9911796707
TMI Blog1986 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. The opening cash balance on 25th Oct., 1976in the above book was Rs. 8,52,920.05. The balance as on 15th April,1977 as per the above book was Rs. 31,47,146.56. However, on physical verification of the cash in the survey, it was found only at Rs. 5,92,264.87. There was thus a shortage of cash amounting to Rs. 25,54,880.89. 3. With regard to the shortage, the ITO who conducted the survey, examined Shri Bajrang lal Ojha, the cashier of the firm. He stated that the money to the extent of Rs. 25,54,880.89 had been taken away by three partners of the assessee firm as under: (1) Shri (Dr.) Gaur Hari Singhania Rs. 25,37,468.31 (2)Shri Govind Hari Rs. 5,000.00 (3)Shri Padampat Rs. 12,412.58 We will, in this connection, deal with the cash claimed ot have been taken by Dr. Gaur Hari Singbania only as there is no dispute about the other partners having taken away the money. Shri Ojha further stated that Gaur Hari had taken away the money about 1-1/2 months back. When questioned whether he had entered the above transactions in his memoranda book, the cashier admitted that it was not so entered. He, however produced a paper giving th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes, when it was returned back, required checking from the records. He also stated that he had taken the money in cash and had returned the same in cash. When asked about the source of returning the withdrawals by him, he replied that it was the same money which he had taken had been returned. Some further questions were asked from him. In any case, he did not divulge the purpose or the work for which the money was taken by him. His answer was that that it was very difficult to tell. He, however, stated that the money was kept by him in his office bungalow and at his factory. 6. There was, however, a turning point in the case with the filing of a letter dt. 14th March,1980 before the ITO. It was stated in this letter that the assessee had received the sum of Rs. 25 lakhs between 5th Feb., 1977 an d14th March, 1977 by cheques from J.K. Synthetics Limited, J.K. Cotton Spg. And Weaving Mills Ltd. And J.K. Jute Mills Co. Ltd. The details of these receipts are given in the letter appearing at p. 16 of the Paper Book submitted by the assessee. It was also for the first time stated in the above letter that the money had been taken away by Dr. Singhania for safe custody in order to esca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en returned to the firm and would have been allowed to be kept with the latter when there was actually Gherao. 8. The ITO also observed that the mere fact that Dr. Singhania found difficulty to explaining the purpose of the investment indicated that the amount had been utilised either by the firm or Dr. Singhania for some purpose which he was reluctant or unable to disclose. He also observed that the onus of proving the possession of the said money and the availability of that money for making payments to various parties on subsequent dates fell squarely on the assessee. It will be relevant to mention here that subsequently the assessee had incurred an expenditure of Rs. 22,27,643.93 between 22nd April, 1977 to 22nd Nov., 1977. The ITO was of the view that once it was established that the firm did not have any money in its possession, the above expenditure must been incurred out of some undisclosed income available to it. He observed that the return of cash by the partner was also unbelievable. He did not give any reasons why it was not believable. This observation is found in paragraph 19 of his order. Apart from the above, the ITO also observed in paragraph 18 of his order tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Shri H.P. Agarwal, in reply, submitted that the Department could not ignore the paper found in the survey on which the details of the cash were recorded. Those details included the name of Dr. Singhania as in the receipt of Rs. 25,37,468.31. He explained that what was torn off was a paper relating the earlier date, i.e., showing the cash balance of 14th April, 1977. According to him, the paper found on survey showed the cash balance as on 15th April, 1977. He further submitted that it was nobody's case that the assessee was not in receipt of Rs. 25 lakhs from J.K. Synthetics Ltd., J.K. Cotton and Spinning and Weaving Mills Co. Ltd. And J.K. Jute Mills Co. Ltd. Between 5th Feb., 1977 an d14th March, 1977. According to him, if the availability of cash was admitted with the assessee on 14th March, 1977, it had also to be admitted that major portion of the money was with Dr. Gaur Hari Singhania on 15th April, 1977 which has not only evidenced by the paper found in the survey referred to above but also with the statements of the cashier Shri Ojha and the statement of Dr. Gaur Hari Singhania himself. He contended that merely because at the initial stage Dr. Singhania had failed to dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the assessee was required to explain the shortage of Rs. 25,54,880.89. The only person available to explain this shortage was Shri Bajrang Lal Ojha, who was the cashier of the firm. He produced before the lower authorities a paper giving the details of Rs. 31,47,146.56. He no doubt admitted that those details had been copied from some other paper which had been destroyed. However, nothing much turns on this fact. There is no change in the basic stand of the assessee that there was shortage of cash to the extent stated above. The Cashier also attributed Rs. 25,37,458.31 as having been taken away by Dr. Singhania about 1-1/2 months back. He further admitted that except on the paper this fact was not recorded either in the memoranda book or in any other book. It would not be said that the details of the cash had been fabricated or cooked up at the survey. The reading of the paper itself goes to show that they must be having some basis and the person cannot be expected to remember such detailed figures so that he could create the paper or those details just at the time of the survey. Thus the stand of the assessee was that out of the total cash available with it a sum of ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be said or