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TaxTMI 
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TaxTMI 
2022 (6) TMI 842
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.... holding that the assessee had failed to discharge the onus lying upon him in terms of section 68 of the Act. The Assessing Officer also brought to tax unpaid sundry creditors u/s 41(1) in respect of M/s Arpit Enterprises of Rs.16,14,500/- and in respect of M/s. V.S.N. Trading Co. of Rs.12,35,500/-. The factual background of the above additions is as under : During the previous year relevant to the assessment year under consideration, the Assessing Officer found that the assessee had received loans from 57 parties aggregating to Rs.13,25,72,525/-. The details of the loan creditors were set out by the Assessing Officer vide page no.3 to 7 of the assessment order. The assessee was called upon to file the requisite details to prove the identity of the sundry creditors as well as creditworthiness and genuineness of the transactions. The assessee had filed complete details as evident from the assessment order as the said details were set out by the Assessing Officer in the assessment order. The Assessing Officer in order to verify the veracity of the particulars filed by the assessee had issued notices u/s 133(6) to the sundry creditors as per details furnished by the assessee. In resp....
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....to discharge the initial onus cast upon him to prove the identity, creditworthiness and genuineness of the transactions. Accordingly, he brought to tax a sum of Rs.13,25,72,525/- as unexplained cash credits u/s 68 of the Act. The Assessing Officer also brought to tax credit balance, outstanding in the name of M/s Arpit Enterprises of Rs.16,14,500/- and M/s. V.S.N. Trading Co. of Rs.12,35,500/- by observing that the notices u/s 133(6) were retuned un-served and copies of the contract notes were not filed by the assessee establishing as to how the credit entries came to be shown in the name of the above said two parties. 3. Being aggrieved by the above additions, an appeal was filed before the ld. CIT(A) contending that the Assessing Officer ought not to have made addition on account of sundry creditors loans of Rs.13,25,72,525/- as the assessee had discharged the onus lying upon him by filing the details establishing the identity, creditworthiness and genuineness of the transactions by filing the copy of returns of income, copy of the ledger extract, copy of the confirmations letter, copy of the bank accounts and other details such as PAN Numbers, the said loans were repaid along w....
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....n ITA No.1954/PUN/2017. Being aggrieved that part of the order of ld. CIT(A) deleting the addition of Rs.9,73,75,375/-, which is against the Revenue, the Revenue is in cross appeal before us in ITA No.1893/PUN/2017. 5. We shall take up the assessee's appeal in ITA No.1954/PUN/2017. ITA No.1954/PUN/2017 - Assessee : 6. The assessee raised the following grounds of appeal :- "1] The learned CIT(A) erred in confirming the addition u/s 68 in respect of the 16 loan creditors amounting to Rs.3,52,00,150/- on the ground that the assessee had failed to establish the identity, creditworthiness and the genuineness of these creditors. 2] The learned CIT(A) erred in holding that since the notices u/s 131 / 133(6) could not be served on these 16 loan creditors, the identity of these creditors remained to be establish and therefore, the A.O. was justified in making the addition u/s 68 in respect of these creditors. 3] The learned CIT(A) failed to appreciate that the assessee had submitted the confirmations of the above 16 creditors along with relevant documentary evidences in the form of return of income, bank statement, etc. etc. and therefore, there was no question of holding that the ....
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....the question of creditworthiness and genuineness of the transactions does not arise. He further submitted that the assessee had failed to discharge the onus cast upon him in terms of the provisions of section 68 of the Act. Therefore, the addition as confirmed by the ld. CIT(A) should be sustained. 9. We heard the rival submissions and perused the material on record. The issue in the present appeal of the assessee relates to the addition of sundry creditors loans received from 16 parties. Under the provisions of section 68, if the Assessing Officer found that any sum is credited in the name of third party in the books of account maintained by an assessee during the previous year relevant to the assessment year under consideration, such sum may be charged to the income-tax as income of the assessee for that relevant previous year; if the assessee has no explanation about the nature and source of such sum and the explanation offered or explained by an assessee is in the opinion of the Assessing Officer not satisfactorily. Thus, the burden is placed on assessee to prove the credit appearing in the books of accounts maintained by the assessee. This burden has to be discharged with cog....
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....evenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, 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 could arise." 10. Reiterating the above position, the Hon'ble Apex Court in the case of Sumati Dayal vs. CIT 214 ITR 801 (SC) held as under :- "In all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if the receipt is in the....
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.... Assessing Officer as well as the ld. CIT(A) had failed to appreciate the facts and law in proper perspective. Accordingly, we set aside the orders of the lower authorities and direct the Assessing Officer to delete the addition of Rs.3,52,00,150/-. 12. In the result, the appeal filed by the assessee in ITA No.1954/PUN/2017 stands allowed. ITA No.1893/PUN/2017 - By Revenue : 13. The Revenue is in cross appeal challenging the decision of the ld. CIT(A) deleting the addition u/s 68 of Rs.9,73,75,375/- in respect of 41 creditors. The factual background relating to the above addition of sundry creditors was narrated by us in the foregoing paragraphs. From the observation made by the Assessing Officer vide para 5 of the assessment order, it would reveal that the assessee had filed details such as name, address, PAN Numbers, income-tax assessment particulars, copy of the IT returns and confirmation letters from these 41 parties. Even those parties have responded to the notices issued u/s 133(6) either through personal attendance or by filing the information sought etc and copy of the IT returns were also filed. However, the Assessing Officer drew adverse inference on the ground that t....
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....e made as it is found that the creditors were existing in the stated address, had confirmed the transactions, the assessee made with sundry creditors and the bank statements, IT returns of the all the sundry creditors were filed by the assessee and no adverse inference can be drawn. This very finding is under challenge before us in the present appeal of the Revenue. We have carefully gone through the orders of the lower authorities and the evidence forming part of the record. It is not the case of the Department that the assessee had failed to discharge the onus lying upon him in terms of the provisions of section 68 of the Act. In fact, in respect of all the sundry creditors, the Assessing Officer had either received the reply in response to notice u/s 133(6) or appeared in person in response to the summons u/s 131 and confirmed the transactions. The case of the Assessing Officer was clearly narrated vide para 5 of the assessment order. On careful perusal of this case made out by the Assessing Officer it would appear that the Assessing Officer had drew a conclusion that the sundry creditors had no capacity to lend the money to the assessee based on the findings given by the Juris....
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....ment of the Hon'ble Supreme Court in the case of CIT vs. Daulat Ram Rawatmull, 87 ITR 349 (SC) and the decision of the Hon'ble Calcutta High Court in the case of CIT vs. Agarpara Co. Ltd., 158 ITR 78 (Cal.) and also in the light of our foregoing detailed discussions on this issue, we do not find any reasoning to interfere with the order of the ld. CIT(A) though the order of the ld. CIT(A) is cryptic. Thus, the ground of appeal no.1 and 2 filed by the Revenue stands dismissed. 18. Ground of appeal no.3 challenges the finding of the ld. CIT(A) deleting the addition made u/s 41(1) of the Act. The Assessing Officer made addition of Rs.16,14,500/- (M/s Arpit Enterprises) and Rs.12,35,500/- (M/s. V.S.N. Trading Co.) disbelieving the genuineness of the credit and brought the tax u/s 41(1) of the Act. During the course of appellate proceedings before the ld. CIT(A) as well as proceedings before us, the assessee had filed credit notes establishing as to how the credit in the name of said two parties came to be made in the books of account of the assessee. The ld. CIT(A) considering the fact that the sundry creditors are not written off in the books of accounts held that the question of inv....