DCIT CEN CIR 2(2), MUMBAI vs. BRIGHT GLOBAL PAPER P.LTD, MUMBAI

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

Appeal in for the Assessment Year 2005-06 is taken as the lead case wherein the Grounds of appeal raised by the Revenue read as under :-

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,

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 ITA No. 7255/Mum/2014 pertaining to Assessment Year 2005-

Resultantly, the captioned appeals of the Revenue are allowed, as above.