Assistant Commissioner of Vs. G. Venkateswaran - Court Judgment

Excerpt:
1. this appeal by the revenue relates to assessment year 1985-86 and arises out of the order of the cit (appeals)-iv, madras dated 24-2-1989. the following two grounds are raised in this appeal : 1. the cit (appeals) has erred in directing deletion of the unexplained expenditure to the extent of rs. 67,216. 2. the cit (appeals) has failed to appreciate that shri haji abdul rahim had acknowledged having received rs. 50,000 towards providing an affidavit.2. the brief facts of the case are that the assessee filed a return of income on 13-5-1986 for the assessment year 1985-86 admitting loss of rs. 70,829. the assessee derived income from salary, house property, business and sitting fees and dividends from companies. the assessing officer found that the assessee had shown credit entry of rs. 1,27,48,325 described as gift in his capital account. the assessing officer called upon the assessee to produce evidence for the same. the assessee claimed that the gifts were received from (i) cash gift of rs. 1,25,00,000 from haji abdul rahim, leh, ladakh and (ii) 3225 shares of m/s. shaw wallace & co. valued at rs. 2,48,325 from v. k. chandrakumar as gift. the assessing officer made enquiries in the matter and found that the gifts were to genuine and the assessee, on seeing that the claim has been disproved, filed a revised return on 6-3-1987 including rs. 2,78,081 as income in respect of value of 3225 shares of shaw wallace & co., earlier claimed as gift.3. since the above grounds of appeal are connected with the amount of rs. 1.25 crores claimed by the assessee as gift received from sri haji abdul rahim, it would be necessary to narrate the facts in brief. when the assessing officer asked the assessee to produce evidence for the cash gift of rs. 1.25 crore received by him, an affidavit dated 11-1-1985 signed by the donor sri haji abdul rahim, duly certified by the judicial magistrate, srinagar was filed. the assessing officer recorded the statements of the assessee on 16-6-1986 and 30-6-1986. in his sworn statement the assessee stated that he knew the donor shri haji abdul rahim from 1960 and that he was introduced to him by his classmate shri sultan vazir, who is a kashmiri doing business at the relevant time in bombay. it was stated that the gift was made by haji abdul rahim on 11-1-1985 in the presence of shri sultan vazir at srinagar at a company's guest house, the address of which the assessee could not recollect. the assessee deposed that the cash was given in 9 suit cases and was not counted at the time of taking over, that the entire gift amount was first brought to delhi by road and from delhi it was brought partly to madras and partly to bangalore. according to the assessee, he does not remember the number of suit cases and amount taken to madras and bangalore and that portion of the gift which was brought to madras was carried by him as additional luggage by air to madras. it was stated that the amount sent from delhi to bangalore was carried by the assessee's personal friend, but whose name was not furnished. the alleged gift amount was invested in fixed deposits and also paid in cash to m/s. sujatha films p. ltd. towards the assessee's account.4. in order to verify the genuineness of the transaction, the assessing officer made reference to the ddi (inv.), unit-i, bombay to examine sri sultan vazir who was reportedly present at the time when the alleged gift was made by waji abdul rahim. the report of the ddi (inv.), bombay indicated that sultan vazir is not a common friend of assessee and haji abdul rahim and he came to know of haji abdul rahim only at the time when the alleged gift was made and he was introduced to haji abdul rahim by the assessee. sri sultan vazir was also not aware of the amount of gift made by haji abdul rahim. the number of suit cases in which it was handed over, etc. similar reference was made by the assessing officer to the ddi (inv.), delhi for verifying the facts about alleged gift. during the course of enquiries, the ddi (inv.), delhi recorded the statement of haji abdul rahim on 3-9-1986 at leh (ladakh). wherein after initial denial haji abdul rahim confessed that he has not made any gift and that he was made to execute the affidavit on a payment of rs. 50,000 by the assessee. it is seen that on the basis of this statement of haji abdul rahim, the assessing officer made addition of rs. 50,000 to the assessee's income as the source for payment of the said sum was not explained by the assessee. the assessing officer also made enquiries with reserve bank of india, madras regarding the weight of currency for a value of rs. 1.25 crores and the volume required for packing the same. a reply received from the bank on 12-9-1986 shows that currencies of rs. 1.25 crores in fresh notes of rs. 100 denomination would weight 125 kg. (approx.) and would require three brief cases of the size of 24" x 10" x 12". enquiries were also made with the indian airlines at delhi, which revealed that sri g. venkateswaran travelled to madras from delhi on 14-1-1985 by ic 540 with a checked baggage weighing 10 kg. only, within the free allowance of 20 kg. on enquiry, the superintendent of police, road traffic, udampur, informed the assessing