Om Builders and Engineers (P) Ltd. Vs. Assistant Commissioner of Income Tax. - Court Judgment

Excerpt:
- divorce by mutual consent personal presence of parties exempted power of attorney to dissolve the marriage the special power of attorney in favour of one mr. lal babu tiwari was executed by the petitioner (husband) to appear before the court and testify about the contents of the petition. the petitioner has signed the petition before indian consulate high commission of india in uk under section 3(2) of the diplomatic and consular officers (oaths and fees) act, 1947 under which the documents do not require any further evidence.[para 3] if both the parties, by way of affidavits or through counsel, state that they are married, and are able to produce proof of the marriage and that they have been living separately and have not been able to live together for the prescribed period, then there can be no reason as to why the court should not record its satisfaction as envisaged under section 13-b(2) of hindu marriage act, despite the fact that parties had not appeared in person and pass a decree for divorce.[para 6] where the parties are living far away from the jurisdiction of the court competent to dissolve the marriage, the parties after filing their affidavits can appoint attorneys to act on their behalf. attorney is competent to act on behalf of the principal on the basis of power of attorney executed by the principal. the courts have been allowing attorneys to file the petition, to withdraw the petition, to carry on proceedings in the court on behalf of their principal in all other cases. the attorney can also act in matrimonial cases as per instructions of their principle. the court can take necessary precautions to prevent frauds being perpetuated on it but unless the court smells some kind of fraud being played with it, the court should normally recognize the act of the attorneys. i therefore allow this petition. the order of the trial court insisting on the personal appearance of the parties is set aside.[para 8] - 263 of the act, the cit alleged that the gifts received by the assessed are from petty persons like labourers, masons, trailors, etc. the learned counsel also filed the statements of accounts from 1985-86 onwards, statement of affairs as well that of assessable income for subsequent assessment years and the assessments framed. as to shri ajay gupta similar evidence was filed which included the income-tax assessments framed as well that of the wealth-tax assessments. aggarwal, as the shareholders were identifiable as held in the case of india rice mills vs .cit [1996]218itr508(all) at best the addition could be made in the hands of the parties. copies of accounts of the party in the books of m/s om builders & engineers show certain withdrawals as well deposits. 111 to 141. this includes income-tax as well wealth-tax assessments framed for asst. 48 to 93 of the paper-book). the steady increase in the income as well wealth apparently has been accepted by the respective aos in cases of both the parties. 1985-86 to 1995-96 stand completed accepting the assessees version both in regard to the income as declared as well the wealth shown for all the assessment years. thus fact remains that the income as well the wealth has been assessed in the hands of these two parties. 147 of the act, the assessments have been framed in the hands of both the parties taking the income surrendered as well the income as declared. according to the learned authorised representative, as all the prerequisite conditions for proving the genuineness of the cash credit were satisfied, the addition was not warranted.ordersmt moksh mahajan, a.m. :these two appeals filed by the assessed for asst. yrs. 1984-85 and 1985-86 are against respective orders of the learned cit(a). as these contain common issues, these are consolidated and disposed of by passing a common order.2. taking up the assessees appeal in ita no. 4606/del/1989 we find that the first ground relates to additions of rs. 2,47,286 and rs. 2,65,638 on account of cash credits in the account of s/shri anil gupta and ajay gupta. the facts in brief as explained by shri c. s. aggarwal are that on examination of the accounts of the assessed it was found that there were cash credits in the accounts of these two parties namely s/shri anil gupta and ajay gupta. both are sons of director shri o. p. gupta. despite evidence filed before the ao the same was not accepted and the additions were made in the hands of the company. the learned cit(a) upheld the additions giving reasons in para 3 of his order. while doing so he totally ignored the facts brought on record which more than showed that not only the parties were identifiable but they were creditworthy and the