Case Law Details
CASE LAWS DETAILS
DECIDED BY: ITAT, COCHIN BENCH, COCHIN,
IN THE CASE OF: The Mathrubhumi Printing & Publishing Co. Ltd. Vs DCIT, APPEAL NO: ITA Nos. 143 & 144/Coch/2006, DECIDED ON September 25, 2009
RELEVANT PARAGRAPH
10. There is no dispute on the fact that the assessee, a public limited company had accepted deposits from public as permitted by the Companies Act,1956 and following the rules and regulations provided thereunder. Even against constraints and the difficulty in tracing out the old records, the assessee company had placed before the assessing authority the relevant documentary support to prove the genuineness of the deposits collected from the public. The assessee company could produce such details before the assessing authority in respect of a lion’s share of the deposits collected from public. The assessee further produced evidences in respect of the remaining portion of the deposits before the CIT (Appeals) which were partially accepted. Regarding the remainder evidence, CIT (Appeals) I was not inclined to admit the details furnished by the assessee and that is why he has sustained part of the addition.
11. One important aspect that to be born in mind while examining this issue is whether the assessee has rightly proved the sources of the deposits reflected in its books of accounts as credits. The assessee has proved beyond doubt that these deposits were accepted by the assessee company from public in pursuance of the Provisions of the Companies Act,1956. Therefore, as far as the credits reflected in the books of accounts of the assessee attributable to the deposits collected from the public are concerned, it is to be seen that the assessee has explained the source of those deposits/ credits beyond any reasonable doubt. The source of those deposits has been established on record. There is no doubt regarding the fundamental fact that those deposits/ credits were collected by the assessee company from public. The assessee has also produced before the lower authorities the documentary evidences in support of the majority of the deposits collected from public in the manner stated above. Therefore; it is clear that the source of the credits is proved and the flow of credit is also proved to a large extent. Therefore, when the scheme of financing adopted by the assessee company is explained in a convincing manner, it is not fair on the part of the lower authorities to treat a part of those deposits as unexplained only for the reason that inch-by-inch documentary particulars were not furnished before them in respect of that remainder deposits. In this context it is to be further seen that the CIT(Appeals) was not inclined to accept further particulars furnished by the assessee.
12. The assessee company had collected deposits not from a few individuals but thousands of members of public. It was a big exercise. Therefore, it takes time for any assessee to collect all the details relating to such deposits after a long span of time. The crucial test to be applied is whether the rule of probability is satisfied and the assessee has reasonably established the source of the credits and flow of the funds.
13. From the facts and circumstances available on record, we find that the assessee has successfully demonstrated the source of the deposits being deposits collected from public and the flow of funds by producing documentary evidences in respect of the majority of such deposit accounts. Therefore, we are of the considered view that the CIT(Appeals) is not justified in confirming the addition of Rs. 16,25,000/ – for the assessment year 1999-2000 and Rs. 29,40,000/ – for the assessment year 2001- 02.
14. Once the source is proved, it is not possible to treat the deposits collected from public under the provisions of the Companies Act as unexplained credits, j This is because the company law provides that where the deposits collected from public are not returned within the specified period after the expiry of the term of the deposits, the company has to deposit such unreturned deposits in the public account of the Government of India. The assessee company cannot retain the funds with it. The money once transferred to public account, the depositors who turn up thereafter for claiming back the deposits, have to get back the deposits from the public account maintained by the Government of India.
