S.R. Chauhan, J.M.
ITA No. 1021/Jp/1994 is an appeal by the assessee while ITA No. 1278/Jp/1994 is revenue’s appeal, both for assessment year 1988-89 and are directed against the same order of Commissioner (Appeal)’s Ajmer, dated 28-3-1994.
2. The learned Commissioner (Appeal)’s vide his impugned order deleted the addition of Rs. 53,992 made on account of undisclosed income of the assessee shown in the hands of the assessee’s wife. Similarly the Commissioner (Appeal)’s also deleted the addition of Rs. 955 made on account of undisclosed income of the assessee shown in the hands of the assessee’s minor son. The revenue’s appeal being ITA No. 1278/Jp/1994 is on these two counts. The learned Commissioner (Appeal)’s sustained an addition of Rs. 5 lacs made by assessing officer to cover up unaccounted investment in trading of explosives unaccounted cash, household articles and entries rotated by assessee in the names of his wife and son, aggrieved whereby the assessee has preferred this appeal before the Tribunal.
3. We have heard the arguments of both the sides and also perused the records.
4. First we take up ITA No, 1278/Jp/1994 being the appeal of revenue. The revenue has raised two grounds of appeal before the Tribunal. Ground No. 1 disputes the deletion of addition of Rs. 53,992 representing undisclosed income of the assessee shown in the wife’s hands. Ground No. 2 disputes the deletion of addition of Rs. 7,955 representing undisclosed income of the assessee shown in the hands of minor son Satish Kumar. As both the grounds are inter-related as we are taking them up together. The learned Departmental Representative of revenue has referred to the statement of the assessee’s wife Smt. Puspa Devi recorded under section 132(4) on 14-10-1987 (per page 91 to 94 of assessee’s paper book) and the statement of assessee Shri Gyan Chand Jain recorder under section 132(4) on 14-10-1987 and 16-10-1987, as placed on per page 51 to 90 of the assessee’s P.B. He has specifically drawn our attention to the answer to question No. 1 by Smt. Puspa Devi (page 91) wherein she has stated that she does not have any source of income nor is she partner in any firm. Her said answer recorded in Hindi is as under :
“Uttar : Meri aap koi sadhan nahin, na hi main kisee firm mai bhagidar hun.
He has further referred to her answer to question No. 6 and question No. 7 (page 93) wherein she has stated that she does not have any knowledge regarding movable and immovable properties, according to her no house, no plot nor any other property has been in her name. She has also stated that if any movable and immovable property has been taken in her name by the assessee’s husband then regarding that she has no knowledge. She has also stated that she has not deposited any money with any person nor has she borrowed any money from any person. The learned Departmental Representative has further drawn our attention to her answer to question No. 8 (page 94) wherein she has stated that as she has not source of income so she has not furnished any return of income or wealth nor she has paid any tax. The learned Departmental Representative has also drawn our attention specifically to answers given by the assessee Shri Gyan Chand Jain to question Nos. 4, 5, 6, 7, 10 and 11 placed on per page 53 to 58 of P.B. In his answer to question No. 4 (page 53) the assessee has stated that the source of income of his wife is from interest, she does the business of money lending. He has also stated that she has also 50 per cent partner in M/s. P.K. Food Industries wherein she has invested a capital of about Rs. 1 lac. He has also stated that the source of income of his son Satish Kumar is from interest only. In answer to question No, 5 (page 54) he has stated that regarding the amount as to how much his wife and son have invested and where and since when is not known to him but the same is recorded in the books. In answer to question No. 6 (page 54) he has stated that regarding the investments of his wife and son they have no knowledge and that he alone has the knowledge and he alone looks after the whole business. In answer to question No. 7 (per page 54 and 5 of P.B) he has stated that the books pertaining to the above business ledger and cash books are maintained which are lying in the office of Vishal Trading Co. and the said books are maintained by Munim