- (1.) THE Tribunal, New Delhi, has referred the following two questions of law under Section 256(2) of the IT Act, 1961, hereinafter referred to as 'the Act' for opinion to this Court for the asst. yr. 1987 -88 : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally justified in deleting the addition of Rs. 95,000 made under Section 68 of the IT Act on account of unproved credits appearing in the accounts of the assessee in the names of his daughters ?
(2.) WHETHER , on the facts and in the circumstances of the case, the Tribunal is right in law to hold that the unproved credits appearing in the account books of the year under consideration cannot be assessed in the relevant assessment year under Section 68 of the IT Act ? 2. The brief facts of the case are as follows. The opposite party assessee (hereinafter referred to as 'assessee') was assessed to tax in the status of individual. The accounting period for the previous year ended on 11th Oct., 1986. In the books of account of the assessee, deposit of Rs. 50,000 was found in the name of Smt. Vimlesh Aggarwal and a sum of Rs. 45,000 was found credited in the name of Smt. Shashi Aggarwal. The assessing authority asked the assessee to explain the aforesaid deposits. In pursuance thereof, it was explained that a sum of Rs. 50,000 was paid by Smt. Vimlesh Aggarwal from the bank account No. 2128 in the Bank of Baroda which stood in the joint name of Smt. Vimlesh Aggarwal and Smt. Shashi Aggarwal. Copy of the pass book was also filed. The entry in the pass book was as follows : Date Amount Cr. Dr.17 -3 -1986 By cash 40,00020 -3 -1986 By cash 11,00028 -6 -1986 15,00019 -7 -1986 10,00020 -7 -1986 15,0001 -8 -1986 10,000 50,000 It was explained that the amount was paid by cheque. It was further explained that she had been assessed to tax under the Amnesty Scheme. With regard to the deposit of Smt. Shashi Aggarwal, it was explained that the amount was paid by cheque. She was maintaining a bank account No. 2119 in the Bank of Baroda in the joint name of Smt. Shashi Aggarwal and Deepak Kumar Goel from where the amount was withdrawn. Copy of the pass book was also filed. It was also explained that she was also assessed to tax under the Amnesty Scheme. The entry in the pass book was as follows : Date Amount Cr. Dr.17 -3 -1986 By cash 60,00026 3 -1986 By cash 13,000 15,0006 -8 -1986 10,00016 -8 -1986 20,000 25 -8 -1986 45,000 asst, yr. 1987 -8820 -10 -1986 10 20 -10 -1986 10 ,00011 -3 -1987 7,00023 -4 -1987 11,000 28,000 asst. yr. 1988 -89 The ITO added the aforesaid two amounts as the income of the assessee under Section 68 of the Act. It was observed that according to Circular No. 451, dt. 17th Feb., 1986, it was clarified that amnesty was not available for introducing black money and benami investment in the names of the ladies. It has been further observed that Hon'ble Supreme Court in the case of Jamnaprasad Kanhaiyalal v. CIT : [1981]130ITR244(SC) has ruled that the protection under the Voluntary Disclosure Scheme was extended only to the declarant and not to third party. The assessing authority was of the view that the assessee introduced his black money by filing voluntary returns of his daughters. Assessee filed appeal before the CIT(A). CIT(A) allowed the appeal and held as follows : I have carefully considered the submissions of the learned Authorised Representative and have also gone through the assessment records. To me, there appears to be some contradiction in the approach of the AO. He has mentioned at p. 3 of the assessment order that the amount disclosed in the Amnesty Scheme actually belongs to the assessee as no proof regarding source of income in the hands of the depositor has been furnished. Although, the exact amounts disclosed by these two ladies in the Amnesty Scheme are not known. It is observed that Smt. Vimlesh had deposited a sum of Rs. 51,000 in March, 1986 and Smt. Shashi had deposited a sum of Rs. 73,000 in March, 1986. The deposits which have been made in the names of these two ladies in the books of the appellant have arisen against the credits made by these two ladies in their bank accounts in March, 1986, therefore, if the AO was of the view that these two ladies did not have any independent source of income and these two bank accounts actually belong to the appellant, then the proper course for the AO, was to add the entire accounts of deposits in the bank accounts maintained in the names of two ladies in the hands of the appellant. In that case the additions would have been of Rs. 51,000 and Rs. 73,000, respectively, in respect of deposits in the bank account of Smt. Vimlesh Agarwal and Smt. Shashi Agarwal rather than the amounts of deposits of Rs. 50,000 and Rs. 45,000 in the books of the appellant. Moreover in such a situation, Section 69 relating to unexplained investment outside the books rather than Section 68 in respect of each credit would, apply and if Section 69 is attracted the assessment year would be determined with reference to the financial year and not the accounting year of the appellant. Therefore, the correct assessment year would be asst. yr. 1986 -87 and not the asst. yr. 1987 -88 in which deposits had been added.
(3.) THE Revenue filed appeal against the order of the CIT(A) before the Tribunal. Tribunal rejected the appeal and confirmed the order of CIT(A). The Tribunal has held as follows : We have given careful thought to the rival submissions of the parties. It is true that mere fact of disclosure under the Amnesty or Voluntary Disclosure Scheme by one person would not preclude the Revenue to make enquiry into ownership of amount disclosed. The Revenue is always entitled to assess the amount in the hands of rightful owner of the amount irrespective of disclosure made by somebody else. It is equally true that for purposes of Section 68, the assessee has to prove the creditworthiness of the creditor. But above propositions or authorities do not entitle the Revenue to add all credits as income of the assessee. Facts of each case are required to be examined objectively. Turning to the present case, we find that creditors had confirmed deposits on oath in statements recorded by the AO. The amount deposited had come from their bank account and source of the deposit was disclosure made under the Amnesty Scheme. The detailed statement of ladies recorded by the AO is not available on record. Assuming that the source of disclosure made under the Amnesty Scheme were not explained by the ladies, it does not follow that amount deposited in bank belonged to the assessee. The AO has not placed any material on record to show that amounts deposited in bank were assessee's income or that assessee was responsible for making the deposits. We agree with learned CIT(A) that immediate source of deposits, i.e., the bank accounts of the creditors was established in this case. The assessee thus discharged initial onus that lays on him to prove the cash credits.;