genuineness of the transaction was not in doubt. the assessments in the hands of shri anil gupta were finalised for asst. yrs. 1981-82 to 1984-85. these were set aside by the cit under s. 263 of the act. after reopening of the assessments the assessed decided to avail of the benefits of the amnesty scheme announced during the financial year 1985-86 and revised the returns for all the assessment years. in addition it also filed a return for asst. yr. 1980-81. in his order passed under s. 263 of the act, the cit alleged that the gifts received by the assessed are from petty persons like labourers, masons, trailors, etc. who are not related to the assessed and as such could not be accepted. in revising its returns for all the assessment years the assessed relied on assurance given on the amnesty scheme whereby no penalties or interest would be charged in the course of assessments as framed. similar was the position in regard to the declaration which would not be questioned by the it department. the assessed filed other evidence showing his creditworthiness. an affidavit was filed stating that shri anil gupta had deposited a sum of rs. 2,62,000 in cash on different occasions with m/s om builders & engineers. in the affidavit it was explained that the income was from salary, business and other sources. the statements of accounts for asst. yrs. 1984-85 onwards, wealth-tax returns from asst. yr. 1983-84 and copies of the assessment orders for asst. yrs. 1980-81 onwards were also filed. the learned counsel also filed the statements of accounts from 1985-86 onwards, statement of affairs as well that of assessable income for subsequent assessment years and the assessments framed. no evidence was brought on record to show that these were cooked-up figures and that they could not be accepted despite the fact that the assessments framed stood finalised. as to shri ajay gupta similar evidence was filed which included the income-tax assessments framed as well that of the wealth-tax assessments. according to shri c. s. aggarwal, as the shareholders were identifiable as held in the case of india rice mills vs . cit : [1996]218itr508(all) at best the addition could be made in the hands of the parties. similarly in the case of addl. cit vs . precision metal works & ors. : [1985]156itr693(delhi) , their lordships of delhi high court held that the income could either be the income of the firm or that of the individual partners. it could not be the income of both. once having accepted the amount as the income of the partners, it could not be added to the income of the firm. the relevant observations were made according to the learned authorised representative on p. 696 of the order. in any case the income of the declarant could not be the income of the company. this apart as held in the case of sona electric co. vs . cit : [1985]152itr507(delhi) cash credit entry in the assessees books of accounts can be rejected by the ito on cogent grounds. attention was also drawn to the decision rendered by the honble patna high court in the case of addl. cit vs . hanuman aggarwal : [1985]151itr150(patna) , wherein it was held that after the initial burden of proof that the credit is genuine is discharged by the assessed by furnishing gir number and address and confirmatory letters from creditors, in absence of any cogent evidence the same cannot be assessed as the income of the assessee. shri c. s. aggarwal also relied on the order of the tribunal in the case of rishi electronics ltd. vs . asstt. cit , wherein after discussing the judgment of the honble delhi high court in the case of cit vs . sophia finance ltd. : [1994]205itr98(delhi) , it was held that though a heavy duty is cast upon the assessed not only to produce shareholders but also evidence of their financial status, bank pass books, etc. it is not fair and reasonable to call upon the company to produce all the mentioned pieces of evidence in case of shareholders. the assessed is required to establish the identity of the party which he did in these cases. the learned departmental representative on the other hand heavily relied on the order of the learned cit(a).3. we have carefully considered the rival submissions and have also gone through the facts as made available in the paper-book. we find that in the case of shri anil gupta in addition to the affidavit filed confirming the deposits in his name as reflected in the books of account of company, other material was placed to show that the party had been assessed to tax right from asst. yr. 1980-81. the assessment for asst. yr. 1981-82 was finalised on 21st february, 1984 on an income of rs. 15,840 (p. 40 of the paper-book). the income shown was from salary and business.the wealth-tax assessment for the same