Shri Ram Lal. In answer to question No. 11 (per page 56 to 58 of P.B) the assessee has stated that he had invested a capital of Rs. 2,50,000 in the name of his wife an the firm named R. Tubes (P) Ltd. so as to make her a partner of 25 per cent, and similarly he had made his son partner in the said firm and invested a capital of Rs. 2,50,000 in the name of his son. He has further stated that he was doing transport business since 1975-76 in partnership and that out of number-two income (black money) received from the said transport business a sum of Rs. 5 lacs was invested by him in the name of his wife and son as capital in M/s. R. Tubes (P) Ltd. He further stated that on M/s. R. Tubes (P) Ltd. getting closed the capital invested therein in the names of his wife and son was withdrawn and that he lent the same capital on interest in the names of the two, and that the interest income received therefrom is being shown by him in their individual files of income-tax which he got opened since 1981-82. The learned Departmental Representative has further argued that the management and control over the said business and utilisation of the money have been proved by the revenue to be lying with the assessee and that the lady and son are Benamidars. He has also contended that the assessee’s wife is even ignorant of about all these transactions and has no knowledge of her capital. He has contended that the learned Commissioner (Appeal)’s has wrongly deleted the above additions and so the assessing officer’s order should be restored.
5. As against this, the learned authorised representative of assessee has contended that the search at the assessee’s premises was conducted by the department but nothing was found during search. He has contended that the nature of statement will reveal that during the course of search the statement under section 132(4) were recorded by the department’s officers like investigating officers. He has cited R.R. Gavit v. Smt. Sherbanoo Hasan Daya & Anr. (1986) 55 CTR (Bom) 427 : (1987) 161 ITR 793 (Bom). He has contended that the time of search huge force of officers of the Income Tax Department had entered the promises and resorted to conduct the search operation. He has contended that in such an atmosphere the officer regarding the statement put such type of queries and rather forcefully recorded the statement which has no sanctity in law. He has referred to the order under section 132(12), dated 5-9-1990, placed on per page 9 to 15 of P.B. and specifically drawn our attention to per page 13 and 14 of the P.B. wherein it has been held that this lady is an income-tax and wealth-tax assessee in her own right and it has been directed that the excess gold ornaments found may be considered in her individual case in the appropriate assessment year. He has contended that the assessment for assessment year 1987-88 was pending at the time of search. He has also referred to the assessing officer’s assessment order, dated 30-3-1990 placed on per page 5 to 8 of P.B. wherein on page 6 the contention on behalf of the assessee has been recorded to the effect that Smt. Puspa Devi is a regular assessee in her own name and that she is being assessed on her own income and also her income from share of profit from R.K. Food Products regularly and since long. Further the contention therein raised is that separate books of account of Smt. Puspa Devi were also seized during the course of search, The learned authorised representative of assessee has contended that her capital is being accepted year after year and for this he has referred to per page 39 and 40 of P.B. containing the statement of capital from 1976-77 to 1987-88 of Smt. Puspa Devi Jain and Satish Kumar Jain. He has contended that no addition for subsequent year and earlier year have ever been made although the orders under section 16(3) of Wealth Tax Act and under section 143(3) of Income Tax Act were made. He has contended that if, a person is Benamidar then that person will always be Benamidar. He has contended that the Wealth Tax assessments were also completed in the names of Smt. Puspa Devi and that no part of wealth was included in the hands of her husband, the present assessee. In his support he has referred to various Wealth Tax assessments of the assessee placed on per page 45 and 46. He has contended that the department cannot now