ORDER
P. K. Bansal, A. M.
This is an appeal filed by the assessee against the order of the Commissioner (Appeals) relating to the assessment year 1985-86. The first ground of appeal regarding the disallowance of Rs. 28,500 has not been pressed by the authorised representative of the assessee and it is, therefore, dismissed as not pressed.
2. Ground Nos. 2 to 9 relate to the main grievance of the assessee against the order of the Commissioner (Appeals) confirming an addition of Rs. 1,02,000 under section 69 to the assessee’s income. The facts of the case have to be noticed before plunging into the provisions of section 69 of the Income Tax Act and the interpretation of the same. The assessee is an individual. For his failure to file the return of income, notice under section 148 was issued and on the basis of which the assessee filed income-tax return showing a loss of Rs. 8,980. There was a search in the case of the assessee on 16-9-1986. In the seized material it was found by the assessing officer that the assessee had deposited a sum of Rs. 70,000 in New Bank of India, Sowcarpet Branch, and two amounts of Rs. 25,000 each were advanced to one Mr. Karimbi on 31-7-1984. When asked to explain the sources for these investment, the assessee filed confirmation letters from 12 persons having received an amount of Rs. 1,12,000 in aggregate. Copies of these confirmation letters and the details of the parties as to their names, addresses and the amounts, are filed at pp. 1 to 8 of the paper-book. Copies of the confirmation were filed only in respect of seven parties before the Bench, while before the assessing officer as per the records, confirmation letters were filed in respect of 12 parties. The copies of confirmation letters were not found at the time of search. During the course of search the assessee did not disclose about these deposits and the money advanced to Mr. Karimbi. According to the assessing officer it was not clear from the confirmation letters that the amounts were not paid by the creditor by cash or by cheque to the assessee. There were no entries in the account books regarding the borrowings and the deposit amounting to Rs. 70,000 and the advance of Rs. 50,000 by the assessee to Karimbi. The assessee was given sufficient opportunity to produce the so-called creditors for his examination, as per p. 3 of the assessment order. But the assessee pleaded his inability to produce them, as eight of the creditors were stated to be at Bangalore and only one creditor was produced before the assessing officer. The assessee has not asked the assessing officer to issue summons under section 131 for verifying whether money has been advanced by these parties to the assessee or not before the assessing officer. The assessing officer, therefore, in the absence of non-production of these parties, added a sum of Rs. 1,20,000 to the income of the assessee as unexplained investment under section 69 of the Income Tax Act, 1961.
3. The matter went to the Commissioner (Appeals), who deleted an addition of Rs. 10,000 in respect of the money advanced by one M. Vijayaraghavan to the assessee in respect of which the assessee recorded a statement on oath on 30-1-1989. Thus, an addition of Rs. 1,10,000 was sustained by the Commissioner (Appeals) under section 69 relying on the decision of the Calcutta High Court in the case of C. Kant & Co. v. CIT (1980) 126 ITR 63 (Cal). Against the said addition the assessee has come up in appeal before us. The addition of Rs. 1,10,000 consisted of two items of Rs. 8,000 and Rs. 1,02,000. In respect of Rs. 8,000 the assessee’s authorised representative was not able to show any source for the investment either before us or before the lower authorities. This addition was not specifically disputed by the assessee’s authorised representative and in the facts and circumstances of the case we uphold the action of the Commissioner (Appeals) to the extent of Rs. 8,000.
4. The learned authorised representative of the assessee invited our attention to the paper-book filed by him, which consisted of details of the loans received by the assessee amounting to Rs. 1,12,000 out of which Rs. 10,000 had already been deleted by the Commissioner (Appeals) relating to the party at Sl. No. 1. The details of these parties as appearing in p. 1 of the paper-book are as under :
Creditor’s name & address
Date of confirmatory letter
Amount of loan given by the creditor to the assessee as per confirmatory letter
Date of loan
Rs.
1.
M. Vijayaraghavan, 3 Parasa Pillai St. Kilpauk, Madras
Nil
10,000
5-5-1984
2.
Shri J. Lakshman, 2711, D. Block 11 Stage, 11th Main Rajaji Nagar, Bangalore
3-5-1984
5,000
3-5-1984
3.
Mrs. Nema L. 21, Subramaniam Swamy Temple Road, Kumarappa Park West Bangalore
Nil
9,000
2-5-1984
4.
