TRADERS AND TRADERS VS COMMISSIONER OF INCOME-TAX, 2000 PTD-MADRAS-HIGH-COURT-INDIA 2818 (1998)

2000 P T D 2818

[236 I T R 269]

[Madras High Court (India)]

Before N. V. Balasubramanian and P. Thangavel, JJ

TRADERS AND TRADERS

versus

COMMISSIONER OF INCOME-TAX

T. C. Nos.292 and 293 of 1983 and 1374 of 1982 (References Nos. 122 and 123 of 1983 and 854 of 1982), decided on 25/03/1998.

(a) Income-tax---

----Income from undisclosed sources---Finding that assessee had earned from dealings in customs clearance permits---Estimate of profits based on evidence---Assessment was justified---Indian Income Tax Act, 1961.

The assessee was a registered firm having branches at various places. For the assessment years 1966-67 and 1967-68, the Income-tax Officer made additions to its income treating it as a beneficiary of customs clearance permits issued in the name of French India Traders. The Tribunal came to the conclusion on the basis of the materials and evidence on record, that the assessee was a beneficiary. The Tribunal found that the exploitation took place amounting to Rs.20 lakhs and it took note of the general practice, that no one would like to openly associate with the exploitation as the exploitation by any other person other than the owner of the permits would be considered as an infringement of the permits. Therefore, the Tribunal came to the conclusion that in the nature of the exploitation, a certain amount of secrecy should be surrounding the transactions and taking into account all other factors, particularly, the interest of the assessee and the fact that the permits were not standing in the name of the assessee, the Tribunal estimated that out of total receipts of Rs.12 lakhs, 50 percent. could be attributable to the assessee. The estimate was also supported by the entries in the accounts of LGA, which was a partner of the assessee wherein two major amounts had been found and the Tribunal, therefore, came to the conclusion, that when the two amounts were taken into account, the profit of exploitation of customs clearance permits could roughly be estimated to be Rs.6 lakhs and on the basis of its own estimate arrived at on the materials on record, the Tribunal held that Rs.1,50,000 should be assessed for the assessment year 1966-67 and the balance of Rs.4.5 lakhs should be assessed for the assessment year 1967-68.

In the assessment year 1967-68, an amount of Rs.60,000 shown as credits in the name of D.R. was included in the total income of the assessee. The Tribunal found that there was an admission by the creditor that the transaction was bogus. The creditor not only denied the transaction, but also filed an affidavit to the effect that the transaction was not a genuine one. The Tribunal sustained the addition. On a reference:

Held, (i) that with regard to the income from undisclosed sources the finding of the Tribunal was arrived at on the basis of materials on record. The Tribunal on an overall consideration came to the conclusion that out of a sum of Rs.6 lakhs, Rs.1,50,000 should be assessed for the assessment year 1966-67 and the balance of Rs.4.5 lakhs should be assessed during the next assessment year. The Tribunal estimated the profit attributable to the transaction and arrived at the figure of Rs.6 lakhs. Therefore, the estimate made by the Tribunal on the basis of the materials could not be disturbed by the High Court.

(b) Income-tax---

----Cash credits---Affidavit by creditor that transaction was bogus ---Assessee not proving transaction was genuine---Addition of amount representing cash credits arid interest thereon was justified---Indian Income Tax Act, 1961.

In so far as the sum of Rs.60,000 was concerned, in the face of the denial by the creditor, the burden was cast on the assessee to prove that the transaction was a genuine one and in the absence of any convincing explanation from the assessee, the Tribunal, rightly came to the conclusion that the sum of Rs.60,000 with interest thereon should be added to the income of the assessee.