be permitted to change the stand. He has cited H.A. Shah & Co. v. CIT (1956) 30 ITR 618 (Bom). He has contended that the said judgment was followed in CIT v. Dalmia Dadri Cement Ltd. (1970) 77 ITR 410 (PM) 420. He has contended that there is no fresh material on record for assessing officer to change the opinion from that which Commissioner has already held in his order under section 132(12) of the Act. He has also referred to the assessee’s letter (page 35 of P.B. last para and page 36 to para) wherein the assessee’s wife Smt. Puspa Devi has been stated to be a partner in the firm P.K. Products in her own right. It has also been stated in the above letter of the assessee that the assessee had made surrender of amount deposited with M/s. R. Tubes (P) Ltd. in the name of Smt. Puspa Devi and Satish Kumar but on verification the department found that there was no such investment. He has contended that it was after torture of three days and nights that the assessee was compelled to make surrender which surrender was found tactually incorrect. He has also contended that there was a further incorrect surrender of Rs. 7 lacs made in respect of house construction in assessment year 1988-89 and the assessing officer himself found it incorrect and made the addition of Rs. 50,000 which was then deleted by Commissioner (Appeal)’s and the department preferred no appeal there against. He has also contended that a surrender of Rs. 1 lac was made in respect of household goods but there is no such addition in assessment year 1988-89. He has contended that similarly a third surrender regarding cash of Rs. 1,20,000 was made but there is no such addition and that the learned Commissioner in his order under section 132(12) found the same to be correct only to the extent of Rs. 4,000 and so the addition of Rs. 4,000 alone was made. He has also contended that similarly there were a few other small surrenders in respect of which also no additions were made. He has contended that this state of affairs explains the nature of statement as also of the surrender made in such a statement. He has further contended that Smt. Puspa Devi is’ being assessed in her own right since 1981-82. He has also contended that the judgment of (1970) 77 ITR 410 (supra) was followed in Russell Properties (P) Ltd. v. CIT (1977) 109 ITR 229 (Cal), and the relevant observations is on page 245 of the report. He has also cited CIT v. Belpahar Refractories Ltd. (1981) 22 CTR (Ori.) 155 : (1981) 128 ITR 610 (Ori.). He has contended that in such circumstances the statement of Gyan Chand Jain, the assessee, cannot be relied due to being factually incorrect and also being not voluntary but made under fear and force. He has contended that the lady of course was unaware of the investments as also of the business. He has contended that no addition can be made on the basis of admission and for this he has referred to various citations, some extracts of which have been mentioned on per page 18 to 20 of the P.B., being a part of the assessee’s letter (written submission addressed to Commissioner (Appeal)’s). He has cited 22 Tax World 25, order dated 23-6-1997 of Jaipur Tribunal in ITA No. 329/Jp/1990 for assessment year 1986-87 in the case of Shri Deepak Jain 19 Tax World 237 (Jp) in the case of Shanty Mal Jain-HUF, order dated 13-10-1997, of Tribunal Jaipur, in ITA No. 317/Jp/1990 for assessment year 1986-87 in the case of M/s. Sanklecha Automobiles (page 67 of P.B). He has contended that regarding Benami transaction the burden lies on the department to prove that the transaction is benami and that in this regard the material aspects to be considered are as to who enjoyed the fruits and from whom the capital is coming. He has cited Madho Lal v. ITO (1991) 40 TTJ (Jp) 333 and Palvinder Kaur v. State of Punjab AIR 1952 SC 354 (head note (c)). He has contended that here whatever income arose was credited in the lady’s account. He has also referred to the finding of the learned Commissioner (Appeal)’s on para 2 and 4 of his order and contended that it is on the basis of the assessee’s written submission as available on page 16 of P.B. He has contended that in the grounds of appeal the department has mentioned the income as undisclosed but the said income is not undisclosed and is quite disclosed as also from definite source and in the hands of Smt. Puspa Devi.
