Appellantkushal Prasad Manhar v. Commissioner6Fincometax,Bilaspurbilaspur

rL-k.<r.-- IN THE HIGH COURT OF CHATTISGARH AT BILASPUR(C.G.) t^T ft,, No.66/JDI?^a@©9 TAX CASE No..A^:.../2010 APPELLANT;*^"®^ p^sj^Kushal' Prasad Manhar,A^^"®.'y[ s/° S/o Shri shri s- S.R. Manhar,^.'y-'\/Aged aboutyears,"...^'BhartiyaN£agar, Vyapar Vihar,-A'i1"^"i-.t"?3-y RlBilaspur (C.G.) -Vs.-, RESPONDENT : Commissioner of Income, Bilaspur,Chhattisgarh. APPEAL UNDER SECTION 260A OF THE INCOME TAXAC^Ji'QRASSESSMENT YEAR 2006-2007 i® mGH COURT OF CHHATHSGARH AT BILASPURTaxCaseNo. 12 of 2010APPELLANT:Kushal Prasad ManharVersusRespondentCommissionerofIncomeTax,BilaspiirORDERFor considerationSd/-N.K. AgarwalJudge$'-8-2010HQN'BLE SIEmi I.M. QUDDUSI. JY<j6^Sd/-:1---^3DR. I.M.Quddusi 1Judgewvcyga-e^ -8-2010Postfor: o^ -8-2010Sd/-N.K. AgrawalJudgeo-S^-8-2010 ^ HIGHCOURTOF CHHATTISGARH AT BILASPURTaxCase No. 12 of 2010 APPELLANTKushal Prasad Manhar Versus :Commissioner6fIncomeTax,BilaspurBilaspur Respondent APPEAL UNDER SECTION 260-A OF THE INCOME TAXACT FORASSESSMENTYEAR 2006-2007DB:Hon'bleMr^LM.QuddusiandHon'ble Mr. N.K. Aearwal. JJ. !"''11 • .• .• 1.;":'•-,11':;'' ''11Present: • .• .• 1.;":'•-,11':;''Shri G.N. Purohit,Sr. Advocate with Shri Abhishek Oswal,*Advocate for the appellsLD.t.Shri Rajeev Shrivastava, Standing Counselfor the respondent. ORDER(Passed onfc day pfAugust, 2010) PER N.K. AGARWAL. J. 1.The appeal under Section 26Q-A ofthe In-come Tax Act,1961 (for short, hereinafter refen-ed to as the Act') wasadmittedby this Court for consideration on the followingsubstantial questions of law:-1961 (for short, hereinafter refen-ed to as the Act') wasadmittedby this Court for consideration on the followingsubstantial questions of law:- i. Whether in the facts and in the circum.stances ofthe case, the Tribunal was correct in law in holdingthatappeUanthasfailedtoprovethecreditworthiness of the creditors and confirmmg theaddition ofRs. 14,99,000/- ?the case, the Tribunal was correct in law in holdingthatappeUanthasfailedtoprovethecreditworthiness of the creditors and confirmmg theaddition ofRs. 14,99,000/- ? . ii. Whether thefindingof theTribunalrecordedwithoutconsidering theevidfenceonrecord iswithoutconsidering theevidfenceonrecord is [in][ law][ and][ not][?]justifiedperverse iii. Whether on the facts and circumstances of thecase, fhe Tribunal was eorrect in law in confirraingcase, fhe Tribunal was eorrect in law in confirraing •^s':"'ys-^'y<.A''%,^t \- "•'''' '^" ^' the addition of Rs. 50,000/- for disallowance oftransportation expenses ? Facts of the case in nutshell are as under:- The assessee is sole prpprietor ofM/s Shradha Fuels,yill.Tiwarta, Korba and is engaged in the business of trading inPetrol, Diesel and Lubricant Oil ete.. He submitted hisreturn ofincome for Assessment Year 2006-2007 on 30-10-2006declaringtotalincomeofRs.1,26,359/-,Theassessment proceedings were taken up by issuance ofnotice under Section 143(2) OftheActdated 20-3-2007. Theassesseeclaiinedexpensesintransportafionaccoiintsamounting to Rs. 4,21,150/-. Cash credit amounting to Rs.9,00,000/- and Rs. 10,99,000/- are app.earihg in the namesofShriS.R. Manhar (Individual) and S.R. Manhar (HUF) inthe books 6f assessee as under:- 2. The above amounts were deposited by the creditors in themonth of Mareh, 2006 bn different dates in eash, in theirrespective bank accounts and account payee cheques wereimmediately issued thereafter to assessee. Qn being asked,theassesseeproducedtheabovecreditorforhis ^,.. ¥--ffy 7. examination. Shri S.R.Manhar (Individual) is also Karta bfthe HUF viz., S.R. Mahar; Statement of Shri S.R. Manhar inhis individual as weU as his capacity as Karta of HUF wererecorded in presence ofthe Authorized Representative of theassessee,separately. Out of Rs. 4,21,150/-, the Assessirig Officer disallowed Rs.50,000/- for want of bills and vouchers and added properthe same to the inGome ofthe assessee. 