Case Law Details

Case Name : CIT Vs Mihir Kanti Hazra (Calcutta High Court)
Appeal Number : Income tax (Appeal) No. 46 of 2015
Date of Judgement/Order : 28/04/2015
Related Assessment Year :
Courts : All High Courts (4158) Calcutta High Court (159)

Brief of the Case

Calcutta High Court held In the case of CIT vs. Mihir Kanti Hazra that it is well settled that creditworthiness of the alleged creditors and the source of the source are relevant enquiries. In the case of CIT Vs Precision Finance Pvt. Ltd. reported in (1994) 208 ITR 465, it was decided that It is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. It was not for the Income-tax Officer to find out by making investigation from the bank accounts unless the assessee proves the identity of the creditors and their creditworthiness.

Facts of the Case

In this case, assessee has received unsecured loans for an aggregate sum of Rs.41,15,000/- from 39 parties. Summonses were issued to all parties under section 131 of the Income Tax Act. Notices sent to 9 of them came back with the endorsement “Not Known”. 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. As per AO, those revert to the notice were not in position to prove the genuineness of the transaction. The assessee failed to furnish any further explanation. Accordingly, the addition under section 68 of the Income Tax Act was made for the aforesaid sum of Rs.41,15,000/-.

Contention of the Assessee

The learned counsel for the assessee referred a judgment of the Apex court in the case of CIT vs. Orissa Corporation Pvt. Ltd. reported in 1986 (Supp.) SCC 110 in which it was held that if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises.

Held by CIT (A)

CIT (A) confirmed the addition under section 68, made by AO.

Held by ITAT

ITAT reversed the CIT (A) order by stating that paper book submitted by the assessee show that the he has provided PAN and the confirmation of the loan by all the parties. Also it is clear that all the parties are assessed to the income tax and filed their return of income for the assessment year 2006-07 in March 2007. The return acknowledgment, computation of income along with the Capital A/c and the affidavits of the creditors were also available. The decision of the Hon’ble jurisdictional High Court dated 21.09.2011, in the case of Dataware Private Limited is squarely applicable on the facts of the assessee’s case.

Held by High Court

ITAT did not examine the correctness of the views expressed by the assessing officer and the CIT (Appeals). No reasons have been disclosed as to why the views expressed by the CIT (Appeals) and the assessing officer are wrong.

The appellate authority has jurisdiction to interfere only when the order is wrong. Reference may be made to the judgement of the Apex Court in the case of The Dollar Company Vs Collector of Madras reported in AIR 1975 SC 1670.

The judgment of CIT vs. Orissa Corporation Pvt. Ltd. reported in 1986 (Supp.) SCC 110 referred by the assessee does not apply to the current case because in current case the assessee was give full opportunity to prove his case. Also in the case of Sreelekha Banerjee, it was held that if there was an entry in the account books of the assessee which showed the receipt of a sum on conversion of high denomination notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money was and to prove that it was not income .The department was not at that stage required to prove anything. All above reasons clearly shows that ITAT decision is not sustainable.

Accordingly, appeal of the revenue allowed.

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