Income Tax Officer vs Nahar Singh Sadhu Singh

Jawahar Lal Gupta, J.—The Revenue has filed this appeal u/s 260A of the Income Tax Act, 1961. It raises the following question for decision :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in confirming the deletion of addition of Rs. 1,82,988 made by the Commissioner of Income Tax (Appeals) on account of income from undisclosed sources introduced by the firm in the shape of exaggerated income from agriculture in the hands of the partners ?"

The assessee is a partnership firm. It is doing the work of commission agent. For the assessment year 1991-92, the assessee showed an income of Rs. 77,030. The Assessing Officer made an addition of Rs. 1,82,988 and fixed the taxable income at Rs. 2,60,018. Aggrieved by the order, the assessee filed an appeal. The Commissioner of Income Tax (Appeals), vide order dated June 30, 1992, found that two of the partners had agricultural land measuring 35 acres and 10 acres. They had sold wheat and narma crops. As a result, they had the requisite amount to invest towards the capital account of the firm. Thus, the addition made by the Assessing Officer was set aside.

The Revenue challenged the order passed by the appellate authority. The Tribunal after consideration of the matter has found that the partners had an agricultural income of Rs. 3,02,500. The income pertains to the holding which belongs to the partners and their family members in their individual capacity. The assessee-firm had shown the income "in its account books, in the capital account of the individual partners--Shri Biker Singh and Shri Baltej Singh, etc." On this basis, the Tribunal concluded that the addition made by the Assessing Officer is nothing but based on "conjectures and surmises ..." Still further, the Tribunal found that the "Assessing Officer was not justified in adding the same as income of the assessee-firm from its undisclosed sources." Thus, the appeal filed by the Revenue was dismissed by the Tribunal, vide order dated November 17, 1998. Hence, this appeal.

Mr. Sawhney contends that the Assessing Officer had rightly made the addition by treating the amount as the undisclosed income of the firm. In support of the contention, he has placed reliance on the decision in Smt. Shanta Devi v. CIT [1988] 171 ITR 532 .

On a perusal of the order passed by the Tribunal, we find that it has come to a firm conclusion that Bikar Singh and Baltej Singh, partners of the assessee-firm had 45 acres of land. The average income shall be Rs. 4,500 per acre. On this basis it has been concluded that the partners could have contributed the amount to the account of the firm. This amount could not have been treated as the undisclosed income of the firm. No evidence has been pointed out which may show that the findings of fact recorded by the Tribunal are untenable.

Mr. Sawhney contends that in view of the decision in Shanta Devi''s case 1988 171 ITR 532, the view taken by the Tribunal cannot be sustained. Is it so ?

This was a case where an entry in the account books of the firm was sought to be used against the individual assessee. It was observed by the Bench that (page 534) "the books of account of the partnership firm are not to be treated as those of the individual partner". In Section 68 the reference was to the books of the assessee and not to the books of any other person. It was found that the assessee maintained no books of account. The cash credit entry, which was sought to be used against the assessee, formed part of the books maintained by the partnership firm. That entry could not be considered against the individual assessee u/s 68 of the Income Tax Act. In our view, this decision is of no assistance to the Revenue in the present case.

No other point has been raised.

The case raises no substantial question of law. The findings of fact are not shown to be perverse or even wrong. Resultantly, we find no merit in this appeal. It is dismissed. No costs.