2. The above amounts were deposited by the creditors in themonth of Mareh, 2006 bn different dates in eash, in theirrespective bank accounts and account payee cheques wereimmediately issued thereafter to assessee. Qn being asked,theassesseeproducedtheabovecreditorforhis ^,.. ¥--ffy 7. examination. Shri S.R.Manhar (Individual) is also Karta bfthe HUF viz., S.R. Mahar; Statement of Shri S.R. Manhar inhis individual as weU as his capacity as Karta of HUF wererecorded in presence ofthe Authorized Representative of theassessee,separately. Out of Rs. 4,21,150/-, the Assessirig Officer disallowed Rs.50,000/- for want of bills and vouchers and added properthe same to the inGome ofthe assessee. The Assessing Officer after taking into. considerationthereturn ffled by the assessee as well as statem.ents of ShriS.R. Manhar in. his bofl-l the capacities held cash credit ofRs. 4,QO,000/- in the name of S.R. Manhar (individual) andcashcredkofRs. 10,99,QOO/- in thename ofS.R.Manhar(HUF)[as][ not]genuine[and][ added][ the][ same][ to][ the][ income][ of]the assessee.return ffled by the assessee as well as statem.ents of ShriS.R. Manhar in. his bofl-l the capacities held cash credit ofRs. 4,QO,000/- in the name of S.R. Manhar (individual) andcashcredkofRs. 10,99,QOO/- in thename ofS.R.Manhar(HUF)[as][ not]genuine[and][ added][ the][ same][ to][ the][ income][ of]the assessee. The appeal preferred thereagainst by fhe assessee before theCommissionerof IncomeTax(Appeals),Bilaspur•wasallowed,[•]• ;•-'•1! "1'.['••]:/,:1.'' Thereagainst, revenue preferred appeal before the IncomeTax Appellate Tribunal, BUaspur. The Income Tax AppeUateTribunal vide its order dated 30-7-2009 allowed the appeal,resfored and confirmed the prder passed by the AssessingOfficer. Hence this appeal. Shri G.N. F'urohit, learned Sr. Advocate would submit that ifthe sum is found credited in the account books of assessee,it has to three things viz. identity of the ereditor, provecapacityofsuchcreditorandgenuinenessofthetransaction. Once aU the aforesaid three things are proyed, The appeal preferred thereagainst by fhe assessee before theCommissionerof IncomeTax(Appeals),Bilaspur•wasallowed,[•]• ;•-'•1! "1'.['••]:/,:1.'' Thereagainst, revenue preferred appeal before the IncomeTax Appellate Tribunal, BUaspur. The Income Tax AppeUateTribunal vide its order dated 30-7-2009 allowed the appeal,resfored and confirmed the prder passed by the AssessingOfficer. Hence this appeal. Shri G.N. F'urohit, learned Sr. Advocate would submit that ifthe sum is found credited in the account books of assessee,it has to three things viz. identity of the ereditor, provecapacityofsuchcreditorandgenuinenessofthetransaction. Once aU the aforesaid three things are proyed, burden shifts on the revenue to that the amount provebelongs to assessee. The assessee has done everythinginasmuch, he has produced confirmation letters of creditorswho areincome tax assessee, also produced them forrecording their statements before the Assessing Officer, inwhich they have explained everything, .thus the assesseehas successfully discharged its initial burden as envisagedunder Section 68 of theAct. The assessee is not obliged to the source ofthe source. For this, the revenue has notprovedischarged its burderi, therefore, the order passed by theAssessing Officer, disallowing cash credit of Rs. 4,00,OOO/-and Rs. 10,99,000/-and adding it ta the income of theassessee is perverse being based on no niaterial on record.For this, he placed reUance upon the judgment in themattersof Coniinissioner of InconieTax —v-OrissaCorporation(P)Ltd.[(1986) 159ITR78(SC)],Comniissioner of Income Tax[-v-]Mehrotra Brothers[(2004) 270 ITR 157 (MP)],Commissioner for Income Tax-v- S.MaljeetSineh [(2005)147 TAXMAN 18 (All)], NemiChand Kothari -v- Conitnissioner of Inconie Tax andanother [(2003) 264 ITR 254(Gau), Commissioner ofIncome Tax -v- Baishnab Charan Mohantv (212 ITR199),Jalan' Tiinbers-v-CommissiorierofrncomeTax[(1997)223rTR(Gau)649],AnilRiceMills-v-Commissioner of Income Tax [(2006) 282 ITR 236 (All)],Kainal Motors —v-Conimissioner of Ihcoine Tax, [(2003)18Q CTR (Raj) I66], Aravali Tradine Co. -v- Income TaxOfficer_[(2008)220CTR622andMurlidhar(Raj) provebelongs to assessee. The assessee has done everythinginasmuch, he has produced confirmation letters of creditorswho areincome tax assessee, also produced them forrecording their statements before the Assessing Officer, inwhich they have explained everything, .thus the assesseehas successfully discharged its initial burden as envisagedunder Section 68 of theAct. The assessee is not obliged to the source ofthe source. For this, the revenue has notprovedischarged its burderi, therefore, the order passed by theAssessing Officer, disallowing cash credit of Rs. 4,00,OOO/-and Rs. 10,99,000/-and adding it ta the income of theassessee is perverse being based on no niaterial on record.For this, he placed reUance upon the judgment in themattersof Coniinissioner of InconieTax —v-OrissaCorporation(P)Ltd.