Rajes Kumar, J. - (1.) TRIBUNAL has referred the following question under Section 256(1) of the for the assessment year 1986 -87 for the opinion of this Court: "Whether the Tribunal was justified in adding the cash credit in the income of the assessee when persons in whose names the cash credit, had declared the same under amnesty scheme and had also been assessed as such on the respective amount credited in the account, despite the fact that those persons were closely related to the partners of the assessee firm -
(2.) BRIEF facts of the case are as follows: The applicant assessee (hereinafter referred to as "Assessee") was a partnership firm consisting of two partners, Sri Prayag Narain Gupta and his son Pramod Kumar Gupta having equal shares. Assessee derived its income from manufacturing and sale of rice and rice bran and also from purchase and sale of food grains, pulses and oil seed. In the course of scrutiny of the account assessing authority found the following cash credit entries during the relevant accounting period: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Sl.No Name Old Balance New Int. Total. Deposits - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1. Smt Sharda Gupta, w/o 8166 61900 6332 176398 Sri Prayag Narain Gupta, Partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2. Sri Anil Kumar Gupta. 26449 99000 7225 32674 s/o Sri Prayag N. Gupta. partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3. Km. Meera Gupta (m) d/o 6790 61500 5810 74100 Sri Prayag N. Gupta partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4. Smt. Arvind Gupta (M) - - - - - 59900 4835 64735 wife of Prayag N Gupta, partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5. Smt. Pushpa Gupta. w/o - - - - - 60900 4968 65868 Sri Pramod Km. Gupta. partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6. Km. Trupati Gupta - - - - - 31900 2223 34123 (Minor) s/o Sri Pramo Kumar Gupta, partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 7 Km. Dipti Gupta (Minor) 44900 3560 48460 s/o Sri Pramod Kumar Gutpa, partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 8. Mast. Rahul Gupta. (M) 60900 3848 64748 s/o Pramod Kr. Gupta, partner. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 41,405 480,900 38801 561106 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - The depositors were the wife and minor children of Prayag Narain Gupta and Pramod Kumar Gupta, partners of the firm. Except Sri Anil Kumar Gupta, who was major sun of Prayag Narain Gupta. Assessing authority asked the assessee to explain the new cash credit in terms of Section 68 of the Act. Assessee filed written explanation and explained that the above depositors are genuine and true and all the depositors were old assessee. Their assessment orders have also been filed. It was explained that all of them got themselves assessed in the amnesty scheme in view of Board's circular No. 451 and deposited their respective money in the different banks and in order to earn more interest money was advanced by the depositors to the assessee firm by way of cheques. It was further explained that Km. Meera Gupta Smt. Sharda Gupta and Anil Kumar Gupta had old balance apart from the fresh deposits made in this year and their deposits have been accepted as genuine and true by the department. In this way it was submitted that the nature and source of the deposits are explained. In as much as the identity of the person, genuineness of the transactions and the capacity of the payment have been established. Assessing authority had not accepted the explanation and made the addition of the entire deposits towards unexplained income under Section 68 of the Act. Income Tax Officer further observed as follows: "The explanation of the assessee is not satisfactory as he could not explain the ability & capacity of the creditors to make such heavy deposits. Initially to make deposits in he hank and then to make deposits with the assessee firm by withdrawing the amounts by cheque does not prove the capacity of the creditors to make the deposits with the assessee unless they prove their sources of income with documentary evidence. All the above creditors had no independent source of income except Shri Anil Kumar Gupta who carried on truck plying business. He has been assessed on the following total income: - A. Y. Truck come Interest Other sources Total 1983 -84 9098 7000 16,100/ - 84 -85 9790 - 25000 15,210/ - 85 -86 16100 59 - 14,690/ - In the assessment year 1985 -86 Shri Anil Kumar Gupta purchased a truck No. URM - 1635 for Rs. 80,000/ -. On 2.8.94. Hence he was not in a position to advance such a heavy amount of Rs. 99,000/ - to the assessee firm. As regards the other creditors who are the minors and ladies and closely related to both the partners. From the scrutiny of the facts it appears that both the partners have introduced the cash creditors in the names of their family members in proportion to their capital in the assessee firm. Assessee has explained that they have introduced their money under Amnesty Scheme and deposited in the bank a/es and by withdrawing from bank account, they have deposited with the assessee firm. Assessee cannot take any benefit of the Amnesty Scheme introduced by the Board by issuing various circulars in this regard. Circular No. 451 dated 17.2.86 in the question & answer from Question No. 11 is very much relevant on this issue which is reproduced below: "Q.No.1... Whether ladies and minors