9911796707
TMI Blog1994 (3) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... . 35,00,000 -------------------------- Rs. 135,00,000 -------------------------- The assessee stated in a statement taken from him during the course of the search that he himself was not aware of the source of the money but that his son Shri K. Venkatesh Dutt had arranged the fund and knew every thing about it. It was however, found out that the credit entries in the bank occurred by way of realisation of demand drafts in favour of the assessee purchased by one Shri P.J. Fernandez. The son of the assessee and Shri Fernandez originally confirmed about the loan of the entire amount of Rs. 135 lakhs by Shri Fernandez to the assessee on the basis of a pro-note. Shri Fernandez again told that he had borrowed the major portion of the amount from his partner, viz., one Shri Srikanta Datta Wodeyar. Shri S.D. Wodeyar also confirmed the transaction. The assessee stated at this stage that he was also aware of the fact that the loan had come from Shri Fernandez, although the entire affairs had been arranged by his son. 3. The Department, however, conducted search and seizure proceedings successively in the premises of Shri Fernandez and Shri S.D. Wodeyar. During the course of examinations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the said credit in the bank account of the assessee, viz., Shri K. S. Dattatreya, shown as loan from Shri Fernandez as the income of the firm/income of the managing partner earned during the period from June 1984 to June 1985, i.e., relevant to assessment year 1986-87. It was also tried to explain therein that as criminal proceedings had been initiated against the partners of the firm, M/s. Intercorp Associates, it was considered expedient not to bring the monies of M/s. Intercorp Associates into the books of account of Shri K. S. Dattatreya directly and for this reason, the name of Shri Fernandez had been used as a name-lender. Shri Venkatesh Dutt actually flied a return of income of his for assessment year 1986-87 on 31-3-1987 showing the return as having been filed under the Amnesty Scheme. He disclosed a total income of Rs. 30 lakhs along with the net agricultural income of Rs. 50,000 in the said return. In the statement showing computation of income, Shri Venkatesh Dutt started with the amount of Rs. 135 lakhs being the gross credit in the name of Shri K.S. Dattatreya, added thereto interest received to the extent of Rs. 15,68,702 and after making adjustments on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him, the CIT(A) made full discussions about the facts of the case. He referred to the discrepancies in the statements of various persons connected with the transactions. Ultimately, he came to the conclusion that when credits were found in the books of the assessee for which no satisfactory explanation was forthcoming, the credits have got to be deemed to be his income under section 68. He stated that although it was not clear as to whom the money belonged and as to where the money came from, in the absence of any cogent evidence in that regard, the deeming provisions of section 68 were applicable. In that view, he confirmed the addition of the entire amount. 9. During the course of the appellate proceedings before him, the CIT(A) also found that in addition to this amount of Rs. 135 lakhs, certain further credits were found in an account book of the assessee discovered during the course of a search and seizure proceeding in the case of the assessee's son Shri Venkatesh Dutt on 23-2-1988. The credit amounts on two dates, viz., 23-5-1985 and 17-6-1985 in the names of several persons actually represented loans stated to have been taken in the form of draft which were again r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inconceivable to place the ownership of the money in the hands of the assessee. On the other hand, Shri Venkatesh Dutt, son of the assessee was in the high-flying business of film financing for quite some time. He was also engaged in the business of discounting bills and cheques. He had to face some troubles from the bank authorities on account of some cheque issued by him being bounced. That is why he tried to shift part of his unaccounted money to the name of his father through the intermediary name of Shri Fernandez. Shri Venkatesan, reiterated that the assessee had all along been taking a consistent stand that he knew nothing about source of the money and that his son alone had arranged for it and also knew about the matter. Shri Venkatesan thus argued that in the face of all these facts it would not be proper to hold the assessee as the owner of the money and to foist the deemed income on the assessee. In support of his claim Shri Venkatesan relied on the two decisions of the Patna High Court in the case of Addl. CIT v. Bahri Bros. (P.) Ltd. [1985] 154 ITR 244 and Sarogi Credit Corpn. v. CIT [1976] 103 ITR 344. He furthermore placed reliance on the decision of the ITAT, Poona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munity cannot extend to the income actually accruing to another person although the declarant might have shown the said income in his own hands. Shri Puniha furthermore drew our attention to the observations of Supreme Court made at page 259 of the above-mentioned decision in Jamnaprasad Kanhaiyalal's case to the effect that in a case like this there cannot be any question of double taxation of the same income inasmuch as the "situation is of the assessee's own making in getting false declarations filed in the names of the creditors with a view to avoid a higher slab of taxation". 