M/s Umesh Electricals, Agra v. ACIT-1, Agra

ITA 231/AGR/2006 | 2000-2001
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 23120314 RSA 2006
Assessee PAN AABFU5228M
Bench Agra
Appeal Number ITA 231/AGR/2006
Duration Of Justice 4 year(s) 7 month(s) 28 day(s)
Appellant M/s Umesh Electricals, Agra
Respondent ACIT-1, Agra
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 25-02-2011
Date Of Final Hearing 09-02-2011
Next Hearing Date 09-02-2011
Assessment Year 2000-2001
Appeal Filed On 27-06-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER AND SHRI H.S. SIDHU JUDICIAL MEMBER ITA NO.231/AGR/2006 ASSTT. YEAR : 2000-01 M/S UMESH ELECTRICALS VS. ASSTT. COMMISSIONER OF INCOME TAX-I 23 MAHAVIR MARKET AGRA. CHHIPITOLA AGRA. (PAN : AABFU 5228 M) (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI VINOD KUMAR JR. D.R. ORDER PER P.K. BANSAL A.M.: IN THIS CASE THE DIFFERENCE AROSE BETWEEN THE MEMBE RS OF THE DIVISION BENCH HEARING THIS APPEAL. THEREFORE THE MATTER WAS REFERRED TO THE OPINION OF THE LD. THIRD MEMBER. THE LD. THIRD MEMBER HAS AGREED WITH THE VIEW OF THE LD. JUDICIAL MEMBER BY HOLDING THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED C ASH CREDIT OF ` 1 50 000/- IS GENUINE. THEREFORE IN VIEW OF THE MAJORITY DECISION THE AS SESSEES APPEAL IS ALLOWED. 2. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . (ORDER PRONOUNCED IN THE OPEN COURT ON 25.02.2011. ). SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 25 TH FEBRUARY 2011 2 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY 3 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI P.K. BANSAL ACCOUNTANT MEMBER (AS THIRD MEMBER) ITA NO. 231/AGRA/2006 ASSTT. YEAR : 2000-01 M/S. UMESH ELECTRICALS VS. ASSTT. C.I.T.-I AGR A. 23 MAHAVIR MARKET CHHIPITOLA AGRA (PAN AABFU 5228 M) (APPELLANT) (RESPONDENT) FOR APPELLANT : S/SHRI PRAKASH NARAIN & S.N. BANSA L ADVOCATES. FOR RESPONDENT : SHRI VINOD KUMAR JR. D.R. ORDER FOLLOWING QUESTION ON DIFFERENCE OF OPINION BETWEE N THE LEARNED ACCOUNTANT MEMBER AND THE LEARNED JUDICIAL MEMBER HAS BEEN REFERRED T O ME BY HONBLE PRESIDENT U/S. 254(4) OF THE INCOME-TAX ACT FOR MY OPINION : WHETHER IN THE GIVEN FACTS AND CIRCUMSTANCES OF T HE CASE THE IMPUGNED CASH CREDIT OF RS.1.5 LACS IS GENUINE OR N OT? 2. THE FACTS AS GATHERED FROM THE RECORD AND THE OR DERS OF BOTH THE MEMBERS ARE THAT THE ASSESSEE HAS TAKEN LOAN OF RS.1 50 000/- FROM M/S. OM PRAKASH HARESH CHAND & CO. VIDE DRAFT NO.045754 DATED 06.08.1999 ON CANARA BANK. WHEN THE ASSESSING OFFICER ASKED TO PROVE THE GENUINENESS OF THE CASH CREDIT THE ASSESSEE SUBMIT TED THE CONFIRMATION OF OM PRAKASH HARESH CHAND & CO. ALONGWITH THEIR PERMANENT ACCOUNT NUMBE R COPY OF THE BANK STATEMENT OF M/S. OM PRAKASH HARESH CHAND IN CANARA BANK AS WELL AS C OPY OF CASH BOOK. THE ASSESSING OFFICER NOTED THAT M/S. OM PRAKASH HARESH CHAND HAS DEPOSIT ED CASH OF RS.1 50 000/- IN CANARA BANK ON 06.08.1999 ITSELF OUT OF WHICH DEMAND DRAFT IN FAVOUR OF THE ASSESSEE WAS MADE. THE ASSESSING OFFICER ADDED THE SUM OF RS.1 50 000/- U/ S. 68 OF THE ACT HOLDING THAT THE ASSESSEE HAS 4 INTRODUCED HIS OWN UNACCOUNTED MONEY IN THE NAME OF THE AFORESAID CREDITOR. WHEN THE MATTER WENT BEFORE THE CIT(A) THE CIT(A) CONFIRMED THE OR DER OF THE ASSESSING OFFICER HOLDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE CRE DITWORTHINESS OF THE CREDITOR. WHEN FURTHER APPEAL TRAVELED TO TRIBUNAL THE LEARNED JUDICIAL M EMBER ALLOWED THE APPEAL OF THE ASSESSEE AND DELETED THE ADDITION OF RS.1 50 000/- HOLDING THAT THE AMOUNT OF RS.1 50 000/- CANNOT BE REGARDED TO BE AN UNEXPLAINED CASH CREDIT. WHILE DE LETING THE ADDITION HE OBSERVED AS UNDER : THE ASSESSEE HAS ALSO EXPLAINED THE SOURCE OF THIS LOAN. AT PAGE 8 OF' ASSESSEE'S PAPER BOOK A CONFIRMATION DIRECTLY SENT TO THE AO BY SHRI HARESH CHAND AGARWAL ON BEHALF OF THE CREDITOR IS SELF EX PLANATORY IN WHICH IT HAS BEEN STATED THAT HIS STATEMENT WAS RECORDED BY AO ON 18. 10.2005 AND SHOWED HIS INABILITY TO AGAIN APPEAR IN COMPLIANCE OF NOTICE I SSUED U/S. 131 AND VIDE LETTER DATED 29.10.2005 HE HAS CONFIRMED THE ADVANCEMENT O F IMPUGNED LOAN AND ALSO PRODUCED A COPY OF CASH BOOK A COPY OF LEDGER ACCO UNT A COPY OF BANK STATEMENT AND ACKNOWLEDGEMENT OF HIS RETURN FILED BEFORE THE DEPARTMENT. A COPY OF ACCOUNTS OF THE ASSESSEE IN THE BOOKS OF THE CREDIT OR IS ENCLOSED AT PB-9 IN WHICH PA NUMBER OF THE CREDITOR HAS ALSO BEEN GIVEN. THE ONLY REASON THAT AN AMOUNT OF RS.L.5 LACS WAS DEPOSITED IN CASH OUT OF WHICH DD WAS PURCHASED FOR THE SAME AMOUNT ON THE SAME DAY OR THE NEXT DAY CANNOT ALON E PROVE THAT THE ASSESSEE HAD DEPOSITED HIS UNACCOUNTED MONEY TO PURCHASE A DRAFT THROUGH CASH CREDITOR'S ACCOUNT. SOMETHING MORE IS REQUIRED TO ESTABLISH T HAT THE ASSESSEE HAS PLAYED SUCH A TRICK TO CONVERT HIS BLACK MONEY INTO WHITE. BUT TO MY KNOWLEDGE THERE IS NO SUCH EVIDENCE FROM WHICH THE ADVERSE FINDING OF THE DEPARTMENT CAN BE APPROVED. A COPY OF LEDGER PLACED AT PB 11 TO 20 ALSO CLEARLY EXPRESSES THE INTENTION OF THE CASH CREDITOR. THE CASH CREDITOR IS AN INCOME-TAX ASSESSEE AND HAS CLEARLY EXPLAINED AND CONFIRMED THE TRANSACTION OF LOAN AND THE RECEIPT OF INTEREST HAVING BEEN RECEIVED BY HIM. THE DEPARTME NT HAS TAKEN NO ACTION IN THE NEXT YEAR RELATING TO RECEIPT OF INTEREST IN THE HA NDS OF M/S. OM PRAKASH HARESH CHAND WHICH WAS ALLOWED WHILE MAKING ASSESSMENT U/ S. 143(3) IN THAT CASE. SIMPLY BECAUSE A CASH AMOUNT WAS DEPOSITED IN THE B ANK OF THE CASH CREDITOR AND A DRAFT WAS PURCHASED WOULD NOT TAKE THE CASE OUT OF THE SPHERE OF GENUINITY. THE