Delhi High Court
Prabhu Dayal Lallu Ram vs Income Tax Officer on 7 June, 1998
Equivalent citations: (1999)63TTJ(DEL)557
ORDER
B.M. KOTHARI, AM.
This appeal by the assessee is directed against the order passed by the CIT(A) on 17th Jan., 1991, for asst. yr. 1988-89.
2.1. The learned counsel for the assessee submitted that the assessee furnished complete quantitative details of Gram account and Barley account before the AO. The details so furnished by the assessee were verifiable from regular books of accounts and other relevant records maintained by the assessee. In view of the smallness of amount of genuine shortage claimed by the assessee, the CIT(A) ought to have deleted the same.
2.2. The learned Departmental Representative supported the order of the CIT(A) and also relied upon the reasons mentioned in the assessment order.
2.3. We have considered the submissions made by the learned representative of the parties and have perused the orders of the Departmental authorities and the details of those two trading accounts submitted at pp 1 and 2 of the compilation. It was explained on behalf of the assessee before the Departmental authorities that these commodities may be damaged by insects despite best efforts. Some shortage may also occur on account of loss of weight due to lapse of time and during storage of such goods. Since the declared trading results are supported by regular books of accounts and AO has failed to Point out any specific mistake or discrepancy in the books of accounts, We are of the view that addition of Rs. 2,250 and Rs. 750 deserves to be deleted. We accordingly direct the AO to delete the same.
3. In ground No. 3, the assessee has challenged the confirmation of the addition of Rs. 10,000 made in the hands of the firm for alleged low drawings by the partners for meeting their household expenses.
3.1. The AO made an addition of Rs. 10,000 on the ground that the withdrawals made by the partners for household expenses are very nominal. The assessee has furnished unsatisfactory explanation. Looking to the size of the family members and keeping in view the fact that the assessee has suppressed its sales and profits, the AO made an addition of Rs. 10,000 on this account.
3.2. The CIT(A) observed that the firm has two partners, namely, Shri Lallu Ram and Shri Om Prakash. Shri Lallu Ram had withdrawn for household expenses Rs. 7,169 and Shri Om Prakash had withdrawn Rs. 4,000 only during the year. The partners did not have any source of income besides share income from the firm. He, therefore, confirmed the said addition in view of elaborate discussion made by him in para 4(ii) and 4(iii).
3.3. The learned counsel for the assessee argued that there is a specific provision in IT Act, namely, s. 69C which provides that an addition in respect of any unexplained expenditure incurred by an assessee for which he offers no explanation or the explanation offered by him is considered to be not satisfactory, such an unexplained expenditure may be deemed to be the income of the assessee. He contended that the firm and the partners are distinct and separate assessees. There is no allegation, much less an evidence, that the firm has incurred any such expenditure. He placed reliance on decisions of Tribunal, Chandigarh Bench in the case of M/s Jai Bhagwan Om Prakash vs. TO (1984) 20 M (Chd) 283 to support this contention. He urged that the said addition should be deleted.
3.4. The learned Departmental Representative strongly supported the order of the CIT(A) in relation to this ground also.
3.5. We have carefully considered the submissions made by the learned representative of the parties. We are inclined to agree with the submissions made by the learned counsel for the assessee before invoking the provisions of s. 69C or before making any addition on account of unexplained household expenses, it is necessary on the part of the AO to establish that the assessee firm and none else, had really incurred such household expenses of the partners. Any such burden has to be discharged on the basis of positive material or evidence on record. In the present case, the AO has not even recorded the statements of the partners with a view to ascertain the amount of household expenditure incurred by them respectively. There is no material on record to prove that the assessee-firm had contributed any amount beyond the amount of withdrawal debited in the capital account of the partners for meeting their respective household expenses. It is true that the withdrawals made by the partners from the firm are grossly inadequate for meeting their household expenses but any addition in respect of such matter can be made only in the hands of the partners and not in the case of the firm unless there is a positive material on records to prove that the firm in fact, had given such amount. We, therefore, direct the AO to delete the addition of Rs. 10,000 made in the hands of the firm.
4. In ground Nos. 4, 5 and 6, the assessee has challenged the confirmation of the addition of unexplained deposit of Rs. 40,000 and Rs. 20,000 in the account of Snit. Bimla Devi w/o one of the partners, Shri Om Prakash. The assessee has also challenged the confirmation of an addition of Rs. 29,135 made in respect of profit allegedly earned by Smt. Bimla Devi on purchase and sale of Sarson made through the appellant firm on her behalf in its capacity as commission agent.
4.1. The AO has discussed the facts relating to the aforesaid ground in para 3 at pp. 2 to 4 of the assessment year. The AO required the assessee to explain the deposit of Rs. 40,000 on 2nd April, 1987, and Rs. 20,000 on 6th April, 1987, in the account of Smt. Bimla Devi. It was explained on behalf of the assessee that she is an existing assessee. The deposits were made by her through account payee cheques. The assessee also made purchase and sale of Sarson on her behalf, in the capacity of a commission agent. All the transactions are genuine and verifiable. Smt. Bimla Devi had also filed her returns of income for asst. yr. 1984-85 to asst. yr. 1986-87 on 17th March, 1987 under Amnesty Scheme and declared the following amounts of income :
Asst. yr.
Rs.
1984-85 15,300 1985-86 15,300 1986-87 18,200 4.2. The AO has further observed at p. 3 of the assessment order that while furnishing the return for asst. yr. 1984-85, Smt. Bimla Devi gave the brief facts of the case on the basis of which she filed returns under Amnesty Scheme. According to these facts, the lady was married about 9 years ago and was taking keen interest in the embroidery, stitching work, etc. She could accumulate only a sum of Rs. 6, 000 upto 31st March, 1983, from such work and her income upto 31st March, 1983, never exceeded the taxable limit. However, from 1st April, 1983, to 31st March, 1986, her income suddenly gone up between Rs. 15,000 to Rs. 18,000 in a year and thus she accumulated savings of Rs. 50,500 within 3 years. Thereafter from 1st April, 1986, her income was not more so as to file a return of income for the subsequent years. She, therefore, did not file any return of income for asst. yr. 1987-88. The AO observed that Smt. Bimla Devi had filed return of income under Amnesty Scheme only to form the capital in her name and to divert firm's income in her hands. The AO also referred to the local enquiries got made by him through the Ward Inspector and in his report, he has reported that Smt. Bimla Devi has never done any work of embroidery or preparing of papads, mangodi, etc. She is only a house lady. Local enquiries further revealed that there are only 8 or 10 houses in the street where Smt. Bimla Devi is residing.
4.3. The AO also examined Smt. Bimla Devi on 28th Dec., 1988. In her statement she admitted having done the work of sewing and embroidery for the last 3-4 years on a large scale, although she did not do any kind of sewing or embroidery course of training. In para 5 of her statement, she admitted that her earnings was Rs. 15,000 in the year 1979, Rs. 15,000 in the year 1982 and thereafter her earnings came down, presently it may be Rs. 100 to Rs. 200 per month. She also admitted in para 6 of her statement that she did work of preparing papads, mangodi in Ateli Mandi about 12 months back and earned about Rs. 1,000 in that period from this work. She also admitted to have maintained the bank account but denied to have any knowledge about the name of the bank. She also admitted that the banking work relating to her funds was being done by her husband, Shri Om Prakash. She further confirmed that she deposited a sum of Rs. 60,000 with the firm last year but was not able to mention the name of the firm. She further deposed that with the help of this amount her husband, Shri Om Prakash purchased Sarson (about 100 bags) on her account on which she earned an estimated profit of Rs. 28,500.
4.4. The AO deeply scrutinised the statement of Smt. Bimla Devi and pointed out certain glaring contradjctions. He has observed that the quantum and reality of the professional income shown by her in the returns of income did not stand on the anvil of evidence. She has stated that she earned Rs. 15,000 in 1979 and Rs. 15,000 in 1982 and thereafter the income dwindled to Rs. 100 to Rs. 200 per month. However, in the return of income for asst. yr, 1984-85, she has stated that her income was below taxable income upto 31st March, 1983 and it started rising only thereafter. Thus, there is a clear contradiction in the facts as stated on oath and the facts submitted along with the Amnesty Return. The second contradiction pointed out by the AO, is that she has * income of Rs, 15,000 each in the year 1979 and in 1982 but she could save only Rs. 6,000 upto 31st March, 1983, whereas with dwindled income, thereafter she had saved Rs. 50,500. Both these facts are contradictory to each other.
