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TMI Blog2006 (9) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 68, without appreciating that the assessee had failed to discharge its onus that these Sundry Creditors were genuine and they had the financial capacity to advance the indicated sum of money." 2. In regard to the commission to the tune of ₹ 7,55,428 paid by the assessee, which was disallowed by the Assessing Officer and that addition has been deleted by the Commissioner, Income-tax in appeal and this had been confirmed by the order of the Appellate Tribunal. The facts relevant are as follows :- The assessee had launched a new scheme (Sona Chandi Uphar Yo na) on 26-1-2001 and it continued up to 15-3-2001. This scheme was applicable till 15-3-2001 but orders received under the scheme were materialized till 31-3-2001. The total liability worked out by the assessee under the scheme was ₹ 20,11,715. Out of this total liability ₹ 3,08,248 was cleared by the end of March, 2001 leaving an amount of ₹ 17,03,467 which was disbursed to different CNF agents after 31-3-2001. 3. The necessary documentary evidences were filed. 4. It was also noted that on perusal of details mainly figures of turnover, it transpired that sales have increased two and half times ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A). We do not find any substantial question of law to be decided in this appeal as the aforesaid issue stands concluded by findings of fact namely payment of commission through credit notes under the mercantile system of accounting and the actual payment having been made subsequently. 8. Second substantial question of law is in respect of cash credit of ₹ 3,43,007 which was added to the income of assessee company under section 68 of the Income-tax Act though has been deleted by CIT(Appeals) and confirmed by Income-tax Appellate Tribunal. 9. The relevant facts are that the Assessing Officer asked the assessee company to file details of sundry creditors amounting to ₹ 6,49,446 besides the trade creditors. The assessee has filed the details which was placed on record. Thereafter the assessee company was further asked by notice dated 9-12-2000 the 'identity, genuineness of the sundry creditors (staff/director)' together with the nature and source, which reply was again submitted by the assessee. 10. Assessing Officer gave the benefit of a part of the amount from the aforesaid amount of ₹ 6,49,446 but held that amount of ₹ 3,43,007 could not be primaril ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y were not entitled for the salary and not only this but it could also not be denied by the revenue that the salary was not paid to them by virtue of credit notes in the books of account. The only question which has been urged by Sri Chopra is that prima facie onus lay upon the assessee to prove the nature and source of credit notes and also the creditworthiness of the creditors which the assessee had failed to prove and the finding recorded in this regard by the appellate authority cannot be sustained. His submission is that the assessee did not bring on record any material to indicate that these creditors were having any other source of income or that they were having no necessity of withdrawing even a single shell from the salary and therefore allowed it to be shown in the books of account, for which purposes it was obligatory upon them to produce at least minimal evidence to show their creditworthiness. 15. Sri Rohit Nandan Shukla appearing for the assessee strongly refuted the aforesaid argument by urging that when the CIT (Appeals) as well as ITAT on the scrutiny of the material evidence on the record has recorded two findings that the identity of the creditors was establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and when the assessee primarily discharges that onus, then it shifts on the department. 20. The findings recorded by the CIT and ITAT that the department did not adduce any evidence to prove that the creditors were not having any other source of income in fact places even the primary onus of proof upon the department. The onus of proof would come upon the department only when assessee discharges its obligation prima facie. 21. In the case of CIT v. United Commercial & Industrial Co. (P.) Ltd. [1991] 187 ITR 5961 Calcutta High Court made the following observations :- "In our view, the assessee failed to discharge the primary onus which lay on it to prove the nature and source of the credits. It was necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts, the onus shifts on to the Department. It is not enough to establish the identity of the creditors. Mere production of the confirmation letters before the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthy or were such who could advance the alleged loan. In the instant case such pleas have neither been pleaded nor raised. The record does not shows that these creditors were income-tax assessee or that they were allotted any PAN. If they were income-tax assessee whether this fact was in the knowledge of the department. No effort or no prayer was made by the assessee to initiate action under section 131 of the Act and therefore it cannot be said that the assessee discharged primary onus upon him. 23. For the reasons said above, the findings recorded on the deletion of ₹ 3,43,000 by the Commissioner of Income-tax (Appeal) and confirmed by ITAT are not sustainable in law as the absence of the finding on the aforesaid issue of creditworthiness, vitiates the order passed by the Tribunal. We set aside the aforesaid finding and remand the matter to the Commissioner of Income-tax (Appeals) for deciding afresh in accordance with law after affording opportunity to the parties including that of adducing evidence if asked for, by them. The rests of the udgment under appeal is upheld. 24. This appeal is thus partly allowed. The matter is remanded to the CIT(A) and it may be decided ex ..... 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