M/S Blowell Auto P. Ltd v. Assistant Commissioner Of Income Tax Circle I, Faridabad

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No. 430 of 2007DATE OF DECISION : 27.03.2008 M/s Blowell Auto P. Ltd. .... APPELLANT Versus Assistant Commissioner of Income Tax Circle I, Faridabad ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:Mr. A.P. Jain, Advocate, for the appellant-assessee. * * * SATISH KUMAR MITTAL, J. ( Oral ) The instant appeal filed by the assessee under Section 260-A ofthe Income Tax Act, 1961 (hereinafter referred to as `the Act') is directedagainst the order dated 19.1.2007 passed by the Income Tax AppellateTribunal, Delhi Bench `SMC' Delhi (hereinafter referred to as `the ITAT') inITA No. 4135 (Del) 2005 in case of the assessee for the Assessment Year1993-94, by raising the following substantial question of law :- “1. Whether in the facts and circumstances of the case and inlaw, the ITAT was correct in sustaining an aggregate additionof Rs. 2,50,000/-, representing the loans and share capitalinvestment, as unexplained cash credit? In the present case, the Assessing Officer framed theassessment under Section 143 (3) of the Act while making an addition ofRs. 2,85,000/- on the ground that the appellant has failed to prove the creditworthiness of the creditors, namely Mrs. Sukha Goyal, Mr. Lav Goyal andSmt. Sumita Shekhar, and the genuineness of the transactions of loan andinvestments made by those creditors. The said order was challenged in appeal by the assessee. TheCommissioner of Income Tax (Appeals) [hereinafter referred to as `the CIT(A)'], vide its order dated 22.8.2005, dismissed the appeal and confirmed theaddition made by the Assessing Officer. Aggrieved against the said order, the assessee filed appealbefore the ITAT, which was allowed in part vide order dated 19.1.2007 andthe addition of Rs. 35,000/- on account of unsecured loan of Smt. SumitaShekhar, sustained by the CIT (A), was deleted. However, the findingrecorded by the Assessing Officer that the assessee failed to establish thesource of income, genuineness and credit worthiness of Mrs. Sukha Goyal,Mr. Lav Goyal was confirmed. We have heard counsel for the appellant and gone through theimpugned order, passed by the CIT (A). In this case, one Smt. Shikha Goyal had advanced loan ofRs.55,000/- and subscribed Rs. 45,000/- as share application money.Another creditor, namely Mr. Lav Goyal, had advanced a loan ofRs.1,05,000/- and subscribed Rs. 45,000/- by way of share applicationmoney. Though the assessee has established the identity of both these creditors by filing their affidavits, but in the affidavits, they have notmentioned any specific source of money which was advanced by them. It iswell settled that it is for the assessee to prove not only the identity of thecreditor, but the capacity of the creditor to advance the money and also thegenuineness of the transaction. In the instant case, the assessee has thoughestablished the identity of both the aforesaid creditors by producing theiraffidavits, but a finding of fact has been recorded to the effect that theassessee has failed to prove the capacity of these creditors to advance themoney and genuineness of the transaction. A perusal of the affidavits,annexed with the appeal, shows that the creditors have only mentioned thatthey advanced the amount to the assessee from their savings, but no savingaccount number of the bank or any other material showing the source ofincome has been mentioned. Except these two affidavits, no other materialwas produced to establish the credit worthiness of the creditors. Since theauthorities have recorded a pure finding of fact, which in our view is neitherillegal nor perverse, we are of the opinion that no substantial question oflaw is arising from the order of the ITAT, therefore, we do not find anymerit in this appeal. Dismissed. ( SATISH KUMAR MITTAL )JUDGE March 27, 2008 ndj ( RAKESH KUMAR GARG )JUDGE