RANJI DAS GUPTA v. INCOME TAX OFFICER
[Citation -1986-LL-0403-1]

Citation 1986-LL-0403-1
Appellant Name RANJI DAS GUPTA
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 03/04/1986
Assessment Year 1976-77
Judgment View Judgment
Keyword Tags household expenditure • voluntary disclosure • disclosure scheme • house property • cash balance • share income
Bot Summary: The assessee, who is deriving income form house property and share income from a firm called M/s Hari Kishan Dinesh Kumar invested a sum of Rs. 1,06,700 in the said firm on the following dates: 1-4-1975 Rs. 51,700 6-7-1975 Rs. 25,000 9-2-1976 Rs. 30,000 Total Rs. 1,06,700 There sums were included in the assessment that was made originally as income form undisclosed sources on the ground that the explanation offered was not acceptable. With regard to the balance of Rs. 56,700, which was stated to have been the saving out of the past assessed income, by referring to the size of the family and the magnitude of the expenditure involved, and having due regard to the fact that one of the sons of the assessee was studying for medicines, the ITO held that the assessee could not have saved any money out of passed assessed income. In the assessee s appeal which we will discuss in the first instance the grievance was that the CIT(A) should have deleted the entire addition of Rs. 1,06,700 as both the withdrawals by the assessee s brother from the firm of Girdharilal Om Prakash was proved and also the capacity of the assessee s to save substantial amount out of assessed incomes, which the Department resisted by contending not only that these additions deleted by the CIT(A) should be restored, no further relief be given to the assessee. The addition made of Rs. 1,06,700 consisted of two components one relating to the amount received from the assessee s brother Rs. 50,000 the order traceable to the past savings Rs. 56,700. The view taken by the CIT(A) was that those withdrawals, which are made in the year 1974 could not be available with the assessee s brother for advancing to the assessee and the amount of Rs. 40,000 withdrawn on 31st March, 1975 alone was available for advance. Since the brother of the assessee agreed that he advanced the money to the assessee and the money was withdrawn on 31st March, 1975 and was found invested on 1st April, 1975 by the assessee in the firm of Hari Kishan Dinesh Kumar, the explanation offered by the assessee to the extent of Rs. 40,000 could not be doubted and the CIT(A) is right in accepting this explanation as correct. 1974-75 and 1975-76 the incomes shown and accepted were Rs. 6,200 and Rs. 5,600 thus giving a total of Rs. 77,400, out of this the assessee stated that personal expenses for household were Rs. 4,000 per year or Rs. 12,000 for these three years and deducting that amount the balance was Rs. 65,400, which was available with the assessee from which an advance of Rs. 56,700 cold be made.


G. KRISHNAMURTHY, SR. VICE-PRESIDENT: Order These two appeals and cross objection, all relating to asst. yr. 1976-77 can conveniently be consolidated and disposed of by common order. T h e dispute in these matters relates to genuineness of explanation offered by assessee for investment of sum of Rs. 1,06,700. 2 . assessee, who is deriving income form house property and share income from firm called M/s Hari Kishan Dinesh Kumar invested sum of Rs. 1,06,700 in said firm on following dates: 1-4-1975 Rs. 51,700 6-7-1975 Rs. 25,000 9-2-1976 Rs. 30,000 Total Rs. 1,06,700 There sums were included in assessment that was made originally as income form undisclosed sources on ground that explanation offered was not acceptable. In appeal CIT(A) set aside assessment directing ITO to hear matter afresh and in particular to consider certain explanations filed before IAC at time of making assessment under s. 144B. In reassessment that was made assessee s explanation for these deposits was that he had taken Rs. 50,000 from his brother Shri O. P. Gupta and balance came out of savings of his past assessed income more particularly for asst. yrs. 1968-69 to 1975-76. ITO examined Shri O. P. Gupta, brother of assessee and recorded his statement in which said O. P. Gupta admitted categorically that he advanced said money to his brother, assessee in March, 1975 after withdrawing same from another firm in which he was partner, namely, Girdharilal Om Prakash. He stated that he retired from this partnership and on retirement he withdrew money owing to him, which he advanced to his brother. ITO was not prepared to accept this explanation n o t because withdrawal from said firm was not proved but because except at late stage at no earlier stage when case was posted for hearing from time to time this explanation was not offered. He referred to one or two minor points which are not very material for or present purpose. eventual conclusion of ITO was that Shri O. P. Gupta could have advanced money to assessee. With regard to balance of Rs. 56,700, which was stated to have been saving out of past assessed income, by referring to size of family and magnitude of expenditure involved, and having due regard to fact that one of sons of assessee was studying for medicines, ITO held that assessee could not have saved any money out of passed assessed income. ITO also referred to low estimate of personal expenses by assessee to conclude that passed income would not permit assessee to have such huge amount of Rs. 56,700. Broadly these are reasons why ITO came to conclusion that sum of Rs. 1,06,700 was not properly explained and should be treated as income from undisclosed sources and added to income of assessee. 3 . On appeal, however, CIT(A) examined this evidence and came to conclusion that amount received by assessee s brother from firm of Girdharilal Om Prakash was not Rs. 50,000 but only Rs. 40,000. With regard to savings out of passed income, CIT(A) felt that assessee could save Rs. 25,000. He thus, deleted addition of Rs. 70,000 and confirmed balance of Rs. 36,700. In these appeals filed both by assessee and Department grievances were made to extent they were unsuccessful before CIT(A). In assessee s appeal which we will discuss in first instance grievance was that CIT(A) should have deleted entire addition of Rs. 1,06,700 as both withdrawals by assessee s brother from firm of Girdharilal Om Prakash was proved and also capacity of assessee s to save substantial amount out of assessed incomes, which Department resisted by contending not only that these additions deleted by CIT(A) should be restored, no further relief be given to assessee. 