4.5. The AO has further pointed out that she had no knowledge about the name of her bank and also about the complete and correct details of purchase and sale of Sarson allegedly made on her behalf. The AO has concluded that the whole business has been done by the firm itself and only to form capital of Smt. Bimla Devi, the firm has diverted their profits in her name. The AO accordingly treated the amount of Rs. 40,000 deposited with the firm on 2nd April, 1987, as not a genuine deposit and added the same under s. 68 of the Act. He also treated the profits of Rs. 29,135 derived on purchase and sale of Sarson through the commission agency of the , assessee-firm, as income belonging to the firm itself and not to the lady, Smt. Bimla Devi.
4.6. As regards deposit of Rs. 20,000, credited in the account of Smt. Bimla Devi on 6th April, 1987, it was explained on behalf of the assessee that she received a gift of Rs. 20,000 from Shri Prabhu Dayal on 6th April, 1987. Shri Prabhu Dayal is 80 years of age and it was claimed that he received the said amount out of his cloth business at Mandi Ateh. His statement was recorded by the AO on 25th Jan., 1989, in which he admitted that he made total sales of cloth of about Rs. 16,000 to Rs. 29,000 during the last 3/4 years. He also filed returns under Amnesty Scheme for asst. yrs. 1984-85 to 1986-87. The AO observed that it is impossible for a person having total sale of cloth Rs. 29,000 during the year to have earned a profit of Rs. 15,000 or above which has been shown in his return of income for asst. yr. 1984-85 to asst. yr. 1986-87. The AO after taking into consideration the relevant facts, came to the conclusion that Shri Prabhu Dayal had no business and the return under Amnesty Scheme were filed only to form capital to be introduced in the books of the firm. The donor had no income for giving the gift of Rs. 20,000 to Smt. Bimla Devi as claimed. He, therefore, made an addition of Rs. 20,000 under s. 68.
4.7. The CIT(A) confirmed the view taken by the AO in view of the elaborate reasons discussed in the order passed by him.
4.8. The learned counsel for the assessee vehemently submitted that the facts of the present case relating to the aforesaid grounds are exactly similar with the facts of the case of one M/s Ramjas Mal Nathu Ram, Mandi Ateli, Namaul, where the Tribunal has deleted an addition of Rs. 49,000 being the addition made on account of alleged unexplained cash credit in the name of Smt. Santra Devi wife of Shri Ramjas Mal, one of the partners of that firm, as well as the addition of Rs. 25,012 made on account of profit earned by Smt. Santra Devi on sale of Sarson through M/s Ramjas Mal Nathu Ram in their capacity as commission agent. The learned lawyer read the entire order passed by the Tribunal in that case with a view to convince us that the facts are exactly identical and, therefore, the Bench should respectfully follow the order of the Tribunal in the name of M/s Ramjas Mal Nathu Ram. The learned counsel submitted that one Shri S.C. Goel, the learned ITP who represented the case of the assessee-firm. before the AO and the CIT(A) also represented the case of the other client, M/s Ramjas Mal Nathu Ram. Almost identical replies were submitted on behalf of both these assessees before the AO. These facts were submitted with a view to further by tress his contention that the facts of the two cases are absolutely similar and there would be no justification for taking a view different than the view taken by the Tribunal in the case of M/s, Ramjas Mal Nathu Ram, ITA 3485/Del/1991.
4.9. The learned counsel also drew our attention towards the copy of account of Smt. Bimla Devi as per the books of the assessee firm (p. 3 of paper-book) and copy of her IT orders under s. 143(1) for asst. yr. 1984-85 to 1986-87 (p. 7 of paper-book), copy of the computation of statutory income of Smt. Bimla Devi for asst. yr. 1988-89 (p. 8 of paper-book), copy of assessment order under s. 143(1) of Smt. Bimla Devi for asst. yr. 1988-89 (p. 9 of paper-book). He further pointed out that a perusal of the return of income for asst. yr. 1988-89 inter alia shows that a sum of Rs. 18,000 was deposited in CTD account of Smt. Bimla Devi. This clearly proves that she really enjoyed her income. The learned counsel placed reliance on decisions reported in Fisons Ispat ITD. vs. Asstt. CIT (1992) 42 ITD 365 (Pat), Puranmafl Naravan Pd. Kedia (HUF) vs. Asstt CIT (1994) 48 ITD 439 (Cal), Debichand Mohanlal vs. ITO (1995) 50 TTJ (Pat) 283 : (1995) 50 ITD 426 (Pat) and CIT vs. Ram Narain Goel (1997) 140 CTR (P&H) 148 : (1997) 224 ITR 180 (P&H) to support his contention. The learned counsel submitted that assessments under s. 143(1) made by the AO for various assessment years upto asst. yr. 1988-89 were just like a regular assessment made under s. 143(3) of the Act. The position has changed only from asst. yr. 1989-90. The AO, therefore, could not validly brush aside the assessments of Smt. Bimla Devi made for asst. yrs. 1984-85 to 1986-87 and for asst. yr. 1988-89.
4.10. He submitted that the burden lies upon the Revenue to prove that Smt. Bimla Devi was a benamidar of the assessee-firm. There is no evidence on record to prove such a fact. On the other hand, it will be seen from the copy of account of Smt. Bimla Devi that there is an opening credit balance of Rs. 3,540 in her account with the firm. This deposit has been accepted as genuine deposit and no addition has been made in respect of the said amount. He also drew our attention towards the copy of bank account of Smt. Bimla Devi of her S.B. A/c No. 2407 to show that a sum of Rs. 3,020 was deposited in her bank account on 19th March, 1986, which falls in the preceding year.
4.11. The learned counsel invited our attention towards the statement of Shri Prabhu Dayal, grandfather of Shri Om Prakash (husband of Smt. Bimla Devi) to corroborate his contention that the deposit of Rs. 20,000 was made by her out of gift of Rs. 20,000 given by Shri Prabhu Dayal. to Smt. Bimla Devi. He has clearly confirmed in the said statement that he made a gift of Rs. 20,000 to Smt. Bimla Devi (wife of his grandson). A perusal of the copy of the statement of Shri Prabhu Dayal recorded on 25th Jan., 1989, submitted at pp. 12-13 of the paper book reveals that the AO had put a specific question to Shri Prabhu Dayal as to whether he has made any gift in last 10 years. In reply to this question, appearing at p. 13 of the paper-book, Shri Prabhu Dayal stated that Rs. 20,000 was given to Shri Om Prakash in the year 1987 and Rs. 20,000 to Smt. Bimla Devi (wife of his grandson) in the year 1988. The deposit of Rs. 20,000 is also fully proved. The statement of a person of the age of 80 years should not have been disbelieved by the AO and by the CIT(A).
4.12. The learned counsel also invited our attention towards the various transactions of purchase and sales of Sarson debited and credited in her account in7the books of assessee's-firm. He pointed out that the assessee is carrying on the business of commission agent. Smt. Bimla Devi gave deposit of Rs. 60,000 on 2nd April, 1987, and 6th April, 1987. The assessee-firm purchased on her behalf Sarson weighing 85 quintals @ Rs. 625.60 on 7th April, 1987.
Certain expenses incurred on her behalf have also been debited in her account. The sale proceeds of the Sarson, as and when it was sold, has been credited in her account. Again, purchase of Sarson of 33.86 quintals made on her behalf on 4th April, 1987 @ Rs. 807 per quintal has been debited in her account. Sales proceeds, as and when it has been sold, has been credited in her account as per the various entries appearing in the said account. He submitted that the entries of purchase and sale made on her behalf are genuine entries. The profit earned by her really belongs to her. On identical facts, the Tribunal has deleted a similar addition in the case of Ramjas Mal Nathu Ram (supra).
4.13. The learned counsel thus strongly urged that the addition made on account of alleged unexplained deposit and an amount of profit credited in the account of Smt. Bimla Devi should be deleted.
