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High Court Of Calcutta
DIPAK KUMAR SEN, C. K. BANERJEE
SHANKAR INDUSTRIES - Appellant
Versus
COMMISSIONER OF INCOME-TAX, CENTRAL - Respondent
Income-Tax Reference 507 Of 1975
Decided On : 03/21/1978
INCOME TAX - Assessment - Addition of undisclosed income - Cash credits in assessee's books of account - Whether Tribunal had material to sustain additions - Whether assessee discharged initial burden of proof - Whether onus shifted to department - Interpretation of relevant provisions.
Fact of the Case:
In the assessment year 1963-64, cash credits were noticed in the assessee's books of account in the names of various parties, including Sureka Jute Co., Ram Kumar Chatoria, and Chouthmull Raghulall. The Income-tax Officer added the amounts alleged to have been advanced by these parties to the assessee's income from undisclosed sources. The assessee appealed to the Appellate Assistant Commissioner, who confirmed the additions. The assessee then appealed to the Tribunal, which also upheld the additions.
Finding of the Court:
The Tribunal found that the assessee had not discharged its burden of proof with regard to the credits in the names of Sureka Jute Co., Ram Kumar Chatoria, and Chouthmull Raghulall. The Tribunal noted that Sureka Jute Co. had initially confessed that its loan transactions were not genuine, that Ram Kumar Chatoria was not in a position to advance the loan to the assessee, and that Chouthmull Raghulall did not have sufficient cash to advance the loan to the assessee.
Issues: 1. Whether the Tribunal had material to sustain the additions of undisclosed income to the assessee's income.
Ratio Decidendi: The court held that the Tribunal had material to sustain the additions of undisclosed income to the assessee's income. The court noted that the assessee had not discharged its initial burden of proof with regard to the credits in the names of Sureka Jute Co., Ram Kumar Chatoria, and Chouthmull Raghulall. The court also noted that the Tribunal had considered all the relevant evidence and had come to a reasonable conclusion.
Final Decision: The court answered the question referred to it in the affirmative and in favor of the revenue. The court held that the Tribunal had material to sustain the additions of undisclosed income to the assessee's income.
( 1 ) THIS reference has been initiated by Messrs. Shankar Industries, Calcutta, the assessee, at whose instance this court, under Section 256 (2) of the Income-tax Act, 1961, has directed the Tribunal to draw up a statement of case and refer the following question :"whether, on the facts and in the circumstances of the case, the decision of the Tribunal that the sum of Rs. 3,10,000 (Rupees three lakhs and ten thousand only) is the income of the assessee from undisclosed sources is based on any material ?"
( 2 ) THE facts found and/or admitted are, inter alia, that in the assessment year 1963-64, the previous year being the samvat year 2019, ending on the 1st April, 1963, a number of cash credits were noticed in the books of account of the assessee in the names of various parties, including those of Sureka Jute Co. , Ram Kumar Chatoria, and Chouthmull Raghulall. In pursuance of a summons issued by the Income-tax Officer, one Vidyanand Sureka appeared before the Income-tax Officer on the llth December, 1967, on behalf of Sureka Jute Co. He claimed to be the proprietor of the concern and stated that his books had been seized by the income-tax department on the 17th November, 19'65. It was ascertained from departmental records that the said Vidyanand Sureka had made a confession on the 9th September, 1966, to the effect that his loan transactions were not genuine and that he was only a name-lender. It was also noted that in the books of account of Sureka Jute Co. , the sources of payments made by third parties were not ascertainable as the entire debit side of the cash book was kept blank and no dates were given.
( 3 ) NO one appeared on behalf of Ram Kumar Chotaria in spite of summons issued. On examination of the income-tax file of the said party it was found that the firm had been closed after the death, of the proprietor, Ram Kumar Chotaria, and in the assessment year in question it had not filed profit and loss account or balance-sheet and that its assessment had been completed under Section 144 of the Income-tax Act, 1961. The previous assessment of the firm for the assessment year 1962-63 had also been completed under Section 144 and the income assessed was only Rs. 2,000. It was also found that a similar loan of Rs. 65,000 alleged to have been advanced by Ram Kumar Chotaria to another concern had been held to be spurious.
( 4 ) NO confirmation letter was furnished on behalf of Chouthmull Raghulall and no one appeared for the firm before the Income-tax Officer.
( 5 ) ON the facts, as aforesaid, the Income-tax Officer held that the source of the credit of Rs. 1,80,000 appearing in the name of Sureka Jute Co. was not proved. He also held that Ram Kumar Chotaria was not in a position to advance Rs. 65,000 as loan to the assessee. He brought the amounts alleged to have been advanced by Sureka Jute Co. , Ram Kumar Chotaria and Chouthmull Raghulall, amongst others, to tax as the assessee's income from undisclosed sources.
( 6 ) BEING aggrieved by the assessment, the assessee appealed to the Appellate Assistant Commissioner, who confirmed the additions of Rs. 1,80,000 and Rs. 65,000, being the credits in the names of Sureka Jute Co. and Ram Kumar Chotaria. He, however, directed that Chouthmull Raghulall should be examined by the Income-tax Officer. Pursuant to such directions one Nidikaran Ahchalia appeared before the Income-tax Officer and claimed to be the karta of Chouthmull Raghulall, a Hindu undivided family. In his deposition given before the Income-tax Officer on the 23rd June, 1969, the said Nidikaran Anchalia stated that the said Hindu undivided family had advanced the said sum of Rs. 65,000 to the assessee. He, however, admitted that the opening cash balance of the family in the accounting year as on the 12th April, 1962, was only Rs. 37,100, but the same was augmented by loans from other parties, namely, Rs. 30,000 from one Mulchand Golabchand and Rs. 20,000 from Sheomi Devi on the 13th April, 1962, and th
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