Ita/27/2011 Of M/S Kaveri Associates v. The Assistant Commissioner Of Income-Tax

IN THE HIGH COURT OF KARNATAKA AT BANGALOREDATED THIS THE 10 DAY OF JULY, 2012 PRESENT THE HON’BLE MR.JUSTICE D V SHYLENDRA KUMAR AND THE HON’BLE MR.JUSTICE B MANOHAR Income Tax Appeal No.27 of 2011 BETWEEN: M/S KAVERI ASSOCIATES,REP. BY ITS MANAGING PARTNERSRI RISHABCHAND BHANSALINO.10, T.N. SETTY LANEAVBNUB ROAD CROSSBANGALORE —- 560 O0APPBRLLAN IBY M/S A SHANKAR & M LAVA, ADVS.| AND: THE ASSISTANT COMMISSIONEROF INCOME-TAX,CIRCLE 35(1)BANGALORE RBSPONDENT IBY SRI K V ARAVIND, ADV.| THIS APPEAL [IS FILED UNDER SBCTION JO0O0A OF INCOME TAX ACT, 1961, PRAYING TO SET ASIDE ORDER DATED23.09.2010 PASSED IN ITA NO. 1116/BANG/2009 FOR THEASSESSMENT YEAR 1999-2000 AND ETC., THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,DV SHYLENDRA KUMAR.J., DELIVERED THE FOLLOWING: JU DBiGMENT This is an appeal by the assessee under section 260-Aof the Income Tax Act, 1961 |for short ‘the Act’] against theorder of the Tribunal dated 23.09.2010 and on the premisethat the Tribunal has committed errors and illegalities indismissing the appeal of the assessee. 2.The assessee — appellant is a partnership firm said tohave been constituted on 16.3.1996 in the name and style ofM/s. Kaveri Associates and has been continued thereafter,with change of composition of partners, but under the samename and style and the questions raised for examination inthis appeal arose for the period relating to assessment year1999-DJ000 3.The appellant — assessee has filed the appeal raisingthe following questions as substantial questions of lawarising for determination in this appeal. “1.Whether the Tribunal was justified in law inholding that reopening of assessment undersection 148 of the Act is valid and complies with all the mandatory conditions forreopening on the facts and circumstance ofthe case? 2.Whether the Tribunal was justified in law inconfirming the addition of Rs.75,50,000/-made by the Assessing officer under section68 of the Act on the facts and circumstanceof the case?confirming the addition of Rs.75,50,000/-made by the Assessing officer under section68 of the Act on the facts and circumstanceof the case? 3.Whether the Tribunal was justified in law inconfirming the addition of Rs.75,50,000/-when the Assessing Officer summoned andrecorded the statement from all the personsand all of them have confirmed the advancepaid for purchase of shops and explainedtheir sources on the facts and circumstanceof the case consequently gave a perversefindingzconfirming the addition of Rs.75,50,000/-when the Assessing Officer summoned andrecorded the statement from all the personsand all of them have confirmed the advancepaid for purchase of shops and explainedtheir sources on the facts and circumstanceof the case consequently gave a perversefindingz 4.Whether the authorities below are justifiedin law in charging interest under section234A sum of Rs. 18,84,432/- and 234B suof Rs.24,52,570/- contrary to the provisionsof section 234A(3) and 234B(3) of the Act onthe facts and circumstance of the case?”in law in charging interest under section234A sum of Rs. 18,84,432/- and 234B suof Rs.24,52,570/- contrary to the provisionsof section 234A(3) and 234B(3) of the Act onthe facts and circumstance of the case?” 4Notice had been issued to the respondent — revenueregarding admission of the appeal on 18.4.2011 andthereaiter on the appearance of learned standing counsel forthe revenue, appearing for the respondent, had beendirected to produce original records including the statementrecorded pertaining to Mr. Rathanlal K Jain — a person who is said to have given certain amount by way of credit to theassessee — firm. 5.Counsel for the other side having taken time, it wassubmitted by learned counsel for the appellant as well asrespondent that they had been given to understand that thematter though is in the admission list, can be heard anddisposed of finally. 4Notice had been issued to the respondent — revenueregarding admission of the appeal on 18.4.2011 andthereaiter on the appearance of learned standing counsel forthe revenue, appearing for the respondent, had beendirected to produce original records including the statementrecorded pertaining to Mr. Rathanlal K Jain — a person who is said to have given certain amount by way of credit to theassessee — firm. 5.Counsel for the other side having taken time, it wassubmitted by learned counsel for the appellant as well asrespondent that they had been given to understand that thematter though is in the admission list, can be heard anddisposed of finally. 