Tax Case (Appeal) v. The Assistant Commissioner Of Income Taxcircle Iv, Chennai – 34

In the High Court of Judicature at Madras Dated: 01.12.2014 Coram The Honourable Mr.JUSTICE R.SUDHAKARandThe Honourable Mr.JUSTICE R.KARUPPIAH Tax Case (Appeal) No.1002 of 2014 Smt.G.MaliniNo.49, Sri Venkatesa Perumal Nagar,Arumbakkam,Chennai – 600 106. .... Appellant/Appellant Vs. The Assistant Commissioner of Income TaxCircle IV, Chennai – 34. .... Respondent/Respondent APPEAL under Section 260A of the Income Tax Act against theorder dated 24.10.2013 made in I.T.A.No.1465/Mds/2013 on the file ofthe Income Tax Appellate Tribunal, Chennai 'C' Bench. against the Order of the Appellate Commissioner of Income Tax(Appeal-VIII) Chennai - 600 034, dated 01.02.2013 and made in ITA No.10/09-10(A)-VIII and against the Order of the Asst.Commissioner of IncomeTax, Circle -IV, Chennai-34 dated 17.12.2008 and made in PAN/GIRNo.AGA PM 29936. For Appellant : Mr.R.SivaramanFor Respondent : Mr.M.Swaminathan Standing Counsel for Income Tax (Delivered by R.SUDHAKAR,J.) This Tax Case (Appeal) is filed by the assessee as against theorder of the Income Tax Appellate Tribunal raising the followingsubstantial questions of law: “ 1. Whether on the facts and in the circumstances ofthe case, the Appellate Tribunal was right in law inconfirming the addition of Rs.1,00,000/- towards estimatedinflation of the labour charges? https://hcservices.ecourts.gov.in/hcservices/ 2. Whether on the facts and in the circumstances ofthe case, the Appellate Tribunal was right in holding thatthe appellant had accepted to the said additions at thetime of assessment, even though a specific ground wasraised before the CIT (Appeals) that only concession wasgranted? 3. Whether on the facts and in the circumstances ofthe case, the Appellate Tribunal is right in law inconfirming the addition of Rs.3,14,800/- under Section 68of the Act, even though the appellant has discharged herburden by proving the details of the persons from whom shehad taken loans?” 2. The assessment in this case relates to the assessment year2006-07. The assessee is engaged in the business of manufacture ofbitumen products and felts. The assessee is also engaged in thebusiness of contracts for purchase of materials, wherein she incurslabour expenses. The assessee filed her return of income for theassessment year in question declaring her income as Rs.4,73,836/- andagricultural income at Rs.5,99,400/-. On a perusal of the records,the Assessing Officer was of the view that the assessee had inflatedthe labour expenses and hence, added a sum of Rs.1.00 lakh. TheAssessing Officer also found that the assessee had shown in herbalance sheet unsecured loans from friends and relatives to the tuneof Rs.11,76,342/-. The loans were ranging between Rs.15,000/- toRs.19,000/-. Hence, the assessee was asked to submit the list of loancreditors along with the addresses. The parties from whom loanswere taken had submitted confirmation letters stating that the loanhas been given for business purposes. The assessee was asked toprove the creditworthiness of the parties and the assesee was able toprove the creditworthiness of majority of the lenders except 19persons and that amounted to Rs.3,14,800/-. Hence, the AssessingOfficer made addition of the same under Section 68 of the Income TaxAct. Aggrieved by the order of the Assessing Officer, the assesseefiled an appeal before the Commissioner of Income Tax (Appeals), whoconfirmed the findings of the Assessing Officer. Aggrieved by thesame, the assessee preferred further appeal before the Income TaxAppellate Tribunal. The Tribunal dismissed the appeal holding thatthe assessee has not shown any material to controvert the findings ofthe Assessing Officer. As against the said order of the Tribunal,the assessee is before this Court. 3. Learned counsel appearing for the appellant submits that theTribunal has not considered the fact that as per Section 68 of theIncome Tax Act, the burden of the assessee shall stand discharged themoment the assessee proves the identity of their creditors. Hence,the order of the Tribunal may be set aside. 4. Heard learned counsel appearing for the appellant and perusedthe materials placed before this Court.https://hcservices.ecourts.gov.in/hcservices/ 5. We find no merits in this appeal. The issue involved in thisappeal is in respect of the additions made towards inflated labourcharges and unproved cash credits. With regard to the labour chargesis concerned, the assessee had met the entire expenditure towardslabour charges in cash and the assessee had not produced any vouchersto prove the genuineness of the expenditure claimed. Hence, theAssessing Officer made addition of Rs.1.00 lakh out of Rs.17,28,696/-claimed by the assessee. It is seen from the assessment order thatthe assessee had also accepted the same at the time of assessment.Hence, the Tribunal is correct in confirming the addition made by theAssessing Officer. 6. With regard to the addition made under Section 68 of theIncome Tax Act in respect of unsecured loans, it is seen from theorder of the Assessing Officer that the assessee had proved thecreditworthiness of majority of lenders except 19 persons, from whomthe assessee had borrowed funds. The Assessing Officer allowed theclaim in part and denied the rest, as the assessee did not prove thecreditworthiness of the 19 persons. Even though the assessee hadshown the identity of 19 persons, the Assessing Officer held thatthey are not income tax assessees and they are only name lenders.The assessee is able to prove the creditworthiness of majority oflenders, but there is no material to prove the creditworthiness ofthe remaining persons. We find that after considering theexplanation submitted by various lenders enclosing the cash bookindicating the date of lending, the Assessing Officer allowed theclaim in part. In respect of the persons who have not shown anymaterial to prove the genuineness of the loan given, the AssessingOfficer declined to grant the benefit. Hence, the Tribunal confirmedthe order of the Assessing Officer. We find no infirmity in theorder of the Tribunal, which is based on facts not rebutted. 7. We hold that the issue raised is a pure question of fact. Wefind no question of law much less any substantial question of lawarises for consideration in this appeal. Accordingly, this Tax Case(Appeal) stands dismissed. No costs. sl Sub Assistant Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1. The Income Tax Appellate Tribunal,Besant Nagar, Chennai -90.2. The Commissioner of Income Tax, 2nd Floor, Main Building, 121, MGRoad, Nungambakkam, VIII(Appeals-VIII), Chennai-34 3. The Assistant Commissioner of Income Tax, Circle IV, Chennai -34. 1 cc to Mr.M.Swaminathan ,Advocate, SR.No.57907/2014 1 cc to Mr. R.Sivaraman,Advocate, SR.No.58155/2014 br(co)pmk.19.12.2014 T.C.(A) No.1002 of 2014