COMMISSIONER OF INCOME TAX Vs. BHATTACHARJEE AND CO

JUDGEMENT

(1.) M/s. M. S. Bhattacharjee, the assessee, is a partnership firm registered under the Income-tax Act, 1961. The assessee carried on the business of dealing in sugar under the control of the Government. In the assessment years 1968-69 and 1969-70, the relevant accounting years ending at or about the middle of April of the years 1968 and 1969, the assessee was assessed to income-tax. In the course of assessment, the Income-tax Officer noted four credit entries in the account of the assessee for the assessment year 1968-69 in the names of four of its customers aggregating Rs. 39,000, all dated April 13, 1968. When asked to explain, it was stated on behalf of the assessee that the said amount represented a short-term loan obtained by Chandra Nath Bhattacharjee, one of the partners of the assessee, from M/s. Chandmal Pannalal. It was stated further that the said amount had been credited in the names of the said four customers as money was due from the said customers on account of sugar delivered to them under Government permits. It was stated that on receipt of payments from the said four parties, the amount of loan had been repaid to M/s. Chandmal Pannalal on April 16 and 17, 1968.

(2.) The Income-tax Officer called upon the assessee to produce the books of account of M/s. Chandmal Pannalal for examination under Section 131 of the Income-tax Act. A representative of Chandmal Pannalal appeared before the Income-tax Officer on December 16, 1971, but did not produce the books of account. The case was thereafter adjourned but the books were not ultimately produced. The Income-tax Officer held that the transaction of the assessee with the said Chandmal Pannalal had not been proved to be genuine and that the said amount of Rs. 39,000 represented the assessee's income from undisclosed sources. The said amount was added to the total taxable income of the assessee.

(3.) Similarly, in the next assessment year 1969-70, an amount aggregating Rs. 60,074 was found to have been credited in the names of five customers of the assessee. The Income-tax Officer called upon the assessee to explain the same credit entries and the assessee's explanation was the same as in the earlier year. The Income-tax Officer rejected the explanation of the assessee and added the said amount of Rs. 60,074 to the total taxable income of the assessee.