6.It is in this background, we have heard Sri. A.shankar, learned counsel for the appellant — assessee andsri. K V Aravind, learned counsel for the respondent -TEVENUC. T Blaborate submissions have been heard on behalf ofthe appellant by Sri. Shankar, learned counsel and brietreply on behalf of the respondent by sri. K V Aravind,learned standing counsel appearing for the revenue. 8.The genesis of these proceedings lies in a search thatwas conducted at the premises of one Rishabchand Bhansali who is also a partner of the firm and it is claimed that he ispartner in his capacity as Kartha of Hindu Undivided Familycomprising of himself and his brothers. However, a perusalof the copy of the partnership deed dated 16.8.1997available in the assessment records indicates that the firmhad come to be reconstituted as per this deed andRishabchand Bhansali had a share of 20% in the firm onreconstitution and in tact three other brothers also hadshares of 20%, 20% and 12.5% respectively in the very firmand they had held shares in their individual capacity etc. Q Be that as it may, insofar as this appeal is concerned,to complete the narration of facts, search of the premises ofRishabchand Bhansali — partner of the firm had indicatedthat said Rishabchand Bhansali had drawn a sum ofRs.795,90,000/- from the firm and said amount had beedrawn for the purpose of loaning this amount to SriBalakrishna and his educational institution VishwabharathiVidhya Mandir and as a sequel, the Assessing Officer had after follow up action etc., had issued notice to the firmunder section 148 of the Act, reopening the assessmentunder section 147 of the Act for bringing to tax the saidamount in the hands of the firm. In response to noticeissued under section 148 of the Act, the assessee firm filed a‘Nil’ return of income claiming that the amount did notrepresent any part of the income of the firm; that it had beenreceived from as many as 14 persons by way of advance forsale of shops in a shopping complex that was beingconstructed by the assessee — firm etc. 1Q,The Assessing Officer did not find the explanationoffered by the partner of the firm to claim licit source of thesum of Rs.75,50,000/-, rejected the stand of the assesseethat it was not income, but concluded that the amounthaving been shown as cash credit in the books of accountsof the assessee and as received from fourteen persons,applied the provisions of section 68 of the Act, assessed thecash credit amount as undisclosed income of the assessee during the assessment year relevant to the period when theamount had been so credited in the books of accounts of thefirm and brought it to tax as per the assessment order dated91.3.9005. 11.The aggrieved assessee appealed to the Commissionerof Income Tax — (Appeals)-IJ, Bangalore. Assessee had raisedvarious contentions before the Appellate Commissioner andthe appeal came to be dismissed as per the order dated29.9.2009 (copy at Annexure-D). 12.A further appeal to the Appellate Tribunal also havingbeen dismissed by the Appellate Tribunal, finding nooccasion to differ from the views taken by the AssessingAuthority and the First Appellate Authority and in thisbackground the present appeal. 13,sri Shankar, learned counsel for the appellant hasmade very elaborate submissions to support the case of theassessee in the context of substantial questions of law as 11.The aggrieved assessee appealed to the Commissionerof Income Tax — (Appeals)-IJ, Bangalore. Assessee had raisedvarious contentions before the Appellate Commissioner andthe appeal came to be dismissed as per the order dated29.9.2009 (copy at Annexure-D). 12.A further appeal to the Appellate Tribunal also havingbeen dismissed by the Appellate Tribunal, finding nooccasion to differ from the views taken by the AssessingAuthority and the First Appellate Authority and in thisbackground the present appeal. 13,sri Shankar, learned counsel for the appellant hasmade very elaborate submissions to support the case of theassessee in the context of substantial questions of law as indicated above and as raised in the memorandum ofappeal. 14,sri. Shankar, learned counsel has made submissionson two aspects. 