TaxTMI 
TaxTMI 
2013 (9) TMI 640
X X X X Extracts X X X X
X X X X Extracts X X X X
....as admitted by the Tribunal. The Commissioner of Income-tax (Appeals) had dismissed the ground raised on the ground that the Income-tax Appellate Tribunal had set aside the assessment to be made de novo and the Assessing Officer was, therefore, empowered to look into all cash credits. The Assessing Officer in the original assessment order under section 144 dated March 15, 1993 had added a sum of Rs. 23,64,272 as cash credit under section 68 of the Act which in appeal was confirmed by the Commissioner of Income-tax (Appeals). In further appeal, the Income-tax Appellate Tribunal vide order dated October 1, 2002 set aside the assessment to be made afresh de novo. In the fresh assessment, the Assessing Officer noted that the total new credits during the year were Rs. 1,02,35,478 and not Rs. 23,64,272 taken in the original assessment. He, therefore, made an addition of Rs. 1,02,35,478. The learned authorised representative argued that once the assessment had been set aside by the Tribunal, the assessee cannot be put into a worse situation than what it was at the time of original assessment as the Tribunal had no power to make enhancement of assessment. Therefore, addition could be mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment had added fresh cash credits which were computed by taking the difference between the opening balance and closing balance as the assessee had not given the details of the fresh loans during the year. On verification it was found that the fresh loans were Rs. 1,02,35,478 during the year. It cannot thus be said that the Assessing Officer had made any new addition. The addition made remains the same being new cash credits and only the figure had changed on verification. Therefore, in our view it cannot be a case of enhancement of income by the Assessing Officer in the set aside assessment. In the case of Mcorp Global P. Ltd. [2009] 309 ITR 434 (SC), the Assessing Officer in the original assessment had allowed depreciation in respect of 42,000 bottles. In appeal, the Tribunal held that it was only a financial arrangement and not lease and, therefore, claim of depreciation could not be allowed which resulted into disallowance of depreciation even in respect of 42,000 bottles allowed by the Assessing Officer in the assessment. It was therefore, held by the hon'ble Supreme Court that the benefit given in the original assessment could not be taken back by the Tribunal. The facts....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad been arranged by a financial consultant. It was also submitted that the accountant who had handled the matter, had left and the new accountant was not aware of the matter. The assessee furnished new address of Western along with name and address of directors and requested the Assessing Officer that summons may be issued under section 131. However, the summons under section 131 could not be served on the company as well as directors at the addresses given. It was reported by the inspector that the property at the address given now vested with the Central Government under section 269UE(1). The Assessing Officer issued sepa rate summons under section 131 on the new address given which was also returned by the postal authorities. Similar summons were also issued to other parties on the addresses but these were also returned by the postal authorities. The Assessing Officer, therefore asked the assessee to produce the lenders/creditors along with books of account to explain the cash crEdits. The assessee however could not produce any of the parties. The authorised representative of the assessee only filed copy of accounts of the assessee appearing in books of Flax India Ltd. and copy ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pect of par ties at Sl. Nos. (iii) to (viii) in respect of party at Sl. No.(ii), i.e., Betext India Ltd. confirmation had been filed on September 8, 1994 before the Commissioner of Income-tax (Appeals). Thus confirmation giving the income-tax file number and address had been filed during the appellate proceedings against the original assessment. The assessee submitted that confirmations filed by the assessee vide forwarding letter dated February 14, 1994 were still in possession of the Department. Thus, the addition confirmed by the Commissioner of Income-tax (Appeals) in the first appel late proceedings was based on gross misrepresentation of facts by the Assessing Officer. It was pointed out that had the Assessing Officer con ducted the enquiry based on details and confirmations given by the asses see, genuineness of cash credits could have been easily established at that stage. The Department failed to conduct any enquiry and now after 14 years, was asking the assessee to prove cash credits which was not reasonable. Thereafter, the Commissioner of Income-tax (Appeals) called for relevant assessment records and found that confirmation letters in respect of six creditors at Sl. No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh credit as explained satisfactorily. Following the said judgment, the Commissioner of Income-tax (Appeals) accepted the cash credits in respect of seven creditors, i.e., parties at Sl. Nos. (ii) to (viii) as explained satisfactorily. It was also mentioned by him that the assessee during the remand proceedings in the first round of appeal, had requested the Assessing Officer for summons to be issued and, in that case, wanted to avail of opportunity of cross exami nation but the Assessing Officer had not taken any action. The action of the Assessing Officer asking the assessee to produce creditors now after a lapse of 14 years was therefore not justified. The Commissioner of Income tax (Appeals) therefore, deleted the addition made in case of seven cash creditors, i.e., parties at Sl. Nos. (ii) to (viii). However, he confirmed the addition made in case of Western as neither any confirmation had been filed nor current address of party had been given nor had the party been produced. Aggrieved by the decision of the Commissioner of Income-tax (Appeals), both parties are in appeal. Whereas the assessee has disputed the decision of the Commissioner of Income-tax (Appeals) confirming the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d added the entire cash credit on the ground that the parties were not found at the address given and the assessee could not produce the parties. In respect of party at Sl. No. (i), i.e., Western, the assessee had not filed confirmation. The Commissioner of Income-tax (Appeals) had therefore confirmed the addition in respect of Western but had deleted the additions in respect of remaining parties at Sl. Nos. (ii) to (viii) aggregating to Rs. 77,35,478 on the ground that the party has filed confirmations giving their income-tax GIR Nos. We have carefully