KRISHNA TEXTILES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, Income -Tax Appellate Tribunal, Ahmedabad Bench 'C' Ahmedabad, has referred the following questions of law for the opinion of this Court, for the assessment year 1987 -88: 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the drafts of Rs. 1,67,261/ - being cash credits in the books of Gujarat Mineral Development Corporation in the account of the assessee was the income of the assessee when there are no corresponding entries in the books of the assessee?

(2.) IF the reply to the above question is in the affirmative, whether the Tribunal was right in law in not allowing the deduction of the said amount as the cost of purchase or as allowable expenditure?

(3.) BEING further aggrieved by the order of the learned Commissioner of Income Tax (Appeals), the assessee preferred second appeal before the Income -Tax Appellate Tribunal, Ahmedabad. While confirming the said addition vide its order dated 27.10.1995, the Tribunal has held that the assessee made certain payments to GMDC by drafts which drafts have been duly credited by GMDC in their books of accounts, but there are no corresponding debit entries in the books of assessee. The onus thus squarely lay on the assessee to explain the source of funds remitted by drafts to GMDC. The assessee's explanation was that the books of accounts of GMDC were not reliable. According to the Tribunal, this is too general an explanation to be accepted especially when the payee is a State Government undertaking of repute. The Tribunal, therefore, took the view that the assessee failed to prove the sources of drafts remitted to GMDC and as such, the additions made by the Assessing Officer and confirmed by the CIT (Appeals) are fully justified.