4.14. The learned Departmental Representative strongly supported the order of the CIT(A) and also relied upon the reasons mentioned in the assessment order. He placed reliance on judgment of Hon'ble Punjab & Haryana High Court in the case of Gumani Ram Shree Ram vs. CIT (1975) 98 ITR 387 (P&H) to support his contention that the assessee has to prove that the third party who is said to have given the money, was in possession of such sums and that he did, in fact, so loaned to the assessee. In the present case, the assessee has failed to discharge such burden.
4.15. The learned Departmental Representative submitted that the entire story made up by the assessee is against normal human probabilities. It is impossible to believe the fantastic story planned by the assessee and claim made by the assessee that Smt. Bimla Devi accumulated a sum exceeding Rs. 40,000 from her income from sewing, preparing mangori, etc. The assessee has not produced any evidence to prove the existence of such income in the hands of Smt. Bimla Devi. The mere furnishing of return of income of Smt. Bimla Devi under the Amnesty Scheme cannot help the assessee-firm to prove the genuineness of the credit in question in any manner. He invited our attention towards judgment of Hon'ble Supreme Court in the case of Jamna Prasad Kanhaiyalal vs. CIT (1981) 23 CTR (SC) 146: (1981) 130 ITR 244 (SC) in which it was clearly held that disclosure made by sons under Voluntarily Disclosure Scheme does not preclude enquiries into genuineness of cash credit in the hands of the firm. The immunity available under the Voluntarily Disclosure Scheme is available only to the declarant and none else.
4.16. The learned Departmental Representative submitted that the entire transactions in the account of Smt. Bimla Devi represents bogus and sham transactions. The returns under the Amnesty Scheme were filed to create bogus capital formation in the hands of Smt. Bimla Devi with a view to divert the funds and income belonging to the assessee-firm in the name of wife of one of the partners. The learned Departmental Representative relied upon the judgment of Hon'ble Allahabad High Court in the case of Ladu Ram vs. CIT (1979) 9 CTR (All) 54: (1980) 126 1TR 42 (All), in which the finding given by the Tribunal that the wife and son of the assessee had no independent means and there was ample evidence on record to sustain the finding of the Tribunal that the deposits in dispute in the name of wife and son were really the income of the assessee was upheld by the Hon'ble High Court. The learned Departmental Representative also relied upon the judgments reported in Banshi Dhar Agarwal Panna vs. CIT (1983) 36 CTR (MP) 94 : (1984) 148 ITR 523 (MP), Lakhmi Chand Bonath vs. CIT (1959) 35 ITR 416 (SC) and B.R. Patel vs. CIT (1968) 67 ITR 53 (AP).
4.17. As regards decision of the Tribunal in the case of M/s Ramjas Mal Nathu Ram (supra), the learned counsel submitted that the facts of that case are clearly distinguishable. In that case, the ladies were old and established endstanding assessees. They filed complete details of purchases and sales. In the present case, the lady has stated that my husband knows about the details of transactions of Sarson, etc. He submitted that there cannot be any precedent as to facts. The facts of each case are bound to vary. In the present case, the AO has pointed out very vital contradictions in the facts stated in the statement of Smt. Bimla Devi and the facts stated in the letter submitted along with return of income submitted under Amnesty Scheme for asst. yr. 1984-85. The learned Departmental Representative also relied upon the judgment of Hon'ble Andhra Pradesh High Court reported in Asstt. CIT vs. Dr. Ved Prakash & Am-. (1994) 122 CTR (AP) 362 : (1994) 209 1TR 448 (A-P). The learned Departmental Representative thus strongly supported the orders of the CIT(A).
4.18. We have carefully considered the rival submissions made by the learned representatives of the parties and have perused the orders of the learned Departmental authorities as well as all other documents submitted in the compilation, to which our attention was drawn during the course of hearing. We have also carefully gone through all the judgments cited by the learned representatives of both sides.
4.19. The learned counsel 'for the assessee has placed heavy reliance on the decision of the Tribunal in the case of Ramjas Mal Nathu Ram, ITA No. 3485/Del/91 dt. 28th June, 1996. There cannot be any precedent as to a question of fact. The facts of each case have to be carefully and deeply scrutinised before one can arrive at the conclusion that the facts of the two cases are exactly similar and identical. The AO in the present case has pointed out various glaring contradictions in the facts recorded in the statement of Smt. Etimla Devi and the facts as disclosed in the statement annexed with the return of income submitted under the Amnesty Scheme. It is not known whether such glaring contradictions were found by the AO in relation to the deposits in the name of Smt. Santra Devi w/o Shri Ramjas Mal, one of the parts of M/s Ramjas Mal Nathu Ram. The decision on such a point will depend on the facts and circumstances of the each case.
4.20. A perusal of the statement of Smt. Bimla Devi recorded on 28th Dec., 1988, reveals that she was married in the year 1980 to Shri Om Prakash who is one of the partners of the appellant firm. The contents of her statement dt. 28th Dec., 1988, are reproduced hereunder :
"1. That I was married in the year 1980 to Shri Om Prakash who is doing arhat business under the name of M/s Prabhu Dayal Lallu Ram, Ateli.
2. I was doing sewing and embroidery work at Ateli for the last 3-4 years in large scale but at present it is being done not much.
3. The sewing work is being done at Ateli mostly of neighbours and various villages adjacent to Ateli Mandi.
4. I have not done any course of sewing and embroidery.
5. I was earning Rs. 15,000 in a year in 1979, in the year 1982 Rs. 15,000 and thereafter it has come down. At present my monthly income may be Rs. 100 to Rs. 200.
6. Besides this I also did manufacturing of Papad, various parties of Mandi Ateli about 12 months back and 1 earned about Rs. 1,000 in the year from this work.
7. I do not do any other work. I have got 3 children; 6 years, 4 years, 2 years of age.
8. I have got one bank account, but the name of the bank is not known to me. This work of Banking is done by my husband Shri Om Prakash.
9. I have deposited Rs. 60,000 with this firm last year. This amount was deposited twice, Rs. 40,000 in one time and Rs. 20,000 on other time.
10. This amount was deposited out of my home-chest account.
11. With help of this amount my husband Shri Om Prakash purchased Sarson about 100 bags in my account. This purchase was made last year. Last year the purchase price of Sarson and sale price of Sarson is not known to me as all the work for the sale/purchase is done by my husband.
12. My husband told me that a profit of Rs. 28,500 has been made for this deal.
13. I do not know when the IT returns of mine were filed."
In para 5 of the said statement she stated that she earned income of Rs. 15,000 in the year 1979 and Rs. 15,000 in the year 1982. In the year 1979, she was not married and was hardly of 17 years of age as is apparent from the fact that her age at the time of recording of the statement on 28th Dec., 1988 was 26 years. She has also stated that the sewing work was done by her at Ateli. It is not available from the records as to where her parents were residing. Before her marriage, she may be studying also. In view of all these circumstances, it is highly probable (sic-improbable) that a girl of 17 years could earn income of Rs. 15,000 from the work of sewing and embroidery, particularly when she did not undergo any course of sewing and embroidery. (ii) Another fact which emerges from the said statement is that according to the lady she earned Rs. 15,000 in 1979 and Rs. 15,000 in 1982. No details in respect of her income have been given for the intervening years nor for the subsequent years. The AO has observed in the assessment order that along with the return of income for asst. yr. 1984-85 submitted under the Amnesty Scheme, it has been mentioned that she could accumulate only a sum of Rs. 6,000 upto 31st March, 1983, from such work and her income upto 31st March, 1983, never exceeded the taxable income. The facts so stated in the documents annexed with the return of income for asst. yr. 1984-85 are clearly contrary to the facts stated in the statement dt. 28th Dec., 1988, where she claimed to have earned Rs. 15,000 in 1979 and Rs. 15,000 in 1982. Such contradictory facts destroys the reliability and correctness of the facts stated in both the aforesaid set of documents. (iii) It has been claimed that she could accumulate only a sum of Rs. 6,000 upto 31st March, 1983. If the ratio of savings as compared to income from sewing and embroidery, as claimed, is considered, it will be found that the ratio of savings was very nominal and small. On the income of Rs. 15,000 + Rs. 15,000 earned in 1979 and 1982 i.e. on total income of Rs. 30,000 of only 2 years, Smt. Bimla Devi could accumulate a sum of Rs. 6,000, which gives a ratio of 1/5th of income. However, the income in asst. yr. 1984-85 to 1986-87, shown at Rs. 15,300, 15,300 and Rs. 18,200 aggregating to Rs. 48,800, a sum of Rs. 40,000 is claimed to have been deposited in cash in the bank account on 10th March, 1987, which prima facie appears to be highly improbable. A lady of respectable family belonging to a rich business family is not likely to engage herself in the work of preparing papad, mungeri or doing sewing and embroidery work unless the family needs funds. In case the lady would have actually been doing such work on such a large scale as claimed, a substantial amount would have been utilised for meeting the necessities of the family and the ratio of savings out of such income would have been quite limited, and it is impossible to believe that the ladies doing such work could save almost their entire income from such sources, so that after a gap of several years, the amount so kept in home-chest is available for deposit in bank which was in turn was utilised for giving a deposit by an account payee cheque to a partnership firm, in which her husband is one of the partners. (iv) In the statement dt. 28th Dec., 1988, the lady has stated that her income from sewing and embroidery reduced after the year 1982, and her present monthly income may be Rs. 100 to Rs. 200. The figures of income from such sources shown in asst. yr. 1984-85 to asst. yr. 1986-87, on the other hand show an increasing trend of income. These facts are mutually contradictory.
