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TMI Blog1981 (7) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the price of the said land was not paid by the assessee, an amount of Rs. 11,623 was paid by the assessee as interest. Both the lower authorities, the ITO and the Commissioner (Appeals), disallowed the claim of the assessee on the short ground that the interest was in respect of the land which the assessee was acquiring for establishment of a new unit. The Commissioner (Appeals) in paragraph 3 of his order found the reliance of the assessee on Calico Dyeing & Printing Works v. CIT [1958] 34 ITR 265 (Bom.) as misplaced and applied the well known Supreme Court decision in the case of Challapalli Sugars Ltd. v. CIT [1975] 98 ITR 167. 5. The learned authorised representative for the assessee vehemently argued that the Commissioner (Appeals) is in error in distinguishing the case of Calico Dyeing & Printing Works and his reliance in the case of Challapalli Sugars Ltd. is misplaced. He submitted that the administration, management, control, planning, etc., was one and the same of the assessee's business at Bombay and the new proposed unit at Delhi and in that light if the business was the same, then the assessee's claim ought to have been accepted and he placed his reliance on CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also came to be referred by the Gujarat High Court in the case of Bansidhar (P.) Ltd. In the said case also, their Lordships attached more importance to the overall control and common fund from which necessary capital and working funds were supplied to various business activities and the said case also supports the contention of the assessee. In the said case, their Lordships made the observation : "If there was complete inter-connection, inter-lacing, inter-dependence and dovetailing of the different business activities carried on by the assessee and all the activities constitute one and the same business, the deduction on account of retrenchment compensation by the assessee upon closure of one of its business and the write off outstanding dues as bad debt in the other were liable deductions." Since there is no dispute about the fact in the instant case that management, control, business organisation, funds, etc., were the same, the assessee's claim deserves to be accepted. In the result, we reverse the finding of the Commissioner (Appeals) and allow the interest claim of Rs. 11,623. 7. The third and the fourth grounds in the appeal by the assessee pertain to the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no dispute about the fact that from parties to whom goods were supplied, orders were oral as per submissions of the assessee. There is no correspondence either in respect of cash advances received by the assessee or for supply of goods. However, delivery challans in respect of goods supplied are signed and initialled and so are the receipts which are in discharge of the return of cash for the balance amounts for which no goods were supplied and which were outstanding with the assessee and subsequently returned. Factually, none of the parties except Mahavir Yarn Agency, could be produced by the assessee before the income-tax authorities nor they were traceable when the revenue made efforts to locate them. 8. The learned authorised representative for the assessee prefixed his submissions by a scheme which was normally prevalent by the purchasers of crimp yarn. He submitted that most of the outside parties, due to octroi and sales tax, used to resort to cash purchases and what they normally used to do was to advance money and obtain goods, whenever needed by them, as they used to prefer to have a buyer in hand before obtaining the goods from the assessee. He submitted that genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 366 and Rs. 1,15,000 not deleted by the Commissioner (Appeals) he vehemently argued that in the light of the above submissions and facts, even the addition sustained by the Commissioner (Appeals) deserved to be deleted. He placed his reliance on CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC). 9. The departmental representative, on the other hand, submitted that there cannot possibly be a clear case of introduction of cash credits than the one under consideration. He submitted that a total amount of Rs. 16,62,000 was introduced in a short span of time and, therefore, it called for thorough examination. He submitted that the parties from whom the cash is said to have come are just for name sake. According to him, it was strange that no safeguards were taken by the depositors in the form of the assessee's acknowledgment or receipt at the time they lent the money. Strangely enough, according to him, there were no agreements, either pertaining to advances received by the assessee or for contract for the supply of goods. He vehemently argued that in a case of this type, where no order book is maintained, the reliance on such sales could not be placed and the ITO was justified in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sales in respect of six parties and these sales have been accepted by the revenue. According to the ITO, though the sales in fact had taken place, they were effected to unknown parties. Out of the seven parties, goods were supplied to the following three parties in toto: Rs. 1. K. L. Trading Company 1,64,000 2. Swastik Rayon Corporation 2,05,000 3. K. G. Corporation 2,26,000 The category of parties to whom goods were partly supplied were: 1. Rayon and Textiles - Goods not supplied for Rs. 1,10,462 out of Rs. 2,95,000. 