Shri Rameshchandra Chanabhai, JAMNAGAR v. The Income Tax Officer, Ward-1(3),, JAMNAGAR

ITA 421/RJT/2009 | 2006-2007
Pronouncement Date: 31-12-2010 | Result: Allowed

Appeal Details

RSA Number 42124914 RSA 2009
Assessee PAN ACPPP6116M
Bench Rajkot
Appeal Number ITA 421/RJT/2009
Duration Of Justice 1 year(s) 6 month(s) 25 day(s)
Appellant Shri Rameshchandra Chanabhai, JAMNAGAR
Respondent The Income Tax Officer, Ward-1(3),, JAMNAGAR
Appeal Type Income Tax Appeal
Pronouncement Date 31-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 31-12-2010
Date Of Final Hearing 23-12-2010
Next Hearing Date 23-12-2010
Assessment Year 2006-2007
Appeal Filed On 05-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI D.T. GARASIA (JM) I.T.A. NO. 421/RJT/2009 (ASSESSMENT YEAR 2006-07) SHRI RAMESHCHANDRA CHANABHAI VS THE ITO WD.1(3) PROP KACHHADIA METAL INDUSTRIES JAMNAGAR SHED NO.A-35 GIDC STU JAMNAGAR PAN : ACPPP6116M (APPELLANT) (RESPONDENT) I.T.A. NO. 834/RJT/2009 (ASSESSMENT YEAR 2006-07) THE ITO WD.1(3) VS SHRI RAMESHCHANDRA CHHANABHA I JAMNAGAR PATEL JAMNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MP SARDA REVENUE BY : SHRI SL MEENA O R D E R A.L. GEHLOT : THESE ARE CROSS APPEALS FOR THE ASSES SMENT YEAR 2006-07 AGAINST THE ORDER OF CIT(A) JAMNAGAR DATED 24-03-2009. 2. THE ASSESSEE IS THE PROPRIETOR OF KACHHADIA META L INDUSTRIES WHICH IS MANUFACTURING BRASS PARTS. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS UPON EXAMINATION OF BOOKS OF ACCOUNTS OF THE ASSESSEE T HE AO FOUND THAT THE ASSESSEE HAS SHOWN EIGHT CREDITORS UNDER THE HEAD UNSECURED LOAN S / DEPOSITORS NAMELY (1) SHRI CHANABHAI MAVJIBHAI PATEL (15 52 000) FATHER OF TH E ASSESSEE (2) SHRI DINESHBHAI CHANABHAI (7 01 600) SECOND ELDETBROTHER OF THE AS SESSEE (3) SMT. JAYSHREEBEN VRAJLAL PATEL (8 04 950) ELDEST BROTHER'S WIFE (4) JIGNAB EN VRAJLAL PATEL (4 01 650) ELDEST .BROTHER'S DAUGHTER (5) SHRI KANJIBHAI BECHARBHAI (77 74 000) MATERNAL GRANDFATHER (6) KRISHNABEN JAGIDHBHAI PATEL (8 80 745) THIRD ELDES T BROTHER'S WIFE (7) NARAYANLAL SARDARJI BHARVAD (75 000) NEIGHBOR AND (8) MAARVEL METAL CORPORATION (6 17 000) (ELDEST BROTHER VRAJLAL'S IMPORT-EXPORT BUSINESS). THE AO ACCORDING LY CALLED FOR THE ASSESSEE TO FURNISH THE EVIDENCES TO PROVE THE IDENTITY CAPACITY AND GENUI NENESS OF THE CASH CREDITS/UNSECURED ITA 421 & 834/RJT/2009 2 LOAN INTRODUCED DURING THE YEAR INCLUDING THE CASH CREDITS SQUARED UP. IN RESPONSE TO THE SAME THE ASSESSEE FURNISHED CONFIRMATION FROM THE DEPOSITORS IN THE FORM OF AFFIDAVITS CONFIRMING THE TRANSACTION EXCEPT SHRI KANJIBHAI BE CHARBHAI PATEL WHO IS MATERNAL GRANDFATHER OF THE ASSESSEE. IT WAS STATED BY THE A SSESSEE THAT SHRI KANJIBHAI EXPIRED IN THE F.Y. 2003-04 HOWEVER THE AFFIDAVIT FROM SHRI JAMANBHAI PATEL SON OF SHRI KANJIBHAI THE ALLEGED LEGAL HEIR OF LATE SHRI KANJIBHAI WAS F URNISHED WHEREIN SHRI JAMANBHAI DECLARED THAT HIS FATHER WAS HAVING AGRICULTURAL LA ND OF 325 VIGHAS (123 ACRES) AND THE LAND WAS USED PURELY FOR AGRICULTURAL PURPOSE ONLY. THE ASSESSEE ALSO SUBMITTED THAT LATE SHRI KANJIBHAI HAD GIVEN LOAN TO KACHHADIA METAL INDUSTR IES AND HAD ALSO GIVEN POWER OF ATTORNEY TO THE ASSESSEE VIDE LETTER DTD. 29-6-2000 TO OPERATE HIS BANK ACCOUNT NO.01502 WITH THE PUNJAB NATIONAL BANK JAMNAGAR AND VIDE TH E SAID POWER OF ATTORNEY HE ALSO AUTHORIZED THE ASSESSEE TO DEPOSIT AND WITHDRAW THE AMOUNT AND ISSUE CHEQUES FROM THE SAID ACCOUNT. IN THE AFFIDAVIT SON OF LATE SHRI KA NJIBHAI FURTHER STATED THAT FROM 1-4-05 TO 31- 3-06 THE ASSESSEE HAS DEPOSITED CASH FROM THEIR (L ATE KANJIBHAI'S FAMILY) SOURCES OF INCOME AND ISSUED CHEQUE TO THE FIRM ON THEIR INSTR UCTIONS ONLY AND ALL THE CASH DEPOSITS ARE FROM THEIR FAMILY AGRICULTURAL INCOME ONLY AND THAT LOAN OF RS.81 55 000 GIVEN TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUE WAS ALSO AS PER TH EIR INSTRUCTION. IN PARA 5 OF THE ASSESSMENT ORDER THE AO HAS MENTIONED THAT SHRI JA MANBHAI BHANDERI SON OF LATE SHRI KANJIBHAI WAS SUMMONED AND HIS STATEMENT WAS RECORD ED ON OATH WHEREIN HE WAS SPECIFICALLY ASKED TO PRODUCE THE EVIDENCE REGARDIN G SALE PROCEEDS OF AGRICULTURAL PRODUCTS HOWEVER HE WAS UNABLE TO FURNISH THE EVIDENCES OF THE SALE PROCEEDS OF AGRICULTURAL PRODUCT AND STATED THAT THE SAID TRANSACTIONS WERE BEING LOOKED AFTER BY HIS LATE FATHER AND HE HAS NO KNOWLEDGE ABOUT THE AGRICULTURAL INCOME A ND SALE BILLS OF AGRICULTURAL PRODUCE. THE AO THEREFORE OBSERVED FROM THE STATEMENT OF SH RI JAMANBHAI AND THE EVIDENCES FURNISHED BY THE ASSESSEE THAT THE GENUINENESS OF T HE DEPOSITS AND THE SOURCES THEREOF HAVE NOT BEEN ESTABLISHED. THE AO FURTHER NOTICED T HAT THE DEPOSITOR HAS DEPOSITED THE CASH IN BANK BEFORE ISSUE OF CHEQUE; THE CREDITOR H AS NOT PAID THE MONEY BACK; DEPOSITOR IS NOT ALIVE AND THE ASSESSEE IS HOLDER OF POWER OF AT TORNEY TO OPERATE THE ACCOUNT; THE ALLEGED LEGAL HEIR HAS NO EXPLANATION FOR THE SOURC ES OF THE INVESTMENT EXCEPT AGRICULTURAL LAND; AND THE ALLEGED LEGAL HEIR IS UNABLE TO GIVE THE EVIDENCES OF THE SALE PROCEEDS OF AGRICULTURAL PRODUCE AND HAS NO KNOWLEDGE AS TO WIT H WHOM THE MONEY WAS LYING. THE AO THEREFORE ISSUED A SHOW CAUSE TO THE ASSESSEE THAT WHEN THE GENUINENESS OF THE CASH CREDITS IN THE NAME OF SHRI KANJIBHAI HAS NOT BEEN ESTABLISHED WHY IT MAY NOT BE TREATED AS ITA 421 & 834/RJT/2009 3 UNEXPLAINED ENTRIES AS PER THE PROVISIONS OF SEC.68 OF THE ACT. THE ASSESSEE IN HIS REPLY SUBMITTED THAT SHRI JAMANBHAI SON OF LATE SHRI KAN JIBHAI BHANDERI VIDE HIS AFFIDAVIT DTD. 19- 11-2008 HAS ADMITTED THAT LOAN HAS BEEN GIVEN TO TH E ASSESSEE AND ALSO MADE SUBMISSION REGARDING THE SOURCES OF FUND AND FILED COPIES OF A GRICULTURAL LAND SHOWING PRODUCE OF CROP AND THE INCOME FROM AGRICULTURAL PRODUCE WAS DEPOSI TED IN THE BANK ACCOUNT OF THE FAMILY. THE ASSESSEE THUS STATED THAT SINCE HE HAS ESTABLIS HED THE GENUINENESS OF THE SAID LOAN AND PAYMENTS HAVE BEEN MADE BY CHEQUES AND THE SOUR CES OF INCOME HAS ALREADY BEEN EXPLAINED THE ONUS SHIFTED ON THE AO TO CONTRADICT THE ABOVE EVIDENCES. IN REGARD TO BILLS OF SALE OF AGRICULTURAL PRODUCE THE ASSESSEE STATE D THAT SHRI JAMANBHAI IN HIS AFFIDAVIT HAS STATED THAT HE IS NOT AWARE OF SALE BILLS OF 2005-0 6 HOWEVER HE FURTHER STATED THAT ALL THE SALES WERE MADE THROUGH BROKER WHO HAS NOT ISSUED ANY BILLS. THE ASSESSEE ALSO CONTENDED THAT HE WAS NOT GIVEN OPPORTUNITY TO CROS S-EXAMINE SHRI JAMANBHAI. THE AO DID NOT