15)It is firstly contended that assumption of jurisdictionfor re-opening the assessment for the year 1999-2000 byissue of a notice under Section 148 was erroneous withoutany basis and therefore, the very initiation of theproceedings is clearly illegal and further proceedings cannotbe sustained. In this regard, it is urged that first of all thereis total non-application of mind on the part of the AssessingOfficer and that the very reasons are recorded before theissue of notice under Section 148 which reads as under :- “It is noticed that the firm M/s. Kaveri Associateshas not filed any return of income for the Asst.Year 1999-2000 till today. As per the informationin the HUF file of Shri Rishabchand MisrimalBhansali, who is a partner of M/s. CauveryAssociates he has withdrawn Rs.71,75,000/- from the above firm as on 31.3.1999. For lendingRs.71,50,000/-, the assessee firm must be havingtaxable income. As the assessee has not filed thereturn of income, the income has_ escapeassessment as per clause (a) to Explanation 2 tosection 147. Hence the assessment proceedingsinitiated under Section 147 of the Act,Issue notice under Section 148. reveals that the assessing officer had mentioned the name ofthe assessee wrongly atleast in one place for this reason inthe sense it had been mentioned as M/s. Cauvery Associateswhereas the name of the firm was M/s. Kaveri Associatesand this in itself indicated there was some contusion in theminds of the assessing officer with regard to the very nameof the firm. However, it is more importantly contended thatthe so called reasons recorded does not really indicate anyformation of belief on the part of the assessing officer toarrive at the inference. He had reasons to believe thatincome of the assessee, which was required to be subjectedto tax during the assessing year had escaped assessment; that the recording never revealed that the assessing officerhad reason to believe that at the best it amounted tosuspicion and it is well settled on authority of law that amere suspicion or a mere satisfaction, that there may besome income, which had not been taxed is not at all aeround for re-opening the assessment, at any _ radetermination on this question has been quite settled that amere suspicion or information by itself cannot constitute areason for re-opening a concluded assessment and therefore,there was no occasion for the assessing officer to pass anassessment order on the basis of re-opening of theassessment. 16.In support of this contention, Mr. Shankar has placedreliance on the following authorities, which touches uponthe vivid situation and hues and shades involving occasionswhen the revenue had sought to re-open the concludedassessment but, which were found fault by the court opining that there is no real reason to believe for the re-opening asindicated by the assessing authorities etc. 1. GANGA SARAN& SONS P. LTD., VS ITO 130 ITR 1(SC}2. ITO Vs. LAKHMANI MEWAL DAS 103 ITR 437 (SC) 3. CALCUTTA DISCOUNT CO. LTD. VS. ITO 41 ITR 191 (SC)4. INDIAN OIL CORPORATION Vs ITO 159 ITR 956 (SC) o. A .NAGAPPA VS. ACIT (UNREPORTED JUDGMENT OFHON’BLE HIGH COURT OF KARNATAKA DATED 11.01.19916. RALLIS INDIA LTD. VS. ACIT 325 ITR 54 (BOM) 16.In support of this contention, Mr. Shankar has placedreliance on the following authorities, which touches uponthe vivid situation and hues and shades involving occasionswhen the revenue had sought to re-open the concludedassessment but, which were found fault by the court opining that there is no real reason to believe for the re-opening asindicated by the assessing authorities etc. 1. GANGA SARAN& SONS P. LTD., VS ITO 130 ITR 1(SC}2. ITO Vs. LAKHMANI MEWAL DAS 103 ITR 437 (SC) 3. CALCUTTA DISCOUNT CO. LTD. VS. ITO 41 ITR 191 (SC)4. INDIAN OIL CORPORATION Vs ITO 159 ITR 956 (SC) o. A .NAGAPPA VS. ACIT (UNREPORTED JUDGMENT OFHON’BLE HIGH COURT OF KARNATAKA DATED 11.01.19916. RALLIS INDIA LTD. VS. ACIT 325 ITR 54 (BOM) 17.It is also contended by Sri Shankar, learned counselthat apart from the impugned order of the assessingauthority the first appellate authority as also the Tribunalbeing vitiated by a clear incorrect understanding of the legalposition for the purpose of re-opening an assessment withinthe scope of Section 147 of the Act, the assessing authorityhas committed an error in law in assuming and presumingthat the fact situation of the goods warranted application ofthe provisions of Section 68 of the Act; that the assessingofficer had called in aid the provisions