[(1986) 159ITR78(SC)],Comniissioner of Income Tax[-v-]Mehrotra Brothers[(2004) 270 ITR 157 (MP)],Commissioner for Income Tax-v- S.MaljeetSineh [(2005)147 TAXMAN 18 (All)], NemiChand Kothari -v- Conitnissioner of Inconie Tax andanother [(2003) 264 ITR 254(Gau), Commissioner ofIncome Tax -v- Baishnab Charan Mohantv (212 ITR199),Jalan' Tiinbers-v-CommissiorierofrncomeTax[(1997)223rTR(Gau)649],AnilRiceMills-v-Commissioner of Income Tax [(2006) 282 ITR 236 (All)],Kainal Motors —v-Conimissioner of Ihcoine Tax, [(2003)18Q CTR (Raj) I66], Aravali Tradine Co. -v- Income TaxOfficer_[(2008)220CTR622andMurlidhar(Raj) 8. 9. 10; 8. 9. 10; Lahorimal—v-Commissioner oflncome Tax [ (2006) 280ITR(Guj)512.He woiild further contend, addition of Rs.50,000/-intheincome,disallowingtransportationexpenses to fhe above exteht inciirred for rurining ahdmaintenance oftankertruckisalsowithout basis. anyOntheother hand,ShriRajeevShrivastava,leamedStanding Counsel appearing for the reqpondent, supportedthe order passed by the Tribunal and contended thatthefindings recorded by the Assessing OfBcer as well as theTribunal are pure fihdings of fact and do notgive risetoany substantial question of law reqi.uringinterference bythisCourt,inasmuchasacceptingorrejectihgtheexplanation offered by the assessee is a finding of fact andthesame does not give rise to Einy substantial question oflaw, as held by this Court in I.T.A. No. 125 of 1999 (TheCommissioner of Income Tax, Raipur -v- Shri SatyanarayanAgrawal, Raipur)yide its order dated 25-11-2009 and theappeal being sans merit deserves to be dismissed.We have heard thesubmissions made by learned counselfor the parties, and also perused the record. In the instant case, the explanation offered by the assesseewas not found satisfactoryby the Assessing Officer foi- thereasoris (i) Incoine-tax Retyms have been filed by Shri S.R.Manhar (Indl) and S.R. Manhar (HUF) for a.y. 2005-2006 forthe first time; the retumsfiled by them are also notsupported by Capital A/c. and Balance Sheet showing loansadvanced by them to assessee;(ii) the loans have beenchanneled through bank accounts by depositing cash in ''. •"•" .•(.. •i' •" •.<•''•'.• •"•" •y •""" \ bank account on various dates, all in the month of Msirch,2006 and then by issuing accountpayee cheques in favourof the assessee iramediately thereafter; (iii) It is absolutelyunbelievablethat any prudent person will keep such ahuge amount of cash with him with allthe risk oflife andpropertyinsteadofdepositinginbankandeaminghandsome income in fhe form ofinterest; (iv) The loans werenot given in one lurripsum but on several occasions onsuccessive days and sometimes in a day's gap by depositmgeash in the accounts pf the alleged creditorsin a similarfashion. This abundantlyproves that eash was not availablewith the alleged creditors as claimed by them; and (y) Thecapacity bf the creditors to advance loansas above fo theassessee, is fherefbre, not proved. The Assessing Officer further held that "The assesseehas claimed expenses in transportation A/G.amount to Rs.4,21,150/-. Admittedly, most of the expenses are supportedby intemal vouchers. It has been stated on behalf of theassessee that Pacca bills are not in most of the cases givenand the assessee has incurred expenditure for businesspurpose only. I have cbnsidered fhe submissions. In tiheabsence of biUs and vouchers the correctness of the properclaim. cannot be verified. I therefore make a disallowance ofRs. 50,000/- frpm the said expenses ahd add the same tothe income shown by the assessee." While allowing the appeal preferred by the assessee,the Commissioner of Income Tax (Appeals) held:- 11. "The assessee has fumished details of the Creditorsiricluding their names and addresses. They were producedand they have confinned the transaction. Considering thetotality of the case, the facts involved and thestateddecision on identical issue, I am of the opinion that theassessee has discharged the primary onus that lay on it interms ofsection 68 ofthe I.T.Act, 1961 and law. I thereforefind the additidn of Rs. 14,99,000/- is not sustainable asperlaw and fact ofthecase.,Thesame stands deleted.'' "In respectof disallowance .of thetransportationexpenses, the net profit shown in respect offruokismorethan the amount u/s. 44AE, hence the disaUowance madebytheAOisdeleted."