ACCEPT THE ABOVE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT THE ONUS TO PROVE THE NATURE AND SOURCE OF CREDIT WAS ON THE ASSESSEE AND MERELY FILING OF CONFIRMATION LETTER CAN NOT BE TAKEN AS TO DISCHARGE OF BURDEN CASTED UPON THE ASSESSEE' UNDER THE LAW. IN THIS REGARD THE AO HAS ALSO RELIED UPON THE DECISION IN THE CASES OF NANAK CHAND LAXMAN DAS VS. CIT (ALLAHABAD) - CTR 280 UNITED COMMERCIAL & INDUSTRIAL CO. P. LTD. (CAL.) 187 ITR 596 KALE KHAN MOHAMMAD HANIF 50 ITR 1 (SC) AND MEE RA & CO. (P & H) 161 ITR 31. IN PARA 7 OF THE ORDER THE AO HAS ALSO RECORDED THAT THE ASSESSEE WAS ALLOWED TO CROSS EXAMINE SHRI JAMANBHAI BHANDERI IN THE PRESENCE OF THE AUTHORIZED REPRESENTATIVE AND IN HIS REPLY SHRI JAMANBHAI HAS STATED THAT LATE SHRI KANJIBHAI WAS HAVING ABOUT 325 VIGHAS (123 ACRES) OF LAND ON WHICH THREE CROPS WERE BEING HARVESTED HOWEVER ON PERUSAL OF THE STATEMENT ISSUED BY THE REVENUE AUTHORITY IT IS SEE N THAT IN MOST PART OF THE LAND THERE WAS ONLY ONE CROP OF RAINY SEASON OF GROUNDNUT HAS BEE N CULTIVATED AND THE TALATI MANTRI HAS NOT WRITTEN THE CROPS OF WINTER AND SUMMER SEASONS. THE AO THEREFORE AFTER TAKING INTO CONSIDERATION THE SAME HELD THAT SUM OF RS.81 55 00 0/- CREDITED IN THE NAME OF SHRI KANJIBHAI BECHARBHAI IS CHARGED TO INCOME-TAX U/S.6 8 OF THE IT ACT AS INCOME FROM UNDISCLOSED SOURCES. THE AO HAS ALSO MADE DISALLOWANCE OF RS.16 649 BEIN G @ 1/5TH OF TOTAL AMOUNT OF RS.83 246 OUT OF TELEPHONE EXPENSES (65 556) AND OF FICE EXPENSES (17 690) ON THE GROUND THAT THERE DOES NOT APPEAR TO BE PROPER CHECK WITH REFERENCE TO PROVISIONS OF SEC.37(1) OF THE ACT AND IT IS DIFFICULT TO VERIFY AND ESTABLIS H THAT THE EXPENSES HAVE BEEN INCURRED ITA 421 & 834/RJT/2009 4 WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS THEREFORE POSSIBILITY OF INCURRING CERTAIN AMOUNTS TOWARDS PERSONAL AND NON-BUSINESS P URPOSE CANNOT BE RULED OUT. 3. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND SUBMITTED AS FOLLOWS: '1) I BEG TO SUBMIT THE FOLLOWING ADDENDUM TO MY EA RLIER SUBMISSIONS MADE WHILE FILING THE APPEAL AGAINST THE HIGH HANDED ASS ESSMENT ORDER U/S. 143(3) DATED 22-12-2008 FOR A Y. 2006-07. 2) THE ASSESSING OFFICER MADE AN ADDITION OF RS.81 55 000/- U/S. 68 WITHOUT MAKING ANY PROPER AND GENUINE AND COGENT INQUIRIES ON THE CASH CREDITS SEEN IN THE BOOKS OF ACCOUNTS OF MR. R. C. KACHCHAD IYA WHATEVER REQUIREMENTS WERE MADE BY THE ASSESSING OFFICER FOR HIS SATISFACTION AS PER SECTION 68 OF THE I.T. ACT 1961 ALL WERE MADE A RE ASONABLE. THE A.O. DID NOT MAKE ANY PROBE TO CATEGORIZE THE FACTS AND THE FIGU RES IN THIS REGARD. THE ASSESSEE COMPLIED WITH ALL THE REQUIREMENTS AS PER SECTION 68 OF THE INCOME TAX ACT 1961. BUT THE I.T.O. DID NOT ACCEPT THE CA SH CREDITS AS APPEARED IN THE BOOKS OF THE ASSESSEE STANDING IN THE NAME OF K ANJIBHAI BHANDERI. 3) THE AO. FAILED TO ESTABLISH EVEN AN IOTA OF EITH ER BY THAT THE CASH CREDITS ARE SPRETIOUS DIRECT EVIDENCE OR INDIRECT EVIDENCE AND WITHOUT ANY LEGAL AND PROCEDURAL INVOLVEMENT. THE A.O. COULD NOT ATTRIBUT E AND APPRECIATE THAT WHAT IS APPARENT FROM THE BOOKS IS NOT CORRECT AND IT IS ONLY FALSIFICATION OF FACTS AND EVIDENCES. THE ASSESSEE TIME AND AGAIN SUBMITTED TH AT THE AMOUNT SHOWN IN THE BOOKS HAVE ALL BEEN BROUGHT BY CHEQUES AS PER S ECTION 26988 AND 269T. IF THE I.T.O. HAD ANY DOUBT HE SHOULD HAVE ATTRIBU TED THE SPECIFIC REASON AND CALLED FOR THE ASSESSEE'S SUBMISSION IN THAT REGARD . WHEN THE RESPONSIBILITIES COUPLED WITH THE OWNERSHIP ARE ESTABLISHED BY THE D IRECT EVIDENCE FROM THE CREDITOR THEN IT IS NOT BOUNDEN DUTY OF THE ASSESSE E AS TO HOW AND FROM WHERE THE CREDITOR GOT THE AMOUNT AND HOW AND WHY THE AMO UNT IS ACCEPTED BY THE ASSESSEE. THESE FACTS HAVE ALL BEEN PROVED BY THE A SSESSEE AND HE HAS ALSO ADDUCED BY WAY OF AN AFFIDAVIT AND ALSO CATEGORIZE ESTABLISHED BY THE CREDITOR THAT THE ENTIRE AMOUNT STANDING IN THE BOOKS OF MR. R. C. KACHCHADIYA ACTUALLY AND REALLY BELONG TO THE CREDITOR IN WHOSE NAME IT HAS BEEN CREDITED. THE ASSESSEE HAS ALSO PROVED THAT IT WAS ABSOLUTELY NECESSARY FOR HIM TO RESORT TO TAKE CREDITS FOR THE FURTHERANCE OF HIS B USINESS ACTIVITIES. 4) THE ASSESSEE HAD RETURNED A BUSINESS INCOME OF R S.3 74 933/- AND THERE WAS A TURNOVER OF RS.41 38 355/- WHICH BY ITSELF WA RRANTED FOR COMPULSORY AUDIT. THIS HAS ALSO BEEN DONE. THE AUDIT REPORT AP PARENTLY IS ALSO UNQUALIFIED ONE. THE I.T.O. COULD NOT EVEN ANY STRETCH OF IMAGI NATION OR CALCULATION PROVES THAT THE ASSESSEE'S RELIANCE ON VARIOUS JUDI CIAL PRONOUNCEMENTS IS NOT SIMILAR TO THE FACTS OF THE CASE AND THESE ONLY SHO ULD HAVE MADE ADDITIONS. 5) IT IS MATERIAL FACTS TO MENTION THAT THIS PARTIC ULAR CREDITOR NAMED LATE KANJIBHAI BHANDERI IS A WELL ORGANIZED AGRICULTURIS T AND HIS OTHER MEMBERS OF HIS FAMILY WERE ALL IN THE OCCUPATION OF CULTIVATIO N OF VARIOUS CROPS. THE I.T.O. ITA 421 & 834/RJT/2009 5 HAS PRESUMPTUOUSLY NOT APPRECIATED 7/12 UTARA AND K HEDUT VAHI AS RELEVANT EVIDENCES. HE HAS NOT EVEN PROPERLY TRIED TO UNDERSTAND THE VARIOUS TYPES OF CROPS CULTIVATED BY HIM. THE CREDITOR HAS EXPIRED ON THE CRUCIAL DATE OF CONDUCTING THE ASSESSMENT PROCEEDING. THE CREDIT OR'S LEGAL HEIR MR. JAMAN BHANDERI HAS MADE AN AFFIDAVIT ON THE FACTS OF THE ACTIVITIES CONDUCTED BY HIS LATE FATHER. BY HAVING RECEIVED TH E AFFIDAVIT THE A.O. ISSUED SUMMONS TO THE LEGAL HEIR AND RECORDED HIS STATEMEN T. THE LEGAL HEIR ANSWERED THE QUESTIONS PUT TO HIM BY THE ASSESSING OFFICER IN UNEQUIVOCAL TERMS. IT MAY FURTHER BE ADDED THAT THE ASSESSEE'S COUNSEL SHRI A. A. CHAKI C.A ALSO MADE A CROSS VERIFICATION OF THE STATEMEN TS OF THE LEGAL HEIR. THE A.O. DID NOT AND COULD NOT PINPOINT ANY CONTRADICTI ONS SO FAR AS THE STATEMENTS GIVEN BY THE ASSESSEE OR LEGAL HEIR OF T HE CREDITOR. 6) IT IS THEREFORE IMPERATIVE TO REASONABLY CONCLUD E THAT THE LEGAL HEIR'S STATEMENT HAS BEEN ACCEPTED BY THE A.O. AND LATER O N THIS DIVERSION IS NOTHING BUT AN ABBREVIATION NOT WITHIN THE CLAIRVOY ANCE OF ANY PRUDENT MAN. THE COPY OF THE STATEMENT GIVEN BY THE LEGAL HEIR I N RESPONSE TO SUMMONS ISSUED IS ALSO ENCLOSED FOR KIND PERUSAL. 