4.21. Smt. Bimla Devi has not shown any income from sewing or embroidery work or from the work of preparing papad, mungeri, etc. The only income shown by her in asst. yr. 1988-89, is the profit on purchase and sale of 140 bags of Sarson through the assessee firm Rs. 28,936 and interest from assessee-firm and Bank Rs. 3,642 (total income has thus been computed at Rs. 32,578). However, in the said statement dt. 28th Dec., 1988, she has stated that she earned about Rs. 1,000 in the year from the work of manufacturing of papad of various parties of Mandi Ateli and had also stated that her income from sewing and embroidery at present was Rs. 100 to Rs. 200 per month. (v) Smt. Bimla Devi has clearly admitted that the entire amount of Rs. 60,000 was deposited out of money lying in her home-chest. A family which is engaged in the business of dealers and commission agent of agricultural produce, would have spared no efforts to utilise such amount in business, as and when earned by Smt. Bimla Devi by taking the deposits from her from time to time rather than allowing the accumulated amount to be kept idle in home-chest. This claim of the assessee is also highly improbable.
4.22. Smt. Bimla Devi did not know the name of the bank, where she had the bank account. She also did not know the details of purchase price and sale price of Sarson, which was claimed to have been purchased and sold through the assessee-firm on her behalf. She was also not aware as to when or whether her IT returns were filed.
4.23. The aforesaid inconsistencies and contradictions and the ignorance of Smt. Bimla Devi relating to some of the vital facts clearly indicate that the stand taken by the assessee that a sum of Rs. 40,000 was deposited out of her income from sewing and embroidery, etc. which was kept in home-chest prior to making of the deposit in cash in the bank account immediately preceding the issue of cheque in favour of the assessee-firm, does not accord with human probabilities. Its acceptance would result in ignoring the facts of life. The story cannot be treated as believable. The assessee has thus failed to discharge the onus of proving the capacity of Smt. Bimla Devi and the genuineness of the transactions, which clearly lay on the assessee under s. 68 of IT Act, 1961.
4.24. We may also refer here to the facts stated by the learned counsel appearing on behalf of the assessee that one Shri S.C. Goel, ITP represented the case of the assessee-firm as well as the case of M/s Ramjas Mal Nathu Ram, Namaul, a distinct firm which is not, in anyway, connected with the assessee firm except that the income-tax consultant of both the firms was the same person, namely, Shri S.C. Goel. It is indeed a strange coincidence that amounts were credited in the accounts of the wives of the partners of both these firms in similar manner with the firms in which their respective husbands were partners. The explanations as to sources of amounts deposited by these different ladies in the two different firms, namely, out of accumulated income from sewing, embroidery, preparing of papad, mungeri, etc. is also claimed to be similar. The ladies belonging to these two different families are stated to have accumulated all such income for several years in home-chest and suddenly when they had to 'give advances or deposit to two partnership firms, money was deposited by them in cash in their bank accounts and soon thereafter the amounts were given by cheques to the respective firms. The ladies belonging to these two different families filed returns of income under Amnesty Scheme for the same years, namely, asst. yr. 1984-85 to asst. yr. 198687 almost at the same figures of income ranging between Rs. 15,000 to Rs. 18,500 in the years from 1984-85 to 1986-87. It may be noted that the maximum amount not chargeable to tax in asst. yr. 1984-85 and 1985-86 was Rs. 15,000, whigh was raised to Rs. 18,000 in asst. yr. 1986-87. The income shown by these ladies from such activities in asst. yr. 1984-85 to 1986-87 marginally exceeded the taxable limits as a result of which these ladies paid petty amount of tax for formation of a substantial amount of capital claimed to be belonging to them and accumulated out of such income. Such strange similarity of the fact relating to capital formation in the hands of these ladies belonging to different families, who are closely related to the partners of two different firms appears to be an artifice or a device planned by some intelligent brain apparently with a view to show the amount as income belonging to the ladies, which, in fact, is the amount of income or funds belonging to the firm. The colourable device of such capital formation is the brainchild of a common intelligent mind and does not represent real transactions according to the test of normal human probability. Had it been brought to the notice of the Tribunal while hearing the appeal of M/s Ramjas Mal. Nathu Ram that the various other dealers and commission agents of agricultural produce represented by the same counsel have also resorted to similar kind of device of introducing credits in similar manner and had there been such significant contradictions and inconsistencies in the statement of the lady depositors in that case also, perhaps, a view different than the one taken by the Tribunal in that case might have been taken. The various significant inconsistencies and contradictions revealed from the scrutiny of the statement of Smt. Bimla Devi as compared to the facts disclosed in the various returns of income filed under Amnesty Scheme coupled with the aforesaid facts that such a planning has been made in more than one case of such dealer and commission agent represented by the same ITP, the facts of the present case stand clearly distinguishable with the facts of the case of M/s Ramjas Mal Nathu Ram (supra).
4.25. The learned counsel for the assessee had raised an objection that the AO had placed reliance on certain local enquiries got made through the Inspector, which were never put to the assessee. The grievance of the assessee appears to be correct but that would not in any manner adversely effect the conclusion derived by the AO because he has elaborately discussed the various vital contradictions and inconsistencies revealed from the statement of Smt. Bimla. Devi and its comparison with the facts disclosed in the statement submitted along with the returns of income submitted under the Amnesty Scheme for asst. yrs. 1984-85 to 1986-87. The various contradictions pointed out by the AO in the assessment order and the facts discussed herein before clearly indicate that the stand of the assessee does not accord with human probabilities and acceptance of such a fantastic story would amount to ignoring the facts of life.
4.26. It may be worthwhile to reproduce hereunder some observations made by the Hon'ble Supreme Court in the case of CIT vs. Duiga Prasad More 1973 CTR (SC) 500: (1971) 82 ITR 540 (SC) at p. 545 and 546 :
"...It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. A little probing was sufficient in the present case to show that the apparent was not the real. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents.
Now coming to the question of onus, the law does not prescribe any quantitative test to find out whether the onus in a particular case has been discharged or not. It ' all depends on the facts and circumstances of each case. In some cases, the onus may be heavy whereas, in others, it may be nominal. There is nothing rigid about it. Herein the assessee was receiving some income. He says that it is not his income but his wife's income. His wife is supposed to have had two lakhs of rupees neither deposited in banks nor advanced to others but safely kept in her father's safe. Assessee is unable to say from what source she built up that amount. Two lakhs before the year 1940 was undoubtedly a big sum. It was said that the said amount was just left in the hands of the father-in-law of the assessee. The Tribunal disbelieved the story, which is, prima facie, a fantastic story. It is a story that does not accord with human probabilities. It is strange that the High Court found fault with the Tribunal for not swallowing that story. If that story is found to be unbelievable as the Tribunal has found, and in our opinion rightly, then the position remains that the consideration for the sale proceeded from the assessee and, therefore, it must be assumed to be his money.