2. Kailash Trading Corporation - Goods not supplied for Rs. 1,21,583 out of Rs. 2,43,000. 3. Laxmi Trading Corporation - Goods not supplied for Rs. 90,321 out of Rs. 4,14,000. In the third category would fall Mahavir Yarn Agency to whom no goods were supplied and total amount of Rs. 1,15,000 was returned. We may mention that in respect of Rayon and Textiles, Kailash Trading Corporation and Laxmi Trading Corporation a total sum of Rs. 3,22,366 for which no goods were supplied, is verifiable from stock book. 11. When we looked at the stock register, we found that the sales of crimp yarn was chronologically shown in the said register and as well were show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sold and sales accepted, wholly or partly. 12. The vehemence with which the departmental representative drew our attention to the statement of a party who admitted that he neither knew the assessee nor dealt with the assessee, is not factually one of the seven parties. When we look to pages 10, 11 and 12, etc., of the revenue's paper book, the entire story is based on the denial of one Mr. Kailash N. Shah, proprietor of Kailash Trading Corpn., whereas, out of the seven parties, there is no Single party of this name as though there is one Kailash Trading Corporation which was one of the depositors to whom goods were supplied. Moreover, a perusal of the statement of Shri Kailash N. Shah shows that whatever he has alleged is in respect of polyester yarn and not in respect of crimp yarn, because in respect of all these seven parties the entire cash was received for purchase of crimp yarn and the issue pertains to sale of crimp yarn. Even when we look to the report of the ITO filed by the departmental representative as required by this Tribunal on an earlier hearing, we may take into consideration certain items for the sake of sample where cash was received by the assessee. For examp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the learned departmental representative on B.R. Patel v. CIT is also misplaced and so is misplaced the reliance of the learned departmental representative on rest of the cases so far six items are concerned. All those cases are on different footing. Once the sales have been accepted not only in respect of these parties but cash sales in respect of other parties and also cash sales in one case as pointed above where sales were effected after the evidence pertaining to delivery challans, receipts, etc., no addition on this account can be sustained. We, however, do not sustain either or confirm the addition of Rs. 1,15,000 for whom no sales were made but remit that matter to the file of the ITO. 14. When we get guidance from the decision of the Supreme Court in the case of Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151, we find the following observation of their Lordships on page 170 of the report : "We are aware that the Income-tax Appellate Tribunal is a fact finding Tribunal and if it arrives at its own conclusions of fact after due consideration of the evidence before it this Court will not interfere. It is necessary, however, that every fact for and against the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be said that this was a genuine cash credit or otherwise because except the ordinary receipts from him, which was originally shown to the lower authorities and a photostat copy was placed before us, there is nothing and it has been in the trade of the assessee to obtain cash in advance and sell goods thereafter but nowhere cash is obtained and no goods are supplied and the account is squared up. But in respect of Mahavir Yarn Agency, the following points are salient about the issue : 1. Sales to Mahavir Yarn Agency amounting to Rs. 34,034 dated 29-1-1974 have been accepted by the ITO for which amount was paid by cheque vide Item No. CY/9 on page 8 of assessee's compilation. 2. Mahavir Yarn Agency has filed a letter before the ITO dated 10-8-1978 on page 6 of revenue's compilation denying any amount with the assessee. 3. What is stated in letter dated 10-8-1978 is at variance with the transaction noted above of Rs. 34,034. 4. Mahavir Yarn Agency is assessed to income-tax and sales tax as per above letter. 5. Amount in dispute was received in cash, a bill was made on 7-6-1974 but cancelled. In the light of these facts stated above for Mahavir Yarn Agency, we remit back the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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