considered the various aspects of the matter. It is a settled legal position that in case of cash credit, burden is on the assessee to prove the identity and creditworthiness of the creditor as well as genuine ness of the transaction. In this case, as the assessee has filed confirmation giving name and address of the party and also the income-tax file number, the onus placed on the party is discharged as the very fact that the party is being assessed to tax shows its creditworthiness. Thereafter unless the authorities below make further enquiry and place any adverse material on record such as income-tax file number being not correc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t in respect of six parties at Sl. Nos. (iii) to (viii), the assessee had filed confirmations giving income tax file number vide letter dated February 14, 1994 during the remand proceedings in the first ground of appeal before the Commissioner of Income-tax (Appeals) and confirmation with file number in respect of party at Sl. No. (ii) had been filed before the Commissioner of Income-tax (Appeals) on September 8, 1994. It has also been mentioned by him that the Assessing Officer had hastily concluded the remand proceedings and submitted the remand report on February 18, 1994 without making any verification and the Commissioner of Income-tax (Appeals) had routinely accepted report of the Assessing Officer and confirmed the addition. The Commissioner of Income-tax (Appeals) has also observed that these loan confirmations, which were filed during remand proceedings before the Commissioner of Income-tax (Appeals) in the first round, were still available on record as confirmed by the Assessing Officer vide letter dated September 29, 2004. The Commissioner of Income-tax (Appeals) therefore, held that explanation regarding cash credit cannot be rejected only on the ground that creditor di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....correctness of finding of the Commissioner of Income-tax (Appeals) that loan confirmation had been filed giving file number of cre ditors at the time of remand proceedings or during appellate proceedings in the first ground of appeal. However, it is a fact which had been admitted even by the Assessing Officer that the assessee filed copies of loan confirmations during fresh assessment proceedings in respect of seven parties but the Assessing Officer had made no verification from the income-tax file numbers of the creditors lying with the Department to disprove the claim of the assessee and proceeded to make addition only on the ground that the creditors did not respond to summons. Now, the issue is whether the Commissioner of Income-tax (Appeals) can delete the addition only on the ground that the Assessing Officer had failed to make necessary verification from the income-tax files of the creditors. It is a settled legal position that the Com missioner of Income-tax (Appeals) has power coterminous with the Assessing Officer and he can do what the Assessing Officer can do and can also do what the Assessing Officer has failed to do. Therefore, in case, the Assessing Officer failed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Income-tax (Appeals) also observed that the loss had to be treated as speculation loss by virtue of the Explanation to section 73 and the same could not be set off against other income. Aggrieved by the said decision, the assessee is in appeal before the Tribunal. Before us, the learned authorised representative submitted that the assessee had filed sale bills of the broker, copies of which were placed at pages 83 to 95 of the paper book. It was however, admitted that distinctive numbers were not available. It was argued that the shares sold were purchased in the earlier year which was clear from the fact that the shares held in the earlier year in the balance-sheet had been liquidated. He referred to the copy of balance-sheet placed at page 7 of the paper book as per which share investment as on March 31, 1990 was Rs. 3 lakhs against investment of Rs. 19,03,280 in the immediate preceding year. He also referred to copy of the profit and loss account on page 5 of the paper book in which loss had been claimed as share trading loss. The learned authorised represent ative also submitted that the gross total income of the assessee mainly con sisted of interest income of Rs. 8,43,72....
X X X X Extracts X X X X
X X X X Extracts X X X X
....purchases of Rs. 38,06,376 of cloth and sales were to the tune of Rs. 35,22,268 resulting into loss of Rs. 3,14,715. The Assessing Officer therefore asked the assessee to file necessary details to which the assessee replied that the details were already filed at the time of original assessment. The Assessing Officer however observed that at the time of original assessment, the assessee had not furnished any details and assessment had been made under section 144 of the Act. The assessee had been asked to file details during remand proceedings at the appellate stage. But the assessee could file only details of sales and purchases stating name of purchaser and seller but no books of account, i.e., sales register, purchase register, ledger and stock register were not produced and therefore in the absence of bills and vouchers and books loss had been disallowed. Neither the assessee could produce any evidence for purchase and sale nor were books produced. The Commissioner of Income-tax (Appeals) therefore confirmed the disallowance aggrieved by which the assessee is in appeal before the Tribunal. Before us the learned authorised representative submitted that the assessee had filed deta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r decision vide paragraph 17 of this order the issue is restored to the file of the Com missioner of Income-tax (Appeals) for fresh order. The second dispute raised in the appeal by the Revenue is regarding dis allowance of bad debt amounting to Rs. 8,811. The Assessing Officer during the assessment proceedings noted that the assessee had claimed bad debt written off amounting to Rs. 8,811. The Assessing Officer asked the assessee to furnish details of bad debt written off, steps taken to recover the sum and to show whether bad debt related to business. As per the Assessing Officer, the assessee made no submissions. The Assessing Officer observed that burden was on the assessee to establish that the debt had actually become bad. In the absence of any details/submission the Assessing Officer disallowed the claim of bad debt of Rs. 8,811 and added to the total income. In appeal the Commissioner of Income-tax (Appeals) observed that after amendment to section 36(1)(vii) with effect from assessment year 1989-90, the assessee was not under any obligation to prove that the debt had actually become bad. He therefore allowed the claim. Aggrieved by the said decision the Revenue is ....