6. In rejoinder, the learned Departmental Representative of the revenue has contended that the contention of the learned authorised representative of assessee that nothing was found in search, is not correct inasmuch as various things were found during search. Regarding the nature of statement recorded under section 132(4) he has contended that some introductory enquiry in the statement/examination has to be made necessarily so as to come to the main examination. He has also contended that the order under section 132(12) is for the purpose of disposal of seized articles and that in such order Commissioner is not giving any finding. He has also contended that if erroneous decision is taken in any such proceeding then the assessing officer is not debarred from taking correct decision. He has also referred to page 75 of the P.B. and contended that the statement of the assessee has been made voluntarily and that the assessee was not subjected to any coercion or duress. He has also tried to distinguish the Bombay decision of Hon’ble Justice Chagla (1956) 30 ITR 618 (supra) and has contended that the same is rather in favour of the revenue. He has also contended that when the lady has no knowledge about investments and the source income and her husband has admitted that the original source of her investment was from the assessee’s unrecorded income to the tune of Rs. 5 lacs : so that cannot be found to be recorded in the books. He has also contended that the income in the name of the assessee was not disclosed as income of the assessee in his books. He has also contended that here the surrender in made by the assessee himself but by an outsider as in the cited cases.
7. We have considered the rival contentions as also the relevant materials on record to which our attention has been drawn during arguments and have also gone through the cited decisions, copies of which have been placed on record. In Shantimal Jain (HUF) v. Dy. CIT 19 Tax World 237 (Jp)the Jaipur Bench of Tribunal has held as under :
“It was during this period of more than 48 gruelling hours that the statements of the ladies were recorded. It may be true that coercion and undue pressure may not have been applied by the search party, but at the same time it cannot be denied that exhausion is caused when the search continues for long and mental strain and stress is always there, particularly on the ladies and children, all the time worrying as to what will be the outcome. This is not to suggest that the powers of search under section 132 unwarranted. But the circumstances prevailing at the time of search, the environment of investigation in the air, fear, etc. all these have a telling effect on the human frailties, and these factors have to be considered while weighing the evidentiary value of the averments made in such a surcharged atmosphere.”
As a sizeable number of department’s officers/officials (sic-enterers into the premises at the time of search and started conducting) the search/seizure operation and the atmosphere gets (sic) for the members of the family and in particular the ladies and children and their mental state being not free from strain and stress as also exhausion due to continuity of search for hours together their statements recorded during search, may not always and invariably justifiably be taken to be their final or conclusive word on the facts stated therein and particularly on nice details thereof and much more so regarding the niceties of details of exact number or description of various investments/expenses or of various assets like ornaments/ valuable articles or the like. The deponents may, sometimes, subsequently also well explain the correct position of those facts, and the same may, if substantiated by evidence supportive thereof, and does convincingly refute/repel the earlier statement on that particular point of fact, be considered as having more reliability or more nearness to truth than the earlier said statement. However, at the same time, we may also clarify that the correct legal position is not that the statements recorded during search are of no evidentiary value whatever or can, in no manner, or in no circumstances, be relied upon. The statements recorded during search, cannot, merely for the reason of the same having been recorded during search, be treated to stand wiped out in toto or to be non-existent. It will however depend on facts and circumstances of each individual case as to how much weight needs appropriately to given or not to a particular facts contained in the deposition recorded during search operation. Such a statement no doubt, needs be read carefully and with a pinch of caution, and be appreciated guided by the cardinal jurisprudential principle of prepondrance of probability. Similar is the position of admission. It is not the position of law that no addition can be made on the basis of an admission, at all, but the position of law in our considered opinion, is that the person making an admission is not always bound by it and can sometimes get out of its binding purview if that person can explain convincingly with supportive evidence/material or otherwise that the admission made by him earlier is not correct or contains a wrong statement or that the true state of affairs is different from that represented therein, and so the same should not be acted upon for fastening tax liability which should rather be fixed on the basis of correct/true facts, as ascertainable from material on record. Till explained as above, the admission does retain its binding nature for the person who makes the admission and the same may, if considered convincing reasonably in view of other facts on record and following the principle of prepondrance of probability, form the basis for fastening tax liability. Although we are not in a position to properly appreciated the judgment cited on per page 18 to 20 of assessee’s P.B. as the copies thereof have not been furnished, nor do we have the same in this Tribunal but on carefully reading the extracts quoted in the said written submission, we find the same to be laying down no different view. Thus the appreciation of evidence of the kind of a search-statement or an admission, has to be on taking a circumspect view of the entire fact-situation.
