Jharkhand High Court
Pradeep Kumar Agarwal vs The Income Tax Officer,Giridih on 3 May, 2011
Author: Prakash Tatia
Bench: Prakash Tatia
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Tax Appeal No. 1 of 2000
(In the matter of an appeal under Section 260 A of the Income Tax Act, 1961)
Pradeep Kumar Agarwal ... .... Appellant
Versus
1. The Income Tax Officer, Giridih
2. The Commissioner of Income Tax (Appeal),
Jamshedpur ... ... Respondents
For the Appellants: Mr. Biren Poddar, Sr. Advocate
M/s. Darshan Poddar & Piyush Poddar, Advocates
For the Respondents: Mr Deepak Roshan, Sr. S.C.(IT) &
Mr. Amit Kumar, Advocate
Dated 3rd May, 2011
PRESENT HON'BLE MR. JUSTICE PRAKASH TATIA HON'BLE MR. JUSTICE H.C. MISHRA Prakash Tatia, J Heard learned counsel for the parties.
2. The appellantassessee is aggrieved against the order passed by the Income Tax Appellate Tribunal, Patna Bench, Patna in I.T.A. No. 90(Pat)/1996 for the assessment year 198990 dated 30.07.1999. The case, in brief, is with respect to the addition of an amount to the tune of Rs. 1,33,000/ as made under Section 68 of the Income Tax Act, 1961 by the Assessing Officer which was upheld by the C.I.T. (Appeals), Ranchi and ultimately by the Tribunal in impugned order.
3. Following substantial question of law was framed : Whether a sum of Rs. 1,33,000/ standing credited in the name of Sri Banwarilal Khetan in the regular books of accounts of the appellant can be added in the total income of the appellant as unexplained cash credit under section 68 of the Income Tax, 1961 ?
4. According to the learned counsel for the appellant, all the authorities and the Tribunal committed grave error in holding that the amount in dispute is the cash credit whereas in fact said amount 2 was the trade credit and therefore, Section 68 of the Income Tax Act, 1961 could not have been invoked. It is also submitted that every burden has been discharged by the assessee by disclosing name of the creditors, address and assessee produced his books of account and also the receipt and thereafter, it was the heavy burden upon the Revenue to show that the stand taken by the assessee was wrong for which, in fact, there is no evidence and material on record on the basis of which it could have been inferred that the said amount was not the trade credit but was the cash credit. It is also submitted that in fact a notice under Section 131 of the Act was given to the disclosed creditors by the Assessing Officer who recorded his statement but did not proceed further so as to assess creditor's income if he had no income or if the creditor had invested the money (undisclosed) then creditor could have been charged under Section 69 of the Income Tax Act, 1961. Learned counsel for the appellant vehemently submitted that the reasons given by all the authorities including the Tribunal indicate that they proceeded to examine the matter as though it was the assessee who was required to prove further and more than what he has already disclosed to the Revenue and there was no burden upon the Revenue to prove their own case.
5. We have considered the submissions of the learned counsel for the appellant as well as learned counsel for the Revenue who drew our attention to the various reasons given in the orders passed by the C.I.T.(Appeals) as well as by the Tribunal and submitted that it is a pure question of fact that whether the amount in question was the cash credit or the trade credit and once it is found by the three 3 authorities that it was cash credit then this question is not a question of law as sought to be projected by the appellant.
6. We have considered the submissions of the learned counsel for the parties as well as considered the two judgements relied upon by the learned counsel for the appellant.
7. The first case relied upon by the learned counsel for the appellant is delivered in the case of Sarogi Credit Corporation Vs. Commissioner of Income Tax, reported in [1976] 103 ITR 344 (Patna) wherein, according to the learned counsel for the appellant, in identical facts and circumstances where there was cash credit in the books of account of the assessee, the said creditors were summoned under Section 131 of the Income Tax Act and their statements were recorded. The Division Bench of the Patna High Court after considering the aspect of the matter observed that having accepted the genuineness of the entries of the books of account; having accepted the explanation offered by third parties with regard to their sources of income, in part at least, there was no material for the Tribunal to hold that the assessee had not discharged the onus, and the finding to that effect must be held to be without any evidence and therefore, with the help of above judgement, learned counsel for the appellant submitted that the same factual situation is available in case in hand as the appellant disclosed the name of the creditor and he was summoned under Section 131 of the Income Tax Act and he fully supported that contention of the assessee that he deposited the amount for purchasing the tractor and it was not the cash deposit.
