Case Law Details
In the present case, in the face of the clear findings that the loan applications were processed by the Officers of the Assessee and the loan transactions in question of the aforesaid 37 persons were also handled really by the Assessee and further in view of the categorical finding that the loan amounts were not reflected in the returns of the 37 persons in question, we do not see how the High Court could have taken the above view and remanded the matter to the Assessing Officer.
Relevant Extract of the Judgment
2. The challenge in the present appeal is to the judgment and order dated 20th March, 2012 in Writ Appeal No.1611 of 2008 passed by the Division Bench of the High Court of Karnataka at Bangalore reversing the judgment and order of the learned single judge dated 10th September, 2008 passed in Writ Petition No.10507 of 2007. The learned single judge, it may be noticed, had dismissed the writ petition filed by the Assessee against the revisional order upholding the order of assessment insofar as addition of an amount of Rs.2,72,19,285/- is concerned, which was claimed by the Assessee as being legally liable for deduction. The learned Commissioner of Income Tax (C.I.T.) in coming to the impugned finding had recorded as follows:
“Regarding the addition relating to trade creditors, the records establish that the assessee has shown sudden in trade creditors without any significant transactions of purchases during the year. Obviously, there cannot be trade creditors without matching transactions. The investigation carried out by the A.O. exposed the modus operandi of the assessee. It is claimed before the A.O. that crop loans were raised in the names or planters within the family circle hailing from Chennai purportedly owning some estates. The loans-raised by them from the bank where the assessee also operated its bank accounts were claimed to be given to theassessee. The investigation further revealed that these crop loan applications were prepared and signed by none other than the top man in the management of the assessee. On top of it, the crop loans accounts in the bank were also operated by the same person from the assessee. When the investigation arm was extended to Chennai and some details were collected about these so-called estate owners, no such accounts appear in their records. Besides, the nexus of their sacrificial loans to bail out the assessee could not be bridged either. In effect, there was clear instance of creation of accounts by way of name leading, a fraudulent practice. All these aspects were fully exposed in the investigation carried out by the A.O. The representative tried to sell the idea that these people are IT payees having proper economic existence. It may be true that these persons are separately assessed to tax, but the nexus of their running estates and their leading financial support could not be substantiated. In my view, there is no cause for interference in the present proceedings to approve the findings of the excellent investigation carried out by A.O.“
Please become a Premium member. If you are already a Premium member, login here to access the full content.