8. We may also clarify here that the position of an admission simpliciter is quite distinct from that of a confession. A confession is not an admission of fact simpliciter, but of facts constituting a crime, entails punishment (imprisonment or fine or both) consequent upon conviction for that crime, and the law, in appreciating the trustworthiness of a confession as also its evidentiary value, is jealously precautious. This is in the wake of the basic principle of criminal jurisprudence that no one should be convicted unless and until his guilt is proved to the hilt and “beyond shadow of all reasonable doubts’. It is in the context of this background that we need read the legal proposition enunciated in respect of a confession or an admission in the context of a confession. The decision of Hon’ble Supreme Court in the case of Palvinder Kaur (supra) headnote of para 17, is in the case of an offence as grave as under and it was in that context that the Hon’ble, apex court held that the confession and admission must either be accepted as a whole or rejected as a whole since if either inculpatory portion only or exculpatory portion only of the statement is accepted, excluding the other portion, though intervene therewith, it may lead to grave injustice.
9. As regards the nature of extent of examination of a person under section 132(4) of Income Tax Act during search we agree with the contentions raised by learned authorised representative of assessee that the said examination cannot be of general investigation type, irrespective of and unrelated to the articles found in the possession of the deponent. In ITO v. Smt. Sharbanoo Hasan Daya 87 (2) Taxation 10 cited by the learned authorised representative of assessee, the Hon’ble Supreme Court has held as under :
“The power to interrogate on oath conferred by section 132(4) is not for the purposes of general investigation of the assets, but for the limited purpose of seeking explanation or information in respect of the documents, articles or things, found during the search. Thus the authorised officer has a limited power to make enquiries on oath in respect of his finding from the search and he is not authorised to put questions in general. Therefore, the impugned statement is not a statement on oath during the proceedings within the meaning of section 132(4) of the Act.”
10. Now we take up the contention of learned authorised representative assessee that once a particular finding on fact is given by Commissioner in a proceeding under section 132(12) the assessing officer being lower in hierarchy and subordinate cannot subsequently change that finding without fresh material. In our considered humble opinion that is not the correct or true statement of law. The proceeding under section 132(5) and its appellate proceeding under section 132(12) are summary in nature and do not necessarily involve an elaborate investigation/enquiry of the kind as are expected to be done in substantive proceedings like those of a regular assessment. The decisions of (1956) 30 ITR 618, (1970) 77 HR 410, 420 and (1981) 22 CTR (Ori.) 155 : 128 ITR 610, 613 (supra), cited by the learned authorised representative of assessee are all on the point that there being a decision on a particular issue in an earlier assessment (or for that matter, in a substantive proceeding), then that earlier decision should not be reopened unless that is perverse or arbitrary or had been arrived at without due enquiry or unless fresh facts are brought on record. Similar is the position of the decision reported in (1977) 109 ITR 229 (supra) the Hon’ble Calcutta High Court has held that if there is a decision of the higher appellate authority the subordinate authorities are bound to follow the said decision if judicial discipline is to be maintained.” These decisions do not lay down that a decision/ finding given in summary proceeding regarding retention/ disposal of seized articles, is conclusive and binding in the subsequent regular assessment, or in substantive proceeding. Such a finding may be binding only in a subsequent similar summary/proceeding. In fact the order passed in proceeding under section 132(5), and for that matter under section 132(12) is a provisional one meant only for determining the extent of seized assets to be retained and the same does not decide finally the rights and liabilities of the assessee, and so not binding when regular assessment is made. We may refer, with advantage Goyal & Co. v. Union of India (1994) 121 CTR (Raj) 511 : (1994) 209 ITR 332 (Raj). In our considered opinion, irrespective of a finding in summary proceedings given for retention/disposal of seized assets under section 132(5) or under 132(12), the assessing officer has, in regular assessment which is a substantive proceeding to apply his own mind to the facts available on record before him and draw the conclusion of his own for framing regular assessment.
