1 Income-tax Reference Nos. 200 and 201 of 1995 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH --- Income-tax Reference Nos. 200 and 201 of 1995 Date of Decision: July 1, 2010 M/s. Sunit Engineering and Industrial Corporation Kotkapura --- Petitioner Versus The Commissioner of Income-tax Jalandhar --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL *** PRESENT: Mr. Sanjay Bansal, Senior Advocate with Ms. Sweta , Advocate for the petitioner. Mr. Vivek Sethi, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This order will dispose of Income-tax Reference Nos. 200 and 201 of 1995. The Income-tax Tribunal, Amritsar Bench, Amritsar has referred the following questions of law, for the opinion of this Court: 1- Whether in the facts and circumstances of the case, the Tribunal was justified in law in admitting and bringing on its file additional evidence furnished by the assessee in its Paper Book at the time of hearing of 2 Income-tax Reference Nos. 200 and 201 of 1995 the appeal, which had been collected by the Assessing Officer after the passing of the assessment order and even after the decision of assessee’s first appeal without recording reasons therefor in violation of the mandate of Rule 29 of the Income-tax Appellate Tribunal Rules, 1963? 2- Whether in the facts and circumstances of the case, the finding recorded and the conclusion reached by the Tribunal that the assessee had failed to explain within the ambit of section 68 of the Income-tax Act, 1961, the cash credits in question totaling Rs. 9,51,200/-, are vitiated by errors of law, failure to take into account the relevant material and consideration taking into account irrelevant consideration and inadmissible evidence.” The controversy herein pertains to the assessment year 1983-84. The assessing officer while framing assessment had come to the conclusion that the cash credit amounting to Rs. 9,51,200/- in respect of 12 persons was not genuine and had, therefore, added the same to income of the assessee under Section 68 of the Act. The Commissioner of Income-tax (Appeals) while upholding the order of the assessing officer whereby addition of Rs. 9,51,200/- was made in the returned income of the assessee in para 7.3 of his order had recorded as under: “7.3. I have considered the contention of the appellant counsel on facts and arguments on the concluding date 3 Income-tax Reference Nos. 200 and 201 of 1995 of hearing and the earlier submissions made and I have also considered the contentions of the Department. However, all these case law relate to one point that for proving the cash credits introduced in the books of account in the name of third party following three ingredients must be satisfied in view of Calcutta High Court 114 ITR 689: i) Identity of the creditor is to be established by appellant. ii) The genuineness of the transaction is to be proved by the appellant. iii) The credit worthiness of the creditor is also to be established by the appellant. And further so far as the addition of cash credits as income from undisclosed sources, it is a question on facts only and for deciding the same in view of 119 ITR 785 and 166 ITR 632 (MP) the facts and circumstances of each case are to be considered. Hence so far the case law quoted by the appellant and the ITO are concerned these are relevant no doubt but are not of any consequence to either of the party because the question whether the cash credit is the income of the appellant or is to be proved keeping in view the facts and circumstances of each cash credit. I am, therefore, keeping this principle in view giving the finding as under: i) The ITO has following the legal formalities correctly when he gave opportunity to the appellant to produce the 4 Income-tax Reference Nos. 200 and 201 of 1995 affidavit and thereafter he cross examined the so called cash creditors in order to find out the contents of the affidavits and to know whether the cash credits are genuine or not and for that purpose he has given full opportunity of cross examination to the appellant and thereafter he came to the conclusion that loan outstanding in the name of all the 12 parties referred to above are not genuine rather the appellant has introduced his own concealed amount in the garb of credits in the name of third parties. He based his conclusion that only the identity of the creditor was established and the transactions were not genuine and thirdly all the 12 creditors were not men of means to advance such heavy amounts to the appellant. ii) He has found that these so called creditors were the relation of one Mr. Vijay Kumar, partner of the appellant- firm; iii) The amounts have been advanced in cash only and not through cross cheques or bank drafts; iv) There is no bank account of all the creditors.” The said order was upheld by the Tribunal. A perusal of the orders passed by the authorities below confirms that the concurrent findings recorded by them are based on appreciation of evidence. Learned counsel for the petitioner-assessee could not demonstrate before us that there was any error of jurisdiction or that the findings recorded by the authorities below that the cash credits in 5 Income-tax Reference Nos. 200 and 201 of 1995 the sum of Rs. 9,51,200/- are unexplained and would fall within purview of the provisions of Section 68 of the Income-tax Act, 1961 are perverse or illegal in any manner. Accordingly, question No.2, as referred to above, is decided against the assessee. Once the answer to question No.2 is against the assessee, it was not seriously disputed by the counsel for the petitioner that question No.1 does not survive for consideration of this Court. In view of the above, the Reference stands answered accordingly. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) July 1, 2010 JUDGE *rkmalik*