M.A. Anto vs Commissioner of Income Tax

C.N. Ramachandran Nair, J.—Heard counsel appearing for the appellant and standing counsel appearing for the respondent. Both the questions raised for our decision relate to additions made in the block assessment, which though deleted by the first appellate authority, were restored by the Tribunal. Counsel contended that there was no justification for the Tribunal to sustain the addition of Rs. 5.85 lakhs which was assessed as unexplained investment made by the assessee in a firm. Even though the assessee tried to prove source towards loan taken from brother, sister, nephew and other close relatives, the Assessing Officer found there is unexplained time lag between the alleged loan and the actual investment. In any case loans were allegedly taken in cash which is against the provisions of the Income Tax Act. We are of the view that when the Income Tax Act provides that taking of loan and repayments in excess of Rs. 20,000 should be only through account payee cheques or demand drafts, cash transaction can be justified only in emergencies. Admittedly, there is substantial time lag between the alleged loan in cash and later investment. Therefore, in our view, the Assessing Officer rightly disbelieved the transaction and the Tribunal confirmed it. We do not find any substantial question of law arising from the order of the Tribunal on this issue for our decision.

The next question also pertains to the addition of Rs. 1,43,660 for the year 1997-98. Even though the assessee contended that the time for filing return was not over as on the date of search, i.e., July 30, 1998, it is the finding of the Tribunal that there was no evidence to prove that income was accounted, which is the requirement u/s 158B(b) of the Income Tax Act, for exclusion from assessment as undisclosed income. The assessee has no case that the assessee has paid advance tax on this amount or has accounted the share income from the firm as on the date of search. Even though counsel for the assessee contended that accounts maintained by the firm is sufficient for exclusion u/s 158B(b), we are unable to accept this contention because it is the assessee who gets the salary income from the firm and as and when income is received, the assessee should account the same and should pay advance tax which is not done here. In the circumstances, the Tribunal rightly held that the share income from the firm was not accounted by the assessee. Consequently, we dismiss the appeal on this issue as well.