TaxTMI 
TaxTMI 
2013 (9) TMI 42
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....facts and circumstances of the case and in law the authorities below erred in construing the loan received in a sum of Rs. 3 lakhs as income and treating the same as taxable under section 68 of the Act. The action being most arbitrary, erroneous and unlawful it is prayed that the same must be quashed with directions for appropriate relief." Briefly stated the facts of I. T. A. No. 2029/D/2011 regarding addition of Rs. 2 lakhs for the assessment year 2003-04 are that it is noted by the Assessing Officer in the order dated December 29, 2009 that the assessee has received cheque of Rs. 2 lakhs on August 8, 2002 from Mr. Rajiv Kumar Aggarwal. The Assessing Officer recorded the statement of Mr. Rajiv Kumar Aggarwal on oath in which he stated that he has closed the bank account through which the amount of Rs. 2,00,000 was advanced to Shri Abhik Jain long ago. Shri Rajiv Kumar Aggarwal also stated that he has received back the amount in question from the assessee and he also filed the copies of income tax return for the assessment year 2003-04 declaring income of Rs. 1,07,259 and a copy of the return for the assessment year 2008-09 declaring total income of Rs. 1,23,972. The Assessing ....
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....harat Bhushan Bansal and the assessee, the Assessing Officer took the view that substantial amount has been deposited on various dates and the like amounts were withdrawn through clearing of cheques on the next day by Shri Bharat Bhushan Bansal. Therefore, he opined that Shri Bansal was mainly working as accommodation entry provider. He also noted that from the income-tax returns filed for the assessment year 2004-05, it is seen that Shri Bharat Bhushan Bansal had no substantial amount of income for advancing loan of Rs. 3 lakhs to the assessee. The Assessing Officer concluded with the finding that the creditworthiness of Shri Bharat Bhushan Bansal has not been proved beyond doubt and the genuineness of the transaction has not been proved and even no documentary evidence was produced for returning the amount in question and the same amount was added to the income of the assessee under section 68 of the Act. Being aggrieved, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals) which was dismissed by the impugned order dated March 31, 2011 and now the assessee is in second appeal before us. It is submitted by the authorised representative....
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....rough cheque and returned to the creditors through cheques and these transactions were operated through banks only. On bare reading of the impugned orders, we note that the learned Commissioner of Income-tax (Appeals) relied on the judgment of the hon'ble Supreme Court in the case of CIT v. Durga Prasad More [1971] 82 ITR 540 (SC) by reproducing paragraph (iii) of the ratio which reads as under (headnote) : "(iii) that though an apparent statement must be considered real until it was shown that there were reasons to believe that the apparent was not the real, in a case where a party relied on self-serving recitals in documents, it was for that party to establish the truth of those recitals : the taxing authorities were entitled to look into the surrounding circumstances to find out the reality of such recitals." From the above part of the ratio, we observe that the hon'ble apex court held that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality of the recitals made by the assessee. This case was related to proper interpretation of the deed of conveyance and the deed of settlement and the part of ratio mentioned hereinab....
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....tative supported the above findings and submitted that the creditors who provided loans to the assessee were part of the entry providers scam which was unearthed during the course of search operation in the case of Manoj Aggarwal and others. Therefore, the creditworthiness of the creditors of the present case cannot be considered as established and accordingly, the genuineness of transaction also becomes doubtful. The authorised representative submitted that on a bare reading of the judgment of the Income-tax Appellate Tribunal, Delhi Special Bench in the case of Manoj Aggarwal v. Deputy CIT [2009] 310 ITR (AT) 99 (Delhi), it is clear that the names of creditors of the assessee, i.e., Shri Rajiv Kumar Aggarwal and Shri Bharat Bhushan are not mentioned or discussed in this judgment and also the facts and circumstances of this case are different from the present case as the case of Manoj Aggarwal was related to admission of the assessee as the assessee Manoj Aggarwal had admitted to have carried out business of providing accommodation entries in respect of share trading business but present case is related to cash credits through cheques. He also submitted that the findings of the A....
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....that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case." We have considered above arguments and perused the judgment of Manoj Aggarwal [2009] 310 ITR (AT) 99 (Delhi) and paragraph 4.13 of impugned orders in the light of the facts and circumstances of the present case and we noted that the assessment orders did not indicate any substantial evidence which establish the fact that creditors of the present case were part of the scam which was unearthed during the course of search operation in the case of Manoj Aggarwal, Bishan Chand Aggarwal, Mukesh Kumar and others. Therefore, on the basis of admission made by Manoj Aggarwal in his case (in Manoj Aggarwal's own search case) cannot be used to borrow this view that the creditworthiness of the creditors of the present case who provided loan to the assessee of the present case, i.e., Shri Rajiv Kumar Aggarwal and Shri Bharat Bhushan Bansal could not be established by the assessee. The learned Depart....
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....he order are reproduced below (page 198) : "40. The case of Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) exemplifies the category of cases where no action is taken by the Assessing Officer to verify or conduct an enquiry into the particulars about the creditors furnished by the assessee, including their incometax file numbers. In the same category fall cases decided by this court in CIT v. Dolphin Canpack Ltd. [2006] 283 ITR 190 (Delhi), CIT v. Makhni and Tyagi P. Ltd. [2004] 267 ITR 433 (Delhi), CIT v. Antartica Investment P. Ltd. [2003] 262 ITR 493 (Delhi) and CIT v. Achal Investment Ltd. [2004] 268 ITR 211 (Delhi). To put it simply, in these cases the decision was based on the fundamental rule of law that evidence or material adduced by the assessee cannot be thrown out without any enquiry. The ratio does not extend beyond that. The boundaries of the ratio cannot be, and should not be, widened to include therein cases where there exists material to implicate the assessee in a collusive arrangement with persons who are self-confessed 'accommodation entry providers'. 41. Reference was also made on behalf of the assessee to the recent judgment of a Division Bench o....
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....the case of Nova Promoters and Finlease P. Ltd. [2012] 342 ITR 169 (Delhi) is not available to the Revenue in the present case because, in this case, the assessee and his creditors appeared before the Assessing Officer and submitted the copies of the relevant documents showing the identity and creditworthiness of the creditors in the form of copies of the permanent account number card, ration card, assessment orders of the relevant year, wealth-tax assessment orders of the creditors, viz., Mr. Rajiv Kumar Aggarwal and Bharat Bhushan Bansal and also the assessee submitted the copies of the passbook where he received the credits by cheque and the statement of the assessee's Axis Bank account showing that the amount received were returned back to the said creditors. In the case of Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) the hon'ble apex court held that the Revenue did not examine the source of income of the alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. The hon'ble court also observed that there was no effort made by the Revenue-Department to pursue the so-called alleged creditors and in those circu....