It is surprising that the High Court has found fault with the ITO for not examining the wife and the father-in-law of the assessee for proving the Department's case. All that we can say is that the High Court has ignored the facts of life. It is unfortunate that the High Court has taken a superficial view of the onus that lay on the Department."
4.27. The Hon'ble Supreme Court in the case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124, has also held that reliability and correctness of evidence and explanation submitted on behalf of the assessee has to be considered in the light of human probabilities. In view of s. 68, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income-tax as income of the assessee of that previous year if the explanation offered by the assessee about the nature and sources thereof, is in the opinion of the AO, not satisfactory. The AO is entitled to consider the explanation of the assessee in the light of the sworn statement and is also entitled to look into the surrounding circumstances to find out the reality the matter has to be considered by applying the test of human probabilities. On a careful consideration of the entire relevant facts and material, it cannot be said that the explanation offered by the appellant in respect of the deposit in the account of Smt. Bimla Devi has been rejected unreasonably by the AO.
4.28. The learned counsel for the assessee had also placed strong reliance on acceptance of income declared by Smt. Bimla Devi in her returns of income submitted under Amnesty Scheme for asst. yrs. 1984-85 to 1986-87. He submitted that assessments made under s. 143(1) under the Amnesty Scheme are valid and binding in similar manner as assessments made under s. 143(3). The amount of income from sewing and embroidery, etc. has been assessed in the hands of Smt. Bimla Devi and the same amount cannot again be added in the hands of the assessee-firm.
4.29. It may be relevant here to refer to Circular No. 451, dt. 17th Feb., 1986 issued under the Amnesty Scheme. The same is reproduced hereunder:
"Q. No. 11 Whether ladies and minors can avail of the immunity given by the circulars ?
Ans. Yes, In respect of their own income or wealth certainly. But taxpayers who try to introduce black money and benami investments in the names of ladies or minors will be doing so at their own risk."
4.30. The Hon'ble Supreme Court in the case of Jamnaprasad Kanhaiyalal vs. CIT (supra) held as under
Atpage257:
"The scheme of the Act makes it abundantly clear that it was to protect only those who preferred to disclose the income they themselves had earned in the past and which they had failed to disclose at the appropriate time. It is undoubtedly true that the Act was brought on the statute book to unearth the unaccounted money. But there is no warrant for the proposition that by enacting the same, the legislature intended to permit, or connive at, any fraud sought to be committed by making benami declarations. If the contentions were to be accepted, it would follow that an assessee in the higher income group could, with impunity, find out a few near relatives who would oblige him by filing returns under s. 24 of the Act disclosing unaccounted income of the assessee as their own and claiming that the said income was kept by them in deposit with the assessee.
Atp, 258:.
"The immunity under s. 24 of the Act was conferred on the declarant only, and there was nothing to preclude an investigation into the true nature and source of the credits..."
"The next question that call for determination is- whether the non obstante clause contained in sub-s. (1) of s. 24 of the Act precludes the Department from proceeding against the person to whom the income actually belonged. Under sub-s. (1) of s. 24, the declaration was required to be made in respect of the amount which represented the income of the declarant. The declaration could not be made in respect of an amount which was not the income of the declarant. If, therefore, a person made a false declaration with respect to an amount which was not his income, but was the income of somebody else, then there was nothing to prevent an investigation into the true nature and source of the said amount. There was nothing in s. 24 of the Act which prevented the ITO, if he was not satisfied with the explanation of an assessee about the genuineness or source of an amount found credited in his books, in spite of its having already been made the subject of a declaration by the creditor and then taxed under the scheme. We find no warrant for the submission that s. 24 had an overriding effect over s. 68 of the IT Act, 1961, insofar as the persons other than the declarants were concerned."
At p. 259:
"The last question that remains is whether the same income cannot be taxed twice, once in the hands of the creditors and again in the hands of the assessee. In a case of this description, there is no question of double taxation. The situation is of the assessee's own making in getting false declarations filed in the names of the creditors With a view to avoid a higher slab of taxation. Once it was found that the income declared by the creditors did not belong to them, there was nothing to prevent the same being taxed in the hands of the assessee to which it actually belonged."
4.31. The similar view was expressed by the Hon'ble Supreme Court in the following cases:
(1) ITO vs. Rattan Lal & Ors. (1984) 38 CTR (SC) 382: (1984) 145 ITR 183 (SC).
(2) Radhey Shyam Tibriwal vs. CIT (1984) 38 CTR (SQ) 381 : (1984) 145 ITR 186 (SC).
4.32. The Hon'ble Punjab & Haryana High Court in the case of CIT vs. Meera & Co. (1986) 52 CTR (PM) 53 : (1986) 161 1TR 31 (P&H), held that the only explanation which the assessee furnished with regard to credits of Rs. 30,000 in the account of 3 minors aggregating to Rs. 90,000 was that, under the Voluntary Disclosure Scheme, these amounts had been accepted in the name of the minors, cannot be accepted as a proper explanation. It was held that the assessee had failed to discharge the onus of explaining the sources of deposit of Rs. 90,000.
4.33. The Hon11e Andhra Pradesh High Court in the case of Radio Instruments Associates (P) ITD. vs. CIT (1987) 64 CTR (AP) 317: (1987) 166 1TR 718 (AP) has held that under the Voluntary Disclosure Scheme, the CIT is not required to make an enquiry into the correctness or otherwise of the voluntary disclosure made by an assessee. It is, therefore, necessary that for proving the genuineness of a cash credit in accordance with the s. 68 of the Act, the assessee should establish the nexus between the voluntary disclosure and the amount of cash credit in question. Unless this burden is discharged, it cannot be said that mere filing of voluntary disclosure automatically absolves the assessee from discharging the obligation that is otherwise cast on him.
4.34. In the present case, the assessee has not produced any evidence to prove that Smt. Bimla Devi had really earned income to the extent as disclosed by her in the returns furnished under the Amnesty Scheme. It has also failed to prove that the entire amount so claimed to have been earned was accumulated and nothing was spent out of the said income. The assessee has further failed to prove that the cash deposited in the bank account of Smt. Bimla Devi immediately prior to issue of cheque in favour of the assessee came out of accumulated income of such activities. On the other hand, the various contradictions and inconsistencies in the sworn statement of Smt. Bimla Devi, as pointed out in the assessment order and as pointed out herein before, clearly destroys the reliability and correctness of the explanation submitted by the assessee. The AO was, therefore, fully justified in rejecting such a explanation submitted by the assessee in relation to deposit in the account of Smt. Bimla Devi.
4.35. The sources of a deposit of Rs. 20,000 in the account of Smt. Bimla Devi on 6th April, 1987, was explained to be a gift from Prabhu Dayal, grandfather of Shri Om Prakash. The learned counsel for the assessee submitted that statement of Shri Prabhu Dayal was duly recorded by the AO. He has confirmed the fact of making the said gift and also the fact of making a deposit in his own name with the assessee-firm. Our attention was also invited towards the copy of pass-book of S.B. Account No. 2705 of Shri Prabhu Dayal with a view to show that deposits were made by him in the said bank account in the month of February, 1987, also the genuineness of which has not been doubted. He submitted that Shri Prabhu Dayal is an old gentleman of 80 years of age. The statement should not have been disbelieved by the Departmental authorities.