officer at udampur on 25-9-1987 that the road from jammu to srinagar was thorough for up-convey only on 10-1-1985 and downconvey only on 11-1-1985. the assessing officer considered that the distance between delhi and jammu is 585 kg. and the assessee could not have been in time at jammu to join the up-convey on 10-1-1985 and obviously, he could not have reached srinagar on 11-1-1985 to receive the alleged gift. the assessee was also afforded an opportunity to cross-examine haji abdul rahim in connection with the statement earlier recorded from him by the ddi (inv.), delhi, on 3-9-1986. however, cross-examination could not be completed-for want of time on 12-8-1987 and further cross-examination and re-examination could not be undertaken on 13-8-1987.5. enquiries by the assessing officer indicated that the alleged donor was enjoying overdraft facilities from the bank of jammu & kashmir, leh from 1978 with a limit of rs. 1 lakh only and he continued to be a debtor to the bank even on 11-1-1985 when the alleged gift was made. it was further found that haji abdul rahim did not travel by air from leh to srinagar at the material point of time when the roads from leh to srinagar were otherwise closed for traffic during winter season, viz., november to may. the assessing officer concluded that the alleged donor was not even an acquaintance to the assessee on the date of gift, i.e., 11-1-1985, that he was a man of ordinary means who in-turn was indebted to the bank and that the assessee ever went to srinagar on 11-1-1985 to receive the alleged gift. the assessing officer also found that the assessee did not go from delhi and was staying during the material period in a hotel at delhi and did not stir out from delhi during the material time. on the basis of all these evidences, the assessing officer issued a letter to the assessee on 19-10-1987 asking him to show cause why the alleged gift should not be treated as his unexplained income. by his letter dated 30-10-1987, the assessee asked for a copy of the statement of sri haji abdul rahim recorded on 7-10-1987 and the same was supplied to him on 3-11-1987. however, on 30-11-1987 the assessee came forward with a second revised return including this gift of rs. 1.25 crores also and has also paid self assessment tax of rs. 78,25,748 under section 140a.6. on these facts, the issue to be considered is whether the assessing officer was justified in believing the statement of haji abdul rahim who stated that he was paid rs. 50,000 by the assessee for executing an affidavit for the alleged gift. the cit (appeals) held that the mere statement without any corroborative evidence cannot establish that the assessee had paid a sum of rs. 50,000 to sri haji abdul rahim. the cit (appeals) accepted the claim of the assessee that a sum of rs. 7,784 might have been expended by his friend towards hotel expenses. the cit (appeals) held that only because the assessee had stayed in hotel, it cannot be taken as a conclusive evidence of having incurred the expenditure.7. the learned departmental representative argued that there is strong circumstantial evidence to show that the assessee must have paid some amount to haji abdul rahim for the purpose of executing a false affidavit. on the other hand, the ld. counsel for the assessee has emphasised that the assessee has offered voluntarily the income of rs. 1.25 crores and had he paid the sum of rs. 50,000 to the donor the assessee would have declared the said amount also. according to the ld.counsel for the assessee, when the assessee is prepared to pay tax of rs. 1.25 crores, he would not have hesitated to pay tax on the said sum of rs. 50,000 also, if in fact such a sum would have been paid to haji abdul rahim.8. we have considered the rival submissions and material on record. the assessing officer found that the assessee has shown in his capital account credit entry of rs. 1,27,48,325 described as gift. it was explained by the assessee that a sum of rs. 1.25 crores was received by him from haji abdul rahim as a gift. similarly the assessee explained that 3,225 shares of m/s. shaw wallace & co. valued at rs. 2,48,325 was received as gift from sri v. k. chandrakumar. but sri chandrakumar stated before the assessing officer that he had only sold those shares for rs. 2,78,081 to the assessee and the shares were not gifted to the assessee. when the assessing officer informed of it and asked for assessee's explanation. the assessee filed a revised return on 6-3-1987 including the sum of rs. 2,78,081 as his income with the narration "acquisition of shares in m/s. shaw wallace & co. earlier treated as gift now treated as purchase and offered as income". subsequently when various enquiries were made by the department and it was fully established that the claim of the assessee regarding alleged cash gift of rs. 1.25 crores from haji abdul rahim is false, the assessee came forward with a second revised return including this gift of rs. 1.25 crores also and has also paid self-assessment tax of rs. 78,25,748. the enquiries made by the departmental officials clearly show that the assessee has obtained a false affidavit of haji abdul rahim for claiming alleged gift of rs. 1.25 crores to defraud the revenue. the submission of the assessee's counsel that had the assessee