Basudev Khetan vs Ito on 1 January, 1800

Income Tax Appellate Tribunal – Ahmedabad
Basudev Khetan vs Ito on 1 January, 1800
Equivalent citations: (1989) 33 TTJ Ahd 660

JUDGMENT ASSESSMENT–Opportunity to assessee.

Ratio :

Where income was estimated without ledgerising, and there was no verification of material, matter would be remanded to give specific opportunity to assessee.

Held :

The books of accounts seized and kept in the custody of the department were not closed and unadjusted even in respect of the purchases to the extent of Rs. 81,728. Therefore, prima facie, the income from business estimated without ledgerising unadjusted purchases would not reflect the correct position of business income. Similarly, the adjustment of bank commission earned, interest paid and commission paid would also make the position vulnerable. The estimation of income on account of Sharafi transaction requires investigation into the availability of interest from funds to the extent of Rs. 8,72,726 to the assessee from which the assessee could have made interest free advances to sister concern. The finding has to be given as to whether the borrowed loans were actually diverted to sister concern which depends upon the factual verification and appreciation. The Income Tax Officer did not also look into the cash book to ascertain the mode of receipt of cash and the mode of payment of loans. Simply the ledger totals were added as income from undisclosed sources which is arbitrary, unjustified and unreasonable. The matter should therefore be restored to the file of the Income Tax Officer for giving specific opportunity to the assessee in respect of the materials relied upon by him for making various additions and deciding the matter afresh after taking into account the evidence tendered by the assessee in this regard.

Application :

Also to current assessment years.

Income Tax Act 1961 s.143

Income Tax Act 1961 s.144

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