^ The Income Tax Appellate Tribunal reversed the orderpassed by the Commissioner oflncome Tax (Appeals) andrestored the order passed by fhe Assessing Officer. WhileaUowing the appeal, the Income Tax Appellate Tribunal hasheld iri 15, 16 and 17 as under:- para "In respectof disallowance .of thetransportationexpenses, the net profit shown in respect offruokismorethan the amount u/s. 44AE, hence the disaUowance madebytheAOisdeleted."^ The Income Tax Appellate Tribunal reversed the orderpassed by the Commissioner oflncome Tax (Appeals) andrestored the order passed by fhe Assessing Officer. WhileaUowing the appeal, the Income Tax Appellate Tribunal hasheld iri 15, 16 and 17 as under:- para "15.Wehaveheardtherivalsubmissionsandperused the material available on fecord. We find thatthe Ld. CIT(A) has simply deleted the addition on thegroimd that the creditors are income tax assessee andhas not into the creditworthiness of the Creditors. goneWe also find that the assessee though proved theidentity of the creditQrs but unable tp prove theircreditworthiness in advaneing such huge sums to theassessee. We also find from the faets of this case thatfhe creditors are using the bank aecount not for ' ' !t. ' !t. •'"•" !t. •/'•''.(; •'..' ' !t. ' !t. •'"•" !t. (' •':' /''. '^y/^:'\'' ^^gDte.'"saBa ^"'"%g^•-^B^"^£?(^' keeping his eamings in that account but only for thepurposeofgiving Ipans to the assessee which is clearfrom the fact that as and when the creditors issuecheque he deposits the money in cash and then givescheques to the assessee. In view of the above, we arepf the opinipn that the assessee fails to proye thecreditworthiness of the creditqrs to advahce suchhugeamount to the assessee. Therefore.we reverse theorder of the Ld. CIT(A)and restpre that of the AO.This ground of appeal of the revenue is, therefore,allowed.. 16.In respectof grpund no.2(a)and(b),fheassessee claimed transportation expenseS ainountingto Rs. 4,21,150/- and most of the expenses weresuppQrted by internal vouchers. In absence of properbills and vouchers, the correctness of the claim cannotbe verified by the A.O. and therefore, he made thedisallowance of Rs. 50,000/- and added the saine tothe income of the assessee. On appeal, the Ld. GIT (A)deleted the said addition. Aggrieved by that order, nowthe assessee is in appeal before us. 17.After hearing both the sides and perusing thematerial available on record, we find that in thea.bsence of bills and vouchers the AQ was properreasoriable enough to disallow only a sum of Rs.50,OQO/- out of the total claim of fhe assessee ofRs.4,21,150/- as transportation expenses. The Ld. CIT(A)has not givenariy cogent I'eason for delefing this '^^?^.^,..1"-y 12; 14. meager addition ofRs. SO.OOO/-. Therefore, the orderpassed by him is hereby reversed and that ofAO is'restored. This ground of appeal of the revenue is alsoallowed. In order to appreciate the CQntroversy involved m thematter, it would be apprQpriate to reproduce Sectibn 68 pfthe Actwhichreads thus:- 68.Where any sum. is found creditedin the bodks: of an assessee rn.aintained for any previous year,and the assessee offers no explanation about thenature and source thereof or the explanation cfferedby him is not, in the opinion ofthe Assessing Officer,satisfactory, the sumso credited may be charged toincome-tdx cis the income of the assessee of thatprevious year." As per Section 68 of fhe Act, where any sum is found.credited in the books of an assessee maintam.ed for anyprevioys year, and the assessee offers no explanation aboutthe nature and spurce thereofor the explanation offered byhimisnot,intheopinionpf fheAssessingOfficer,satisfaGtory, the sym so credited may be charged to incometax as the inconie of the assessee of that previous year. We have considered fhe ease lawcited by Shri