TMI Blog2012 (6) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is a firm engaged in the business of manufacturing electrical wires, cables and flexible. The assessee filed the original return of income for assessment year 1994-95 declaring total income of ₹ 17,361 on 31.10.1994. Subsequently, assessee filed revised return of income declaring loss of ₹ 1,87,253 on 25.11.1994. The original assessment was completed under section 143(3) of the Act on 9.12.1996 determining the total loss of ₹ 1,87,253. The assessment was reopened by issue of notice u/s.147 r.w.s 148 of the Act dt.15.2.2000. It is relevant to state that AO recorded the reasons before initiating reassessment proceedings; copy of it is placed at page 32 of paper book. In response to notice issued under section 148 of the Act, assessee did not file any return but stated that return earlier filed might be treated as a fresh return. 3. During the course of assessment proceedings, assessee was asked to file details of unsecured loans as per Schedule-E to the balance sheet. However, assessee could not furnish any confirmation apart from filing a statement of loans and interest. Further, assessee stated that the factory was closed down due to huge losses incurred by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings as well as additions made by the AO u/s.68 of the Act. It is relevant to state that ld CIT(A) while confirming the action of the AO to initiate reassessment proceedings for all three assessment years under consideration, stated that assessee did not file loans confirmations. Nor names of the creditors appearing in Schedule-E of the balance sheet, their addresses and confirmations were filed. He further stated that assessee did not file any loan confirmations and other details even during the course of regular assessment proceedings and after placing reliance on the decision of Hon ble apex court in the case of Tax Officer cum Regional Transport Officer vs Durg Transport Co. P. ltd., 85 ITR 156(SC) and the decision of Hon ble Allahabad High Court in the case of Pradeep Kumar Har Saran Lal v. Assessing Officer, 229 ITR 46(All) held that recourse to reassessment proceedings could not be said to be illegal. In regard to confirmation of bogus loans and disallowance of interest, ld CIT(A) in his order dated 11.6.2002 stated that simply filing of balance sheet and profit and loss account could not be treated as disclosure of material information. Further, the assessee did not file an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness and genuineness of transaction because the source of the credit is within the knowledge of the assessee and section 106 of the Evidence Act requires the assessee and not the department to disclose it and to prove it. Ld CIT(A) also stated that in spite of giving sufficient opportunities to the assessee, even basic requirement of filing confirmatory letters with addresses and PAN No/GIR No. also could not be furnished and, therefore, AO rightly used his discretion to draw an inference that the receipts are of an assessable nature. Ld CIT(A) also placed reliance on the decision of Hon ble Bombay High Court in the case of Orient Trading Co.Ltd vs. CIT, 49 ITR 723(Bom),wherein, it was held that the AO is entitled to satisfy himself as to the true nature and source of amounts of cash credits entered in the books of account of the assessee and if he is satisfied that there is no satisfactory explanation as to those entries, he would be entitled to regard them as representing the undisclosed income of the assessee. Ld CIT(A) stated in the above order dated 11.6.2002 that the very first element of proving the cash credit i.e. the identity of the creditors could not be met by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal had confirmed the action of the AO to initiate reassessment proceedings for all the three assessment years and in respect of addition made u/s.68 of the Act in respect of unsecured loans and interest, restored the matter to the file of the AO for readjudication. 9. For all these three assessment years under consideration, assessment orders were passed on 28.12.2006. 10. The AO has stated in the assessment order for A.Y. 1994-95 that assessee filed 98 loan confirmations letters out of 145 parties claimed by the assessee. He has stated that as per direction of ITAT, assessee was given ample opportunities to produce the parties. The assessee was asked to produce copies of bank statements and copies of income tax return and particulars of the creditors. AO has stated that since the assessee has not produced the documentary evidence for the same, notice u/s.133(6) of the Act was issued to all the parties where the assessee filed loan confirmation letters. He has stated that only 8 parties, details mentioned in page 7 of the assessment order confirmed and filed details called for stating that they have given loan to the assessee. Thus, the AO accepted genuineness of the loans s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer But the appellant has produced only affidavits of the broker along with list of creditors, In some cases addresses, PA Debit/Credit entries and closing balances were given. But in most of the cases, only names of the parties were given. For example, in page 223, SI. No. I to 12, addresses are not shown. Similarly, in page 237, addresses and PAN details are not provided. In page No. 238 SI. No. 152 to 165, addresses and PAN details were not given, in page No.239 SI. No. 162 to 177 no PAN details were given, in page 240 SI. No. 178 to 189 no addresses were given, in page No. 241 SI: No. 192 to 201 no addresses no PAN details were given, in page No. 242 arid 243, SI. No. 202 to 215 no addresses and PAN details were given. In other pages also only names of the creditors were given and addresses and PAN details were not provided. It shows that the brokers affidavit, who do not know even addresses of the parties from whom he has arranged the loans, seems to have no sanctity. 