TaxTMI 
TaxTMI 
2010 (4) TMI 1199
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....ax Officer, CCII, Kanpur. Though the three separate reference applications have been moved by the Revenue before the Tribunal, in three aforesaid appeals, the Tribunal has referred only one composite reference. At the instance of the Revenue, the following questions have been raised: "1. Whether on the facts and in circumstances of the case, the Hon'ble Income-tax Appellate Tribunal was justified in holding that the investment in question reflected in parcha No. 56 could not be brought to assessment in the hands of Shadiram Ganga Prasad, Smt. Premlata Kanodia and Shri S.P. Kanodia in the manner in which the Department had brought them to assessee in their hands?" 2. Whether on the facts and in the circumstances of the ....
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....es belong to the persons whose names have been mentioned and interest at the rate of 9.44 per cent on the aforesaid capital investment had been given to them for the aforesaid period, i.e., June, 1980 to December, 1980 and accordingly, a sum of Rs. 2,07,440 had been added towards unexplained investment and interest, in the case of partnership firm, a sum of Rs. 1,86,696 has been added in the hand of Sri S.P. Kanodia and a sum of Rs. 77,790 has been added in the hand of Smt. Premlata Kanodia being unexplained investment and the interest accrued thereon. The order of the assessing authority has been confirmed by the Commissioner of Income-tax (Appeals). The matter went to the Tribunal in second appeal. Before the Tribunal, it was contended th....
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....aw appropriate adverse inference against him but how could one draw adverse inference against the three appellants before us, namely, Shri G.P. Kanodia, Smt. Premlata Kanodia and Shri S.P. Kanodia? 15. The department's explanation is that the abbreviations S.P. And Prema could not but refer to S.P. Kanodia & Premlata and so far as S.R.G.P. was concerned, it represented Shadi Ram Ganga Prasad and as the jottings, prima facie, indicated interest at the rate of the 9.44 per cent for six months worked out on the capital amounts noted against the above names. The only inference to be drawn from these jottings could be that interest indicated in the said paper had been given to the parties named above on the capital amounts belonging....
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....lected in parcha No. 56 can be brought to assessment in the hands of Shadi Ram Ganga Prasad, Smt. Premlata Kanodia and S.P. Kanodia in the manner in which the department has brought them to assessments in their hands. In view of this we are unable to sustain the additions in the hands of the three appellants as above." 4. Heard Sri R.K. Upadhyaya, learned Standing Counsel appearing on behalf of the Revenue and Sri S.K. Garg, learned counsel, appearing on behalf of the respondent/assessees. 5. Sri R.K. Upadhyaya, learned Standing Counsel submitted that under section 132 (4A) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") a presumption can be drawn that the parcha belonged to the persons from whose possession it was ....
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....fore, at the most a presumption can be raised against him. Sri D.P. Kanodia, at no stage, in the statement admitted that these entries relate to the unexplained investment made by the assessees and the interest mentioned therein had been accrued to them. No opportunity of cross-examination to Sri D.P. Kanodia was given to the assessees. The entries in the parcha, therefore, remained uncorroborated. Moreover, the entries against Sri S.P.Kanodia and Smt. Premlata Kanodia were found scored out. What is the reason for scoring out such entries is not explained and, therefore, in the absence of corroborative evidence, the Tribunal has rightly held that no adverse inference can be drawn from the entries of parcha No. 56 against the assessees. The ....
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....s are brought before the authorities and allowed to be cross-examined by the assessee. This does not mean that the assessing authority is bound to examine the wholesale dealers as witnesses in presence of the assessee; it is sufficient if such wholesale dealers are merely tendered by the sales tax authorities for cross-examination by the assessee for whatever worth it is." 10. This Court further observed as follows: "It is true that the decision was in slightly different context but the principle laid down appears to be that in cases where entries are detected in the account books of other dealer the burden is on the Department to produce that dealer for cross-examination and if the Department fails to do so no adverse inference....