G.N. Purohit,learned Sr. Counsel appearing for the appellant. Gist ofthesame is fhat the assessee has to three conditions: prove i. Identity ofthecreditor; ii. Capacity ofsuch creditor to advance money; and iii. Genuineness of transactiDn As per Section 68 of fhe Act, where any sum is found.credited in the books of an assessee maintam.ed for anyprevioys year, and the assessee offers no explanation aboutthe nature and spurce thereofor the explanation offered byhimisnot,intheopinionpf fheAssessingOfficer,satisfaGtory, the sym so credited may be charged to incometax as the inconie of the assessee of that previous year. We have considered fhe ease lawcited by Shri G.N. Purohit,learned Sr. Counsel appearing for the appellant. Gist ofthesame is fhat the assessee has to three conditions: prove i. Identity ofthecreditor; ii. Capacity ofsuch creditor to advance money; and iii. Genuineness of transactiDn Burden ofassessee to ofthe transactions prove genuinenessas well as the creditworthiness of the creditor must remainconfinedto the transactions,whichhavetakenplacebetween the assessee and the creditor. It is not the businessof the assessee to find out the souree of money of hiscreditor. t(2006) 282 FTR 236 (All) Para 9], [(2003) 264 ITR254(Gau)Para 13 and 14].A three Judges Beneh of the Supreme Court in case ofSumati Dayal -v- Comihissioner of Incoine Tax, Banglorereported inl995 Supp.(2) SCC 453 while dealing with thefacts- ..:.•,' '; ',! •:' ' ;•. .'.. prove genuinenessas well as the creditworthiness of the creditor must remainconfinedto the transactions,whichhavetakenplacebetween the assessee and the creditor. It is not the businessof the assessee to find out the souree of money of hiscreditor. t(2006) 282 FTR 236 (All) Para 9], [(2003) 264 ITR254(Gau)Para 13 and 14].A three Judges Beneh of the Supreme Court in case ofSumati Dayal -v- Comihissioner of Incoine Tax, Banglorereported inl995 Supp.(2) SCC 453 while dealing with thefacts- ..:.•,' '; ',! •:' ' ;•. .'.. "During the assessment year 1971-72, the appellantreceived a total amountofRs. 3,11,831 by way ofracewinnings in Jackpots andTreble events in rdces atTurf Clubs in Bangalpre, Madras and Hyderabad. Thesdid am.ount was shown by the appellantinthe capitalamount in fhe books. Ths dppellant filed a retum on27-3-1972 declaringanincome of Rs. 27.829.The.appellant also m.ade a swom statement on 6-1-1973before the Income TaxOfficer and on the bdsis of thesaid statement theIncomeTaxOfficerm.ade anassessment order dated 27-3-1974 where he held thatthe sumofRs. 3,112,831 isnotwinningsinracesdndhe treated the said receipts as income fromundisclosedsources and assessed the same as incom.e from. othersources.Fortheassessment1972-73theyearappellant showed receipts 6f Rs.93,500 as race / winnings in two Jackpots at Bangalore and Madrasand the said amount was credited in the cdpitalaccount in the books. The appellant filed a retumdeclaring an income of Rs. 3827 on 3-2-1973. In hisassessment order dated 31-8-1974 the Income TaxOfficer included tke mnount of Rs. 93,500 asincome'frqm.[other][ sources][ and][ assessed][ the][ income]of[the]appellant on that basis. Theappeals filed by theappellantagainst the two assessment orders weredisposed of by the Appellate Assistant Commissionerby order dated 12-12-1975 wkereby the assessmentofRs. 3,11,831 asincomeundertheheadothersourcesfor the assessment year 1971-72 and Rs. 93,500 for-the assessmentyear1972-73 was confirmed.Theassessee had taken the m.atter before the SettlementCommission. Thetwo members constituting majority onthe Settlement Com.mission, came to theconclusion thatthe apparent is not the real and. that the appellant'sclaim about her winning inraces is contrived and notgenuine forthe follpwing reasons:-:.a.The appellant's knowledge of racing is very.meager. A Jackpot is a stake offive events in a singledayandoneeanbelieve a regutar andexperiencedpunterclearingaJackpotoccasioncdly but the claim of the appellant tohave won anumber of Jackpots in three or fourseasons not rrierely at one place but at three b: ' '. '."•' !t- '. '."•' !t- '."•' !t- !t- ./'•' '.(""'.•' '. '."•' !t- '. '."•' !t- '."