DCIT, CIRCLE-2, , ASANSOL vs. M/S. DIAMOND BOTTLING PLANT COMPANY, KOLKATA

IN THE INCOME TAX APPELLATE TRIBUNAL “B”, BENCH KOLKATA

BEFORE SHRI P.M. JAGTAP, V.P & SHRI S. S. GODARA, JM आयकर अपीलसं./I.T.A No.894/Kol/2019 ("नधा"रण वष" / Assessment Year: 2012-13) DCIT, Circle-2, Asansol Vs. M/s Diamond Bottling Plant Company C/o. S.N. Ghosh & Associates, Seven Brothers Lodge, P.O-Buroshibtala, P.S- Chinsurah, Hooghly, - 712105. "थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAEFD5674R (Appellant) .. (Respondent) Appellant by : Smt. Ranu Biswas, Sr. DR Respondent by : Shri S.M. Surana, Advocate सुनवाई क" तार"ख/ Date of Hearing : 11/12/2019 घोषणा क" तार"ख/Date of Pronouncement : 31/12/2019 आदेश / O R D E R Per Shri S. S. Godara: This Revenue’s appeal for assessment year 2012-13 arises against the Commissioner of Income Tax (A), Asansol dated 30.01.2019 passed in Case No.58/CIT(A)/ASL/DCIT/Cir-2/ASL/15-16 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused. 2. The Revenue’s sole substantive grievance seeks to revive Assessing Officer’s action treating assessee’s loans of Rs.11,85,00,000/- as unexplained cash credits u/s 68 which has been reversed to the extent of Rs.5,26,50,251/- in the CIT(A)’s order. Its case accordingly is that the Assessing Officer had rightly added the assessee’s total loan amount of Rs. 11,85,00,000/- raised from four entities M/s Diamond Carbon Pvt. Ltd., M/s Mukherjee Capital Pvt. Ltd., M/s Wimper Trading and Distributors Pvt. Ltd. and M/s Mukherjee Farms Pvt. Ltd.

I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

involving respective sums of Rs.1,10,00,000/-, 1,20,00,000/-, 2,50,00,000/- & 7,05,00,000/-; respectively as unexplained cash credits.

“7. We have heard rival submissions and gone through the facts and circumstances of the case. The Ld. AR assailing the decision of the Ld. CIT(A) in giving only partial relief to the assessee when the facts un-disputed was that the AO has accepted the interest outgoing to the four lender companies without a murmur. When the interest expenditure incurred by the assessee for the loan taken from the four lending companies the Ld. AR wondered as to how the AO can question the veracity of the loan taken by the assessee from the very same four lender companies. The Ld. AR took pains to demonstrate that the four lender companies are sister concerns of the assessee firm. According to Ld. AR, the statements recorded by the AO are of a director who had recently joined the company and was not aware of the loans given to the assessee in this assessment year under consideration. According to ld AR, the AO had asked certain irrelevant questions which had got no relevance to the loan disbursed by lender company in this assessment year under consideration and has recorded answers without asking question in a straight manner and has recorded only certain selected answers which suited him to draw adverse inference against the loan transaction. It was pointed out by the Ld. AR that the assessee has deducted TDS on the amount of interest outgoing to the lender companies and the entire transaction of loan transaction from the sister concerns which were through banking channel should have been accepted. The Ld. AR drew our attention to the chart filed by the AO to demonstrate that the partners of the assessee firm were holding substantial shareholding in the four lender companies. The Ld. AR has filed the following chart to demonstrate and convince us that the lender companies had substantial capital and reserve and that they had substantial investments in FD and bank balance as per earlier year Balance Sheet. I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

The Ld. AR drew our attention to the fact that the source of investment of M/s. MFPL can be noted from a perusal of page 17 of the paper book. In respect of M/s. MCPL the source of investment can be noted from page 42 of the paper book. In respect of M/s. WTDPL the source of investment can be noted from page 61 of the paper book and in respect of M/s. DCPL it can be noted from page 73 of the paper book. The Ld. AR drew our attention to the explanation given by the assessee before the Ld. CIT(A) regarding the source of cash credit which is noted from pages 22 to 25 of the order of Ld. CIT(A) which reads as under: I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