assessment year was framed on 21st february, 1984. (p. 43 of the paper-book). the wealth was inclusive of rs. 2,11,135 as per statement of affairs. the income-tax and wealth-tax assessments framed from asst. yr. 1982-83 onwards would again show that shri anil gupta has been regularly assessed to tax (pp. 45 to 83 of the paper-book). further from the information gathered from these orders we find that shri anil guptas main source of income was salary from m/s om builders & engineers, business income and income from other sources. as per the statements of assessable wealth, the capital increased from rs. 3,24,935 in asst. yr. 1982-83 to rs. 4,53,974 in asst. yr. 1983-84. for asst. yr. 1984-85 the balance-sheet reflected the deposit with m/s om builders at rs. 2,47,286 from which interest earned was shown. copies of accounts of the party in the books of m/s om builders & engineers show certain withdrawals as well deposits. in asst. yr. 1986-87 shri anil gupta also showed share of profit from om construction company and the income has been assessed under s. 143(1) of the act. even for later asst. yrs. i.e. 1987-88 to 1995-96 shri anil gupta has been assessed on the income as returned.4. as regards shri ajay gupta, the information filed in the paper-book is from pp. 111 to 141. this includes income-tax as well wealth-tax assessments framed for asst. yrs. 1983-84 to 1984-85. wealth-tax assessments for asst. yr. 1983-84 has been framed on net wealth of rs. 2,51,200. as on 31st march, 1984 the opening capital of shri ajay gupta was reflected at rs. 2,64,280 (p. 117 of the paper-book), which stands accepted by the wto. similar is the case for asst. yrs. 1985-86 and 1986-87. the sources of income of shri ajay gupta as reflected are from salary, share of profit from m/s om construction and interest income. the capital as on 31st march, 1985 is reflected at rs. 3,46,133. this has increased to rs. 3,86,836 on 31st march, 1986. the assessments for asst. yrs. 1984-85 to 1996-97 have been framed by the ao. this is evident from the copies of the assessment orders filed before us (pp. 48 to 93 of the paper-book). the steady increase in the income as well wealth apparently has been accepted by the respective aos in cases of both the parties. as to the capital built by way of gifts we find that for asst. yrs. 1981-82 to 1984-85 in the case of shri anil gupta the assessments were cancelled by the learned cit(a) vide his order dt. 4th march, 1986. in response to the notice issued under s. 148 of the act, the assessments were reframed taking the income surrendered by shri anil gupta on account of gifts received from various parties. in the order so framed, however, no finding was given by the ao as to whether there was any evidence to prove the existence of moneys during the relevant assessment years as directed by the cit in his order passed under s. 263 of the act. proceedings under s. 271(1)(c) of the act were also initiated for all these assessment years. statement of affairs filed on 31st march, 1981 (p. 88 of paper-book) reveal that the cash in hand was shown at rs. 2,07,644. this was accepted by the wto and for other years too. the amount surrendered by the party was brought to tax in the concerned assessment years. as to what happened in regard to the penalties imposed under s. 271(1)(c) of the act, no material is placed before us by the learned authorised representative or for that matter by the learned departmental representative. similar was the case in regard to ajay gupta where proceedings under s. 148 of the act were also initiated. in response to notices issued under s. 148 the assessments were reframed in pursuance of which shri ajay gupta surrendered the gifts of rs. 53,247 for asst. yr. 1983-84. as per information filed the assessments for asst. yrs. 1985-86 to 1995-96 stand completed accepting the assessees version both in regard to the income as declared as well the wealth shown for all the assessment years. thus fact remains that the income as well the wealth has been assessed in the hands of these two parties. the parties are identifiable, the source of income has been explained and no evidence was brought on record to show that the transactions were not genuine. on the other hand despite proceedings under s. 263 of the act and s. 147 of the act, the assessments have been framed in the hands of both the parties taking the income surrendered as well the income as declared. no finding has been given in these orders to show that the amount did not belong to shri anil gupta and shri ajay gupta and that the same actually belong to the company. in the face of ample evidence brought on record by the assessed in support of the deposits received from the parties and in absence of any material on record in