Commissioner of Income Tax vs C. Vijayan and Co.

C. N. Ramachandran Nair, J.—Appeal is filed by the revenue challenging the order of remand by the Tribunal remanding the matter again to the assessing officer on the ground that the Tribunal has no justification to do so. We have heard standing counsel appearing for the revenue and Sri P. Balakrishnan, counsel appearing for the Respondent.

The Respondent was admittedly engaged in civil construction work. In the course of verification of books of account for the year 2001-02, the assessing officer noticed that the Assessee has recorded a liability of Rs. 33,50,000 as due to 179 persons. The accounts containing this as cash credits were initially explained by the Assessee as amounts due to various suppliers of country materials. However, in the appeal before the Commissioner (Appeals), the Assessee changed the stand that the amount represented cash borrowed from workers, each such loan is found to be around Rs. 18,000 or Rs. 19,000 just below the limit of Rs. 20,000 borrowal of which requires acceptance of the same by cheque or demand draft as provided u/s 269SS of the Act. The appellate authority called for a remand report from the assessing officer who based on the facts and confirmation letters produced by the Assessee from the workers called for and examined 30 persons. None of the creditors examined proved the Assessees case. Consequently the assessing officer reported that the claim is bogus. Even though the Commissioner (Appeals) dismissed the appeal, the Assessee went in further appeal before the Tribunal. The Tribunal also concluded that the Assessees case is bogus and in spite of such a finding entered by the Tribunal, the Tribunal remanded the matter again to the officer for giving one more opportunity to the Assessee. Even though counsel for the Respondent contended that the Assessee was given opportunity to crosS-examine the persons examined by the officer and for this purpose, the Tribunal remanded the matter, we are unable to uphold the order of the Tribunal because burden of proof to explain cash credit is on the Assessee. The Assessee not only failed to prove cash credit but the persons from whom the Assessee is stated to have borrowed funds deposed before the officer that they have not advanced any such loans. When the Assessee shifted the stand from country materials purchased to cash borrowals, the bona fides stood disproved there itself. However, the Commissioner (Appeals) was considerate in giving an opportunity to the Assessee to prove cash credits before the officer. However, once the Assessee failed to establish the same before the officer in the course of pendency of appeal before the Commissioner (Appeals), there is no justification for the Tribunal again to remand the matter. Further the Tribunals order amounts to shifting of burden to the department to prove cash credit which was not explained by the Assessee in the assessment or in the appeal before the Commissioner (Appeals). It is seen that the Tribunal itself could not accept the Assessees explanation. In other words, the Tribunal unnecessarily remanded the matter only to protract it. We therefore allow the appeal by reversing the order of the Tribunal and by restoring the assessment confirmed in first appeal.