CASH CREDITOR HAS EXPLAINED THAT THE AMOUNT WHICH W AS DEPOSITED IN THE BANK CAME THROUGH WITHDRAWALS FROM HIS CASH BOOK WHICH I S EVIDENT FROM PAGES NOS. 9 TO 20 OF HIS PAPER BOOK. THE HON'BLE JURISDICTIONA L HIGH COURT IN THE CASE OF CIT VS. M/S. RAJESH DAL MILL KOSI KALAN MATHURA IN LI KE CIRCUMSTANCES AND UNDER ALMOST IDENTICAL FACTS HAS HELD THAT WHEN IN THE CA SH BOOK OF THE CREDITOR SMALL SUMS ARE FOUND BUT LATER ON LARGE AMOUNTS ARE SHOWN IT MAY CREATE A SUSPICION IN THE MIND OF THE ITO BUT THIS CANNOT BE A PROOF OF MALPRACTICE AND WHEN THE TRANSACTIONS WERE MADE THROUGH BANK DRAFT AND THE C REDITOR WAS AN INCOME-TAX PAYEE AND SUFFICIENT FUNDS WERE AVAILABLE WITH THE CREDITOR TO FINANCE THE LOAN 5 SUCH TYPE OF SUSPICION CANNOT OVER RIDE THE OVERWHE LMING POSITIVE EVIDENCES. A COPY OF THIS DECISION DATED 22.09.2006 WAS FILED ON RECORD. THEREFORE BY FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION AN D IN VIEW OF THE OVERWHELMING EVIDENCES AVAILABLE ON RECORD TO CONFIRM THE IDENTI TY AND CREDITWORTHINESS OF THE CREDITOR AS WELL AS GENUINENESS OF THE TRANSACTION THE LOAN AMOUNT OF RS.1.5 LACS CANNOT BE TREATED AS UNEXPLAINED AND THEREFORE HA S TO BE DELETED FROM THE HANDS OF THE ASSESSEE. 3. THE LEARNED ACCOUNTANT MEMBER DID NOT AGREE WITH THE LEARNED JUDICIAL MEMBER AND HE WAS OF THE VIEW OF DISMISSING THE APPEAL OF THE ASS ESSEE. WHILE HOLDING SO HE OBSERVED AS UNDER : 4.4 IN THE PRESENT CASE AS WE OBSERVE EVEN THE C APACITY STANDS UNEXPLAINED AS THE NECESSARY DETAILS I.E. OF THE CASH AVAILAB LE WITH THE CREDITOR COULD NOT BE FURNISHED. THE CREDITOR HAS STATED TO HAVE LENT MO NEY TO THE ASSESSEE OUT OF BORROWED MONEY DETAILS OF WHICH COULD NOT BE FURNI SHED IN SPITE OF BEING AFFORDED PROPER OPPORTUNITY FOR THE SAME INCLUDING IN THE REMAND PROCEEDINGS AND THE APPELLATE PROCEEDINGS. THE CALLING OF THE DETAILS OF THE AVAILABILITY OF CASH WITH THE CREDITOR OR OF THE PERSON(S) (SOURCE S) FROM WHOM CASH STOOD GENERATED BY IT WOULD NOT IT MAY BE CLARIFIED AM OUNT TO CALLING FOR THE SOURCE OF THE SOURCE INASMUCH AS THE AMOUNT UNDER QUESTION A DMITTEDLY DOES NOT BELONG TO THE CREDITOR BUT REPRESENTS HIS BORROWINGS. THE REQ UISITION THUS ONLY ATTEMPTS TO VERIFY THE SOURCE OF THE FUNDS OR EXAMINING THE C REDIT ON THE CAPACITY ASPECT OF THE CREDIT AS ALSO ITS GENUINENESS. THE SOURCE OF THE MONEY WHICH FINDS ITS WAY INTO THE ASSESSEE'S ACCOUNT THUS IS CLEARLY NOT E XPLAINED WITH THE CREDITOR'S ACCOUNT BECOMING THE CHANNEL THROUGH WHICH THE MONE Y STANDS ROUTED (ALSO REFER: CIT V. BIJU PATNAIK 160 ITR 674 (SC)). IT MUST BE APPRECIATED THAT SECTION 68 IS ITSELF A RULE OF EVIDENCE STATUTORILY CAST PROVIDING FOR THE CREDIT AS APPEARING IN THE ASSESSEE'S BOOKS WHERE NOT SATISF ACTORILY EXPLAINED WITH REFERENCE TO ITS NATURE AND SOURCE AS ITS INCOME AND ONLY ON THE PREMISE THAT THE ASSESSEE IS THE BENEFICIARY OF THE SAID SUM SO THA T THAT ITSELF IS AN EVIDENCE AGAINST IT (REFER: SUMATI DAYAL V. CLT 214 ITR 801 (SC)). THE ONUS ON THE ASSESSEE IN THE PRESENT CASE HAS THUS DEFINITELY NO T BEEN DISCHARGED BOTH WITH REGARD TO THE CAPACITY OF THE CREDITOR AND THE GENU INENESS OF THE TRANSACTION. WE DECIDE ACCORDINGLY. 4.4 THE ASSESSEE HAS BEFORE US RELIED ON THE DECISI ONS IN THE CASE OF NEMI CHAND KOTHARI V. CIT 264 ITR 254 (GAUHATI) AND ROH INI BUILDERS V. DY. CLT 256 ITR 360 (GUJ). IN THIS REGARD WE MAY CLARIFY THAT WE HAVE ONLY APPLIED THE TRITE LAW AS EXPLAINED BY THE HON'BLE APEX COURT P ER A HOST OF CASE LAW AS UNDER TO THE FACTS OF THE CASE SO THAT WE DO NOT CONSIDER IT NECESSARY TO DISCUSS AND DISTINGUISH THE CASE LAW RELIED UPON' WHICH W OULD ONLY BE RENDERED IN THE FACTS AND THE CIRCUMSTANCES OF THE RESPECTIVE CASES AND WHICH WERE EVEN 6 OTHERWISE NEITHER TAKEN US THROUGH BY THE LD. A.R. DURING HEARING NOR ITS RELIANCE/APPLICABILITY EXHIBITED/PLEADED: A. GOVINDA RAJULU MUDALIAR V. CLT 34 ITR 807 (SC) SREELEKHA BANERJEE & OTHERS V. CIT 49 ITR 112 (SC) KALEKHAN MOHAMMED HANIF V. CIT 50 ITR 1 (SC) CLT V. DURGA PRASAD MORE 82 ITR 540 (SC) CLT V. BIJU PATNAIK (SUPRA) SUMATI DAYAL V. CLT (SUPRA) CIT VS. P. MOHANAKALA & OTHERS 291 ITR 278 (SC) IN FACT THE LD. CIT(A) HAS HIMSELF RELIED UPON SEV ERAL DECISIONS WHICH STAND NEITHER MET NOR EVEN ADVERTED TO BY THE ASSES SEE DURING HEARING EVEN AS IT IMPUGNS HIS ORDER AS WAS ALSO THE CASE QUA THE ORD ER BY THE TRIBUNAL IN THE CASE OF SHYAM RADIOS V. ITO (SUPRA) ALSO RELIED UPON BY THE LD. CIT(A): NANAK CHANDRA LAXMAN DAS VS. CIT 140 ITR 151 (ALL) CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. PVT. LTD . 187 ITR 596 (CAL) CIT VS. PRECISION FINANCE PVT. LTD. 208 ITR 465 (C AL) K SADHUKHAN & SONS PVT. LTD. VS. CIT 239 ITR 77 (C AL) OCEANIC PRODUCTS EXPORTING CO. VS. CIT (SUPRA) R.B. MITTAL VS. CIT 246 ITR 283 (A.P.) 5. IN VIEW OF THE FOREGOING WE FIND NO INFIRMITY WHATSOEVER IN THE FINDINGS BY THE REVENUE SO THAT THE SAME STAND ENDORSED AND C ORRESPONDINGLY NO MERIT IN THE ASSESSEE'S CASE SO THAT THE SAME DOES NOT FIND OUR FAVOUR. 