TaxTMI 
TaxTMI 
1990 (12) TMI 134
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....). Considering these facts, the CIT(A) restricted the disallowance to 1/6th of the total expenses. 5. The learned counsel for the assessee Shri C.S. Aggarwal pointed out that the facts in the present case are identical to the facts in the case of M/s Mahavir Iron Foundry wherein the disallowance was reduced to 1/12th in the asst. yr. 1982-83. Therefore, there is no justification for restricting it to 1/6th of the total expenses. The learned Departmental Representative Shri Amitabh Kumar supported the action of the CIT(A). 6. We have considered the rival submissions. Keeping in view the fact that in the case of the assessee's sister concern M/s Mahavir Iron Foundry, in the asst. yr. 1982-83, the disallowance was reduced to 1/12th by the CIT(A), we modify the order of the CIT(A) and restrict the disallowance to 1/12th of the total expenses. 7. Now, we come to main ground of the assessee's appeal where the assessee has challenged the confirmation of addition in the following names: (a) Rs. 18,000 cash credit in the account of Smt. Madhu Bala Jain. Rs. 7,746 credited in her account as interest as well as the old balance in her account. (b) Rs. 54,000 cash credit in th....
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....ue No. 719 amount received back from M/s Indian Ceramic House(Potteries). . Rs. 15,000 7.6.1983 By cheque No. 749 amount received back from M/s Indian Ceramic House(Potteries). Rs. 10,000 26.6.1983 By amount received back from Munni Agarwal,Agra, cheque No. 1347. . Rs. 9,000 8.4.1983 By amount deposited in Canara Bank loans amount received back with interest and work done. . Rs. 20,000 12.4.1983 To cheque No. 053061 Canara Bank issued to Paras Foundry,Agra Rs. 35,000 . 25.6.1983 To cheque No. 050062 Canara Bank issued to Paras Foundry Rs. 10,000 . 26.10.1983 To cheque No. 053063 Canara Bank issued to Paras Foundry,Agra. Rs. 9,000 . In view of the reply given by the assessee, the ITO issued summons under s. 131 of the IT Act, of Smt. Madhubala Jain and Smt. Kanchana Jain. In the statement recorded on 18th March, 1985 Smt. Madhubala Jain disclosed her source of income from Coaching/teaching painting to girls at her residence and money-lending business on interest. During the cross-examination Smt. Madhubala Jain could not tell the names of persons to whom she has taught the subject painting and al....
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....he has not kept any account or any diary of the Dalali work though he has been doing this business for more than 6-7 years back and has done Dalali for the assessee as well as for the firm M/s Mahavir Iron Foundry and he obtained money for them from outside parties. But he has denied to have arranged lending out of money by these firms or persons belonging to these firms to outside parties. He has also shown his ignorance regarding transaction entered into between Smt. Munni Devi Agarwal and Smt. Madhubala Jain. Smt. Madhubala Jain in her statement mentioned that she has lent money to Smt. Munni Devi Agarwal through Shri K.K. Goyal, Dalal. The ITO doubted the genuineness of these transactions because Shri Darshan Lal, partner did not produce letter dt.19th April, 1985addressed to ITO (SIC),Agrafrom Shri K.K. Goyal, nor cross-examined Shri K.K. Goyal. From all these facts, he concluded that the loan given to Smt. Munni Devi and alleged receipt of the money were actually sham transactions. Similarly in the case of Smt. Kanchana Jain, the ITO made enquiries regarding pay order of Rs. 9,000 purchased in her favour. A letter Smt. Munni Devi Agarwal showed repayment on6th Oct., 1983throu....
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.... the absence of the assessee and it was never confronted with the same. It was also pointed out that the Inspector's report was never shown to the assessee. However, the CIT(A) did not agree with the submissions of the assessee and he confirmed the order of the ITO, for the same reasons as given in the case of M/s Mahavir Iron Foundry,Agra. The assessee is aggrieved. 9. The learned counsel for the assessee Shri C.S. Aggarwal pointed out that there are two sets of partners in the firm, Group 'A' consists of S/Shri D.K. Jain, R.K. Jain and I.K. Jain whereas Group 'B' consists of S/Shri K.L. Jain, Praveen Jain and Shri A.K. Jain. But, there is no direct relationship of these ladies and the partners in whose names cash appeared in the books of account. It is pointed out that these ladies are income-tax assessees. They have made the payment to the assessee firm through account payee cheques. Therefore, the identity as well as the genuineness of the transactions cannot be doubted. In respect of creditworthiness, it was pointed out that these ladies have confirmed in their statements before the ITO, the lending of this money and the source from where they have earned this amount. It wa....
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....nce of the assessee and had wrongly pointed out the inherent weakness in the explanation of the assessee. Our attention was also invited to the fact that the report of the Income-tax Inspector which was the main basis for the infirmity in the statement was never supplied to the assessee. As against this, the learned departmental representative Shri Amitabh Kumar submitted that if there is an entry in the account book of the assessee which shows cash credit in the names of certain person, it is necessary for the assessee to establish the source of that money. The burden of proof lies upon him. The Department can reject the evidence of the assessee on the point of inherent weakness in the explanation or it can rebut it by putting to the assessee some information or evidence which came in its possession. In this case the assessee had shown cash credits in the names of ladies. These ladies are not directly related to the firm but somehow have relation with the persons who in turn have relationship with the partners. Therefore, the ladies are indirectly related to the firm. It is also submitted that the Revenue authorities have pointed out infirmities and inherent weaknesses in the evid....
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....ssessee and not from the Department. In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee, prima facie, discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the Department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The Department cannot by merely rejecting unreasonably a good explanation convert good proof into no proof. When proceedings are validly commenced under s. 34 of the Indian IT Act, 1922, there is no difference between an ordinary assessment and an additional assessment under s. 34 and the same rule as to burden of proof governs the additional assessment." In the case of Shankar Industries vs. CIT (1978) 114 ITR 689 (Cal), the Hon'ble Calcutta High Court has laid down that the assessee is required to prove the identity of the creditor, the capa....
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.... made the basis of proof of their source of income. It is pertinent to mention here that the CIT(A) brought out in his discussion in paragraph 3.29 of his order the relationship of these ladies with the partners of M/s Paras Foundry and M/s Mahavir Iron Foundry and in the absence of proof, he has doubted the very source of earning of this amount which to our mind is a correct conclusion when these ladies had failed to stand the test of cross-examination regarding their original source of income from private tuition, coaching and money lending business. The learned counsel for the assessee strongly relying upon the decisions of the Patna High Court in the cases of Hanuman Agarwal and Bahri Brothers (P) Ltd., contended that these ladies who made investment in the assessee firm are income-taxpayers. In the case of Smt. Praveen Jain and Smt. Madhubala Jain, the assessments for asst. yr. 1980-81 were completed under s. 143(3) though later on their assessment were completed under s. 143(1) in which the Department has accepted the income returned by them relating to the source of income, they have shown in this case also. Therefore, when the Department has accepted the investment, it is n....