K. Jagadish 42, Venkateshwara Nilaya, II Floor, PRS Lane, Nagarathpet Cross, Bangalore-2
Nil
9,000
2-5-1984
5.
Mrs. Lachha Bai, w/o Jaichand 2711, 1st Floor, D Block, II Stage 11 th Main Road, Rajaji Nagar, Bangalore 10
Nil
7,000
2-5-1984
6.
S. Narayanan, 28/2, Maranahalli, 1st Main, Vijayanagar, Bangalore-40
Nil
20,000
2-5-1984
7.
K. Sham, 28, Anjaneya Temple Road, Cubbonpet, Bangalore-2
Nil
15,000
2-5-1984
8.
Smt. N. Geetha 25, Muniappa Street Kondithope Market, Madras-79
Nil
7,000
2-5-1984
9.
Naraindas Punjabi 25, Muniappa Mudali, Street, Kondithope Market, Madras-79
Nil
5,000
1-5-1984
10.
Mrs. Lakshmi Bai, 42, Venkateswara Nilaya II Floor, PRS Lane, Nagarathpet Cross, Bangalore-2
Nil
8,000
2-5-1984
11.
J.V. Sadasivam, 119A, Kallukudalur Road, Vridhachalam South Arcot
Nil
10,000
2-5-1984
12.
Mrs. Rena Vijayan, 3, Parasa Pillai, Street Kilapuk, Madras-10
Nil
7,000
2-5-1984
Total
1,12,000
The learned counsel for the assessee has submitted that the assessee has filed before the assessing officer the confirmation letters in respect of all the parties, but copies in respect of seven confirmation letters only were filed before us at pp. 2 to 8 of the paper-book, out of which confirmation in respect of a sum of Rs. 10,000 from Vijayaraghavan is not relevant before us, because the Commissioner (Appeals) has already deleted the addition in respect of the said amount. He further stated that in the confirmation full addresses of the parties were given. Out of these parties seven parties were stationed at Bangalore and it was not possible for the assessee to produce them before the assessing officer. If the assessing officer wanted to examine the parties he could have himself issued summons to the parties under section 131 or could have deputed his Inspector to verify the genuineness of the parties. He further argued that since the assessee has furnished confirmation consisting of the address of the parties, the onus of proof is discharged by the assessee and the same was shifted to the assessing officer, which he failed to discharge. Further, for the inaction of the assessing officer the assessee should not be made responsible. The learned counsel for the assessee stated that the Commissioner (Appeals) has wrongly applied the decision of the Calcutta High Court in the case of C. Kant & Co., cited supra. That decision relates to section 68 and not to section 69. He further relied on the decision of the Patna High Court in the case of Addl. CIT v. Hanuman Agarwal (1985) 151 ITR 150 (Pat), specifically on p. 157 of the report, in which it was held: “Where, therefore, an assessee gives the correct name, address and the GIR number of the creditor, as my learned brother has observed, he has discharged his onus and unless a notice in due form under section 131 of the Act is issued by the revenue authority concerned to test the veracity or the genuineness of the transaction or the capacity of the creditor to pay, the assessee has to succeed”. He also placed reliance on the decision of the Patna High Court in the case of Jhaverbhai Bihari Lal & Co. v. ClT (1985) 154 ITR 591 (Pat), in which it was held : “that the law enjoins the issuance of summons in cases certificates purported to have been granted by the creditors are produced before the assessing authority. The assessee had produced the books of account before the Income Tax Officer and the books showed the names of the six creditors whose cash credits had not been accepted by the department inspite of the production of the certificates from them by the assessee. It was, therefore, incumbent on the Income Tax Officer to have resorted to the provisions of section 131 at least even once by issuing summons to those creditors. The refusal to summon the parties under section 131 vitiated the addition of the cash credits to the assessee’s income as income from other sources”. When the assessee’s counsel was asked by the Bench as to whether he has asked the assessing officer to issue summons under section 131 to these parties and has also given his consent to deposit the diet money for calling the witness in accordance with the summons under section 131 as per the procedure given under the Civil Procedure Code, the learned counsel for the assessee answered very frankly that no such type of request as appeared from the records was ever made by the assessee.
