PRABASH CHANDRA SAHA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS appeal under Section 260A of the Income Tax Act, 1961 is directed against the order dated May 27, 2002, passed by the Income Tax Appellate Tribunal, Gauhati Bench, Guwahati, in I.T.A. No. 336(Gau) of 1996 relevant for the assessment year 1989 -90.

(2.) THE appeal was admitted for hearing on the following substantial questions of law:

(3.) IT would appear from the assessment order that the assessee had executed contract works for a total value of Rs. 19,00,034 and out of this amount the assessee received Rs. 16,30,494.19 after deduction of security deposit, value of materials, and taxes deducted at source. The assessee has no bank account of its own and all the cheques received were credited to the personal bank account of Sri P.C. Saha, the steering partner at SBI, Agartala. The assessee disclosed a net profit of Rs. 82,493 at 5 per cent, of gross receipt of Rs. 19,00,034. The assessee explained the reason for low profit due to unsuitable work site, higher labour charges, etc. The Assessing Officer noticed that the expenses for purchase of raw materials were not vouched for and no stock register was maintained and that the drawings of the partners were low and incompatible with their standard of living. For these reasons, the Assessing Officer added a sum of Rs. 40,000 as profit at 11 per cent, identical with other assessees during the relevant period. Further, the Assessing Officer found that the cheques amounting to Rs. 15,000 and Rs. 26,819 totalling Rs. 41,819 were not credited to the bank account and hence, treated this amount as income of the assessee from undisclosed sources. The Assessing Officer found that cheques amounting to Rs. 1,86,762 were deposited in the bank account of Shri P.C. Saha and the amounts were realised on April 4, 1989. The balance -sheet filed along with the return did not show "cheque in hand" or liability to the extent of Rs. 1,86,762. The Assessing Officer rejected the explanation of the assessee that the cheque was deposited in the bank account of Sri P.C. Saha and, therefore, the assessee has nothing to do with the amount of the cheque. The closing balance as on March 31, 1989, amounting to Rs. 1,30,243 was not shown in the balance -sheet of the assessee. Having failed to bifurcate the transaction of the firm from the personal transaction of Sri P.C. Saha, the Assessing Officer added both the amount totalling Rs. 3,17,000 as income of the assessee from undisclosed sources.