rebuttal of the same, the only logical conclusion could be that the additions could not be made in the hands of the company. this is also in view of the various decisions as cited by the learned authorised representative which we need not repeat. in the circumstances the additions of rs. 2,47,286 and rs. 2,65,638 in respect of unexplained cash credits in the accounts of s/shri anil gupta and ajay gupta respectively stand deleted.5. second ground of appeal relates to addition made on account of unexplained cash credit in the account of shri hanuman. the ao found that out of the amount of rs. 78,000 stated to have been advanced to the company it was explained by the party that a sum of rs. 30,000 was borrowed from his son shri krishan kumar and the balance came out of his agricultural income. in support affidavit was furnished along with the affidavit of shri krishan kumar. both shri hanuman and shri krishan kumar were examined and after finding certain discrepancies in the statement of shri krishan kumar, the addition of rs. 30,000 was made. the learned cit(a) confirmed the addition for the reasons as given in the order of the ao. in addition to the confirmation letter filed and source of investment explained, the learned authorised representative relied on the statements of both the parties whereby in certain terms the transactions were admitted. according to the learned authorised representative, as all the prerequisite conditions for proving the genuineness of the cash credit were satisfied, the addition was not warranted. it was argued that the assessed was not required to prove the source of source and as such the addition was unwarranted. the learned departmental representative on the other hand, relied on the order of the learned cit(a).6. we have considered the submissions made on both sides. we have also gone through the material to which our specific attention was drawn. we find that in support of his investment made in the company shri hanuman filed an affidavit whereby he stated that annual produce of his land is approximately rs. 80,000. as per the contents of the affidavits a sum of rs. 78,000 was advanced. out of (sic them) rs. 48,000 was advanced after withdrawing the same from savings bank account no. 3901 with sbi, mandi dabhauli and the balance came from his son shri krishan kumar. in his affidavit shri krishan kumar submitted that he is also an agriculturist and annual produce of his land is rs. 40,000. he also mentioned that rs. 30,000 was advanced to his father. the statements of both s/shri hanuman and krishan kumar have not been furnished before us either by the learned authorised representative or for that matter by the learned departmental representative. accordingly the reference is made to the order of the ao wherein it is mentioned that shri krishan kumar could not produce any evidence in regard to rs. 30,000 having been advanced to his father. he also could not produce the pass-book. it was these factors which led to the making of an addition in the hands of the company. in this regard it is admitted that both the parties existed and as such are genuine. they also admitted having advanced the amounts as mentioned. the fact that shri krishan kumar did not produce any pass-book in support of the amount having been given to his father, could be the starting point of enquiries to be made in the hands of shri krishan kumar and not in the case of the company. in absence of any material to show that it was the unexplained income of the company which was ploughed back in its books of accounts in the name of shri hanuman, we are unable to uphold the addition as sustained by the learned cit(a) and accordingly we delete it.7. coming to ita no. 4607/del/1989 for asst. yr. 1985-86, the first contention raised in ground nos. 1 and 2, relates to disallowance of interest of rs. 51,290 paid to s/shri anil gupta and ajay gupta. both the parties admitted that the interest is related to the deposits made by both the parties in asst. yr. 1984-85 which have not been accepted by the revenue. we have deleted the additions made on account of deposits in the names of s/shri anil gupta and ajay gupta as per our order in para 4 hereinabove. consequently the interest paid on the deposits is also allowed. this is also for the reason that no material was placed before us to show that the interest claimed was bogus.8. ground no. 3 relating to disallowance of rs. 22,155 made under s. 40a(8) of the act and ground no. 4 relating to disallowance of rs. 2,722 under s. 37(3a) of the act have not been pressed by the learned counsel for the assessed and as such these are dismissed having become infructuous.9. in the result, ita no. 4606/del/1989 is allowed and ita no. 4607/del/1989 is partly allowed.

