Income Tax Appellate Tribunal - Mumbai
Mahes Gulabrai Joshi vs Cit(A) Ward 21(1)(3) on 19 July, 2004
Equivalent citations: [2005]95ITD300(MUM)
ORDER
As Per Bench
1. This appeal by assessee for assessment year 1998-99 is directed against the order of CIT(A), Mumbai dated 26-9-2003.
2. I have heard the arguments of both the sides and have also perused the records.
3. The assessee-appellant has raised four grounds of appeal. Ground No. 3 is general. Ground Nos. 1, 2 and 4 constitute single issue disputing the addition of Rs. 2,17,600 made by assessing officer under section 68 as income from undisclosed sources on account of unexplained cash credit. The learned authorised representative of assessee has contended that the assessee had made declaration under VDIS but the same was not accepted. He has contended that the addition of Rs. 2,17,600 under dispute was made in reassessment proceedings under section 147 initiated on the basis of survey in the case of V.D. Trivedi and the statement of V.D. Trivedi was recorded during survey in Trivedis case. He has contended that the assessee has not been allowed opportunity of cross-examining V.D. Trivedi; and that the report of survey in the case of V.D. Trivedi was supplied to assessee only during hearing of arguments before learned CIT(A). He has contended that the assessing officer has treated the sale of diamonds by assessee to M/s. Dhananjay Diamonds for Rs. 2,17,600 as fictitious merely on the basis of the statement of V.D. Trivedi, the proprietor of M/s. Dhananjay Diamonds, although no opportunity of cross-examining him was allowed to the assessee and the assessee has furnished the affidavit of V.D. Trivedi wherein V.D. Trivedi has retracted from his statement recorded during survey. He has contended that the assessee has also filed bills of purchase of diamonds by V.D. Trivedi, proprietor of M/s. Dhananjay Diamonds from assessee as also confirmation letter by V.D. Trivedi. He has contended that the assessee had received the sale proceeds by account-payee cheques and deposited the same in assessees bank account. He has contended that the existence of loose cut and polished diamonds with assessee is established by assessees VDIS declaration, he has contended that the assessee is not challenging the re-opening, but is challenging the addition, which should be deleted. He has contended that the assessing officer has not brought on record any evidence/proof that any cash transaction has been entered into by assessee with Dhananjay Diamonds.
4. As against the above, the learned department representative has relied on the orders of assessing officer and CIT(A) contending that the surrounding circumstance establish the transaction of sale of diamonds by assessee to be fictitious. He has contended that in income-tax proceedings, conclusive proof is not required. He has cited the following decisions in support of his contention:
(1) Mriganka Mohan Sur v. CIT (1979) 120 ITR 529 (Cal) (2) CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) He has referred to page 3 of assessing officer and contended that in Balance Sheet for assessment year 1997-98, assessee has not shown any asset in the form of cut and polished diamond or diamond jewellery, so where is the question of sale of diamond by assessee? He has referred to bottom para on page 2 and top para on page 3 of assessing officer and contended that as regards allowing of opportunity of cross-examination to assessee, the assessing officer had issued summons to Dhananjay Diamonds for the purpose but the summons were returned by postal authorities unserved with the remark "Not claimed" and the onus of proving sale remains on assessee. He has relied on the orders of authorities below.
5. I have considered the rival contentions as also the cited decisions. In 82 ITR 540 it has been held that it was within the province of Tribunal to accept the recitals of two deeds or not and the High Court could not interfere with Tribunals conclusion unless it was perverse or not, supported by evidence or was based on irrelevant evidence.
6. In Mriganka Mohan Surs case (supra) the Honble High Court held as under:
"It is well settled that strict rules of evidence do not apply to income-tax proceedings and conclusive proof is also not necessary to arrive at any conclusion or to establish a fact. The Appellate Tribunal is entitled to arrive at a conclusion on appreciation of a number of facts, the cumulative effect whereof may be considered to judge the soundness of the conclusion."
7. As such the legal position, settled as it is, is that in income-tax matters decision may be drawn on pre-ponderence of probabilities, as spelt out from the surrounding circumstances without essentially insisting on conclusive proof as such, though general principles of law of evidence need appropriately be followed, for the reason of the proceedings being of the nature of judicial or quasi-judicial.
8. Now we proceed to consider the facts of the case in hand in the light of the above legal position. In the instant case, the addition has been made on the basis of statement of V.D. Trivedi recorded during survey, but no opportunity of cross-examining him having been allowed to the assessee, the said statement cannot be relied upon and in turn, cannot be made basis of addition. The onus of proving sale of diamond does lie on assessee no doubt, but the assessee having depended upon assessing officer for effecting the presence of V.D. Trivedi for cross-examination and the assessing officer also having issued summons to V.D. Trivedi, it cannot thereafter be pleaded by the department that the assessee failed to produce V.D. Trivedi for proving sale of diamond by assessee to V.D. Trivedi. The summons having been returned unserved by the postal authorities with the remark "Not claimed", it was for assessing officer to have exercised his powers for enforcing the attendance of V.D. Trivedi for verification of sale when the assessing officer was doubting the same; V.D. Trivedi was I.T. assessee and survey action in the case of V.D. Trivedi had undisputedly taken place. In the circumstance, there is hardly any justification in law for putting the blame of non-production of V.D. Trivedi on assessee and attributing the failure of discharge of onus to assessee, the vast jurisdiction, for enforcing attendance of any person, has been vested with the assessing officer under law not without a purpose, and the same is meant to be exercised so as to explore the truth by dissecting the layer spread of haziness on true facts. An appropriate action, strict though it might have been, having not been taken by assessing officer, may be due to being too busy to spare time for taking such strict action in accordance with law as required in the above mentioned frustrating circumstances, the department cannot justifiably find an escape, suited to it, for making addition in the hands of assessee with the emphatic thrust of reasoning that the assessee has failed to produce V.D. Trivedi. Be that as it may, considering all the facts and circumstances of the case as also the legal position, I am of the considered view that in the circumstances of the case this addition is uncalled for. I, therefore, delete the addition.
9. In the result, this appeal of assessee is allowed.