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TMI Blog2011 (6) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer (AO). 3. At the very outset, it was submitted by the ld. AR, the assessee's counsel, qua the first issue, that the Tribunal's (common) order for assessment years 2003-04 and 2004-05 (in ITA Nos. 130/Coch./2008 and 4/Coch./2008 dated 31-3-2009), following which the ld. CIT(A) had allowed the assessee's claim, has since been upheld by the Hon'ble Jurisdictional High Court, adducing a copy thereof (ITA No. 1722/2009 dated 29-10-2009). As such, the Revenue's grievance in its respect is not sustainable in law, i.e., at least before the Tribunal. The facts in relation to the second issue, being relevant, would bear narration. The assessee filed confirmatory letters on specimen basis from some of the depositors. The same were not accompanied by any proof of identity or qua the source of the deposit as well as regards the genuineness of the transactions. The Inspector of Income-tax (ITI) was deputed by the Assessing Officer to make enquiries, and who did so in respect of seven persons. The same confirmed having made the deposits, without, however, stating any source for the same or as to their income. The Assessing Officer, therefore, being not satisfied with the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2005] 278 ITR 170/149 Taxman 149 (Guj.). Further, the revenue has, per its relevant ground/s, relied on the decision in the case of CIT v. United Commercial & Industrial Co. (P.) Ltd. [1991] 187 ITR 596/56 Taxman 304 (Cal.). In the facts of the said case, the assessee had produced the confirmatory letters and discharged hundis, as also the copies of the accounts to show that the receipts as well as the payments were made by cheques. The assessee was called upon by the Assessing Officer to produce the parties, which it did not. Notices under section 131 of the Act were issued to the hundi creditors, and which were received back unserved. Even on those on whom the notices could be served, did not appear in response to the said notices. The Assessing Officer, accordingly, held that no reliance could be placed on the confirmatory letters. It was under such circumstances that the Hon'ble High Court confirmed the non-discharge of the burden of proof by the assessee and, thus, upheld the validity of the non-satisfaction of the Assessing Officer with regard to the assessee's explanation qua the credits under section 68 of the Act. Clearly, the facts of that case are completely different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nuine transaction genuine. It is only where the credit is proved prima facie on each of these parameters by the assessee, by adducing evidence to establish the same, that the onus shifts to the Department. The matter is, thus, primarily and essentially factual, even as confirmed by the Apex Court in the case of Orissa Corpn. (P.) Ltd. (supra), relied upon by the assessee. 4.2 Coming to the facts, our first observation is the quantum of credit involved, i.e., Rs. 927.05 lakhs, and which the ld. CIT(A) mistakenly records at Rs. 92.70 lakhs. Why does, it may be asked, the assessee, a labour contractor, need that much capital, considering that it claims it to be a labour contractor engaged in the collective disposal of labour of its member labourers, seeking exemption of its entire income under section 80P(2)(a)(vi) on that basis. This is all the more relevant as this is not the only capital with the assessee, and would only be in addition to the existing capital base. In fact, the same gives credence to the Assessing Officer's observation that the assessee is undertaking civil construction work on its own and, thus, cannot be said to be a labour contractor, existing for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re physically inquired with by the Assessing Officer, were able to state the source from where the money was lent/advanced to the assessee. Can the assessee, under the circumstances, be said to have discharged the onus that lay on it? The ld. CIT(A) has not met any of the factual findings. Further, his observation that why would an assessee, whose income is exempt under the Act, indulge in an activity for generation of undisclosed income, is not based on any fact/s, but based only on a presumptions, and as such cannot be considered as a valid ground for deletion of addition based on valid considerations. Would that mean that if the assessee's income is not exempt under section 80P, a negative inference is to attend its case with regard to section 68. The same is even otherwise not a relevant consideration, and could at best serve as a supportive argument; the issue, i.e., of proving the credit in terms of section 68, being essentially factual. 4.5 Continuing further, no doubt the sample size selected for verification by the Assessing Officer is not adequate and too small to be able to draw any definite conclusions with regard to the total credit. However, even as observed by the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and source of such sums found credited in the books of the assessees is in the opinion of the Assessing Officer not satisfactory. Such opinion formed itself constitutes a prima facie evidence against the assessee, viz., the receipt of money, and if the assessee fails to rebut the said evidence the same can be used against the assessee by holding that it was a receipt of an income nature. In the case in hand the authorities concurrently found the explanation offered by the assessee unacceptable. The authorities upheld the opinion formed by the Assessing Officer that the explanation offered was not satisfactory. The assessee did not take the plea that even if the explanation is not acceptable, the material and attending circumstances available on record do not justify the sum found credited in the books to be treated as a receipt of an income nature. The burden in this regard was on the assessee. No such attempt has been made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this court in Sumati Dayal [1995] 214 ITR 801 (SC)." The Hon'ble Jurisdictional High Court has pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be so in another, and assume further business(es), which would again only be as per its bye law/constitution. There is no bar for undertaking a new business or additional business, particularly when the same is allied to the activity being already undertaken. We have already observed that there has been sufficient and unexplained infusion of capital, and which fact is in complete contradiction and inconsistent with the assessee's claim of being only a labour contractor. This would be all the more so as the additional capital would only be an addition to the existing capital base (as made at the beginning of the year) as well as, the supplier's credit. Where and how has all this capital been utilized, which would only be for its business? Reference is drawn to our observations at para 4.2 of this order. The Assessing Officer has sought to support his finding of the assessee having undertaken civil construction work on the basis of TDS certificates issued to it, being qua the same. We further observe the assessee to have received a capital subsidy of Rs. 15 lakhs during the year against purchase of machinery. What has the same been purchased for? We find it surprising indeed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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