4.36. We have carefully gone through the statement of Shri Prabhu Dayal recorded by the AO on 25th Jan., 1989. Shri Prabhu Dayal had also filed returns of income under Amnesty Scheme for asst. yr. 1984-85 to 1986-87 declaring income of Rs. 15,800 for asst. yr. 1984-85, Rs. 15,800 for asst. yr. 1985-86 and Rs. 18,500 for asst. yr. 1986-87. The bank account No. 2705 with New Bank of India was opened by him on 5th Feb., 1987 with a cash deposit of Rs. 10. On 9th Feb., 1987, and 25th Feb., 1987, he deposited Rs. 10,000 and Rs. 15,000 respectively in the said bank account. A cheque was issued for Rs. 20,000 on 2nd March, 1987. Again cash of Rs. 25,000 was deposited in the said bank account on 10th March, 1987. A cheque for Rs. 20,000 was given to Smt. Bimla Devi as gift on 6th April, 1987. This amount was deposited by Smt. Bimla Devi with the assessee-firm on 6th April, 1987. Shri Prabhu Dayal in his statement dt. 25th Jan., 1989, has stated that he is doing the business of cloth for last 3-4 years at the payment outside the shop of the assessee firm. He did not have any bill for purchase of cloth nor in respect of sale of cloth. He stated that his sales was Rs. 16,000 and sometimes it was extended upto Rs. 29,000. It is not known whether the aforesaid figures of sale were for one year or for one month or for one day. He stated that he was selling 'Rajai', 'Gadra' and 'Tehmat'. He was however not able to say as to what was the normal length and size of a 'Rajai', 'Gadra' and 'Tehmat' sold by him. He was also not able to tell as to what was the rate of purchase and sale of such material/items. He also stated in the said statement that due to health problem, he has not carried on any business in the last 3/4 years from the date of said statement recorded on 25th Jan., 1989. It was also admitted by him that he resides with his grantson, Shri Om Prakash who meets the entire expenses. Since Shri Prabhu Dayal could not even tell the normal length and size of 'Rajai', 'Gadra' and 'Tehmat' nor could he state the normal purchase price or selling rate of those commodities, it is not believable that he really carried on such business of cloth in asst. yr. 1984-85 to asst. yr. 1986-87 for which returns of income were submitted under Amnesty Scheme. The AO has observed that Shri Prabhu Dayal admitted in the statement that total sales of cloth made by him was about Rs. 16,000 to Rs. 29,000, during last 3/4 years. He could not earn an income of Rs. 15,000 to 18,000 per annual on such meagre amount of sales. Such conclusions derived by the AO have not been challenged by the assessee by bringing any material in rebuttal thereof. The assessee has not produced any evidence to show that Shri Prabhu Dayal had really carried on such cloth business and his annual sale of cloth was higher than the one adopted by the AO on the basis of the reading of the statement of Shri Prabhu Dayal. The aforesaid facts and discussion and elaborate reasons given in the orders of the learned Departmental authorities, clearly prove that the assessee has failed to discharge the burden of proving the capacity of Shri Prabhu Dayal of making a gift of Rs. 20,000 to Smt. Bimla Devi as well as for making deposits with the assessee-firm. Apart from the aforesaid facts and reasons, it is clear from the copy of statement of Shri Prabhu Dayal. placed at p. 12 and 13 of the paper-book, that he, inter alia, stated that gift of Rs. 20,000 was given to Smt. Bimla Devi wife of his grandson in the year 1988. He also stated that gift of Rs. 20,000 was given to Shri Om Prakash in the year 1987. Since Shri Prabhu Dayal stated on oath that the gift of Rs. 20,000 was given to Smt. Bimla Devi in the year 1988, the said amount of gift given by cheque on 6th April, 1987 was not a real gift by him and the same could not be a valid source for explaining the deposit of Rs. 20,000 claimed to have been made by Smt. Bimla Devi with the assessee-firm on 6th April, 1987. This fact further fortifies the view taken by the AO on the basis of valid and convincing reasons mentioned in the assessment orders.
4.37. The CIT(A) has confirmed the addition of Rs. 29,135 being the amount of profit on transactions of purchase and sale of Sarson carried out by the assessee-firm allegedly on behalf of Smt. Bimla Devi. We have already confirmed the view of the CIT(A) holding that the deposits of Rs. 40,000 and Rs. 20,OQO appearing in the account of Smt. Bimla Devi in the books of assessee firm has rightly been added as income under s. 68 in the hands of the appellant firm. As a result of the aforesaid findings, the transactions of purchase and sale of Sarson made by the AO, which are said to have been made on behalf of Smt. Bimla Devi, is not based on any commercial consideration. A perusal of the statement of Smt. Bimla Devi clearly indicates that she did not even know the approximate rate of purchase and sale of Sarson made by the assessee-firm on her behalf. Site has also admitted that the work of purchase and sale of Sarson has been done by her husband. Shri Om Prakash, who is one of the partners of the assessee-firm. The appellant firm is carrying on the business of dealer and commission agent of agricultural produce. The assessee has failed to discharge the burden of proving that transactions of purchase and sale of Sarson were made on behalf of Smt. Bimla Devi, pursuant to any oral or written contract between Smt. Bimla Devi and the assessee-firm. Mere debit of certain entries of purchases in the account of Smt. Bimla Devi and crediting the amount of sale proceeds thereof in her account in the books of the firm will not result in diversion of profits which really accrued to the assessee on its trading transactions in favour of Smt. Bimla Devi, wife of one of the partners.
4.38. The assessee's contention that Smt. Bimla Devi has disclosed such profit in her return of income in asst. yr. 1988-89 which has duly been assessed under s. 143(1) will not, in any manner, help the assessee. It has been held by the Hon'ble Supreme Court in the case of 1TO vs. Ch. Atchaiah (1996) 130 CTR (SC) 404.. (1996) 218 ITR 239 (SQ as under:
At p. 246:
'When s. 4(1) of the present Act speaks of levy of income-tax on the total income of every person, it necessarily means the person who is liable to pay income-tax in respect of that total income according to law. The tax has to be levied on that person, whether an individual, HUF, company, firm, A0P/B01, a local authority or an artificial juridical person. From this, it follows that if income of A is taxed in the hands of B, A may be legitimately aggrieved but that does not mean that B is exonerated of his liability on that account. B cannot say, when he is sought to be taxed in respect of the total income which is lawfully taxable in his hands, that since the ITO has taxed the very same income in the hands of A, he himself cannot be taxed with respect to the said total income. This is not only logical, but is consistent with the provisions of the Act."
The Hon'ble Supreme Court in the case of Jamna Prasad Kanhaiyalal vs. CIT (supra) at p. 259 which has already been extracted herein before, has held that in such a situation there is no question of double taxation. The situation is of the assessee's own making in getting false declarations/returns filed in the name of Smt. Bimla Devi with a view to avoid a higher slab of taxation. This fact will not prevent the same income being taxed in the hands of the assessee firm to which it actually belonged. The CIT(A) has rightly confirmed the addition of the said amount in the hands of the assessee-firm.
4.39. We have also carefully gone through the various decisions cited on behalf of the assessee in respect of additions made in relation to the deposits and profit credited in the account of Smt. Bimla Devi. The facts of all those cases are clearly distinguishable. The decisions reported in Fisons Ispat ITD. vs. Asstt. CIT (supra) and Puran Mafl Narayan Pd. Kedia (HUF) vs. Asstt. CIT (supra) relate to orders passed by the CIT under s. 263 in which it was held that an order made under s. 143(1) cannot be revised under s. 263. The facts of the decision reported in Debi Chand Mohan lal vs. ITO (supra) is clearly distinguishable as in that case the capacity of the creditor and the genuineness of the transactions was established by the assessee. The donor has also confirmed the gifts and explained the sources of making the gifts. However, in the instant case, the capacity of Smt. Bimla Devi as well as the donor, Shri Prabhu Dayal have not been proved nor the genuineness of the transactions has been established. Likewise, the facts of the judgment reported in (1997) 224 1TR 180 (P&H) (supra) are also clearly distinguishable because the Tribunal after taking into consideration the entire evidence, came to the conclusion that cash credits stood duly explained by sufficient evidence. The Hon'ble High Court held that no question of law arises from such findings given by the Tribunal. This is clearly distinguishable from the facts of the present case.
4.40. In view of the aforesaid facts and discussion, the view taken by the CIT(A) of confirming the additions of Rs. 40,000 + Rs. 20,000 + Rs. 29,135 i.e. an aggregate addition of Rs. 89,139 in relation to Smt. Bimla Devi, is held to be valid, reasonable and justified. The view taken by him, is, therefore, confirmed. Hence, ground Nos. 4, 5 and 6 are rejected.