11. Now we may analyse the fact-situation of the case in hand, in the light of the above legal position. The two income of Rs. 53,992 and Rs. 7,955 already stand assessed in the hands of assessee’s wife Smt. Pushpa Devi and son Satish Kumar and both these persons are regular assessees since 1981-82. The tax for ascertaining the Benami aspect of transaction may, in general be summarised thus :
(i) what is the source of investment/income?
(ii) what is the destination of income?
(iii) who enjoys the usufruct/income?
(iv) who holds the control or management of the income-earning activity?
However there may be certain exceptional situations as well. In the case of a husband and wife or father and minor son, the former may generally manage and control the income-earning affairs of latter in Indian society, traditionally, and sometimes the latter may even be unaware of the said situation. In the instant case the original source of investment of Rs. 2,50,000 each in the name of Smt. Pushpa Devi and Satish Kumar has been the undisclosed income of present assessee Shri Gyan Chand as he himself has admitted in his deposition (assessee’s answer to question No. 11 on per page 56, 57 of P. B) and this may create suspicion regarding the income disputed herein, to be in reality of assessee, and that his wife and son being Benami owners, but an assessment cannot be made on the basis of a mere suspicion. The exit or the amounts of investment from the original source, being assessee, was as long back as 1980-81 and the assessee’s wife and son are regular assessees since 1981-82. It has not been shown that the income earned in their names has since been ever clubbed in the hands of assessee prior to search. Separate books pertaining to the business affairs of assessee’s wife Smt. Pushpa Devi and son Satish Kumar seem to have been maintained as revealed from the assessee’s answer to question No. 7 (per page 54 & 55 of P.B) and 18 (P. 81 & 82 of P.B) which are maintained by assessee’s Muneem. The learned Commissioner (Appeal)’s has deleted these additions as the assessments of the same, in the hands of Smt. Pushpa Devi and Satish Kumar, already made, have not been cancelled yet. We may note here, though with an inconvenient situation for the department, that an income cannot be taxed twice, nor in the hands of more than one person. In the case of Deepak Jain for assessment year 1986-87, in ITA No, 320/Jp/1990 the Jaipur Tribunal has in its order, dated 23-6-1997 held in para 8 that Smt. Pushpa Devi Jam was a regular assessee from assessment year 1983-84 and was having independent source of income. In that view of the matter considering all the facts and circumstances of the case, we are of the view that the learned Commissioner (Appeal)’s impugned order, deleting the above referred two additions, made by assessing officer by way of inclusion of the same in the hands of present assessee, treating him to be the real owner and Smt. Pushpa Devi and Satish Kumar being only Benami, is quite justified and warrants no interference. We, therefore, decline to interfere with the same.