•' !t- !t- c. d. A Jackpot is a stake offive events in a singledayandoneeanbelieve a regutar andexperiencedpunterclearingaJackpotoccasioncdly but the claim of the appellant tohave won anumber of Jackpots in three or fourseasons not rrierely at one place but at three b: ' '. '."•' !t- '. '."•' !t- '."•' !t- !t- ./'•' '.(""'.•' '. '."•' !t- '. '."•' !t- '."•' !t- !t- c. d. different centres, namely, Madras, Bangaloreand Hyderabad appedrs, prima fade, to bewild and contrary to the statistical theoriesandexperienceofthefrequenciesandprqbabilities. TheappeUant'sbooksdonotshowanydrawings onrace days oron the im.mediatelypreceding days for the purchase of Jackpotcombination tickets, which entailed sizeable[']amounts varying generally between Rs. 2000and Rs- 3000. The drawings recorded in thebooks cannot be correlated to the variousracing events at which the appellanf mad.e thealleged winnings.drawings onrace days oron the im.mediatelypreceding days for the purchase of Jackpotcombination tickets, which entailed sizeable[']amounts varying generally between Rs. 2000and Rs- 3000. The drawings recorded in thebooks cannot be correlated to the variousracing events at which the appellanf mad.e thealleged winnings. While the appellant's capital account wascredited with theamountsof race-grosswinnings,there werenodebitsetther forexpenses and purcha&e oftickets orforlosses.'In view ofthe exceptional luck claimedto kavebeen enjoyed by the appellant, her loss ofmterestin.racesfrom1972assumessignijicance. Winnings in racing became liableto incometcixfrom 1-4-1972 but one would not.give up an activity yielding or likely to yield alarge income merely because the income wouldsuffer tax. The position would be different,however, ifthe claim ofwinnings in races wasfalse and what were passed off as such tB]l;%^®S^^':?'''r?:'': ^ winninjgs really represehted the appellantstaxablemcomefrom.someu.ndisclosedsources. 10. The majority opinion includesthat it would notbeunreasonable to mfer that tKe appellant had hotreally participated in any of the races excepf tothe extent of purchdsing the winning tickets afterfhe events presumably itdth unaccountedfunds. 11.The Chairmdn of the Settlement Commisswn, mhis dissenting opinion has Idid emphasis on thefact[that][ the][ appellant][ had]produced[evidence][ in]support of the creditsin the form. of certificatesfrom the racing clubs of fhe giving particularscrossed cheques forpayment of the amounts for.winning6f Jackpots ete.TheChairman hasrejected the contention regarding lack ofexpertisein respect ofthe appellant and has bbserved thatthe expertise is the last thing that is necessary fora game ofchcm.ee and anybody has to go andcallfor five numbers in a counter and obtairt aJackpotticketandthatbookscontaininginformationare available which are cheap." quitehas observed in para 12 ofitsjudgment as under:- "12.Th.ls,inouropinion,isasuperficialapproach to the problem. The matter has to beconsidered in the light of humanprobabilities. TheChairm.an df theSettlement Com.rrdssion kasemphasized that the dppellant did the possess © "12.Th.ls,inouropinion,isasuperficialapproach to the problem. The matter has to beconsidered in the light of humanprobabilities. TheChairm.an df theSettlement Com.rrdssion kasemphasized that the dppellant did the possess © winning ticket which was surrendered to the RaceCluband in retum a crossed cheque wasobtained.Itis,inouropinion,aneutral.circumstanCe,beeauseif theappellanthadpurchased the winning ticket after the event shewould be haifing the winning ticket urith herwhich she could surrender to the Race Club. Theobservation by the ChairmcCn of the Settlement"fraudulentComnzission that saleof winningticket is natan usual practice but is uery muchofanunusualpractice"ignorestheprevalentmalpractice tkatwas notieed by the Direct TaxesEnquiryCQmmittee and the recommendationsrnade by the said Committee whichledto theamendment pf the Actby the-Finance Act of 1972wherebytheexemption fromtaxthat wasavailable in respect of winnings from. lotteries,crossword pups.les, races, etc; was withdrawn.Similarly the observation m.ade by the Chairm.anthat if it isalleged that these ti.ckets wereobtainedthroughfraudulentmeans, itisupon thealleger to prove that it isso, ignores the reality.The transaction abaut purchase of wm.ningtick.ettakes place in secret and directevidence aboutsuch purchase would be rarely