6. IN THE RESULT THE ASSESSEES APPEAL IS DISMISSE D. 4. THE CASE WAS FIXED FOR HEARING FROM TIME TO TIME BUT THE ADJOURNMENT WAS SOUGHT BY THE LEARNED DR ON THE ONE PRETEXT OR THE OTHER. EVEN TH E ADJOURNMENT APPLICATION WAS SENT THROUGH THE INSPECTOR WHO WAS NOT AUTHORIZED TO SIGN THE AD JOURNMENT APPLICATION. ULTIMATELY ON 15.10.2010 THE CASE WAS FINALLY ADJOURNED FOR 16.1 2.2010 WITH THE CONDITION THAT IN CASE ANY OF THE PARTIES SEEKS ADJOURNMENT A COST OF RS.5000/- WILL BE IMPOSED ON THE PARTY SEEKING ADJOURNMENT. BUT STILL ON 16.12.2010 THE LEARNED D R AGAIN MOVED AN ADJOURNMENT APPLICATION WITH THE REASON THAT HE IS HOLDING CHARGE OF SIX RA NGES OF AGRA AND THEREFORE HE CANNOT APPEAR BEFORE THE TRIBUNAL. THE CASE WAS FINALLY ADJOURNED FROM 16.12.2010 TO 03.01.2011 AND THE 7 LEARNED SR. DR WAS ASKED TO EXPLAIN WHY A COST OF R S.5000/- BE NOT IMPOSED ON THE DEPARTMENT. ON 03.01.2011 AGAIN SHRI MANAS MAHROTRA LEARNED SR . DR MOVED AN APPLICATION FOR ADJOURNMENT REPEATING THE SAME PLEA THAT HE IS HOLD ING CHARGES OF THREE RANGES SITUATED AT AGRA JHANSI AND FIROZABAD AND IN ORDER TO ATTEND SOME UR GENT WORK HE IS PRESENTLY AT JHANSI AND THEREFORE HE REQUESTED FOR THE ADJOURNMENT. WHEN I WAS REJECTING THE ADJOURNMENT APPLICATION BY IMPOSING A COST OF RS.5000/- IN THE MEANTIME O THER LEARNED DR MR. VINOD KUMAR APPEARED FOR THE DEPARTMENT AND ACCORDINGLY THE CASE WAS HE ARD AND THE QUESTION REFERRED TO ME WAS DISPOSED OF. 5. THE LEARNED AR BEFORE ME VEHEMENTLY ARGUED THAT ONLY QUESTION IS WHETHER THE CASH CREDIT OF RS.1 50 000/- RECEIVED BY THE ASSESSEE IS GENUINE OR NOT. ACCORDING TO THE LEARNED ACCOUNTANT MEMBER CASH CREDIT IS NOT EXPLAINED WHI LE ACCORDING TO THE LEARNED JUDICIAL MEMBER THE CASH CREDIT WAS DULY EXPLAINED. THE LEA RNED AR CARRIED ME TO PAGE 5 PARA 16 OF THE ASSESSMENT ORDER AND POINTED OUT THAT THE ASSESSEE PRODUCED THE CONFIRMATION FROM OM PRAKASH HARESH CHAND FROM WHOM THE ASSESSEE HAS RECEIVED A SUM OF RS.1 50 000/- VIDE DRAFT NO. 045754 DATED 06.08.1999. THE ASSESSING OFFICER NOTE D THAT OM PRAKASH HARESH CHAND HAS DEPOSITED A CASH OF RS.1 50 000/- IN HIS CANARA BAN K ACCOUNT ON 06.08.1999 PRIOR TO MAKING OF THE DRAFT IN FAVOUR OF THE ASSESSEE. THE ASSESSEE H AS SUBMITTED CONFIRMATION OF OM PRAKASH HARESH CHAND ALONGWITH PAN FOR WHICH ATTENTION WAS DRAWN TO PAGE NO. 1 OF THE PAPER BOOK. HE ALSO SUBMITTED THE COPY OF PAN CARD OF THE LENDE R COPY OF BANK STATEMENT AND POINTED OUT THAT THE LENDER IS AN INCOME-TAX ASSESSEE. COPY OF ASSESSEES ACCOUNT IS AVAILABLE AT PAGE 9. IT WAS ALSO POINTED OUT THAT EVEN THOUGH THE ASSESSEE HAS NOT TO PROVE THE SOURCES OF SOURCE BUT STILL THE ASSESSEE HAS SUBMITTED COPY OF CASH BOOK OF LENDER FROM 22.05.1999 TO 20.08.1999 FOR 8 WHICH MY ATTENTION WAS DRAWN AT PAGE 11 TO 22 OF TH E PAPER BOOK. REFERRING TO PAGE 19 IT WAS POINTED OUT THAT THE SUM OF RS.1 50 000/- WAS DEPOS ITED BY THE LENDER OUT OF CASH IN HAND AVAILABLE IN HIS CASH BOOK. IT WAS POINTED OUT THAT THERE WAS OPENING CASH IN HAND AMOUNTING TO RS.1 56 748/- WHICH WAS BROUGHT FORWARD FROM 22.07. 99 . EVEN IT WAS POINTED OUT THAT ON 15.07.1999 ALSO THERE WAS A CASH IN HAND OF RS.1 2 3 748/-. THE ASSESSING OFFICER HAS TOTALLY IGNORED THIS VITAL EVIDENCE. LEARNED JUDICIAL MEMBE R HAS DULY TAKEN THE COGNIZANCE OF THIS EVIDENCE AND DELETED THE ADDITION MADE BY THE ASSES SING OFFICER. REFERRING TO THE DECISION OF THE LEARNED ACCOUNTANT MEMBER IT WAS POINTED OUT THAT THE LEARNED ACCOUNTANT MEMBER WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE IN PARA 4.4 OF HIS ORDER RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. BIJU PATNAIK 160 ITR 674 (SC). THIS DECISION IS NOT AT ALL APPLICABLE TO THE FACTS OF THE CASE OF ASSESSEE. TH E ONLY QUESTION IN THIS DECISION RELATES TO WHETHER THE QUESTION OF LAW ARISES FROM THE ORDER O F TRIBUNAL OR NOT. SIMILARLY IT WAS POINTED OUT THAT THE FACTS INVOLVED IN THE CASE OF SUMATI DAYAL V. CIT 214 ITR 801 (SC) WERE ALSO DIFFERENT AND IT DOES NOT RELATE TO PROVE THE SOURCES OF SOUR CE. THERE WAS NO FINDING GIVEN IN THE JUDGMENT THAT THE ASSESSEE HAS TO PROVE SOURCE OF SOURCES. T HE DECISION OF ROHINI BUILDERS VS. DCIT 256 ITR 360 (GUJ) HAS CLEARLY LAID DOWN THAT THE ASSES SEE HAS NOT TO PROVE THE SOURCE OF SOURCES. THE ASSESSEE HAS PROVED THE IDENTITY OF CREDITOR. THE A MOUNT WAS RECEIVED BY DRAFT AND THE PARTY HAS DULY CONFIRMED THAT HE HAS ADVANCED LOAN TO THE ASS ESSEE. THUS THE ASSESSEE HAS DISCHARGED THE ONUS WHICH LAY ON HIM. IT WAS VEHEMENTLY CONTENDED THAT OTHER DECISIONS REFERRED TO ARE NOT APPLICABLE TO THE FACTS OF THE CASE. THE CASE OF TH E ASSESSEE IS DULY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. JO HRIMAL GOEL 147 TAXMAN 448 (ALL.) COPY OF WHICH WAS PROVIDED TO ME IN WHICH THE JURISDICTION AL HIGH COURT HAS CATEGORICALLY HELD THAT THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOU RCES OR ORIGIN OF A DEPOSIT. MY ATTENTION WAS 9 ALSO DRAWN TOWARDS THE DECISION IN THE CASE OF KULB IR SINGH VS. ACIT ITAT AGRA THIRD MEMBER BENCH (COPY FILED) IN WHICH IT WAS HELD THA T ONCE THE ASSESSEE HAS FURNISHED THE CONFIRMATION OF ALL THE CREDITORS THERE AFFIDAVITS AND PASSBOOKS ALL CREDITORS BEING ASSESSED TO TAX AND IDENTIFIED AND HAVING FURNISHED PROOF OF SO URCE OF CASH AND ALL TRANSACTIONS HAVING BEEN CONDUCTED THROUGH BANKING CHANNELS CASH CREDITS WE RE RIGHTLY ACCEPTED BY THE ASSESSING OFFICER AS GENUINE. THUS IT WAS CONTENDED THAT THE DECISIO N OF LEARNED JUDICIAL MEMBER IS IN ACCORDANCE WITH LAW. 6. THE LEARNED DR ON THE OTHER HAND RELIED UPON T HE DECISION OF LEARNED ACCOUNTANT MEMBER. 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL ON RECORD. I HAVE ALSO GONE THROUGH THE CASE LAW AS RELIED ON BY THE LEARNED AR BEFORE US. IN ORDER TO APPRECIATE THE CONTENTIONS URGED BEFORE ME IT WOUL D BE APPROPRIATE TO REPRODUCE THE PROVISIONS OF SECTION 68 OF THE ACT: 68. CASH CREDITS WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT I N THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. FROM THE READING OF THE AFORESAID SECTION IT IS AP PARENTLY CLEAR THAT THIS SECTION LAYS DOWN RULE OF EVIDENCE THAT WHEN ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR AND THE ASSESSEE OFFERS NO EXPLANATI ON ABOUT THE NATURE AND SOURCE OF SUCH CREDIT FOUND IN THE BOOKS OF THE ASSESSEE OR THE EXPLANAT ION OFFERED BY THE ASSESSEE IN THE OPINION OF 10 THE AO IS NOT SATISFACTORY THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. 