(i) In respect of M/s. DCPL , the Ld. CIT(A) has held as under: “From the discussion made it can be said that the assessee has failed to prove the creditworthiness of the loan given and the genuineness of the transactions. In view of the above, the amount of loan given to the appellant company by M/s. Diamond Trading Pvt. Ltd., which were sourced from unexplained share capital and share premium received by M/s Diamond Carbon Pvt. Ltd. is held to be unexplained. Hence, out of total loan of Rs. 1,10,00,000/- received by the appellant from M/s Diamond Carbon Pvt. Ltd., an amount of Rs.21,00,101/- is from the business reserves of the appellant and is hence deemed to be explained. However the balance amount of Rs.88,99,899/- (i.e. Rs.l,10,00,000/- - Rs. 21,00,000/-) are treated to be received out of unexplained share capital and share premium received by M/s. Diamond Carbon Pvt. Ltd and to that extent the loan is treated to be unexplained. In view of this, in respect of the loan of Rs. 1,10,00,000/- received by the appellant, loans received to the extent of Rs.88,99,899/- is held to be unexplained. Hence, appeal to the extent of Rs. 21,00,101/- is allowed and appeal to the extent of Rs.88,99,899/- is not allowed.”

ii) In respect of M/s. WTDPL , the Ld. CIT(A) has held as under: “Thus, it is seen that M/s. Wimper Trading and Distributors Pvt. Ltd. was having its reserves and surplus of Rs. 43,91,563/- from it's business activities. Hence, the I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

loan given by M/s Wimper Trading and Distributors Pvt. Ltd. to the extent of Rs. 43,91,563/- is out of the business surplus generated by M/s Wimper Trading and Distributors Pvt. Ltd. and hence is treated as explained. However, the portion of the loan not covered by the business surplus i.e. Rs.2,06,08,437/- (Rs. 2,50,00,000/- - Rs.43,91,563/-) is considered to be unexplained as it is being funded from the dubious share capital raised by it . Thus appeal to the extent of Rs. 2,06,08,437/- is not allowed and appeal to the extent of Rs.43,91,563/- is allowed in respect of loan taken from M/s Wimper Trading and Distributors Pvt. Ltd. aggregating to Rs.2,50,00,000/-.”

iii) In respect of M/s. MFPL, the Ld. CIT(A) has held as under: “The appellant had taken loan of Rs. 7,05,00,000/- M/s Mukherjee Firms Pvt. Ltd. During the course of appeal proceedings, the appellant had produced the copies of the Balance Sheet and Profit & Loss Account of M/s Mukherjee Firms Pvt. Ltd. From the Balance- Sheet, it is seen that M/s Mukherjee Firms Pvt. Ltd. was having share capital of Rs. 3,94,28,000/· and surplus on account of share premium amounting to Rs.4,53,50,000/-. Further, the amount of surplus on account of the business operation of M/s Mukherjee Firms Pvt. Ltd. was to the tune of Rs.3,03,83,863/-. The share holders of M/s Mukherjee Firms Pvt. Ltd. were Mr. Kallol Kumar Mukherjee, Ms. Kalpana Mukherjee and M/s Wimper Trading and Distributors Pvt. Ltd. As stated in the earlier paragraphs, the share capital of Wimper Trading and Distributors Pvt. Ltd. were held to be dubious, tainted and unexplained in nature and constitute the unaccounted money of the appellant which were routed through various name lenders. Further, during the course of the appeal proceedings, the appellant could not give the source of the funds introduced by Mr. Kallol Mukherjee and Ms Kalpana Mukherjee. Hence, the entire share capital and share premium raised by M/s Mukherjee Farms Pvt. Ltd. is held to be unexplained and dubious. In view of my arguments given in earlier paragraphs in respect of other loan giving entities, it is held that out of the total loan of Rs.7,05,00,000/-, loans to the extent of Rs.3,03,83,863/- is deemed to be explained as they are considered to be out of the accumulated reserves generated from the business operations of M/s. Mukherjee Firms Pvt. Ltd .. It was also submitted by the appellant that the appellant was having an opening balance of Rs 60,00,000/- in respect of M/s Mukherjee Farms Pvt. Ltd. This amount of Rs 60,09,000/- was paid to Ms M/s Mukherjee Firms Pvt. Ltd by the appellant and was again received back by the appellant. Hence, this amount of Rs.60,00,000/- stands explained as the amount was paid by the appellant to the lender and was again given as a loan to the appellant. Thus the amount of loan of Rs 3,63,83,863 ( Rs 3,03,83,863/- + Rs. 60,00,000/- ) is from the explained sources. However, the remaining portion of the loans taken to the extent of Rs.3,41,16,137/- is deemed to be ,out of the dubious and unexplained share capital. and share premium of M/s Mukherjee Firms Pvt. Ltd. and thus loans received to ,.the extent of Rs. 3,41,16,137/- held to be unexplained. Thus appeal to the extent of Rs. 3,41,16,137 /- is not allowed and appeal to the extent of Rs;3,63,83,836/- is allowed.”