12. Now we take up the assessee’s appeal being ITA No. 1021/Jp/1994. The assessee has raised two grounds of appeal before the Tribunal. Ground No. 2 is general and calls for no specific decision on our part. Ground No. 1 has its three sub-parts. Ground No. 1(1) and 1(2) have not been pressed by the learned authorised representative of assessee during arguments before us, and so the same are dismissed accordingly. Ground No. 1(3) disputes the addition of Rs. 5 lacs on the basis of three credit bills. The learned authorised representative of the assessee has contended that this addition of Rs. 5 lacs has been made on the basis of three bills placed on per page 95, 96 and 97 of the assessee’s P.B. which were found not entered in the books. He hag contended that these bills were not cash bills but were credit bills which, though, were not entered in the books of the assessee through mistake, but were duly entered in the books of Jagat Explosive from whom the assessee had purchased this material (explosive) or credit through the above three bills. He has referred to per page 98 to 102 being the accounts of Jagat Explosive, containing the above three bills. He has contended that these three bills cannot prove investment as purchase through these bills is not on cash payment. In this regard he has drawn our attention to para 13 on para 4 of Commissioner (Appeal)’s order as also para 11 on per page 9 to 11 of the assessment order. He has referred to page 9 of the P.B. containing Commissioner’s order under section 132(12) and contended that this is not a summary order but there is a discussion in detail and that the learned Commissioner has considered all the purchaser’s credits and seller’s credits and each of the vouchers were considered in toto. He has contended that the sale of Rs. 2 lacs is not recorded in the assessee’s books and for this he has referred to p’-82 of the assessee’s P.B. and he has drawn our attention to question No. 19 and its answer on the said page in the statement of assessee. He has contended that this question is not based on any paper found in search. He has also referred to question No. 8 and its answer in the statement of the assessee as placed on page 90 of the assessee’s P.B. and contended that the assessee has stated therein that the goods will be taken on credit. He has concerned that the department cannot accept the statement in part and reject in part, and for this the learned authorised representative of the assessee has cited AIR 1952 SC 354 (supra)(on page 70 of the bunch of cited case laws). He has also contended that the assessee has not made any voluntary surrender but the assessee is forced to surrender. He has also contended that the surrender was made on 16-10-1987 and the search had started from 14-10-1987. He has contended that whichever item of surrender the department speaks, has been shown by the assessee as non-existent. He has referred to the decision of Tribunal, Jaipur, reported in 22 Tax World 25 (28). He has also contended that the assessee’s trading account as also profit & loss account have not been disputed/disturbed by the department then how there can be purchases out of books. As against this the learned Departmental Representative of revenue has contended that the assessing officer’s order has given elaborate (sic) on the issue. He has contended that the assessee’s books were written up to 1-9-1987 and the two bills of purchases had already been received by the assessee prior to 1-9-1987 but the same were not recorded in the books which prima facie rendered the accounts of the assessee to be defective. He has also contended that as per the assessee substantial amount of cash was available with him but in the books cash was not found which itself shows that all the transactions are not recorded in books. He has also contended that regarding the sale of explosive worth Rs. 2 lacs by the assessee to Basant Bhai Patel of Ahmadnagar, there was some dispute between the parties but the same was ultimately settled but the transactions are admittedly not recorded in the books which clearly shows that the assessee is doing business outside the record. He has also contended that the shortage of cash also shows the defect in the books of accounts. He has also contended that the case of Mustaq Ahmad Makrana 22 Tax World 25 is in favour of the Revenue. He has thus supported the orders of the authorities below.
13. We have considered the rival contentions, relevant materials on record to which our attention was drawn during arguments as also the cited decisions, copies of which have been placed on record. The details of the three bills in question (per page 95, 96 and 97 of P.B) whereby the purchases are made as under :
As on the date of search on 14-10-1987, the books of accounts were written up to 1-9-1987 the aforesaid two bills dated 27-7-1987 and 24-8-1987 ought reasonably to have been entered in the books/although the third bill being of 30-9-1987, may be said to have reasonably been not entered as no entries whichever after 1-4-1987 were made in the books. Be that as it may the specific addition, is made, has not been made on account of the aforesaid three bills of purchases but the above facts of purchases by the said three bills, found as having not been entered in the assessee’s books of account, has been mentioned by the assessing officer in the assessment order so as to consider the conduct of the assessee in transacting his business. The assessing officer has also contextually observed on page 10 of his order that the fact of these there bills being found as not recorded in the books definitely gives indication that the purpose of keeping the purchase unrecorded was to facilitate unaccounting trading. While making this addition the assessing officer has observed as under :
“In sum total, it is therefore, reasonable to estimate assessee’s unaccounted investment in various business activities being run out of books and profits thereon, After considering all the evidences discussed above, I estimate such investments and profits thereon to be Rs. 5 lakhs. This amount intends to cover up unaccounted investment in trading of explosives, unexpected cash, household articles as well as entries rotated by the assessee in the names of his wife, Smt. Pushpa Devi Jain and son Shri Satish Kumar.”