4.6 Secondly, the appellant has argued that summons to 98 parties were served is also not correct because the A.O has issued notices u/s 133(6) to 98 parties where the addresses were provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to establish the identity, creditworthiness and genuineness of the transactions of loans received. Merely filing of affidavit of the broker with the lenders names cannot be called as confirmation without proving the identity, creditworthiness and genuineness of transaction. A large number of opportunities were provided to the appellant to file the confirmations along with bank statements, mode of payment / receipt i.e. cheque number, date etc and identity and creditworthiness of the creditors of providing so many opportunities, the appellant could not submit any further evidence to prove the genuineness of the loans except taking plea that loans were very old, firm is closed and the creditors are non cooperative. Since the appellant has failed to prove these loans with any documentary evidences, as the onus lies upon him as per the judicial pronouncements cited above. Therefore, the grounds of appeal are dismissed and the action of the AO is confirmed. 10.1 Ld CIT(A) also confirmed, as mentioned herein above, the disallowance of balance interest of ₹ 12,83,560 vide para 5.2 of the impugned order, which reads as under: 5.2 I have gone through the submission made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the AO for an addition of loan of ₹ 27,76,867 and disallowance of interest of ₹ 13,00,185 out of interest of ₹ 13,20,185 made by the AO, after deducting interest of ₹ 20,000 on admitted loan of ₹ 4,70,000 (wrongly mentioned in the order ₹ 4,00,000). 12. Similarly, for A.Y. 1996-97, the AO while making the assessment dated 28.12.2006 has stated that assessee only filed 88 loan confirmation letters out of 148 parties claimed in the submission filed on account of unsecured loan of ₹ 33,28,067. Since the assessee could not produce any documentary evidence for the same, notice u/s.133(6) of the Act was issued to all parties where the assessee filed loan confirmations letters. The AO stated that only 7 persons confirmed with evidence that they had given loan to the assessee, the details of which are mentioned in para 7 of the assessment order for an aggregate of ₹ 6,38,000. The AO after giving credit of ₹ 6,38,000 confirmed the addition of balance amount of loan ₹ 26,90,067 u/s.68 of the Act for the reasons mentioned hereinabove relating to assessment year 1994-95. The AO also confirmed the disallowance of interest of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en inadvertently or by mistake. When we stated that we do not agree with ld A.R. now appearing before us and tried to persuade ld A.R. that the said ground of validity of reassessment cannot be agitated before us as the earlier order of the Tribunal dated 29.9.2005 dismissing the ground of appeal relating to initiation of reassessment proceedings still subsists and is binding on us. However, ld A.R. referred to the decision of Hon ble apex Court in the case of National Thermal Power Co. Ltd vs CIT, 229 ITR 383(SC) and submitted that the reopening of assessment is a question of law and same can be reagitated by the assessee even in the second round of appeal although in the first round of appeal, the Tribunal dismissed the same as ld A.R. Mr Sonde did not press for it. We do not find merit in above submission of ld A.R as the said case of NTPC (supra) does not apply to the issue at hand as in that case Hon ble Supreme Court stated that the issue relating to jurisdiction can be raised for the first time in appeal before the Tribunal provided all the facts are on record to correctly assess the tax liability. In the case before us, it is not the issue but the issue is as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed the order specifically on this very issue in the first round of appeal and now the assessee in the second round of appeal again want this Bench to sit on the decision of the earlier Bench. Therefore, we hold that case relied upon by ld A.R. is not of any assistance to her. 18. In regard to submission of ld A.R. that admission made by ld counsel is not binding on the assessee unless circumstances are such as to give rise estoppels against the assessee and referred to decision of Hon ble A.P. High Court in the case of Abdul Hameed Khan v. Commissioner of Income-tax, 63 ITR 738 (AP). We have considered the above case of Hon ble A.P. High court in the case of Abdul Hameed Khan (supra) and observe that the said case is also not relevant to the contention of ld A.R. On the other hand, we observe that assessee never disputed the order passed by the Tribunal dt.29.9.2005 dismissing the ground of the assessee that reassessment proceedings initiated by the AO is not valid. Further, the said order of the Tribunal still subsists and as has been held by various High Courts that the Tribunal has no power to reconsider the finding or information of question which have become final an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. 