M/S.KAMAL BRICKS FACTORY vs. INCOME TAX OFFICER

Facts

The Income Tax Appellate Tribunal (Tribunal) passed an order dated 08.01.2002 in Income Tax Appeal No. 875/Ahd/1996 for assessment year 1993-94. The revenue (Income Tax Officer) is aggrieved by this order and has filed the present tax appeal before the High Court. The assessee, M/s. Kamal Bricks Factory, had filed its return of income for AY 1993-94 declaring a total income of Rs. 524/-. The Assessing Officer assessed the total income at Rs. 4,53,580/-. The CIT(A) allowed the assessee's appeal, deleting an addition of Rs. 3,00,000/- made under Section 68 of the Income Tax Act. The Tribunal, however, partly allowed the revenue's appeal and partly restored the Assessing Officer's order.

Held

The High Court agreed with the Tribunal's reasoning and findings. The Tribunal rightly held that no credence could be given to the statement regarding payments made to labourers during the year under appeal relating to earlier outstandings, as only the peak entry of payment till the end of the accounting year was made, and actual payment dates were unknown. The Court noted that in cases like Murlidhar Lahorimal, relief is given when the assessee produces relevant documents to establish genuineness. However, in the present case, the Tribunal observed that only one labourer was produced before the Assessing Officer, and the onus was discharged only for that labourer. Since no other labourer was produced, the credits for other entries could not be substantiated. The Tribunal correctly adjudged the genuineness of credits and held Rs. 89,000/- as correct credit as on the close of the previous year. Therefore, the issue was answered in favour of the revenue and against the assessee.

Key Issues

1. Whether, in the facts and circumstances of the case, the ITAT was right in law in upholding the addition of Rs. 3,00,000/- u/s 68 of the Act without properly appreciating facts and without considering the applicability of sec. 68 of the Act? (Question of law) Assessee's contention: The Tribunal erred in upholding the addition of Rs. 3,00,000/- under Section 68 as it was not attracted. No money was received by the appellant from the concerned parties, and the outstanding liability was discharged by payment to labourers by the end of March 1994. Relied on Murlidhar Lahorimal vs. Commissioner of Income Tax (280 ITR 512 (Guj)). Revenue's contention: The appeal lacks merits. The onus is on the assessee to furnish documents and prove the transaction was not bogus. Relied on Ashwinbhai B. Pokiya vs. Assistant Commissioner of Income Tax (45 Taxamnn.com 62). The Tribunal had proportionately discharged credit for one workman produced by the assessee.