V. Ramachandran for K. Mani and Mallika Srinivasan for the Assessee.

J. Jayaraman for C. V. Rajan for the Commissioner.

JUDGMENT

N. V. BALASUBRAMANIAN, J.---The assessee is a registered firm having branches at various places, one of which is Lala Gopikrishna Gokuldas Agencies, Bombay. The Income-tax Officer, for the assessment year 1966-67 made an addition of Rs.1,50,000 treating the assessee as a beneficiary of the customs clearance permits issued in the name of Messrs. French India Traders. The said French India Traders, Pondicherry, were issued customs clearance permits with c.i.f. value of Rs.21,70,678. According to the Income-tax Officer, a syndicate was formed consisting of Madhusudan Gordhandas & Co., Naraindas Gohimal, Sohanlal Sharma and Balwant Singh Bawa and the said syndicate had paid to the said French India Traders a sum of Rs.1,50,000 in cash in July, 1965, Rs.7,50,000 by way of cheques issued by Babubhai & Sons, Bombay, in April and June, 1966, and Rs.2,18,750 by way of consignment of thin-walled bearings. As regards the first item of Rs.1,50,000, the assessee showed receipts of Rs.20,000, dated July 21, 1965, by drafts on Bank of India and Rs.80,000, dated July 14, 1965, by cash through Balwant Singh Bawa. The accounts showed that the amounts were originally credited to Madhusudan Gordhandas & Co. and later transferred to the accounts of French India Traders in the assessee's books of account. As regards the balance of Rs.50,000 the amount was alleged to have been paid by Madhusudan Gordhandas & Co., Bombay, to the assessee directly. As regards cheques, the assessee's books showed the following entries:

April 26, 1966 cheque of Babubhai & Sons, Rs.4,00,000

June 8, 1966 cash of Babubhai & Sons, Rs.1,00,000.

June 29, 1966 cheque of Babubahi & Sons, Rs.1,50,000.

According to the Income-tax Officer, the balance of Rs.1,00,000 was received by the assessee directly from Madhusudan Gordhandas & Co., in cash and there was no mention in the books of the assessee that thin? walled bearings had been handed over to the customs clearance permit holders. The Income-tax Officer, therefore, came to the conclusion that the profits on account of customs clearance permits of French India Traders were assessable in the hands of the assessee. He arrived at the above conclusion on the basis of the statement of one D. B. Gandhi, partner of Babubhai & Sons, before the Income-tax Officer, Bombay, that Mr. G. L. Pathy, Proprietor of French India Traders, had negotiations with them and that French India Traders was a dummy concern of Lala Gopikrishna Gokuldas Agencies, Bombay and Madras, which was one of the activities of the assessee.

Secondly, he relied upon a statement of one T. K. Katakia of Madhusudan Gordhandas & Co., and according to the officer, he was having intimate knowledge of the transactions relating to the customs clearance permits and though G. L; Pathy was shown as proprietor of French India Traders, actually the beneficiary was Lala Gopikrishna Gokuldas Agencies with whom the syndicate dealt. in respect of licences to French India Traders and the payments were made to the. persons in charge of the Bombay office of Lala Gopikrishna Gokuldas Agencies. The statement of Katakia was corroborated by entries in the books of account of the firm Madhusudan Gordhandas & Co., as regards the payments on account of customs clearance permits and it was further corroborated by the correspondence, the firm had with various other concerns. The Income-tax Officer found that the assessee's accounts showed the receipt of cheques and amounts either from the members of the syndicate or from Babubhai & Sons who issued the cheques on behalf of the syndicate. Hence, he made an addition of Rs.1,50,000 for the assessment year 1966-67. For the assessment year 1967-68 also, the Income-tax Officer made an addition of Rs.9,68,750 in regard to the above transactions comprising two items; one, payment to Babubhai.& Sons of Rs.7,50,000 and another Rs.2,18,750 being the cost of 625 sets of thin-walled bearings at Rs.350 per set. The assessee challenged the additions before the Appellate Assistant Commissioner for both the assessment years.

It was submitted on behalf of the assessee that the Income-tax Officer was not correct in holding that the assessee was the real beneficiary of the customs clearance permits. According to the assessee, the permits were issued in the name of various parties and the officer was wrong in placing reliance on the uncorroborated testimony of G. L. Pathy in coming to the conclusion that the assessee was the beneficiary of the transactions. The Appellate Assistant Commissioner considered the matter in detail. He referred to the statement of G. L. Pathy, the power of attorney of Kailashchand Bhaiya, an employee of the assessee-firm, the power of attorney deed executed by Pathy in favour of Kailashchand Bhaiya, certain correspondence and also statement given by the said Pathy at the time of examination by the Income-tax Officer. After exhaustively considering the matter, he came to the conclusion that the customs clearance permits of French India Traders were exploited by the assessee and the entire amount received as a result of such exploitation was utilised by the assessee for its benefit. He, therefore, held that the Income-tax Officer was justified in making the additions admitting all customs clearance permits in the hands of the assessee for both the assessment years.

