Pr. Commissioner of Income-tax I v. Chartered Speed Pvt. Ltd
[Citation -2015-LL-0303-46]

Citation 2015-LL-0303-46
Appellant Name Pr. Commissioner of Income-tax I
Respondent Name Chartered Speed Pvt. Ltd.
Court HIGH COURT OF GUJARAT AT AHMEDABAD
Relevant Act Income-tax
Date of Order 03/03/2015
Judgment View Judgment
Keyword Tags admissible evidence • unexplained income • share application • audited accounts • creditworthiness • unexplained cash • question of law • initial burden • initial onus • share money • genuineness of transaction
Bot Summary: The Revenue has preferred the present appeals wherein the main question raised is as under: Whether the appellate Tribunal has substantially erred in deleting the addition of Rs.70 Lakhs made under section 68 of the Act despite the fact that the assessee failed to prove the genuineness of the transaction In Tax Appeal No.127/15, similar is the question but there is change in the amount, i.e., Rs.2 Crores instead of Rs.70 Lakhs. Further, we find that the Assessing Officer also made an attempt to allow the assessee opportunity to cross examine the makers of the statement by issuing summons to them. In our considered view, in the circumstances, the statement of those persons cannot be read against the assessee. Our above view finds support from the decision of the Hon'ble Jurisdictional High Court in the case of Heirs and Legal Representatives of Late Laxmanbhai S. Patel Vs. Commissioner of Income Tax CIT Vs. Indrajit Singh Suri DCIT Vs. Mahendra Ambalal Patel CIT Vs. Kantibhai Revidas Patel In view of the above settled position of law, we find force in the argument of the assessee that the statements of the persons mentioned above are not admissible evidence against the assessee. In absence of these statements, we find that no other material has been brought on record by the Revenue to show that why still the amount in question should be treated as income of the assessee Page 3 of 7 O/TAXAP/126/2015 ORDER when the assessee furnished all the documents which were available with it to discharge the onus which was upon it u/s. Therefore the Tribunal has rightly found that the statement of those persons cannot be read against the assessee. The attempt made to contend that the burden is upon the assessee to prove the identity of the person, creditworthiness of the person and the genuineness of the transaction are to be examined in context to the existence of the person concerned, the factum of actual money in possession of the person and having paid to the asseessee and the mode of payment.


O/TAXAP/126/2015 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 126 of 2015 with TAX APPEAL NO. 127 of 2015 PR. COMMISSIONER OF INCOME TAX I Appellant(s) Versus CHARTERED SPEED PVT. LTD. Opponent(s) Appearance: MRS MAUNA M BHATT, ADVOCATE for Appellant(s) No. 1 CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL and HONOURABLE MR.JUSTICE S.H.VORA Date : 03/03/2015 ORAL ORDER (PER : HONOURABLE MR.JUSTICE JAYANT PATEL) 1. Revenue has preferred present appeals wherein main question raised is as under: Whether appellate Tribunal has substantially erred in deleting addition of Rs.70 Lakhs made under section 68 of Act despite fact that assessee failed to prove genuineness of transaction? In Tax Appeal No.127/15, similar is question but there is change in amount, i.e., Rs.2 Crores instead of Rs.70 Lakhs. 2. We have heard Mr.Manish Bhatt, learned Senior Counsel for appellant Revenue. 3. It appears that as per AO, since he found Page 1 of 7 O/TAXAP/126/2015 ORDER that creditworthiness of purchaser of shares and fact that shares thereafter were transferred at price of Rs. 10/ per share to sister company of assessee, he did not accept explanation given under section 68 of Income Tax Act (hereinafter referred to as Act ) and said amount of share money credited in books of accounts of assessee were considered as unexplained income and therefore, added as income of assessee. In appeal before Commissioner (Appeals), order of AO was confirmed. In further appeal before Tribunal, at paras 17 and 18, it was observed thus 17. We find that in instant case, addition is made u/s. 68 of Act on ground of unexplained cash credit. As per provisions of section 68, initial onus lies upon assessee to prove nature and source of amount credited in his books of account. We find that this initial onus was discharged in instant case by assessee by furnishing documents like MOA, AOA, share application & board resolution, Certificate of Incorporation, Certificate of Commencement, acknowledgements of ITRs, audited accounts etc. of concerned companies. Thereafter, in our view, onus shifted upon Department and it was for Department to bring on record relevant material to show that why inspite of above stated documents, addition is still to be made in hands of assessee. In instant case, Department has endeavoured to discharge its burden on basis of statements recorded by it of persons mentioned above. Page 2 of 7 O/TAXAP/126/2015 ORDER 18. We find that assessee requested for cross objection of maker of statement. Further, we find that Assessing Officer also made attempt to allow assessee opportunity to cross examine makers of statement by issuing summons to them. However, cross examination could not take place because of failure on part of makers of statements to appear on appointed date. But strangely, thereafter, Assessing Officer did not take any step to allow effective opportunity to assessee to cross examine makers of statements. Assessing Officer did not pursue matter