Date Of Order 20-02-2018 W.p v. The Deputy Commissioner Of Income Tax 2/7

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20[th]DAY OF FEBRUARY, 2018 BEFORE, THE HON’BLE Dr.JUSTICE VINEET KOTHARI W.P.No.33125/2017 (T-IT) | BETWEEN M/S. DEEPAK EXTRUSIONS PVT. LTD.,A COMPANY INCORPORATBD UNDER THE |COMPANIES ACT, 1956HAVING ITS OFFICE AT:NO.180/780, YERANDHALLI VILLAGEJIGANI HOBLI, ANE KAL TALUKBEHIND BOMMASANDRA.INDUSTRIAL AREABANGALORE -560 O58. REPRESHNIED BY ITS DIRECITLOMR. DBBPAK BHRTHALA»/O. PRAKASH BETHALAAGED ABOUT 43 YBARS. ... PETITIONER (By Mr. HARISH V.S. ADV..,) AND: THERE DEPUTLY COMMISSIONER OF INCOME TCENTRAL CIRCLE 1(4)C.R. BUILDING, QUEENS ROADBANGALORE -560 OO1._. RESPONDENT (By Mr. JEEVAN J. NEERALGI, ADV..,) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND22/ OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax2/7 IMPUGNED ORDEROF.ASSEKSSMENTPASSEDBY|THERESPONDENT U/S.143(3) READ WITH SECTION 144 OF THE.INCOME TAX ACT DTD.29.12.2016, FOR THE ASSESSMENTYEAR 2014-15 VIDE ANNE AND THE CONSEQUENTIAL DEMANDNOTICK ISSUED BY THR RESPONDENT IN FORM NO.7/DTD.29.12.2016 FOR THR ASSKBSSMEBENT YRBAR 2014-15 VANNEX. THIS WRIT PRTITION COMING ON FOR PRELIMINARY|HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER Mr. Harish V.S. Adv. tor Petitioner. Mr. Jeevan J. Neeralgi, Adv. for Respondent. The writ petition has been filed by the petitioner- M/s.DeepakExtrusionsPvt.Ltd>againstthe.Assessment Orderpassed by the Respondent-DeputyCommissioner of Income Tax, Central Circle 1(4),Bengaluru, U/s. 143(3)|read withSection 144|of theIncome Tax Act, 1961,forA.Y. 2014-15. oD The impugned additions have been made inthe declared income of the petitioner-assesseeinter alia Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax3/7) on the ground of ‘unexplained cash credits’ —U/s. 68ot|theActamounting to<10.49 Crores.The relevantextract of the impugned order giving the reasons for thesame is quoted below for ready reference: 3.8Going through the above, it is.SECC?thatinspiteofgivingseveralopportunities, the assessee has not proved the|sources for thecash receipts totalingRs.10,49,73,975-00 credited to the booksof account from the above said on various|dates,which the assessee claimed to be the|proceeds from cash sale of goods.Nodocumentaryevidencesliketheconfirmation from the party paying thecash to this effect, cash receipts bearing|the signature of payer or his authorizedperson/s etc. were produced till dated.|Hence, as discussed above, it was proposedto |reject the book results under the provisions ofsection 145(3) of the Income Tax Act, 1961, for|the following reasons. a.|PrimarydocumentsareNOT|reliable. Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax 4/7) b.More than 50% of the total sales declared are cash sales_ and theseare not verifiable. C.|Confirmation for credit of cashinto the books are not aquailable. qd.Data furnished by the assessee|not verifiable and not supported by anydocumentary evidence. ea.On third party verification, the|assessee’s claim is found to be false as the|alleged payers of the money disowned for|having made any payments to the assessee. 4.6TheOTlLUofprovingthegenuineness of the transaction, source of sum|of money found to have been received by anassessee is on the assessee. If the disputes|the liability for tax, it is for him to show eitherthat the receipt was not income or that ff it|was, it was exempt from taxation under the|provisions of the Act. In the absence of such|proof, the Revenue is entitled to treat it as|taxable income. Merely making the claimwithout furnishing supporting evidences doesnot absolve the assessee of the responsibility|in discharging the onus with regard to thesources for credit of cash into books as cash|sales. The burden ofproof squarely lies on the| 4.6TheOTlLUofprovingthegenuineness of the transaction, source of sum|of money found to have been received by anassessee is on the assessee. If the disputes|the liability for tax, it is for him to show eitherthat the receipt was not income or that ff it|was, it was exempt from taxation under the|provisions of the Act. In the absence of such|proof, the Revenue is entitled to treat it as|taxable income. Merely making the claimwithout furnishing supporting evidences doesnot absolve the assessee of the responsibility|in discharging the onus with regard to thesources for credit of cash into books as cash|sales. The burden ofproof squarely lies on the| Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax o/ 7 assessee. In view of the various shortfalls|discussed above and in view of the variousjudicialpronouncementsregardingthedischarge of onus with respect to the burdenof proof, I am constrained to hold that the|assessee has not discharged its burden ofproof. The onus squarely lies with the|assessee to prove the genuineness of the cashcreditswithSupportingdocumentaryevidences and the assessee has failed indischarging the above liability. 4.11 Inthe|backdropofthesepronouncements and in the light of the failure|of the assessee to prove its case as discussed|above, I arrive at the following reasonable|conclusion. All the particulars filed by the|assessee in respect of the claim of sources for|cash credits have been verified. After|examination and verification, the assessee’s|submission that the sources for cash credited|into the books on various dates, is from sales|to six parties, is hereby rejected. Accordingly,an amount ofRs. 10,49,73,975-00 being thetotalamountofallegedcashsalesrecorded in the books of accounts of theassessee against the names of the above|six parties, ts hereby brought to tax as| Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax6/7) unexplained credit u/s 68 of the Income Tax Act, 1961and added to the taxable|income of the assessee company. 3.|The petitioner-assessee has an_ effective alternate remedy by way of an appeal before the Commissioner of Income Tax (Appeals) U/s. I46Aof theActagainst the said order and in viewof the same, the petitioner-assessee is not entitledto invoke the extraordinary jurisdiction of this Courtunder Article 226of the Constitution of India. — 4The writ petition isdisposed ofwithliberty and direction to the petitioner-assessee to fileregular appeal before theCommissioner of Income Tax (Appeals), Bengaluru. If such an appeal is|filed by the petitioner-assessee within 30 days fromtoday, the same shall be entertained without raisingany objection of bar of limitation against thepetitioner-assessee asprayedbythelearned Date of Order 20-02-2018 W.P.No.33125/2017M/s. Deepak Extrusions Pvt. Ltd., VS.The Deputy Commissioner of Income Tax T/T counsel for petitioner but however subject to thepetitioner-aSSeSSEecomplyingwith.the.other conditions for maintaining such appeal before the saidCommissioner of Income Tax (Appeals), Bengaluru. TL| Sd/-)JUDGE