available. Aninference about sucha purchase has tobe drawnonthe basis of fhe circumstances availdble on therecord.Having regard 'to the conduct 6f the 16. appellant as disclosed in her swom statementas well as other material on the record aninference eould reasonably be drawn that thewinning tickets were purchased by the appellantafter the event. We are, therefore, unable toagreewiththe view of the Chairman in his dissentingopinwn. In our opinion, the majority opinion afterconsideringsurraundingdrcumstancesandapplying the. test of hum.an probabilities hasrightly concluded that the appellant's clairh aboutthe amount being her winnings from races is notgenuine. It cannot be said that the explanationoffered by the appellant in respect of the saidamouhts has been rejected unreasonably andthat the that the sdid amounts are income findingof the appellant from other sources is not basedon evidence. The Supreme Courtin case 6f Commissioner of IncomeTax[-v-]P. Mohankala reported in (2007) 6 SCC 21 afterconsideringthe case of Sumati Dayal (supra), GIT V. P.K."NQprjahan [(1997) 11 SGC 198], CIT V. Bharat Engineeringand Construction Co. [(1972) 4 SCC 401], CIT v. OrissaCprporation (P) Ltd. [(1986) Supp. SCC 110], has observedin para 24 and 26 pfitsjudgment as under:- "24. R is true that even afterrejecting the explanationgiven by the assessees if found unacceptdble, thecrucial aspect whether onthefacts and circumstances •i' ''.r''".-^'"I.!.'-. i.i!'. t.,.I1. •t1 '"' •.f'".'^'t.,.I1. The Supreme Courtin case 6f Commissioner of IncomeTax[-v-]P. Mohankala reported in (2007) 6 SCC 21 afterconsideringthe case of Sumati Dayal (supra), GIT V. P.K."NQprjahan [(1997) 11 SGC 198], CIT V. Bharat Engineeringand Construction Co. [(1972) 4 SCC 401], CIT v. OrissaCprporation (P) Ltd. [(1986) Supp. SCC 110], has observedin para 24 and 26 pfitsjudgment as under:- "24. R is true that even afterrejecting the explanationgiven by the assessees if found unacceptdble, thecrucial aspect whether onthefacts and circumstances •i' ''.r''".-^'"I.!.'-. i.i!'. t.,.I1. •t1 '"' •.f'".'^'t.,.I1. ofthe case it should be inferred that the sums creditedin the books ofthe assessees constituted incorne oftheprevious year[must][ receive][ the][ cpnsideratlon][ of][ the]authorities provided the assessees rebut the evidenceand the inference drawn to reject the expldnationoffered as unsatisfactory.We are required to noticethat Section 68 ofthe Act itself provides, where anysum.is found credited in the books of the assessees forany previous year fhe same may be charged to incometax as the income of the assessees of the previous yearif the explanation offered by the assessees about thenature and source of such sums found credited in thebooks of the assesseesis in the opinion qf theAssessing Qfficer not satisfactory.Such opinion found(sic formed) itself constitutes a prima facie evidence'against the assessees, im., the receipt of money, and iftke assessees fail to rebut the said eiridence the samecanbe used againstthe assessees by holding that itwas a receiptofan income nature. In the case inhandtheauthoritiesconcurrently found theexplanationoffered by the assessees unacceptable. The authoritiesupheld the opinionformed by the Assessing Officerthat-the explanation offered was not satisfactory.Theassesseesdid not take the plea that even if theexplanationisriotacceptablethematerial andattending circumstances available on record do notjustify the sumfoundcreditedinthe books t6 be treatedas d receipt of an income nature.Ths burden in this .•{'••• .r':',;--"-~. regard was on the assessees.No such attem.pt hasbeenmade before any authority.All the deciswns citedandreferredtohereinabovearerequiredfobeappredated and understood in the light of the lawdeclared by this GourtinSumatiDayal(supra).26.Reh/ing oh the decisions of this Court in BejoyGopal Mukherji Vs. Pratul Chandra Ghose & M/s Orient Distributors Vs. BankofIndiaLtd. 