From the perusal of the record we find that there has been an unaccounted sale of explosives at Rs. 2 lakhs as is evident from the assessee’s answer to question No. 19 (page 82 of assessee’s P.B). This statement of the assessee has been recorded on. 16-10-1987, Although he has also stated that about two months back the party has refused to make the payment yet despite the party’s has refusal to make the payment the fact of the sale of material worth Rs. 2 lacs still very much remains there and the same was admittedly not recorded in the books. It may not be irrelevant to mention here that the assessee made a surrender of Rs. 2,60,000 as his undisclosed income being in business as can be seen from his statement on page 75 of the assessee’s P.B. From the details of surrender as made by the assessee in his statement as available on page 75 of P.B. it is revealed that the assessee also made a surrender of Rs. 1 lac as undisclosed money being in domestic articles and various miscellaneous expenses. In answer to question No. 8 in the statement dated 1-10-1987 (p 90 of P.B) the assessee has admitted sending his Vehicle No. 5611 RE with driver Shariff Khan and cleaner Mohammed for purchase of explosives to Dehradun but he has stated that he had not given any amount to the said driver and cleaner and that the payment would have been made afterwards in cash or through draft on receipt of the material. That assessing officer has observed on page 11 of his order that the assessee’s intention was to purchase goods in an unaccounted manner. He has also observed that such transactions are on cash basis and it can be presumed that the assessee sent some amount through these persons to purchase goods and that this indicates that the assessee was encouraged in unaccounted business of explosives. However this fact of sending his persons along with vehicle to Dehradun by the assessee for purchasing explosives may support assessing officer’s view regarding this fact being indicative of there being unaccounted trading or explosives but in our considered opinion no specific addition on this count can justifiably be made. We also find from the perusal of the record and that the assessee had stated in answer to question No. 14 (per page 60 and 61 of P.B) that he had purchased a scooter No. RSA 6164 at a price of Rs. 11,500 towards which he had given a sum of Rs. 8,000 out of his undisclosed income.
14. We may clearly observe here that the statements, like any other evidence, have got to be appreciated siftingly. That part of the statement which appears to be inconvincing, and with reference to other material on record does not stand the test of prepondrance of probability needs justifiably be discarded as being not reliable for fastening tax liability. Such other part of the statement as appears to be convincing and containing grain of truth, in view of other facts on record, and stands the test or prepondrance of probability may well be accepted to form the basis for fixing tax liability. Some kind tension/stress/exhausion might have been there in the mind of the assessee but on the basis of material on record we are not convinced that during search the statement of the assessee was recorded under some threat/force/fear exerted on him so as to render the statement in its entirety as unacceptable. The assessee, no doubt, is stated to have made a complaint against search officers but we do not know as to what were the contents or the complaint due to the copy of the same being not available on record, and mere making of a complaint does not, by itself, prove the contention, and further there can be hundred and one reasons for making a complaint. It may not be irrelevant to note here that when during search the assessee makes surrender of a particular amount in respect of particular items then because of this surrender so made further/elaborate enquiry into facts pertaining to that item becomes dispensible and that with the event of surrender the process of collection of evidence gets shortened/stopped which otherwise would have entailed further enquiry/investigation together with cross-verification. As such considering an the facts and circumstances of the case including the material/evidence on record and taking a circumspect view of the entire fact-situation and being also conscious of the factual as also legal position in respect of the statement made by the assessee, we are of the view that the addition of Rs. 3,08,000 may justifiably be sustained and not the entire addition of Rs. 5 lacs which, in the face of specific evidence on record, we find to be somewhat excessive. We order accordingly.
15. In the result, the revenue’s appeal being ITA No. 1278/Jp/1994 is dismissed while the assessee’s appeal being ITA No. 1021/Jp/1994 is partly allowed as indicated above.