20 On perusal thereon, it is stated that when the case is transferred from one or more AO(s) subordinate to him to any other AO(s) also subordinate to him, reasons are to be recorded and also give a reasonable opportunity of hearing the matter, wherever it is possible to do so. In the case before us, there is no fact placed by the assessee that reasons were not recorded by the concerned Chief Commissioner/Commissioner of Income tax before transferring the jurisdiction from one AO subordinate to him to another AO subordinate to him. Moreover, the AO has specifically mentioned in para 5 of the assessment order that the case is assigned to him as per Notification dt.26.7.2006(supra). Further, this ground is also not arising out of the order of the authorities below. In the absence of any relevant facts placed on record and in the absence of any specific submission made to point out as to whether any prejudice caused to the assessee, we do not find any merit in Ground No.2 of appeal taken by the assessee and, accordingly same is rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 232(Mad). Ld A.R. further submitted that assessee filed confirmation letters from 98 loans creditors out of 145 loan creditors and the AO should have examined the said loan creditors and merely issuing of notice u/s.133(6) of the Act is not sufficient. Ld A.R. submitted that when the details were provided by filing confirmation letters, assessee discharged his onus and if the concerned person failed to appear before the AO in response to notice issued, assessee should not be made to suffer for the default of the concerned person(s). In this respect, ld A.R. placed reliance on the following cases: i) CIT vs. Creative World Telefilms Ltd, 15 Taxman.com 183(Bombay) ii) CIT vs. Lovely Exports (P)Ltd., 216 CTR (SC) 195 iii) CIT vs. N.P.Garodia (2009) 310 ITR 62(P H) iv) CIT vs. Carbo Indl. Holdings Ltd., 244 ITR 422(Cal) v) CIT vs. Orissa Corporation P. Ltd., 159 ITR 78(Ori) vi) LIC vs. CIT, 219 ITR 410 (SC) vii) CIT vs. U.M.Shah, 90 ITR 396(Bom) viii) Nathu Ram Premchand vs CIT, 49 ITR 561(All) 25. Ld A.R. further submitted that assessee filed confirmation letters and the same were not considered by the authorities below judiciously. She submitted that if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, 113 TTJ 898 vi) Ms. Mayawati VS DCIT, 19 SOT 470(Del) vii) Anand Ram Raitani vs CIT ,223 ITR 544(Guj) viii) CIT vs. Taj Borewells,291 ITR 232 (Mad) ix) CIT vs. Creative World Telefilms Ltd,15 Taxman.com. 183(Bom) x) CIT vs. Lovely Exports Pvt Ltd, 216 CTR 195 (SC) xi) CIT vs. N.P.Garodia,310 ITR 62 (P H)) xii) Jalan Timber vs CIT, 223 ITR 11(Gau) xiii) CIT vs. Rohini Builders, 256 ITR 360(Guj) xiv) DCIT vs. Anil Kumar (1997) 58 TTJ 340 (Del.Trib) xv) CITvs. Dwarkhadhish Investments Pvt Ltd;., 330 ITR 298(Del) xvi) Labh Chand Bohra vs. ITO(2010) 189 Taxman 141 (Raj) xvii) Ami chand Jain vs DCIT, 120 TAXMAN 29 (Del) xviii) Aravali Trading Co. vs. ITO, 220 CTR (Raj) 622 26. Lastly, when a query was raised to ld A.R. as to whether she could produce relevant books of account to substantiate her submission that the loan aggregating to ₹ 20,85,000 was brought forward from the earlier years and also the books of account to substantiate her submission that the loans were duly entered in the books of account and the interest was paid, ld A.R. submitted that the case has become old and due to flood which took place in 2005, all the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . reopening of assessment u/s.147 to the date of completion of set aside assessment, details were not offered by the assessee. Ld D.R. further referred remand report dated 7.3.2008 and stated that AO specifically stated that assessee was asked on 30.1.2008 to produce the creditors with supporting documentary evidence but the assessee failed to furnish the same. Ld D.R. submitted that AO was fair and judicious in considering the issue and deleted the loans wherever the details were filed before him to establish the genuineness of loan. Ld D.R. further submitted that merely filing of affidavit from a broker does not establish the genuineness of loan or creditworthiness of loan creditors. Ld D.R. further submitted that the cases relied upon by ld A.R. are not relevant as the assessee failed to discharge his onus in spite of giving repeated opportunities to him that the loan creditors are genuine. 28. We have carefully considered the submissions of ld representatives of parties and orders of the authorities below. We have also considered the cases cited by ld A.R. in support of her submissions. We may state that other cases which were cited by ld A.R at the time of hearing have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors. As held by Hon ble Allahabad High Court in the case of Jagdish Saran Shukla(supra) that unless the assessee furnish the addresses, there is no duty on AO to issue summons also. The Hon ble Bombay High Court in the case of Orient Trading Co.Ltd(supra) held that the AO is entitled to satisfy himself as to the true nature and source of amounts of cash credits entered in the books of account of the assessee and if he is satisfied that there is no satisfactory explanation as to those entries, he would be entitled to regard them as representing