iv) In respect of M/s. MCPL, the Ld. CIT(A) has held as under: “The appellant had taken loan of Rs.1,20,00,000/- from M/s Mukherjee Capital Pvt. Ltd. From the Balance Sheet of M/s. Mukherjee Capital Pvt. Ltd, it is seen that it is having share capital of Rs.2,78,82,400/- and share premium of Rs.2,95,33 600/-. It is also having surplus from its business operations amounting I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

to Rs. 97,74,724/-. The shares of M/s Mukherjee Capital Pvt. Ltd. are being held by M/s. Wimper Trading and Distributors Pvt. Ltd. As stated in the earlier paragraphs, the share capital of M/s. Wimper Trading and Distributors Pvt. Ltd. has been considered to be tainted, dubious and unexplained. The funds of the appellant have been routed through various entities and enterprises and have been pumped into M/s. Wimper Trading and Distributors Pvt. Ltd. Hence, the share capital and share premium of M/s. Mukherjee Capital Pvt. Ltd. and similarly held to be dubious and unexplained and the undisclosed money of the appellant have been injected through various layers. Hence, out of the total loan of Rs.1,20,00,000/-, received from M/s Mukherjee Capital Pvt. Ltd., the amount of Rs. 97,74,724/- is held to be explained and to have been received from business surplus of the appellant. However, the excess of that i.e. Rs. 22,25,276/- (Rs.1 ,20,00,000/- - Rs.97,74,724/-) is held to be sourced from the share capital and share premium received by M/s Mukherjee Capital Pvt. Ltd. and is held to be unexplained. Thus appeal to the extent of Rs.22,25,276/- is not allowed and appeal to the extent of Rs.97,94,724/- is allowed in respect of the loan of Rs.l,20,00,000/- received by the appellant from M/s Mukherjee Capital Pvt. Ltd.”

assessee has discharged the onus casted upon it u/s. 68 of the Act by proving the identity, creditworthiness and genuineness of the lender and the loan transactions. 11. Taking note of the aforesaid documents the Ld. CIT(A) was of the opinion that assessee had partly discharged its onus to prove the identity, creditworthiness and genuineness of the share subscribers and had partly deleted the addition made u/s. 68 of the Act. Before we adjudicate as to whether the Ld. CIT(A)’s action is right or erroneous, let us look at section 68 of the Act and the judicial precedents on the issue at hand. 12. Section 68 under which the addition has been made by the Assessing Officer reads as under: "68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. " The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words ‘shall’ be charged to income-tax as the income of the assessee of that previous year". The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. We note that against the said decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court. 13. In the case of Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble Guahati High Court has thrown light on another aspect touching the issue of onus on assessee under section 68, by holding that the same should be decided by taking into consideration the provision of section 106 of the Evidence Act which says that a person can be required to prove only such facts which are in his knowledge. The Hon'ble Court in the said case held that, once it is found that an assessee has actually taken money from depositor/lender who has been fully identified, the assessee/borrower cannot be called upon to explain, much less prove the affairs of such third party, which he is not even supposed to know or about which he cannot be held to be accredited with any knowledge. In this view, the Hon'ble Court has laid down that section 68 of Income-tax Act, should be read along with section 106 of Evidence Act. The relevant observations at page 260 to 262, 264 and 265 of the report are reproduced herein below:- "While interpreting the meaning and scope of section 68, one has to bear in mind that normally, interpretation of a statute shall be general, in nature, subject only to such exceptions as may be logically permitted by the statute itself or by some other law connected therewith or relevant thereto. Keeping in view these fundamentals of interpretation of statutes, when we read carefully the provisions of section 68, we notice nothing in section 68 to show that the scope of the inquiry under section 68 by the Revenue Department shall remain confined to the transactions, which have taken place between the assessee and the creditor nor does the wording of section 68 indicate that section 68 does not authorize the Revenue Department to make inquiry into the source(s) of the credit and/or sub-creditor. The language employed I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

