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TMI Blog2011 (9) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... al. The facts leading to the filing of the present appeal may be summed up thus: a) In the assessment year 1998-99 the Assessing Officer found a claim for interest of Rs.45,000/- in the name of M/s. East West Arbitrage Investment Pvt. Ltd. of 26/1/1A, Strand Road, Kolkata-1 (hereinafter referred to as "East West"). The assessee had claimed to have received a total amount of Rs.3 Lac from the East West by three different cheques, issued by the said company on Benaras State Bank Ltd., Calcutta. Confirmation from East West was filed before the Assessing Officer. The Assessing Officer deputed his Inspector to verify the genuineness of the creditor and according to the report of the Inspector, despite best efforts, the said company was not found to exist at the given address. The caretaker of the building at Strand Road had denied the existence of such a concern at the said premises. b) The assessee claimed that the loan was taken from an Indian company registered with the Registrar of Companies, West Bengal, under registration no.62087 and as such, the Assessing Officer should have made further enquiry. It appears that the address of the directors of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 1996-97, Rs.45,000/- each for the assessment year 1997-98 and 1998-99. i) Being dissatisfied, the Revenue preferred three appeals before the Tribunal and the Tribunal by the order impugned herein set aside the order of the CIT(Appeal) and restored the one passed by the Assessing Officer. j) Being dissatisfied, the assessee has come up with the present appeal. A Division Bench of this Court by order dated 6th January, 2004 formulated the following substantial question of law:- "1) Whether the Tribunal was justified in law in withdrawing the relief granted by the commissioner of Income Tax (Appeals) with regard to the loan of Rs.3,00,000/- taken by the appellant and the interest thereon and its purported findings in that behalf are arbitrary, unreasonable and perverse ? 2) Whether the Tribunal was justified in law in upholding the addition of Rs.30,000/- in respect of the loan taken by the appellant in the assessment year 1996-97 and disallowance of the interest on the said loan in the assessment years 1996-97, 1997-98 and 1998-99 and its purported findings that the identity and credit worthiness of the creditor or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at best it can be taken as a statement or confirmation of advance of loan. In the statement what has been stated by the director is of relevance. From the purported affidavit it is observed that Shri Uma Shankar Rathi has stated that the company, named as East West Abritrage Investment P. Ltd. was incorporated at Kolkata in the year 1995. The fact that the amount of Rs.3 lakhs was paid to the assessee in 1995 and returned in 2000 is also stated. The purported affidavit does not give the complete address of the company at Mumbai or anywhere else. The source of the loan amount as indicated in the affidavit is the share application money received by the said company. 10. It is evident from the above facts that the address of East West at which it existed at the time of giving the loan as well as at the time of making statement on oath by one of the directors is not indicated at all. East West is not assessed to tax. The bank account from which the amount was paid to the assessee stands closed. In the absence of all these details how can one expect the AO to make enquiries about the genuineness of the transaction as well as source as indicated in the purported affidavit. In my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loor, Customs Colony Housing Cooperative House, Military Road, Marol, Andheri East, Mumbai-400 059. Therefore, the finding of the Tribunal below that the address of the deponent viz. Uma Shankar Rathi is not available from materials on record is not correct. Before us the xerox copy of the paper book of the Tribunal was produced and from page 12 of such paper book, it would appear that the cheque by which loan was repaid back to the East West was encashed through the Kalvadevi Road Branch of Banaras State Bank Limited, Mumbai-2. Therefore, the transferred address of Banaras State Bank Limited at Mumbai of the said East West was also available on record and the finding of the Tribunal that in the absence of material the Assessing Officer was not expected to enquire further was not correct. The Assessing Officer could easily enquire from the transferred branch of the Bank of the creditor about any further necessary information. We, therefore, find that the creditor of the assessee is a registered company which subsequently transferred its activities to Mumbai and changed its bank account, the address of which was available and even subsequently, the loan in question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the director of the creditor. We, therefore, find that the said decision cannot have any application to the fact of the present case. In the case of Commissioner of Income Tax vs. Precision Finance Pvt. Ltd. (supra), the enquiry of the Income Tax Officer revealed that either the assessee was not traceable or there was no such file and accordingly, the first ingredient as to identity of the creditors had not been established. In such circumstances, the Division Bench was of the view that if the identity of the creditors had not been established, the question of establishment of genuineness of the transaction or creditworthiness of the creditor did not and could not arise. The Division Bench further held that the Tribunal did not apply its mind to the fact of that particular case and proceeded on the footing that since the transactions were through bank account, it should be presumed that the transactions were genuine. In the case before us, we have already pointed out that the director of the creditors of the assessee affirmed affidavit before the Assessing Officer confirming the loan transaction which was effected to account payee cheques and the address of the b ..... 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