8. BEFORE CHARGING THE CREDIT AS THE INCOME OF THE ASSESSEE THE AO HAS TO FORM AN OPINION. THIS OPINION IS SUBJECTIVE BUT IT HAS TO BE JUDICI OUS AND BASED ON MATERIAL ON RECORD. AN OPINION IS AN INFERENCE OF FACTS FROM OBSERVED FACTS. IT I S NOT AN IMPRESSION. IT IS A CONVICTION BASED ON APPRAISAL OF EVIDENCE ON RECORD. IN V.L.S. FINANCE LTD. V CIT (2000) 246 ITR 707 THE HONBLE DELHI HIGH COURT OBSERVED AS UNDER: OPINION MEANS SOMETHING MORE THAN MORE RETAILIN G OF GOSSIP OR HEARSAY; IT MEANS JUDGMENT OR BELIEF THAT IS A BELIEF OR A CO NVICTION RESULTING FROM WHAT ONE THINKS ON A PARTICULAR QUESTION. IT MEANS: JUDGMENT OR BELIEF BASED ON GROUNDS SHORT OF PROOF. IF A MAN IS TO FORM AN OPINION AND HIS OPINION IS TO GOVERN HE MUST FORM IT HIMSELF ON SUCH REASONS AND GROUNDS AS SEEM GOOD TO HIM. THUS BEFORE THE AO FORMS AN OPINION HE MUST CONSI DER THE MATERIAL BEFORE HIM. HE HAS BEFORE HIM THE MATERIAL SUBMITTED BY THE ASSESSEE WHILE GI VING AN EXPLANATION THEN HE MUST COLLECT HIS OWN MATERIAL AS AN ENQUIRY OFFICER WEIGH THE TWO M ATERIALS AND AS A QUASI-JUDICIAL AUTHORITY FORM AN OPINION AS TO WHETHER EXPLANATION FURNISHED BY THE ASSESSEE IS SATISFACTORY OR NOT. IF THE AO DOES NOT APPLY HIS MIND IN EXAMINING THE DOCUMEN TS FURNISHED BY THE ASSESSEE AND DOES NOT FIND ANY SUBSTANTIVE ERROR IN THEM NOR HE COLLECTS ANY MATERIAL BY EXERCISING POWERS UNDER INCOME-TAX ACT THEN THE CLAIM OF THE ASSESSEE CAN NOT BE STRAIGHTWAY REJECTED. IF HE DOES IT WOULD BE A VIOLATION OF PRINCIPLES OF NATURAL JUSTI CE AND PROVISIONS OF SECTION 68. 9. THE EXPRESSION THE ASSESSEE OFFERS NO EXPLANATI ON MEANS WHERE THE ASSESSEE OFFERS NO PROPER REASONABLE AND ACCEPTABLE EXPLANATION AS RE GARDS THE SUM FOUND CREDITED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. THE OPINION OF THE AO FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE AS NOT SATISFACTORY MUST BE BASED ON PROPER APPRECIATION OF THE MATERIAL 11 AND OTHER SURROUNDING CIRCUMSTANCES AVAILABLE ON RE CORD. THE OPINION OF THE AO IS TO BE BASED ON APPRECIATION OF THE MATERIAL ON RECORD. 10. THE WORD MAY USED IN SECTION 68 PROVIDES DISC RETION TO THE AO. IN GENERAL THE WORD MAY IS AN AUXILIARY VERB CLARIFYING THE MEANING O F ANOTHER VERB OF EXPRESSING AN ABILITY CONTINGENCY POSSIBILITY OR PROBABILITY. WHEN USED IN A STATUTE IN ITS ORDINARY SENSE THE WORD IS PERMISSIVE AND NOT MANDATORY. BUT WHERE CERTAIN CON DITIONS ARE PROVIDED IN THE STATUTE AND ON THE FULFILLMENT THEREOF A DUTY IS CAST ON THE AUTHO RITY CONCERNED TO TAKE AN ACTION THEN ON FULFILLMENT OF THOSE CONDITIONS THE WORD MAY TAKE THE CHARACTER OF SHALL AND THEN IT BECOMES MANDATORY. IN SECTION 68 WE FIND THAT THERE ARE N O SUCH CONDITIONS ON THE FULFILLMENT OF WHICH THE AO IS DUTY BOUND TO MAKE THE ADDITION. THE WORD MAY DENOTES THE DISCRETION OF THE AO THAT HE CAN MAKE AN ADDITION OR CANNOT MAKE AN ADDI TION. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V SMT. P K NOORJAHAN 237 ITR 570 (SC) WHILE DEALING WITH THE WORD MAY IN SECTION 69 OBSERVED AS UNDER: 'IN THE CORRESPONDING CLAUSE OF THE BILL WHICH WAS INTRODUCED IN PARLIAMENT WHILE INSERTING SECTION 69 IN THE INCOME-TAX ACT 1 961 THE WORD 'SHALL' HAD BEEN USED BUT DURING THE COURSE OF CONSIDERATION OF THE BILL AND ON THE RECOMMENDATION OF THE SELECT COMMITTEE THE SAID WO RD WAS SUBSTITUTED BY THE WORD 'MAY'. THIS CLEARLY INDICATES THAT THE INTENTI ON OF PARLIAMENT IN ENACTING SECTION 69 WAS TO CONFER A DISCRETION ON THE INCOME -TAX OFFICER IN THE MATTER OF TREATING THE SOURCE OF INVESTMENT WHICH HAS NOT BEE N SATISFACTORILY EXPLAINED BY THE ASSESSEE AS THE INCOME OF THE ASSESSEE AND THE INCOME-TAX OFFICER IS NOT OBLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOM E IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFACTORY. THE QUESTION WHETHER THE SOURCE OF THE INVESTMENT SHOULD BE TREA TED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF THE FACTS OF EACH CASE. IN OTHER WORDS A DISCRETION HAS BEEN CONFERRED ON THE INCOM E-TAX OFFICER UNDER SECTION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SA TISFACTORY AND THE SAID DISCRETION HAS TO BE EXERCISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE.' 12 11 IN THE CASE BEFORE ME THE PERSON M/S OM PRAKASH HARESH CHAND FROM WHOM THE LOANS HAVE BEEN RECEIVED BY THE ASSESSEE AMOUNTING TO RS. 150000 VIDE DRAFT NO.045754 DT.6.8.99 DRAWN ON CANARA BANK BELAN GANJ AGRA IS INCOME-TAX ASSESSEE. HE IS HAVING PAN NUMBERS. THE CONFIRMATION FROM THIS PERSON WAS FILED. THE AM OUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. XEROX COPY OF THE BANK STATEMENT OF ACCOUN T OF THE LENDER WAS ALSO FILED. M/S OM PARKASH HARESH CHAND HAS DEPOSITED A SUM OF RS.1500 00/- IN ITS BANK ACCOUNT ON 6.8.99 BEFORE THE DRAFT NO.045754 WAS TAKEN BY ISSUING A CHEQUE N O.522129 DT. 6.8.99. THE ASSESSEE HAS SUBMITTED A COPY OF CASH BOOK OF M./S OM PARKASH HA RESH CHAND AVAILABLE AT PAGE 11 TO 20 OF THE PAPER BOOK. CASH BOOK CLEARLY SHOWS OPENING BAL ANCE OF THE CASH IN HAND OF RS.1 26 748.50 AS ON 16.06.1999 AND ON 06.08.1999 THE OPENING BALA NCE WAS RS.1 56 748.50 AFTER THE ASSESSEE HAS SHOWN WITHDRAWAL OF RS.6000/- FROM CANARA BANK AND RS. 27 000/- FROM PUNJAB NATIONAL