Judgment:
ORDER

SMT MOKSH MAHAJAN, A.M. :

These two appeals filed by the assessed for asst. yrs. 1984-85 and 1985-86 are against respective orders of the learned CIT(A). As these contain common issues, these are consolidated and disposed of by passing a common order.

2. Taking up the assessees appeal in ITA No. 4606/Del/1989 we find that the first ground relates to additions of Rs. 2,47,286 and Rs. 2,65,638 on account of cash credits in the account of S/Shri Anil Gupta and Ajay Gupta. The facts in brief as explained by Shri C. S. Aggarwal are that on examination of the accounts of the assessed it was found that there were cash credits in the accounts of these two parties namely S/Shri Anil Gupta and Ajay Gupta. Both are sons of director Shri O. P. Gupta. Despite evidence filed before the AO the same was not accepted and the additions were made in the hands of the company. The learned CIT(A) upheld the additions giving reasons in para 3 of his order. While doing so he totally ignored the facts brought on record which more than showed that not only the parties were identifiable but they were creditworthy and the genuineness of the transaction was not in doubt. The assessments in the hands of Shri Anil Gupta were finalised for asst. yrs. 1981-82 to 1984-85. These were set aside by the CIT under s. 263 of the Act. After reopening of the assessments the assessed decided to avail of the benefits of the Amnesty Scheme announced during the financial year 1985-86 and revised the returns for all the assessment years. In addition it also filed a return for asst. yr. 1980-81. In his order passed under s. 263 of the Act, the CIT alleged that the gifts received by the assessed are from petty persons like labourers, masons, trailors, etc. who are not related to the assessed and as such could not be accepted. In revising its returns for all the assessment years the assessed relied on assurance given on the Amnesty Scheme whereby no penalties or interest would be charged in the course of assessments as framed. Similar was the position in regard to the declaration which would not be questioned by the IT Department. The assessed filed other evidence showing his creditworthiness. An affidavit was filed stating that Shri Anil Gupta had deposited a sum of Rs. 2,62,000 in cash on different occasions with M/s Om Builders & Engineers. In the affidavit it was explained that the income was from salary, business and other sources. The statements of accounts for asst. yrs. 1984-85 onwards, wealth-tax returns from asst. yr. 1983-84 and copies of the assessment orders for asst. yrs. 1980-81 onwards were also filed. The learned counsel also filed the statements of accounts from 1985-86 onwards, statement of affairs as well that of assessable income for subsequent assessment years and the assessments framed. No evidence was brought on record to show that these were cooked-up figures and that they could not be accepted despite the fact that the assessments framed stood finalised. As to Shri Ajay Gupta similar evidence was filed which included the income-tax assessments framed as well that of the wealth-tax assessments. According to Shri C. S. Aggarwal, as the shareholders were identifiable as held in the case of India Rice Mills vs . CIT : [1996]218ITR508(All) at best the addition could be made in the hands of the parties. Similarly in the case of Addl. CIT vs . Precision Metal Works & Ors. : [1985]156ITR693(Delhi) , their Lordships of Delhi High Court held that the income could either be the income of the firm or that of the individual partners. It could not be the income of both. Once having accepted the amount as the income of the partners, it could not be added to the income of the firm. The relevant observations were made according to the learned Authorised Representative on p. 696 of the order. In any case the income of the declarant could not be the income of the company. This apart as held in the case of Sona Electric Co. vs . CIT : [1985]152ITR507(Delhi) cash credit entry in the assessees books of accounts can be rejected by the ITO on cogent grounds. Attention was also drawn to the decision rendered by the Honble Patna High Court in the case of Addl. CIT vs . Hanuman Aggarwal : [1985]151ITR150(Patna) , wherein it was held that after the initial burden of proof that the credit is genuine is discharged by the assessed by furnishing GIR number and address and confirmatory letters from creditors, in absence of any cogent evidence the same cannot be assessed as the income of the assessee. Shri C. S. Aggarwal also relied on the order of the Tribunal in the case of Rishi Electronics Ltd. vs . Asstt. CIT , wherein after discussing the judgment of the Honble Delhi High Court in the case of CIT vs . Sophia Finance Ltd. : [1994]205ITR98(Delhi) , it was held that though a heavy duty is cast upon the assessed not only to produce shareholders but also evidence of their financial status, bank pass books, etc. It is not fair and reasonable to call upon the company to produce all the mentioned pieces of evidence in case of shareholders. The assessed is required to establish the identity of the party which he did in these cases. The learned Departmental Representative on the other hand heavily relied on the order of the learned CIT(A).

3. We have carefully considered the rival submissions and have also gone through the facts as made available in the paper-book. We find that in the case of Shri Anil Gupta in addition to the affidavit filed confirming the deposits in his name as reflected in the books of account of company, other material was placed to show that the party had been assessed to tax right from asst. yr. 1980-81. The assessment for asst. yr. 1981-82 was finalised on 21st February, 1984 on an income of Rs. 15,840 (p. 40 of the paper-book). The income shown was from salary and business.

