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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAVISH SOOD
PER G.S. PANNU, AM :
The captioned are three appeals preferred by the Revenue in the case of the same assessee for Assessment Years 2005-06, 2006-07 and 2007-08, which involve a similar dispute.
At the time of hearing, it was noticed that inspite of issuance of notices on more than one occasion, the respondent-assessee has not put in appearance. The ld. DR also filed a communication from the Assessing
2 to 7257/Mum/2014 M/s. Bright Global Paper Pvt. Ltd. Officer pointing out the service of notice of hearing at the stated address of the assessee and yet nobody appeared on behalf of the assessee nor has any application been received for adjournment. Under these circumstances, following Rule 25 of the Income Tax (Appellate Tribunal) Rules, 1963, the appeals of the Revenue are being disposed off ex-parte the respondent- assessee after hearing the appellant-Revenue on merits.
Appeal in Assessment Year 2005-06 is taken as the lead case wherein the Grounds of appeal raised by the Revenue read as under :-
“(i) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.1,14,49,265/- on account of unsecured loan without appreciating the fact that though the parties are family members, no confirmations are filed by the assessee and the source of the funds are not verifiable from the records of these parties, as no balance-sheet or bank statements have been filed?
2. The Appellant craves leave to add, to amend and/or to alter any of the grounds of appeal, if need be.
3. The Appellant, therefore, prays that on the grounds stated above, the order of the CIT(A)-37, Mumbai may be set aside and that of the Assessing Officer restored.”
The said appeal is directed against the order of CIT(A)-37, Mumbai dated 30.09.2015 pertaining to the Assessment Year 2005-06, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 28.03.2013 u/s 144 r.w.s. 153A of the Income Tax Act, 1961 (in short ‘the Act’).
3 to 7257/Mum/2014 M/s. Bright Global Paper Pvt. Ltd.
Notably, the relevant discussion in the assessment order reveals that a search and seizure action u/s 132(1) of the Act was carried out in a group of concerns, which included the assessee, and consequently a notice u/s 153A of the Act was issued to the assessee, in response to which assessee filed a return of income for Assessment Year 2005-06 declaring a total income of Rs.19,07,478/-. The discussion in the assessment order also reveals that there was non-compliance by the assessee in the assessment proceedings, and the total income has been determined at Rs.11,37,54,360/-. One of the additions, which is the subject matter of the appeals before us, was of Rs.1,14,49,265/- made u/s 68 of the Act by treating the unsecured loans to the extent of Rs.1,14,49,265/- as being unexplained cash-credits. The relevant discussion reveals that the assessee was asked to furnish the confirmation of the loan taken, copies of bank statement of lenders in order to prove their lending capacity, etc. Noticing the failure of the assessee to submit the required details, the unsecured loans to the extent of Rs.1,14,49,265/- were treated as unexplained cash-credits by the Assessing Officer and assessed u/s 68 of the Act. The assessee filed an appeal before the CIT(A) and it is noticed that even before the CIT(A), assessee did not respond to the various notices of hearing. However, with regard to the aforesaid addition, the CIT(A) noticed that the Tax Audit report furnished by the assessee revealed that the loans were obtained from three concerns whose PAN numbers were available. The CIT(A) also noted that in the case of two of the loan creditors, assessments were completed by the very same Assessing Officer. In this background, the CIT(A) noted that when the identity of the creditors are disclosed and it is found that they are assessed to tax, the onus shifts from the assessee to the Assessing Officer to demonstrate the lack of credit-worthiness and, therefore, he proceeded to
At the time of hearing, the ld. CIT-DR canvassed that the CIT(A) erred in not considering the fact that in the absence of confirmation or details being furnished by the assessee, the source of funds of the creditors were not verifiable and, therefore, the addition has been wrongly deleted.
We have considered the orders of the authorities below as well as the submission put forth by the ld. CIT-DR. Notably, the Assessing Officer had made the addition u/s 68 of the Act, which requires the assessee to establish the nature and source of credits appearing in the account books. In the present case, as the relevant discussion in the assessment order reveals, assessee did not furnish any detail during the assessment proceedings. The CIT(A), however, noted that the three creditors were income-tax assessees and two of them were subject to assessment by the same Assessing Officer. For this reason, he has proceeded to delete the addition considering that the onus shifted to the Assessing Officer. In our considered opinion, the CIT(A) missed the point that in the absence of any details having been furnished by the assessee to the Assessing Officer, the onus cannot be said to have shifted to the Assessing Officer. Ostensibly, in-principle, the point made out by the CIT(A) cannot be disputed, so however, it has to be appreciated as to whether in the facts of the present case, the material and evidence available on record is enough to satisfy the ingredients of Sec. 68 of the Act, which casts an onus on the assessee to explain the nature and source of the credits. It is judicially well-settled that in order to discharge the onus cast on the assessee u/s 68 of the Act, assessee is required to justify the identity,
5 to 7257/Mum/2014 M/s. Bright Global Paper Pvt. Ltd. credit-worthiness of the creditor as also the genuineness of the transaction. The mere fact that the creditors are income-tax assessees would ipso facto not justify the ingredients of credit-worthiness and genuineness of the transaction, which can be examined by the income-tax authorities only when the relevant material is available for appropriate verification. Quite clearly, the order of the CIT(A) is conspicuous by the absence of findings on all the aforesaid three ingredients of Sec. 68 of the Act and, therefore, we are unable to sustain his conclusion of deleting the addition. Accordingly, we hereby set-aside the order of the CIT(A); but, in the interest of justice and fair play, restore the matter back to the file of the Assessing Officer who shall carry out appropriate verification on the basis of the material and evidence that may be submitted by the assessee before him. We may make it clear that if the assessee does not assist the Assessing Officer properly, the Assessing Officer shall be free to examine the material available with him, which has been pointed out by the CIT(A), namely, the assessment records of two of the creditors available with him in order to arrive at the appropriate conclusion. Be that as it may, we direct the Assessing Officer to allow the assessee a reasonable opportunity of being heard and only thereafter proceed to evaluate the efficacy of the impugned unsecured loan in terms of Sec. 68 of the Act, as per law. Thus, the appeal of the Revenue for Assessment Year 2005-06 is allowed, as above.
At the time of hearing, the ld. CIT-DR contended that the facts and dispute in & 7257/Mum/2014 for Assessment Years 2006-07 and 2007-08 respectively are pari materia to those considered in Assessment Year 2005-
Resultantly, the captioned appeals of the Revenue are allowed, as above.
Order pronounced in the open court on 29th November, 2017