The assessee carried the matter on appeal before the Income-tax Appellant Tribunal. In the appeal before the Tribunal, the assessee challenged also the addition of Rs.60,000 being the credit in the name of one Damodardas Ramandas. It was an undisclosed income and the credits in the name of Damodardas Ramandas of Rs.30,000 each were made on November 6, 1964 and November 7, 1964. The I0ncome-tax Officer confronted the assessee with the statement of the creditor and the creditor had confessed before the Income-tax Officer that they were bogus. He also produced a copy of the books of account and stated that all the transactions were hawalas and no loan was actually advanced or received back as shown in the copy of the accounts. The Income-tax Officer made an addition of Rs.60,000 and also disallowed the interest of Rs.3,500. The Appellate Assistant Commissioner, on appeal, also confirmed the addition and the Tribunal came to the conclusion that the admission of the creditor makes it clear that the transaction with the assessee was bogus and the Tribunal upheld the addition of Rs.60,000 with the interest thereon.

The Tribunal then took up for consideration the addition of Rs.9,68,750 for the assessment years 1966-67 and 1967-68. The Tribunal went into the materials and found that while answering the relevant questions put to him G. L. Pathy was contradicting his statement. The Tribunal then referred to another statement taken on November 28, 1970. After noticing the statement as well as certain letters, the Tribunal found that G. L. Pathy had no knowledge or control over the receipts that were coming from Balwant Singh through M. G.`& Co., contrary to his statement that he had deposited the amount with L. G. G. Agencies. The Tribunal also went into the accounts. The Tribunal recorded a finding that the statements of the officer were not only vague but also contradictory. It found several instances where Pathy was contradicting himself and Pathy had adopted an evasive approach while he was questioned. The Tribunal also held that it was unbelievable that a sum of Rs.3,00,000 was said to have been given to Zip Industries as compensation for non-delivery of goods; i.e., thin-walled bearings, admittedly at the instance of G. L. Naidu in the course of business. The Tribunal found that Zip Industries had never contracted earlier, nor was connected with thin-walled bearing, who suddenly had the benefit of the contract of G.L. Naidu. Though there was assessment in the name of Zip Industries for the sum of Rs.3 lakhs, the total income that was assessed was Ks. 18,954 and for the sake of convenience, the assessment was obtained in the name of Zip Industries. The Tribunal, therefore, came to the conclusion that the receipts credited in the name and account of G. L. Pathy in respect of customs clearance permits were all disbursed in the manner in which they were said to have been disbursed. The Tribunal, therefore, held that G. L. Pathy did not play any role though the permits stood in his name. According to the Tribunal, L. G. G. Agencies which is a part of the assessee had taken a greater and real interest. The mere fact that employees of the Bombay office and Delhi officer associated with G. L. Pathy and receipts were recorded in the books of L. G. G. Agencies is a significant one which can be attributable to L. G. G. Agencies. The Tribunal, on the basis of the materials and evidence came to the conclusion that the benefits relating to the exploitation of customs clearance permits reached the assessee and where surrounding circumstances and probabilities of the case indicate that it was difficult to evaluate the benefits, then greater share should have gone in favour of the assessee. The Tribunal, therefore, estimated that out of total receipts, i.e., Rs.12 lakhs, 50 percent. should be taken as the assessee's share and directed the Income-tax Officer to take Rs.6 lakhs as the income attributable to the transactions of the assessee-firm. The Tribunal further held that on the basis of the statement of Madhusudan Gordhandas and Balwant Singh and the letter, dated September 28, 1965, a sum of Rs.1,50,000 should be assessed as income in the assessment for the assessment year 1966-67 and the balance of Rs.4.5 lakhs should be assessed in the assessment for the assessment year 1967-68. The Tribunal also found that in the books of L. G. G. Agencies, Bombay two amounts were found. viz., Rs.3 lakhs and Rs.2,99,887 and G. L. Pathy made a statement only with reference to two figures, of which one is relating to the payment of compensation to Zip Industries. The Tribunal, therefore, held that Rs.3 lakhs should be considered as income flowing from the exploitation of the customs clearance permits through the assessee, though it was assessed in the hands of Zip Industries. As regards other sum of Rs.2,99,887 there was no evidence to show that Balwant Sigh had taken money and the said two major items, viz., Rs.3 lakhs and Rs.2,99.887, if put together, would work out to Rs.6 lakhs and the addition to be sustained to the extent of Rs.6 lakhs spread over for a period of two years. In this view of the matter, the Tribunal partly allowed the appeal for both the assessment years.

