Income Tax Appeal No. 61 of 2006 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 61 of 2006 Date of decision: 30.11.2010 M/s. Acron Finance (P) Ltd. through its Director Rakesh Thapar --- Appellant Versus Commissioner of Income Tax-2 Jalandhar --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Ravish Sood, Advocate for the appellant-assessee. None for the respondent-revenue. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the assessee against the order dated 13.7.2005, passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short “the Tribunal”) in ITA No. 208(ASR)/2000 relating to the assessment year 1996-97. The appeal was admitted for determination of the following substantial questions of law by this Court: “1- Whether the Tribunal was right in law in sustaining the order of the authorities below, wherein the latter had treated certain Income Tax Appeal No. 61 of 2006 2 ‘deposits’ as ‘unexplained cash credits’, by neither taking any cognizance of the ‘affidavits’ of the ‘depositors’ as per which their identity and source of deposits stood duly substantiated nor bring any material on record which could go to refute the contents of the same? 2- Whether on the facts and in the circumstances of the case, the tribunal was right in law by treating the deposits of Rs. 10,000/- each of S/Smt. Payal Sehgal and Veena Rani as ‘unexplained cash credit’ and therein not setting aside the same to the file of the A.O. for reconsideration?” The facts, in brief, necessary for adjudication, as narrated in the appeal are that the assessee filed return for the assessment year 1996-97 declaring loss of Rs. 1,82,095/- which was taken up for scrutiny and notice under Section 143(2) of the Act was issued. During assessment proceedings, the assessing officer earmarked deposits in the names of 35 parties, aggregating to Rs. 4,22,300/- and made query from the assessee in respect of the parties whose deposits were found to be of Rs. 9,000/- or above. The assessee supplied complete particulars of the depositors. But still, the assessing officer on further investigation into the matter at his own level, treated the above amount in respect of all the 35 deposits as ‘unexplained cash credits’ and assessed the income of the assessee company at Rs. 3,45,120/- vide order dated 24.12.1998. Before the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, the assessee produced further evidence in the shape of affidavits of 15 depositors in order to wriggle out of the additions made by the assessing officer in that context. The CIT(A), however, was of the Income Tax Appeal No. 61 of 2006 3 view that since it was a fresh evidence which could only be examined by the assessing officer and, accordingly directed the assessing officer to examine the aforesaid fresh evidence and report whether such credits were acceptable or not. During remand proceedings before the assessing officer and despite various submissions made on behalf of the assessee nothing favourable could be gained by him. The assessing officer, thus, again put its seal on the additions made earlier. The CIT(A) on receipt of report from the assessing officer sustained the additions made by him and dismissed the appeal vide order dated 9.2.2000 as the assessee had not produced material to substantiate genuineness of those deposits. The CIT(A) in paras 3.4 to 3.6 observed as under: “ 3.4 The A.O. has since submitted his report dated 24/ 27-12-99, copy of which was made available to the appellant. It was pointed out by the Ld. A.O. that the Ld. counsel Sh. K.K. Sareen, C.A. was asked to furnish whatever evidence he had to prove the source of deposit corresponding to which additions have been made at the time of assessment. The case was fixed for hearing by the A.O. on 17.12.99, as desired by the counsel. On 17.12.99, Sh. K.K. Sareen, C.A. appeared along with Sh.Rakesh Thapar, Managing Director of the company before the A.O. However, neither any depositor was produced for recording of statement nor any written reply was filed. The A.O. has concluded that the assessee company had no evidence to prove the source of cash credits. Income Tax Appeal No. 61 of 2006 4 3.5 A copy of the report of the A.O. was made available to the appellant and the case was fixed for hearing on 8.2.2000. It was admitted by Sh. K.K. Sareen and Sh. Dheeraj Sehgal, Director that no evidence were produced before the A.O. in suppot of the credits. A written submission dated 8.2.2000 was also filed along with copies of certain documents. As none of these documents was produced before the A.O. neither during the assessment proceedings or during the remand proceedings, no cognizance is being taken in respect of these documents and this was brought to the notice of Ld. counsel during the appellate proceedings on 8.2.2000. 3.6 In the light of above discussion, it is clear that the assessee company had shown deposits in 35 names but required evidence was not produced before the A.O. to prove the genuineness of the credits by establishing the identity and capacity of the creditors and genuineness of the transactions although the A.O. had allowed seven opportunities to the assessee. No evidence was produced before the A.O. even when another opportunity was allowed to the assessee to produce necessary evidence before the A.O. during the remand proceedings as mentioned above. In these circumstances, the action of the A.O. in treating the deposits of Rs. 4,22,300/- as income of the assessee was justified and is upheld.” The assessee took the matter in appeal before the Tribunal and emphatically submitted that the assessing officer and CIT(A) had Income Tax Appeal No. 61 of 2006 5 failed to appreciate the facts in the right spirit. Before the Tribunal as well, the assessee reiterated its submissions made before the authorities below. The Tribunal while partly allowing the appeal provided one more opportunity to the assessee to prove the genuineness of four depositors, namely, Sh. C.L. Duggal, Mr. Nirdosh Sareen, Pinki Dada and Sh. Satinder Sehgal, by restoring the matter to the file of the assessing officer. However, the other depositors were not accepted to be genuine as the assessee had failed to establish the identity of the creditors, credit worthiness of the creditors, and genuineness of the said deposits. Hence, this appeal at the instance of the assessee. We have heard learned counsel for the appellant and have perused the record. Learned counsel for the assessee submitted that the Tribunal was in error and had recorded findings which are based on surmises and conjectures without there being any sufficient material on record. Learned counsel further submitted that the affidavits had been filed by the depositors to prove their identity and, in such a situation, it was not proper for the Tribunal to have sustained the additions. It was next argued that the Tribunal had referred back