M/S Ashoka Trading Co v. Commissioner Of Income Tax, Karnal

ITA No. 456 of 2006 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 456 of 2006 Date of Decision: 3.12.2010 M/s Ashoka Trading Co. Versus Commissioner of Income Tax, Karnal ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rushtam Kapoor, Advocate for the appellant.Mr. Yogesh Putney, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal was admitted by this Court vide order dated22.1.2007 for determination of the following substantial question of law:- “Whether under the facts and circumstances of thecase the Tribunal is justified in arriving at the findingson the true and correct interpretation of theprovisions of Section 68 which are misconceived?” 2.Briefly stated the facts for adjudication as narrated in theinstant appeal are that the assessee filed its return of income on31.8.1997 for the assessment year 1997-98 declaring an income ofRs.59,110/-. The case of the assessee was taken up for scrutiny andthe Assessing Officer found the credits in the names of Ram Kumar and Risal of Rs.40,000/- and Rs.86,012/- respectively to be genuinewhereas credit of Rs.40,000/- in the name of Smt. Sarla Devi was heldto be unexplained. Accordingly, vide order dated 31.1.2000 theAssessing Officer made various additions and completed theassessment at Rs.1,42,560/-. Feeling aggrieved, the assesseeapproached the Commissioner of Income Tax (Appeals) [in short “theCIT(A)”] who vide order dated 5.5.2003 partly allowed the appeal.However, the addition of Rs.40,000/- made by the Assessing Officer onaccount of cash credit in the name of Sarla Devi to be unexplainedincome of the assessee under Section 68 of the Act was affirmed. Onfurther appeal by the assessee, the Income Tax Appellate Tribunal,Bench “A”, Chandigarh (hereinafter referred to as “the Tribunal”) videorder dated 24.3.2006 while partly allowing the appeal of the assessee,upheld the aforesaid addition of Rs.40,000/-. Hence, the present appealby the assessee. 3.We have heard learned counsel for the parties. 4.The solitary question in this appeal is with regard to theaddition of Rs.40,000/- under Section 68 of the Act which has beensustained by all the three authorities below. 5.The Tribunal while upholding the aforesaid addition hadheld as under:- “We have given our careful consideration to the rivalcontentions. It is well settled principle of law that theonus to establish the genuineness of the credit in thebooks of accounts is upon the assessee. Mere filingof confirmatory letters or particulars is not enough todischarge the onus. Even filing of the affidavit of thecreditor is not sufficient to discharge the onus. This principle of law is established by the ratio of followingdecisions: i)Sree Lekha Banerjee & others Vs. CIT 49 ITR112(SC).112(SC). ii)CIT Vs. Nivedan Vanijay Niyojan Ltd. 263 ITR623 (Cal).623 (Cal). iii)Shankar Industries Vs. CIT 114 ITR 689 (Cal). iv)CIT Vs. Ruby Traders & Exports Ltd. 182 CTR596 (Cal).596 (Cal). v)CIT Vs. Nivedan Vanijya Niyojan Ltd. 182 CTR605 (Cal).605 (Cal). vi)CIT Precision Finance Pvt. Ltd. 208 ITR 465(Cal).(Cal). principle of law is established by the ratio of followingdecisions: i)Sree Lekha Banerjee & others Vs. CIT 49 ITR112(SC).112(SC). ii)CIT Vs. Nivedan Vanijay Niyojan Ltd. 263 ITR623 (Cal).623 (Cal). iii)Shankar Industries Vs. CIT 114 ITR 689 (Cal). iv)CIT Vs. Ruby Traders & Exports Ltd. 182 CTR596 (Cal).596 (Cal). v)CIT Vs. Nivedan Vanijya Niyojan Ltd. 182 CTR605 (Cal).605 (Cal). vi)CIT Precision Finance Pvt. Ltd. 208 ITR 465(Cal).(Cal). Moreover, the Assessing Officer has rightly placedreliance on the decision of the jurisdictional HighCourt of Punjab & Haryana in the case of Smt. ShantiDevi (supra) to support the finding that where thecreditor did not maintain any personal books ofaccounts, the Assessing Officer is entitled to enquireand satisfy himself about the sources of money in thehands of the creditor. In this case, though thecreditor had admitted to have advanced the money tothe assessee, the source of money deposited in thebank account out of which the money was advancedto the assessee was not explained. The merestatement that a sum of Rs.40,000/- was saved out ofhouse-hold expenses is bereft of substance. Thelady creditor does not have any source of incomeand therefore, accumulation of Rs.40,000/- cash,advanced to the assessee, routed through bankaccount is not satisfactorily explained. TheAssessing Officer was, therefore, justified in makingthe addition of Rs.40,000/-. The additional evidencefurnished by the assessee before us is also of noconsequence in so far as the source of credit of Rs.40,000/- has not been satisfactorily explained.Mere payment by cheque is not enough to dischargethe onus. We, therefore, confirm the addition ofRs.40,000/-.” 6.The Assessing Officer, CIT(A) and the Tribunal onappreciation of the evidence on record had arrived at the conclusionthat the cash credit of Rs.40,000/- in the name of Smt. Sarla Devi wasunexplained income of the assessee under Section 68 of the Act as theexplanation furnished by the assessee was not satisfactory. Learnedcounsel for the appellant made valiant efforts to demonstrate that thefinding recorded was perverse but only effort was to reappreciate theevidence and conclude otherwise. This does not fall within the domainof Section 260A of the Act. The Tribunal has taken a plausible view onappreciation of material on record. Accordingly, the substantial questionof law is answered against the assessee and finding no merit in theappeal, the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE December 3, 2010gbs (ADARSH KUMAR GOEL)JUDGE