7) IF A.O. REALLY WAS NOT SATISFIED THE CASE LAWS F ILED BY FOLLOWING ESTABLISHED VARIOUS REASONING'S BY THE JUDICIAL AUTHORITIES. FU RTHER TO THE ABOVE SUBMISSIONS RESPECTFULLY IT HAS ALSO TO BE MENTIONE D THAT WHEN THE CASH CREDIT ADDITIONS ARE PROPOSED TO BE MADE U/S. 68 TH E A.O. MUST ESTABLISH BY DIRECT EVIDENCE THAT THE MONEY BROUGHT IN HIS BOOKS OF ACCOUNTS HAS ALL BEEN EMANATED FROM THE ASSESSEE'S COFFERS AND THEREFORE IT HAS TO BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE ONLY WARRANTING FOR ADDITIONS U/S. 68 OF THE I.T. ACT 1961. THE RATIO PROPOSITION LAID DOWN BY THE HIGH COURT OF THE DELHI IN THE CASE OF C.I.T. V/S. VALUE CAPITAL SERV ICES PVT. LTD. (CITATION ITR 307 PAGE 334) IS EQUALLY AND DIAMETRICALLY APPRECI ABLE IN THE CASA OF THE ASSESSEE ALSO. 8) IN THIS CASE AS FACTS SPEAK FOR ITSELF THAT THE A.O. WITH PRECIPITATED MIND AND CALCULATED DECISION HAS JUMPED TO THE CONCLUSIO N OF MAKING THE ADDITION OF RS 81 55 000/- AS CASH CREDIT NOT GENUINE IRRESP ECTIVE OF THE FACT THAT THE CREDITOR HAD AND IS ALSO CONTINUING THE CREDIT TRAN SACTIONS WITH THE ASSESSEE. IT IS THEREFORE ONCE AGAIN REITERATED THAT THE ADDI TIONS OF RS.81 55 000/- MAY KINDLY BE DELETED AS THE ADDITIONS ARE UNWARRANTED AND UNCALLED FOR. 9) THE OTHER TWO ADDITIONS AS MENTIONED EARLIER PRI MA FACIE AND APPARENTLY ARE ALSO UNCALLED FOR. THESE TWO ADDITIONS ALSO MAY KINDLY BE DELETED AS UNWARRANTED AND MADE ON THE FOOTING OF SURMISES.' 4. THE CIT(A) CALLED FOR A REMAND REPORT ON THE ABO VE SUBMISSIONS OF THE ASSESSEE. THE ASSESSING OFFICER VIDES LETTER DTD. 16-2-09 HAS REPORTED AS UNDER: ITA 421 & 834/RJT/2009 6 '2.PARAWISE REPLY ON THE WRITTEN SUBMISSION OF THE ASSESSEE IS SUBMITTED AS UNDER .AO HAS MADE AN ADDITION OF RS.8 1 55 000/- WITHOUT MAKING ANY PROPER AND GENUINE AND COGENT INQUIRIES ON THE CASH CREDITS SEEN IN THE BOOKS OF ACCOUNTS OF R. C. KACHHADIA. THE ASSESSEE HAS COMPLIED WITH ALL THE REQUIREMENTS AS PER SECTION 68 OF THE I. T. ACT BUT THE I.T.O. DID NOT ACCEPT THE CASH CR EDITS AS APPEARED IN THE BOOKS OF THE ASSESSEE STANDING IN THE NAME OF SHRI KANJIBHAI BHANDERI. THE ASSESSEE'S CONTENTION IS NOT CORRECT. SIMPLY FI LING OF A LETTER OF TRANSACTIONS CAN NOT PROVE THE GENUINENESS OF CREDI TORS REGARDING COMPLY OF REQUIREMENT OF PROVISION OF SECTION 68 IS ALSO NOT CORRECT. SECTION 68 GIVES STATUTORY RECOGNIZED TO THE PRINCIPAL THAT CASH CRE DITS WHICH ARE NOT SATISFACTORILY EXPLAINED MAY BE ASSESSED AS INCOME SECTION 68 SEEKS TO BRING TO TAX ANY CASH CREDITS APPEARING IN THE BOOKS SEC TION 68 GIVES STATUTORY RECOGNITION TO THE PRINCIPLE THAT CASH CREDITS WHI CH ARE NOT SATISFACTORILY EXPLAINED MAY BE ASSESSED AS INCOME. SECTION 68 SE EKS TO BRING TO TAX ANY CASH CREDITS APPEARING IN THE BOOKS OF ACCOUNTS WHI CH ARE NOT SATISFACTORILY EXPLAINED AS THE INCOME OF THE PREVIOUS YEAR. THE J UDICIAL OPINION IS THAT IN THE EVENT OF CREDIT ENTRY IN THE BOOKS OF ACCOUNT THE AO HAS TO MAKE AN ENQUIRY AND GIVE THE ASSESSEE AN OPPORTUNITY TO EXP LAIN THE CREDIT ENTRY AND IF THE ASSESSEE DID NOT RENDER THE SATISFACTORY EXP LANATION WITH REGARDS TO THE NATURE AND SOURCE OF CREDIT THEN THE A.O. IS ENTIT LED TO DRAW THE INFERENCE THAT THE RECEIPTS ARE OF AN INCOME NATURE AND SUBJECT TO CHARGE. THE JUDGEMENT OF THE SUPREME COURT IN A. GOVINDARAJULU MADALIAR VS C IT (1958) 34 ITR 807 (SC) REFLECTS THIS POSITION. SECTION 68 CONSTITUTES A CHARGING PROVISION WHICH APPLIES WHEN THE ASSESSEES EXPLANATION REGARDING A CASH CREDIT IS REJECTED AS BEING UNSATISFACTORY OR WHEN THE ASSESSEE DOES N OT RENDER ANY EXPLANATION. SECTION 68 PROVIDES THAT THE A.O. MAY BRING TO CHARGE A SUM AS INCOME OF THE PREVIOUS YEAR IF (I) THE SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR AND (II) THE ASSESSE E OFFERS NO EXPLANATION ABOUT THE NATURE OF SOURCE OF THAT SUM; OR (III) TH E EXPLANATION IS NOT IN THE OPINION OF THE AO SATISFACTORY WHETHER THE SUM SO CREDITED MAY BE IN THE ASSESSEE'S NAME OR IN THE NAME OF THE THIRD PARTY. IT IS WELL ESTABLISHED BY THE DECISIONS OF SUPREME COURT AND HIGH COURTS THAT THE BURDEN OF PROVING THAT A CREDIT ENTRY APPEARING IN THE ASSESSEE'S BOOKS OF A CCOUNT DOES NOT REPRESENT INCOME OF THE ASSESSEE IS ON THE ASSESSEE. WHERE AN Y SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE THE INITIAL ONUS IS O N THE ASSESSEE TO OFFER AN EXPLANATION OF THE NATURE AND SOURCE OF THE CREDIT. IF THE EXPLANATION IS NOT FOUND SATISFACTORY OR REASONABLE THE AO CAN TREAT SUCH MONEY AS THE ASSESSEE'S INCOME FROM UNDISCLOSED SOURCE. IT IS NO T NECESSARY FOR THE AO TO LOCATE THE EXACT SOURCE OF THE CREDITS. THE ASSESSE E CAN PROVE THE GENUINENESS OF CREDITS THE IDENTITY OF THE CREDITO R AND CREDITWORTHINESS BY ESTABLISHING SOME PLAUSIBLE EVIDENCE OF THE TRANSAC TIONS. THE VIEW TAKEN BY THE KERALA HIGH COURT IN M V UNNEERI KUTTY'S CASE ( SUPRA) IS AFFIRMED BY THE SUPREME COURT IN MA UNNEERI KUTTY VS. CIT (S.L.P. (CIVIL)NO. 4789 OF 1993(1993) 207 ITR 23 (SI). THE BOMBAY HIGH COURT I N THE CASE OF VEGI DEORQI & CO VS. CIT(1968) 68 ITR 708 (BOM) HAS HELD THAT THE ASSESSEE'S DUTY TO PROVE THAT AN UNEXPLAINED ENTRY IN HIS ACCO UNT BOOK DOES NOT ITA 421 & 834/RJT/2009 7 REPRESENT UNDISCLOSED INCOME IS NOT DISCHARGED BY M ERELY SHOWING THAT THE ENTRY APPEARS IN THE ACCOUNT OF THIRD PARTY AND THAT THE PARTY IN WHOSE NAME THE AMOUNT IS CREDITED IS NOT A FICTITIOUS PAR TY BUT A REAL PARTY BUT THE ASSESSEE ALSO HAS TO PROVE FURTHER THAT THE ENTRY M ADE IN ACCOUNT BOOK IS A GENUINE ENTRY. HERE IN THIS CASE THE ASSESSEE FAILE D TO PROVE THE GENUINENESS AND TO OFFER THE SATISFACTORY EXPLANATION OF THE EN TRY APPEARING IN THE BOOKS OF ACCOUNT IN THE NAME OF LATE SHRI KANJIBLIAI BHANDER I. 2. FURTHER IT IS ARGUED THAT THE AMOUNT SHOWN IN TH E BOOKS HAVE ALL BEEN BROUGHT BY CHEQUES AS PER SECTION 26988 AND 269T.LT IS TRUE THAT THE AMOUNT HAS BEEN CREDITED BY WAY OF BANK CHEQUES BUT THE AM OUNT DEPOSITED IN THE BANK IS IN CASH AND FOR WHICH ASSESSEE COULD NOT ES TABLISH THE SOURCE OF SUCH CASH DEPOSIT. THE MERE FILING OF AFFIDAVIT REGARDIN G THE SOURCE COULD NOT PROVE THE SOURCE. THE ALLEGED LEGAL HEIR OF THE DECEASED DEPOSITOR COULD NOT PRODUCE THE EVIDENCES FOR THE SOURCE OF SUCH HUGE C ASH AMOUNT EXCEPT THE HOLDING OF LAND IN THE NAME OF SHRI KANJIBHAI BHAND ERI. THE LEGAL HEIR COULD NOT ESTABLISH THE SALE PROCEED S OF THE CROPS AND HAS ALSO NO KNOWLEDGE OF CROPS TAKEN BY THEM. AS PER REVENUE RECORDS ONLY RAINY SEASON CROPS TAKEN SHOWN WHILE IN HIS STATEMENT 8HR I JAMANBHAI HAS EXPLAINED THREE CROPS AND OTHER MISC. CROPS. THE RE VENUE RECORDS OF CROPS IS CONCLUSIVE EVIDENCE AND CAN NOT BE CHALLENGED CONSI DERING THE SAME THE INCOME SHOWN SHRI JAMANBHAI IS ALSO INCORRECT. IN VIEW OF THE ABOVE AND CONSIDERING THE FACTS OF C ASE DISCUSSED IN ASSESSMENT ORDER IT IS PRAYED TO CONFIRM THE ADDITI ON MADE WITH THE TOTAL INCOME ON ACCOUNT OF UNEXPLAINED CASH CREDIT MAY KI NDLY BE CONFIRM.' 