the matter in respect of four depositors, namely, C.L. Duggal, Mrs. Nirdosh Sareen, Pinki Dada and Satinder and the Tribunal ought to have remanded the case with regard to other depositors also. Once the affidavits had been furnished by the assessee, there could not have been any doubt about the genuineness of those depositors. Learned counsel placed reliance on Mehta Parikh and Co. v. Commissioner of Income Tax, Bombay, (1956) 30 ITR 181 (SC), L. Sohan Lal Gupta v. Commissioner of Income Tax, U.P. Lucknow, Income Tax Appeal No. 61 of 2006 6 (1958) 333 ITR 786 and Collector, Land Acquisition v. Mst. Katiji and others, (1987) 167 ITR 471. We have given our thoughtful consideration to the submissions made by the learned counsel for the assessee. It would be apt to reproduce the findings recorded by the Tribunal in paras 3.9 and 3.11 of its order, which are: “3.9. Now in this case, it is a fact that the assessee did not file any evidence and even affidavits during the course of assessment proceedings. Even during the course of appellate proceedings, the assessee could file affidavits only in respect of 15 depositors. The Ld. CIT(A) referred these affidavits to the A.O. with a direction to examine the same in the light of evidence whatever the assessee would like to produce. Copies of these affidavits appeared on pages 42 to 54 of the CIT(A)’s appeal folder. Even the written submissions filed by the assessee before the CIT(A) vide letter dated 30.11.1999 are at pages 55 to 60 of the paper book. Nowhere the same shows that the assessee had offered that it could produce depositors provided an opportunity of producing the same was allowed by the AO. It simply refers that the AO could have issued summons under Section 131 for investigating the source. But summons under Section 131 could be issued only if the assessee expresses its inability for producing the creditors or requests the AO to do so. Otherwise the onus is on the assessee to produce such creditors before the A.O. as held by the Hon’ble Punjab and Haryana High Court in the case of CIT vs. Vir Bhan and Income Tax Appeal No. 61 of 2006 7 sons (supra). The A.O. submitted the remand report vide letter dated 24/27.12.1999 where he had clearly mentioned that the assessee was given full opportunity to furnish whatever evidence was with him to prove the sources of cash credits. Neither the assessee produced the creditors nor filed any written submissions and, therefore, there was no evidence available with the assessee to prove the same. This was also confronted to the assessee vide CIT(A)’s letter dated 2.2.2000 and the case was posted for hearing on 8.2.2000. The Ld. counsel for the assessee along with the Director and the Accountant appeared before the CIT(A) on 8.2.2000 and accepted that no evidence was produced before the AO as reported by the AO. The order sheet entry dated 8.2.2000 is duly signed by these persons. However, the reply submitted in the letter dated 8.2.2000 is on record of CIT(A)’s folder at pages 87 & 88. In the said letter, it has been mentioned that on 17.12.1999, few depositors were asked to come to the office for recording their evidence, but they could not turn within officials hours and as such three more persons appeared at about 5.30 P.M. and their affidavits were got signed from them and attested. The details for the same were given in the letter. These facts clearly show that the assessee could not produce the depositors despite opportunity allowed by the AO during the course of remand proceedings. The contentions of the Ld. AR that the assessee was not asked to produce these depositors is untenable and incorrect, in view of the facts Income Tax Appeal No. 61 of 2006 8 placed on record. In fact, the assessee has miserably failed both during the course of appellate proceedings and assessment proceedings to produce these depositors or furnish any worthwhile evidence in spite of the fact that ample opportunities were allowed. 3.11. Before parting with this ground, I wish to mention that the Ld. counsel had relied on certain judgments stating that the averments made in the affidavits should be accepted until there is a contrary material brought on record. I am unable to agree with such proposition for the simple reason that there is no universal proposition of law that a statement given in the form of an affidavit should be accepted as true. I have already discussed in detail that in case of cash credits, the onus of proving the source and genuineness is entirely on the assessee and mere filing of confirmations or affidavits without there being any corroborative evidence does not by itself prove the source and genuineness thereof. Moreover, these affidavits were not even filed during the course of assessment proceedings. These were filed only during the course of proceedings before the CIT(A) and there also the asssessee failed to either produce depositors or file any further corroborative evidence in support of the case, I am unable to accept the submissions of the assessee that contents of the affidavits should be accepted and no addition on account of cash credit should be made.” As observed by the CIT(A) and also recorded by the Tribunal, the assessee had been provided ample opportunities to Income Tax Appeal No. 61 of 2006 9 substantiate its claim with regard to depositors to be genuine, but the assessee had failed to discharge the onus placed upon it by establishing the identity of the creditors, their creditworthiness and genuineness of the deposits. The CIT(A) had already provided another opportunity to the assessee to prove its case but the assessee had failed to produce any material to show the deposits to be genuine. The Tribunal had remanded the case with regard to four depositors whereas other depositors were held not to be genuine on the ground that the amount was stated to have been paid to the assessee by them out of saving from household expenses etc. without producing any evidence. The counsel, however, made an attempt to persuade this Court to remand the matter. But in the facts and circumstances of the case, as noticed above, it is considered not to be a fit case where the assessee deserves any further opportunity to establish genuineness of other depositors by remanding the case in that regard. The findings of fact recorded by the authorities below have not been shown to be perverse in any manner which may warrant interference. As regards the judgments relied upon by the learned counsel, suffice it to say that the proposition of law laid down therein is well- recognized, but in view of the findings noticed above, the said judgments do not come to the rescue of the appellant. The substantial questions of law are answered against the assessee and finding no merit in the appeal, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 30, 2010 JUDGE Income Tax Appeal No. 61 of 2006 10 *rkmalik*