TaxTMI 
TaxTMI 
1993 (11) TMI 95
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.... 1985 4,53,172 1982-83 5th Oct., 1985 1,58,544 .. .. 11,11,716 The assessee's explanation was that this amount was part of the disclosure made by the assessee-firm, M/s D.K.B. & Co., by Shri R. Bharathan, who was looking after the affairs of the firm. As the Assessing Officer was not satisfied with the explanation, he treated the entire remittances as unexplained investments of the firm. 3. In the books of accounts of the assessee there was an opening balance of Rs. 2,50,000. It was explained that the amount had come out of the following: . Rs. (a)Cash balance as per balance sheet as on 31st March,, 1983 13,406 (b)Lease rent received from D.K.B. & Co. Abkari Contractors, Quilon for the years ended 31st March,, 1984 and 31st ....
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.... arriving at the figure of Rs. 41 lakhs and also without knowing whether the Department had accepted the availability of Rs. 41 lakhs as reduced by Rs. 10.5 lakhs already distributed amongst the partners, as on the date on which the agreed figure of Rs. 41 lakhs was arrived at. It is quite possible that after the close of the accounting year for 1983-84 or during the said accounting year the assessee or its managing partner Shri Bharathan might have spent away large sums, which were not allowable as deductions in computing the total income for the asst. yr. 1983-84. According to the decided case laws, it is for the assessee to prove that an addition made in one assessment year was actually available with him by adducing corroborative eviden....
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....to the circumstances in which the assessee-firm came forward for settlement of its case with an additional income of Rs. 41 lakhs for the asst. yr. 1983-84 and also how a sum of Rs. 31,70,434 was found distributed among the partners of the firm. These are to be found in paras 4 and 5 of his order. At para 6, he gives the summary of the amounts distributed out of Rs. 41 lakhs, which is as follows: . Rs (a) Distribution among partners 10,50,000 (b) Utilised by Sri Sadanandan 2,72,410 (c) Utilised by Sri Subhakaran 3,00,000 (d) Utilised by Sri Sukumaran 75,000 (e) Utilised by Sri N. Krishnan 2,00,000 (f) Utilised by Sri R. Bharathan 2,00,000 g) Utilised by Smt. Indira Rani 9,35,276 (h) Utilised by Sri R. Bharathan 1,37,748 ....
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....e, he held that the payment of taxes should have come from out of the unaccounted funds of the firm. In this view of the matter, the sum of Rs. 11,11,716 was added to the income of the firm as before. 6. On appeal, the first appellate authority held that no money would have been left by April, 1985 after explaining away the various investments that has been described in the assessment order. The assessee's representative was asked to show whether there was any cash on hand in the wealth-tax assessment of the partners as on 31st March, 1985. But the assessee's representative could not furnish such information. He was also asked to prove whether the payments were made from the running business of the assessee for which the assessments has b....
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.... only to the extent of Rs. 31,70,434 out of Rs. 41 lakhs and for the balance amount there is no evidence of distribution. There is only a conjecture about its distribution among the partners. The CIT(A)'s approach is equally wrong because based on this conjecture he had asked for the proof of the same in the wealth-tax assessments of the respective partners. Hence, we reject their approach. The sum of Rs. 41 lakhs offered for assessment and assessed as such represented profits kept outside the books. The distribution of Rs. 31.7 lakhs is also found to have been made outside the books. Therefore, it is reasonable to hold in the preponderance of probabilities of the case that the balance of Rs. 9,29,566 must have been kept outside the books a....