5. UPON CONFRONTING THE ABOVE REPLY OF THE ASSESSIN G OFFICER TO THE ASSESSEE THE ASSESSEE FILED THE FOLLOWING COUNTER-REPLY VIDE LET TER DTD. 24-2-09: '1. FURTHER TO THE SUBMISSIONS MADE AGAINST THE ASS ESSMENT FOR THE A.Y. 206-2007 IT IS SUBMITTED FOR FURTHER ELUCIDATION A S THE A.O. HAS RATHER JUMPED TO THE CONCLUSION THAT WHAT THE ASSESSEE STA TED IS NOTHING BUT PREVARICATION OF THE FACTS AND THAT HE HAS MADE THE ADDITION CORRECTLY TO THE INCOME SHOWN BY THE ASSESSEE. 2. THIS CONCLUSION IS ONLY AN EXHIBITION OF BANKRU PTCY OF LOGIC WHICH WILL BE BOILED DOWN FROM THE FURTHER NARRATION OF THE FACTS OF THE CASE. 3. THE A.O. SELECTED THE CASE FOR THE SCRUTINY AND ASKED THE ASSESSEE TO FURNISH VARIOUS DETAILED INFORMATION AS REQUIRED BY HIM FOR FINALIZATION OF THE ASSESSMENT. SUCH INFORMATION CALLED FOR AND FURNISH ED INCLUDED A CASH CREDIT IN THE NAME OF A THIRD PARTY NAMED KANJIBHA I BHANDARI. THE AMOUNT ADDED TO THE INCOME IS RS. 8155000/-. ITA 421 & 834/RJT/2009 8 SHRI KANJIBHAI BHANDARI WAS NO MORE ALIVE WHEN THE A.O. COMMENCED THE ASSESSMENT PROCEEDINGS IN THE ASSESSEE'S CASE. THE ASSESSEE SUBMITTED DOCUMENTARY EVIDENCE TO THIS EFFECT AND THE A O. HA S NOT DISPUTED IT. THE CREDITORS LEGAL HEIR SHRI JAMAN K. BHANDARI MADE AN AFFIDAVIT ON OATH AS PER THE PROCEDURE LAID DOWN FOR THE ABOVE PURPOSE. THE AFFIDAVIT IN A NARRATION FORM CONFIRMS THE FACTS AND FIGURES OF TH E CREDITS AS APPEARED IN THE BOOKS OF THE ASSESSEE. ON RECEIPT OF THE AFFIDA VIT THE AO. ISSUED SUMMONS REQUIRING THE LEGAL HEIR'S PRESENCE IN HIS OFFICE FOR VERIFICATION AND CONFIRMATION OF THE POINTS MENTIONED IN THE AFFIDAV IT. ON THE APPOINTED DAY AS PER THE SUMMONS THE LEGAL HEIR ATTENDED THE OFFICE. ON THE SAME DAY AND TIME THE ASSESSEE'S COU NCIL SHRI A.A. CHAKI C.A ALSO REMAINED PRESENT IN THE A.O.'S OFFICE. THE A.O. TOOK THE STATEMENT AS WAS FOUND NECESSARY FOR HIM. THE LEGAL HEIR CONF IRMED CATEGORICALLY THE CREDIT ENTRIES AS APPEARED IN THE BOOKS OF ASSESSEE . THE LEGAL HEIR SUBMITTED TO THE A O. THAT IF DIRECTED HE WOULD PRO DUCE THE BROKER TO WHOM AGRICULTURE PRODUCT IS SOLD IF DIRECTED BUT THE A O. DID NOT DIRECTED SO. HE EXPLAINED THAT THEIR FAMILY BELONGS TO AGRICULTURAL ACTIVITIES AND DIFFERENT SEASONAL CROPS ARE PRODUCED. THE A O. IN HIS ORDER HAS STATED THAT HE HAS NOT CULTIVATED DIFFERENT CROPS BUT ONLY ONE CROP. T HE LEGAL HEIR SUBSTANTIATED HIS SUBMISSION BY DOCUMENTARY PROOF VIZ 7/12 UTARO AND KHEDUTH VAHI. IT APPEARS THAT THE A O. DID NOT GET TIME TO LOOK INTO THE DOCUMENT PROPERLY OR OMITTED TO MENTION IN THE ASSESSMENT ORDER. AFTER R ECORDING THE STATEMENT OF THE LEGAL HEIR THE ASSESSEES COUNCIL ALSO MADE A V ERIFICATION BY PUTTING QUESTION TO THE LEGAL HEIR. THE LEGAL HEIR WITHOUT LEAST HESITATION REAFFIRMED THE FACTS AND ALSO STATED THAT THE CREDITOR USED TO ADVANCE LOANS EARLIER TO THE COMMENCEMENT DATE. RELEVANT TO THE A Y. UNDER C ONSIDERATION AND THAT THEY HAVE RECLAIMED THE AMOUNT SUBSEQUENT TO THE LA ST DATE OF THE A Y. FROM HIS DEBTORS. THE OBJECT OF THE LEGAL HEIR IS TO LAY EMPHASIS THAT THE CREDITOR USED TO ADVANCE LOANS AND GET IT SUBSEQUENTLY. THE A.O. AFTER RECORDING STATEMENT OF THE LEGAL HEIR THAT TOO IN THE PRESENC E OF THE ASSESSEE INCOME TAX REPRESENTATIVE DID NOT SAY THAT LEGAL HEIR STAT EMENT IS FABRICATION AND CAMOUFLAGING. FROM THE QUESTION PUT TO THE LEGAL HE IR THERE IS NO APPARENT EVIDENCE PATENTLY THAT HOW THE INFERENCE HAS BEEN D RAWN AND WHAT ARE THE MATERIAL CO-GENT TO HAVE BEEN EMANATED. AT THIS JUN CTURE IT IS FOUND ABSOLUTELY NECESSARY TO MENTION WHAT IS MEANT BY AN AFFIDAVIT ON OATH. IN THE COMMON PARLANCE IT IS CONSTRUED THAT AN AFFIDAV IT IS A STATEMENT OF FACTS MENTIONED BY THE PERSON AND MADE ON OATH AND IF THE AFFIDAVIT IS FOUND FALSE UNTRUE OR WRONG SO FAR AS THE FACTS ARE CONC ERNED THE MAN MAKING THE AFFIDAVIT IS LIABLE TO BE SUED BY THE AUTHORITY FOR SUCH FALSE AND INCORRECT STATEMENT MADE. IN THIS CASE IF THE ASSESSING OFFIC ER HAS DEFINITE INFORMATION TO THE EFFECT THAT THE STATEMENT IS UNTRUE HE CAN S UE HIM IN THE COURT OF LAW. THE A.O. HAS NOT MENTIONED ANY THINGS SUBSTANTIALLY TO WARRANT SUCH A CONCLUSION. THEREFORE THE AFFIDAVIT MADE BY THE LEG AL HEIR CANNOT BE IGNORED BUT HAS TO BE CONSIDERED IN THE RIGHT PERCEPTIVE IN THE EYE OF EQUITY AND NATURAL PHENOMENON. THIS HAS NOT BEEN DONE THEREFORE THE ADDITION MADE REGARDING AFFIDAVIT OF THE LEGAL HEIR AND ALSO IGNORING THE STATEMENT RECO RDED IN RESPONSE TO ITA 421 & 834/RJT/2009 9 SUMMONS ISSUED IS OBNOXIOUS AND BAD IN THE EYES OF LAW. HENCE THE ADDITION OF RS. 8155000/- MADE DOES NOT STAND ESTAB LISHED. NOW GOING THROUGH THE A.O.'S REPLY DATED 16.02.2009 IT IS SEEN THAT THE' A O. HAS MADE A PASSING REMARK TO THE EFFECT THAT THR OUGH ASSESSES BOOKS OF ACCOUNTS. THE AMOUNTS ARE BROUGHT BY CHEQUE BUT THE CREDITOR HAS DEPOSITED THE AMOUNTS IN HIS BANK ACCOUNT IN CASH O NLY. AT THE OUTSET AND AS MENTIONED EARLIER IT HAS TO BE REITERATED THAT T HE ASSESSEE'S CREDITOR IS AN AGRICULTURIST AND THE AO. HAS NOT MENTIONED WHETHER HE HAS A PAN A/C. OR NOT. FURTHER THE A.O. ALSO DID NOT MADE ANY VERIFIC ATION FROM THE BANKING ENTRIES TO CONCLUDE THAT THE AMOUNT DEPOSITED WERE OF HIS OWN ONLY. AS PER THE PROCEDURE LAID DOWN IT IS INCUMBENT FOR THE DEP OSITOR TO ADDUCE BY WAY OF EVIDENCE A COPY OF THE PAN ACCOUNT ISSUED BY THE I. T. DEPARTMENT IF THE TOTAL AMOUNT TO BE DEPOSITED IS RS. 50 000/- OR MOR E. IN CASE THE DEPOSITOR IS UNABLE TO ADDUCE SUCH EVIDENCE NAMELY PAN A/C PR OCEDURAL STANDING INSTRUCTIONS HAVE BEEN ISSUED BY THE I. T. DEPARTME NT TO THE BANKS TO HAVE COLLATERAL EVIDENCE TO DISPENSE WITH THE PAN CARD. WHILE DEPOSITING CASH OF RS. 50 000/- AND ABOVE. THE A.O.S ORDER IS SILENT ON THIS ISSUE. THEREFORE IT IS PRESUMPTION THAT THE CREDITOR HAD COMPLIED WITH PROCEDURE AND THEREFORE IN WHAT FORM THE MONEY HAS BEEN DEPOSITED IS BEYON D THE PURVIEW OF THE AO. AT THIS STAGE. FURTHER IT APPEARS FORM THE PASS ING REMARKS OF THE AO. THAT THE CREDITORS ARE NAME LENDER OF THE ASSESSEE. THE A.O. IF CONSIDER THE CREDITOR IS A NAME LENDER OF THE ASSESSEE HE HAS TO PROVE THAT THE ASSESSEE HAS SIPHONED OUT HIS OWN MONEY TO THE CREDITOR IN O NE FORM OR THE OTHER AND HAS MANAGE TO RECEIVE