CIT, FARIDABAD vs. M/S FASHION ACCESSORIES

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ITA/696/2008HC Punjab & HaryanaPHHC01080712200810 February 2009Author: MR. JUSTICE NAWAB SINGH,MR.JUSTICE J.S. KHEHAR3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court found no reason to differ from the determination of the Income Tax Appellate Tribunal. The Tribunal had concluded that the loan extended by Mr. Sanjay Batra to the assessee was genuine. This conclusion was based on a thorough examination of various documents, including confirmation letters from Mr. Sanjay Batra detailing his sources, copies of his ledger account with the assessee, his income-tax returns, a certificate from HSBC confirming a Rs. 20 lakh loan to Mr. Batra, HSBC bank statements showing the loan disbursement and subsequent payment by cheque to the assessee, confirmation from Mr. Anoop Thatai regarding a Rs. 5 lakh loan to Mr. Batra, Mr. Thatai's bank statements and income-tax returns, confirmation from Dr. S.P. Batra regarding Rs. 3,50,000 paid to the assessee on behalf of his son, and Dr. Batra's income-tax return and bank statement showing the source of funds as a loan against FDR. The High Court found these grounds to be valid and justifiable. No issue was left undecided.

What were the facts?

This case involves an appeal by the Commissioner of Income Tax (CIT), Faridabad, against an order of the Income Tax Appellate Tribunal (ITAT). The appeal concerns the assessment year(s) not explicitly stated but implied to be related to the loan transactions. The ITAT had ruled on the genuineness of a loan extended to the respondent assessee, M/s. Fashion Accessories, by its employee, Mr. Sanjay Batra. The ITAT considered various documents, including confirmation letters, ledger accounts, income tax returns of the lender and other individuals, bank statements, and certificates from HSBC, to ascertain the loan's authenticity. The CIT is challenging the ITAT's determination on this matter.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in holding that the loan extended by Mr. Sanjay Batra to the assessee was genuine. The assessee's contention, as inferred from the ITAT's findings, is that the loan was genuine and supported by documentary evidence. The revenue's contention, as presented by the learned counsel for the appellant, is that the ITAT's determination regarding the genuineness of the loan was incorrect. The ITAT considered confirmation letters, ledger accounts, income tax returns of Mr. Sanjay Batra and others, bank statements, and a certificate from HSBC. The ITAT found the loan to be genuine based on this material. The High Court was asked to decide if it had any reason to differ from the ITAT's conclusion.

AI-generated summary — verify with the full judgment below

In the High Court of Punjab and Haryana, Chandigarh.

Date of Decision: 10.02.2009 CIT, Faridabad.

....Appellant. Versus M/s. Fashion Accesssories. ....Respondents.

Coram:- Hon'ble Mr.Justice J.S. Khehar Hon'ble Mr. Justice Nawab Singh Present: Mr. Yogesh Putney, Advocate for the appellant.

... J.S. Khehar, J. (Oral). The solitary contention of the learned counsel for the appellant was on the determination rendered by the Income Tax Appellate Tribunal in respect of the genuineness of the loan extended by Mr. Sanjay Batra, an employee of the respondent – assessee. While determining the aforesaid issue, the Income Tax Appellate Tribunal took into consideration, inter- alia, the following material: -- “(i) Confirmation letter from Sh. Sanjay Batra confirming the transaction in question giving, inter-alia, full details of sources in his hands. (ii) Copy of ledger account of the assessee in the books of Sh. Sanjay Batra. (iii) Copies of income-tax returns of Sh. Sanjay Batra for different assessment years. (iv) Certificate from the Hong Kong and Shanghai Banking Corporation certifying that a sum of Rs.20 lakhs was given as a loan to Sh. Sanjay Batra. (v) Copy of HSBC Bank statement of Sh. Sanjay Batra showing disbursal of loan of Rs.20 lakhs on 16.10.2002 and the payment made by Sh. Sanjay Batra to the assessee by cheque No.705551. (vi) Copy of confirmation from Sh. Anoop Thatai regarding a loan of Rs.5 lakhs given to Sh. Sanjay Batra. (vii) Bank statements of Sh. Anoop Tharai showing the amount of Rs.5 lakhs paid to Sh. Sanjay Batra. (viii) Copy of income tax returns of Sh. Anoop Thatai as well as balance sheet of his proprietary concern M/s. Orient Kint Apparel. (ix) Confirmation of Dr. S.P. Batra in respect of an amount of Rs.3,50,000/- paid by him to the assessee by demand draft on behalf of his son Sh. Sanjay Batra. (x) Copy of income tax return of Dr. S.P. Batra as well as his bank statement showing payment of Rs.3,50,000/- given to the assessee on behalf of Sh. Sanjay Batra and the source thereof as loan against FDR.” Having examined the aforesaid material, the Income Tax Appellate Tribunal found, that the aforesaid loan extended by Mr. Sanjay Batra to the respondent – assessee was genuine. We find no reason, whatsoever, to differ from the aforesaid determination of the Income Tax Appellate Tribunal, which is based on valid and justifiable grounds. Dismissed. ( J.S. Khehar ) Judge ( Nawab Singh ) Judge. 10.02.2009 sk.

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