BANK. ON 06.08.1999 M/S. OM PRAKASH HARESH CHAND AS PER CASH BOOK HAVE RECEIVED A SUM OF RS.17 250/- FROM NAVIN GOEL AND HAS ALSO DEPOSITED A SUM OF RS.1 50 000/- IN CANARA BANK BELANGANJ BRANCH AGRA AND ACCORDINGLY WITHDRAWN A SUM OF RS.1 50 150 RS.1 50 000/- BY WAY OF DRAFT NO.045754 AND RS.150/- AS BANK CHARGES LEAVING CASH IN HAND OF RS.6 748/-. M/S. OM PRAKASH HARESH CHAND IS A REGULAR ASSESSEE HAVIN G PERMANENT ACCOUNT NUMBER WHICH IS AVAILABLE ON THE CONFIRMATION. M/S. OM PRAKASH HARE SH CHAND HAS DEPOSITED THE CASH ON 06.08.1999 DOES NOT MEAN THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE BY FILING THE COPY OF THE CASH BOOK OF M/S. OM PRAKASH HARESH CHAND HAS DISCHARGED THE ONUS AND EVEN PROVED THE SOURCE OF S OURCES WHICH HE IS NOT OBLIGED TO PROVE. THE ASSESSEE HAS DULY EXPLAINED IN RESPECT OF THE DEPOS IT AND THE CIRCUMSTANCES UNDER WHICH THE DEPOSITS WERE RECEIVED. THE IDENTITY OF THE PERSONS IS NOT BEYOND THE DOUBT. THE SOURCE OF CASH WAS DULY EXPLAINED. THE IDENTITY AND CAPACITY OF TH E CREDITORS WAS DULY ESTABLISHED. THE AO ONLY 13 DOUBTED THE GENUINENESS OF THE TRANSACTIONS. UNDER THESE FACTS IN MY OPINION THE AMOUNT RECEIVED BY THE ASSESSEE FROM M/S. OM PRAKASH HARES H CHAND CANNOT BE REGARDED TO BE UNEXPLAINED ONE. 12. I HAVE GONE THROUGH THE DECISION IN THE CASE OF CIT VS. BIJU PATNAIK 160 ITR 674. THE FACTS INVOLVED IN THIS CASE WERE THAT THE ASSESSEE HAD CLAIMED DEDUCTION IN RESPECT OF PAYMENT OF INTEREST ON LOAN TAKEN FROM KALINGA FOUNDATION TRUS T FOR THE ASSESSMENT YEAR 1962-63 TO 1964- 65. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRO DUCE THE EVIDENCE AND TO PROVE (I) THAT THE CASH CREDITS IN THE NAME OF THE TRUST WERE GENUINE AND (II) THAT 39000 SHARES OF KALINGA TUBES LTD. STANDING IN THE NAMES OF CERTAIN PERSONS WERE NOT REALLY HIS OWN INVESTMENTS. THE CASH CREDIT WAS CLAIMED BY THE ASSESSEE TO BE LOANS FROM THE TRUST. THE TRUST WAS FORMED IN 1947 AND IT WAS CLAIMED THAT IT COLLECTED LARGE AMOUNT OF DO NATIONS OVER A DECADE AND HAD KEPT ALL THE MONEY COLLECTED BY IT WITH THE MAHARAJA OF SONEPUR WITHOUT EARNING INTEREST. THE AMOUNT WAS NOT DEPOSITED IN BANK. THE EVIDENCE OF THE PERSONS WHO HAD COLLECTED THE DONATIONS WAS GIVEN BUT THE RESPONDENT DID NOT PRODUCE EVIDENCE AS TO W HO WERE THE PERSONS FROM WHOM THE MONEY WAS COLLECTED HOW THE MONEY WAS RECEIVED OR HOW IT WAS INVESTED. THE ASSESSING OFFICER AFTER MAKING ENQUIRIES TOOK THE VIEW THAT KALINGA FOUNDAT ION TRUST DID NOT EXIST AND EVEN IF IT EXISTED IT HAD NO FUNDS; AND THAT THE NAME OF THE TRUST WAS USED AS A CAMOUFLAGE BY THE RESPONDENT TO PUT THROUGH HIS UNACCOUNTED MONEY AND TREATED THE CASH CREDIT AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. SIMILARLY AFTER THE DECISION OF SUPREME COURT IN THE CASE OF S.P. JAIN VS. KALINGA TUBES LTD. (1965) 35 COMP CAS 351 (SC) THE ITO ALSO HELD THAT THE 39000 SHARES ACQUIRED IN THE NAME OF SEVEN PERSONS WITH MONEYS A DVANCED IN THE NAME OF THE TRUST ACTUALLY BELONGED TO THE ASSESSEE THE HOLDERS BEING BENAMID ARS AND BROUGHT TO TAX THE DIVIDENDS ON THOSE 14 SHARES IN THE HANDS OF THE ASSESSEE. THE INCOME-TAX OFFICER REFERRED TO THE FINANCIAL INCAPACITY OF ONE OF THEM WHO WAS NOT ASSESSED TO TAX AS AN INDIV IDUAL AND WHO HAD NEVER FILED HIS WEALTH-TAX RETURN TO HOLD SHARES WORTH RS.2.5 LACS TO 7.5 LACS . WHEN THE MATTER TRAVELED TO THE TRIBUNAL THE TRIBUNAL HELD THAT THE TRUST WAS COMPRISED OF AND U NDER THE EFFECTIVE CONTROL OF PERSONS OF PUBLIC REPUTE AND HELD THAT THE INVESTMENTS MADE BY THE TR UST WITH THE ASSESSEES GROUP OF INDUSTRIES OR WITH THE ASSESSEE WERE FROM ITS OWN RESOURCES AND F UNDS AND THEREFORE THE CASH CREDITS INCOME FROM INTEREST DIVIDEND ETC. SHOULD BE EXCLUDED. TH E TRIBUNAL AS WELL AS HIGH COURT REJECTED THE APPLICATION OF THE DEPARTMENT FOR A REFERENCE. WHEN THE MATTER WENT BEFORE THE HONBLE SUPREME COURT THE HONBLE COURT HELD THAT THE TWO BASIS QU ESTIONS WERE WHETHER THE DONATIONS COLLECTED BY THE TRUST WERE GENUINE AND WHETHER THE DEPARTMEN T COULD RELY UPON THE LARGE AMOUNT OF MATERIAL COLLECTED BY THE DEPARTMENT SUBSEQUENT TO THE DECISION OF THE SUPREME COURT IN JAINS CASE. THE IDENTITY AND CREDITWORTHINESS OF THE DONO RS HAD NOT BEEN ESTABLISHED AND THE LARGE AMOUNTS RECEIVED AS DONATIONS BY THE TRUST WERE FOR OVER A DECADE LYING AS CASH WITHOUT BEING INVESTED ANYWHERE. THE QUESTION WHETHER THE MONEYS WERE RAISED BY THE TRUST AS DONATIONS FROM VARIOUS PEOPLE OR NOT WAS NOT CONSIDERED BY THE TRI BUNAL IN ITS PROPER PERSPECTIVE. IN NOT APPRECIATING THE BASIC QUESTION OR DISCUSSING THE E VIDENCE IN RESPECT THEREOF THERE WAS NON- CONSIDERATION OF A RELEVANT FACTOR ON A FACTUAL ASP ECT AND THE QUESTION WHETHER THE TRIBUNALS DECISION WAS PERVERSE IN THE SENSE THAT NO MAN INST RUCTED PROPERLY IN LAW COULD HAVE ACTED AS THE TRIBUNAL DID AND WHETHER THERE WAS IGNORING OF MATE RIAL AND RELEVANT FACTS IN CONSIDERING THIS ASPECT AROSE OUT OF THE ORDER OF THE TRIBUNAL. IGNO RING THE POINT AS TO WHO MADE THE DONATIONS AND WHAT WAS THEIR CAPACITY TO MAKE THE DONATIONS W HICH WAS A VITAL FACT GAVE RISE TO THE QUESTION OF LAW. 15 13. THIS CASE IN MY OPINION IS NOT APPLICABLE TO TH E FACTS OF THE CASE BEFORE ME. IN THE CASE BEFORE ME THE IDENTITY OF THE LENDER IS NOT DENIED EVEN BY THE DEPARTMENT. THE LENDER IS AN INCOME TAX ASSESSEE AND IS BEING REGULARLY ASSESSED TO INCOME-TAX. IN THE CASE BEFORE THE SUPREME COURT THE IDENTITY AND CREDITWORTHINESS OF THE DONORS WERE NOT ESTABLISHED BUT IN THE CASE BEFORE ME THE ASSESSEE HAS DULY PRODUCED EVID ENCE REGARDING THE CASH IN HAND AVAILABLE WITH THE LENDER IN HIS REGULAR BOOKS OUT OF WHICH T HE LENDER HAS DEPOSITED THE MONEY IN HIS BANK ACCOUNT. 