COMMISSIONER OF INCOME TAX, BILASPUR vs. ABDUL AZIZ, SURAJPUR

order became invalid as per their earlier order dated 15.10.1999? ii Whether on the facts and in t circumstances of the case, learned Income Tax Appellate Tribunal was justified in upholding CIT(A)’s order whereby the CIT(A) deleted the additions of Rs. 4,93,500/— made u/s. 68 in the Assessment Year 199 1 when the creors have no crewortness to advance the loan \ T 2. he brief facts, as projected by the appellant, are that the original sessment of the assessee was coleted under Section 143 (3)/147 of the l.T. Act on a total income of Rs.2,36,130/- on 31.03.1995 with an addition of unexplained cash credit of Rs.96,000/— under Section 68 of the l.T. Act. The Commissioner of Income Tax (for short ”the CIT’), set nt e r ./.L a 1 h d In w de () he 0 9 dlt dithi s as mp

aside No.F/SROI263/10l1996-97 the assessment with order a direction on 25 i0 03 eomplete 1997 in assessment Revision \ M Q; erder afresh. i

the appeal holding that the ipugned .Order dated 007 ed m 5.10.1999 of the Tribunal, setting aside the well reasoned rder of the 1 o omissioner, was not just and, as such, the orde dated 15.10.1999 Cm r of the Tribunal was quashed and the order dated 25.03.1997 of the C IT was restored vide orer d dated 08.07.2009, passed in ITA No.21 of 2000. The Asistt san Commissioner of Income Tax vide Vadresh assessment rder dated 30.03.1999 added a sum of Rs. 493,5OOI- under o , rovisions of Section 68 o the l.T. Act as an additional income on the p f round th 27 creditors d not proved credit worthiness and the g at ha c l hereagains an appeal was preferred before the Commissioner of Income Tax (Appeals) (for short “the CIT (A)"). The CIT (A) (l) set aside the order, vide order dated 25.8.1999. The CIT (A) served that all the creditors appeared before the ob ssessing Office (for short "the A.O. ’9, their statements were recorded A r n oh and all of them ave affirmed the fact of giving the said loans the assessee. They had also indicated their source and financial to apacity for making th impugned deposits with the assessee. hey c e T ‘ urther explained the detail of repayment of the deposits or interest to f s redits remain unproved. Tt, l ded y e d l o at h

them by the assessee. Their complete addresses were also disc osed to the Assessing Officer. It was further observed that the A.O. had sufficient time at his credit to verify the verifiabie facts but then neither the deponents have been cross-examined nor was there any evidence brought on reco'rd to disprove the truth in the depositions made by t em and, as such, the initial burden cast upon the assessee was discharged. The CIT further held that the A.O. disbelieved the depositions made by the creditors and substituted his own personal presumptions to l c‘onclude that the creditors did not have adequate sources to make the x . said deposits. The A.O. without conducting local enquiries or collecting material evidence on record proved the statements of the creditors as false. The assessee and the creditors were confronted after a long lapse of 10 years. Thus. the assessee could not have been called Jpon to explain the origin and source of the sources. All the creditors were villagers and most of them were agriculturists and because they do not maintain bank a/cs., no adverse inference/could be drawn against the assessee. The payment of interest had been accepted as genuine without accepting the receipt of loan. The CIT held that the assessee tiad satisfactorily explained the cash credits appearing in the names of various persons, in his books of a/c., thus, he had discharged his burden of proving all the essential ingredients of Section 68 of the l.T.Act. Thus, additions made under Section 68 for Rs.4,93,500/— was not sustainable in law and the same was accordingly deleted. l‘n further appeal before l.T.A.T. preferred by the revenue, the l.T.A.T. observed that the statements of 27 creditors were recorded on oath by the A.O., where creditors disclosed source of income and file confirmation and affidavits, therefore, the assessee has discharged the onus of proving the capacity of lender, transactions and source of income of lenders. The explanation and statement not found acceptable to the A.O. does not lead to the conclusion that there is undisclosed income in the hands of the assessee. The A.O. has also not brought on record the cogent reasons to falsify the statements and affidavits submitted before the A.O. The A.O. also not rejected the s- atements and affidavits on valid reasons. Therefore, it was concluded t at the A.'O. has not applied judicious mind while resorting to addition iT passing the order as per direction of CIT u/s. 263 of the Act. The addition made by the A.O. deserves to be deleted. ‘3 i So far as question No1 is concerned the same does not arise for consrderation as the order dated 15 10 1999 passed by the ITAT quashing the order dated 25 03 1997 passed by the CIT was quashed by this Court on 08.07.2009 in l.T.A. No.21/2000. With regard to second question of law, Shri Shrivastava, learned counsel appearing for the appellant submits that the order passed by the l.T.A.T. confirming the order passed by the‘QgFiA) on the ground that the A.O. has not applied his mind is erroneous and perverse. The method of enquiry with regard to creditworthiness and genuineness of creditors found favour wuth this Court In the order dated 08 07 2009 passed In l.T.A. No.21/2000. Thus, the finding of the l.T.A.T. is not sustainable in law under Section 68 of the l.T.Act. lf the assessee fails to offer explanation about the nature and source thereof, the credit may not be taken as genuineness and the finding of the A.O. was wrongly set aside. t t. On the other hand, Shri Dewangan, learned counsel appearing for the assessee submits that CIT (A) had discussed the issue thoroughly and came to the conclusion that there was no reason for the A.O. to declare the statement of 27 creditors as unworthiness when the A.O. had examined all the creditors and recorded their statements, wherein,

5 \M all the creditors have confirmed that they have independent source of income and have given loan to the assessee out of their income. The dssessee had paid interest on most of these creditors, who had advanced loans to the assessee. The assessee has produced ail the creditors for examination before the A.O. on 24.01.1999. The finding of A.O. was not just and proper in view of the observation made by the High Court of Madras in Hastimal (S) v. CIT 49 ITR (Madras). All the iredits have been shown in the balance sheet, though the books of a/c. was not maintained. i liearned counsel appearing for the assessee in support of his ¥ . submission relied ori Commission of Income Tax v. Shiv Shakti Timbers1, Commissioner of Income Tax v. P. Mohanaka/a2, Santosh Hazari v. Purshottam Tiwari3 and Commissioner of Income Tax v. Smt. Anita Chouhan".

6 \fé clear where .there were entries in the books of accounts, the case shall be covered under Section 68 and if there is no satisfactory explanation, i titien it will be deemed to be the income of the firm. 17. in P. Mohanakala (supra), the Supreme Court observed that if the findings recorded by the A.O., CIT (A) and the l.T.A.T. were based on the material on record, the High Court should not disturb the I concurrent finding of facts.

er each and every transaction. Thus, the issue is purely question acts. No question of law, more so substantial questions of Iaw, as aforestated, arise in the facts of the case.