5. The learned Departmental Representative, on the other hand relied on the assessment order and the order of the Commissioner (Appeals). He also stated that four of the parties belonged to Madras, but the assessee did not bother even to produce those parties. As per the Departmental Representative the onus to prove the source of undisclosed investment is on the assessee. He stated that the Calcutta High Court decision was applicable to the facts of the case because here the addition is in respect of unexplained investment and for which the assessee has given the source to be the cash credits. The confirmation letters do not have any date and any GIR number was also not given. In this regard he relied on the following decisions:
CIT v. M. Ganapathi Mudaliar (1964) 53 ITR 623 (SC);
CIT v. Durga Prasad More (1969) 72 ITR 807 (SC);
A. Govindarajulu Mudaliar v. CIT (1958) 34 ITR 807 (SC);
CIT v. Devi Prasad Vishwanath Prasad (1969) 72 ITR 194 (SC)
V. Datchinamurthy & Anr. v. Asstt. Director of Inspection (Intelligence), IT Dept & Anr. (1984) 149 ITR 341 (Mad);
CIT v. Daulat Ram Rawattmull (1973) 87 ITR 349 (SC), and
Sumati Dayal v. CIT (1995) 214 ITR 801 (SC).
6. We have considered the rival submissions carefully and perused the material on record. In the present case there was a search on 16-9-1986, and deposits amounting to Rs. 70,000 and a loan amounting to Rs. 50,000 advanced by the assessee were noticed. But these investments were not disclosed in the books of account of the assessee. Therefore, the assessing officer invoked the provisions of section 69 of the Income Tax Act. The assessing officer also asked for the source of such investments or the explanation for such investments. Section 69 of the Income Tax Act, 1961 reads as under :
“69. Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any maintained by him for any source of income, and the assessee offers no explanation about the nature and the source of the investments or the explanation offered by him is not in the opinion of the assessing officer satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.”
From the said section it is clear that the nature and source of investments are to be explained by the assessee and the onus or burden has on him. If he could not discharge the onus the assessing officer can treat such undisclosed investment to be the income of the assessee. In this case the assessee could only give the names of the parties from whom the loan was taken in respect of the unexplained investment. Confirmation letters were filed only in respect of seven of the parties. For the rest of the parties from whom a sum of Rs. 37,000 was received, no confirmation was filed except names and addresses of these parties. The assessing officer has given opportunity to produce the parties for his examination, but the assessee pleaded his inability, as some of the parties were at Bangalore. Even he has not discharged his burden by producing the parties who were at Madras. From the confirmations, we find that none of the parties is an income-tax assessee and for the source of investment they have a common wording, which reads: “The abovesaid source is from my savings”. Nothing is mentioned in the confirmation about the source of income of these parties. Not only this, even the assessee did not bother to ask the assessing officer to issue summons under section 131 of the Income Tax Act to these parties for which he is required to offer diet money if needed by these parties to the assessing officer because these parties are to be produced as witnesses. The cases relied on by the assessee’s authorised representative, in our opinion are not applicable to the facts of the case because in those cases the confirmation consisted of GIR numbers of the parties and also those cases related to cash credits only. The assessee did not dispute the investments which are made outside the books and the papers found during the search in respect of those investments. The conduct of the assessee creates a doubt why the assessee was keeping such investments outside the books. None of the loans appears to have been advanced through bank. The authorised representative has also not stated as to when these loans have been repaid back by the assessee. It is a matter of utter surprise that parties can come from Bangalore to advance loan in cash but could not be produced for the examination, nor the assessee did ask the assessing officer to issue summons under section 131 to these parties. In our opinion the burden of proof lies on the assessee which he failed to discharge. The onus to prove that the appellant is not the real owner of the amount is on the party who claims it to be so. The assessee claimed that the amount deposited in the bank and the loan given to Mr. Karimbi has come out of the loan taken by the assessee from the various parties. The burden lies on the assessee to prove that he has taken the loan from these parties by adducing evidence to the satisfaction of the assessing officer. A simple way of discharging the onus would have been to ask the assessing officer to issue summons under section 131 by agreeing to deposit the diet money, which the assessee failed to do. We are, therefore, inclined to agree with the Commissioner (Appeals) in confirming the order of the assessing officer relating to the addition to the extent of Rs. 1,02,000 under section 69 of the Income Tax Act.
7. The appeal is dismissed.