by section 68 cannot be read to impose such limitations on the powers of the Assessing Officer. The logical conclusion, therefore, has to be, and we hold that an inquiry under section 68 need not necessarily be kept confined by the Assessing Officer within the transactions, which took place between the assessee and his creditor, but that the same may be extended to the transactions, which have taken place between the creditor and his sub-creditor. Thus, while the Assessing Officer is under section 68, free to look into the source(s) of the creditor and/or of the sub- creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 106 of the Evidence Act which reads as follows: "Burden of proving fact especially within knowledge.-When any fact is especially within the knowledge of any person, the burden) of proving that fact is upon him. " ******** What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the extent of his proving the source from which he has received the cash credit, section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s)of the creditor but also of his (creditor's) sub-creditors and prove, as a result, of such inquiry, that the money received by the assessee, in the form of loan from the creditor, though routed through the sub-creditors, actually belongs to, or was of, the assessee himself. In other words, while section 68 gives the liberty to the Assessing Officer to enquire into the source/source from where the creditor has received the money, section 106 makes the assessee liable to disclose only the source(s) from where he has himself received the credit and IT is not the burden of the assessee to prove the creditworthiness of the source(s) of the sub-creditors. If section 106 and section 68 are to stand together, which they must, then, the interpretation of section 68 are to stand together, which they must, then the interpretation of section 68 has to be in such a way that it does not make section 106 redundant. Hence, the harmonious construction of section 106 of the Evidence Act and section 68 of the Income- tax Act will be that though apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub- creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been. eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be Judged vis-a-vis the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions, which took between the creditor and sub- creditor and/or creditworthiness of the sub- creditors, for, these aspects may not be within the special knowledge of the assessee. " ********** " ... If a creditor has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of cheque in the form of loan and in such a case, if the creditor fails to satisfy as to how he had I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

actually received the said amount and happened to keep the same in the bank, the said amount cannot be treated as income of the assessee from undisclosed source. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not between the creditor and the sub- creditors, for, it is not even required under the law for the assessee to try to find out as to what sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had' with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub- creditor… " ********** "In other words, though under section 68 an Assessing Officer is free to show, with the help of the inquiry conducted by him into the transactions, which have taken place between the creditor and the sub-creditor, that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that the loan advanced by the sub-creditor to the creditor was income of the assessee from undisclosed source unless there is evidence, direct or circumstantial, to show that the amount which has been advanced by the sub- creditor to the creditor, had actually been received by the sub-creditor from the assessee …." ********** "Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far as the appellant is concerned, he has established the identity of the creditors, namely, Nemichand Nahata and Sons (HUF) and Pawan Kumar Agarwalla. The appellant had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the Assessing Officer to prove the contrary. On mere failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assessee. In the absence of any such evidence on record, the Assessing Officer could not have treated the said amounts as income derived by the appellant from I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from. undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness.” 14. Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18(All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AA C, setting aside the assessment order.” 15. We also take note of the decision of the Hon'ble High Court, Calcutta in the case of S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata 347 ITR 347 wherein the Court held as follows: “15. It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assessee and if no explanation is given or the explanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction of loan. But the law is equally settled that if the initial burden is discharged by the assessee by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the assessee and in the process, the onus may again shift from the Assessing Officer to assessee. 16. In the case before us, the appellant by producing the loan-confirmation- certificates signed by the creditors, disclosing their permanent account numbers and address and further indicating that the loan was taken by account payee cheques, no doubt, prima facie, discharged the initial burden and those materials disclosed by the assessee prompted the Assessing Officer to enquire through the Inspector to verify the statements.” 16. In a case where the issue was whether the assessee availed cash credit as against future sale of product, the AO issued summons to the creditors who did not turn up before him, so AO disbelieved the existence of creditors and saddled the addition, which was overturned by Ld. CIT(A). However, the Tribunal reversed the decision of the Ld. CIT(A) and upheld the AO’s decision, which action of Tribunal was challenged by the Hon'ble High Court, Calcutta in the case of Crystal Networks (P.) Ltd. v. Commissioner of Income-tax 353 ITR 171 wherein the Tribunal’s decision was overturned and decision of Ld. CIT(A) upheld and the Hon’ble High Court has held that when the basic evidences are on record the mere failure of the creditor to appear cannot be basis to make addition. The court held as follows: 8. Assailing the said judgment of the learned Tribunal learned counsel for the appellant submits that Income-tax Officer did not consider the material evidence showing the creditworthiness and also other documents, viz., confirmatory statements of the persons, of having advanced cash amount as against the supply of bidis. These evidence were duly considered by the Commissioner of Income-tax (Appeals). Therefore, the failure of the person to turn up pursuant to the summons I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

