1982 (7) TMI 67

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.... 185 of the Act. During the previous year relevant to the assessment year 1965-66 the wives of the three partners of the petitioner-firm, namely, Smt. Sita Bai, wife of Sobhraj, Smt. Ganga Devi, wife of Damodar Das, and Smt. Mooli Bai, wife of Khem Chand, had each made a deposit of Rs. 1,500 with the petitioner-firm. The ITO while assessing the petitioner-firm for that year did not accept the genuineness of these loans and treated the same as the petitioner's income from undisclosed sources and included the aggregate amount of Rs. 4,500 in the total income of the petitioner-firm. Similarly, in the previous year relevant to the assessment year 1966-67, each of these three ladies made a deposit of Rs. 2,500 with the petitioner-firm, but the g....

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....assessment, interest amounts paid to them were allowed while computing the total income of the petitioner-firm. In the assessment year 1970-71, apart from disallowing a part of interest amount paid to Sint. Mooli Bai, that is, Rs. 240 out of Rs. 847.56 for the reason that the payment claimed was excessive, the balance amounts of interest paid to these three ladies were fully allowed while computing the total income. Similarly for the assessment years 1971-72 to 1973-74 interest amounts paid to these three ladies were allowed in full except for a small disallowance in respect of interest paid to Sint. Mooli Bai. In the previous year relevant to the assessment year 1974-75 there was a fresh deposit in the account of Sint. Sita Bai of Rs. 750 ....

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.... opinion and hence were bad in law. After hearing counsel for the parties we are inclined to agree with this contention. We have already given above the facts of the case in detail and we have shown that in the assessments for the years under consideration, apart from disallowing a part of the interest paid by the petitioner-firm to Smt. Mooli Bai, the remaining payments were accepted and were allowed while computing the total income of the petitioner-firm. The petitioner-firm had filed before the ITO copies of accounts of these ladies as also copy of the interest account, and, therefore, it could not be said that there was any escapement of the petitioner's income by reason of the omission or failure on the part of the petitioner-firm to d....