G.A.No.905 of 2015 G.A.No.904 of 2015 ITAT 46 OF 2015 IN HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE CIT, BURDWAN Versus MIHIR KANTI HAZRA BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 28th April, 2015. Appearance : Mr. S.Mookherjee,Advocate Mr. Avratosh Mazumder,ld.Govt.Pleader & Advocate Mr. Avra Mazumder, Advocate Court: application for condonation of delay of 38 days in filing appeal, after hearing parties, is allowed. application being G.A. No.904 of 2015 is thus disposed of. subject matter of challenge in appeal is judgement and order dated 10th September, 2014 passed by learned Income Tax Appellate Tribunal pertaining to assessment year 2006-07 by which learned Tribunal reversed order passed by CIT (Appeals) concurring with views of assessing officer in so far as addition under section 68 of Income Tax Act was made. revenue has come up in appeal. following questions have been suggested. ( I) Whether Income Tax Appellate Tribunal was correct in law in deleting addition of Rs.41,15,000/-, which was made by Assessing Officer under Section 68 of Income Tax Act, 1961, and which was upheld by Commissioner of Income Tax (Appeals) by ignoring facts recorded by Assessing Officer as also Commissioner of Income Tax (Appeals) and whether in such view of mater decision of Tribunal could be said to be perverse? (II) Whether on facts and in circumstances of present case Tribunal was justified in law in applying ratio in case of Dataware Private Limited (being I.T.A.T. No.263 of 2011 passed by Hon ble Calcutta High Court) as such decision is clearly distinguishable from facts of present case? facts and circumstances of case, briefly stated, are that assessee, in this case, has allegedly received unsecured loans for aggregate sum of Rs.41,15,000/- from 39 persons. Summons were issued to all 39 alleged lenders under section 131 of Income Tax Act. Notices sent to 9 of them came back with endorsement Not Known . Notices were served upon balance 30 persons. 22 of them did not turn up. 8 of them did. Some of them deposed that they never lent any money. Some of them were undecided. assessing officer, for reasons recorded, was of opinion that creditworthiness of alleged creditors and genuineness of transactions were not proved by persons who responded to summons under section 131. Those who did not turn up, naturally, were not examined. assessee failed to furnish any further explanation. It is, in that view of matter, addition under section 68 of Income Tax Act was made for aforesaid sum of Rs.41,15,000/-. CIT (Appeals) concurred with views of assessing officer. learned Tribunal, however, has set aside order of CIT (Appeals) for following reasons:- W e have considered rival submissions. perusal of paper book as filed by assessee shows that assessee has provided Permanent Account Numbers and confirmation of loans by all loan creditors. Further perusal of paper book clearly shows that all creditors are assessed to income tax and they have filed their returns on income for assessment year 2006-07 in March, 2007. assessment in case of assessee has been initiated only after March, 2007, so obviously it cannot be assumed that returns had been filed by creditors after initiation of assessment proceedings in case of assessee. Further perusal of paper book clearly shows that return acknowledgement, computation of income along with Capital A/c. and affidavits of creditors were before Assessing Officer. This fact being undisputed clearly decision dated 21.09.2011 of Hon ble jurisdictional High Court in case of Dataware Private Limited is squarely applicable on facts of assessee s case. Consequently respectfully following decision of Hon ble jurisdictional High Court in case of Dataware Private Limited referred to supra as also decision dated 15.07.2014 of coordinate Bench of this Tribunal in case of Jyoti Saraf referred to supra, addition as made by Assessing Officer and as confirmed by Ld.CIT (Appeals) stands deleted. learned Tribunal, it is obvious, did not examine correctness of views expressed by assessing officer and CIT (Appeals). No reasons have been disclosed as to why views expressed by CIT (Appeals) and assessing officer are wrong. learned Tribunal proceeded to set aside order without any examination whatsoever of views expressed as would appear from paragraph quoted above. It is now well settled that creditworthiness of alleged creditors and source of source are relevant enquiries. Reference, in this regard, may be made to judgement in case of CIT Vs- Precision Finance Pvt. Ltd. reported in (1994) 208 ITR 465 wherein following views were expressed:- It is for assessee to prove identity of creditors, their creditworthiness and genuineness of transactions. In our view, on facts