The wealth-tax assessment for the same assessment year was framed on 21st February, 1984. (p. 43 of the paper-book). The wealth was inclusive of Rs. 2,11,135 as per statement of affairs. The income-tax and wealth-tax assessments framed from asst. yr. 1982-83 onwards would again show that Shri Anil Gupta has been regularly assessed to tax (pp. 45 to 83 of the paper-book). Further from the information gathered from these orders we find that Shri Anil Guptas main source of income was salary from M/s Om Builders & Engineers, business income and income from other sources. As per the statements of assessable wealth, the capital increased from Rs. 3,24,935 in asst. yr. 1982-83 to Rs. 4,53,974 in asst. yr. 1983-84. For asst. yr. 1984-85 the balance-sheet reflected the deposit with M/s Om Builders at Rs. 2,47,286 from which interest earned was shown. Copies of accounts of the party in the books of M/s Om Builders & Engineers show certain withdrawals as well deposits. In asst. yr. 1986-87 Shri Anil Gupta also showed share of profit from Om Construction Company and the income has been assessed under s. 143(1) of the Act. Even for later asst. yrs. i.e. 1987-88 to 1995-96 Shri Anil Gupta has been assessed on the income as returned.

4. As regards Shri Ajay Gupta, the information filed in the paper-book is from pp. 111 to 141. This includes Income-tax as well Wealth-tax assessments framed for asst. yrs. 1983-84 to 1984-85. Wealth-tax assessments for asst. yr. 1983-84 has been framed on net wealth of Rs. 2,51,200. As on 31st March, 1984 the opening capital of Shri Ajay Gupta was reflected at Rs. 2,64,280 (p. 117 of the paper-book), which stands accepted by the WTO. Similar is the case for asst. yrs. 1985-86 and 1986-87. The sources of income of Shri Ajay Gupta as reflected are from salary, share of profit from M/s Om Construction and interest income. The capital as on 31st March, 1985 is reflected at Rs. 3,46,133. This has increased to Rs. 3,86,836 on 31st March, 1986. The assessments for asst. yrs. 1984-85 to 1996-97 have been framed by the AO. This is evident from the copies of the assessment orders filed before us (pp. 48 to 93 of the paper-book). The steady increase in the income as well wealth apparently has been accepted by the respective AOs in cases of both the parties. As to the capital built by way of gifts we find that for asst. yrs. 1981-82 to 1984-85 in the case of Shri Anil Gupta the assessments were cancelled by the learned CIT(A) vide his order dt. 4th March, 1986. In response to the notice issued under s. 148 of the Act, the assessments were reframed taking the income surrendered by Shri Anil Gupta on account of gifts received from various parties. In the order so framed, however, no finding was given by the AO as to whether there was any evidence to prove the existence of moneys during the relevant assessment years as directed by the CIT in his order passed under s. 263 of the Act. Proceedings under s. 271(1)(c) of the Act were also initiated for all these assessment years. Statement of affairs filed on 31st March, 1981 (p. 88 of paper-book) reveal that the cash in hand was shown at Rs. 2,07,644. This was accepted by the WTO and for other years too. The amount surrendered by the party was brought to tax in the concerned assessment years. As to what happened in regard to the penalties imposed under s. 271(1)(c) of the Act, no material is placed before us by the learned Authorised Representative or for that matter by the learned Departmental Representative. Similar was the case in regard to Ajay Gupta where proceedings under s. 148 of the Act were also initiated. In response to notices issued under s. 148 the assessments were reframed in pursuance of which Shri Ajay Gupta surrendered the gifts of Rs. 53,247 for asst. yr. 1983-84. As per information filed the assessments for asst. yrs. 1985-86 to 1995-96 stand completed accepting the assessees version both in regard to the income as declared as well the wealth shown for all the assessment years. Thus fact remains that the income as well the wealth has been assessed in the hands of these two parties. The parties are identifiable, the source of income has been explained and no evidence was brought on record to show that the transactions were not genuine. On the other hand despite proceedings under s. 263 of the Act and s. 147 of the Act, the assessments have been framed in the hands of both the parties taking the income surrendered as well the income as declared. No finding has been given in these orders to show that the amount did not belong to Shri Anil Gupta and Shri Ajay Gupta and that the same actually belong to the company. In the face of ample evidence brought on record by the assessed in support of the deposits received from the parties and in absence of any material on record in rebuttal of the same, the only logical conclusion could be that the additions could not be made in the hands of the company. This is also in view of the various decisions as cited by the learned Authorised Representative which we need not repeat. In the circumstances the additions of Rs. 2,47,286 and Rs. 2,65,638 in respect of unexplained cash credits in the accounts of S/Shri Anil Gupta and Ajay Gupta respectively stand deleted.

