SILK MUSEUM Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench "A", has referred under S. 256(1) of the IT Act, 1961 (hereinafter referred to as the "said Act"), the following question for the opinion of this Court :

(2.) THE matter pertains to the asst. year 1981 82. The assessee was a partnership firm dealing in sarees at Rajkot and doing its business since 1st Nov., 1979. The assessee filed return of its income on 17th July, 1981. During the assessment proceedings, the Department came in possession of some information to the effect that for acquiring the business premises on rent, the assessee firm had paid certain amount by way of "pagri". As recorded in para. 5 of the draft assessment order, the premises occupied by the assessee were previously in possession of M/s Mansukh Stores. Pursuant to the report made by Shri R.J. Vyas, Inspector of Income tax, which revealed that certain amount was received by the landlord from the assessee, the ITO issued summons under S. 131 to the landlord Shri Haresh Jadavji Parekh and recorded his statement on 26th March, 1984, as noted in para. 5 of the assessment order. The report of Shri R.J. Vyas was placed on record. We are emphasizing this aspect because earlier at no point of time till the Tribunal has decided the matter was it ever urged that the copy of the report of Mr. Vyas was not given to the assessee. However, even that report will pale into insignificance because of the fact that the authorities have not based their conclusions on that report but have relied upon the statement of one Bhupatrai C. Doshi who was a partner in M/s Mansukh Stores along with his wife Vidyaben who had vacated the premises after occupying it for nearly 25 years and as per which statement, the assessee had given Rs. 1 lakh for handing over possession of the premises to Vidyaben. There is admission in the statement of Bhupatrai C. Doshi which was recorded by the ITO on 26th March, 1984, that a total amount of Rs. 1,20,000 was received from the assessee, out of which, the amount of Rs. 20,000 was paid by cheque towards cost of furniture. Shri Doshi had also stated that a sum of Rs. 40,000 was given by the assessee to the landlord for the premises. At the request of the assessee, copies of the statements of Harish Jadav Parekh and Bhupatrai C. Doshi which were recorded by the ITO on 26th March, 1984, were furnished to the assessee as recorded in para 8 of the said draft order. The ITO noted that the statement of Shri Doshi that a cheque of Rs. 20,000 was given by the assessee towards furniture was borne out from the assessee's own books of account, in which it was stated that a sum of Rs. 20,000 was paid by cheque to Smt. Vidyaben B. Doshi of Mansukh Stores for wooden cuboards, "Gadi", Takkia", etc. The ITO, therefore, added Rs. 1 lakh paid by the assessee to Smt. Vidyaben Doshi and Rs. 40,000 paid to Harish Jadavji Parekh as the unaccounted income of the assessee, since it was not entered in the books of account of the assessee.

(3.) THE Revenue appealed against the order of the CIT(A) before the Tribunal and the Tribunal on a detailed appreciation of evidence on record held that the assessee firm had in fact paid Rs. 40,000 to the landlord Shri Parekh and Rs. 1 lakh to the outgoing tenant Smt. Vidyaben by way of "pagri" and that the said amount of Rs. 1,40,000 was paid out of the books from the income derived from undisclosed sources. The order of the CIT(A) was, therefore, set aside on this count and the order of the ITO was restored.