TMI Blog2002 (3) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... check basis. 4. The assessee had taken loans amounting to ₹ 3,76,000 from 30 parties. The Assessing Officer treated this loan amount of ₹ 3,76,000 and interest thereon, amounting to ₹ 43,632, totalling to ₹ 4,19,632, as unexplained cash credits appearing in the books under section 68 of the Income-tax Act. Penalty proceedings under section 271(1)(c) were initiated separately. 5. While making this addition, the learned Assessing Officer observed, inter alia, that in respect of the creditors, the assessee submitted confirmations, which were not signed by the creditors; that this has no evidentiary value; that further, since the assessee claimed that the payments have been received by cheques, letters under section 133(6) of the Income-tax Act were issued to these parties at the addresses given by the assesee in the confirmation letters; that there is neither any response to these letters, nor did the postal authorities return these letters with the comments incomplete addresses or parties left from the given addresses ; that the assessee was, therefore, given an opportunity, vide letter dated 01-02-1989, to produce these parties in order to verify the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Assessing Officer. On the contrary, the Assessing Officer passed the assessment order under section 143(3), observing therein, inter alia, that the assessee was asked to file details on the basis of directions issued by the CIT(A). The assessee filed confirmatory letters. The Assessing Officer issued summons to the concerned parties as per the addresses given by the assessee. Only 6 parties out of a total of 30 parties put in appearance before the Assessing Officer in response to the summons. The assessee was again asked to produce the parties for verification on 16-3-1992. The assessee failed to do so. The matter was posted to 20-03-1992, on which date, the accountant of the assessee attended. The Assessing Officer drew his attention to the fact that despite opportunities given, the assessee had failed to produce any party for verification of the credits appearing in the books of account of the remaining 24 parties. The case was adjourned to 23-03-1992 for the assessee to produce these parties. This was the final chance given. On 23-03-1992, nobody attended on behalf of the assessee, nor was any party produced for verification. The Assessing Officer, therefore, concluded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of W.J. Walkar and Co. 117 ITR 690, was also relied on ; that similarly, merely establishing the identity of the creditors is not enough (reliance placed on Shankar Industries v. CIT, 114 ITR 689 and C. Kant Co. v. CIT 126 ITR 63, both Calcutta High Court decisions); that applying the above principles to the facts of the present case, he found that the assessee has simply filed confirmatory letters, which does not discharge its onus; that the Assessing Officer started making enquiries by issuance of summons; that these summons were issued at the addresses supplied by the assessee; that the summons were returned by the postal authorities in almost all the cases except six; that this fact was brought to the notice of the assessee; that the assessee was requested to produce these parties; that nothing was done by it; that under these facts, it was impossible for the Assessing Officer to verify the genuineness of these transactions; that the assessee made a point that since the loans were obtained through brokers, summons ought to have been issued to them; that he [CIT(A)] did not subscribe to this view; that it is the assessee s case that the loans were arranged by broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order mis-leadingly in its favour. A perusal of the order under reference clearly shows that the CIT(A) has not minced words in making the observations therein. Firstly it has been observed that the summons issued could not be served because they were not accepted by the parties. Other parties also did not respond to the summons. In the case of non-acceptance of the summons, service is legally deemed to have been affected upon them and they are, to all intents and purposes, deemed to have been served. However, since six parties had refused to accept the summons and since the other parties did not respond to the summons by way of attending before the Assessing Officer, it is abundantly clear that they were in no mood to co-operate with the assessee. It was therefore, that the assessee was constrained to request the Assessing Officer to verify the genuineness of the parties through enquiry, as observed by the CIT(A) in the order under consideration. Further, the assessee went even to the extent of offering, which it was legally obliged to do at his option to help in the enquiry, should any Inspector be deputed for the purpose. 16. It was in the above backdrop that the CIT(A) direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und taken by the department cannot and does not stand the test of reason, much less that of law. Hence, it must fail. 25. It stands settled and oft reiterated by the Hon ble Supreme Court that the lower authorities are bound to accept the decisions and directions of the Appellate Authority without any reservation. The latest case on the point is that of Nicco Corporation v. CIT 251 ITR 791. 26. The appeal of the revenue is liable to be rejected on this lone score, so far as regards the assessee, he has filed a paper book before us. This paper book contains, inter alia, confirmations duly signed and new addresses furnished by the brokers. The affidavits under consideration are those of: (i) Kiran Arora (ii) Virender Verma (iii) Rajkumar Hasija (iv) Radha International (v) Renu Sehgal The learned Departmental Representative has objected to these being read into evidence since, as per him, they constitute fresh evidence, which was not produced before either of the authorities below. 27. We find no merit in this contention of the learned Departmental Representative. The assessee has only endeavoured to bitress his earlier stand that the cash credits in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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