Iapl/37/2004 Of M/S Gaurav Theatres Ltd v. Asst. Commissioner Income Tax

Court No. - 35Case :- INCOME TAX APPEAL No. - 37 of 2004Appellant :- M/S Gaurav Theatres Ltd.Respondent :- Asst. Commissioner Income TaxCounsel for Appellant :- Amitabh Agrawal,Rahul AgarwalCounsel for Respondent :- Ashish Agarwal Hon'ble Bharati Sapru,J.Hon'ble Rohit Ranjan Agarwal,J. (By Hon. Rohit Ranjan Agarwal, J.) Heard Sri Rahul Agarwal, learned Counsel for the appellant and Sri Ashish Agarwal, learned Counsel forthe Department. The present appeal under Section 260A of the IncomeTax Act, 1961 was admitted on the following substantialquestion of law on 6.4.2007 :- "Whether in the facts and circumstances of the case within themeaning and purport of Section 68 of the Income Tax Act, 1961the appellant had discharged his onus and the addition ofRs.1,80,000/- as unexplained cash credit was justified?" The case of the assessee/appellant in nutshell is that itis a private limited company incorporated under theCompanies Act, 1956, and is carrying on business ofhigher purchase finance of vehicle, running of CinemaHall and also plying of trucks. The dispute relates to theassessment year 1996-97 financial year 1995-96. Theappellant had filed returned showing an income ofRs.1,18,640/- against which assessment was completedon an income of Rs.5,07,090/-. The difference inassessed and disclosed income was on account ofaddition of cash credit of Smt. Kallu Devi, deposit ofRs.1,80,000/- made by her in cash as margin money on12.6.1995 with the appellant for purchase of Truck. Case of the assessee is that Smt.Kallu Devi,subsequently decided not to purchase the Truck andmoney was treated as loan. The assessment for relevant year was made on 22.3.1999 and addition ofRs.1,80,000/- was made in the income of the assessee.The appeal filed by assessee against the assessmentorder was partly allowed by the Commissioner of IncomeTax (Appeal) on 18.2.2000, but the addition ofRs.1,80,000/- in the income of the appellant was upheldand the creditworthiness of Kallu Devi was discarded.The appeal filed by the appellant before the Tribunal alsomet the same fate and Tribunal dismissedthe appeal ofthe appellant and disbelieved the creditworthiness of thecreditor Smt. Kallu Devi on the ground that herstatement is not reliable as she has failed to prove thedeposit of interest received by her in the bank accountby way of demand draft as well as the return of the loanamount. Further the Tribunal held that the assessee also couldnot prove that the amount of interest has been paid toher. Tribunal also recorded finding that the assessee-company was advancing interest free loan to sisterconcerns and if the assessee has amount with it, thenthere was no need to take loan on deposit from Smt.Kallo Devi on interest. We have heard learned Counsel for the appellant who has relied upon the provisions of Section 68 of theIncome Tax Act and submitted that the assessee hadoffered explanation about the nature and source of themoney credited in the books of account and furtherproved the identity of the creditor and alsocreditworthiness of creditor. Learned Counsel for the Department vehemently submitted that all the three authorities had disbelievedthe creditworthiness of Smt. Kallu Devi, as the statementmade by her could not give any plausible explanation asto the deposit of interest and the refund of loan given byher to the assessee and further the money which came into her by way of gifts and loans from her relatives. We have heard learned Counsel for the appellant who has relied upon the provisions of Section 68 of theIncome Tax Act and submitted that the assessee hadoffered explanation about the nature and source of themoney credited in the books of account and furtherproved the identity of the creditor and alsocreditworthiness of creditor. Learned Counsel for the Department vehemently submitted that all the three authorities had disbelievedthe creditworthiness of Smt. Kallu Devi, as the statementmade by her could not give any plausible explanation asto the deposit of interest and the refund of loan given byher to the assessee and further the money which came into her by way of gifts and loans from her relatives. Having heard learned Counsel for the parties andperusing the records of the case, we find that theassessee had failed to give any satisfactory explanationas to the cash credit of Rs.1,80,000/- which was creditedin the name of Smt. Kallu Devi and the authorities hadrightly confirmed the addition of the said amount asunexplained cash credit. Further, the creditworthiness ofthe Creditor has been disbelieved by all the authoritiesand there is no plausible reason to believe the statementof Smt. Kallu Devi who has failed to give explanation orevidence before the authorities concerned which canlook into the facts of the case. The Tribunal being lastfact finding Court has found the creditor not creditworthyand the evidence has been disbelieved. We find noground to interfere in this matter. The question of law is, therefore, answered in favour of the Department and against the assessee. Accordingly, theappeal is dismissed. Order Date :- 26.7.2019S. Singh