inferred that whatever the partner was doing he was doing it only on behalf of the firm and for the benefit of the firm. The activities of Dr. Singhania, therefore, in the intervening period cannot be taken to be the activities of the firm. The assessee firm is not concerned for what purpose the money was taken by Dr. Singhania and from where he had repaid it. We do not think much importance can be given to the purpose for which the money was taken by Dr. Singhania so far as the assessee firm is concerned. To take the illustration of a simple creditor and debtor, a creditor is not concerned with the activities of the debtor. If he has lent some money to the debtor and the latter has returned it, that is the end of the matter. It cannot be said that if the debtor had misutilised the money or had repaid it out of some undisclosed sources, it can also be treated as the undisclosed income of the creditor. Same principle will apply to the present circumstances also. The assessee firm is not concerned for what purpose the money was taken by Dr. Singhania and from where he had returned it. So far as the assessee is concerned, it has accounted for the non-availability of the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent without much thought. We have already pointed out above that in both these statements the claim of the assessee was that the amount of over Rs. 25 lakhs had been taken away by Dr. Singhania. It was so spoken by the cashier in his statement and that statement was not denied by Dr. Singhania. He only stated that he could not remember the correct figure which required a verification and further he also found it difficult to state the purpose for which the money was taken by him. We have already stated above that we are not concerned with the purpose for which Dr. Singhania had taken the money. Suffice it to say that he had taken the money and he returned it to the assessee firm. Thus, so far as the assessee firm was concerned, it had not only explained the non-availability of cash in its hands but has also explained the availability of non cash to the extent of Rs. 25 lakhs on 15th April, 1977 which obviously could be utilised by it for meeting the expenses between 22nd April, 1977 and 22nd Nov., 1977. It may also be mentioned here that in paragraph-11(xx) the ITO stated that as per statement of Dr. Singhania, he had returned Rs. 25 lakhs on 16th April, 1977. The opening sentence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the point. The first decision is in the case of M/s Pooranwan vs. CST(1980 UPTC 358). It was held in this case that the shortage in cash box does not furnish material for rejection of account books. Even if it be assumed that a person carrying on business of purchase and sale, both is found to be in possession of cash which is short, it can at most give rise to suspicion that the amount might be utilised in purchase. But that by itself does not furnish material for drawing inference that purchases have been made and are not recorded in account books. The Court also observed in paragraph-5 of its order that the requirement of law is that account books should be maintained in intelligent form so that sale or purchase can be verified. If sale and purchase is entered in the account books and no defect is noticed, how can the shortage in cash books furnishes material for rejection of account books. A similar view was taken in the case of M/s Nomi Chand Jain vs. CST (1983 UPTC 547).In M/s Chhedilal Lalman vs. CST (1981 UPTC 864) some amount was shown in the Bahi under the head 'Uchant'. This was the practice of the assessee as it was revealed from the account books. The Court held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om other sources. 19. The assessee appealed to the CIT(A). The latter examined the interest account in detail. Before him, the assessee filed a detailed conclusion showing how the loss in interest account had been arrived at. The ITO, who was present at the time of hearing before the CIT(A), checked the calculation and accepted it as correct. In the circumstances, the CIT(A), held that there was no case of disallowance of Rs. 2,63,648. He deleted the addition. However, at the same time, he also withdrew the deduction amounting to Rs. 2,68,814 allowed by the ITO in the computation of the assessee's income from dividend and other sources. 20. The above election is not challenged by the Department in its appeal. However, the ld. counsel not able to point out in what respect the CIT(A) had committed an error as the calculation submitted by the assessee showing the loss had been accepted by the ITO as correct. We, therefore, find no merit in this contention of the Department. Further, it is amply compensated by the withdrawal of the deduction allowed by the ITO himself from dividend and from other sources. 21. The next contention relates to determination of the A.L.V. of J.K. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to above, held that the ALV of Kamala Tower and Kamala Retreat had been correctly determined at Rs. 18,281 and Rs. 22,344 respectively. He, however, directed that the ALV of Ganga Kutir should be reconsidered and predetermined. 24. The assessee in its appeal has challenged the determination of the ALV of all the above properties. Objection in particular was, however, taken only to that of Ganga Kutir. It was submitted before us by the counsel for the assessee that the value of this property had subsequently been determined by the CIT(A) at Rs. 20,000 in the asst. yr. 1979-80 in his order dt. 2nd Sept., 1985. He contended that the same value might be determined for the year under appeal also. 25. We have gone through the order of the CIT(A) referred to above. We find that he has followed the order of the Addl. District Magistrate dt. 31st March, 1981 determining the value of the above property at Rs. 20,000. The ADM in this connection has examined the relevant laws on the point. After going through his order and after finding that it was followed by the CIT(A) in the asst. yr. 1979-80, we are of the opinion that the same value of Rs. 20,000 should be adopted for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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