of this case, Tribunal did not take into account all these ingredients which have to be satisfied by assessee. Mere furnishing of particulars is not enough. enquiry of Income-tax Officer revealed that either assessee was not traceable or there was no such file and, accordingly, first ingredient as to identity of creditors had not been established. If identity of creditors had not been established, consequently question of establishment of genuineness of transactions or creditworthiness of creditors did not and could not arise. Tribunal did not apply its mind to facts of this particular case and proceeded on footing that since transactions were through bank account, accordingly, it is to be presumed that transactions were genuine. It was not for Income-tax Officer to find out by making investigation from bank accounts unless assessee proves identity of creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make non-genuine transaction genuine. appellate authority, it is well settled, does not interfere because order is not right. appellate authority has jurisdiction to interfere only when order is wrong. Reference may be made to judgement of Apex Court in case of Dollar Company Vs-Collector of Madras reported in AIR 1975 SC 1670. Mr. Majumdar, learned counsel appearing for assessee- respondent drew our attention to judgment of Apex Court in case of C.I.T. Vs. Orissa Corporation Pvt. Ltd. reported in 1986 (Supp.) SCC 110. What had happened in that case was that loan for sum of Rs.1,50,000/- allegedly obtained by assessee had been added back under Section 68 of Income Tax Act. assessee had produced documentary evidence to show that loan was backed by hundi transaction. Discharged hundies were also produced by him. But lenders could not be produced for purpose of giving evidence. assessee wanted more time to adduce evidence in support of loans he had obtained which assessing officer refused to give. It is in that case that Tribunal and High Court had held in favour of assessee and Supreme Court refused to interfere. views expressed by Supreme Court in paragraph 13 are as follows;- 1 3. In this case assessee had given names and addresses of alleged creditors. It was in knowledge of Revenue that said creditors were income tax assessees. Their index number was in file of Revenue. Revenue, apart from issuing notices under Section 131 at instance of assessee, did not pursue matter further. Revenue did not examine source of income of said alleged creditors to find out whether they were creditworthy or were such who could advance alleged loans. There was no effort made to pursue so-called alleged creditors. In those circumstances, assesee could not do any further. In premises, if Tribunal came to conclusion that assessee has discharged burden that lay on him then it could not be said that such conclusion was unreasonable or perverse or based on no evidence. If conclusion is based on some evidence on which conclusion could be arrived at, no question of law as such arises. law laid down by their Lordships in peculiar facts of that case does not apply to case before us because in this case assessee was given fullest opportunity to prove his case. view that source of income of creditors and their creditworthiness was required to be gone into militates against view taken by Tribunal. In case of Sreelekha Banerjee referred to in paragraph 11 of judgement, views expressed were as follows:- 11. In Sreelekha Banerjee v. CIT, this Court held that if there was entry in account books of assessee which showed receipt of sum on conversion of high denomination notes tendered for conversion by assessee himself, it is necessary for assessee to establish, if asked, what source of that money was and to prove that it was not income. department was not at that stage required to prove anything. It could ask assesse to produce any books of account or other documents or evidence pertinent to explanation if one was furnished, and examine evidence and explanation. If explanation showed that receipt was not of income nature, department could not act unreasonably and reject that explanation to hold that it was income. If, however, evidence was unconvincing then such rejection could be made. department cannot by merely rejecting unreasonably good explanation, convert good proof into no proof. For aforesaid reasons, we are of opinion that view taken by learned Tribunal is not sustainable. first question is answered in negative and in favour of revenue. second question need not be answered except for observing that facts and circumstances are distinguishable. appeal is thus admitted and disposed of. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) ssaha AR(CR) Commissioner of Income-tax, Burdwan v. Mihir Kanti Hazra