5. Second ground of appeal relates to addition made on account of unexplained cash credit in the account of Shri Hanuman. The AO found that out of the amount of Rs. 78,000 stated to have been advanced to the company it was explained by the party that a sum of Rs. 30,000 was borrowed from his son Shri Krishan Kumar and the balance came out of his agricultural income. In support affidavit was furnished along with the affidavit of Shri Krishan Kumar. Both Shri Hanuman and Shri Krishan Kumar were examined and after finding certain discrepancies in the statement of Shri Krishan Kumar, the addition of Rs. 30,000 was made. The learned CIT(A) confirmed the addition for the reasons as given in the order of the AO. In addition to the confirmation letter filed and source of investment explained, the learned Authorised Representative relied on the statements of both the parties whereby in certain terms the transactions were admitted. According to the learned Authorised Representative, as all the prerequisite conditions for proving the genuineness of the cash credit were satisfied, the addition was not warranted. It was argued that the assessed was not required to prove the source of source and as such the addition was unwarranted. The learned Departmental Representative on the other hand, relied on the order of the learned CIT(A).

6. We have considered the submissions made on both sides. We have also gone through the material to which our specific attention was drawn. We find that in support of his investment made in the company Shri Hanuman filed an affidavit whereby he stated that annual produce of his land is approximately Rs. 80,000. As per the contents of the affidavits a sum of Rs. 78,000 was advanced. Out of (sic them) Rs. 48,000 was advanced after withdrawing the same from Savings Bank Account No. 3901 with SBI, Mandi Dabhauli and the balance came from his son Shri Krishan Kumar. In his affidavit Shri Krishan Kumar submitted that he is also an agriculturist and annual produce of his land is Rs. 40,000. He also mentioned that Rs. 30,000 was advanced to his father. The statements of both S/Shri Hanuman and Krishan Kumar have not been furnished before us either by the learned Authorised Representative or for that matter by the learned Departmental Representative. Accordingly the reference is made to the order of the AO wherein it is mentioned that Shri Krishan Kumar could not produce any evidence in regard to Rs. 30,000 having been advanced to his father. He also could not produce the pass-book. It was these factors which led to the making of an addition in the hands of the company. In this regard it is admitted that both the parties existed and as such are genuine. They also admitted having advanced the amounts as mentioned. The fact that Shri Krishan Kumar did not produce any pass-book in support of the amount having been given to his father, could be the starting point of enquiries to be made in the hands of Shri Krishan Kumar and not in the case of the company. In absence of any material to show that it was the unexplained income of the company which was ploughed back in its books of accounts in the name of Shri Hanuman, we are unable to uphold the addition as sustained by the learned CIT(A) and accordingly we delete it.

7. Coming to ITA No. 4607/Del/1989 for asst. yr. 1985-86, the first contention raised in Ground Nos. 1 and 2, relates to disallowance of interest of Rs. 51,290 paid to S/Shri Anil Gupta and Ajay Gupta. Both the parties admitted that the interest is related to the deposits made by both the parties in asst. yr. 1984-85 which have not been accepted by the Revenue. We have deleted the additions made on account of deposits in the names of S/Shri Anil Gupta and Ajay Gupta as per our order in para 4 hereinabove. Consequently the interest paid on the deposits is also allowed. This is also for the reason that no material was placed before us to show that the interest claimed was bogus.

8. Ground No. 3 relating to disallowance of Rs. 22,155 made under s. 40A(8) of the Act and Ground No. 4 relating to disallowance of Rs. 2,722 under s. 37(3A) of the Act have not been pressed by the learned counsel for the assessed and as such these are dismissed having become infructuous.

9. In the result, ITA No. 4606/Del/1989 is allowed and ITA No. 4607/Del/1989 is partly allowed.