishwa Prakash. There is no evidence to connect Gyan Prakash and Vishwa Prakash with the assessee. Scoring off the name of the assessee from the applications dated 10-8-1973 and 16-8-1973 is also of no consequence and cannot bind the assessee. It is possible that either the assessee or some of his representatives might have gone to purchase the draft on that day but might have decided not to do so which might have led the clerk of the bank to score out the name. In any case, there is no evidence on record to suggest that the drafts purchased through the above applications related to the assessee. Similarly, in our view, the assessee cannot be held responsible if the clerk of the bank has given details of some higher amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot be used as an argument against the assessee. Similarly, the ITO has unnecessarily held that maintenance of a bank account with Allahabad Bank was a factor against the assessee. 16. About the drafts mentioned by the ITO in his order, one of Rs. 15,000 was attributed to Parmeshwar Prasad Gupta on 29-1-1971. It was submitted before the lower authorities, as also before us, that this draft was purchased by Parmeshwar Prasad Gupta and not the partner of the assessee. In any case, this was purchased in the assessment year 1971-72 and, therefore, it could not be taken as a ground for making any addition in either of the assessment years under appeal. The other draft of Rs. 4,000 is also attributed to Parmeshwar Prasad Gupta having been purchased on 29-3-1973, The bank vide its letter dated 13-10-1976, appearing at pages 38 and 39 of the paper book, submitted by the assessee, has denied the sale of this draft to the assessee. The other drafts valuing Rs. 11,282 were purchased by the assessee on 26-10-1970. It was submitted that these drafts were purchased by debit to the assessee's current account with the bank. The debit was given to that account on 29-3-1971. Similarly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lways rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence or a benami is the intention of the party or parties concerned ; and not unoften such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him ; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof. The reason is that a deed is a solemn document prepared and executed after considerable deliberation, and the person expressly shown as the purchaser or transferee in the deed, starts with the initial presumption in his favour that the apparent state of affairs is the real state of affairs. Though the question, whether a particular sale is benami or not, is largely one of fact, and for determining this question, no absolute formulae or acid test, uniformly applicable in all situations, can be laid down ; yet i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du Mal Sons v. Official Liquidators of the Dehra Dun Mussoori Electric Tramway Co. Ltd. AIR 1930 All. 778, to show that unless a person signed on somebody's behalf, it could not bind the principal. The applications, though signed by certain persons, are not on behalf of the assessee, and, therefore, the assessee could not be bound by such applications. We have already in this connection referred to the decision of the Supreme Court in the case of Kishinchand Chellaram which fully supports the stand of the assessee. 21. The learned departmental representative next contended that if the ITO had failed to make proper enquiries and investigation into the matter and bring sufficient evidence on record to hold that the various drafts related to the assessee, it was the duty of the Commissioner (Appeals), as an appellate authority to either himself make those enquiries and investigation or direct the ITO to conduct them. He, therefore, urged that we should remand the case to either of the lower authorities for further enquiries and proper assessment in accordance with law. In this connection, besides referring to the decision of the Supreme Court in Guduthur Bros. v. ITO [1960] 40 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al cause to allow its admission at the appellate stage especially when the evidence was available to the party at the initial stage and had not been produced by him . . ." The Allahabad High Court in the case of Gopinath Naik v. CIT [1936] 4 ITR 1 observed as under : " . . . Similarly, the enquiries made by the Assistant Commissioner during the hearing of the appeal behind the back of the appellant were not justified by the provisions of sub-section (3) and the result of such private enquiries should not have been made the basis of any assessment. " A similar view was expressed by the Allahabad High Court in the case of Biradhmal Lodha v. CIT [1934] 2 ITR 164 in the following words : " I consider that the section means that the assessment could be set aside on the ground that it is defective on record as it stands, and not that it should be set aside on the ground that new evidence if heard and accepted would prove that the assessment was defective. It is only after the assessment is set aside that further enquiry would be made, for the purpose of making a fresh assessment. But apart from this view of the wording of section 31(3)(b), I consider that on general principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty adjudicating upon rights and liabilities between the dealer and the revenue. That adjudication must be effected through a procedure informed by the interests of justice. It is to do justice in accordance with law that the appellate authority exists. It departs from its function when it permits the influence of partisan considerations. " The above view was reiterated by the Court in the case of Jain Sudh Vanaspati Ltd. v. CST [1980] UPTC 1097. The observations of the Court appear in the following words : " Despite all this, it has remanded the case to the assessing authority on the ground that proper investigation had not been made. The question arises whether such remand order can be upheld as valid and legal ? 13. In the first instance, the appellate authority was not justified in fishing out material from the record in an attempt to justify the action of the assessing authority in reopening the assessment for this year. Apart from that the appellate authority itself did not find that material as relevant for this purpose and even then remanded the case on the ground that proper investigation had not been made. It is difficult to uphold such an order as being valid in law ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