further. Thus, we find that assessee was not allowed any real opportunity to cross examine persons who made statement at back of assessee. In our considered view, in circumstances, statement of those persons cannot be read against assessee. Our above view finds support from decision of Hon'ble Jurisdictional High Court in case of (i) Heirs and Legal Representatives of Late Laxmanbhai S. Patel Vs. Commissioner of Income Tax (supra) (ii) CIT Vs. Indrajit Singh Suri (supra) (iii) DCIT Vs. Mahendra Ambalal Patel (supra) (iv) CIT Vs. Kantibhai Revidas Patel (supra) In view of above settled position of law, we find force in argument of assessee that statements of persons mentioned above are not admissible evidence against assessee. In absence of these statements, we find that no other material has been brought on record by Revenue to show that why still amount in question should be treated as income of assessee Page 3 of 7 O/TAXAP/126/2015 ORDER when assessee furnished all documents which were available with it to discharge onus which was upon it u/s. 68 of Act. In above circumstances, in our considered view, addition was made solely based on inadmissible and unreliable material and therefore addition so made cannot be sustained. We, therefore, delete addition of Rs 2,00,00,000/ made in case of M/s Charted Motors Pvt. Ltd. as well as addition of Rs.70,00,000/ made in case of M/s. Chartered Speed Private Limited. Under circumstances, present Tax Appeals before this Court. 4. Mr.Bhatt, learned counsel appearing for Revenue contended that three aspects were required to be proved. One was identity of person concerned from whom source of money is disclosed. another was creditworthiness of person concerned and third was genuineness of transaction. He submitted that in present case, Tribunal has committed error in not considering that creditworthiness as well as genuineness of transaction were not proved and therefore, irrespective of fact that persons who had given statements were not made available for cross examination, Tribunal has committed error in accepting explanation as sufficient and thereby deleting amount as income of assessee concerned. He also relied upon decision of this Court in case of Umesh Krishnani Vs. ITO in Tax Appeal No.800/12 Page 4 of 7 O/TAXAP/126/2015 ORDER decided on 15.12.2013 and he contended that as preliminary burden was not discharged by assessee, Tribunal has not considered said aspect and hence, matter deserves consideration on question raised. 5. As recorded by Tribunal, Tribunal found that initial burden was discharged by asseessee. In our view, once Tribunal upon appreciation of material found and recorded finding of fact that assessee had discharged initial burden, such finding of fact would be outside judicial scrutiny in appeal before this Court unless finding of fact is perverse to record. It is undisputed position that statement of persons concerned which were recorded by department, those persons were not made available for cross examination, may be for one reason or another inspite of attempts made by department. Therefore Tribunal has rightly found that statement of those persons cannot be read against assessee. 6. attempt made to contend that burden is upon assessee to prove identity of person, creditworthiness of person and genuineness of transaction are to be examined in context to existence of person concerned, factum of actual money in possession of person and having paid to asseessee and mode of payment. Thereafter, Page 5 of 7 O/TAXAP/126/2015 ORDER if person concerned is in existence and has actually paid amount from his account by cheque, it can be said that initial burden is discharged so far as explanation to be considered under section 68 of Act. Thereafter, burden would be upon revenue to show that either person was bogus or there was no financial capacity to make payment and arrangement of money was artificial or that money has not passed over and it was only by way of eye wash. Such could be proved by Revenue in present case through statement of persons, but unfortunately, they were not made available for cross examination and therefore, statements could be used as evidence against asseessee. No other evidence was available with Revenue. 7. Under these circumstances, if Tribunal has found that explanation under section 68 of Act was acceptable in absence of non discharge of burden upon Revenue, such finding of fact would not call for interference when appeal before this Court is limited to substantial questions of law. decision upon which reliance has been placed by Mr.Bhatt in Tax Appeal No.800/12 (supra) is of no help to Revenue because facts and circumstances of present case cannot be equated with facts of said case considered by this Court. It is hardly required to be stated that whether explanation is Page 6 of 7 O/TAXAP/126/2015 ORDER sufficient or not would essentially depend upon facts and circumstances of each case. But principle remains that once initial burden is discharged by assessee, it would be for Revenue to show that transaction was bogus leading to conclusion for discarding of explanation. In present case, as observed by us hereinabove, burden was not discharged and therefore Tribunal has held in favour of assessee. We do not find that any substantial question of law would arise for consideration in present appeals, as canvassed. 8. Hence, appeals are meritless and therefore, dismissed. (JAYANT PATEL, J.) (S.H.VORA, J.) bjoy Page 7 of 7 Pr. Commissioner of Income-tax I v. Chartered Speed Pvt. Ltd
Report Error