of section 68 to bringto tax the amount of Rs.75,50,000/-, even when the assessee had very satisfactorily explained the sources ofsuch credits that the assessing officer opining such sourcehad not been properly explained or was found to beconvincing is a extraneous consideration for bringing to taxcash credit amounts as income of an assessee under Section68 of the Act; that a recording or finding to the effect suchamounts which were cash credits and which were properlyexplained by the assessee, nevertheless is income of theassessee during the previous year when the entries weremade, is nothing short of recording a perverse finding andthe Tribunal has committed an error in law in affirming suchfindings of the lower authorities and that the order of theTribunal is not sustainable for such reasons. In support ofsuch submissions Mr. Shankar, learned counsel, has placedreliance on the following decisions both of the SupremeCourt as well as other High Courts viz., aaCIT VS. DAULAT RAM RAWATMULL 87 ITR 349 (SC)b.ARAVALI TRADING CO. ITO 220 CTR 622 (RAJ)b.ARAVALI TRADING CO. ITO 220 CTR 622 (RAJ) CCNEMI CHAND KOTHARI VS. CIT 264 ITR 254 (GAU) qdKANHAIALAL JANGID Vs. ACIT 217 CIR 354 (RAd)ANDAND oaCIT VS. LOVELY EXPORTS P. LTD. 216 CTR 195 (SC} 18,On the contrary, Sri K.V. Aravind, learned Standingcounsel appearing for the revenue has submitted that havingregard to the concurrent findings recorded by all the threeauthorities, there is absolutely no scope for interferenceunder Section 260A of the Act; that all the three authoritieshave in great detail discussed the fact situation and haveconcluded that the amount not only was undisclosed incomeof the assessee firm during the period when the cash creditentries had been made, but also is a situation, which clearlyattracted the provisions of Section 68 of that Act that the re-Opening was based on material as found in the premise thatit was the partner of the ftirm, who had claimed that he hadrawn the amount from the account of the firm; that alltransactions though were huge in terms of the amounthaving not been depicted in the books of accounts of theassessee, but for the first time being revealed aiter the search and the fact that all transactions were settledthrough cash payments though were transactions of moneyin lakhs and one such transaction being 20 lakhs of rupees,all did indicate that the assessee did not at all properly elicitsource of income; that mere indicating of the creditors initself is not the end and therefore, contends that there is noneed for interference. It is also submitted that the reasonshad in fact been recorded before the issue of notice; that ithad been so recorded prior to issue of notice on 28.1.2004;that the very reason indicated the basis for re-opening. Thiswas thoroughly examined by all the three authorities, whohad satisfied such recording and therefore, submits thatthere is no cause for examining the same again in a appealunder Section 260-A of the Act. 19,Mr. K.V. Aravind, learned standing counsel has alsobrought to our notice the provisions of Clause (a) ofExplanation 2 to Section 147 reading as under:- “Explanation 2 — For the purposes of this section,the following shall also be deemed to be cases where income chargeable to tax has escapedassessment, namely :- (a)where no return of income has been furnishedby the assessee although his total income or thetotal income of any other person in respect ofwhich he is assessable under this Act duringthe previous year exceeded the maximumamount which is not chargeable to income-tax; 20,Mr. Aravind, learned standing counsel submits thatthe assessee had never filed any return of income that it hadnever disclosed existence of a firm that though the assesseehad transactions involving immovable property and hugeamounts, had never, at any point of time, revealed suchtransactions to the revenue; that the explanation putiorthsubsequent to the notice claiming that the firm had notstarted its business and therefore, that no income wasearned was rejected by the authorities; that the firm hadbeen receiving amounts and even as per itS Own version forcommercial purposes and therefore, the explanation havingbeen rejected, bringing to tax this amount was inevitable as it disclosed income which had escaped assessment. It istherefore, urged that the appeal has no merit and has to bedismissed| D1Mr. Aravind, learned Standing counsel for the revenuehas