The Revenue as well as the assessee sought for references and on the basis of the directions of this Court, the following questions of law have been referred both at the instance of the Revenue and the assessee:

T. C. Nos.292 and 293 of 1983 (at the instance of the assessee).

For the assessment year 1966-67:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the applicant has derived benefit equal to 50 percent. of the value of customs clearance permits in regard to the transactions with Shri Naidu?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the applicant had any interest or derived any benefit in respect of the clearance permit transactions?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the transaction with the Zip Industries is not a genuine transaction?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that though the customs clearance permits stood in the name of Shri Naidu, the applicant should be deemed to have derived 50 percent. benefit?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that even assuming any profit has been received by the applicant in regard to the customs clearance permit transaction whether the same is assessable as income liable to tax?

(6) Whether, on the facts and in the circumstances of the case, the Tribunal is right in ignoring the fact that the applicant was not carrying on business of dealing in or exploiting customs clearance permits and as such even assuming without conceding any profit had been derived the same is not income but a casual receipt?

(7) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in its finding that Shri Naidu did not play any role worthwhile especially in view of the clear finding that the customs clearance permits really belonged to him?

(8) Whether, on the facts and in the circumstances of the case, the Tribunal is correct in its finding that Lala Gopikrishna Gokuldas Agencies appears to have taken greater and real interest and concern than Shri Naidu?

(9) Whether, on the facts and in the circumstances of the case, there is any justification for the Tribunal to adopt 50 percent. value of the customs clearance permits as the benefit derived by the applicant?

(10) Whether, the Tribunal has exceeded its jurisdiction and/or acted without any evidence in holding that the applicant had 50 percent. share in the income attributable to the transaction when it was not even the Department's case that there was any such profits sharing arrangement.

(11) Whether there was any material on record for holding that:

(i) applicant's share in the income attributable to the transactions was 50 percent-?

(ii) Rs.1,50,000 assessable as income from such transactions in the assessment year 1966-67?

(12) Whether, the finding of the Tribunal that the applicant had 50 percent. share in the income from the transactions is based on suspicion and surmises and is inconsistent with the evidence on record, and therefore, vitiated in law?"

For the assessment ear 1967-68:

"(1) whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the addition of the sum of Rs.60,000 being the credit in the name of Damodardas Ramandas is the income of the petitioner?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the applicant has derived benefit equal to 50 percent. of the value of customs clearance permits in regard to the transactions with Shri Naidu?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the applicant had any interest or derived any benefit in respect of customs clearance permit transactions?

(4) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the transaction with Zip Industries is not a genuine transaction?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that though the customs clearance permits stood in the name of Shri Naidu the applicant be deemed to `have derived 50 percent. benefit?

(6) Whether, on the facts and in the circumstances of the case the Tribunal is right in law in holding that even assuming any profit has been received by the applicant in regard to the customs clearance permit transaction, whether the same is assessable as income liable to tax?

(7) Whether, on the facts and in the circumstances of the case, the Tribunal is right in ignoring the fact that the applicant was not carrying on business of dealing in or exploiting customs clearance permits and as such even assuming without conceding any profit had been derived the same is not income but a casual receipt?

8. Whether, on the facts and in the circumstances 'of the case, the Tribunal was justified in its finding that Shri Naidu did not play any role worthwhile especially in view of the clear finding that the customs clearance permits really belonged to him?

Whether, on the facts and in the circumstances of the case, the Tribunal is correct in its finding that Lala Gopikrishna Gokuldas Agencies appears to have taken greater and real interest and concern than Shri Naidu?

?(10) Whether, on the facts and in the circumstances of the case, there is any justification for the Tribunal to adopt 50 percent. of the value of the customs clearance permits as benefit derived by the applicant?

(11) Whether, the Tribunal has exceeded its jurisdiction and/or acted without any evidence in holding that the applicant had 50 percent. share in the income attributable to the transaction, when it was not even the Department's case that there was any such profit sharing arrangement?

(12) Whether, there was any material on record for holding that:

(i) applicant's share in the income attributable to the. transactions was 50 percent.

(ii) Rs.4,50,000 were assessable as income from such transactions in the assessment year 1967-68?

(13) Whether, the finding of the Tribunal that the applicant had 50 percent., share in the income from the transactions is based on suspicion and surmises and is inconsistent with the evidence on record and, therefore, vitiated in law?"

T. C. No. 1374 of 1982 (at the instance of tile Revenue).

For the assessment year 1967-68:

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in sustaining only a sum of Rs.4.5 lakhs against Rs.9,68,750 being the profits on the exploitation of customs clearance permits?