paid the sum of rs. 50,000 to haji abdul rahim, he would have offered that amount, is devoid of any merit. after the assessing officer made enquiries in the matter, the assessee had no option but to offer the amount of rs. 2,78,081 in the revised return dated 6-3-1987 and the sum of rs. 1.25 crores as his income in the second revised return filed on 30-11-1987.if the assessing officer had not made any enquiries in the matter, then these amounts of rs. 2,78,081 and rs. 1.25 crores would have definitely escaped assessment totally. the assessee in order to evade payment of tax at rs. 78,25,748 (which was paid as self-assessment tax under section 140a) obtained the false affidavit of haji abdul rahim claiming gift of rs. 1.25 crores on 11-1-1985. enquiries conducted by the assessing officer clearly reveal that the donor was not capable of making such a huge amount of gift and he continued to be a debtor to the j&k bank even on 11-1-1985 when the alleged gift was made. it is against all human probabilities also that person residing in leh (ladakh) would have made a gift of rs. 1.25 crores to a total stranger residing at madras without any reason. but the assessee was under the impression that he would succeed in evading tax of rs. 78,25,748 by producing a false affidavit of haji abdul rahim before the assessing officer regarding the alleged gift. if the assessing officer has not conducted enquiries, the assessee would have succeeded in his designs and in order to succeed in his designs to defraud the revenue by huge sum as taxes legitimately due to the state, the assessee must have paid some amount to haji abdul rahim as otherwise there is no reason why the said person should sign a false affidavit stating that the alleged gift of rs. 1.25 crores was made by him, which he himself knew to be false.therefore, under the circumstances, which are created by the assessee himself, there are no reason to disbelieve the statement of haji abdul rahim that he was made to execute the affidavit on a payment of rs. 50,000 by the assessee. the assessee might not have directly paid the said payment, because as stated, the alleged donor was not even an acquaintance to the assessee on the date of gift, i.e., 11-1-1985. but the circumstances show that whatever means the assessee might have employed to get the affidavit of haji abdul rahim, it is clear that the assessee must have paid some amount directly or indirectly through somebody to the said donor, because it serves the purpose of the assessee to defraud the revenue by a huge amount of rs. 78,25,748 by claiming gift of rs. 1.25 crores and rs. 50,000 paid by the assessee to haji abdul rahim is comparatively a small amount than the tax amount of rs. 78.25 lakhs. in this background we are fully convinced that the assessee must have paid the sum of rs. 50,000 because there is no reason why haji abdul rahim should sign a false affidavit without any consideration. these facts and other circumstances and evidences were totally ignored by the cit (appeals) in coming to the conclusion and he did not go deeper into the matter to find out the truth. we, therefore, reverse the order of the cit (appeals) on this issue and confirm the order of the assessing officer insofar as the addition of rs. 50,000 is concerned. there is no other evidence to show that the assessee would have spent anything more than rs. 50,000 to obtain the false affidavit.9. it may be mentioned that normally addition to the total income of an assessee cannot be made on the basis of statement of a person but in each case facts and circumstances have to be analysed thoroughly with the due care. in the case of assessee before us, he himself is responsible for creation of situation and circumstances, which compelled us to believe the statement of sri haji abdul rahim. the assessee himself produced the false affidavit of haji abdul rahim before the assessing officer for claiming cash gift of rs. 1.25 crores.the assessee also gave false statement on oath on 16-6-1986 and 30-6-1986 before the assessing officer that he knew the donor and that he received cash gift of rs. 1.25 crores from haji abdul rahim. in view of the facts stated in the preceding paragraphs (in brief) the statement of the assessee was found totally false. facts of the case shows that in order to defraud the revenue the assessee can go to any extent in telling lies even on oath. if the assessing officer had not been vigilant the assessee would have succeeded in his design to defraud the revenue by the amount of taxes in more than rs. 78 lakhs.therefore, the assessee must have paid a small amount of rs. 50,000 to hail abdul rahim in order to refraud the revenue by amount of more than rs. 78 lakhs. otherwise, we do not find any reason why a stranger like haji abdul rahim should sign a false affidavit duly certified by a magistrate of srinagar (jammu & kashmir) as evidence of cash gift of rs. 1.25 crores to the assessee. the assessee as well as the donor sri haji abdul rahim view that the affidavit was false, yet the assessee purposely produced the false affidavit before the assessing officer and also gave false statement before the assessing officer. under the circumstances, we are not able to give any credence to the arguments of the ld. counsel for the assessee.