8sOrs. ,Shri lyer, leamed seniorcpunsel contended that issue relating to the propriety oflegal conclusion that could be drawn on basis ofprovedfacts gives riseto aquestion oflaw and, therefore, theHigh Court is Justified in interfering in the matter sincethe authorities belqw failed to draw a proper andlogical inference from the proved facts.We are unabletp persuade ourselves to accept tke submission.Thefindings offact arrlved at by the authorities belovj arebased on proper appredation of the facts dnd the'materialavailableonrecordandsurroundingeircumstances.Tke doubtful nature ofthe transactionandthe mdnner in which the sums werefound creditedin the books of accaunts maintained by the assesseehavebeendulytaken intoconsiderationbytheauthorities below.The transactions though apparentwere heldto be not real ones. May be the money came-by way of bank cheques and paid through the process-isofbankingtransactionbut thatitselfof no'corisequence." •:.lt.•'"'"••'"'"•, •/'•;'.'''".••:.lt.•'"'"••'"'"• lt ", it.', 17. 18. 19. •:.lt.•'"'"••'"'"•, •/'•;'.'''".••:.lt.•'"'"••'"'"• lt ", it.', 17. 18. 19. By applying the law laid down by the Supreme Gourt in thedicta of the above referred two cases, it is clear that whereany soine is foi.md credited in the books of assessee for anyprevious year, the same may be charged to income tax asincomeof theassesseeof thepreviousyearif theexplanationoffered by the assessee about nature andsource ofsuch suins found credited in the books of assesseeis iti the opinion of the AO not satisfactory. Sucla opinion(sic formed) itself constitutes a prima facie evidence agairistthe assessee viz. the receipt of money, and if the assesseefail to rebut the said evidence the same can be used agairistthe assessees by holding that it was a l;eceipt ofan iricomenatiu-e. Inthe case in hand theAO hasformed the opinionthattheexplanatioriofferedbytheassesseeisnotsatisfactory, is based on cogent material which shows thatthe transaction is not genuine. All the decisions cited by Shri Purohitare required to beappreciated and understood in the light of law declared bythe Hontile Apex Court in the cases referred to hereinabove.We have carefully gone through the finding recorded by theAssessing Offieer as referred in para 10 of the judgment inholding the traiisaction as not genuine and the explanationoffered by the assessee as not satisfactory and we do notfirid any illegality in the said finding. Therefore, the caselaws cited by Shri Purohit are ofno help to him.TheTribunal has confirmed the above Ending. The appellant didnot ,take the plea that everi if explanation is not accepted,the material aad attending circumstances availableonappreciated and understood in the light of law declared bythe Hontile Apex Court in the cases referred to hereinabove.We have carefully gone through the finding recorded by theAssessing Offieer as referred in para 10 of the judgment inholding the traiisaction as not genuine and the explanationoffered by the assessee as not satisfactory and we do notfirid any illegality in the said finding. Therefore, the caselaws cited by Shri Purohit are ofno help to him.TheTribunal has confirmed the above Ending. The appellant didnot ,take the plea that everi if explanation is not accepted,the material aad attending circumstances availableon 2Q. 21. 22. record do not justify the suin found credited in the bopks tobe treated as receipt of income nature, the burden in thisregard was on the assessee as held by Supreme Court incase of CIT -V- Mohankala (supra).So far as the clauns ofthe assessee regarding transportationexpenses amounting to Rs, 4.21,l50/- is concerned, it isalso a finding of fact and we do not find any illegality orperversity in the flnding arrived at by the Assessing Officeras well as by the Tribunal., In view of above, in our considered opinion, the case inhand does not involve any substantial question of law. TheBnding of fact arrived at by the AO as well as the IncomeTax Appellate Tribunal are based on proper appreciation offactandmaterialonrecordandsurroundingcircumstances. The doubtful nature of the transaction inthe mahrier in which the sum was fdund credited in thebooks of accounts niaintained by the assessee have beenduly taken into consideration by the above authorities. Thetransactibns though apparent were held to be notreal ones.May be the money came by way of bank cheques and paidthrough the process 6f banking trEinsaction but thatitselfis of no consequence. In the resylt, the appeal preferred by the appellant deserves to be and is hereby dismissed. Sd/-^-:..DR. LM.QuddusiJudge Sd/-M.K.'Judge