issued to any witness is immaterial when the material documents made available, should have been accepted and indeed in subsequent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable and unfavourable should have been considered. By not doing so the Tribunal committed grave error in law in upsetting the judgment in the order of the Commissioner of Income-tax (Appeals). 9. In this connection he has drawn our attention to a decision of the Supreme Court in the case of Udhavdas Kewalram v. CIT [19671 66 ITR 462. In this judgment it is noticed that the Supreme Court as proposition of law held that the Tribunal must In deciding an appeal, consider with due care, all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. 10. We find considerable force of the submissions of the learned counsel for the appellant that the Tribunal has merely noticed that since the summons issued before assessment returned unserved and no one came forward to prove. Therefore, it shall be assumed that the assessee failed to prove the existence of the creditors or for that matter the creditworthiness. As rightly pointed out by the learned counsel that the Commissioner of Income-tax (Appeals) has taken the trouble of examining of all other materials and documents, viz., confirmatory statements, invoices, challans and vouchers showing supply of bidis as against the advance. Therefore, the attendance of the witnesses pursuant to the summons issued, in our view, is not important. The important is to prove as to whether the said cash credit was received as against the future sale of the product of the assessee or not. When it was found by the Commissioner of Income-tax (Appeals) on facts having examined the documents that the advance given by the creditors have been established the Tribunal should not have ignored this -fact finding. Indeed the Tribunal did not really touch the aforesaid fact finding of the Commissioner of Income-tax (Appeals) as rightly pointed out by the learned counsel. The Supreme Court has already stated as to what should be the duty of the learned Tribunal to decide in this situation. In the said judgment noted by us at page 464, the Supreme Court has observed as follows: "The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act; it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. " 11. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all contentions raised by the assessee and the Commissioner, in the light of the evidence and the relevant law. It is also ruled in the said judgment at page 465 that if the Tribunal does not discharge the duty in the manner as above then it shall be assumed the judgment of the Tribunal suffers from manifest infirmity. 12. Taking inspiration from the Supreme Court observations we are constrained to hold in this matter that the Tribunal has not adjudicated upon the case of the assessee in the light of the evidence as found by the Commissioner of Income-tax I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

(Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Commissioner of Income-tax (Appeals). The appeal is allowed. 17. When a question as to the creditworthiness of a creditor is to be adjudicated and if the creditor is an Income Tax assessee, it is now well settled by the decision of the Calcutta High Court that the creditworthiness of the creditor cannot be disputed by the AO of the assessee but the AO of the creditor. In this regards our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the COMMISSIONER OF INCOME TAX, KOLKA TA-Ill Versus DATAWARE PRIVATE LIMITED ITAT No. 263 of 2011 Date: 21st September, 2011 wherein the Court held as follows: “In our opinion, in such circumstances, the Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness" of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness" of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities.” 18. Further, our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the case of Commissioner of Income Tax vs M/s. Leonard Commercial (P) Ltd on 13 June, 2011 in ITAT NO 114 of 2011 wherein the Court held as follows: “The only question raised in this appeal is whether the Commissioner of Income- tax (Appeals) and the Tribunal below erred in law in deleting the addition of Rs.8,52,000/-, Rs. 91,50,000/- and Rs. 13,00,000/- made by the Assessing Officer on account of share capital, share application money and investment in HTCCL respectively. After hearing Md. Nizamuddin, learned Advocate appearing on behalf of the appellant and after going through the materials on record, we find that all such application money were received by the assessee by way of account payee cheques and the assessee also disclosed the complete list of shareholders with their complete addresses and GIR Numbers for the relevant assessment years in which share application was contributed. It further appears that all the payments were made by the applicants by account payee cheques. I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

