BHARAT KUMAR,CHENNAI vs. ITO, NCW-4(5), CHENNAI

After hearing both the parties, I find force in the argument of the ld. DR in submitting that the facts and circumstances in the case of Sekar Jayalakshmi (supra) is different from the facts and circumstances of the case in hand and accordingly, the additional ground raised by the assessee is dismissed.

Coming to the merits of the case, it is noted that the assessee furnished every details before the Assessing Officer in respect of the objections raised by the Assessing Officer. On perusal of the assessment order in para 3 to 8, which clearly demonstrate furnishing every details in respect of the debtors before the Assessing Officer along with opening cash balance/interest income earned and cash withdrawals re-deposited. The Assessing Officer, to verify the genuineness of the transaction, issued notices to all the 17 parties, but, however, notices were served on 5 parties and other notices remained unserved. I find that the Assessing Officer proceeded to add the said amount for non-compliance in respect of summons issued under section 133(6) of the Act.

The ld. AR vehemently argued that the assessee furnished every detail before the Assessing Officer and it is the duty of the Assessing Officer to conduct enquiry in respect of the said parties. He relied on the decision of the Hon’ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. 159 ITR 78 (SC) and argued that the assessee discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence with reference to non-compliance of alleged debtors on the summon under section 133(6) of the Act.

The ld. DR by referring to para 5.4 at page 12 of the impugned order and argued that the ld. CIT(A), during the appellate proceedings, sought for information, but, nothing was furnished as per page 13 of the impugned order.

Upon hearing both the parties, I note that the assessee furnished every detail before the Assessing Officer, which is clear from para 3 of the assessment order. It is noted that the Assessing Officer proceeded to make the addition only on the non-compliance by the alleged debtors to the summons issued under section 133(6) of the Act. I find the principle laid down by the Hon’ble Supreme Court in the case of CIT v. Orissa Corporation (P) Ltd. (supra) is applicable considering the facts and circumstances of the case, wherein, the Hon’ble Supreme Court was pleased to hold that the Appellant-Revenue, apart from issuing notice under section 133(6) of the Act at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were credit- worthy or were such who could advance the alleged loans. In the present case, I find that the assessee is stated to have been engaged in pawn broking and financing activities made advances to the persons, whose details are reflected in para 8 of the assessment order. I note that the assessee furnished details of such 17 persons before the Assessing Officer and in turn, the Assessing Officer issued summon under section 133(6) of the Act. As discussed above, the Assessing Officer proceeded to add the said addition on account of non-compliance of such 17 debtors. As the Hon’ble Supreme Court held that it is the duty of the Revenue to pursue the matter in examining the source of income of the said debtors in paying interest to the assessee. Admittedly, no efforts were made by the Assessing Officer in this regard. Therefore, I am of the opinion that the assessee discharged his duty in furnishing the details of all 17 debtors and making addition in the hands of the assessee for non- compliance by the debtors to the summons issued under section 133(6) of the Act, is not justified. Accordingly, the addition made by the Assessing Officer is deleted. Thus, the ground raised