can avail of the immunity given by the circulars ? Answer. Yes, in respect of their own income or wealth certainly. Abut tax payers who try to introduced black money and benami investments in the names of ladies or minors will be doing so at their own risk." Hence Board had specifically mentioned that bogus and benami declarations are not allowable under the Amnesty Scheme. Assessee has nowhere furnished evidence regarding the source of income declared by the creditors in their returns of income under Amnesty scheme. From the perusal of these returns filed by above creditors under Amnesty scheme it appears that they had not furnished any evidence regarding the source of their income in the returns, income has been declared under the head "Income from other sources" or Cash gifts received from relations and friends other than husband but due to lack of evidence or details regarding their source of income. It can therefore be proved that ht creditors do not even deserve the immunity granted by the Amnesty scheme as they have not proved their own income as laid down by the Hoard in Answer to Q.No. 11 of the above mentioned circular No. 451. Even if for argument's it is admitted that immunity has been granted to the creditors under Amnesty scheme and they were not hound to disclosed their sources of income assessee cannot take any benefit in its own case in view of the decision of the Hon'ble Supreme Court in the case of Jamuna Prasad Kanhaiyalal v. : [1981]130ITR244(SC) . This decision has set in rest a controversy among different high courts regarding voluntary disclosures. It has held that voluntary disclosure scheme cannot be construed as concerning any benefit or immunity to any person other than the person making the declaration under that scheme. There was nothing in that scheme which prevented the /TO, It he was not satisfied with the explanation of the assessee about the genuineness or source of the amount found credited in its books inspite of its already being made a subject of the declaration by the creditor and taxed under the scheme, from investigating the true nature and source of the credits. There is no question of double taxation once it was found that the income declared by the creditors did not belong to them there has nothing to prevent the same being taxed in the lianas of the assessee to whom it actually belongs. In view of the above discussion, I am of the opinion that the explanation offered by the assessee regarding the total sum of Rs. 4,80,900/ - credited in his books of accounts in the names of wives, 5 minor children and one major child of the partners is not satisfactory as he could not prove their capacity to make the deposits with the assessee firm. Hence the total sum of Rs. 4,80,900/ - so credited is charged to Income Tax as the income of the assessee from undisclosed sources for this year and added to his total income."
(3.) ASSESSEE filed the appeal before the Commissioner of Income (Appeals), which was rejected. Applicant further filed appeal before the Tribunal, which too has been rejected Before the Tribunal assessee raised the following submissions: "2. That the learned Commissioner of Income Tax (appeals) has failed to appreciate that the interest on these deposits has been duly accepted by the Income Tax Officer, which indirectly proofs that he has partially accepted the credits. 3. That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that each of the creditors were regular assessee on record and had deposited fund with the assessee by means of cheques drawn by them in favour of the assessee firm on their personal bank account. 4. That the learned Commissioner of Income Tax (Appeals) has misdirected himself in stating that partners have introduced the cash credits in proportion to their capital in the assessee firm. There is no basis for such observation. It any case, even it these credits represents the credits made by the partners then also these can not be included as an income of the firm. 5. That the learned Commissioner of Income Tax (Appeals) has misdirected himself in confirming the assessing officer conclusion that the assessee had brought buck undeclared income in the form of declaration by the above creditors under the amnesty scheme and no advantage of such deposits can be taken by the assessee. These findings of the assessing officer are without any evidence or material on record and are based on mere suspicion and conjunctures. 6. That the entire thrust of the arguments and pleading of the assessing officer in confirming the cash credits has been only emphasis that the alleged cash creditors are benamidar of the assessee firms partners and as such the income is liable to be included in the hands of the assessee firm under Section 68. This entire approach is prima facie erroneous in law and can not be sustained specially in view of the provision contained in Benami transactions (Prohibition) Act, 1988 which is retrospective application and is universally applicable in India. 7. That the Assessing Officer and the learned Commissioner of Income Tax (Appeals) has failed to that the creditors are all regular assessee on record who have paid the moneys by means of cheques and have duly confirmed the deposits. The assessment of the creditors have been duly completed before the present assessment in the hands of the assessee and accordingly there is no warrant for such addition or conclusion as arrived by the authorities below.";