TMI Blog1996 (10) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) set aside the matter to the file of the Income-tax Officer asking him to make further investigation and decide the same on merits. This cash credit need not detain us any further. 3. In dealing with the three cash credits involved the discussion as per the assessment order revolves around the enquiry conducted by the Intelligence Wing of the Income-tax Department at Bombay. A copy of the report dated 21st March, 1986 signed by the Asstt. Director of Inspection (Investigation, Bombay) to the Assessing Officer was obtained from the Departmental Representative who argued the Revenue's case. In reverting back to the assessment order, the Income-tax Officer noted that Shri Rakesh Kumar Gupta had left Bombay as per the report of the Intelligence Wing and " his present address was not known ". In respect of Shri Ramakant B. Banka the address given by the assessee was found " to be incorrect." The third party, namely, Shri Sushil Kumar Chiranjilal was " not traceable " and " there was no such address existing in Bombay at Pedder Road ". The aforesaid position was pointed out to the assessee by the Income-tax Officer vide letter dated 1-5-1986 and the report of the D.D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) His annual income varied between Rs. 12,000 to Rs. 15,000 and this was not adequate for him to save Rs. 30,000 for advancing the same to the assessee ; and (iii) That he had an account with the Union Bank of India, Malad (East Bombay) whereas the draft had been prepared and issued from the State Bank of Banaras. 5. On the basis of the aforesaid facts which were more or less common in respect of the three alleged cash credits, the Commissioner of Income-tax (Appeals) in the ultimate analysis concurred with the Income-tax Officer to confirm the additions in respect of the three cash credits. According to him it was not sufficient merely to file a confirmation and further the facts of the case revealed that the three persons in question did not have the capacity to advance the amounts in question. He also referred to the non-fulfilling of the other two conditions by the assessee, namely, proof regarding the identity of the creditors and the non-genuine nature of the transactions. In confirming the additions the CIT (Appeals) relied upon the decisions in Bharati (P.) Ltd. v. CIT [1978] III ITR 951 (Cal.), CIT v. W.J Walker Co. [1979] 117 ITR 690 (Cal.), Sreelekha Banerjee v. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished by the assessee, but no such thing was done either by him or subsequently by the Commissioner of Income-tax (Appeals) since both of them squarely relied on the earlier report of the Intelligence Wing dated 21st March, 1986. 7. On the basis of the aforesaid submissions, the learned counsel urged that since the assessee had discharged the onus which lay on it to prove the three cash credits within the meaning of section 68 of the income-tax Act, the aggregate addition of Rs. 1, 15,000 be deleted. According to him, the assessee was not expected to do the impossible in proving the cash credits, more so, when the Department itself had not conducted relevant and proper enquiries through the Assessing Officer of the three persons concerned as they were assessees and particulars of their ward and permanent account number had been duly furnished. In support of the arguments, the learned counsel placed reliance on the following decisions : (i) CIT v. Orissa Corpn. (P.) Ltd [1986] 159 ITR 78/25 Taxman 80F (SC) ; (ii) Addl CIT v. Hanuman Agarwal [1985] 151 ITR 150/[1984] 17 Taxman 19 (Pat.) ; (iii) Addl CIT v. Bahri Bros. (P.) Ltd [1985] 154 ITR 244/22 Taxman 3 (Pat.) ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd by the assessee. 12. Taking up for consideration the question of addresses the report of the Intelligence Wing mentioned the following : " (1) Ramesh Kumar Gupta, Sudha Chawl, Room No. 2, Ramjiwas, Querry Road, Malad (East), Bombay ; (2) Ramakant, Maharashtra Colony, Gorai Road, Borivili (West), Bombay ; (3) Sushil Kumar Chiranjilal, 2nd Floor, Malad Co-op. Housing Society, Pedder Road, Malad, South Bombay." 13. As against this, the following is noted from the facts and evidence placed on record : (i) Ramakant B. Banka's last known address is given as 1/13, Santa Nagar Near Mahindra Mahindra Kandiwali (East) Bombay 400 110 ; (ii) Sushil Kumar Chiranjilal's address reiterated as 8/14, 2nd Floor, Malad Co-op. Housing Society, Poddar Park, Malad (East), Bombay -- 400 064. 14. It is apparent that in the case of Sushil Kumar Chiranjilal, the report of the Intelligence Wing mentioned " Pedder Road " whereas the name given was " Poddar Park ". Another address of this creditor was given as " Farid Nagar, Mangat Ram Petrol Pump, Bhandup, Bombay ". 15. There is nothing on the record to show that the Department made an attempt to contact the aforesaid two persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,15,000 which in our opinion had been wrongly sustained by the Commissioner of Income-tax (Appeals). The case law relied upon by the learned counsel adequately supports his arguments as would be apparent from the following : Orissa Corpn. (P.) Ltd. 's case. 19. In the aforesaid case, the assessee placed on record basic evidence with a view to discharge its onus, but the Income-tax Officer treated three cash credits aggregating Rs. 1,50,000 as unexplained. A penalty of Rs. 50,000 under section 271(1)(c) was also imposed. Another relevant fact is that the Income-tax Officer on the request of the assessee issued summons under section 131 to the creditors which were returned unserved with the remark " left ". 20. On the basis of the aforesaid facts, the Hon'ble Supreme Court confirmed the judgment of the Orissa High Court which in turn had affirtned the view taken by the Tribunal cancelling the penalty. In doing so, their Lordships observed as under : " In this case, 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 numbers were in the file of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e known only to the bank but they were introduced by a third person to the bank. In view of these facts, it could not be said that the creditors were fictitious persons. As I have already held above that the assessee discharged his primary onus and the onus shifted upon the Department, the Department, on getting materials in hand could proceed to verify whether the creditors were genuine or not. They could also examine the other transactions of the creditors in their respective bank accounts and could have also examined the person who introduced them to the bank and such an examination/verification would have given a correct picture and then if any adverse material was available, the same could have been passed on to the assessee. In my opinion, the assessee having discharged the primary onus, the Department without resorting to verification, could not add the amount as income from undisclosed sources." 23. Lastly, we would refer to the order passed by the Commissioner of Income-tax (Appeals) in the assessee's own case when he proceeded to cancel the penalty levied under section 271(1)(c) by the Income-tax Officer with reference to the addition of Rs. 1, 15,000. The penalty was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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