also drawn our attention to the judgment of thesupreme Court in the case ofACIT VS. RAJESH JHAVERISTOCK BROKERS P. LTD*)29] ITR 50G, which has beenreferred to and applied by the Tribunal to reject thecontention on behalf of the assessee to the effect that the re-Opening of the assessment was bad, on noticing the followingparagraph :- “The expression “reason to believe” in section 147would mean cause or_ justification. If theAssessing Officer has cause or justification toknow or suppose that income had escapedassessment, he can be said to have reason tobelieve that income had escaped assessment.The expression cannot be read to mean that theAssessing Officer should have finally ascertainedthe fact by legal evidence or conclusion. What 1srequired is "reason to believe” but not the established fact of escapement of income. At theStage of issue of notice, the only question iswhether there was relevant material on which qreasonable person could have formed the requisitebelief. Whether material would conclusively proveescapement of income is not the concern at thatStage. This is so because the formation of thebelief is within the realm of the subjectivesatisfaction of the Assessing Officer.” DO?Mr. Aravind, learned counsel has also submitted thatthe authorities have gone into the question of accepting orotherwise, the explanation offered by the assessee on thetouchstone of the genuineness and credit worthiness of thecreditors and that the Tribunal and lower appellate authorityfound no occasion warranting a different finding from theview of the assessing authority on this aspect, but to rejectthe explanation; that there is no occasion to interfere onsuch findings by the High Court in an appeal under Section260A of the Act. In support of this contention reliance issought to be placed on the following decision :- DO?Mr. Aravind, learned counsel has also submitted thatthe authorities have gone into the question of accepting orotherwise, the explanation offered by the assessee on thetouchstone of the genuineness and credit worthiness of thecreditors and that the Tribunal and lower appellate authorityfound no occasion warranting a different finding from theview of the assessing authority on this aspect, but to rejectthe explanation; that there is no occasion to interfere onsuch findings by the High Court in an appeal under Section260A of the Act. In support of this contention reliance issought to be placed on the following decision :- 1. (2007) 292 ITR 225 (KAR) ACIT VS. VISHWANATH & CO, 2. (2012) 246 CIR (JHARKHAND) 82 MUKESH SHAWVS.ITO 3. (2008) 304 ITR 145 (P & H) TIRATH RAM GUPTA V5. CIT 23|Reliance is also placed on the decision of the SupremeCourt 1n(1999) 236 ITR 34 (SC) RAYMOND WOOLLENMILLS LTD., VS. ITO AND ORS.to contend that suificiencyof reasons cannot be gone into in a case of re-opening ofassessment under Section 147 of the Act, in terms of thisdecision. D4|Even having regard to the contention of the learnedcounsel for the assessee to the effect that initially notice nothaving mentioned the status of the assessee all furtherproceedings are vitiated, submission is that at the best itmay amount to an irregularity and not an illegality ascontended by the learned counsel for the assessee and insupport of this proposition reliance is placed on thejudgment of this court in the case ofASST. COMMISSIONER 19 OF INCOME TAX VS. VISHWANATH & CO., (2007) 292ITR 225 (KAR). 25,We have bestowed our attention to the submissionsmade at the Bar and the contentions urged with thesupporting decisions. 26,What is contended basically on behalf of the assesseeis that the very re-opening of the assessment is bad andbringing to tax cash credits as income of the assessee, isalso bad on settled legal principles. The basic undisputedfacts were that the assessee had claimed the status of a firmand whether or not the notice mentioned it, the stand of theassessee is that it is a partnership firm and in income taxparlance a partnership firm is a person and an assessableentity at the relevant period and that is not in dispute.Insofar as the argument of application of mind or lack of it,regarding the discrepancy in the name of the assessee andtherefore, the assessment proceedings is. vitiated, iconcerned, we find that the description is only in the name of the assessee firm and not as to, who is the firm. At anyrate the wrong spelling assuming that to be so, in describingthe name