D.K.Seth, J. - (1.) In this case, it is urged on behalf of the applicant that the accounts were neither rejected nor there was any finding that the books of account were not reliable nor was it observed by the Assessing Officer that the explanations furnished were not satisfactory. Therefore, the books of account, as produced by the assessee, are to be accepted. Having regard to the provisions contained in Sections 69 and 69B of the Income-tax Act, 1961, he relied upon the decision reported in CIT v. Pratapsingh Amrosingh Rajendra Singh and Deepak Kumar of the Rajasthan High Court. In the said decision, it was held that there can only be two modes to find out the correct position in respect of the investment, namely, examination of books of account which have been maintained properly and valuation report. If the assessee has maintained proper books of account and all details are mentioned in such books of account, which are duly supported by vouchers and no defects are pointed out and the books are not rejected, the figures shown therein have to be followed. The valuation report can be taken into consideration only when the books of account are not reliable or are not supported by proper vouchers or the Income-tax Officer is of the opinion that no reliance can be placed on such books of account. It is true that the Income-tax Officer has no option but to rely on the valuation report, which is a document prepared by an expert and is admissible, but there must be a finding by the Income-tax Officer that the books of account maintained by the assessee are defective or are not reliable. There may be a marginal difference in the actual investment and the report of the Valuation Officer for a number of reasons as the valuation report is prepared on the basis of norms prescribed by the C. P. W. D. for the construction of buildings and the difference may be with regard to quality of the materials, etc.
(2.) Thus, it appears that the Assessing Officer can add back only if he rejects the books of account or it is found by him that the books of account are not reliable or are not supported by proper vouchers or that no reliance can be placed on the books of account. Sections 69 and 69B, the Income-tax Act, make it clear that if the amount is not recorded in the books of account, even then it can be explained. But if the explanations are not satisfactory, then the amount can be held to be undisclosed income and not otherwise. We do not find any reason to differ with the said decision. But, however, the statement made in the books of account shall not alone be sufficient evidence. Inasmuch as, according to Section 34 of the Indian Evidence Act, 1872, entries in the books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to enquire. Section 34 of the Evidence Act has two parts. The first part speaks of relevance of the entries as evidence. The second part speaks of its evidential value. It is necessary upon the person relying on those entries to prove that they were in accordance with the facts. It is to be supported by some other independent evidence. It was so held in Central Bureau of Investigation v. V. C Shukla.
(3.) In our view, it is not necessary that the books of account are to be rejected. Inasmuch as, Section 68 of the Income-tax Act, essentially contains a deeming provision, which applies when the assessee's explanation is rejected. Section 68 does not imply that the books of account are to be rejected in order to hold otherwise than the entries made. On the other hand, it implies addition only when the discrepancies are not explained by the assessee to the satisfaction of the Assessing Officer. The same principle will apply in cases under Sections 69 and 69B. The onus of proving the source of a sum of money is on the assessee. If he disputes the liability for tax, it is for him to show that the receipt was not income or that it was exempted from taxation under the law. In the absence of any proof, the Assessing Officer is entitled to charge it as taxable income. Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1, 4 (SC). If an assessee fails to prove satisfactorily the source and nature of certain amount received during the accounting year, the Assessing Officer is entitled to draw the inference that the receipts are of an assessable nature. A. Govindarajulu Mudaliar v. CIT. The presumption arising under Section 132(4A) of the Income-tax Act, does not override or exclude Section 68 of the Income-tax Act. It does not obviate the necessity to establish by independent evidence, the genuineness of cash credit under Section 68. The presumption is relevant and limited only to summary adjudication contemplated under Section 132(5). Neither more nor less. The assessee has a legal obligation to explain the nature and source of such entries, Sreelekha Banerjee v. CIT. Thus, it appears that it is not necessary that the books of account have to be rejected expressly or that it is to be, in express terms, recorded that the books of account are not reliable or the explanation is not satisfactory. It has to be gathered from the order itself whether in effect the Assessing Officer was satisfied with the explanation or had found that the books of account were not reliable. It is not the technical terms, which must appear in the order. It is the substance of the order that the Assessing Officer was not satisfied with the explanation which is relevant. This is apparent from Sections 69 and 69B. Where accounts are not reflected in the account books, it can be explained by the assessee, who under Section 69 is entitled to an opportunity to explain. If in the opinion of the Assessing Officer the explanation is not satisfactory, the income can be added. The phraseology of Section 69 creates a legal fiction.;