COMMISSIONER OF INCOME-TAX Vs. GUJARAT DISTRIBUTORS

JUDGEMENT

(1.) THE following question has been referred for the opinion of this court: Whether, the Appellate Tribunal's findings are borne out from the record and whether the same are not perverse, whereby the additions of Rs. 3,71,000 and Rs. 7,000 respectively were deleted.

(2.) TO find out whether the answer of the Tribunal is perverse or not, we have to see the reasons given by the Tribunal. For ready reference the order of the Tribunal reads as under: We have carefully considered the rival submissions and perused the records. As rightly summarised by the Departmental Representative the points in contrary are fairly similar whether the diary belongs to the assessee or to A.B. Parikh in the personal capacity. To this the contents of the diary would be very such relevant. The diary as could be seen from its contents contains personal transactions of Shri A.B. Parikh and whenever the personal transactions or the assessee firm they are properly reflected in the books of the firm. In our view, the first statement of the partner of the assessee -firm that the transactions totalling to Rs. 3,71,000 relates to business transactions of the assessee should not be accepted at the face value. When Shri A.B. Parikh admits in his reply to question No. 6 that those facts needed verification and he was without the assistance of an accountant, the transactions so recorded, in our view, are undoubtedly related to the personal transactions of Shri A.B. Parikh with Gujarat Fertilizers, Sihore (Mukund Trust). It cannot be ruled out that Shri A.B. Parikh while entering these transactions in the diary has mistook the firm Gujarat Fertilizers, Bhavnagar instead of Gujarat Fertilizers. It must be appreciated that more statements, wrong statements or statements were in haste do not by themselves result in undisclosed income in the hands of the assessee. The assessee's capital structure is only of Rs. 25,000 and its stock at the end of the year was only of Rs. 21,554. Viewed from this angle, to burden such an assessee with a large addition of Rs. 3,71,000 the material placed by the Department, in our view, would not suffice. The contentions of the Department that the introduction of Mukund Trust was only an afterthought has only to be rejected. On September 22,1980, Shri Amin was examined and he clearly stated that he was one of the trustees of Mukund Trust and Mukund Trust was doing the business of manufacturing of mixed fertilizers since June 10,1980. So, it is not all true to say that Mukund Trust was just created to link up the transactions missing in the books of the assessee -firm. The initial statements made by Shri A.B. Parikh on September 22, 1980, should have been immediately followed up by the Department. It took nearly four years to confront the assessee -firm. What we find from the subsequent statement of Shri A.B. Parikh and the statements of the recipients of the money from Shri A.B. Parikh and copies of the accounts filed by Mukund Trust so also Pandya Gaurishanker Madhavji of Talaja is that transactions in dispute undoubtedly belonged to the personal transactions of Shri A.B. Parikh and not the business transactions of the assessee -firm and the recipient of the cash from the disputed transactions was Mukund Trust through its representatives. In view of this, the assessee's explanation needs to be accepted. In our view, considering all the facts of the case and the statements made by the parties and placed on record the addition is not justified. We have no hesitation in deleting the same. The addition of Rs. 3,71,000 made in respect of the alleged transactions with Gujarat Fertilizers as also the addition of Rs. 7,000 made in respect of alleged transaction with Shri Jadeja are, therefore, deleted.

(3.) WHEN on the basis of these facts, the addition was deleted, we see no perversity in the finding of the Tribunal. Accordingly, we answer the question referred in the affirmative, i.e., in favour of the assessee and against the Revenue. Income -tax Reference stands disposed of.