Judgment:
1. This appeal by the Revenue relates to assessment year 1985-86 and arises out of the order of the CIT (Appeals)-IV, Madras dated 24-2-1989. The following two grounds are raised in this appeal : 1. The CIT (Appeals) has erred in directing deletion of the unexplained expenditure to the extent of Rs. 67,216.

2. The CIT (Appeals) has failed to appreciate that Shri Haji Abdul Rahim had acknowledged having received Rs. 50,000 towards providing an affidavit.

2. The brief facts of the case are that the assessee filed a return of income on 13-5-1986 for the assessment year 1985-86 admitting loss of Rs. 70,829. The assessee derived income from salary, house property, business and sitting fees and dividends from companies. The Assessing Officer found that the assessee had shown credit entry of Rs. 1,27,48,325 described as gift in his capital account. The Assessing Officer called upon the assessee to produce evidence for the same. The assessee claimed that the gifts were received from (i) cash gift of Rs. 1,25,00,000 from Haji Abdul Rahim, Leh, Ladakh and (ii) 3225 shares of M/s. Shaw Wallace & Co. valued at Rs. 2,48,325 from V. K. Chandrakumar as gift. The Assessing Officer made enquiries in the matter and found that the gifts were to genuine and the assessee, on seeing that the claim has been disproved, filed a revised return on 6-3-1987 including Rs. 2,78,081 as income in respect of value of 3225 shares of Shaw Wallace & Co., earlier claimed as gift.

3. Since the above grounds of appeal are connected with the amount of Rs. 1.25 crores claimed by the assessee as gift received from Sri Haji Abdul Rahim, it would be necessary to narrate the facts in brief. When the Assessing Officer asked the assessee to produce evidence for the cash gift of Rs. 1.25 crore received by him, an affidavit dated 11-1-1985 signed by the donor Sri Haji Abdul Rahim, duly certified by the Judicial Magistrate, Srinagar was filed. The Assessing Officer recorded the statements of the assessee on 16-6-1986 and 30-6-1986. In his sworn statement the assessee stated that he knew the donor Shri Haji Abdul Rahim from 1960 and that he was introduced to him by his classmate Shri Sultan Vazir, who is a Kashmiri doing business at the relevant time in Bombay. It was stated that the gift was made by Haji Abdul Rahim on 11-1-1985 in the presence of Shri Sultan Vazir at Srinagar at a company's guest house, the address of which the assessee could not recollect. The assessee deposed that the cash was given in 9 suit cases and was not counted at the time of taking over, that the entire gift amount was first brought to Delhi by road and from Delhi it was brought partly to Madras and partly to Bangalore. According to the assessee, he does not remember the number of suit cases and amount taken to Madras and Bangalore and that portion of the gift which was brought to Madras was carried by him as additional luggage by air to Madras. It was stated that the amount sent from Delhi to Bangalore was carried by the assessee's personal friend, but whose name was not furnished. The alleged gift amount was invested in fixed deposits and also paid in cash to M/s. Sujatha Films P. Ltd. towards the assessee's account.