5. In ground No. 7, the assessee has challenged the confirmation of an addition of Rs. 12,900 being the amount of deposit and interest thereon in the account of Shri Prabhu Dayal. The facts relating to the capacity of Shri Prabhu Dayal have been elaborately discussed while dealing with the explanation of a credit entry of Rs. 20,000 in the account of Smt. Bimla Devi claimed to have been made out of gift received from Shri Prabhu Dayal. We have confirmed the view taken by the CIT(A) as well as the AO that Shri Prabhu Dayal had no capacity of making any such gift or deposit out of his so-called income from cloth business. In view of the elaborate reasons given in the earlier paras while examining the capacity of Shri Prabhu Dayal on the basis of his sworn statement, and in view of the detailed reasons given in the orders of the Departmental authorities, the view taken by the CIT(A) of confirming the said addition of Rs. 12,900 in respect of unexplained deposit and interest credited in the account of Shri Prabhu Dayal is confirmed. The adjustments reported in (1981) 23 CTR (SC) 146 : (1981) 130 1TR 244 (SC) (supra), (1984) 145 1TR 183 (SC) (supra), (1984) 38 CTR (SC) 38 : (1984) 145 1TR 186 (SQ) (supra), (1986) 52 CTR (PM) 53 : (1986) 161 1M 31 (P&H) (supra) and (1987) 64 CTR (AP) 317.. (1987) 166 1TR 718 (AP) (supra) equally apply in respect of the unexplained credits in this account. The mere filing of returns of income under Amnesty Scheme by Shri Prabhu Dayal will not absolve the assessee from discharging the burden of proving the capacity of the depositor as well as the genuineness of the transactions in question. On a careful consideration of the entire relevant facts and material, we are of the view that the assessee has failed to discharge the burden of proving these aspects in conformity with s. 68 of the Act.
5.1. The learned counsel for the assessee has submitted that in the account in the name of Shri Prabhu Dayal reveals that deposits of Rs. 25 were made in the preceding year in the month of February, 1987, The deposits made in the preceding year have surfaced in the accounting year In question. Hence, no addition can be made in the year under consideration in view of the judgment of Hon'ble Delhi High Court reported in CIT vs. Om Prakash Mahajan & Sons (1984) 42 CTR (Del) 159.. (1985) 152 1TR 583 (Del). The Hon'ble Delhi High Court in the said case has observed that the assessee's wife had disclosed on 30th March, 1966 a sum of Rs. 10,000 as her income under VDS. Credit for this amount was made in assessee's accounts books on 4th April, 1966. The assessee's explanation was that this amount represented the money which was available with his wife on 30th March, 1966, It was held by the Hon'ble High Court that amount disclosed by assessee's wife could be assessed as income of the assessee. Since the Tribunal had accepted the explanation to the extent that the amount was available on 30th March, 1966, it was held that the amount could not have been earned in the accounting period relating to asst. yr. 1967-68 but same was directed to be taxed in the correct year, namely, asst. yr. 1966-67. The facts of that case are clearly distinguishable. In the present case, it has been held that no income was really earned by Shri Prabhu Dayal. He did not carry on any business of cloth as shown in the returns filed under Amnesty Scheme. The deposits in the bank account of Shri Prabhu Dayal made in the month of February, 1987, have been debited in the said bank account on 2nd March, 1987, by an amount of Rs, 20,000. Thereafter, Rs. 25,000 was deposited in his bank account on 10th March, 1987. On 6th April, 1987, a debit entry of Rs. 20,000 appears in the said bank account. In the statement, Shri Prabhu Dayal stated that he made a gift of Rs. 20,000 to Shri Om Prakash in the year 1987. There are two debit entries in the said bank account of Shri Prabhu Dayal, one on 2nd March, 1987, and the other on 6th April 1987. In the statement, Shri Prabhu Dayal had stated that gift to Smt. Bimla Devi was made in the year 1988, although it was stated on behalf of the assessee that such a gift of Rs. 20,000 was made by him to Smt. Bimla Devi on 6th April, 1987 out of withdrawal of the said amount from his bank account. The deposit of Rs. 11,000 has been made by Shri Prabhu Dayal in the books of accounts of the assessee-firm on 13th April, 1987. The immediate source of this deposit is a credit entry in the said SB account of Shri Prabhu Dayal of Rs. 6,OQO on 13th April, 1987. The assessee has failed to establish any nexus of income declared in the return of income filed by Shri Prabhu Dayal for asst. yr. 1984-85 to asst. yr. 1986-87. The accounting year for asst. yr. 1986-87 ended on 31st March, 1986. The deposits in the bank account were made in the year 1987. No direct nexus or correlation between the two has been established by the assessee in the present case. The facts in the case of CIT vs. Shri Om Prakash Mahajan & Sons (1984) 42 CTR (Del) 159 ' - (1984) 152 ITR 583 (Del) are, therefore, entirely different. There the gap was of only 4 days and the Tribunal had accepted the nexus of the amount voluntarily disclosed on 30th March, 1966 and the credit of the equivalent amount in the books on 4th April, 1966. The said decision, therefore, does not, in any manner, support the assessee's contention.
5.2. In view of the aforesaid facts and circumstances, the view taken by the CIT(A) in relation to the said addition of Rs. 12,900 is also confirmed. Hence, ground No. 7 is accordingly rejected.
6. In ground No. 8, the assessee has challenged the confirmation of an addition of Rs. 26,160 being the amount of deposit of Rs. 20,000 and proportionate interest of Rs. 6,160 in the account of Shri Puran Mal.
6.1. The learned counsel submitted that there was an opening balance of Rs. 24,160 in this account. The genuineness of which has not been doubted by the AO. The deposit of Rs. 20,000 was made by cheque on 9th April, 1987. This amount was received by Shri Puran Mal by way of gift from his grandfather (Nanaji), Shri Ram Prasad. He invited our attention towards the pass book of Shri Puran Mal with a view to show that deposit of Rs. 20,500 was made in his bank account on 4th April, 1986. The deposits made in the preceding year have surfaced in the year under consideration. He relied upon the judgment of Hon'ble Delhi High Court in the case of Om Prakash Mahajan & Sons (supra). He also drew our attention towards the statement of Shri Ram Prasad recorded by the AO on 31st Jan., 1989 in which he had confirmed the fact of making the said gift of Rs. 20,000 to Shri Puran Mal on 9th April, 1987. Shri Ram Prasad had also submitted returns for asst. yr. 1984-85 to asst. yr. 1986-87 under the Amnesty Scheme.
6.2. The CIT(A) has discussed the facts relating to the aforesaid deposit in the account of Shri Puran Mal at pp. 9 to 11 of his order. The findings have been given by the CIT(A) on pp. 14 to 16 of the order passed by him.
6.3. We have carefully considered the submissions made by the learned representative of the parties and have perused the orders of the Departmental authorities and all documents submitted in the compilation, to which our attention was drawn during the course of hearing. Shri Puran Mal is the son of Shri Lahu Ram, partner. Shri Ram Prasad is the father-in-law of Shri Lallu Ram.
6.4. The statement of Shri Ram Prasad was recorded by the AO on 31st Jan., 1989. The CIT(A) has carefully examined the said statement and made the following observations in the order passed by him at pp. 14 and 15 of the order as under:
"Similarly, the version of Shri Ram Prashad doing any business does not sound rational and logical. In fact, there are apparent contradiction in the statements of Shri Ram Prasad. Shri Ram Prasad returned back to Ateli from Bombay in 1982. After staying in Ateli for 10 to 11 months during which period he did no work he shifted to Delhi, i.e. he must have shifted to Delhi sometime in 1983. His statement was recorded on 31st Jan., 1989. He had stated, in his statement, that I had been operated upon 4 to 5 years back in Bhiwani. This means that the operation must have been done sometime in 1984-85. It is further stated in his statement that he returned to Ateli in 1986. But subsequently, on being specifically asked as to where he was residing in March, 1986, he replied that he was at that time residing in Delhi. Thus from the events and happenings it can be easily inferred and established that Shri Ram Prasad had done no cloth business whatsoever in Delhi because during his brief stay in Delhi, prior to his eye operation, he could not have conducted any business on the footpath as he had very poor eye-sight. In fact, he has himself stated that even to move about in the house he needed assistance. This in itself establishes that Shri Ram Prasad had neither the means nor the source to give a gift of Rs. 20,000 to Shri Puran Mal and also to deposit Rs. 9, 000 with the assessee firm."