IT AS LOAN THIS HAS NOT BEEN DONE BY THE A.O. ACTUALLY THE LEGAL HEIR HAS STATED THAT THE ASSESSE E HAS PAID BACK AFTER THE PERIOD ENDING ON 31.03.2006 A SUM OF RS. 25 90 000/ - OR SO. IF IS HAS TO BE CONCLUDED THAT IT IS THE ASSESSESS OWN MONEY THE C ONCLUSIVE ONUS LIES ON THE DEPARTMENT TO CONCLUSIVELY PROVE THAT THE ASSES SES UNDISCLOSED INCOME HAVING BEEN SIPHONED OUT TO THE CREDITOR EARLIER IS NOW TAKEN BACK BY HIM. THIS HAS NOT BEEN DONE. VARIOUS RECENT JUDGMENTS HAVE BEEN QUOTED BY THE AS SESSEE SUPPORTING HIS CONTENTION BUT THE SAME HAVE NOT BEEN REBUTTED. IN VIEW OF THE DETAILED SUBMISSION MADE TIME AND AGAIN THE ADDITION OF RS. 81 55 000/- MAY BLANDLY BE DELETED BEING UNCALLED FOR AND UNWARRANT ED. THE CITATION MADE BY THE A O. (SAMUEL COMPANY) IN G OVIND RAJU MADALIAR VS. CIT 1958 34 ITR PAGE 807 (SC) HAS BEEN SUPERSED ED BY THE HONORABLE SUPREME COURT OF INDIA IN ITS JUDGMENT IN CASE OF P ARIMISETTI SITARAM. VS. CIT (1965) ITR 57 PAGE 532. I HAVE TO EXPRESS MY INABILITY TO ACCEDE THE SUGGES TIONS MADE THROUGH MY COUNCIL THAT OUT OF THE ADDITIONS MADE IF THE OPENI NG BALANCE AND THE PAYMENT MADE DURING THE YEAR ARE DEBITED WHETHER T HE REMAINING BALANCE OF ADDITIONS WOULD BE ACCEPTED OR NOT. THIS SUGGEST ION FALLS WITHIN THE CATEGORY OF PEAK CREDIT ADDITION IN DIRECTLY AND IT HUNGER ON UNDISCLOSED INCOME. I HAVE GOT NO UNDISCLOSED INCOME AND THEREF ORE I DECLINE TO AGREE RESPECTFULLY THIS SUGGESTION. ITA 421 & 834/RJT/2009 10 IT IS NOT CORRECT THAT VIEW TAKEN BY THE SUPREME CO URT IN THE CASES OF AS CITED BY THE A O. WARD 1 (3) JAMNAGAR IN THE CASES OF GOV INDA RAJU MADALIAR PARIMISETTI (1958) 341TR 807 AND KALE KHAN (1963) 5 0 ITR 7. IT HAS BEEN MODIFIED BY THE SUPREME COURT IN PARIMI SETTI SEETHARAMA VS. CIT (1965) ITR 532 537 (SC).IN THE LAST NAMED CASE IT WAS LAID DOWN THAT BURDEN OF PROOF HELD IN THE EARLIER NAMED TWO CASES TO BE UPON ASSESSEE TO PROVE THE SOURCE NATURE AND CHARACTER OF THE CREDITOR WOULD NOT APPLY TO A CASE WHERE THE SOURCE OF THE RECEIPT IS DISCLOSED BY THE ASSES SEE AND THERE IS NO DISPUTE ABOUT THE TRUTH OF THAT DISCLOSURE AND IN SUCH EVE NT THE INCOME TAX AUTHORITIES WOULD NOT BE ENTITLED TO RAISE AN INFER ENCE THAT THE RECEIPT IS ASSESSABLE TO INCOME TAX ON THE GROUND THAT THE ASS ESSEE HAD FAILED TO LEAD ALL THE EVIDENCE IN SUPPORT OF HIS CONTENTION THAT IT IS NOT WITHIN THE TAXING PROVISION. GANESH PRASAD VS. CIT (1968) 671TR 33434 8 (ALL.) 1) THE ASSESSING OFFICER HAS MENTIONED RS. 77 74 00 0/- ON THE PAGE NO. 2 OF THE ASSESSMENT ORDER AND ADDED RS.81 55 000/- WITHO UT CONSIDERING REPAYMENT OF RS. 12 55 000/- AND OTHER AMOUNT OF RE PAYMENT OF RS.25 90 000/- IN F. Y. 2006-07 BY A/C. PAYEE CHEQUE. 2) THE ASSESSING OFFICER DID NOT CONSIDER THE REQUE ST OF THE HEIR OF KANJIBHAI THAT THE AMOUNT HAS BEEN GIVEN TO HIS NEPHEW AS PER REPLY OF QUESTION NO. 7 GIVEN ON 1/12/08 BEFORE A.O. ON OATH. 3) THE A O. HAS IGNORED THE FACT THAT THE SAID AMOU NT OF DEPOSIT IS GIVEN OUT OF SAVING OF KANJIBHAI AND HIS SEVEN BROTHERS AND F AMILY MEMBERS WHO ARE ALSO AGRICULTURISTS IN THE ANSWER 8 OF THE STATEMEN T DATED 1/12/08 BEFORE THE AO. 4) THE AO. HAS IGNORED THE FACT OF ANSWER NO. 9 OF THE STATEMENT THAT THE SAID AMOUNT IS GIVEN AFTER GETTING CONSENT OF SEVEN MEMB ERS WHO ARE HOLDING AGRICULTURAL LAND AND AMOUNT HAS BEEN GIVEN AFTER T HE DEATH OF KANIJIBHAI. 5) THE A O. HAS IGNORED THE REAL FACT BY REQUEST BY JAMANBHAI WHICH IS MENTIONED IN PARA 5 OF THE ASSESSMENT ORDER WHEREIN IT WAS REQUESTED BY JAMANBHAI THAT HE WAS READY TO PROVE THE FACTS AND REQUESTED TO PRESENT THE BROKERS THROUGH WHOM PRODUCTS HAVE BEEN SOLD. IT WA S NOT ACCEPTED BY THE A.O. FOR EVIDENCE TO PROVE THE SALE. 6) THE A.O. DID CONSIDER THE FACTS OF AFFIDAVIT OF JAMANBHAI IN WHICH IT IS MENTIONED THAT ALL THE DEPOSITED CASH IS FROM OUR F AMILY AGRICULTURAL INCOME ONLY. IT IS FURTHER STATED THAT THE AMOUNT OUTSTAND ING AS AT 31/3/06 IS OF LATE KAN MAI BECHARBHAI BHANDERI AND THEIR HEIRS - FAMIL Y MEMBERS. THE PRINCIPLE THAT HAS BEEN LAID DOWN BY THE VARIOU S DECISIONS RENDERED BY THIS COURT FROM TIME TO TIME IS THAT IF THE EXISTEN CE OF THE APPLICANT IS PROVED NORMALLY NO FURTHER INQUIRY IS NECESSARY. ITA 421 & 834/RJT/2009 11 IT IS SUBMITTED THAT CREDIT WORTHINESS OF THE APPLI CANT CAN NEVERTHELESS BE EXAMINED BY THE ASSESSING OFFICER. IT IS QUITE OBVI OUS THAT IT IS VERY DIFFICULT FOR THE ASSESSEE TO SHOW THE CREDIT WORTHINESS OF STRAN GERS. IF THE REVENUE HAS ANY DOUBT WITH REGARD TO THEIR ABILITY TO MAKE INVE STMENT. THEIR RETURNS MAY BE REOPENED BY THE DEPARTMENT. IN ANY CASE WHAT IS CLINCHING IS THE ADDITIONAL BU RDEN ON THE REVENUE. IT MUST SHOW THAT EVEN IF THE APPLICANT DOES NOT HAVE THE M EANS TO MAKE INVESTMENT THE INVESTMENT MADE BY THE APPLICANT ACTUALLY EMANA TED FROM COFFERS OF THE ASSESSEE SO AS TO ENABLE IT TO BE TREATED AS UNDIS CLOSED INCOME OF THE ASSESSEE. THIS HAS NOT BEEN DONE IN SO FAR AS THE P RESENT CASE IS CONCERNED AND THAT HAS BEEN NOTED BY THE TRIBUNAL ALSO IN THE CASE OF C.I. T. VS. VALUE CAPITAL SERVICES PVT. LTD. 307 ITR 334. IN HOLDING A PARTICULAR RECEIPT AS INCOME FROM UNDI SCLOSED SOURCE THE FACTS OF THE ASSESSEE CAN NOT BE DECIDED BY THE REVENUE ON T HE BASIS OF SURMISE SUSPICIOUS OR PROBABILITIES. NORTHERN BENGAL JATE T RADING CO. LTD. VS. C.I. T. (1968) 70 ITR 407 415 (CAL)] I. ANRAJ NARAIN DASS VS. CIT (1951) 20 ITR 562 (PU NJ) 2. MITHOO LAL TEK CHAND VS. CIT (1953) 23 ITR 494 (ALL) 3. RADHAKRISHNA BEHARILAL VS. CIT (1954) 26 ITR 34 4 (PAT) 4. D.C. AUDDY & BROS. VS. CIT (1955) 28 ITR 713 (C AL) AFFIRMED (1959) 36 ITR 194 (SC) ON ANOTHER POINT 5. P. V. RAGHAVA REDDI VS. CIT (1956) 29 ITR 942 ( AP) 6. M.M.AK. MOHIDEEN THAMBY & CO. VS. CIT (1959) 36 ITR 481 (AP) 7. DANIEL VS. CIT (1961) 43 ITR 119 (KER) 8. NABADWIP CHANDRA ROY VS. CIT (1962) 44 ITR 591 (ASSAM) 9. HAZARILAL VS. CIT (1963) 47 ITR 516 (AP) 10. AD. JAYAVEERAPANDIA NADAR VS. CIT (1964) 54 IT R 401 (MAD) 11. RAGHUNATH SINGH VS. CIT (1965) 57 ITR 562 (PUN J) 12. SRIRAM JHABARMULL (KALIMPONG) LTD. VS. CIT (19 67) 64 ITR 314 (CAL) 13. VELJI DEOFAJ & CO. VS. CIT (1968) 68 ITR 708 ( BOM) 14.CIT VS. S. KAMARAJA PANDIAN (1984) 150 ITR 703 (MAD) SPECIAL LEAVE PETITION DISMISSED BY THE SUPREME COURT: (1985) 155 ITR (ST.) 66 (SC) 15.ADDL. CIT VS. BAHRI BROTHERS (P.) LTD. (1985) 1 54 ITR 244 (PAT) 16. HOMI JEHANGIR QHEESTA VS. CIT (1961) 41 ITR 13 5 142 (SC) THE TRUE VIEW IS THAT WHILE THE A.O. IS NOT BOUND T O ACCEPT AS TRUE ANY POSSIBLE EXPLANATION WHICH THE ASSESSEE MAY PUT FOR TH HE CAN NOT ARBITRARILY REJECT THE ASSESSEE EXPLANATION. 