THE COMMISSIONER OF INCOME TAX-II, NASHIK vs. JAI BAJRANG GINNING AND PRESSING P LTD.

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ITA/20/2012HC BombayHCBM03024713201211 February 2014Author: HON'BLE SHRI JUSTICE S C DHARMADHIKARI,HON'BLE SHRI JUSTICE RAVINDRA V. GHUGE3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the findings of the Tribunal and the CIT(A) were essentially factual. They had concurrently held that the lenders were agriculturists who sold cotton to the assessee, were shareholders, and had been repaid through account payee cheques. The Court found that the three ingredients of identity, creditworthiness, and genuineness of the transactions were satisfied, and the explanation offered by the assessee was satisfactory. The Court concluded that these concurrent factual findings did not give rise to any substantial question of law. Therefore, the appeal filed by the revenue was dismissed. The operative direction was the dismissal of the appeal.

What were the facts?

The Assessing Officer (AO) identified 16 individuals who admitted to advancing loans to the assessee, Jai Bajrang Ginning and Pressing Pvt. Ltd. While the existence of these loans and the lenders' income sources were not disputed, the AO disbelieved them. The Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal (ITAT) found that the lenders were agriculturists who had sold cotton to the assessee company, a business involved in ginning and pressing cotton. These lenders were also shareholders of the assessee company, and all loans were subsequently repaid via account payee cheques. The AO's action under challenge is not explicitly stated, but it pertains to the assessment of these loans.

What were the issues?

1. Whether the Tribunal and the CIT(A) erred in holding that the three ingredients of identity, creditworthiness, and genuineness of the transactions of loans advanced to the assessee were satisfied, thereby raising a substantial question of law? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. The findings of the CIT(A) and the ITAT suggest that the assessee provided satisfactory explanations regarding the loans. Revenue's contentions: The revenue, represented by the Commissioner of Income Tax-II, Nashik, argued that the AO had grounds to disbelieve the lenders, despite their admissions and explained income sources. The revenue's appeal to the High Court suggests a disagreement with the concurrent findings of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 68,Section 131

AI-generated summary — verify with the full judgment below

-:(1):- 20 FARAD CONTINUATION SHEET NO. IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD. APPELLATE SIDE JURISDICTION Office

Notes,

Office Memoranda

of Coram, appearance,

Court's orders   or   directions   and Registrar's orders. Court's or Judge's orders.

INCOME TAX APPEAL NO. 20 OF 2012 THE COMMISSIONER OF INCOME TAX­II, NASHIK VERSUS JAI BAJRANG GINNING AND PRESSING P LTD. ... Advocate for Appellant : Mr. Soman D. V. *** CORAM: S.C.DHARMADHIKARI & RAVINDRA V.GHUGE,JJ. DATED: 11th FEBRUARY, 2014. PER COURT:

1.

Heard Mr. Soman appearing on behalf of the Appellant/   Revenue.     Perused   Sections   68   and 131 of the Income Tax Act, 1961. We have also perused   the   concurrent   findings   of   the Commissioner   of   Income   Tax   (Appeals)   and   the Income Tax Appellate Tribunal.

2.

The Assessing Officer could lay his hands on   16   instances   involving   persons   who   had appeared and admitted of advancing loans to the assessee. However,   he   found   that   there existence   was   not   in   dispute,   they   have

-:(2):- 20 explained   their   sources   of   income   but   the Assessing Officer disbelieved them.

3.

The  findings  of  the  Tribunal  as  also  the Commissioner  of Income  Tax  (Appeals)  are  that the lenders are agriculturists, they have sold their   cotton   produce   to   the   assessee   company which is engaged in the business of ginning and pressing   of   cotton.     The   lenders   are   not strangers  to  the  assessee  company  inasmuch  as they are its shareholders.   All creditors have been repaid subsequently through account payee cheques.     In   these   circumstances,   the   three ingredients viz.  identity,  creditworthiness of the   lenders   as   well   as   genuineness   of   the transaction   have   been   satisfied   and   the Tribunal has, together with the Commissioner of Income   Tax   (Appeals),   concurrently   held   that the explanation offered is, in  their  opinion, satisfactory.  The explanation offered has been considered in para 9 and 10 of the order passed by   the   Income   Tax   Appellate   Tribunal.     The findings are essentially factual.   They do not give rise to any substantial question of law.

-:(3):- 20 Merely   because   the   amounts   have   been   paid   by the   assessee   during   the   course   of   the proceedings   before   the   Assessing   Officer   that by itself will not mean that the ingredients as necessitated and to be satisfied have not been satisfied.  There is no merit in this appeal as it   does   not   give   rise   to   any   substantial question   of   law. Hence,   the   appeal   is dismissed. [RAVINDRA V. GHUGE,J.][S.C.DHARMADHIKARI,J.] Dt.11/02/2014 ans/20

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