TMI Blog2010 (9) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... (AO) found that the assessee had raised loans aggregating to Rs.17,10,000 from five different parties. He, therefore, required the assessee to file the necessary evidence to prove the genuineness of the cash credits. The assessee stated that the loans were raised by cheques and/or bank drafts, and the depositors had also subscribed towards shares of the assessee company, besides filing letters in writing from various persons. Not satisfied with the evidence produced, the AO issued summons under Section 131 of the Income Tax Act (hereinafter referred to as 'the Act') so as to ensure personal presence of the creditors and since the summons issued were returned by the postal authorities, the AO in the draft assessment order proposed addition of cash credits. In the proceedings under Section 144B of the Act, the assessee further explained that the amounts were received from Shri B.S. Patel, who owned various concerns and had also made the deposition before the Department on three occasions in this regard. However, in the absence of detailed deposition in writing before the IAC, the IAC justified the addition under Section 68 of the Act. In appeal, the various factual aspects alongwith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the order of the CIT (A) and thereby dismissed the appeal preferred by the Department. 4. At this stage, the Commissioner of the Income Tax moved an application under Section 256(1) of the Act seeking reference of certain questions. Hence, the following question of law has been referred for opinion of this Court: "Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee had discharged its burden under Section 68 of the Income Tax act, 1961 and thereby deleting the aggregate amount of Rs.17,10,000 raised by way of cash credits and also deleting the amount of Rs.1,04,784 disallowed on account of interest payable on those credits." 5. Ms. Suruchi Aggarwal, learned counsel appearing for the Revenue, argued that fresh evidence was adduced before the CIT(A), which was taken into consideration, but the remand report thereupon of the AO was not sought. Likewise, the statement of Mr. B.S. Patel was produced before the Tribunal, but no remand report was called for. We are of the opinion that it will not be permissible for the learned counsel to take these contentions as in the application seekin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had shown certain loans raised from different parties, the particulars whereof are as under: a) Gayatri Tech. Services Rs.7,75,000 b) S.K. Mehtotra Rs.15,000 c) S.P. Agro Products Rs.5,05,000 d) B.K. Nair Rs.15,000 e) Plastika Enterprises Rs.4,00,000 Rs.17,10,000 7. The order of the AO reveals that he had asked the assessee to file proof of the genuineness of these loans. The assessee had stated before the AO itself that the above loans/deposits were either by cheques or by bank draft and these depositors had also subscribed towards the shares of the assessee company. It was explained by the assessee that the aforesaid sums received from these parties have emanated from Mr. B.S. Patel, Prop. M/s. Chemoplat of New Kavi Nagar, Ghaziabad. The assessee had also explained the work of apoxy-lining of water tank in different treatment plants of M/s Sehgal Papers Ltd. was being carried on, under a contract, by Shri B.S. Patel in the name of aforesaid proprietary firm. He had submitted various bills to the said company for the work done by him for Sehgal Papers Ltd and received payment against those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heques and deposits in five names had been made by Mr. Patel out of the funds received by M/s. Sehgal Papers Ltd. Taking note of these facts, the CIT(A) allowed the appeal in the following manner: "I have considered the sequence of events and the arguments of the appellant. While there is no doubt that Sh. Patel had made different statements on different occasions, he is consistent about one statement i.e. that the funds in the names of various concerns came through him. As regards the sources of these funds there may be a doubt i.e. whether the funds belong to Sh. B.S. Patel or to M/s Sehgal Papers Ltd. or some other party. However, his statement does not leave any doubt in my mind that the funds did not belong to the appellant company. As such it would not be correct to invoke the provisions of Section 68 in the present case. The addition of Rs.17,10,000/- thus appears to be unwarranted. The appeal on this point is, therefore, allowed." 9. The Tribunal in its brief order observed that since the identity of the creditors, especially, Mr. Patel had been proved, who was assessed to tax regularly, the assessee had successfully discharged the onus. 10. It is clear from the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... understand as to how the CIT (A) or the Tribunal could presume that the funds did not belong to the assessee company, but it belonged to either Mr. Patel or M/s. Sehgal Papers Ltd. or some other party. The assessee has clearly failed to discharge its onus by linking its inability to link the amounts with the ultimate deposits/loans. 13. We may point out here that Mr. C.S. Aggarwal, learned Senior Counsel appearing for the assessee, had highlighted the observations of the CIT (A) and the Tribunal in support of his plea that their approach was correct. We are unable to agree. He had also argued that these were only concurrent findings of fact and no legal issue arises. In view of our aforesaid observations, we are unable to agree with this contention also. Therefore, various judgments cited by the learned Senior counsel that it was only a question of evaluation of evidence and findings recorded on that basis and no question of law arises would not be of any help to him. Establishing the identity of Mr. Patel would not be sufficient in these circumstances, which was the main thrust of the argument of Mr. Aggarwal. 14. We are of the opinion that there is no evidence worthy enough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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