4. In order to verify the genuineness of the transaction, the Assessing Officer made reference to the DDI (Inv.), Unit-I, Bombay to examine Sri Sultan Vazir who was reportedly present at the time when the alleged gift was made by Waji Abdul Rahim. The report of the DDI (Inv.), Bombay indicated that Sultan Vazir is not a common friend of assessee and Haji Abdul Rahim and he came to know of Haji Abdul Rahim only at the time when the alleged gift was made and he was introduced to Haji Abdul Rahim by the assessee. Sri Sultan Vazir was also not aware of the amount of gift made by Haji Abdul Rahim. The number of suit cases in which it was handed over, etc. Similar reference was made by the Assessing Officer to the DDI (Inv.), Delhi for verifying the facts about alleged gift. During the course of enquiries, the DDI (Inv.), Delhi recorded the statement of Haji Abdul Rahim on 3-9-1986 at Leh (Ladakh). Wherein after initial denial Haji Abdul Rahim confessed that he has not made any gift and that he was made to execute the affidavit on a payment of Rs. 50,000 by the assessee. It is seen that on the basis of this statement of Haji Abdul Rahim, the Assessing Officer made addition of Rs. 50,000 to the assessee's income as the source for payment of the said sum was not explained by the assessee. The Assessing Officer also made enquiries with Reserve Bank of India, Madras regarding the weight of currency for a value of Rs. 1.25 crores and the volume required for packing the same. A reply received from the bank on 12-9-1986 shows that currencies of Rs. 1.25 crores in fresh notes of Rs. 100 denomination would weight 125 Kg. (approx.) and would require three brief cases of the size of 24" x 10" x 12". Enquiries were also made with the Indian Airlines at Delhi, which revealed that Sri G. Venkateswaran travelled to Madras from Delhi on 14-1-1985 by IC 540 with a checked baggage weighing 10 kg. only, within the free allowance of 20 kg. On enquiry, the Superintendent of Police, Road Traffic, Udampur, informed the Assessing Officer at Udampur on 25-9-1987 that the road from Jammu to Srinagar was thorough for up-convey only on 10-1-1985 and downconvey only on 11-1-1985. The Assessing Officer considered that the distance between Delhi and Jammu is 585 kg. and the assessee could not have been in time at Jammu to join the up-convey on 10-1-1985 and obviously, he could not have reached Srinagar on 11-1-1985 to receive the alleged gift. The assessee was also afforded an opportunity to cross-examine Haji Abdul Rahim in connection with the statement earlier recorded from him by the DDI (Inv.), Delhi, on 3-9-1986. However, cross-examination could not be completed-for want of time on 12-8-1987 and further cross-examination and re-examination could not be undertaken on 13-8-1987.

