Commissioner of Income Tax vs Laul Transport Corporation

Satish Kumar Mittal, J.—Revenue has filed this appeal u/s 260A. of the Income Tax Act, 1961 (''the Act'') against the order dated 31-5-2007 passed by the Income Tax Appellate Tribunal, Delhi Bench T, Delhi (''the Tribunal'') in ITA No. 2025/Delhi/2005 for the assessment year 2000-01.

In this case, the dispute is about the addition of Rs. 17,84,000 on account of unsecured loans shown to have been taken by the assessee from various persons which were treated as undisclosed income u/s 68 of the Act by the Assessing Officer. The Assessing Officer vide its order dated 31-3-2003 made certain additions/disallowances, including the aforesaid addition. On appeal by the assessee, the Commissioner of Income Tax (Appeals) vide its order dated 23-2-2005 partly accepted the appeal of the assessee and deleted the aforesaid addition, while observing as under:

The issue has been examined. I have carefully gone through the records which include the statement on oath of the various persons, bank accounts, Income Tax details, affidavits and confirmations and hold that the Assessing Officer was not justified in treating any of the aforesaid sums as undisclosed income of the appellant. It is also now well established in law that once particulars of the loan have been disclosed by the assessee the onus shifts squarely on to the Assessing Officer to establish that the persons concerned did not have the creditworthiness to give the loan or the transaction was not genuine. A perusal of the assessment order clearly shows that the onus had not been discharged. In three cases the Assessing Officer had himself recorded the statements of the persons from whom the loans had been taken and in other cases he did not even call the persons for examination in spite of the request made by the appellant. Moreover, on record was the bank statements, confirmations, affidavits and other income particulars which clearly points out that necessary evidence had been adduced by the assessee and further onus was on the Assessing Officer. Under the aforesaid circumstances, it is held that the Assessing Officer committed an error in treating all the above loans received from the various persons as undisclosed income of the appellant.

Feeling aggrieved against the part of the order, the revenue filed an appeal before the Tribunal. The Tribunal vide its order dated 31-5-2007 dismissed the appeal and confirmed the deletion made by the Commissioner of Income Tax (Appeals). Against the said part of the order, the revenue has filed the present appeal raising the following substantial questions of law for consideration of this court:

(i) Whether on the facts and circumstances of the case, the Hon''ble ITAT was right in law in not appreciating the fact that the cash deposits were made into bank account of creditors immediately prior to advancing the loan?

(ii) Whether on the facts and circumstances of the case, the Hon''ble ITAT was right in law in deleting the addition of Rs. 17,84,000 in respect of alleged loan credits, though creditworthiness of the loan creditors was not established by the assessee?

We have heard the counsel for the appellant and perused the record of the case. In this case, the assessee had taken loan of Rs. 25,49,000 from 18 parties, the details of which are available in the assessment order. The Assessing Officer accepted the loans taken from three persons, i.e., Rs. 7,65,000 and the balance amount of Rs. 17,84,000 out of total unsecured loans of Rs. 25,49,000 was opined to be not satisfactory explained and was, thus, added of the income of the assessee''s firm u/s 68 of the Act. The Assessing Officer has made the aforesaid addition only on the ground that the creditworthiness of the remaining creditors could not be established by the assessee.

On the other hand, the plea of the assessee is that the affidavits of all the creditors were submitted during the assessment proceedings wherein full details of creditors and factum of advancing loans along with sources of their incomes was extended. Therefore, the assessee has discharged the initial onus and the Assessing Officer was wrong in making the aforesaid addition without there being any contrary evidence. A perusal of the order passed by the Commissioner of Income Tax (Appeals) revealed that the Appellate Authority, after taking into consideration the evidence/material placed on record by the assessee and discussing the details and evidence with regard to each creditor, had come to the conclusion that the assessee has placed on record the affidavits of the creditors and their bank statements confirmation, which clearly established trustworthiness, creditworthiness and identity of the creditors. Since the identity and the creditworthiness of the creditors were established, the aforesaid addition made by the Assessing Officer was held to be non-sustainable.

In the present case, a perusal of the impugned order passed by the Tribunal reveals that in the instant case the assessee has discharged its onus to prove the genuineness of the cash credit by placing on record before the Assessing Officer sufficient material/evidence. Not only the identity of the creditor has been established by producing the record of the assessee in which those transactions have been duly accounted for, but the assessee has also discharged its onus in explaining the nature of source and the cash credit. It is also well settled that the assessee can be made to explain the source of the credits in the books of account, but not the source of the source, i.e., source of the creditors.

In our view, the Commissioner of Income Tax (Appeals) as well as the Tribunal while taking into consideration the material and documents and appreciating the evidence available on the record, have recorded a pure finding of fact which cannot be interfered by this Court in appeal filed by the revenue. It has been held in Raichand Kothari (HUF) Vs. Commissioner of Income Tax, that in cash credit cases the Tribunal is the final fact finding body. Further, it has been held in Commissioner of Income Tax Vs. Shree Gopal and Co., that the High Court cannot, in a reference/appeal, embark upon a reappraisal of the evidence. The question of the genuineness of a credit or the correctness of the assessee''s explanation is a question of fact which cannot be interfered in appeal by this Court u/s 260A of the Act.

Thus, in view of a pure finding of fact recorded by the Tribunal with regard to the identity and creditworthiness and the capacity of the creditors to advance money, we do not find any ground to interfere in the impugned order as the counsel for the appellant could not point out any illegality or perversity in the said finding of fact.

In view of the above, in our opinion, no substantial question of law, much less a substantial question of law, is arising from the decision of the Tribunal.

Dismissed.