TaxTMI 
TaxTMI 
2005 (4) TMI 52
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....he Income-tax Act ?" 2. The brief facts of the case are as follows : The opposite party assessee (hereinafter referred to as "assessee") was assessed to tax in the status of individual. The accounting period for the previous year ended on 11-10-1986. In the books of account of the assessee, deposit of Rs. 50,000 was found in the name of Smt. Vimlesh Aggarwal and a sum of Rs. 45,000 was found credited in the name of Smt. Shashi Aggarwal. The assessing authority asked the assessee to explain the aforesaid deposits. In pursuance thereof, it was explained that a sum of Rs. 50,000 was paid by Smt. Vimlesh Aggarwal from the bank account No. 2128 in the Bank of Baroda which stood in the joint name of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal. Copy of the pass book was also filed. The entry in the pass book was as follows : Date Amount Cr. Dr. 17-3-1986 By cash 40,000 20-3-1986 By cash 11,000 28-6-1986 15,000 19-7-1986 10,000 20-7-1986 15,000 1-8-1986 10,000 50,000 3. It was explain....
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....ough, the exact amounts disclosed by these two ladies in the Amnesty Scheme are not known. It is observed that Smt. Vimlesh had deposited a sum of Rs. 51,000 in March, 1986 and Smt. Shashi had deposited a sum of Rs. 73,000 in March, 1986. The deposits which have been made in the names of these two ladies in the books of the appellant have arisen against the credits made by these two ladies in their bank accounts in March, 1986, therefore, if the Assessing Officer was of the view that these two ladies did not have any independent source of income and these two bank accounts actually belong to the appellant, then the proper course for the Assessing Officer, was to add the entire accounts of deposits in the bank accounts maintained in the names of two ladies in the hands of the appellant. In that case the additions would have been of Rs. 51,000 and Rs. 73,000 respectively in respect of deposits in the bank account of Smt. Vimlesh Agarwal and Smt. Shashi Agarwal rather than the amounts of deposits of Rs. 50,000 and Rs. 45,000 in the books of the appellant. Moreover in such a situation, section 69 relating to unexplained investment outside the books rather than section 68 in respect of ....
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....f Amnesty Scheme was available to the declarant and not to the assessee in whose books of account the deposit was found. He submitted that it was open to the assessing authority to make the enquiry and to add the cash credit in the hands of the assessee. In support of his contention, he relied upon the decision of the Apex Court in the case of CIT v. United Trading & Construction Co. [2001] 247 ITR 819 1 in which the earlier decision of the Apex Court in the case of ITO v. Rattan Lal [1984] 145 ITR 183 2 has been followed. The Apex Court held as follows : "It is now brought to our notice that this very question has since been decided by this Court in ITO v. Rattan Lal [1984] 145 ITR 183 . In the said decision it has been held that the immunity enjoyed by a declarant under section 24 of the Finance (No. 2) Act, 1965, under the Voluntary Disclosure Scheme is confined to the declarant alone and is not extended to the assessment of a third party assessee in relation to the income disclosed by the declarant. It was further held that there is nothing in section 24 of the Finance (No. 2) Act which prevents the Income-tax Officer, if he is not satisfied with the explanation of the....
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.... no explanation about the nature and source thereof or the explanation offered by him is not in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Therefore, what has to be enquired into by the Assessing Authority is about the nature and source of the deposit. If the explanation with regard to nature and source is found unsatisfactory only then the amount so credited may be treated as income. In the present case, the assessee offered the explanation both about the nature and source of the money. It was explained that the money was deposited by Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal, which they have deposited after withdrawing from their bank account. The Commissioner of Income-tax and the Tribunal found that the assessee has discharged its burden in proving the source of the money, which had flew from the bank account. It was further held that in addition to the source of money from the bank account of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal both the ladies were the income-tax assessees and assessed to tax under the Amnesty Scheme and the amount deposited in their b....
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.... (1) Identity of the person, (2) Genuineness of the transaction and (3) capability of the person giving cash credit. On the explanation being given the assessing authority can reject the explanation by cogent grounds and if the grounds are based on no ground, presumption against the assessee does not arise. 16. In Sreelekha Banerjee v. CIT [1963] 49 ITR 112 , Apex Court held that "if there was an entry in the account books of the assessee which showed the receipt of a sum on conversion of high denominations notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money was and to prove that it was not income. The Department was not at that stage required to prove anything. It could ask the assessee to produce any books of account or other documents or evidence pertinent to the explanation if one was furnished and examine the evidence and the explanation. If the explanation showed that the receipt was not of an income nature, the Department could not Act unreasonably and reject that explanation to hold that it was income. If, however, the evidence was unconvincing, then such rejection could be made. Th....
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....and the Income-tax Officer is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory. The question whether the source of the investment should be treated as income or not under section 69 has to be considered in the light of the facts of each case. In other words, a discretion has been conferred on the Income-tax Officer under section 69 of the Act to treat the source of investment as the income of the assessee if the explanation offered by the assessee is not found satisfactory and the said discretion has to be exercised keeping in view the facts and circumstances of the particular case." 19. It may be mentioned here that under the Amnesty Scheme, the new taxpayers were allowed to declare their income for various years and their returns were allowed to be accepted without any charge of penalty and interest. It appears that Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal filed returns under the Amnesty Scheme declaring certain income and as a result of such declaration, savings have been deposited in the bank account which have been subsequently paid to the assessee. There is no dispute ....