5. Enquiries by the Assessing Officer indicated that the alleged donor was enjoying overdraft Facilities from the Bank of Jammu & Kashmir, Leh from 1978 with a limit of Rs. 1 lakh only and he continued to be a debtor to the bank even on 11-1-1985 when the alleged gift was made. It was further found that Haji Abdul Rahim did not travel by air from Leh to Srinagar at the material point of time when the roads from Leh to Srinagar were otherwise closed for traffic during winter season, viz., November to May. The Assessing Officer concluded that the alleged donor was not even an acquaintance to the assessee on the date of gift, i.e., 11-1-1985, that he was a man of ordinary means who in-turn was indebted to the bank and that the assessee ever went to Srinagar on 11-1-1985 to receive the alleged gift. The Assessing Officer also found that the assessee did not go from Delhi and was staying during the material period in a hotel at Delhi and did not stir out from Delhi during the material time. On the basis of all these evidences, the Assessing Officer issued a letter to the assessee on 19-10-1987 asking him to show cause why the alleged gift should not be treated as his unexplained income. By his letter dated 30-10-1987, the assessee asked for a copy of the statement of Sri Haji Abdul Rahim recorded on 7-10-1987 and the same was supplied to him on 3-11-1987. However, on 30-11-1987 the assessee came forward with a second revised return including this gift of Rs. 1.25 crores also and has also paid self assessment tax of Rs. 78,25,748 under section 140A.6. On these facts, the issue to be considered is whether the Assessing Officer was justified in believing the statement of Haji Abdul Rahim who stated that he was paid Rs. 50,000 by the assessee for executing an affidavit for the alleged gift. The CIT (Appeals) held that the mere statement without any corroborative evidence cannot establish that the assessee had paid a sum of Rs. 50,000 to Sri Haji Abdul Rahim. The CIT (Appeals) accepted the claim of the assessee that a sum of Rs. 7,784 might have been expended by his friend towards hotel expenses. The CIT (Appeals) held that only because the assessee had stayed in hotel, it cannot be taken as a conclusive evidence of having incurred the expenditure.

7. The learned Departmental Representative argued that there is strong circumstantial evidence to show that the assessee must have paid some amount to Haji Abdul Rahim for the purpose of executing a false affidavit. On the other hand, the ld. counsel for the assessee has emphasised that the assessee has offered voluntarily the income of Rs. 1.25 crores and had he paid the sum of Rs. 50,000 to the donor the assessee would have declared the said amount also. According to the ld.counsel for the assessee, when the assessee is prepared to pay tax of Rs. 1.25 crores, he would not have hesitated to pay tax on the said sum of Rs. 50,000 also, if in fact such a sum would have been paid to Haji Abdul Rahim.

8. We have considered the rival submissions and material on record. The Assessing Officer found that the assessee has shown in his capital account credit entry of Rs. 1,27,48,325 described as gift. It was explained by the assessee that a sum of Rs. 1.25 crores was received by him from Haji Abdul Rahim as a gift. Similarly the assessee explained that 3,225 shares of M/s. Shaw Wallace & Co. valued at Rs. 2,48,325 was received as gift from Sri V. K. Chandrakumar. But Sri Chandrakumar stated before the Assessing Officer that he had only sold those shares for Rs. 2,78,081 to the assessee and the shares were not gifted to the assessee. When the Assessing Officer informed of it and asked for assessee's explanation. The assessee filed a revised return on 6-3-1987 including the sum of Rs. 2,78,081 as his income with the narration "acquisition of shares in M/s. Shaw Wallace & Co. earlier treated as gift now treated as purchase and offered as income". Subsequently when various enquiries were made by the Department and it was fully established that the claim of the assessee regarding alleged cash gift of Rs. 1.25 crores from Haji Abdul Rahim is false, the assessee came forward with a second revised return including this gift of Rs. 1.25 crores also and has also paid self-assessment tax of Rs. 78,25,748. The enquiries made by the Departmental officials clearly show that the assessee has obtained a false affidavit of Haji Abdul Rahim for claiming alleged gift of Rs. 1.25 crores to defraud the revenue. The submission of the assessee's counsel that had the assessee paid the sum of Rs. 50,000 to Haji Abdul Rahim, he would have offered that amount, is devoid of any merit. After the Assessing Officer made enquiries in the matter, the assessee had no option but to offer the amount of Rs. 2,78,081 in the revised return dated 6-3-1987 and the sum of Rs. 1.25 crores as his income in the second revised return filed on 30-11-1987.