the undisclosed income of the assessee. In the case before us, assessee has not only failed to produce the books of account to substantiate the unsecured loans taken by the assessee as per balance sheet, but also at the time of hearing, admitted that assessee could not produce the books of account even if assessee was asked to produce them before us and simply took plea that it is an old matter and books of account have already been destroyed. It is an established fact that onus is on the assessee to establish the source of the credit with sufficient documentary evidence and if the assessee fails to prove the same, the department can d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account of the assessee maintained and the requisite details to substantiate the same were made available before the department unlike in the case before us, where no documentary evidence has been filed by the assessee except confirmation letters in respect of 98 parties out of 145 parties. Therefore, the said case is not relevant to the facts of the case before us. b) In the case of CIT vs. Usha Stud Agricultural Farms Ltd (supra), we find that cash credit was appearing in the books of the assessee over past 4 to 5 years and there was no fresh credit entry pertaining to relevant assessment year for which addition u/s.68 was made. Considering the above fact, we hold that said case is of no assistance to the assessee because it is well established that genuineness of the loans could be examined in the year in which they were credited to the account of the assessee. In the case before us, assessee has credited the loan amounts in the assessment year 1994-95 and therefore, department is within its right to examine the genuineness of the loans on the basis of documents to be field by the assessee but assessee has admittedly not filed any supporting documents save and except conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed the creditworthiness of the loan creditors unlike the case before us. h) In the case of Creative World Telefilms Ltd (supra), assessee had given address of the shareholders, therefore, it was held AO could not treat share capitals is bogus in the absence of any investigation. i) Similarly the case of Lovely Exports Pvt Ltd (supra), is a case of share application. The assessee proved that the amount was received by cheque and disclosed the particulars of the shareholders and in that context, it was held that the addition could not be made in the hands of the assessee. j) Further, the case of N.P.Garodia(supra) is not applicable to the facts of the case. In the case before us, the assessee has not filed any bank statement, particulars of banks evidencing that the assessee received amount by cheque, as made available in above case relied upon. Hence, we observe that the assessee will not get any benefit from the said judgment while placing reliance. k) Similarly cases of Jalan Timber vs CIT, Rohini Builders, Anil Kumar, Dwarkadhish Investments Pvt Ltd, Labh Chand Bohra, Ami Chand Jain and Aravali Trading Co (supra) are not applicable to the facts of the case before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise his own input to find out whether the loans taken by the assessee are genuine or not. 3.1 We at the cost of repetition state that the cases cited by ld A.R. are not relevant to the facts of the case of the assessee before us and ld A.R. has cited the cases by picking up the facts which are incomplete and has placed reliance thereon. It is well settled principle laid down by the various Courts including the Hon ble Supreme Court in the case of Sun Engineering, (198 ITR 297) that it is neither desirable nor permissible to pick out a word or sentence from the judgment divorced from the context of the question under consideration and treat it to be the complete law declared by the Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which are before the Court. A decision of the Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the Courts must carefully try to ascertain the true principle laid down by the decision. 31.2 In view of above and considering the facts and circumstances of the case, we hold that l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. Hence, we hold that the interest paid on the unsecured loans creditors in the assessment year 1994-95 is ₹ 5,45,418 (Rs.13,08,010 ₹ 7,62,592). Further, out of the said interest paid to the unsecured creditors, we also consider it reasonable to delete the addition of ₹ 24,450 in respect of loan aggregating to ₹ 2,85,000 which is treated as genuine by the authorities below. Accordingly, the disallowance of interest comes to ₹ 5,20,968(Rs.5,45,418 ₹ 24,450) and addition of it is confirmed. Hence, ground No.6 of concise ground is allowed in part. 35. Now we take up appeals for assessment years 1995-96 and 1996-97 being I.T.A. No.3754 3755/M/2008, respectively. 37. At the time of hearing, ld representatives of parties submitted that the facts and main issues involved are identical to A.Y. 1994-95, which was argued heard at length. We have considered and disposed of the grounds of appeal of A.Y. 1994-95 by a detailed order hereinabove. In both the assessment years also, assessee has filed concise grounds of appeal. 38. In Ground No.1 of both appeals, assessee has disputed the order of ld CIT(A) on reassessment proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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