COMMNR.OF INCOME TAX vs. B.S.N.JOSHI and SONS

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 63 / 2006 Commissioner of Income Tax, Jaipur-II, Jaipur. ----Appellant Versus M/s Lok Vikas Leasingh Pvt. Ltd., 3-F-1, Shivanand Marg, Malviya Nagar, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment Per Hon’ble Jhaveri, J. 16/05/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has confirmed the order of the CIT(A) which has allowed the appeal of the assessee and dismissed the appeal preferred by the department. 2. This court while admitting the appeal on 17.02.2006 has framed the following substantial questions of law: “(i) Whether in the facts and circumstances of the case the ITAT and CIT(A) are justified in law and have not acted perversely in deleting the additions made u/s.68 of the Act of Rs.76,20,912/- on account of unexplained deposits when the assessee neither submitted books of account nor there was any record to substantiate the claim of the assessee. (ii) Whether in the facts and circumstances of the case the ITAT and CIT(A) were justified in law in granting the relief of

(2 of 4) [ITA-63/2006] Rs.9,14,510/- on account of interest paid on bogus loans when the account and books were never submitted before the assessing officer and the loans could not be substantiated?” 3. Mr. Mathur counsel for the revenue has taken us to the order of CIT(A) wherein the CIT(A) has in para 6 & 7 held as under: “6 The next ground of appeal relates to the reply of the appellant assessee company submitted on 14.2.2002 that the books of accounts, documents and other relevant records of the company have been sealed and locked by the official liquidator in the case of M/s Lok Vikas Finance Corporation. This matter has been dealt with by the AO in para-2 of the assessment order and whatever efforts were required on his part, he has requested the official liquidator to produce the requisite information alongwith books of accounts for the period under consideration. The official liquidator in reply to this request has informed that he is the official liquidator in the case of M/s Lok Vikas Finance Corporation only and not in the case of the appellant assessee company. Thereafter, the AO has given opportunity to the director of the company to produce the books of accounts on 5.3.2002 and 11.3.2002 but the appellant could not produce the requisite details/books of accounts. In completion of the assessment the appellant assessee is ought to have produced the books of accounts and other details and documents as required by the AO but in the instant case the appellant assessee has failed to furnish the requisite details and documents. Therefore, this ground of appeal has no weight and the same is rejected. 7. The next ground of appeal related to an addition of Rs.1,35,50,063/-, interest claimed

unexplained

deposits Rs.24,26,003/- and interest income due to difference in reconciliation Rs.3,10,315/- The perusal of the assessment orders shows that the appellant assessee company in its balance sheet has shown the fixed deposit of Rs.1,35,50,063/- from public and no supporting detail was available in the assessment record. Therefore, the AO vide

(3 of 4) [ITA-63/2006] his letter dated 5.3.2002 has asked the appellant assessee to furnish the details of unsecured loans shown as Fixed Deposits from public amounting to Rs.1,35,50,063/-. Since the appellant assessee could not furnish the requisite details, the AO has held the above said deposits of Rs.1,35,50,063/- as concealed income of the assessee company holding that the assessee has failed to prove the identity, creditworthiness of the creditors and the genuineness of the transactions.” 4. Mr. Mathur has contended that the Tribunal has confirmed the order of CIT(A) and para 3 & 4 of the order of the Tribunal reads as under: “3. This issue has been discussed by the ld. CIT(Appeals) at pages 4&5, in paras 7.1 & 7.2 of his order. The ld. CIT(Appeals) observed in para 7.2 that the fixed deposits in the shape of unsecured loan accepted during the accounting period relevant to the assessment year 1995-96 cannot be added under section 68 of the I.T. Act, 1961. Therefore, the action of the AO in making the addition of the whole of the amount of Rs.1,35,50,063/-, which also included the carry-forward deposits of Rs.76,20,912/- was not justified. 4. After perusal of the case, we are of the views that the ld. CIT(Appeals) had rightly deleted the addition made by the AO out of unexplained deposits as the amount of deposit of Rs.76,20,912/- pertained to the assessment year 1995-96 and to the year under appeal. Thus, we find no infirmity in the order of the ld. CIT(Appeals).” 5. Mr. Mathur has further contended that if the finding of non- availability of books of accounts has been confirmed, since the assessee has gone into liquidation, the best way for the CIT(A) was to have remanded the matter back to the Assessing Officer.

(4 of 4) [ITA-63/2006] 6. We have considered the case which is of the assessment year 1996-97. The CIT(A) while considering the matter has considered each of the ground in detail and after taking into consideration the law prevailing at that time, has rightly decided carry forward deposits of the previous year could not be included in the income. 7. In that view of the matter, the issues are answered in favour of the assessee and against the department. 8. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/11