COMMISSIONER OF INCOME-TAX Vs. RAM ENTERPRISES

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal, Allahabad, has referred the following questions under Section 256(1)/(2) of the Income -tax Act, 1961 ('the Act'), for the opinion of this court: 1. Whether, on the facts and in the circumstances of the case, the hon'ble Income -tax Appellate Tribunal was justified in law in deleting the addition of Rs. 3,38,000 made under Section 68 of the Act and interest thereon of Rs. 52,493 on the ground that the assessee had discharged its onus of proving the genuineness of the deposits and had explained the nature and source of the deposits satisfactorily?

(2.) WHETHER , on the facts and in the circumstances of the case and keeping in view the provisions of Rule 29 of the Income -tax (Appellate Tribunal), Rules, 1963, the Income -tax Appellate Tribunal was justified in law in admitting the additional evidence produced by the assessee in terms of its letter dated April 24, 1995? 2. The reference relates to the assessment year 1990 -91.

(3.) THE assessee -firm deals in purchase and sale of supari and kattha. A return of income was filed showing a total income of Rs. 16,430 on 7 -11 -1990, and the assessment was completed on a total income of Rs. 6,24,720 under Section 143(3) vide order dated 12 -2 -1993. During the course of assessment proceedings, the Assessing Officer observed that the goods of the assessee were seized by the Forest Department and the Sales tax Department, which were to be released on furnishing of bank guarantee in view of an order of the Hon'ble Allahabad High Court. The firm was not having adequate funds of its own. Therefore, the assessee -firm raised funds of Rs. 6,50,000 which were invested in FDRs. The Assessing Officer examined the source of funds raised and held that the source of these loans and advances was not proved. They were alleged to have been received from different persons whose status and creditworthiness could not be proved by the assessee although ample opportunity was given to the assessee for about two years from 18 -2 -1991 to 12 -2 -1993, during which period the case was under hearing. Therefore, he treated these deposits as unexplained credits under Section 68 of the Income -tax Act, made additions of Rs. 2,90,000, Rs. 50,000, Rs. 1,21,000 and Rs. 1,00,000 besides making other additions.