(2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding and had valid materials to hold that only 50 percent. of the total receipts on the exploitation of customs clearance permits could be attributable to the assessee"?

The Department's contention is that the Tribunal was not right in sustaining only a sum of Rs.4.5 lakhs out of Rs.9,68,750 being the profit on the' exploitation of customs clearance permits. The main contention of the Department is that the Tribunal had no material at all to hold that only Rs.6 lakhs was the income arising on the exploitation of the customs clearance permits and, therefore, the Tribunal was not correct in holding that only 50 percent. of the profit should be attributable to the assessee. The assessee's case is that no amount is taxable in the hands of the assessee. The case of the assessee is that the amount was already assessed in the hands of Zip Industries and it is a genuine transaction and no part of the mount is assessable in the hands of the assessee. The case of the assessee is that it was not carrying on the business of exploitation of the customs clearance permits and on the basis of the mere statements of witnesses, the Tribunal was not correct. in holding that the assessee's share should be attributable to 50 percent. of the profit. The assessee also questioned the addition made towards the unexplained credit entries amounting to Rs.60,000.

We have carefully considered the case of the Department as well as the assessee. We are of the opinion that the Tribunal has arrived at a finding that there was an exploitation of customs clearance permits. The Tribunal took into account the statements of Ramnarayan, one of the partners of the assessee-firm, and the statements of G.L. Pathy, Balwant Singh and Bahaiya. It also took into account the correspondence between Madhusudan Gordandas and Ramnarayan and clearly recorded its finding that G. L. Pathy did not play any role though the permits were standing in his name. The Tribunal also from the evidence came to the conclusion that L. G. G. Agencies which is a partner of the assessee had taken a greater role and real interest. Though the assessee, had pleaded lack of interest and anxiety relating to the exploitation of the customs clearance permits, the Tribunal also found that the employees of the assessee in Bombay and Delhi had been associated with G. L. Pathy and all the receipts had been recorded in the books of L. G. G. Agencies and there was positive evidence in the form of letters in the name of Pathy supplying details of happenings of the permits. These significant factors were taken into account and on that basis, the Tribunal came to the conclusion that there was a connection of L. G. G. Agencies in the exploitation of customs clearance permits. The Tribunal, in our view, came to the conclusion on the basis of the materials and evidence on record that the assessee was a beneficiary and the further question that was posed before the Tribunal was how much of the benefits could be attributable to the assessee. It rejected the plea that various record of debits and credits in the account of G. L. Pathy should be allowed to be treated as merely accommodating account and no consideration can be involved in the entries. The Tribunal found that the exploitation took place amounting to Rs.20 lakhs and it took note of the general practice that no one would like to openly associate with the exploitation as the exploitation by any other person other than the owner of the permits would be considered as an infringement of the permits. Therefore, the Tribunal came to the conclusion that in the nature of the exploitation, a certain amount of secrecy should be surrounding the transactions and taking into account all other factors, particularly, the interest of the assessee and the fact that the permits were not standing in the name of the assessee, the Tribunal estimated that out of total receipts of Rs.12 lakhs, 50 percent. can be attributable to the assessee. The estimate is also supported by the entries in the accounts of L. G. G. Agencies, Bombay, wherein two major amounts had been found and the Tribunal, therefore, came to the conclusion, that when the two amounts were taken into account, the profit of exploitation of customs permits can roughly be estimated to be Rs.6 lakhs and on the basis of its own estimate arrived at on the materials on record, the Tribunal held that Rs.1,50,000 should be assessed for the assessment year 1966-67 and the balance of. Rs.4.5 lakhs should be assessed for the assessment year 1967-68.

We are, therefore, of the view that the finding arrived at by the Tribunal is based on materials. The Tribunal also noticed that the fact that the amount was assessed in the hands of Zip Industries would not in any way affect the assessment of the said amount in the hands of the assessee. The Tribunal found that Zip Industries have not entered into any such contract earlier and it was in no way connected with thin-walled bearings. Though there was assessment in the hands of Zip Industries for the sum of Rs.3 lakhs, the total income Assessed was Rs.18,954. Even there was a controversy about the receipt of articles between Pathy and Balwant Singh and the contract in respect of articles entered into with Zip Industries which had