4. In purview order of CIT(A) deserves to be upheld. addition made of Rs. 1,06,700 consisted of two components one relating to amount received from assessee s brother Rs. 50,000 order traceable to past savings Rs. 56,700. Insofar as amount received from assessee s brother savings Rs. 56,700. Insofar as amount received from assessee s brother is concerned, he was partner in firm of Girdharilal Om Prakash and as on 31st March, 1974 balance sheet in of that firm showed that sum of Rs. 63,300 was owing to assessee s brother Shri O. P. Gupta. copy of account of assessee s brother in said firm shows, which CIT(A) had copied in his order withdrawal of Rs. 40,000 on 31st March, 1975. There were no doubt withdrawals earlier to that date but they were for remote in time by near by one year. view taken by CIT(A) was that those withdrawals, which are made in year 1974 could not be available with assessee s brother for advancing to assessee and amount of Rs. 40,000 withdrawn on 31st March, 1975 alone was available for advance. It is no doubt true that here is another amount of Rs. 15,180 withdrawal made after 31st March, 1975 but there was no date shown against it nor any date was available indicating when this money was withdrawn. Since brother of assessee agreed that he advanced money to assessee and money was withdrawn on 31st March, 1975 and was found invested on 1st April, 1975 by assessee in firm of Hari Kishan Dinesh Kumar, explanation offered by assessee to extent of Rs. 40,000 could not be doubted and CIT(A) is, therefore, right in accepting this explanation as correct. Therefore, to extent of Rs. 40,000 no exception can be taken to conclusion of CIT(A). question is with regard to balance of Rs. 10,000, which can be traced, if we accept explanation that it came out of balance of Rs. 15,180. Although this amount was shown as withdrawn from books of Girdharilal Om Prakash, dates of withdrawals were not available. In absence of date, it is not possible nor open to us to probabilities date of withdrawal as 31st March, 1975 or immediately proceeding thereto and give credit to assessee. It is for assessee to give dates and since it has failed, we think proper course for us would be to held that this sum was not withdrawn on 31st March, 1975 and was withdrawn much earlier. If so onus was heavily on Shri O. P. Gupta assessee s brother to show that amount was available with him. Since no light was thrown in this area, we are unable to accept assessee s explanation in full. As regards past savings, CIT(A) pointed out in his order that assessee stated that there was cash balance of Rs. 51,000 available with him as on 31st March, 1972 and thereafter for asst. yr. 1973-74 income of Rs. 14,600 was shown and was accepted and for asst. yrs. 1974-75 and 1975-76 incomes shown and accepted were Rs. 6,200 and Rs. 5,600 thus giving total of Rs. 77,400, out of this assessee stated that personal expenses for household were Rs. 4,000 per year or Rs. 12,000 for these three years and deducting that amount balance was Rs. 65,400, which was available with assessee from which advance of Rs. 56,700 cold be made. CIT(A) pointed out that except mere version of assessee there was no proof to show that cash balance of Rs. 51,000 was available with assessee as on 3 1 s t March, 1972 even though this was amount disclosed under Voluntary Disclosure Scheme. For subsequent three years since amount of Rs. 56,700 was shown to have been invested as on 1st April, 1975, income for year 1975-76 of Rs. 5,600 should be left out of consideration. assessee had three major sons and one minor daughter and one son was studying for M. S. after taking his degree in M.B.B.S. the daughter was reading in fourth class and family of this firm with such commitments could not be spending only Rs. 4,000 per year for household expenses. estimate of household expenditure was, therefore, doubted and rejected but assessee stated that one of his sons was lecturer and his doctor son was also earning. Besides assessee was realising rent of Rs. 300 per month. Giving disallowance to these additional sources of income, CIT(A) gave benefit of Rs. 25,000 for savings out of assessed income after meeting household expenses. balance of Rs. 30,000 was regarded as unexplained. Now assessee contends that his conclusion was incorrect. We are inclined to agree with reasoning adopted by CIT(A) because there is no proof with assessee to show that he was having cash balance of Rs. 51,000 as on 31st March, 1972. There was no knowing as to where this bag money was kept when assessee did not have any book account. If we accept assessee s explanation it would mean that assessee was having large cash balance at home invested anywhere. This we think is improbable particularly in case if businessmen. Secondly even if this cash balance was available on 31st March, 1972 as it was disclosed under Voluntary Disclosure Scheme, still assessee has to prove that he was having this cash balance from that date till date of investment with him. There is no proof in this regard. Thirdly income assessed for asst. yrs. 1973-74, 1974-75 and 1975-76 showed such variation that earning of huge income by assessee before 31st March, 1972 was highly improbable. Lastly it is very unlikely that assessee with such large family and commitments for education would be spending so little on household expenses and saving so high amount. In our opinion, CIT(A) is, therefore, justified in discounting assessee s explanation and giving benefit of savings for only Rs. 25,000 out of past assessed income. This in our opinion is very fair and does not call for any further interference from our side all for want of proof. It is for those reasons we thought order passed by CIT(A) is justified, proper and deserves to be confirmed. We, therefore, confirm his order and dismiss these appeals and cross objection, which does not raise any particular point except that it was filed mere by way of supporting assessee s appeal and objecting to Department s appeal rather than raising new point. 5. In result, appeal and cross objections are dismissed. *** RANJI DAS GUPTA v. INCOME TAX OFFICER
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