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TMI Blog1976 (4) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of the assessment proceedings required the assessee to explain the reasons for maintaining this fictitious diary. The assessee's reply was that the transactions entered in that diary were bogus and the entries had been made only to influence the clients. The Income-tax Officer was not satisfied with this explanation. The total amount of advances made in different names according to the diary came to Rs. 9,22,000 on which total dalali received by the assessee was Rs. 2,344. The Income-tax Officer found that the peak credit came to Rs. 1,65,000 as on 18th January, 1972 in the name of Smt. Sarla Devi Agarwal, which is also the name of the assessee's wife. He added back this amount accordingly as assessee's income from undisclosed sources as also added dalali receipts of Rs. 2,344. The assesee disputed both these additions in his appeal before the Appellate Assistant Commissioner 3. The first submission made on behalf of the assessee was that this diary was not a genuine diary, nor was it in the nature of cash book and the entries therein could not have been regarded as cash credits liable to be taxed under s. 68 of the Income-tax Act, 1961. The transactions did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntage of Rs. 2,500 made in the name of wife and that was by cheque made of the funds belonging to the wife. The only source of income to the assessee was brokerage. The assessee., of course, had a locker in the bank, but the jewellery did not exceed 30 tolas. He is living in a house paying Rs. 15 by way of rent. From all these circumstances the Appellate Assistant commissioner concluded that it could not be presumed that the assessee had been carrying on money lending business running into lacs of rupees. Accordingly, he deleted the addition of Rs. 1,65,000 as also the dalali receipts of Rs. 2,344. 4. The first two grounds taken in the present appeal are against the deleting of these two amounts. It was submitted on behalf of the revenue that the approach join the Appellate Assist ant Commissioner is fallacious. He has not accepted the submission that these amounts could not be brought to tax under s. 68 or 69. In other words, according to him either of these sections is applicable and hence. the only way to give relief was to hold that the assessee explained that it was satisfactory. For that he has given certain grounds but they do not appear to be very sound. The Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in money lending business and voluntarily filed returns for 1970-71 to 1972-73. His conduct has been consistent since the very beginning. It was explained that M/s Amarnath Vishwanath, a big Kirana firm failed in 1971 and that shook the confidence of the creditors and in order to earn his living the assessee took resort to this device of mentioning fictitious transactions in the red dairy to impress the prospective customers. The names mentioned in the diary are not imaginary and the Income-tax Officer could have summoned them for verification of the asssessee's contention. Further reliance was placed on the reasons given by the appellant. Assistant Commissioner as also on some decisions. In K.S. Kannan Kunchi vs. CIT(1), the view taken was that it is not the law. that when once the explanation of the assessee for certain credit entries in his account books is rejected, it automatically follows that the receipts are income. Whether an explanation is acceptable and if not. Whet her it should be inferred hat the receipts constitute income are different aspects of the same quest ion. Both these aspects are inter related, and the question whet her such receipts constitute income or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's statement was recorded and he stated that the blue diary was a genuine diary. While the red diary, was a fictitious diary in which he had made entries to impress his clients. Another fact is that upto 31st March, 1969 the assessee had been deriving income from brokerage of the food-grains only. From 1st-April, 1969 he started brokerage of financing. For these three years. That is 1970-71 to 1972-73, he himself filed return disclosing income exceeding Rs. 15,000 in each of these years. In other words, the only source of his income is brokerage. The status of the assessee stated by the Appellate assessment Assistant Commissioner as well cannot be disputed. He is residing in a house paying Rs. 15 as monthly rent. The income disclosed by him is verifiable from the blue diary and the other books of accounts. He opened savings bank accounts in his own name and in the names of his wife and children and the credits appearing therein are all verifiable. Therefore, the source of income of the assessee is well established and that is only one. Further, he is not in a very affluent circumstance. The entries in the red are not cash credit entries. This diary cannot be regarded as a cash b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee's reply was that the ornaments were old and had been received by him from his parents and in laws and he sold them because they had become obsolete. The Income-tax Officer held that since no evidence had been given to prove the acquisition of the ornaments, the receipt remained unexplained and he treated it as income from undisclosed sources under s. 69. Before the Appellate Assistant commissioner the assessee filed copy of purchase voucher dated 20th August, 1971 of society Jewellers, Birhana Road, Kanpur to support the sale of the ornaments. The Appellate Assistant Commissioner had upheld the addition because the assessee had not been able to prove the source of the acquisition of these ornaments. 10. It was submitted on behalf of the assessee by Shri Jain that this amount represented sale proceeds of Kardhani which he had sold to society Jewellers. The receipt was with the department. To our mind, the addition would have to be sustained because this amount represented sale of only one item. While the assessee's explanation before the Income-tax was that the assessee had received ornaments from his parents and in laws at the time of his marriage which took place ..... X X X X Extracts X X X X X X X X Extracts X X X X
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