If the Assessing Officer had not made any enquiries in the matter, then these amounts of Rs. 2,78,081 and Rs. 1.25 crores would have definitely escaped assessment totally. The assessee in order to evade payment of tax at Rs. 78,25,748 (which was paid as self-assessment tax under section 140A) obtained the false affidavit of Haji Abdul Rahim claiming gift of Rs. 1.25 crores on 11-1-1985. Enquiries conducted by the Assessing Officer clearly reveal that the donor was not capable of making such a huge amount of gift and he continued to be a debtor to the J&K Bank even on 11-1-1985 when the alleged gift was made. It is against all human probabilities also that person residing in Leh (Ladakh) would have made a gift of Rs. 1.25 crores to a total stranger residing at Madras without any reason. But the assessee was under the impression that he would succeed in evading tax of Rs. 78,25,748 by producing a false affidavit of Haji Abdul Rahim before the Assessing Officer regarding the alleged gift. If the Assessing Officer has not conducted enquiries, the assessee would have succeeded in his designs and in order to succeed in his designs to defraud the Revenue by huge sum as taxes legitimately due to the State, the assessee must have paid some amount to Haji Abdul Rahim as otherwise there is no reason why the said person should sign a false affidavit stating that the alleged gift of Rs. 1.25 crores was made by him, which he himself knew to be false.

Therefore, under the circumstances, which are created by the assessee himself, there are no reason to disbelieve the statement of Haji Abdul Rahim that he was made to execute the affidavit on a payment of Rs. 50,000 by the assessee. The assessee might not have directly paid the said payment, because as stated, the alleged donor was not even an acquaintance to the assessee on the date of gift, i.e., 11-1-1985. But the circumstances show that whatever means the assessee might have employed to get the affidavit of Haji Abdul Rahim, it is clear that the assessee must have paid some amount directly or indirectly through somebody to the said donor, because it serves the purpose of the assessee to defraud the revenue by a huge amount of Rs. 78,25,748 by claiming gift of Rs. 1.25 crores and Rs. 50,000 paid by the assessee to Haji Abdul Rahim is comparatively a small amount than the tax amount of Rs. 78.25 lakhs. In this background we are fully convinced that the assessee must have paid the sum of Rs. 50,000 because there is no reason why Haji Abdul Rahim should sign a false affidavit without any consideration. These facts and other circumstances and evidences were totally ignored by the CIT (Appeals) in coming to the conclusion and he did not go deeper into the matter to find out the truth. We, therefore, reverse the order of the CIT (Appeals) on this issue and confirm the order of the Assessing Officer insofar as the addition of Rs. 50,000 is concerned. There is no other evidence to show that the assessee would have spent anything more than Rs. 50,000 to obtain the false affidavit.

9. It may be mentioned that normally addition to the total income of an assessee cannot be made on the basis of statement of a person but in each case facts and circumstances have to be analysed thoroughly with the due care. In the case of assessee before us, he himself is responsible for creation of situation and circumstances, which compelled us to believe the statement of Sri Haji Abdul Rahim. The assessee himself produced the false affidavit of Haji Abdul Rahim before the Assessing Officer for claiming cash gift of Rs. 1.25 crores.

The assessee also gave false statement on oath on 16-6-1986 and 30-6-1986 before the Assessing Officer that he knew the donor and that he received cash gift of Rs. 1.25 crores from Haji Abdul Rahim. In view of the facts stated in the preceding paragraphs (in brief) the statement of the assessee was found totally false. Facts of the case shows that in order to defraud the revenue the assessee can go to any extent in telling lies even on oath. If the Assessing Officer had not been vigilant the assessee would have succeeded in his design to defraud the revenue by the amount of taxes in more than Rs. 78 lakhs.

Therefore, the assessee must have paid a small amount of Rs. 50,000 to Hail Abdul Rahim in order to refraud the revenue by amount of more than Rs. 78 lakhs. Otherwise, we do not find any reason why a stranger like Haji Abdul Rahim should sign a false affidavit duly certified by a Magistrate of Srinagar (Jammu & Kashmir) as evidence of cash gift of Rs. 1.25 crores to the assessee. The assessee as well as the donor Sri Haji Abdul Rahim view that the affidavit was false, yet the assessee purposely produced the false affidavit before the Assessing Officer and also gave false statement before the Assessing Officer. Under the circumstances, we are not able to give any credence to the arguments of the ld. counsel for the assessee.