TaxTMI 
TaxTMI 
2005 (1) TMI 77
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....nted the purchase price of sarson, i.e., investment made by Smt. Bimla Devi? 2. Whether, in sustaining the aforesaid additions of Rs. 60,000 and Rs. 29,135 has not the Income-tax Appellate Tribunal misdirected itself in law in holding that the burden lay upon the assessee to explain the source of investment made by Smt. Bimla Devi in the purchase and sale of sarson? 3. Whether the Income-tax Appellate Tribunal has not misdirected itself in law in holding that the facts of the present case are distinguishable with the facts of the case of M/s. Ramjasmal Nathuram and thus not following its order passed in the case of M/s. Ramjasmal Nathuram wherein under identical circumstances similar additions have been deleted? 4. Whether the findings of the learned Income-tax Appellate Tribunal of sustaining the additions of Rs. 60,000 and Rs. 29,135 is not vitiated in law in the light of the finding that certain inquiries made through the Inspector had not been confronted to the assessee? 5. Whether the finding of the learned Income-tax Appellate Tribunal that Smt. Bimla Devi has failed to justify the accumulation of funds and the facts stated by the lady regarding accumulation of fu....
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....ified and right in law in holding that the credits of Rs. 1,00,000 and interest thereon aggregating to Rs. 38,755 including the profits derived by Smt. Bimla Devi had rightly been assessed as the income of the assessee from undisclosed sources? 15. Whether the learned Income-tax Appellate Tribunal has not misdirected itself in law in restoring the issue to the Assessing Officer regarding the levy of interest under section 215 of the Income-tax Act?" The assessee, which is a registered firm and is engaged in the business of sale of agricultural commodities and commission agency, filed a return for the assessment year 1988-89 declaring an income of Rs. 86,040. The Assessing Officer completed the assessment at Rs. 2,40,770 by making additions on account of cash credits including interest thereon, disallowance of losses in gram and barley accounts, etc., the particulars of which are as under: "(a) Rs. 2,250 being the alleged excess shortage in gram account; (b) Rs. 750 being the alleged excess shortage in barley account; (c) Rs. 10,000 on account of low household withdrawals by the partners; (d) Rs. 40,000 being the alleged unexplained deposits in the account of Smt. ....
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.... alleged excess shortage in gram and barley accounts and low household withdrawals. The Commissioner of Income-tax (Appeals) independently examined the entire matter and upheld the additions and disallowances. He, however, quashed the assessment order to the extent of charging of interest by observing that the same was vitiated due to the violation of the rule of hearing. The Tribunal upheld the order of the assessment as well as the appellate order, but deleted the additions made at serial Nos. (a), (b) and (c). While upholding the disallowance of deposits made by Smt. Bimla Devi, the Tribunal referred to her statement recorded on December 28, 1998 and held that the assessee had failed to discharge the onus of proving the capacity of Smt. Bimla Devi and genuineness of the deposits made by her. The observations made by the Tribunal on this issue are as follows: "In para. 5 of the said statement she stated that she earned income of Rs. 15,000 in the year 1979 and Rs. 15,000 in the year 1982. In the year 1979, she was not married and was hardly of 17 years of age as is apparent from the fact that her age at the time of recording of the statement on December 28, 1988 was 26 years. ....
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....ould have actually been doing such work on such a large scale as claimed, a substantial amount would have been utilised for meeting the necessities of the family and the ratio of savings out of such income would have been quite limited, and it is impossible to believe that the ladies doing such work could save almost their entire income from such sources, so that after a gap of several years, the amount so kept in home chest is available for deposit by an account payee cheque to a partnership firm, in which her husband is one of the partners, (iv) In the statement dated December 28, 1988, the lady has stated that her income from sewing and embroidery reduced after the year 1982, and her present monthly income may be Rs. 100 to Rs. 200. The figures of income from such sources shown in the assessment year 1984-85 to the assessment year 1986-87, on the other hand show an increasing trend of income. These facts are mutually contradictory. 4.21 Smt. Bimla Devi has not shown any income from sewing or embroidery work or from the work of preparing paper, mungeri, etc. The only income shown by her in the assessment year 1988-89, is the profit on purchase and sale of 140 bags of sarson th....
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....o Instruments Associates P. Ltd. v. CIT [1987] 166 ITR 718. The Tribunal also rejected the theory of alleged gift made by Prabhu Dayal by assigning detailed reasons in paras. 4.35 and 4.37 which are reproduced below: "4.35 The sources of a deposit of Rs. 20,000 in the account of Smt. Bimla Devi on April 6, 1987 was explained to be a gift from Prabhu Dayal, grandfather of Shri Om Parkash. Learned counsel for the assessee submitted that the statement of Shri Prabhu Dayal was only recorded by the Assessing Officer. He has confirmed the fact of making the said gift and also the fact of making a deposit in his own name with the assessee-firm. Our attention was also invited towards the copy of pass book of S.B. Account No. 2705 of Shri Prabhu Dayal with a view to show that deposits were made by him in the said bank account in the month of February, 1987 also the genuineness of which has not been doubted. He submitted that Shri Prabhu Dayal is an old gentleman of 80 years of age. The statement should not have been disbelieved by the departmental authorities. 4.37 We have carefully gone through the statement of Shri Prabhu Dayal recorded by the Assessing Officer on January 25, 198....
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....years. He could not earn an income of Rs. 15,000 to 18,000 per annum on such meagre amount of sales. Such conclusions derived by the Assessing Officer have not been challenged by the assessee by bringing any material in rebuttal thereof. The assessee has not produced any evidence to show that Shri Prabhu Dayal had really carried on such cloth business and his annual sale of cloth was higher than the one adopted by the Assessing Officer on the basis of the reading of the statement of Shri Prabhu Dayal. The aforesaid facts and discussion and elaborate reasons given in the orders of the learned Departmental authorities, clearly prove that the assessee has failed to discharge the burden of proving the capacity of Shri Prabhu Dayal of making a gift of Rs. 20,000 to Smt. Bimla Devi as well as for making deposits with the assessee-firm. Apart from the aforesaid facts and reasons, it is clear from the copy of statement of Shri Prabhu Dayal placed at page 12 of the paper book, that he, inter alia, stated that the gift of Rs. 20,000 was given to Smt. Bimla Devi wife of his grandson in the year 1988. He also stated that a gift of Rs. 20,000 was given to Shri Om Parkash in the year 1987. Since....
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....ed that he made a gift of Rs. 20,000 to Shri Om Parkash in the year 1987. There are two debit entries in the said bank account of Shri Prabhu Dayal, one on March 2, 1987 and the other on April 6, 1987. In the statement Shri Prabhu Dayal had stated that the gift to Smt. Bimla Devi was made in the year 1988, although it was stated on behalf of the assessee that such a gift of Rs. 20,000 was made by him to Smt. Bimla Devi on April 6, 1988, out of withdrawal of the said amount from his bank account. The deposit of Rs. 11,000 has been made by Shri Prabhu Dayal in the books of account of the assessee-firm on April 13, 1987. The immediate source of this deposit is a credit entry in the said S.B. account of Shri Prabhu Dayal of Rs. 6,000 on April 13, 1987. The assessee has failed to establish any nexus of income declared in the return of income filed by Shri Prabhu Dayal for the assessment year 1984-85 to the assessment year 1986-87. The accounting year for the assessment year 1986-87 ended on March 31, 1986. The deposits in the bank account were made in the year 1987. No direct nexus or correlation between the two has been established by the assessee in the present case. The facts in the ....