It appears from the Assessing Officers order that his grievance was that the assessee was not willing to produce the parties who had allegedly advanced the fund. In our opinion, both the Commissioner of Income-tax (Appeals) and the Tribunal below were justified in holding that after disclosure of the full particulars indicated above, the initial onus of the assessee was shifted and it was the duty of the Assessing Officer to enquire whether those particulars were correct or not and if the Assessing Officer was of the view that the particulars supplied were insufficient to detect the real share applicants, to ask for further particulars. The Assessing Officer has not adopted either of the aforesaid courses but has simply blamed the assessee for not producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities below, on consideration of the materials on record, rightly applied the correct law which are required to be applied in the facts of the present case and, thus, we do not find any reason to interfere with the concurrent findings of fact based on materials on record. The appeal is, thus, devoid of any substance and is dismissed summarily as it does not involve any substantial question of law. 19. From the details as aforesaid which emerges from the paper book filed before us as well as before the lower authorities, it is vivid that all the lender companies are (i) income tax assessee’s, (ii) they are filing their return of income, (iii) confirmationis available on record, (iv) the loan was made by account payee cheques, (v) the details of the bank accounts belonging to the lenders and their bank statements, (vi) in none of the transactions the AO found deposit in cash before issuing cheques to the assessee , (vii) the lenders are having substantial creditworthiness which is represented by a capital and reserve as noted above. 20. As noted from the judicial precedents cited above, where any sum is found credited in the books of an assessee then there is a duty casted upon the assessee to explain the nature and source of credit found in his books. In the instant case, the credit is in the form of receipt of loan from lending companies. The nature of receipt towards loan is seen from the entries passed in the respective balance sheets of the companies as loan to assessee firm. In respect of source of credit, the assessee has to prove the three necessary ingredients i.e. identity of lenders, genuineness of transactions and creditworthiness of lenders. For proving the identity of lenders, the assessee furnished the name, address, PAN of lender companies together with the copies of balance sheets and Income Tax Returns. With regard to the creditworthiness of share applicants, as we noted supra, these Companies are having capital in several crores of rupees and the investment made in the appellant company is only a small part of their capital. These transactions are also duly reflected in the balance sheets of the lenders, so creditworthiness is proved. Even if there was any doubt if any regarding the creditworthiness of the lenders was still subsisting, then AO should have made enquiries from the AO of the lender companies as held by Hon’ble jurisdictional High Court in CIT vs DATAWARE (supra) which has not been done, so no adverse view could have been drawn. Third ingredient is genuineness of the transactions, for which we note that the monies have been directly paid to the assessee company by account payee cheques out of sufficient bank balances available in I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

their respective bank accounts. It will be evident from the paper book that the appellant has even demonstrated the source of money deposited into their bank accounts which in turn has been used by them to lend it to the assessee firm as loan. Hence the source of source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The lending companies have confirmed about the loan in response to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. 21. In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the lender companies, thereafter the onus shifted to AO to disprove the documents furnished by assessee and it cannot be brushed aside by the AO to draw adverse view which action cannot be countenanced. In the absence of any investigation, much less gathering of evidence by the Assessing Officer, we hold that an addition cannot be sustained merely based on inferences drawn by circumstance. Applying the propositions laid down in these case laws to the facts of this case, we are inclined to uphold the order of the Ld. Commissioner of Income Tax (Appeals) giving relief to the assessee to the tune of Rs 5,26,50,251/-. However on the facts discussed supra we are of the view that Ld CIT(A) erred in confirming Rs 6,58,49,749, so we are inclined to direct deletion of the Rs 6,58,49,749/-.

Order is pronounced in the open court on 31.12.2019. (P. M. Jagtap) (S. S. Godara) VICE-PRESIDENT JUDICIAL MEMBER कोलकाता /Kolkata; "दनांक/ Date: 31/12/2019 RS, Sr.PS I.T.A No.894/Kol/2019 M/s Diamond Bottling Plant Company

आदेशक"""त"ल"पअ"े"षत/Copy of the Order forwarded to : 1. The Appellant - DCIT, Circle-2, Asansol 2. The Respondent - M/s Diamond Bottling Plant Company आयकरआयु"त(अपील) / The CIT(A), Kolkata [sent through email] 3. आयकरआयु"त/ CIT 4. "वभागीय""त"न"ध, आयकरअपील"यअ"धकरण, कोलकाता/ DR, ITAT, Kolkata [sent 5. through email] गाड"फाईल / Guard file. 6. स"या"पत""तBy Order