Income Tax Appellate Tribunal - Kolkata
V.T.R Marketing vs Asstt. Cit on 28 April, 2004
Equivalent citations: [2005]1SOT205(KOL)
ORDER
G.C. Gupta, J.M. This appeal by the assessee for the assessment year 1994-95 is directed against the order of the CIT (A). The revised grounds of appeal filed by the assessee are as under:-
"1. The learned CIT (A)-XlX, Kolkata erred in confirming the action of the assessing officer in treating of the loans of Rs. 1 lakh received from two loan creditors as unexplained credit under section 68 of the Income Tax Act in the hands of the appellant firm.
2. The learned CIT (A) erred in confirming the disallowance of interest amounting to Rs. 11,154 paid to the two loan creditors."
2. The learned counsel for the assessee stated that the assessee had discharged its onus by filing loan confirmations from the two creditors who are existing income-tax assessees. The loans were received through banking channel and are genuine. The learned counsel has relied on the Confirmation of Statement of Accounts of the creditors wherein the creditors have confirmed the transactions and have also mentioned their income-tax assessment file Nos. The learned counsel argued that copies of balance sheets of the creditors were also filed wherein the amount shown in the account of the assessee tallies with that of the balance in the account of the assessee-firm. He further submitted that the decision of Hon'ble Apex Court in CIT v. Orissa Corpn. (P) Ltd. (1986) 159 ITR 78 (SC) clearly applies to the facts of the case of the assessee. The learned counsel argued that the assessing officer had sent summons at the old address, although the new address was furnished by the assessee before the assessing officer. The Learned Departmental Representative has opposed the arguments of the assessee's learned counsel. He argued that the assessee could not discharge its onus since it could not produce the creditors before the assessing officer. He relied on a series of the decisions in Hindusthan Tea Trading Co. Ltd. v. CIT (2003) 263 ITR 289 (Cal.), CIT v. Precision Finance (P) Ltd (1994) 208 ITR 465 (Cal.), CIT v. United Commercial & Industrial Co. (P) Ltd. (1991) 187 ITR 596 (Cal.) and Karlay Trading Co. Ltd. (1998) 232 ITR 820 (Cal).
3. We have considered the rival submissions. We find that the creditors have confirmed their statements of account as appearing in the accounts of the assessee. The loan transactions are through bank and the creditors are existing income-tax assessees and their income-tax assessment file Nos. were also furnished to the assessing officer. The copies of the balance sheets of the creditors show the balance in the name of the assessee-firm and the figures therein tally with those of the account books of the assessee. We find that the assessing officer was informed about the new address of the creditors vide communication of the assessee in writing. In these circumstances, we hold that the assessee has discharged its onus to prove the identity and the creditworthiness of the creditors and also that the loan transactions are genuine. In the absence of any material to disbelieve the evidence filed by the assessee, we hold that no case of addition for unexplained credit is made out by the revenue and hence the addition of Rs. 1 lakh is deleted. As we have deleted the addition made on account of unexplained cash credit under section 68 of the Act, the disallowance of interest paid on the loans also stands deleted and, accordingly, grounds of appeal are allowed.
4. In the result, the appeal of the assessee is allowed.