Facts

The assessee firm was carrying on mill store business at Ahmedabad.

The Governor-General on 12-1-1946, promulgated the High Denomination Bank Notes (Demonetisations) Ordinance, 1946, and high denominations bank notes ceased to be legal tender on the expiry of 12-1-1946.

Pursuant to the Ordinance the assessee, on 18-1-1946, encashed high denomination notes of Rs. 1,000 each of the face value of Rs. 61,000.

After examining the entries in the books of account of the Assessee and the position of the cash balances on various dates and the nature and extent of the receipts and payments during the relevant period, the AO came to the conclusion that in order to sustain the contention of the appellants he would have to presume that there were eighteen high denomination notes of Rs. 1,000 each in   the cash balance on 1st January, 1946, and that all cash receipts after 1-1-1946,   and before 13-1-1946, were received in currency notes of Rs. 1,000. The AO, therefore, added the sum of Rs. 61,000 to the assessable income of the assessee from undisclosed sources.

Before the AAC the assessee produced affidavits from some of the parties to demonstrate that payment was received in Rs. 1,000 denomination notes. The ACC did not accept the statements contained in the said affidavits and dismissed the appeal

Issue

Whether facts put forth by the assessee in an affidavit could be disregarded without any material to dislodge the position taken by the assessee?

Views

Neither scrutiny was made by the AO or the AAC of the entries in the cash book  nor were the entries challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considerednecessary by either party and no cross examination of the

deponents carried out by the Authorities. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits.

Held

Disregarding of the affidavits was based pure surmise and had no basis in the evidence, which was on the record of the proceedings. (AY.  1947-48) (CA No. 81   of 1954 dt. 10-5-1956)

Editorial: Followed in Daulat Ram Rawatmull v. CIT (1973) 87 ITR 349 (SC). Once an affidavit is furnished, it should be presumed to be a correct statement of facts. If these facts are to be controverted, either the deponent must be examined   or evidence contrary to facts must be led. In the absence of these the affidavits could not be ignored.

“We notice that the mind is a restless bird; the  more it gets the more it wants, and still remains unsatisfied. The more we indulge our passions the more unbridled theybecome.”

– Mahatma Gandhi