14. COMING TO THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 801 (SC) I NOTED THAT IN THIS CASE THE HONBLE SUPREME COURT HAS HELD THAT IN VIEW OF SECTION 68 OF THE INCOME-TAX ACT 1961 WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS IN THE OPINION OF THE ASSESSING OFFICER NOT SATISFACTORY. IN SUCH A CASE THEE IS PRIMA FACIE EVIDENCE AGAINST THE ASSESSEE VIZ. THE RECEIPT OF MONEY AND IF HE FAILS TO REBUT THE SAID EVIDENCE IT CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANATION OF THE ASSESSEE THE DEPARTMENT CANNOT HOWEVER ACT UNREA SONABLY. IN THIS CASE DURING THE ASSESSMENT YEAR 1971-72 THE ASSESSEE CLAIMED THAT SHE RECEIVE D A TOTAL AMOUNT OF RS.3 11 831/- BY WAY OF RACE WINNINGS IN JACKPOTS AND TREBLE EVENTS IN RACE S AT TURF CLUBS IN BANGALORE MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE ASSESSE E IN THE CAPITAL ACCOUNT IN HER BOOKS. FOR THE ASSESSMENT YEAR 1972-73 SHE CLAIMED RECEIPTS O F RS.93500/- AS RACE WINNINGS IN TWO JACKPOTS AT BANGALORE AND MADRAS AND THE SAID AMOUN T WAS CREDITED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE ASSESSING OFFICER INCLUDED THESE AMOUNTS AS INCOME FROM OTHER SOURCES AND ASSESSED THEM. THE AAC CONFIRMED THE ADDITION. THE MATTER WE NT TO SETTLEMENT COMMISSION WHO BY A 16 MAJORITY HELD THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUINE DUE TO THE REASONS (I) THAT THE ASSESSEES KNOWLEDGE OF RACING WAS VERY MEAGER (II ) THAT A JACKPOT IS A STAKE OF FIVE EVENTS IN A SINGLE DAY AND ONE CAN BELIEVE A REGULAR AND EXPERI ENCED PUNTER CLEARING A JACKPOT OCCASIONALLY BUT THE CLAIM OF THE ASSESSEE OF HAVING WON A NUMBE R OF JACKPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE BUT AT THREE DIFFERENT CENTRES NAMELY MADRAS BANGALORE AND HYDERABAD APPEARED PRIM FACIE TO BE WILD AND CONTRARY TO ST ATISTICAL THEORIES AND EXPERIENCE OF FREQUENCIES AND PROBABILITIES (III) THE ASSESSEES BOOKS DID N OT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATELY RECEDING DAYS FOR THE PURCHASE OF JACKP OT COMBINATION TICKETS WHICH ENTAILED SIZABLE AMOUNTS VARYING GENERALLY BETWEEN RS.2 000/ - AND RS.3 000/- (IV) THE ASSESSEES CAPITAL ACCOUNT WAS CREDITED WITH THE GROSS AMOUNT WITHOUT SHOWING ANY EXPENSES AND PURCHASES OF TICKETS OR FOR LOSSES (V) IN VIEW OF THE EXCEPTION AL LUCK CLAIMED TO HAVE BEEN ENJOYED BY THE ASSESSEE HER LOSS OF INTEREST IN RACES FROM 1972 W AS VERY SIGNIFICANT. THE SETTLEMENT COMMISSION TOOK THE VIEW THAT ONE WOULD NOT LOSE IN TEREST IN RACE FROM 1972 AND INCOME YIELDING ACTIVITIES MERELY BECAUSE THE INCOME FROM THAT SOURCE BECOME CHARGEABLE TO TAX. WHEN THE MATTER WENT BEFORE THE SUPREME COURT IT DISMIS SED THE APPEAL OF THE ASSESSEE. FROM THE FACTS OF THIS CASE IT IS APPARENT THAT THIS CASE DOES NO T RELATE TO THE CASE WHERE THE ASSESSEE HAS TAKEN LOAN FROM ANY PARTIES BUT IT IS A CASE WHERE THE AS SESSEE HIMSELF HAS SHOWN THE INCOME FROM A PARTICULAR SOURCE AND INCOME SHOWN BY THE ASSESSEE WAS NOT FOUND TO BE GENUINE. THIS CASE IN MY OPINION WILL NOT ASSIST THE REVENUE. 15. IN THE CASE OF DCIT VS. ROHINI BUILDERS 256 ITR 360 (GUJ.) THE FACTS ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE H AD TAKEN LOANS FROM VARIOUS PARTIES AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AS SESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVING FULL ADDRESSES GIR NUMBERS/PERMANENT ACCOUN T NUMBERS ETC. OF ALL THE DEPOSITORS. THE 17 ASSESSING OFFICER ISSUED SUMMONS TO SOME OF THE CRE DITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. ULTIMATELY THE ASSESSING OFFICER MADE AN ADDITION OF RS.12 85 000/- TO THE RETURNED INCOME OF THE ASSESSEE WHICH WAS CONFIRMED BY THE CIT(A). ON FURTHER APPEAL THE TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE ACT WAS CLEAR THAT THE LEGISLATURE HAS LAID DOWN THAT I N THE ABSENCE OF A SATISFACTORY EXPLANATION THE UNEXPLAINED CASH CREDIT MAY BE CHARGED TO INCOME-TA X AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR THAT THE LEGISLATIVE MANDATE IS NOT IN TERMS OF THE WORDS SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEARS THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSESSEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROV ING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES GIR NUMBERS/PERMANENT ACCOUNT N UMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READILY AVAILABLE THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUNTS WERE RECEIVED BY THE ASSESSEE BY A CCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDITORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS B ECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SOURCE OF THE CREDITS IN ITS BOOKS OF ACC OUNT BUT NOT THE SOURCE OF THE SOURCE. THUS TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN PARTICULAR THE FACT THAT THE ASSESSING OFFICER HAD NOT DISALLO WED THE INTEREST CLAIMED/PAID IN RELATION TO THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDER ATION OR EVEN IN THE SUBSEQUENT YEARS AND TAX HAD BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAI D/CREDITED TO THE CREDITORS THE TRIBUNAL HELD THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIE D IN MAKING THE ADDITION OF RS.12 85 000/-. THE HONBLE HIGH COURT DISMISSED THE APPEAL OF THE DEPA RTMENT. HONBLE SUPREME COURT ALSO 18 DISMISSED THE SPECIAL LEAVE PETITION. THIS DECISION CLEARLY LAYS DOWN THE PROPOSITION THAT THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOU RCE. THE ASSESSEE CAN BE ASKED ONLY TO PROVE THE SOURCE OF THE CREDIT. THIS DECISION IN MY OPIN ION IS CLEARLY APPLICABLE TO THE FACTS OF THE CASE BEFORE ME. THE ASSESSEE IN THE CASE BEFORE ME HAS D ULY DISCHARGED HIS ONUS BY FILING THE CONFIRMATION ADDRESS PERMANENT ACCOUNT NUMBER AND THE COPY OF BANK ACCOUNT OF THE CREDITOR. EVEN THOUGH THE ASSESSEE WAS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE BUT STILL THE ASSESSEE IN THE CASE BEFORE ME HAS FILED THE COPY OF CASH BOOK OF THE LENDER FROM WHICH IT IS APPARENT THAT THE LENDER WAS HAVING THE CASH IN HAND ON THE DATE WHEN HE HAS DEPOSITED THE AMOUNT IN HIS BANK ACCOUNT. 