6.5. We have carefully gone through the statement of Shri Ram Prasad. He was of 82 years of age at the time when his statement was recorded on 31st Jan., 1989. He discontinued his business of selling kerosene oil in Bombay in the year 1982. Then he came to Mandi Ateli. He lived there for 10-12 months and did not do any work during his stay at Mandi Ateh. Thereafter he went to Delhi and lived with his son, Shri Daya Ram. He has stated that he did the work of cloth business at Delhi. He sold the cloth at footpath at Tri Nagar Bazar and Cantt. Bazar. He has not maintained any books of accounts. Vouchers for purchase and sale were also not maintained. He has stated that such work was done at Delhi for 3 years and thereafter he stopped work on account of weak eye-sight. His eye's operation was also conducted at Bhiwani four five years ago. He stated that a bank account was opened by him with New Bank of India, Ateh Mandi. It was also admitted by him that whatever funds were deposited in the said bank account, were wholly spent on the death of his wife. His wife died 4/5 years ago. In the subsequent para, he has taken a different stand that whatever amount was earned by him at Delhi, that was given by him to his daughter who resides at Ateli Mandi. A gift of Rs. 20,000 was given on 4th April, 1986, to Smt. Narbada and another Puran Mal. on 9th April, 1987. A deposit of Rs. 9,000 was also stated to have been made with the assessee firm. He further stated that he lived at Delhi since 1986. A statement of Shri Puran Mal was also recorded by the AO on 16th Jan., 1989. In this statement, he stated that he received a gift of Rs. 20,000 from his Nanaji who was doing some work at Bombay. At present he is not doing any work. Shri Puran Mal has not stated anything about his Nanaji's cloth business at Delhi.
6.6. The various contradictions and inconsistencies pointed out by the AO and by the CIT(A) in their respective orders clearly support the view taken by them that Shri Ram Prasad had not done any cloth business whatsoever as claimed by the assessee and shown in the return of income submitted under the Amnesty Scheme.
6.7. It is indeed strange that close relatives of both the partners of the assessee-firm submitted returns of income under the Amnesty Scheme for asst. yr. 1984-85 to asst. yr. 1986-87. Snit. Bimla Devi, Shri Ram Prasad and Shri Prabhu Dayal filed such returns at the following figures of income :
Asst. yr.
Smt. Bimla Devi (w/o Sh. Om Prakash Partner) (from p. 7 of the P.B.) Sh. Ram Prasad (father-in-law of Sh. Lallu Ram, partner) (from p. 19 to 21 of P.B.) Sh. Prabhu Dayal (grandfather of Sh. Om Prakash (from p. 8 of orders of CIT(A) 1984-85 15,200 15,500 15,500 1985-86 15,300 15,800 15,800 1986-87 18,200 18,800 18,800 Token amount of tax of less than Rs. 200 in a year has been paid in respect of the income disclosed under VDS Scheme. The amount of income shown by all of them under the Amnesty Scheme has been stated to have been accumulated in cash. No deposits in the respective banks or any other investment was made in the currency of the respective years when income was earned. The amount has directly or indirectly flown back in favour of the assessee-firm by way of direct loan to the assessee-firm. or by way of gift to close relative of the partners who in turn have made deposits of the said amount with the assessee-firm. The real destination of the major part of the amount is with the assessee-firm or a small portion thereof stands deposited in the name of close relatives of the partners such as deposit in CTD account of Smt. Bimla Devi of an amount of Rs. 18,000 made in asst. yr. 1988-89. The assessee has failed to prove that all these persons had really derived any income from the activities claimed to have been carried on by them. The ratio of the judgment of the Hon'ble Supreme Court in the case of Jamna prasad Kanhaiyalal vs. CIT (cited supra) is, therefore, clearly and fully applicable on the facts and circumstances of the present case. The mere furnishing of the returns of income under Amnesty Scheme by these close relatives cannot absolve the assessee from discharging its burden of proving the genuineness of the cash credits, capacity of the respective creditors in conformity with the s. 68 of the IT Act, 1961. The assessee in the present case has failed to discharge such a burden.
6.8. On a careful consideration of the entire relevant facts, we are of the view that the CIT(A) has rightly held that the deposit in the account of Shri Puran Mal remained unexplained. The CIT(A) has also rightly held that Shri Ram Prasad did not carry on any business of cloth and had no capacity to give any gift of Rs. 20,000 to Shri Puran Mal, as claimed by him. In our view, the ground No. 8 raised by the assessee has also no merit. The addition of Rs. 26,160 in respect of the credit in the account of Shri Puran Mal bn account of deposit and interest has rightly been confirmed by the CIT(A). Ground No. 8 is accordingly rejected.
7. Ground No. 9 relates to confirmation of the deposit of Rs. 10,560 in the account. of Shri Ram Prasad. We have already discussed the facts relating to the capacity of Shri Ram Prasad while dealing with the ground No. 8. The CIT(A) has given elaborate reasons while confirming the aforesaid addition. He has rightly held that Shri Ram Prasad did not carry on any business and he neither had the means nor the sources to give any gifts or deposits of Rs. 9,000 with the assessee-firm.
7.1. The contention of the learned counsel for the assessee-firm that there were deposits in the bank account of Shri Puran Mal as well as in the account of Shri Ram Prasad in the earlier years and those deposits surfaced in the year under consideration and, therefore, no addition can be validly made in view of the -Judgment of Hon'ble Delhi High Court in (1984) 42 CTR (Del) 159 : (1984) 152 1TR 583 (supra). The facts relating to deposits in their bank account in the preceding year are similar as has been discussed while dealing with the deposit in the account of Shri Prabhu Dayal. The credit entry appearing in the books of the firm in the year under consideration has no nexus with the deposits made in the earlier years. The assessee has failed to establish any nexus between the income disclosed by Shri Ram Prasad under the amnesty scheme with the deposits made by him in his bank account. There are withdrawals in their bank accounts in the preceding year also. No nexus has been established by the assessee to prove that deposits made in the year under consideration in any manner directly relate to the deposits in their respective bank accounts made in the earlier years. The facts of the judgment of Hon'ble Delhi High Court are clearly distinguishable with the facts of the present case.
7.2. On a careful consideration of the entire relevant facts, we are of the view that the CIT(A) has rightly confirmed the addition of Rs. 10,560 being the credit in the account of Shri Ram Prasad consisting of deposit of Rs. 9,000 and interest thereon Rs. 1,560. Ground No. 9 of the assessee's appeal also has no merit and is accordingly rejected.
8. In ground No. 10, the assessee has challenged the order of the CIT(A) restoring the matter relating to levy of interest of Rs. 180 under s. 216 of IT Act, 1961. It is an undisputed fact that the AO had charged interest under s. 216 without passing any speaking order. The levy of interest under s. 216 without a specific finding about underestimation of advance tax payable by the assessee has been held to be invalid in various judgments, such as, the one reported in CIT vs. Hindustan Sanitaily Ware Industries ITD. (1989) 180 1TR 21 (Cal). We are, therefore, of the view that the CIT(A) ought to have cancelled the levy of interest under s. 216. We accordingly direct the AO to cancel the interest charged under s. 216 of the Act.
9. In ground No. 11, the assessee has challenged the finding given by the CIT(A) of restoring the matter relating to levy of interest under s. 215 amounting to Rs. 4,745. The CIT(A) has restored back this issue to the AO with a direction to examine all the circumstances including waiver or reduction of interest before charging such interest. The assessee will also be entitled to submit all other relevant judgments including the judgment of Hon'ble Gujarat High Court reported in CIT vs. Bharat Machinery & Hardware Mart (1982) 136 ITR 875 (Gul) mentioned in ground No. 11, for consideration of the AO, The restoration of such a matter back to the AO for deciding the same afresh in accordance with the provisions of law and after giving an opportunity to the assessee cannot give any valid cause of grievance to the assessee. Hence, ground No. 11 raised by the assessee is also rejected.
10. In the result, the appeal is partly allowed.