TaxTMI 
TaxTMI 
1987 (1) TMI 48
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....gainst the unexplained cash credits of Rs. 1,57,708 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the sum of Rs. 73,708 assessable as income for the assessment year in question under section 68 of the Income-tax Act, 1961 ? " This reference relates to the assessment year 1963-64. The assessee is a Hindu undivided family and derives income from various sources. It owns house properties. It carries on business in " Bardana ". It also runs passenger buses in the name of " M/s. Mathuradas Motor Services". For the assessment year in question, it disclosed a loss of Rs. 1,47,767 in relation to the motor service. It declared an income of Rs. 12,718 in relation to its other business. I....
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....nge the Income-tax Officer's finding that the cash credits were not genuine. He contended only that the taxing authorities should have set off against the cash credits in the sum of Rs. 1,57,708 not only the estimated income but also the loss of Rs. 1,47,767 which they had disallowed in the account of the motor service. The Tribunal accepted this contention on behalf of the assessee for the reasons quoted below: ".. ......... These statements show that according to the books, there was an alleged loss of Rs. 1,47,767 in this business. It is not disputed that the accounts of the assessee are unreliable and the loss is not genuine. So the question that naturally confronted the assessee was how to balance the books of account. The books wer....
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....ndisclosed sources simply because the entries appeared in the books of business whose income they had computed on a percentage basis. Mr. Jetly also drew our attention to the judgment of the Patna High Court in CIT v. Jhaverbhai Biharilal & Co. [1986] 160 ITR 634. In this matter, the taxing authorities added sums to the income disclosed on account of discrepancies in purchases and profits on sales. The Tribunal held that the cash credits should be set off against the additions made to the assessee's income. The reference to the Patna High Court was made at the instance of the Revenue. The court noted that the basis of the Tribunal's order was that since there were unexplained cash credits, the additions to the trading account must be rel....
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....ew our attention to the assessment order passed by the Income-tax Officer. He also drew our attention to the order passed by the Tribunal. In his submission, the intangible addition that had been made by the Income-tax Officer and confirmed by the Appellate Assistant Commissioner, was in the sum of Rs. 2,06,767, comprising the estimated income in the motor service business of Rs. 59,000 and the loss in that business of Rs. 1,47,767. What was added as intangible income was not only that income but also the loss that was disbelieved and converted into a zero figure. The taxing authorities ought to have given credit for the sum of Rs. 2,06,767. Our attention was drawn by Mr. Thakar to the judgment of the Supreme Court in Anantharam Veerasin....
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....circumstances of the case. Mr. Thakar also drew our attention to the judgment of this court in CIT v. Jawanmal Gemaji Gandhi [1985] 151 ITR 353. It is unnecessary to refer to that judgment in any detail for the court was satisfied, having regard to all the circumstances that were before the Tribunal, that the sources for the acquisition of certain gold could well be assumed to be the amount added to the assessee's income. This being, in the court's view, reasonable conclusion, it declined to substitute its own view for that of the Tribunal. In the case of S. Kuppuswami Mudaliar v. CIT [1964] 51 ITR 757, it was held by the Madras High Court that " where the income-tax authorities make an addition to the income of the assessee over and ....
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.... being introduced in the business can only be accepted to the extent of income estimated, and the balance of credits still not covered will be treated as income from undisclosed sources under section 56 read with section 68 of the Income-tax Act ......... Thus, the cash credits were covered to the extent of Rs. 84,000, being the estimated income. The balance thereof in the amount of Rs. 73,708 remained unexplained. This amount, the Income-tax Officer added, to the assessee's " income from other sources ". Before the Tribunal, the assessee did not dispute the estimate of its income. It did not dispute that the cash credits of Rs. 1,57,708 could not be explained. All that it urged was that the addition of the amount of Rs. 73,708 made by t....