Assessee can’t receive Payments from its Old Sundry Debtors after a gap of Two to Three years: Madras High Court [Read Judgment]

The Madras High Court said that it is impossible to believe the assessee had received the payments from its old Sundry Debtors after a gap of two to three years.

The assessment for the Assessment Year under consideration, AY 2002-03, was reopened and notice under Section 148 of the Act was issued. From the findings recorded by the Assessing Officer in the Assessment Order, dated 19.12.2007. Initially, the assessee, M/s.Jaidayal Prannath Kapur did not extend full cooperation in the reopened assessment proceedings, and ultimately, notice was issued under Section 142(1) of the Act calling upon the assessee to furnish the details of the source of payment of a sum of Rs.60,63,000/- by cash to M/s.Aditya Securities Ltd., and another amount of Rs.9,50,000/- by Demand Draft to the very same company.

The assessee, by letter dated 19.11.2007, confirmed the purchase of shares amounting to Rs.2,00,34,125/- through the said company for the year ended 31.03.2002 and also Rs.60,63,000/- paid to the said company by cash on various dates and another amount of Rs.9,50,000/- paid by Demand Draft.

This was a candid admission made by the assessee before the Assessing Officer, which has not

been disputed even before us. When the assessee was questioned as regards the nature and source of payment, they stated that Rs.98,40,421/- was due from Sundry Debtors as of 31.03.1999. The assessee was requested to furnish the name and address of the Sundry Debtors who gave/settled their amounts by cash with the date and the hearing of the case was postponed.

However, the assessee was unable to provide any details and filed an affidavit, which was rejected by the Assessing Officer as baseless. Since the assessee has failed to furnish the nature and source for Rs.70,13,506/- paid to M/s.Aditya Securities Ltd., and failed to furnish the name and address of the Sundry Debtors, who they claim to have paid/settled their amounts to the assessee, the Assessing Officer rightly drew an adverse inference against the assessee in the absence of any documentary evidence and completed the assessment by order dated 19.12.2007. Aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).

The division bench of Justice T.S. Sivagnanam and Justice Sathi Kumar Sukumara Kurup held that the assessee could not furnish any details regarding the payments received from the Sundry Debtors and that even their names could not be furnished, and that apart, the Tribunal has recorded that the assessee had admitted that income details are available with the assessee and in the

absence of any details, the Tribunal rightly held that it is impossible to believe the theory that the assessee had received the payments from its old Sundry Debtors after a gap of two to three years, and accordingly, the appeal was dismissed.

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M/s.Jaidayal Prannath Kapur vs Commissioner of Income Tax-VIII , 2021 TAXSCAN (HC) 566 , Mr.T.Vasudevan , Mrs.V.Pushpa