1. ANILKUMAR SINGH VS. CIT (1972) 84 ITR 307 (CAL) 2. AKBAR ALLY ESUTALLY VS. CIT (1966) 60 ITR 563 ( MAD) 3. HAZARILAL VS. CIT (1963) 47 ITR 516 (AP) 4. BACHRAJ AMOLKCHAND VS. CIT (1956) 29 ITR 1009 ( NAGPUR) 5. R.B.N.J. NAIDU VS. CIT (1956) 29 ITR 194 (NAGPU R) ITA 421 & 834/RJT/2009 12 INABILITY OF THE DEPARTMENT TO VERIFY THE EXPLANATI ON OFFERED BY THE ASSESSEE IS NOT SUFFICIENT CAUSE FOR REJECTION OF T HE EXPLANATION [SO HASTIMAL VS. CIT (1963) 49 ITR 273 (MAD); SONAELECT CO. VS. CIT (1985) 152 ITR 507] BUT WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE REGARDING CASH CREDIT APPEARING IN HIS BOOKS. IF THE EVIDENCE IS SHUT OUT AND WILLINGNESS PRODUCED ARE NOT PERMITTED TO EXPLAIN CREDIT IT WILL MOT BE OPEN TO THE TRIBUNAL TO APPRAISE THE EVIDENCE AS IT IS AND REACH ITS OWN CO NCLUSION WHICH MAY RESULT IN THE CASH CREDIT BEING ACCEPTED AS GENUINE CIT VS . ISWARLAL DASS SHARMA (1986) 1581TR 168 169 (DELHI) AN EXPLANATION PRIMA FACIE REASONABLE CAN NOT BE RE JECTED ON CAPRICIOUS OR ARBITRARY GROUNDS OR ON MERE SUSPICION OR ON IMAGIN ARY OR IRRELEVANT GROUND. 1. R.B.N.J. NAIDU VS. CIT (1956) 291TR 194 (NAG) 2. KANPUR STEEL CO. LTD. VS. CIT (1957) 321TR 56 (A LL) 3. LAJWANI SITAL VS. CIT (1956) 30 ITR 228 (NAG) SO MUCH SO WHERE THE GENUINENESS AND REGULARITY OF THE ACCOUNTS HAVE NOT BEEN CHALLENGED THE ACCOUNTS ARE RELEVANT PRIMA FA CIE PROOF OF THE ENTRIES AND THE CORRECTNESS THEREOF UNDER SECTION 34 OF IND IAN EVIDENCE ACT 1872.' 6. THE CIT(A) HOWEVER SUSTAINED THE ADDITION OF R S.43 10 000/- OUT OF ADDITION OF RS.81 55 000 WITH THE FOLLOWING OBSERVATIONS: GROUND OF APPEAL NOS. 1 TO 5 ARE AGAINST THE ADDITI ON OF RS.81 55 000. BEING CASH CREDITS APPEARING IN THE NAME OF SHRI KANJIBHA I B. PATEL DISCUSSED ABOVE. IN THE WRITTEN SUBMISSION THE ASSESSEE HAS MAINLY STATED THAT HE HAS COMPLIED WITH ALL THE REQUIREMENTS AS PER SEC.68 OF THE ACT AND THE ENTIRE AMOUNT OUTSTANDING IN THE BOOKS OF SHRI R.C. KACHHA DIYA ACTUALLY BELONG TO THE CREDITOR IN WHOSE NAME IT HAS BEEN CREDITED AND HE HAS ALSO PROVED THAT IT WAS ABSOLUTELY NECESSARY FOR HIM TO RESORT TO TAKE CREDITS FOR THE FURTHERANCE OF HIS BUSINESS ACTIVITIES AND THAT THE AO HAS NOT PINPOINTED ANY CONTRADICTIONS IN THE STATEMENT GIVEN BY SHRI JAMAN BHAI BHANDERI SON OF LATE SHRI KANJIBHAI BECHARBHAI AND ON THE STATEMENT GIVE N BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO IN HIS REPORT DTD. 16-02-09 HAS MENTIONED THAT THE ENTIRE AMOUNT HAS BEEN TAXED U/S.68 AS THE ASSESSEE'S EXPLANATION REGARDING CASH CREDITS WAS N OT FOUND SATISFACTORY AND THE ONUS WAS ON THE ASSESSEE TO PROVE THAT THE ENTR Y IN THE ACCOUNT DOES NOT REPRESENT UNDISCLOSED INCOME. THE ASSESSEE IN HIS C OUNTER-SUBMISSION HAS RELIED UPON THE STATEMENT RECORDED OF SHRI JAMANBHA I SON OF LATE SHRI KANJIBHAI BECHARBHAI AND ALSO STATED THAT DURING TH E COURSE OF ASSESSMENT PROCEEDINGS SHRI JAMNABHAI SUBMITTED BEFORE THE AO THAT IF DIRECTED HE WOULD PRODUCE THE BROKER THROUGH WHOM AGRICULTURAL PRODUCE HAS BEEN SOLD HOWEVER NO SUCH DIRECTION WAS ISSUED BY THE AO. TH E ASSESSEE HAS FURTHER SUBMITTED THAT THE AO HAS NOT HELD THAT THE AFFIDAV IT OF SHRI JAMANBHAI IS ITA 421 & 834/RJT/2009 13 FALSE. THE ASSESSEE HAS FURTHER STATED THAT NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO TO SHOW THAT HE HAS SIPHONED OU T HIS OWN MONEY TO THE CREDITOR IN ONE FORM OR THE OTHER AND MANAGED TO RE CEIVE IT AS LOAN. ON THE CONTRARY IT IS SUBMITTED THAT THE ASSESSEE HAS REP AID AN AMOUNT OF RS.25 90 000/- AFTER THE PERIOD ENDING ON 31-03-200 6. THEREFORE IT IS STATED BY THE ASSESSEE THAT THE ONUS LIES ON THE DEPARTMEN T TO PROVE THAT THE ASSESSEE'S UNDISCLOSED INCOME HAS BEEN SIPHONED OFF TO THE CREDITOR EARLIER HAS NOW BEEN TAKEN BACK BY HIM. THE ASSESSEE HAS RE LIED UPON THE DECISIONS IN THE CASES OF GOVIND RAJU MADALIAR 34 I TR 807 (SC) AND PARIMISETTI SITARAM 57 ITR 532. THE ASSESSEE HAS AL SO SUBMITTED THAT AO HAS NOT CONSIDERED THE REPAYMENT OF RS.12 55 000 AN D RS.25 90 000 IN THE F.Y. 2006-07 AND THE STATEMENT RECORDED ON OATH OF THE LEGAL HEIR OF LATE SHRI KANJIBHAI THAT AFTER THE DEATH OF LATE SHRI KANJIBH AI BECHARBHAI THE AMOUNT OF DEPOSIT/LOAN GIVEN TO THE ASSESSEE IS FROM THE SAVI NGS OF LATE SHRI KANJIBHAI AND HIS SONS VIZ. FAMILY MEMBERS WHO ARE AGRICULT URISTS AND THE SAME HAS BEEN GIVEN AFTER OBTAINING CONSENT OF SEVEN MEMBERS OF THE FAMILY OF LATE SHRI KANJIBHAI WHO ARE HOLDING AGRICULTURAL LAND A ND FURTHER THAT SHRI JAMANBHAI DURING THE COURSE OF ASSESSMENT PROCEEDIN GS STATED BEFORE THE ASSESSING OFFICER THAT HE WAS PREPARED TO PRODUCE THE AGENT THROUGH WHOM THE AGRICULTURAL PRODUCE HAS BEEN SOLD WHICH REQUE ST HAS NOT BEEN CONSIDERED. THE ASSESSEE HAS FURTHER STATED THAT TH E AMOUNT OUTSTANDING AS ON 31-03-2006 IS OF LATE KANJIBHAI BECHARBHAI AND H IS HEIRS LE. THE FAMILY MEMBERS AND ALL THE DEPOSITS HAVE BEEN MADE IN CASH FROM THEIR FAMILY AGRICULTURAL INCOME WHICH SUBMISSION HAS ALSO NOT BEEN CONSIDERED. THE ASSESSEE HAS ALSO RELIED UPON A NUMBER OF DECISIONS WHICH ARE APPEARING IN HIS SUBMISSION DTD. 24-02-09 REPRODUCED ABOVE. 6.1.2. THE FACTUAL ISSUES THAT ARE EMERGING OUT OF THE DISCUSSION MADE ABOVE ARE AS FOLLOWS: (I) LATE SHRI KANJIBHAI BECHARBHAI IS MATERNAL GRAN DFATHER OF THE ASSESSEE WHO EXPIRED ON 31-08-2003. (II) LATE SHRI KANJIBHAI BECHARBHAI HAD A JOINT ACC OUNT WITH THE ASSESSEE VIDE S.B.ALC.NO. 502 WITH PUNJAB NATIONAL BANK UDYOGNAG AR JAMNAGAR. (III) THE ASSESSEE HOLDS THE POWER OF ATTORNEY ISSU ED BY HIS MATERNAL GRANDFATHER TO OPERATE THE ABOVE ACCOUNT AND ON THE BASIS OF THE SAID' POWER OF ATTORNEY THE ASSESSEE HAS BEEN OPERATING THE AB OVE ACCOUNT. (IV) AFTER THE DEATH OF LATE SHRI KANJIBHAI BECHARB HAI BHANDERI THE MATERNAL GRANDFATHER OF THE ASSESSEE THE ABOVE ACCOUNT HAS BEEN CONTINUED TO BE OPERATED BY THE ASSESSEE ON THE BASIS OF THE POWER OF ATTORNEY ISSUED IN HIS FAVOUR BY THE MATERNAL GRANDFATHER. (IV) THE LEGAL HEIRS OF LATE SHRI KANJIBHAI BECHARB HAI HAVE NOT OBJECTED TO THE OPERATION OF THE ACCOUNT BY THE ASSESSEE. HOWEVER ANY DEPOSITS MADE IN THE SAID ACCOUNT AND OR ISSUE OF CHEQUES FOR WITHDRAWAL OF AMOUNT FROM THE SAID ITA 421 & 834/RJT/2009 14 ACCOUNT IS MADE ONLY WITH THE CONSENT OF SHRI JAMAN BHAI BHANDERI SON OF THE DECEASED SHRI KANJIBHAI BHANDERI. (V) LATE SHRI KANJIBHAI BECHARBHAI WAS HOLDING AGRI CULTURAL LAND OF 325 VIGHAS (123 ACRES) USED FOR AGRICULTURAL PURPOSES. IN SO FAR AS THE ABOVE FACTS ARE CONCERNED THE SAM E HAVE NOT BEEN DISPUTED IN THE ASSESSMENT PROCEEDINGS. 