High Court Of Madhya Pradesh
Nandlal Khanchand Khatri vs. CIT
Sections 68, 69, 147, 148, 260A
Asst. Year 1987-88, 1988-89, 1991-92
Deepak Verma & A.M. Sapre, JJ.
IT Appeal Nos. 47 to 50 of 2001
2nd November, 2001
Counsel Appeared
B.K. Joshi, for the Appellant
JUDGMENT
A.M. Sapre, J. :
The decision rendered in this appeal shall govern the disposal of other connected appeals being ITA No. 48 of 2001 (N. Khanchand Khatri vs. CIT), IT Ref. No. 49 of 2001 (N. Khanchand Khatri vs. CIT) and ITA No. 50 of 2001 (N. Khanchand Khatri vs. CIT) as all these appeals involve common issues and, secondly, they are filed by the same assessee except the difference being that these appeals arise out of different assessment years and were disposed of by a common order by the Tribunal, Indore.
The present appeal is filed under s. 260A of the IT Act, 1961, which arise out of order dt. 12th April, 2001, by the Tribunal, Indore, in ITA Nos. 216, 217 and 218/Ind. of 1996. They relate to the asst. yrs. 1987-88, 1988-89 and 1991-92. It appears that on 13th Sept., 1990, a search operation was carried out in the premises of the assessee resulting in seizure of several incriminating documents. This led to issuance of notices to the assessee under s. 148 of the Act by the AO in relation to the aforementioned assessment years for reopening of the cases. In these proceedings some unexplained cash credit entries in the books as also the unexplained source of money was noticed by the AO on the strength of seized documents. The assessee was asked to reply and explain these entries. The assessee not only challenged the very action of the AO in issuing the notice under s. 148 of the Act but also gave his explanation justifying the source of income in relation to these disputed entries. Since the AO rejected both the objections of the assessee and hence the matter travelled up to the Tribunal partly at the instance of the assessee and partly at the instance of the Department. By the impugned order, the Tribunal rejected the contention of the assessee and upheld the additions made by the AO and affirmed by the CIT(A). It is against this order, the assessee has felt aggrieved and filed this appeal. Heard Shri Joshi learned counsel for the appellant.
Having heard learned counsel for the appellant (assessee), and having gone through the impugned order of the Tribunal, we find no merit in this appeal worth admission. In our considered view, the appeal does not involve any question of law much less substantial question of law—a prerequisite for entertaining the appeal.
The submission of learned counsel for the appellant that there was no material on record to issue notice under s. 148 of the IT Act for reopening of the cases for the years in question and that in the absence of any reasoning not being communicated to the assessee as to why the cases are being reopened vitiates the notice, has no substance. As rightly concluded by the Tribunal, the very act of conducting a raid operation in the premises of the assessee which resulted in seizure of several incriminating documents, itself is more than sufficient material to issue notices under ss. 147 and 148 for reopening of the cases already decided. It was a fact well within the knowledge of the appellant (assessee) and hence it cannot be successfully urged by the appellant that there was no material for initiating action under s. 147/148 of the Act. Yet another submission of learned counsel for the appellant was that while the raid itself was illegal having been conducted not in the office of the appellant but in the office of his father, the impugned action becomes bad in law has no substance. Indeed, this issue is settled by the well known decision of the Supreme Court in the case of Pooran Mal vs. Director of Inspection (Investigation) 1974 CTR (SC) 25 : (1974) 93 ITR 505 (SC), wherein their Lordships, have, inter alia, ruled that even though the search made under s. 132 of the IT Act is held to be in contravention of s. 132 is no ground to hold that the material collected in such search operation that cannot be made the basis for initiating, separate action against the assessee under different sections of the Act. In this case there is no finding that the raid in question is bad in law. But even if it is so the material so collected can always be made the basis against the concerned person for reopening of the cases. Therefore, the submission pressed in service has absolutely no merit. It is accordingly rejected.
Now coming to the next question, whether a particular cash credit entry appearing in the books of account of an assessee or not appearing in the books and unexplained money found in the possession of an assessee is genuine or not is essentially a question of fact. It is required to be proved by an assessee by tendering evidence to the satisfaction of an AO. Secs. 68 and 69A of the IT Act, which specifically deal with cases of cash credit and unexplained money in clear terms provide that it is for the assessee to offer an explanation to prove the entry and source to the satisfaction of an assessing authority. Secs. 68 and 69A ibid do not define as to what type of evidence, the assessee is required to file and, hence, it depends upon the facts of each case as to what type of evidence, documentary or/and oral, the assessee tenders before the AO so as to satisfy the AO to accept the genuineness of a particular cash credit entry and source of money. However, the assessee is always free to bring any material piece of evidence which will convince the AO that the cash credit entry and unexplained income is a genuine one. What is, therefore, material and decisive is, the satisfactory or/and adequacy of relevant material— may be in any form to prove the genuineness of the entry in question to the satisfaction of the AO.
The scope and ambit of s. 68 ibid came up for consideration in two well known decisions of the Supreme Court A. Govindaranjulu Mudaliar vs. CIT (1958) 34 ITR 807 (SC) and Kale Khan Mohammad Hanif vs. CIT (1963) 50 ITR 1 (C). Their Lordships ruled that where an assessee fails to prove satisfactorily the source and nature of certain amounts of cash received during the accounting year, the AO is entitled to draw the inference that the receipts are of an assessable nature. It was held that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, then it was exempt from taxation under the provisions of the Act. It was ruled that in the absence of such proof, the AO is entitled to treat it as taxable income. Keeping in view the aforesaid law if one examines the facts of this case and the concurrent findings recorded by the AO, the CIT(A) and lastly affirmed by the Tribunal, we find that the explanation offered by the appellant and the evidence tendered in support of the disputed cash credit entries and unexplained source of money was not found to be satisfactory and accordingly it was included in the income of the appellant. It is in our opinion a pure finding of fact and does not involve any issue of law that to say substantial questions so as to empower this Court to entertain the appeal on the merits. We concur with the finding so recorded by the Tribunal and dismiss this appeal in limine.
[Citation : 260 ITR 318]