16. I HAVE ALSO GONE THROUGH THE DECISION IN THE CA SE OF CIT VS. JOHRIMAL GOEL 147 TAXMAN 448 (ALL.) IN THIS CASE THE ASSESSING OFFICER FOUN D TWO DEPOSITS IN THE BOOKS OF ACCOUNT OF ASSESSEE IN THE NAME OF HIS DAUGHTERS. THE ASSESSIN G OFFICER ASKED THE ASSESSEE TO EXPLAIN THESE DEPOSITS. THE ASSESSEE EXPLAINED THAT THE AMOUNTS W ERE PAID BY THE TWO LADIES THROUGH CHEQUE AND THAT BOTH OF THEM HAD BEEN ASSESSED TO TAX UNDE R THE AMNESTY SCHEME. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD INTRO DUCED HIS BLACK MONEY BY FILING VOLUNTARY RETURNS OF HIS DAUGHTERS AND THEREFORE ADDED THE AMOUNTS AS HIS INCOME UNDER SECTION 68. THE CIT(A) TOOK THE VIEW THAT THE TWO LADIES CREDITED T HE AMOUNT IN THEIR BANK ACCOUNT IN MARCH 1986. THEREFORE IF THE ASSESSING OFFICER WAS OF TH E VIEW THAT THE LADIES DID NOT HAVE ANY INDEPENDENT SOURCE OF INCOME AND THE TWO BANK ACCOU NTS ACTUALLY BELONGED TO THE ASSESSEE THEN PROPER COURSE FOR THE ASSESSING OFFICER WAS TO ADD ENTIRE AMOUNTS OF DEPOSITS IN THEIR BANK ACCOUNTS IN THE HANDS OF THE ASSESSEE AND THE PROVI SIONS OF SECTION 69 WOULD HAVE BEEN ATTRACTED AND THE CORRECT ASSESSMENT YEAR WOULD HAVE BEEN 198 6-87 AND NOT THE RELEVANT ASSESSMENT YEAR 19 1987-88. THE TRIBUNAL CONFIRMED THE ORDER OF CIT(A) . WHEN THE MATTER WENT BEFORE THE HIGH COURT THE HIGH COURT HELD AS UNDER :- UNDER SECTION 68 IF ANY SUM IS FOUND CREDITED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THE SUM SO CREDITED MAY BE C HARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THERE FORE WHAT HAS TO BE ENQUIRED INTO BY THE ASSESSING AUTHORITY IS ABOUT THE NATURE AND SOURCE OF THE DEPOSIT. IF THE EXPLANATION WITH REGARD TO NATURE AND SOURCE IS FOU ND UNSATISFACTORY ONLY THEN THE AMOUNT SO CREDITED MAY BE TREATED AS INCOME. IN THE INSTANT CASE THE ASSESSEE OFFERED THE EXPLANATION BOTH ABOUT THE NATURE AND S OURCE OF THE MONEY. IT WAS EXPLAINED THAT THE MONEY WAS DEPOSITED BY THE TWO L ADIES WHICH THEY HAD DEPOSITED AFTER WITHDRAWING FROM THEIR BANK ACCOUNT . THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAD FOUND THAT THE ASSES SEE HAD DISCHARGED HIS BURDEN IN PROVING THE SOURCE OF THE MONEY WHICH HAD FLEW FROM THE BANK ACCOUNT. IT WAS FURTHER HELD THAT IN ADDITION TO THE SOURCE OF MONE Y FROM THE BANK ACCOUNT BOTH THE LADIES WERE THE INCOME-TAX ASSESSEES AND ASSESS ED TO TAX UNDER THE AMNESTY SCHEME AND THE AMOUNT DEPOSITED IN THEIR BANK ACCOU NT WAS AS A RESULT OF THEIR DISCLOSURE OF INCOME UNDER THE AMNESTY SCHEME. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL FOUND THE EXPLANATION SATISFACTORY AND ACCORDINGLY DELETED THE ADDITION. IT WAS NOT A CASE WHERE THE ASSESSEE CLAIMED ANY IMMUNITY FROM TAX ON ACCOUNT OF THE DISCLOSURE OF INCOME BY THE TWO L ADIES. IT WAS A CASE WHERE THE ASSESSEE WAS ASKED TO EXPLAIN THE DEPOSITS IN HIS B OOKS OF ACCOUNT ABOUT THE NATURE AND SOURCE WHICH THE ASSESSEE HAD EXPLAINED . THE ASSESSING AUTHORITY HAD NOT ACCEPTED THE EXPLANATION BUT THE COMMISSIONER(A PPEALS) AND THE TRIBUNAL HAD ACCEPTED THE EXPLANATION. THE FINDING OF THE TR IBUNAL WAS A FINDING OF FACT IN THAT REGARD AND IT WAS NOT SHOWN THAT THE FINDING R ECORDED BY THE TRIBUNAL WAS PERVERSE. VARIOUS COURTS HAVE HELD THAT THE ASSESSEE HAS TO PROVE THREE CONDITIONS : (1) IDENTITY OF THE CREDITOR (2)CAPACITY OF SUCH CR EDITOR TO ADVANCE MONEY AND (3) GENUINENESS OF THE TRANSACTIONS. IF ALL THE AFORESA ID THREE CONDITIONS ARE PROVED THE BURDEN WOULD SHIFT ON THE REVENUE TO PROVE THAT THE AMOUNT BELONGED TO THE ASSESSEE. IT HAS BEEN HELD BY THE VARIOUS HIGH COUR TS THAT THE ASSESSEE CANNOT BE ASKED TO PROVE THE SOURCE OF SOURCE OR THE ORIGIN O F DEPOSIT. UNDER THE AMNESTY SCHEME THE NEW TAX PAYERS WERE ALLOWED TO DECLARE THEIR INCOME FOR VARIOUS YEARS AND THEIR RETURNS WE RE ALLOWED TO BE ACCEPTED WITHOUT ANY CHARGE OF PENALTY AND INTEREST. IT APPE ARED THAT BOTH THE LADIES HAD FILED RETURNS UNDER THE AMNESTY SCHEME DECLARING CE RTAIN INCOME AND AS A RESULT OF SUCH DECLARATION SAVINGS HAD BEEN DEPOSITED IN THE BANK ACCOUNT WHICH HAD BEEN SUBSEQUENTLY PAID TO THE ASSESSEE. THERE WAS N O DISPUTE THAT THE INCOME-TAX 20 RETURNS UNDER THE AMNESTY SCHEME IN THE CASE OF BOT H THE LADIES HAD BEEN ACCEPTED. FURTHER THERE WAS NO ERROR IN THE ORDER OF THE TR IBUNAL WHERE THE TRIBUNAL HELD THAT IN CASE THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THOSE TWO LADIES WERE TO BE TREATED AS THE AMOUNT BELONGING T O THE ASSESSEE AND THE DEPOSITS MADE BY THE ASSESSEE THEN IT WOULD BE A CASE OF IN VESTMENT MADE BY THE ASSESSEE IN THE NAME OF THOSE TWO LADIES AND THE PROVISION O F SECTION 69 WOULD APPLY AND NOT SECTION 68 AND FOR THAT PURPOSE THE FINANCIAL Y EAR WOULD BE RELEVANT AND THEN SUCH INVESTMENT MIGHT BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR WHICH WOULD FALL IN THE ASSESSMENT Y EAR 1986-87 AND NOT 1987-88. SECTION 68 APPLIES WHEN