of the assessee has not caused any prejudice perse to the assessee as the assessee was quite aware of theproceedings that it was in respect of the very firm. In ourconsidered view, it is difficult to assume, that either thewrong description of the name of the assessee and notindicating the status of the assessee as a firm has reallyworked to the prejudice of the assessee and at the best itbeing an irregularity, does not alfect the further proceedings.Insofar as the re-opening aspect is concerned we cannotavoid noticing and even as recorded by the authorities belowthe re-opening of the assessment proceedings of the firmwas because of the submission or explanation offered by oneof its partner Rishabchand Bhansali, who claimed that anAmount found in his books of accounts which was in turnadvanced to some other person, was drawn by this partnerfrom the account of the firm, is by none other than thepartner of the very firm. A firm always acts through its partners, and therefore, there cannot be a dichotomy of thestand in the case of the individual partner being differentfrom that of the firm. What the partners states whether he isa partner in the capacity of HUF or in his individualcapacity, nevertheless it is on behalf of the firm, becauseonly through this finding this aspect has been noticed by theauthorities below also. It is in the wake of such a standtaken by the partner, there was an occasion for investigatingthe transactions of the firm, who had claimed the amount asits amount and which was the very version of the assesseeand its partner. oT|Insofar as the recording of the reasons is concernedthis has been thoroughly examined by the three authoritiesbelow and in the facts and circumstances of the case, it isaccepted that a bonafide reason is recorded for re-opening.Though Sri. Shankar, learned counsel submits that therecords had been called for only to examine this aspect as towhether reasons recorded is right or it is otherwise. We cannot accept this submission for the reason that issue ofnotice has been proceeded by a follow up action taken by theassessing officer subsequent to the search of the premises ofone of the partners and after recording the statements ofsome persons, who were available and claimed to becreditors. Ultimately the assessing officer was of the opinionthat a firm, which had the capacity to lend an amount ofRs.71,90,000/- that too, to one of its partners or others isreasonably presumed to have the taxable income and if theassessee had never disclosed its expenditure or otherwiseearlier and in such circumstances, if the officer records thathe has reason to believe that assessee had taxable incomeand a non-filing of the return is not merely suspicion andtherefore in bringing to tax such amount by re-opening. Wedo not find, it can amount to a mere suspicion or a surmiseas submitted by Sri Shankar, learned counsel. 28.As to whether the recording of reasons to believeconstitutes a real reason or otherwise has to be culled out from the facts and circumstances of each case and in thisregard, we cannot lose sight of the fact that information isprovided in respect of the assessee by its own partner andwhile the assessee had never filed its returns not disclosingits expenditure and therefore, there was no record availablewith the revenue with respect to the assessee, QI|A return was being filed for the first time only aiterissue of notice under Section 148 of the Act, no doubtshowing nil income in the return, but that is a matter to beexamined for acceptance by the assessing authority who hadproposed reopening and that the authorities below haveconcurrently opined that the recording of the reasons by therevenue was suificient for the purpose of issue of noticeunder Section 145 of the Act. The judgment of the SupremeCourt not only in the decision ofACIT VS. RAJESHJHAVERI STOCK BROKERS REPORTED IN 29] ITR 5OG(SC)but in other cases also wherein it is held thatsufficiency cannot be gone into applies. 