Calcutta High Court
Commissioner Of Income Tax vs Jamna Dass Gupta on 15 February, 2011
Author: Bhaskar Bhattacharya
Bench: Sambuddha Chakrabarti, Bhaskar Bhattacharya
ITAT No. 20 of 2011
GA No. 289 of 2011
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction
[Income Tax]
ORIGINAL SIDE
COMMISSIONER OF INCOME TAX, KOL-XIII
Versus
JAMNA DASS GUPTA
For Appellant : Mrs. Soma Chatterjee, Advocate
BEFORE:
The Hon'ble JUSTICE BHATTACHARYA
And The Hon'ble JUSTICE DR. SAMBUDDHA CHAKRABARTI Date : 15th February, 2011.
This appeal under Section 260A of the Income Tax Act, 1961 is at the instance of the revenue and is directed against the order dated August 31, 2010 passed by the Income Tax Appellate Tribunal, "A" Bench, Kolkata in ITA No.692/Kol/2010 relating to the assessment year 2006-07 thereby affirming the order of the Appellate Authority.
Being dissatisfied, the Revenue has come up with the present appeal.
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The facts giving rise to filing of this appeal may be summed up thus:
The assessee filed return of income tax on 16th October, 2006 disclosing total income of Rs.1,62,982/-. The assessing officer assessed the total income of the assessee at Rs.17,90,940/-. According to the assessing officer, the assessee apparently took loans from friends and relatives of Rs.16,25,961/- which was outstanding at the end of the year and consequently, after issuing summons under Section 131 of the Act to some of the persons, who had given loans to the assessee, the assessing officer came to the conclusion that the amounts given as loans were deposited in the bank account of the creditors just a day before the day of issuing the cheques for loan. Consequently, the assessing officer held that loans represented the money of the assessee routed through the apparent creditors and added the amount under Section 68 of the Income Tax Act.
On appeal the CIT (Appeal) directed the assessing officer to delete the said addition.
The Appellate Authority, in detail, discussed the materials on record indicating that the loan amounts taken by the assessee were duly disclosed in the balance sheet of the creditors and income tax returns were filed, which were duly accepted by the assessing officer. The following finding recorded by the Appellate Authority would disclose that the Appellate Authority in detail considered the aforesaid aspect: 3
"In view of the above submission of the appellant and scrutiny of the documents submitted by the appellant in support of the loans a letter was written to the AO vide this office letter no. CIT (A)XXIV/Remand/09-10/227 dated 10.07.2009. By this letter it was pointed out to the AO that for the year under consideration total loans of Rs.35,30,000/- was received and Rs.16,35,961/- was balance outstanding in the account of 8 creditors namely - (I) Mahabir Prasad Bubna & Others, (2) Ashok Kr. Bubna & Sons, (3) Sudarshan Bubna, (4) Ashok Kumar Bubna, (5) Suman Devi Bubna, (6) Swati Gupta, (7) Anuradha Saraf & (8) Sudarshan Bubna Family Trust. The AO was asked to clarify as to whether the balance amount of Rs.19,04,039/- (i.e., 35,30,000 - 16,25,961) was found to be satisfactorily explained or not. The AO was also asked to verify the contention of the appellant that most of the loans which were given to the appellant by the loan creditors were out of repayment of loans received by them from two concerns namely - (1) Swastik Refinery Pvt.
Ltd. & (2) Shri Vegetable Oil Co. Pvt. Ltd. The appellant had also stated that part of the loan was also out of withdrawal from PPF account and cash deposit from personal account. The AO was also asked to verify the claim of the appellant that the above two concerns i.e., Swastik Refinery P. Ltd. and 'Shri Vegetable Oil Co. P. Ltd. are filing return of incomes since several years and the balances of the cash creditors were duly reflected in the said concern. In response to the above letter a reply was received from the AO vide letter no.ITO, Wd.38(1)/Remand/09-10/Kol/104 dated 20.08.2009. In this letter the AO submitted that the entire amount of Rs.35,30,000/- represented unexplained 4 cash credit and only by mistake amount of Rs.16,25,961/- was added. It was further stated by the AO that from the bank statement it was amply evident that without the alleged receipts from Swastik Refinery P. Ltd./Shri Vegetables P. Ltd./ withdrawal from PPF amount the cash creditors did not have the creditworthiness to advance the loans and therefore the AO requested that further time may be granted for examination of the above transactions. However no report has been submitted by the AO so far therefore the issue is decided on the basis of material available on record. Thereafter, on 16.07.09 the appellant filed further written submissions in which the appellant reiterated what was stated earlier and also filed copies of relevant documents such as confirmation, copies of balance sheet and audit reports of Swastik Refinery P. Ltd. and Shri Vegetable Oil P. Ltd., details of sources of loans given by the cash creditors etc. On perusal of the above details it is seen that all the 8 persons have confirmed that deposits were given by them, they had stated the sources of the loans given. The loans standing in their name in the accounts of Shri Vegetable Oil P. Ltd. and Swastik Refinery P. Ltd. are duly confirmed and are found to be reflected in the balance sheet of the said concern. Appellant filed copies of bank account as also cash flow chart showing the sources of the loans given. On the contrary no material has been brought on record to establish that the deposits in the bank account of the cash creditors were out of funds received from the appellant. The primary onus u/s. 68 cast on the appellant has been discharged by the appellant by furnishing the complete name & address of the depositors by furnishing their confirmation and details of Income Tax Returns filed by them 5 as also by producing copies of their bank statements and sources of funds out of which the loans had been given. Some of the depositors were even examined by the AO during the course of assessment proceedings and nothing has been brought on record by the AO to show that in their depositions they have denied giving the loans or that their creditworthiness was not established. Once the depositors have accepted the fact that the amounts 'have been advanced by them by way of banking channels and they have produced their bank statements in support of their contention no adverse inference can be drawn in the hands of the appellant merely on the ground that before the issue of loan cheques an equivalent amount was deposited in the account of the depositors. The onus to explain the deposit in their bank accounts is on the depositors and if any adverse inference has to be drawn on the basis of examination of these accounts unless nexus is established between the depositors in the bank accounts of the depositors and flow of fund from the appellant such adverse inference has to be drawn only in the hands of the depositors and flow of fund from the appellant such adverse inference has to be drawn only in the hands of the depositors and not the appellant. Considering the above facts of the case the addition of Rs.16,25,691/- is directed to be deleted. These grounds of the appellant are therefore allowed. The appellant gets relief of Rs.16,25,691/-."
The learned Tribunal below in view of the aforesaid findings, given in detail by the Appellate Authority, refused to interfere with the order passed by the Appellate Authority.
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After hearing the learned advocate for the appellant and after going through the aforesaid findings, we agree with the Tribunal below that the finding of the assessing officer that the loans represented the money of the assessee routed through the creditors was a perverse finding of fact as he did not consider the aspects mentioned in the order of the appellate authority.
We, thus, find that in the facts of the present case it is well established that those were general loans taken by the assessee from those creditors, those amounts were also reflected in their Income Tax Return and those were also accepted by the Income Tax Authority.
We, thus, find that no substantial question of law is involved and consequently, the same is dismissed.
In view of the dismissal of the appeal itself, the connected application has become infructuous and the same is disposed of accordingly.
Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(BHATTACHARYA, J.) (DR. SAMBUDDHA CHAKRABARTI, J.) sm AR[CR]