6.1.3. SIMILARLY THE OTHER FACTS WHICH COME OUT F ROM THE ABOVE DISCUSSION ARE AS UNDER: (I) LATE SHRI KANJIBHAI B. PATEL WAS NOT ASSESSED T O TAX. (II) THE ONLY EVIDENCE OF AGRICULTURAL INCOME IS OF AGRICULTURAL LAND HOLDING VIDE DOCUMENT 7/12. (III) THE CONTENTION OF SHRI JAMANBHAI BHANDERI IS THAT ALL THE AGRICULTURAL PRODUCE HAS BEEN SOLD THROUGH BROKERS WHO HAVE NOT ISSUED ANY SALE BILLS. THE ABOVE FACTS ARE NOT DISPUTED BY THE ASSESSEE. 6.1.4. THE ISSUE THEREFORE IN DISPUTE IS THE CONTE NTION OF THE ASSESSEE THAT FROM THE LAND HOLDING OF LATE SHRI KANJIBHAI BHANDE RI THREE SEASONAL CROPS WERE TAKEN OUT WHICH ACCORDING TO THE AD IS NOT SU BSTANTIATED BY DOCUMENTARY EVIDENCE VIDE FORM 7/12. THE AO'S ARGU MENT THEREFORE IS THAT SUM OF RS.81 55 000/- ADVANCED TO THE ASSESSEE AS L OAN BY LATE SHRI KANJIBHAI BHANDERI HAS NOT BEEN PROVED. IN OTHER WO RDS THE LENDERS CAPACITY TO ADVANCE THE ABOVE AMOUNT HAS NOT BEEN ESTABLISHE D. THE ASSESSEE ON THE OTHER HAND HAS DISPUTED THE ABOVE FINDING OF THE AD BY STATING THAT IN HIS STATEMENT ON OATH RECORDED BY THE AD DURING THE COU RSE OF ASSESSMENT PROCEEDINGS SHRI JAMANBHAI BHANDERI HAS CATEGORICA LLY STATED THAT HE WAS READY TO PRESENT THE BROKERS THROUGH WHOM AGRICULT URAL PRODUCE HAS BEEN SOLD WHICH HAS NOT BEEN ACCEPTED BY THE AD; THE AD HAS NOT CONSIDERED THE DOCUMENTARY PROOF VIZ. 7/12 UTTARA AND KHEDUT VAHI FROM WHICH THE TOTAL PRODUCE OF THE CROP CAN BE DETERMINED; THE AO HAS N OT CONSIDERED THAT THE ASSESSEE HAS REPAID AN AMOUNT OF RS.12 55 000/- TO SHRI KANJIBHAI B. PATEL DURING THE YEAR AND RS.25 90 000/- IN THE SUBSEQUEN T ASSESSMENT YEAR. THE ASSESSEE HAS THUS STATED THAT THE AD HAS NOWHERE HE LD THAT THERE WAS DIVERSION OF INCOME OR THAT THE MONEY BROUGHT IN HI S BOOKS OF ACCOUNT IS FROM THE ASSESSEE'S PROFITS FOR WHICH REASON THE SAME H AS BEEN CONSIDERED AS UNDISCLOSED INCOME FOR ADDITION U/S.68 OF THE ACT. 6.1.5. UPON CONSIDERATION OF THE ABOVE FACTS AND IS SUES DISCUSSED ABOVE I HOLD THAT SINCE THE ENTIRE TRANSACTIONS APPEARING I N THE ACCOUNT OF LATE SHRI KANJIBHAI IS IN THE F.Y. 2005-06 I.E. AFTER THE DE ATH OF LATE SHRI KANJIBHAI BECHARBHAI EACH AND EVERY CREDIT ENTRY IN THE LEDG ER ACCOUNT OF LATE SHRI KANJIBHAI BECHARBHAI IS TO BE EXPLAINED BY THE ASSE SSEE AND HE HAS TO ESTABLISH THE GENUINENESS OF THIS LOAN AMOUNT. IN T HIS BACKGROUND OF THE ITA 421 & 834/RJT/2009 15 MATTER IT IS SEEN THAT AFTER THE DEATH OF LATE SHR I KANJIBHAI THE BANK ACCOUNT OF LATE SHRI KANJIBHAI FROM WHICH THE LOAN AMOUNTS HAVE BEEN SHOWN TO HAVE BEEN GIVEN TO THE ASSESSEE AND THE AMOUNT O F DEPOSITS WERE OPERATED AND MADE BY THE ASSESSEE. ONE OF THE LEGAL HEIRS SHRI JAMANBHAI BHANDERI THOUGH IN HIS DEPOSITION MADE ON OATH BEF ORE THE AO HAS STATED THAT SOURCE OF DEPOSITS IN THE ACCOUNT IS AGRICULTU RAL INCOME OF THE FAMILY HOWEVER HE HAS NOT BEEN ABLE TO CONCLUSIVELY PROVE THE SAID ASSERTION IN THE AFFIDAVIT BEFORE THE AO THAT THE SOURCE OF DEPOSITS IN THE ACCOUNT OF LATE SHRI' KANJIBHAI IS OF AGRICULTURAL INCOME. IN THE LIGHT O F THE ABOVE FACTS THE ENTRIES APPEARING IN THE LEDGER ACCOUNT OF LATE SHRI KANJIB HAI BECHARBHAI PARTAKE THE CHARACTER OF CASH CREDITS UNDER THE PROVISIONS OF S EC. 68 OF THE ACT AND VARIOUS DECISIONS RELIED UPON BY THE AO IN THE ASSE SSMENT ORDER AND IN HIS REPLY TO THE WRITTEN SUBMISSION OF THE ASSESSEE BE COME APPLICABLE. HOWEVER I FIND THAT OUT OF THE LOAN AMOUNT OF RS.81 55 000/ - THE ASSESSEE HAS RETURNED AN AMOUNT OF RS.12 55 000/- DURING THE YEA R ITSELF WHICH IS DULY REFLECTED VIDE ENTRIES IN THE BANK ACCOUNT NO. 4115 00210000552 OF THE ASSESSEE AND IN SAVINGS BANK JOINT A/C. NO.502 IN T HE NAME OF LATE SHRI KANJIBHAI BECHARBHAI AND THE ASSESSEE. SIMILARLY T HE ASSESSEE HAS RETURNED AN AMOUNT OF RS.25 90 000/- IN THE SUBSEQUENT YEAR WHICH TOO IS REFLECTED IN THE ACCOUNT OF THE ASSESSEE AND IN THE JOINT ACCOUN T WITH LATE SHRI KANJIBHAI. THUS WHILE THE ABOVE AMOUNTS HAVE BEEN RETURNED BY THE ASSESSEE THE SOURCE OF THE BALANCE DEPOSITS APPEARING IN THE LED GER ACCOUNT OF LATE SHRI KANJIBHAI IN THE BOOKS OF THE ASSESSEE HAS NOT BEEN CONCLUSIVELY ESTABLISHED BY THE ASSESSEE. IT IS FURTHER SEEN THAT THE AO HAS NOT DISPUTED THE GENUINENESS OF THE AMOUNT IN THE NAME OF LATE SHRI KANJIBHAI BHECHARBHAI WHICH IS ALSO ESTABLISHED VIDE THE BANK ACCOUNT ITS ELF AS THE ASSESSEE IS JOINT ACCOUNT HOLDER AND IS OPERATING THE ACCOUNT OF LATE SHRI KANJIBHAI ON THE STRENGTH OF POWER OF ATTORNEY GIVEN BY LATE SHRI KA NJIBHAI IN FAVOUR OF THE ASSESSEE TO THE BANK. THEREFORE IN SO FAR AS THE I DENTITY OF THE ACCOUNT HOLDER FROM WHOM AMOUNT HAS BEEN TAKEN IS CONCERNE D THE SAME STANDS PROVED. AS FOR GENUINENESS OF THE TRANSACTION IT I S SEEN THAT THE AMOUNT HAS BEEN BROUGHT FROM THE ABOVE BANK ACCOUNT OF LATE SH RI KANJIBHAI TO THE BANK ACCOUNT OF THE ASSESSEE AND REPAYMENT HAS ALSO BEEN MADE BY THE ASSESSEE. HOWEVER THE REMAINING AMOUNT OF DEPOSITS IN THE ACCOUNT OF LATE SHRI KANJIBHAI FOR WHICH CHEQUES HAVE BEEN ISSUED H AS NOT BEEN CONCLUSIVELY ESTABLISHED BY LEGAL HEIR OF LATE SHRI KANJIBHAI TH AT THE SAME IS FROM AGRICULTURAL INCOME. THE CAPACITY OF THE LENDOR IS THEREFORE NOT FULLY ESTABLISHED. THUS CONSIDERING ALL THESE FACTORS IN TO ACCOUNT AND THE FACT THAT IDENTITY OF THE ACCOUNT IN THE NAME OF SHRI KANJIBH AI REMAINS ESTABLISHED AS THE SAME HAS NOT BEEN CONTRADICTED BY THE BANK OR B Y WAY OF EVIDENCE BROUGHT ON RECORD BY THE AO ALLOWABILITY OF CREDIT OF THE AMOUNT RETURNED BY THE ASSESSEE DURING THE YEAR AND IN THE SUBSEQUENT ASSESSMENT YEAR IN THE ABOVE ACCOUNT OF LATE SHRI KANJIBHAI B. PATEL HAS T O BE CONSIDERED. THE SAME HAS ALSO TO BE SEEN IN THE LIGHT OF THE FACT THAT T HE AO HAS NOT HELD THAT THE ABOVE DEPOSIT MADE IN THE ACCOUNT OF LATE SHRI KANJ IBHAI BECHARBHAI IS OF THE ASSESSEE I.E. THE MONEY DEPOSITED IN THE ACCOUNT O F LATE SHRI KANJIBHAI IS OF THE ASSESSEE. IN THE ABSENCE OF SUCH FINDING THE A MOUNT RETURNED BY THE ASSESSEE DURING THE F.Y. AND THE SUBSEQUENT ASSESSM ENT YEAR HAS TO BE CONSIDERED. I THEREFORE HOLD THAT OUT OF RS.81 55 000/- RS.12 55 000/- ITA 421 & 834/RJT/2009 16 REPAID DURING THE YEAR AND RS.25 90 000/- REPAID IN THE SUBSEQUENT ASSESSMENT YEAR CANNOT BE TAXED U/S.68 O F THE ACT. THE REMAINING AMOUNT OF RS.43 10 000/- ONLY IS TO BE CO NSIDERED FOR ADDITION U/S.68 OF THE ACT. THE SOURCE OF THE ENTRIES OF THE AMOUNT OF RS.43 1 0 000 IN THE ACCOUNT OF LATE SHRI KANJIBHAI HAS NOT BEEN PRO VED EITHER BY THE ASSESSEE OR BY THE LEGAL HEIRS OF LATE SHRI KANJIBH AI AND THE SAID AMOUNT ALSO REMAINED OUTSTANDING IN THE ABOVE LEDGER ACCOUNT OF LATE SHRI KANJIBHAI BECHARBHAI. AS THE CAPACITY TO ADVANCE THE ABOVE AM OUNT BY THE LENDOR HAS NOT BEEN ESTABLISHED THE GENUINENESS OF THE TRANSA CTION HAS NOT BEEN PROVED. I THEREFORE CONSIDER THIS AMOUNT AS TAXAB LE U/S.68 OF THE ACT AND UPHOLD THE ADDITION TO THE EXTENT OF RS.43 10 000/- . THE ABOVE GROUNDS OF APPEAL ARE THEREFORE PARTLY ALLOWED. 