30,In the circumstances and on the basis of the findingsrecorded by the authorities follow, we are unable to acceptthe submission of the learned counsel for the appellant-assessee that there was no reason and it was only asuspicion based on which the re-opening has been made. Inour considered opinion, until and unless the statutoryprovisions are mis-used or abused or invoked arbitrarily tovictimize an assessee or the action is in a biased manner,interference is not warranted particularly, to renderineffective the statutory provisions. The very purpose oiisSuing notice under Section 148 of the Act is to bring to taxthe income, which is otherwise suspicious assessment,Therefore, in the wake of the findings recorded by theauthorities below, we are not very impressed that we canexercise appellate jurisdiction under Section 260-A of theAct to hold that the very reopening cannot be sustained. SL.Insofar as merits of the matter relating to bringing theamount to tax is concerned, this amount is an income SL.Insofar as merits of the matter relating to bringing theamount to tax is concerned, this amount is an income brought to tax in the hands of the firm on the authoritiesfinding the explanation offered being not acceptable, 39)The case of the assessee firm was not that creditentries were in dispute and though it is urged very stronglyby Sri Shankar, learned counsel, that atleast one or two oithe creditors had independent income in their own capacityand that they were quite capable of lending such amountsetc., and the Department has not made good that theamount is actually not lent by such assessees, who hadborrowed the amount. We are airaid this argument cannotbe accepted for more than one reason. It is to be noticedthat in the first instance, it is one of the partners, who hadsought to explain that the amount in question was drawn byhim from the account of the firm justifying that kind oflending by the partner of the firm in favour of some thirdparties and the source was attributed to the firm. Theaction taken against the firm was a follow-up action, as aresult of search of the premises of the partner. If the version of the assessee partner is to be accepted then there is nochoice for the revenue to proceed further as against theperson, who has lent the money to the firm. The firmthough had transactions had not indicated the income fromits transactions but claiming that it had no income liable totax was not further accepted by the authorities below. 33.We sitting in appeal under Section 260-A of the Act donot find it proper to examine the appeal for the purpose offinding as to whether explanation offered by the assesseefirm should have been accepted by the authorities below.The explanation was rejected and in the circumstances, wefind that if the authorities had opined on the facts andcircumstances that the re-opening was not bad in law andjustified in the facts and circumstances, and to bringing totax the cash credits of the assessee was also justified andfinding recorded, which was examined by the authorities, wedo not find occasion to interfere in respect of an order of thisnature. 34|We also find that the arguments to the effect that theDepartment has not established through the factual positionas against the stand taken by the assessee is arguments,which is principally based on the premises that theDepartment is expected to prove or produce material tocounter the circumstances of the assessee. Assessmentproceedings are not adversary proceedings in nature and itis not as though there is a lis between the assessee and theassessing authority. The assessing authority is thestatutory functionary and is required to perform statutoryduty. An order passed by an assessing authority if iserroneous on facts, there is scope for interference by theTribunal and if it is erroneous on law, there is scope forinterference even up to the High Court in an appeal. But itdoes not mean that the revenue having not proved certainposition or not made good such position, the order rendersitself to be bad in law. 35,There is no question of the revenue proving anythingagainst the assessee, but it is the duty of the assessee forproving taxable income. Therefore, to pay corresponding taxis the statutory duty of the assessee and not because theassessing authority determines or quantifies the liability ofthe tax, the liability is fastened on the assessee and in thisbackground. We find that if the authorities had occasion toexamine the amount of Rs.75,50,000/- which according tothe authorities had not been properly accounted for,particularly, being in the nature of cash credits as claimedby the assessee and therefore, thought it fit to bring it to taxas the income earned during the relevant period, we do notfind occasion to interfere 1n a matter of this nature andtherefore dismiss the appeal. AN/-, NG* Sd/-JUDGESd/-JUDGE