Hari Om Maratha, J.M. - (1.)BOTH these appeals pertain to assessment year 2000-01 and arise out of identical facts, one arising out of order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') and the other arising out of order passed under section 271D. So, these are being disposed of by this common order for the sake of convenience.
(2.)Briefly stated, the relevant facts of the case are that the assessee filed returns of income on 3-4-2001 declaring Nil income alongwith a copy of audit report which was processed under section 143(1)(a) on 26-3-2002. Thereafter, the case was selected for scrutiny. The assessee deals in agricultural produce on wholesale basis as well as derives income from commission. This is the first year of business which started on 5-11-1999. During the year the assessee had shown total turnover of Rs. 48,63,569 and had declared loss of Rs. 7,154 the assessee had also shown commission of Rs. 1,06,758. After claiming various expenses, the assessee had shown net loss of Rs. 31,837. On examination of trading account, it was noticed by the assessing officer that in respect of some of the commodities, the assessee had shown G.P. of Rs. 1, 150 and in respect of some other commodities, the assessee had shown loss of Rs. 8,306 and thereby showed a net trading loss of Rs. 7,154 the items in which the losses were shown were Guwar, Jeera, Moongfali and cottonseeds.
On examination of profit and loss account it was noticed that the assessee had claimed shop general expenses at Rs. 20,697. The assessing officer concluded that these expenses were not fully vouched. On examination of capital account, it was noticed that during the year the assessee had introduced Rs. 17 lakhs as his capital. The assessee explained the source of this amount as from assessee's own funds, namely, from sale of tractor as on 8-6-1999 of Rs. 1,69,000, sale of tractor as on 25-8-1999 of Rs. 1,31,000, loan received back from Shri Ram Niwas of Rs. 60,000 loan received back from Shri Baksharam of Rs. 40,000 loan received back from Shri Bhikaram of Rs. 50,000 totalling to Rs. 4,50,000. The assessee also showed loans raised from HUF and his wife Smt. Patasi Devi to the tune of Rs. 5,50,000 and Rs. 7 lakhs respectively totalling to Rs. 12,50,000, the grand total of all these comes to Rs. 17 lakhs. The assessee was not having any documentary evidence about loans given to and recovered from as claimed by the assessee. The assessing officer concluded that recovery of loan shown from these persons is nothing but a paper exercise just to show the source of the funds which actually did not exist and as such, claim of the assessee is not genuine. Accordingly, an amount of Rs. 1.5 lakhs; were disallowed.

(3.)SO far as HUF is concerned, the assessing officer treated Rs. 3.5 lakhs as genuine credit and the remaining amount of Rs. 2 lakhs was added under section 68 of the Act. In respect of the loan from his wife Smt. Patasi Devi to the extent of Rs. 6 lakhs the assessing officer treated as explained, but the remaining Rs. 1 lakh was added to the total income under section 68 of the Act.