12.1 Shri Puniha furthermore argued that the facts of the present case show that self-serving evidences were created by the son of the assessee subsequent to the investigation made by the Department simply to bail out his father, as has been discussed in detail by the CIT(A) in his appellate order. Shri Puniha also pointed out that the two decisions of the Patna High Court as relied upon by the learned counsel for the assessee related to cases where the creditors were third parties not having any direct relationship with the assessees. He argued that in such cases only the onus of the assessee ends up by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case concerning a third party. In this case, because of subsequent denials made by Shri Fernandez and also Shri S.D. Wodeyar and furthermore on account of owning up of the money by Shri Venkatesh Dutt, the original story about the loan having been given by Shri Fernandez gets completely washed away. The issue, therefore, before us is to come to a conclusion as to whether the money belonged to the assessee himself or was really provided by Shri Venkatesh Dutt as claimed by him. We take due note of the submissions of Shri Venkatesan in this case that although the assessee used to be the leader of a consortium of excise bidders taking part in the auction processes inasmuch as the assessee was being held in high esteem by the other persons in the consortium, the assessee however, was not carrying on any business in his personal name and that even whatever business would ultimately come on the assessee out of bids made by the consortium, would be carried on by the different partnership firms, of which the assessee, of course, was a partner. The assessee was deriving merely share income from the different partnership firms and there is no indication anywhere that there was a possibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank by whatever resources he had instead of trying to put money in his father's bank account. Shri Venkatesan drew our attention to the depositions given by Shri Venkatesh Dutt during the course of the search and seizure proceedings at his premises to the effect that a total amount of Rs. 4,05,61,767 was being owed by the various debtors of M/s. Intercorp Associates to the said firm and also that Shri Venkatesh Dutt himself was owning several properties at different places. We also take due note of the assertion made by Shri Venkatesan that ultimately the entire money under consideration found its destination to the firm M/s. Intercorp Associates, the assets and liabilities of which were again taken over by Shri K. Vankatesh Dutt in due course. This strongly indicates that the money had originally come from Shri Venkatesh Dutt and after serving the purpose in the hands of the assessee, went back to the original source. The fact that the assessee has all along been taking a consistent stand that he knew nothing about the source of the money or the mode of transactions and that every thing was known to his son only, also lends strong credence to the case of the assessee that the mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd managed to get the amount assessed in his hands at a much lower figure by claiming huge losses and allowances which were non-genuine. it is the same AO who completed the assessment of the assessee and Shri Venkatesh Dutt on the same day and the amount of Rs. 135 lakhs was assessed in the hands of Shri K. Venkatesh Dutt not on a protective basis. The reliance placed by the learned DR. on the judgment of the Supreme Court in Jamnaprasad Kanhaiyalal's case and as mentioned above, would therefore be of no use inasmuch as in the instant case, the same AO was aware of the pros and cons relating to the assessment proceedings of both the assessee and his son and the conscious act on the part of the AO in choosing to assess the amount of Rs. 135 lakhs in the hands of Shri Venkatesh Dutt in a substantive manner would certainly preclude him from assessing the same amount once more in the hands of the present assessee. 15. Finally, therefore, in view of all these matters as discussed above, firstly that the facts clearly indicate that the availability of the amount under consideration was more probable in the hands of Shri Venkatesh Dutt than in the hands of the assessee and, subsequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues that the decision of the Supreme Court, as relied upon by the teamed counsel for the assessee being in respect of the provisions of the 1922 Act, would not apply to the present case. On the other hand, he has drawn our attention to the Explanation attached to section 251, which was not there in the 1922 Act. 16.1 The fact that the Assessing Officer had asked for explanation from the assessee about this particular credit entry, cannot be denied. However, it is also an admitted fact that the matter relating to this particular credit entry was neither declared nor disclosed by the assessee in the return of income filed by him nor mentioned In the assessment order. The Explanation to section 251 reads as below: "Explanation : In disposing of an appeal, the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Appellate Assistant Commissioner or, as the case may be, the Commissioner (Appeals) by the appellant." Kanga & Palkhivala state at page 1514 of their book: "The above propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, the M.P. High Court, by making a reference to the Explanation to section 251(2) of the 1961; Act, held as below: "The Explanation empowers the AAC to 'consider and decide any matter arising out of the proceedings in which the order appealed against was passed'. In our opinion, the words 'any matter arising out of the proceedings' are not wide enough to include a matter which could have been raised before or considered by the ITO but was not raised before him or considered by him. These words, in our opinion, mean any matter which was processed by the ITO or was raised before him for being processed. The proceedings before the ITO are limited to the matters expressly or impliedly raised by the assessee and the ITO and the proceeding done by him of these matters. The Explanation does not authorise consideration of any matter by the AAC which was not raised or processed before the ITO." 16.3 From an examination of the abovementioned judgments we feel that even the Explanation to section 251(1) means by the expression 'any matter arising out of the proceedings' only such matters which were either specifically disclosed by the assessee in the return of income filed by him o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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