Learned counsel for the appellant relied upon the judgement 4 passed in the case of Commissioner of Income Tax, Orissa Vs. Orissa Corporation (P) Ltd. Reported in (1986) 159 ITR 78 (SC). In this case Hon'ble Supreme Court observed that the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were 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. Hon'ble Supreme Court observed that if the Tribunal in that situation came to the conclusion that the assessee had discharged the burden that lay on him then it could not be said that such a conslusion was unreasonable or perverse or based on no evidence. Therefore, according to the learned counsel for the appellant, the appellant did discharge his burden and also rebutted the allegation of the Revenue.
8. However, we are of the considered opinion that the core issue was whether the amount in question was cash credit or the trade credit. In this regard, the contention of the assessee was that it was the trade credit in as much as, the person named by him gave advance for purchase of tractor which is admitted fact. However, in fact, the transaction was not completed and the said person did not take the delivery of the tractor and the amount was returned to the 5 said person and the reason given for nonexecution of the said transaction was that the price of the tractor rise from the time of the booking, therefore, the money was returned to the said person, therefore, it wass only trade credit and not a cash credit.
9. The summon under Section 131 of the Act of 1961 was given to the said alleged creditor who appeared before the concerned authority and it would worthwhile to mention here that the Assessing Officer, the C.I.T.(Appeals) and the Tribunal, all have considered the evidence of the said alleged creditor in detail and quoted extensively. On consideration of the said evidence, we are of the firm view that, in fact, not only the creditworthiness of the creditor, the credibility of the alleged trade creditor is also very doubtful which has been noticed by the three authorities. We would also like to mention few of the facts which has been stated by the said person, B.Khetan. In his statement, the said creditor B.Khetan stated that he had income from Dalali, tuition and also from the interest as well as from agriculture. But when he was asked that what kind of Dalali he was doing, he said that he did not know. When further asked for whom he was doing Dalali business, his answer was negative. When further asked how much he was earning from Dalali then he stated that sometimes it was Rs. 50/, sometimes Rs. 100/ and sometimes nothing. Besides that he earns Rs. 300/ to 400/ per month from tuition but that was also for 2 - 3 months only. Regarding the interest income, he said that he was earning from Rs. 50/ to Rs. 100/ and not more than that. He also did not know from whom he was earning interest income. It will be worthwhile to mention herein that when he was 6 specifically asked how much money he had advanced and from where he arranged the same then he answered that some money he had with him from his past savings and some from borrowings from relatives and on being asked how much money he borrowed and from whom, he said that he did not know. Not only this, he claimed to have received back the money from the assessee but when he received the money, he failed to give the date and when asked, to whom he returned the money, he could not named the relatives and persons. We need not give more details of the statement of such type of person who has shown to have given money to the assessee for the purpose of purchasing the tractor. In fact, it was a case about the credibility of the witness first, rather than the creditworthiness of the witness. In fact, from the statement of the witnesses credibility of entry of transaction in question in the books of accounts has lost it's value. It is clearly proved that the transaction for which the finding has been recorded by the authorities below is based on the evidence available on record as stated by nonelse than the witness suggested by the assessee himself and the said witness was called and it was found that his statement in his proof of the entry made in the books of account of the assessee and in view of the above reasons the facts which have been before the Hon'ble Court in the case of Commissioner of Income Tax, Orissa Vs. Orissa Corporation (P) Ltd and Sarogi Credit Corporation Vs. Commissioner of Income Tax have no application because the facts in those cases have a material fact that the creditworthiness and the credibility of the witness was not in doubt in any manner.
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10. In view of the above reasons, we are of the view that the Revenue has rightly held that a sum of Rs. 1,33,000/, standing credited in the name of Banwarilal Khetan in the regular books of account can be credited in the total income of the appellant as unexplained cash credit under Section 68 of the Income Tax Act, 1961.
11. There is no merit in the appeal. Appeal is dismissed.
There is no order as to costs.
(Prakash Tatia, J) (H.C. Mishra, J) Jharkhand High Court, Ranchi Dated the 3rd of May, 2011 A.F.R/BirendraAlankar