C. I. T. Kolkata - II v. Regency Trust Ltd
[Citation -2014-LL-0916-50]

Citation 2014-LL-0916-50
Appellant Name C. I. T. Kolkata - II
Respondent Name Regency Trust Ltd.
Court HIGH COURT OF CALCUTTA
Relevant Act Income-tax
Date of Order 16/09/2014
Judgment View Judgment
Keyword Tags initial burden • cash credit
Bot Summary: 68 of the I.T. Act 1961 is unjustified whereas the A.O. specifically observed and found that the loan creditors namely M/s. Angle India Ltd. and M/s. Sajan Financial Commercial Pvt. Ltd. acquired the loan amount by receiving share application in cash from various persons who are neither found in their given address nor their identity or credit - worthiness was established Heard Mr. Dutta. The appellant company discharged its initial onus of proving the loan transaction by filling the loan confirmation and also causing the personal appearance of the loan creditors with their books of accounts and bank accounts. These loan have duly been accepted by the assessing officer assessing the loan creditors. The assessing officer has also admitted that the appellant has proved the identity of the 3 creditor and also the genuiness of the loan transactions. The assessing officer is of the view that since, the creditors could not explain the source of the money found credited in the creditor books of accounts, the appellant company has not been able to prove the creditworthiness of the loan creditors. In view of the aforesaid facts and the legal proposition of law has laid down by the Patna High Court in the case of Saraogi Credit Corporation, I am of the view that the assessing officer was not justified in asking the appellant company to prove the genuineness of the share holders of the loan creditors company from 4 whom the appellant company obtained the loan and in absence thereof to treat the loan of Rs.4,00,000/- as unesplained cash credits U/s. If sources of the loan could be proved, if identity of the creditors could be established, if the creditor would appear and admist having given the loan, then the Assessing Officer has no powers to add the same amounts as income of the assessee from undisclosed sources.


ORDER SHEET ITA 663 of 2004 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE C. I. T. KOLKATA - II Versus REGENCY TRUST LTD. BEFORE: Hon'ble JUSTICE SOUMITRA PAL AND Hon ble JUSTICE DEBANGSU BASAK Date : 16th September, 2014. Appearance: Mr.S.N.Dutta, Adv. Court: Since none has appeared on behalf of appellant when matter is taken up for hearing. Mr. S.N.Dutta, learned Advocate who normally appears on behalf of Revenue, is requested to appear in this matter. learned Central Government Advocate on Record is directed to regularise his appointment. We find that appeal was admitted on following question: 1) Whether Income Tax Appellate Tribunal erred in law in holding that identity of loan creditors, genuineness 2 of transaction and credit worthiness of loan creditors were established and therefore addition U/s. 68 of I.T. Act 1961 is unjustified whereas A.O. specifically observed and found that loan creditors namely M/s. Angle India Ltd. and M/s. Sajan Financial & Commercial Pvt. Ltd. acquired loan amount by receiving share application in cash from various persons who are neither found in their given address nor their identity or credit - worthiness was established? Heard Mr. Dutta. We find that CIT(A) in this regard had found as under: I have considered submissions of appellant. Various courts are consistent in their view that for purpose of in- working section 68 assessee has to prove prima facie, transactions which results in cash credit in his books of accounts. Such proof includes no.(a) identity of credit no.(b) genuineness of transaction and No.(c) creditworthiness of loan creditors. appellant company discharged its initial onus of proving loan transaction by filling loan confirmation and also causing personal appearance of loan creditors with their books of accounts and bank accounts. These loan have duly been accepted by assessing officer assessing loan creditors. assessing officer has also admitted that appellant has proved identity of 3 creditor and also genuiness of loan transactions. assessing officer is of view that since, creditors could not explain source of money found credited in creditor books of accounts, appellant company has not been able to prove creditworthiness of loan creditors. It is appellant s contention that if creditors are unable to satisfy assessing officer as to source from which depositors derived money, it can not be used against assessee to hold that loan creditors are in genuine. Patna High Court in case of Saraogi Credit Corporation 103 ITR 349 under these circumstances has observed that Once identity of third party is established before Income Tax Officer and other such evidence are prima facie placed before him pointing to fact that entry is not fictitious, initial burden lying on assessee can be said to have been duly discharged by him. It will not, therefore be for assessee to explain further as to how or in what circumstances third party obtained money and how or why he came to make advance of money as loan to assessee. In view of aforesaid facts and legal proposition of law has laid down by Patna High Court in case of Saraogi Credit Corporation (Supra), I am of view that assessing officer was not justified in asking appellant company to prove genuineness of share holders of loan creditors company from 4 whom appellant company obtained loan and in absence thereof to treat loan of Rs.4,00,000/- as unesplained cash credits U/s. 68 of I.T. Act. Therefore, addition of Rs.4,00,000/- is deleted. On appeal preferred by Revenue, learned Tribunal found as under: We have considered rival submissions. law is very clear on this subject. If sources of loan could be proved, if identity of creditors could be established, if creditor would appear and admist having given loan, then Assessing Officer has no powers to add same amounts as income of assessee from undisclosed sources. If there would be any dificiency or doubtful transactions made by creditors in their books Assessing Officer assessing creditor should take necessary action in this regard. So far as present assessee is concerned, we are satisfied that all tests required for establishing genuineness of loans were satisfactorily carried out. Thus, we do not find any infirmity in order of Ld. CIT (A) deleting addition of Rs.4 lacs and consequential interest of Rs.8918/-. In upholding his view, therefore, we dismiss ground taken by revenue. In view of categorical finding of Tribunal regarding genuineness of loans, we find no reason to interfere. Therefore, appeal is dismissed. 5 Urgent certified copy of this order, if applied for, be supplied to parties subject to compliance with all requisite formalities. (SOUMITRA PAL, J.) (DEBANGSU BASAK, J) cs C. I. T. Kolkata - II v. Regency Trust Ltd
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