TaxTMI 
TaxTMI 
2010 (9) TMI 201
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.... of the creditors and since the summons issued were returned by the postal authorities, the AO in the draft assessment order proposed addition of cash credits. In the proceedings under Section 144B of the Act, the assessee further explained that the amounts were received from Shri B.S. Patel, who owned various concerns and had also made the deposition before the Department on three occasions in this regard. However, in the absence of detailed deposition in writing before the IAC, the IAC justified the addition under Section 68 of the Act. In appeal, the various factual aspects alongwith the evidence laid from time to time were placed before the CIT (Appeals). After considering the evidence and the findings brought on record, the CIT(A) concluded that the amounts given to the assessee were confirmed by Shri B.S. Patel, who had received the amounts from M/s. Sehgal Paper Ltd. or some other party and it was clear that the funds did not belong to the assessee company. According to him, the provisions of Section 68 were not applicable. He, therefore, deleted the addition made under Section 68 together with the interest payable thereon. 2. Feeling aggrieved with this order of the CIT ....
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.... way of cash credits and also deleting the amount of Rs.1,04,784 disallowed on account of interest payable on those credits." 5. Ms. Suruchi Aggarwal, learned counsel appearing for the Revenue, argued that fresh evidence was adduced before the CIT(A), which was taken into consideration, but the remand report thereupon of the AO was not sought. Likewise, the statement of Mr. B.S. Patel was produced before the Tribunal, but no remand report was called for. We are of the opinion that it will not be permissible for the learned counsel to take these contentions as in the application seeking reference filed by the Commissioner of Income Tax under Section 256(1) of the Act, neither such grievance was made nor any reference was sought thereupon. Naturally, no such reference is made as well. We have to deal with the reference in the form forwarded for our opinion and therefore, the issue is as to whether the assessee had discharged its burden under Section 68 of the Act on the basis of material considered by it. The issue is not about the admissibility of that material. On merits, submission of Ms. Aggarwal was that the approach adopted by CIT (A) as well as by the Tribunal is not in acc....
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....ssessee company. It was explained by the assessee that the aforesaid sums received from these parties have emanated from Mr. B.S. Patel, Prop. M/s. Chemoplat of New Kavi Nagar, Ghaziabad. The assessee had also explained the work of apoxy-lining of water tank in different treatment plants of M/s Sehgal Papers Ltd. was being carried on, under a contract, by Shri B.S. Patel in the name of aforesaid proprietary firm. He had submitted various bills to the said company for the work done by him for Sehgal Papers Ltd and received payment against those bills. Particulars of these payments amounting to Rs.22.76 Lakhs were also furnished. The documents were also furnished in support of work done by Mr. Patel at Sehgal Paper Ltd. However, Mr. Patel was not produced. In these circumstances, the AO opined that even if money had been received by Mr. Patel from Sehgal Papers Ltd., that could not have been utilized for making deposits by the assessee company in different names. Thus, in his view, the assessee had failed to discharge the requisite onus. The AO observed as under: "When a cash credit entry appears in the assessee's books of account in an accounting year, it is the assessee who is u....
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....atement does not leave any doubt in my mind that the funds did not belong to the appellant company. As such it would not be correct to invoke the provisions of Section 68 in the present case. The addition of Rs.17,10,000/- thus appears to be unwarranted. The appeal on this point is, therefore, allowed." 9. The Tribunal in its brief order observed that since the identity of the creditors, especially, Mr. Patel had been proved, who was assessed to tax regularly, the assessee had successfully discharged the onus. 10. It is clear from the aforesaid approach of the CIT (A) as well as Tribunal that the fact which they took into consideration was that insofar as the assessee is concerned, the funds did not belong to it. Therefore, the provisions of Section 68 of the Act could not be invoked. It is difficult to accept this approach of these two Authorities. 11. Learned counsel for the Revenue appears to be correct when she argued that the CIT (A) or the Tribunal did not keep in mind the parameters required for discharge of such an onus. We have already indicated the reasons which persuaded the AO to make additions. It may be reiterated that five persons from whom the loans are all....