6. WITH REGARD TO DISALLOWANCE OUT OF TELEPHONE AND OFFICE EXPENSES OF RS.16 649 THE LD.CIT(A) HELD AS FOLLOWS: 6.2. THE GROUNDS OF APPEAL NO. 6 7 & 8 ARE AGAINST THE ESTIMATION OF DISALLOWANCE @1/5 OUT OF THE TOTAL EXPENSES AT RS.1 6 649/-. THE ASSESSEE'S SUBMISSION ON THESE GROUNDS OF APPEAL ARE THAT THE ADDITIONS ARE UNCALLED FOR AND UNWARRANTED THEREFORE DESERVE TO BE DELETED. I HAVE DULY CONSIDERED THE SUBMISSION OF THE ASSESSEE; HOWEVER I FIND THAT TH E ASSESSEE HAS NOT GIVEN ANY SUBMISSION ON THE FINDING OF THE AO THAT PERSON AL AND NON-BUSINESS EXPENSES CANNOT BE RULED OUT FROM THE EXPENSES INCU RRED ON TELEPHONE AND OFFICE EXPENSES. I THEREFORE FIND THAT THE AO HAS MADE THIS DISALLOWANCE WITHOUT EXAMINING THE ABOVE TWO ACCOUNTS AND WITHOU T CITING SPECIFIC INSTANCES. I THEREFORE RESTRICT THIS DISALLOWANCE @ 10% OF RS.83 246/- I.E. RS. 8 325/-. THE ASSESSEE GETS RELIEF OF RS.8 324/ -. THE ABOVE GROUNDS OF APPEAL ARE PARTLY ALLOWED. 7. AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL WITH THE FOLLOWIN G GROUNDS: ASSESSEES GROUNDS: ALL THE BELOW MENTIONED GROUNDS OF APPEAL ARE INDEP ENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 1. THE ASSESSMENT ORDER U/S 143(3) IS BAD IN LAW. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW S WELL AS ON FACTS IN MAKING ADDITION OF RS.81 55 000/- ON ACCOUNT OF ALL EGED UNEXPLAINED CASH CREDIT U/S 68 IN THE NAME OF LATE SHRI KANJIBH AI BECHARBHAI BHANDERI. THE LEARNED CIT(A) HAS ERRED IN CONFIRMI NG IT TO THE EXTENT OF RS.43 10 000/-. ITA 421 & 834/RJT/2009 17 3. .THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS ON FACTS IN MAKING DISALLOWANCE OF RS.16 649/- B EING 1/5 TH OF TELEPHONE AND OFFICE EXPENSE ON THE ALLEGED GROUND OF PERSONAL AND NON BUSINESS USE. THE LEARNED CIT(A) HAS ERRED IN CONFIRMING IT TO THE EXTENT OF RS.8 325/-. REVENUES EFFECTIVE GROUNDS: 1. THE LD.CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION OF RS.38 40 000/- OUT OF TOTAL ADDITION OF RS.81 55 00 0/- MADE U/S 68 OF THE ACT ON ACCOUNT OF BOGUS CASH CREDIT APPEARING I N THE BALANCE SHEET IN THE NAME OF SHRI KANJIBHAI BHANDERI. 2. THE LD CIT(A) HAS ERRED IN LAW AND IN FACTS THAT REPAYMENT OF LOAN F RS.1255000/- IN THE FINANCIAL YEAR AND THAT OF RS.2 5 90 000/- IN THE SUBSEQUENT YEAR ESTABLISH THAT THE TRANSACTION IS G ENUINE. 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES RECORD PERUSED. THE LD.AR SUBMITTED THAT THE FOLLOWING DOCUMENTS ARE BE ING SUBMITTED FOR THE FIRST TIME WHICH ARE ADDITIONAL EVIDENCES AND WHICH GO TO THE ROOT O F THE ISSUE: 1. COPY OF THE WILL EXECUTED BY SHRI KANJIBHAI ALON GWITH ITS FREE ENGLISH TRANSLATION PB PAGES 35 TO 41 2. COPY OF BANK PASSBOOK OF THE LENDER SHRI KANJIBH AI PB 42 3. COPY OF LEDGER ACCOUNT OF THE LENDER FROM THE BO OKS OF THE APPELLANT FROM 01-04- 2005 TO 31-03-2009 PB 43-44 4. COPY OF LEDGER ACCOUNT OF LENDER FROM THE BOOKS OF SHRI VRAJLAL (PROP. VISHAL BRASS PRODUCTS) AND SHRI JAGIDSHBHAI (PROP. JAGIDSH CAST) PB 45-47 5. COPY OF ASSESSMENT ORDER U/S 143(3) IN CASE OF S HRI VRAJLAL (PROP VISHAL BRASS PRODUCTS) FOR A.Y. 2007-08 PB 49 THE LD.AR ACCORDINGLY REQUESTED THAT THESE ADDITION AL EVIDENCES MAY BE ADMITTED AND THE ISSUES MAY BE DECIDED ACCORDINGLY. THE LD.DR SUBMI TTED THAT THE ASSESSEE FILED THE ADDITIONAL EVIDENCE AND THE REVCENUE AUTHORITIES DI D NOT GET OPPORTUNITY TO EXAMINE THESE EVIDENCES. THEREFORE MATTER MAY BE SENT BACK TO T HE FILE OF THE ASSESSING OFFICER. HOWEVER THE LD.DR SUBMITTED THAT THE MATTER RELATI NG TO THE REVENUES APPEAL IS ONLY BE SENT BACK TO THE FILE OF THE ASSESSING OFFICER AND OBJECTED TO SENDING BACK THE GROUNDS OF APPEAL OF THE ASSESSEE. AFTER CONSIDERING THE FACT S OF THE CASE WE FIND THAT THE ADDITIONAL EVIDENCES GO TO THE ROOT OF THE ISSUES RAISED IN TH E GROUNDS OF APPEAL BY THE REVENUE AND ITA 421 & 834/RJT/2009 18 THOSE RAISED IN THE ASSESSEES APPEAL. WE THEREFO RE IN THE INTEREST OF JUSTICE ADMIT THESE ADDITIONAL EVIDENCE. SINCE THESE ADDITIONAL EVIDENCES ARE SUBJECT TO VERIFICATION OF THE REVENUE AUTHORITIES WHO DID NOT GET OPPORTUNIT Y TO APPLY THEIR MIND ON THESE ADDITIONAL EVIDENCE WE THINK IT PROPER TO SEND BACK THESE ISS UES RAISED IN THE GROUNDS OF APPEAL OF THE ASSESSEE AS WELL AS THE REVENUE TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER CONSID ERING THE ADDITIONAL EVIDENCES AND OTHER EVIDENCES IF ANY FILED BY THE ASSESSEE BEFOR E HIM AT THE TIME OF HEARING. ACCORDINGLY GROUNDS 1 & 2 OF ASSESSEES APPEAL AS WELL AS REVEN UES APPEAL ARE RESTROED TO THE FILE OF THE ASSESSING OFFICER WITH ABOVE DIRECTION. 9. THE THIRD GROUND OF ASSESSEES APPEAL PERTAINS T O DISALLOWANCE OF RS.16 649 OUT OF TELEPHONE EXPENSES ON ACCOUNT OF PERSONAL USE. THE CIT(A) RESTRICTED THE DISALLOWANCE TO RS.8 325. AFTER HEARING THE LEARNED REPRESENTATIVE S OF THE PARTIES WE FIND THAT PERSONAL ELEMENT IN THESE EXPENSES CANNOT BE RULED OUT. NOW THE QUESTIONS REMAINS IS THE PERCENTAGE OF DISALLOWANCE. THE CIT(A) AFTER CONSI DERING THE FACTS HAS CONFIRMED THE DISALLOWANCE TO THE EXTENT OF RS.8 325. THERE IS N O MATERIAL ON RECORD BASED ON WHICH A DIFFERENT ETIMATION CAN BE MADE AT THIS STAGE. WE THEREFORE CONFIRM THE ORDER OF CIT(A). GROUND NO.3 OF THE ASSESSEE IS REJECTED. 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED AND THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31-12-2010. SD/- SD/- (D.T. GARASIA) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT DT : 31 ST DECEMBER 2010 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) JAMNAGAR BY ORDER 4. THE CIT JAMNAGAR 5. THE DR (TRUE COPY) ASSTT.REGISTRAR ITAT RAJKOT