THE AMOUNT IS FOUND DEPOSIT ED IN THE BOOKS OF ACCOUNT OF AN ASSESSEE AND NOT IN THIRD PARTY. DEPOSIT IN THE ACCOUNT OF BANK WOULD AMOUNT TO INVESTMENT AND SECTION 69 WOULD APPLY AND NOT SE CTION 68. IN MY OPINION THE CASE OF THE ASSESSEE IS DULY COV ERED BY THE DECISION OF JURISDICTIONAL HIGH COURT WHICH I AM BOUND TO FOLLOW AND ON THE BASIS O F THIS DECISION ITSELF THE ADDITION OF CASH CREDIT OF RS.1 50 000/- HAS TO BE TREATED AS EXPLAI NED ONE. 17. I HAVE ALSO GONE THROUGH THE DECISION OF THIRD MEMBER IN THE CASE OF KULBIR SINGH VS. ACIT 124 TTJ (AGRA)(TM) 1 AS RELIED UPON BY THE L EARNED AR. THIS DECISION RELATES TO THE QUESTION WHETHER THE PROCEEDINGS TAKEN U/S. 263 WER E JUSTIFIED OR NOT. ALTHOUGH THE FACTS INVOLED IN THIS CASE ALSO RELATE TO THE ACCEPTANCE OF CASH CREDIT U/S. 68 TO BE GENUINE BY THE ASSESSING OFFICER BUT TREATED AS ERRONEOUS BY THE COMMISSION ER OF INCOME-TAX BY INVOKING THE PROVISIONS OF SECTION 263. THIS DECISION SINCE RELATES TO THE QUESTION OF APPLICABILITY OF PROVISION OF SECTION 263 IN MY OPINION WILL NOT BE APPLICABLE TO THE F ACTS OF THE CASE. IN THIS DECISION THE THIRD MEMBER HAS AGREED WITH THE ORDER OF LEARNED JUDICIA L MEMBER WHO HAS COME TO THE CONCLUSION THAT IN THE LIGHT OF THE DECISION OF SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD.243 ITR 83 (SC) AND THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GABRIEL INDIA LTD. 203 ITR 108 (BOM.) THE ORDER OF CIT U/ S. 263 CANNOT BE SUSTAINED. 21 18. I HAVE ALSO GONE THROUGH THE DECISION IN THE CA SE OF CIT VS. RAJESH DAL MILL MATHURA IN REFERENCE NO. 12 OF 1994 DATED 22.09.2006 COPY OF WHICH AVAILABLE ON RECORD WHEREIN THE HONBLE ALLAHABAD HIGH COURT HAS HELD AS UNDER :- WE HAVE HEARD SHRI R.K. UPADHYAYA LEARNED STANDIN G COUNSEL APPEARING ON BEHALF OF THE REVENUE AND SRI KRISHNA AGARWAL LEARNED COUNSEL FOR THE APPLICANT. LEARNED STANDING COUNSEL SUBMITTED THAT EVEN THOUG H THE CREDITORS WERE GENUINE AND THE INCOME TAX PAYEES AND THE DEPOSITS WERE MADE THROUGH BANK DRAFT THEY DID NOT HAVE SUFFICIENT FUNDS TO GIVE T HE AMOUNT IN QUESTION TO THE ASSESSEE AND IT WAS ONLY TO UTILIZE THE UNACCOUNTED MONEY OF THE ASSESSEE. THE SUBMISSION IS MISCONCEIVED. THE COMMISSIONER OF INC OME TAX (APPEALS) AS WELL AS THE TRIBUNAL HAS RECORDED CATEGORICAL FINDINGS O F FACT THAT THE CREDITORS WERE INCOME TAX PAYEES AND THE TRANSACTIONS WERE MADE BY WAY OF BANK DRAFTS. SUFFICIENT FUNDS WERE AVAILABLE WITH THE CREDITORS TO FINANCE LOAN WHICH FINDINGS CANNOT BE QUESTIONED IN THE PRESENT REFERENCE. IN T HIS VIEW OF THE MATTER WE ARE OF THE CONSIDERED OPINION THAT THE TRIBUNAL WAS RIGHT IN DELETING THE ADDITION IN QUESTION. 19. IN THE CASE OF CIT V PRAGATI CO-OPERATIVE BANK LTD. (2005) 278 ITR 170 (GUJ) THE HONBLE COURT HELD AS UNDER: HELD THAT IT WAS APPARENT THAT THE ASSESSEE HAD F URNISHED THE DETAILS WHICH WOULD DISCHARGE THE ONUS WHICH LAY ON THE ASSESSEE CONSIDERING THE FACT THAT THE DEPOSITS WERE MAD BY THIRD PARTIES VIZ. CUSTOMERS OF THE BANK. IT WAS NOBODYS CASE THAT THE DEPOSITS WERE MADE EITHER BY THE DIRE CTORS OF THE ASSESSEE-BANK OR ANY OF THE RELATIVES OF THE DIRECTORS. THE ACTIVITI ES OF THE ASSESSEE-BANK WERE REGULATED BY THE PROVISIONS OF THE BANKING REGULATI ON ACT 1949 AND THE GUIDELINES ISSUED BY THE RESERVE BANK OF INDIA. THI S WAS APART FROM THE FACT THAT UNDER THE PROVISIONS OF SECTION 80P OF THE ACT THE ENTIRE INCOME FROM BANKING ACTIVITIES WAS EXEMPT IN THE HANDS OF THE ASSESSEE A CO-OPERATIVE BANK. THUS THERE COULD EXIST NO REASON FOR THE ASSESSEE-BANK T O INDULGE IN ANY ACTIVITY WHICH WOULD YIELD UNDISCLOSED INCOME. THE TRIBUNAL WAS RI GHT IN DELETING THE ADDITION OF RS.1 80 95 811 IN RESPECT OF FIXED DEPOSITS AND RS.21 71 500 IN RESPECT OF INTEREST. 20. IN THE CASE OF MURLIDHAR LAHORIMAL V CIT (2006) 280 ITR 512 (GUJ) THE HONBLE HIGH COURT WHILE EXPLAINING THE SCOPE OF SECTION 68 HAS HELD AS UNDER: 22 HELD THAT THE TRIBUNAL FAILED TO NOTE THE FACT TH AT THE IDENTITY OF THE DONOR WAS ESTABLISHED THE DONOR HAVING APPEARED IN PERSON BE FORE THE AO THE GENUINENESS OF THE TRANSACTION WAS ESTABLISHED NOT ONLY BY THE RECEIPT OF THE BANK DRAFT BUT ALSO BY THE FACT OF THE TRANSACTION HAVING BORNE GI FT TAX ONCE THE ASSESSMENT WAS FRAMED. THE PRIMARY ONUS WHICH RESTED WITHIN THE AS SESSEE THUS STOOD DISCHARGED. THEREFORE IF THE REVENUE WAS NOT SATIS FIED WITH THE SOURCE OF THE FUNDS IN THE HANDS OF THE DONOR IT WAS UP TO THE R EVENUE TO TAKE APPROPRIATE ACTION. THE TRIBUNAL CONSIDERED THE MOTIVATION FOR MAKING THE GIFT WHICH WAS NOT RELEVANT. THE ADDITION OF RS.50 000 WAS NOT JUSTIFI ED. 21. IN THE INSTANT CASE THE ASSESSING OFFICER WITH OUT LOOKING INTO THE FACTS AND BRINGING ANY EVIDENCE TO THE CONTRARY REJECTED THE EXPLANATION O F THE ASSESSEE. SECTION 68 NOWHERE EMPOWERS THE ASSESSING OFFICER TO REJECT EACH AND EVERY EXPL ANATION OF THE ASSESSEE. THE ASSESSING OFFICER IS A QUASI-JUDICIAL AUTHORITY AND HE SHOULD FORM HI S OPINION JUDICIOUSLY NOT IN AN ARBITRARY MANNER. IT APPEARS THAT IN THIS CASE THE REVENUE HA S JUST MADE THE ADDITION FOR THE SAKE OF MAKING THE ADDITION U/S 68. THE DECISIONS OF THE GU JARAT HIGH COURT AS WELL AS THAT OF ALLAHABAD HIGH COURTS AS CITED EARLIER ARE APPLICABLE TO THE FACTS OF THE CASE. 22. IN VIEW OF MY AFORESAID DISCUSSION I AGREE WIT H THE VIEW TAKEN BY THE LEARNED JUDICIAL MEMBER THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED CASH CREDIT OF RS.1 50 000/- IS GENUINE. NOW THE MATTER WILL GO T O THE REGULAR BENCH. SD/- (P.K. BANSAL) ACCOUNTANT MEMBER DATED: 17 TH JANUARY 2011 *AKS/-