never dealt in those articles would appear to be make-believe contract. Therefore, the Tribunal, after taking into account the fact that the amounts were credited in the accounts of G. L. Pathy and the Income-tax Officer assessed Zip Industries in respect of receipts when Zip Industries offered the same for assessment, came to the conclusion that a part of the profit was attributable to the assessee. Therefore, it cannot be stated that the Tribunal has omitted to take into account any rel6vant consideration or taken into account some irrelevant consideration in holding that a part of the profit arising on the exploitation of customs clearance permits found its way to the assessee. We are, therefore, of the opinion that the finding arrived at by the Tribunal is a finding of fact and this Court, sitting in reference jurisdiction, as it is well-settled has no jurisdiction to go into the question of fact. The finding of the Tribunal, in our opinion, was arrived at on the basis of the evidence of Pathy and the correspondence between Jhaver and R. N. Bhatt. The Tribunal took into account the modus operandi involved in exploiting the customs clearance permits and there was a telling evidence of Pathy being ignorant of even the basic nature of the transaction. The Tribunal found that the profits on the exploitation were deposited in the books of L. G. G. Company, Bombay, and transferred to L. G. G. Company, Madras and Pathy was ignorant of knowing in which bank he had opened the account in Bombay and why he had not transferred the money to his own bank account at Madras or Pondicherry. The Tribunal also took into account the statements of Katakia and Gandhi. The facts clearly reveal that Pathy was ignorant and the details relating to the transactions amounting to several lakhs of rupees and the Tribunal, therefore, came to the correct conclusion that Pathy could not be the real beneficiary of exploitation of the customs clearance permits.

In so far as the assessment made on Zip Industries is concerned, the Tribunal also recorded a clear finding that the real beneficiary could not be Zip Industries, though the assessment was made. The final picture that emerges from the overall reading of order of the Appellate Tribunal is that the assessee was the real beneficiary of the exploitation of the customs clearance permits and Pathy was a man of straw and a syndicate was formed to exploit the customs clearance certificates. The finding of the Appellate Tribunal, as already stated, was arrived at on the basis of the materials on record. Further, the question that arises is whether the entire sum of Rs.1.5 lakhs and Rs.9,68,750 would be assessable in the hands of the assessee. The Tribunal, in our opinion, has estimated that in so far as Rs.1,50,000 is concerned the amount was received by the assessee-firm from Madhusudan Gordhandas and in the . light of receipts ,and the, letter, dated August 28, 1965, from Balwant Singh, the sum of Rs.1.5 lakhs should be assessed for the assessment year 1966-67. The Tribunal, on an overfill consideration came to the conclusion that out of a sum of Rs.6 lakhs, Rs.1,50,000 should be assessed for the assessment year 1966-67 and the balance of Rs.4.5 lakhs should be assessed during the next assessment year. The Tribunal estimated the profit attributable to the transaction and arrived at the figure of Rs.6 lakhs. Therefore, the estimate made by the Appellate Tribunal on the basis of materials cannot be disturbed by this Court while sitting in reference jurisdiction. Once it is found that the assessee was not entitled to the entire benefits, the further question that remains is only the question of estimation and the Tribunal estimated the profit at Rs.6 lakhs and directed the apportionment of the same into two years under consideration. Therefore, we are of the view that the estimate made by the Appellate Tribunal on the basis of the materials cannot be disturbed by this Court.

In so far as the sum of Rs.60,000 is concerned, the Tribunal found that there was an admission by the creditors that the transaction was bogus. The creditors not only denied the transaction, but also filed an affidavit to the effect that the transaction was not a genuine one: Thus, on the face of the denial by the creditors, the burden was cast on the assessee to prove that the transaction was a genuine one and in the absence of any convicting explanation from the assessee, the Tribunal, in our view, rightly came to the conclusion that the sum of Rs.60,000 with interest thereon should be added to the income of the assessee. The finding of the Tribunal on that aspect also is purely a finding of fact and no question of law arises out of the order of the Appellate Tribunal on that finding and in this view we have taken, we are of the view, the questions of law referred both at the instance of the Department and at the instance of the assessee should be answered against both the parties and the order of the Appellate Tribunal as a whole does not call for any interference.

Accordingly, we answer, the various questions of law referred at the instance of the assessee against the assessee and we also answer the questions of law referred at the instance of the Department against the Department. The effect of the judgment is the order of the Appellate Tribunal is upheld in toto. The assessee is entitled to costs of Rs.5,000 in its reference in one set and the Revenue is entitled to costs of Rs.5,000 in its reference in one set.

M.B.A./4127/FC ??????????????????????????????????????????????????????????????????????????????? Order accordingly.