The Commissioner Of Income Tax – 10, Mumbai v. Trilite Plastics Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.2959 OF 2009 The Commissioner of Income Tax – 10, Mumbai ..Appellant. Versus Trilite Plastics Private Limited ..Respondent. Mr.B.M. Chatterjee with Ms.Padma Divakar for the appellant. Mr.Atul K. Jasani for the respondent. CORAM : Dr.D.Y. Chandrachud & J.P. Devadhar, JJ. DATE : 23[rd] February, 2010. P.C. : 1.The registry is directed to register the appeal. Office objections are waived. By consent, the matter is taken up for hearing and final disposal. 2.The following questions of law have been formulated by the Revenue in this appeal against the decision of the Income Tax Appellate Tribunal : a)Whether on the facts and circumstances of the case, the Tribunal in law was justified in deleting the addition of Rs.38,00,000/- as unexplained cash credit u/s.68 of the Income Tax Act in the Books of the assessee on the ground that the assessee had proved the identity of the creditor and need not prove the genuineness and the credit worthiness of the creditor ? b)Whether on the facts and circumstances of the case, the Tribunal in law was justified in holding that the addition of Rs.1,55,80,712/- u/s.41(1) of the I.T. Act was not warranted as the assessee had offered the same in A.Y. 2007-2008 ? c)Whether on the facts and circumstances of the case, the Tribunal in law was justified in admitting the additional evidence in contravention of the Rule 46 A in deleting the addition of Rs.1,55,80,712/- made by the AO u/s.41(1) of the I.T. Act on the ground that the same was offered for taxation in A.Y.2007-2008 ? 3.In so far as the first question is concerned, the case of the assessee was that a loan was taken from Agnikal Vyapar Private Limited, which was directly paid by the loan creditor on behalf of the assessee to the State Industrial and Investment Corporation of Maharashtra (SICOM) and to the Canara Bank by cheque. The assessee filed a ledger extract from its books in respect of the account of Agnikal Vyapar Private Limited and also furnished the address of the loan creditor together with the GIR number. The Assessing Officer accepted the case of the assessee in respect of another loan, but rejected the case of the assessee in respect of the loan in question on the ground that the assessee had not filed the PAN number of the loan creditor. The Income Tax Appellate Tribunal, while adverting to the provisions of Section 68 of the Income Tax Act, 1961, noted that the assessee had furnished (i) The ledger extract in respect of the account; (ii) The address of the loan creditor; and (iii) The GIR number. The Tribunal noted that the Assessing Officer did not issue summons to the aforesaid third party for, if he had done so the veracity of the claim could have been verified. Consequently, on the basis of the material on record, the Income Tax Appellate Tribunal held that there was no justification for the Assessing Officer to make an addition under Section 68. The Tribunal thus ordered deletion of the same. 4.There can be no dispute about the principle of law, espoused in these proceedings by the Revenue, that the onus of proving the source of a sum of money found to have been received by an assessee is on him. (In this connection, see Roshan Di Hatti V/s. Commissioner of Income Tax, Delhi[1]). However, it is not possible to accept the contention of the Revenue that the failure of the assessee to furnish the PAN number of the loan creditor must necessarily result in the rejection of the claim of the assessee and a consequent addition under the provisions of Section 68. The requirement of furnishing the PAN number is neither explicit nor implicit in Section 68. Consequently, the Tribunal was of the view that the assessee, on the basis of the material placed on record, had discharged the onus cast upon him by the provisions of Section 68 by offering a satisfactory explanation of the nature and the source of the alleged loan. The loan was, according to the assessee, utilized for repayment of the outstanding dues of the assessee to SICOM and to Canara Bank and was directly paid by the loan creditor to those financial institutions by cheque. The view which has been taken by the Tribunal is a possible view on the basis of the material on record. No substantial question of law would arise. 5.Insofar as the second and third questions are concerned, both of them relate to an addition that was made under Section 41(1) by the Assessing Officer in the amount of Rs.1.55 crores. The Tribunal has noted in para 12 of its judgment that the amount was written off by the assessee and was offered to taxation in the financial year 2006-2007, corresponding to assessment year 2007-2008. This has been accepted on the part of the Revenue. The assessment for assessment year 2007-2008 has become final. In these circumstances, the view which has been formed by the Tribunal on this aspect of the matter does not suffer from any error and would not give rise to any substantial question of law. 6.The appeal shall accordingly stands dismissed. There shall be no order as to costs. (J.P. Devadhar, J.) (Dr.D.Y. Chandrachud, J.)