Madhya Pradesh High Court
Commissioner Of Income-Tax vs Barjatiya Children Trust on 22 March, 1996
Equivalent citations: [1997]225ITR640(MP)
JUDGMENT A.R. Tiwari, J.
1. The applicant (Commissioner of Income-tax, Bhopal) has filed this application under Section 256(2) of the Income-tax Act, 1961 (for short the Act), seeking a direction to the Tribunal to state the case and to refer the proposed question of law after rejection of the application registered as R. A. No. 444/Ind. of 1991 for the assessment year 1985-86 on January 10, 1992, arising out of the order dated September 27, 1991, passed by the Tribunal in I.T.A. No. 602/Ind. of 1989 for our consideration and opinion :--
"Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is justified in holding that mere confirmation with CIR No. of the creditor and appearance of the amount in the balance-sheet of the creditor would be enough to accept the genuineness, credit-worthiness and capacity to lend and no further enquiry and production of the creditor for exemption is necessary ?"
2. Briefly stated, the facts of the case are that the assessment year is 1985-86. The Assessing Officer found certain cash credits. Finding the assessee failing to prove the genuineness of the credits, the Assessing Officer made an addition of Rs. 85,000 attributed to four creditors. On appeal, the Deputy Commissioner of Income-tax (Appeals) set aside the order of assessment on the limited issue of verification of cash credits amounting to Rs. 65,000 relating to three creditors and deleted the addition of Rs. 20,000 relating to the fourth creditor, Smt. Urmila Agrawal, on the ground that she was assessed to tax wherein the aforesaid amount was shown by her as having been loaned to the assessee. Aggrieved by the deletion of this amount, the Department filed the appeal before the Tribunal. The Tribunal dismissed the appeal. The Department then filed an application under Section 256(1) of the Act, which was rejected. Thereafter, the Department has filed this application under Section 256(2) of the Act.
3. We have heard Shri D.D. Vyas, learned counsel for the applicant/ Department and Sri Nazir Singh, learned counsel for the non-applicant/ assessee.
4. Shri Nazir Singh submitted that the question proposed is not of law but of fact and the matter stands concluded by Rameshchandra v. CIT [1989] 176 ITR 503 (MP), and CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC). According to him, there is no referable question of law.
5. We find that the Tribunal dismissed the appeal of the Department and held as under ;
"He found that in the balance-sheet the loan of Rs. 20,000 given to the assessee-trust was mentioned. Under these circumstances, the Department should not have any grievance as to violation of Rule 46A. The Income-tax Officer could have taken pains to examine the income-tax file of Smt. Urmila Agrawal but instead he chose the easier course of ordering production of the creditor which cannot be appreciated, The Assessing Officer should realise the inconveniences which an assessee faces in producing the cash creditor before him. The production of the cash creditor in person should be insisted upon only when the genuineness of the transactions cannot be established with the help of documents and the record of the Income-tax Department itself. I find no infirmity in the order of the Deputy Commissioner of Income-tax (Appeals). It is sustained."
6. On application under Section 256(1) of the Act, the Tribunal held that it correctly reached the conclusion that the addition was unwarranted and no referable question of law arose out of the conclusion reached on appreciation of facts properly.
7. In our view, the finding about the genuineness is a finding of fact based on proper appreciation of facts and does not manifest any illegality or perversity.
8. In the result, the application is rejected but without any order as to costs.
9. Counsel fee for each side is, however, fixed at Rs. 750 if certified.