Pr. Commissioner Of Income Tax v. M/S Kundlas Loh Udyog

IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA ITA No.12 of 2016 Date of decision: 17.5.2017 Pr. Commissioner of Income Tax Versus ..Appellant. M/s Kundlas Loh Udyog ..Respondent. Coram: The Hon’ble Mr. Justice Sanjay Karol, Acting Chief Justice The Hon’ble Mr. Justice Sandeep Sharma, Judge Whether approved for reporting? For the Appellant: Mr. Vinay Kuthiala, Senior Advocate, with Mr. Diwan Singh Negi, Advocate, for the appellant. Mr. Vishal Mohan, Advocate. For the respondent: ______________________________________________________________ Sanjay Karol, J(oral) It is the common case of the parties, as is also evident from the impugned order(Annexure P-A), dated 21.10.2015, passed in ITA Nos. 133/CHD/2010 & 463/CHD/2011 by the Income Tax Appellate Tribunal Division Bench, Chandigarh, that the Tribunal did not discuss the evidence while examining the credit worthiness of the creditors and genuineness of the transactions, only for the reason that a question of law in this regard stands settled in Roshan Di Hatti versus Commissioner of Income Tax, Delhi (1977)2 Supreme Court Cases 378 and the Commissioner of Income Tax, U.P versus Bharat Engineering and construction company (1972) 4 Supreme Court Cases 401. 2. Having gone through the decisions aforesaid, we are of the considered view that Hon’ble Supreme Court has not laid down the law so as to read, that unless and until the assessee starts production, rigours of Section 68 of the Income Tax Act, shall not come into force/play. Rather, perusal of the aforesaid reports suggest that burden lies upon the assessee to prove the creditworthiness of the creditors as well as genuineness of the transactions, which fact necessarily has to be adjudicated by the fact finding authorities. 3. Noticeably, in the instant case, which fact is also not in dispute that out of 64 creditors, notices never came to be issued to 11 creditors. Quite apparently, learned Tribunal without discussing the evidence, if any, placed on record by the assessee with regard to the creditworthiness and genuineness of the transactions, proceeded to hold that no addition on account of unexplained credit could be made against the assessee, since the assessee was in the process of installing the plant and had not commenced any business activities. Apart from above, it also emerges from the impugned order that assessee vide letter dated 24.11.2008 had requested the Assessing Officer to issue summons against the aforesaid 11 creditors to ensure their attendance for their examination on oath under Section 131 of the Income Tax Act, but Assessing Officer instead of issuing notices under Section 131 of the Act proceeded to decide the case on the basis of material on record. 4. Accordingly, in the given facts and circumstances of the case, we quash the impugned order dated 21.10.2015 (Annexure P-A) passed by the tribunal and remand back the matter to the Assessing Officer, ITA Baddi to examine and decide the matter afresh on the basis of material adduced on record by the respective parties, so they may confirm whether they had advanced loan to the assessee against interest through banking channel or not. The creditworthiness of the creditors and genuineness of the transactions shall be ascertained as per law. Since, the assessment pertains to the year 2006-2007 & 2007-2008, this Court hope and trust that authority concerned shall take decision expeditiously. [ Copy dasti. ( Sanjay Karol ) Acting Chief Justice 17[th] May, 2017 (shankar) ( Sandeep Sharma) Judge