TaxTMI 
TaxTMI 
2018 (11) TMI 515
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....rge his burden of proof in proving the cash credits when the books of account alongwith supporting vouchers had been accepted coupled with the fact that the purchases against the said sales stands accepted? (c) Whether the addition sustained by the Ld. Income Tax Appellate Tribunal qualifies for deduction under Section 80 IC of the Income Tax Act, 1961?" ITA No. 30 of 2014: "(a) Whether the Ld. Income Tax Appellate Tribunal is right in law in upholding the addition made under Section 68 of the Income Tax Act of Rs. 1.94 crores when the books of accounts had been accepted and as such the provisions of Section 68 of the Income Tax Act, 1961 were not attracted? (b) Whether the Ld. Income Tax Appellate Tribunal is right in law in upholding that the assessee had failed to discharge his burden of proof in proving the cash credits when the books of account alongwith supporting vouchers had been accepted coupled with the fact that the purchases against the said sales stands accepted? (c) Whether the addition sustained by the Ld. Income Tax Appellate Tribunal qualifies for deduction under Section 80 IC of the Income Tax Act, 1961? (d) Wh....
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....n the absence of rejection of the books of accounts, the authorities erred in assessing the amount of sales as an income of the assessee. In support, he seeks reliance upon M/s. Lakhmichand Baijnath vs. Commissioner of Income Tax West Bengal, AIR 1959 SC 341; Roshan Di Hatti vs. Commissioner of Income Tax, Delhi, (1977) 2 SCC 378; and R.B. Jessaram Fatehchand (Sugar Dept.) vs. Commissioner of Income Tax, Bombay City- II, (1970) 75 ITR 33 (Bom). 8. On the other hand Mr. Vinay Kuthiala, learned Senior Advocate, contends that findings of fact are based on full appreciation of cogent material and that there being no illegality or perversity therein, no interference is warranted. He refers to and relies upon the following decisions rendered by the Apex Court in Sumati Dayal vs. Commissioner of Income Tax, Bangalore, 1995 Supp (2) SCC 453; Commissioner of Income Tax vs. P. Mohanakala, (2007) 6 SCC 21; and Commissioner of Income Tax, Ahmedabad vs. Reliance Petroproducts Private Limited, (2010) 11 SCC 762. 9. For answering the questions we find it prudent to refer to certain provisions of the Act. 10. The Act is divided into several Chapters containing several Sections. 11. Cha....
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....me-Tax, Madras, (1983) 144 ITR 452 (Madras)] 15. Chapter VI of the Act specifically deals with aggregation of income; set off and carry forward. How the income or the loss in the relevant assessment year is required to be computed stands specified therein. Cash credit; unexplainable investment; unexplainable money; investments not disclosed in the books of account; unexplained expenditure or amount borrowed or paid on 'hundi' are relevant factors for consideration. All this is required to be carried out by the authority, in the manner specified therein. Under the said Chapter, Section 68 categorically deals with the issue of cash credit with which we are concerned, relevant portion whereof, we reproduce as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers 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." 16. The said Section mandates fulfillment of the following essential ingredients: (a) A ....
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....ubstantial questions of law but not of fact, hence, required to deal only with the second issue. 22. What is 'opinion' and what is 'satisfactory' or so to say satisfaction of the Assessing Officer are the terms which require examination. 23. In P. Mohanakala (supra) the Apex Court while dealing with the true nature and scope of Section 68 of the Act has held that the opinion of the assessing officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The court further held that the opinion of the assessing officer is required to be formed objectively with reference to the material available on record. Hence, application of mind is sine qua non for forming the opinion. 24. The Apex Court in CIT v. McMillan & Co., 1958 SCR 689 : AIR 1958 SC 207 : (1958) 33 ITR 182 while dealing with section 13 of the Income Tax Act, 1922 (11 of 1922), inter alia, observed that the words "in the opinion of the Income Tax Officer" are not to be construed in the sense of a mere discretionary power; but in the context of the words used in the proviso to Sec....
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.... it is not the personal whim, wish, view or opinion or the ipse dixit of the President dehors the material but a legitimate inference drawn from the material placed before him which is relevant for the purpose. 32. In fact, decision rendered in M/s. Lakhmichand Baijnath (supra) clarifies the position in law in the following terms: "10. The position may thus be summed up: In the business accounts of the appellant we find certain sums credited. The explanation given by the appellant as to how the amounts came to be received is rejected by all the Income-tax authorities as untenable. The credits are accordingly treated as business receipts which are chargeable to tax. In V. Govindarajulu Mudaliar v. Commissioner of Incometax, Hyderabad, Civil Appeals Nos. 41 to 43 of 1957 D/- 24-9-1958 : (AIR 1959 SC 248) this Court observed : "There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amounts of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature." That is precisely what the Income-tax authoriti....