TMI Blog2011 (6) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... findings, which have not been met by CIT, who has reversed the same by relying on the Tribunal's decision for another year; a matter which is primarily factual, and subject to variation from year to year. We, therefore, restore this matter back to the file of CIT(A) - 111 (COCH.) OF 2010 - - - Dated:- 28-6-2011 - N. VIJAYAKUMARAN, SANJAY ARORA, JJ. V.P. Mohandas for the Appellant. S.R. Senapati for the Respondent. ORDER Sanjay Arora, Accountant Member. This is an Appeal by the Revenue arising out of the Order by the Commissioner of Income-tax (Appeals)-I, Calicut ('CIT(A)' for short) dated 10-12-2009, and the assessment year (A.Y.) under reference is 2006-07. 2. The appeal raises, in effect, two issues. The first relates to the deduction under section 80P(2)(a)(vi) of the Income-tax Act, 1961 ('the Act' hereinafter) claimed by the assessee on its entire income [wrongly mentioned in the assessment order as section 80P(2)(a)(iv)], which stood allowed by the ld. CIT(A), reversing its disallowance by the assessing authority. The second issue relates to the addition of Rs. 927.05 lakhs received by the assessee-society by way of fixed deposits/loans in cash f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indulge in an activity generating undisclosed income. The assessee-society had thus discharged the onus cast on it under section 68 of the Act, and the failure of the Assessing Officer to make further investigations would not justify an addition in the hands of the society, and directed the deletion of addition made. Before us, while the ld. DR would submit that the revenue's case is covered squarely by the law in the matter as explained by the Apex Court in the case of CIT v. P. Mohanakala [2007] 291 ITR 278/161 Taxman 169 (SC), the ld. AR relied on the impugned order. The assessee did not receive any show-cause notice from the Assessing Officer, i.e., consequent to the filing of the confirmatory letters, as called for by the Assessing Officer, from some of the depositors, and it was only on the receipt of the assessment order that it came to light that the Assessing Officer was not satisfied with its explanation(s) in the matter, leading to the invocation of section 68. The ld. CIT(A) had rightly appreciated the law in the matter, and for which he placed reliance on the decisions in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 (SC); CIT v. Orissa Corpn. (P.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o credited may be charged to income-tax as the income of the assessees of that previous year. The expression "the assessee offers no explanation" means where the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the Assessing Officer for not excepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming an opinion." [Emphasis supplied] It is, therefore, for the assessee to prove the identity of the creditors; the creditworthiness of the creditors, and the genuineness of the credit transactions. It is thus not enough to establish the identity of the creditors, and mere production of confirmatory letters before the Assessing Officer would not by itself prove that the loans have been obtained from its loan creditors or their being creditworthy. Mere furnishing of particulars is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny case, adopting the stated figure of 1300, the average, credit works to Rs. 71,311 per person. As some credits would naturally be higher and some lower than the average figure, one can, for the purpose of preliminary examination, safely presume the credit figure to be varying from Rs. 50,000 to Rs. 1 lakh per person. The amounts, even as confirmed by the ld. AR during the hearing, are received principally from the members. They would have also been holding deposits earlier, as it is only on the consideration thereof that they would be entitled to be considered as members and, consequently, to voting rights and a share in the profit of the assessee-society. Considering that the membership base, as contended, is of labourers, the amount of deposits received in a single year is not insignificant, i.e., it cannot be said to represent a fraction of their annual earnings, for one to assume of it having arisen from savings effected therefrom. Also relevant in this context is the fact that the entire amount has been received in cash. Banking is ubiquitous these days; rather, for all we know, the members may be paid their dues against labour or share of profit only through the banking cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y explain the source of the credits. In the facts of the case, all that we can say, on the basis of the material furnished by the assessee, is that it by furnishing the names and full addresses of the creditors, has, at best, prima facie established the identity of the creditors, of course, assuming that the Assessing Officer had, as it appears, having regard to the volume, not called for the confirmation from all the creditors. Their capacity or the genuineness of the transactions; the two other parameters on which the satisfaction of the Assessing Officer under section 68 is to rest and, thus, met by the assessee, have in any case not been. 4.6 Coming to the case law relied upon by the assessee, even as the law in the matter is trite, and the question of validity of the satisfaction or otherwise, a question of fact, it would be suffice to reproduce from the same decision by the Apex Court: (pg. 288) ". . . the inference drawn to reject the explanation offered as unsatisfactory. We are required to notice that section 68 of the Act itself provides, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income-tax as the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the context of the question which arose for consideration. Judged in that background, the Tribunal's conclusions cannot be maintained." A mere browse of the statement of law as projected in the 'held' portion of the cited case (pg. 596,597) and the question referred to the Hon'ble Calcutta High Court (pg. 597), would clarify this; the same bear no variation with that per the several decisions by the Apex Court cited supra. 4.7 Under the circumstances, we only consider it fit and proper to restore the issue back to the file of the Assessing Officer to allow another opportunity to the assessee to present its case before him. The Assessing Officer shall adjudicate the matter per a speaking order in accordance with law. We decide accordingly. 5. Coming to the assessee's first issue, no doubt Hon'ble Court has confirmed that the assessee is a workers' society, undertaking civil construction work by executing the work by the members, and its activity rightly answers that referred to in section 80P(2)(vi), i.e., the collective disposal of the labour of the members of the society and, accordingly, confirmed the deduction of its entire income thereunder. The matter, however, is agai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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