TaxTMI 
TaxTMI 
1998 (2) TMI 32
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....ncerned is 1976-77, the relevant previous year ended on 15th April, 1976. The ITO made an addition of a sum of Rs. 50,000 to the total income returned by the assessee on the ground that the assessee had not satisfactorily explained the nature and source of credit entry of Rs. 50,000 found in the books of accounts dt. 29th Dec., 1975. The assessee had made a voluntary disclosure of Rs. 50,000 under the provisions of the Voluntary Disclosure of Income and Wealth Act, 1976 (hereinafter referred to as 'Voluntary Disclosure Act'). The assessee made the declaration under the Voluntary Disclosure Act as under : &n....
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....egarded as an income of the assessee and made an addition of the said amount to the total income returned by the assessee for the said assessment year. 3. The assessee preferred an appeal before the CIT(A), Coimbatore, against the inclusion of the said sum of Rs. 50,000. The CIT(A) confirmed the order of the AO holding that the assessee had not explained the source of credit and the ITO was justified in treating the said sum as the income of the assessee. 4. The assessee preferred a further appeal before the Tribunal. The Tribunal, after, noticing the declaration made by the assessee under the Voluntary Disclosure Act, held that the declaration made under the Voluntary Disclosure Act has to be accepted as true and correct unless there are materials to discredit the statement. The Tribunal, therefore, held that in the absence of any evidence contra, the statement of the assessee as to the nature and source of the said sum of Rs. 50,000 has to be accepted. The Tribunal pursued the assessment files for the earlier years and found that the sum of Rs. 50,000 probably cannot be an income for the asst. yr. 1976-77 on the score that the assessment records for the asst. yrs. 1964-6....
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....the learned counsel for the assessee, after perusing all the records came to the conclusion that the assessee could not have earned the income of Rs. 50,000 during the relevant previous year for the asst. yr. 1976-77 and the credit entry represented the income of earlier years. He, therefore, submitted that the finding was arrived at on the basis of the evidence and, therefore, this Court should not interfere with the finding of the Tribunal. 7. Before considering the arguments, it is necessary to refer to the decisions relied upon by the learned counsel. In Baldeo Prasad vs. CIT (1986) 52 CTR (Pat) 166 : (1987) 166 ITR 205 (Pat) : TC 42R. 1388 the Patna High Court held that where the assessee admitted that the disclosure, disclosing certain sum of money under the Voluntary Disclosure Act which was not accepted by the Department, it is open to the authorities to draw an inference that the sum declared by the assessee and not accepted by the Department was the income of the assessee from the undisclosed sources. In CIT vs. Durga Prasad More (1969) 72 ITR 807 (SC) : TC 42R. 1314, the Supreme Court held that once it was found that a receipt by the assessee was income of the assesse....
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.... which such an addition was made. 10. In Ashokpal Daga (HUF) vs. CIT (1996) 136 CTR 235 (MP) : (1996) 220 ITR 452 (MP) : TC 55R.529 the Madhya Pradesh High Court held that the question whether the Tribunal was right in law and had any material to hold that the sums in the names of various parties were unproved cash credits and the assessee's income from undisclosed sources and interest paid thereon were liable to be assessed as income is the question of law arising out of the order of the Tribunal. In CIT vs. Bharat Engineering & Construction Co. 1972 CTR (SC) 247 : (1972) 83 ITR 187 (SC) : TC 55R.520, the Supreme Court held that the finding of the Tribunal that the credit entry did not represent the income of the assessee-company is a finding of fact. In Patnaik & Co. Ltd. vs. CIT (1986) 58 CTR (SC) 92 : (1986) 161 ITR 365 (SC) : TC 55R. 1066, the Supreme Court held that the Tribunal is the final fact-finding authority under the IT Act and the Court has no jurisdiction to go behind the statement of facts made by the Tribunal in its appellate order. The Supreme Court also held that the Court may go so only if there is no evidence to support the findings of the Tribunal or the....
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....ove three reasons, the Tribunal came to the conclusion that the nature and source of the credit entry has been properly explained by the assessee. 12. Insofar as the first reason is concerned, the declaration made by the assessee under the Voluntary Disclosure Act was not accepted by the CIT as the declaration reached the CIT belatedly and therefore, the declaration of the assessee that it represented the income of earlier years cannot be accepted. The reliance placed by the Tribunal on the declaration filed under the Voluntary Disclosure Act would indicate that the Tribunal has accepted the Voluntary disclosure made by the assessee and when the CIT had not accepted the same it is impermissible for the Tribunal to come to the conclusion that the credit entry represented the income of the earlier years. The Tribunal was also of the view that the Government has induced and invited the assessee to come out with the truth, and therefore, basing upon the inducement offered by the Government that the immunity will be offered, the assessee has made the statement. It is, no doubt, true that the Government made a promise that if the assessee voluntarily discloses the income subject to ce....
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....we are of the opinion that a concealed income which was neither disclosed in the assessment proceedings nor in any other ancillary proceeding for any earlier year can hardly constitute a source for a subsequent credit entry and if the explanation of the assessee that the source of the credit entry is the undisclosed income of earlier years is accepted, it will open the doors of the tax evasion and the purpose behind the enaction of s. 68 will be easily defeated as it will be open to anyone to point out that the credit entry came from some undisclosed and unassessed income of prior year. When the Parliament has placed onus on the assessee to explain satisfactorily the nature and source of the credit entry, it is for the assessee to prove the source of the credit entry and the Courts have held that if the additions were made in earlier years, that would constitute the source for the subsequent credit entry, and then it is for the Department to prove that the earlier additions were spent away during intervening period. It is not clear from the order of the Tribunal how the Tribunal came to the conclusion on the perusal of the earlier assessment records that the assessee might have ear....