The Commissioner Of Income Tax-Iii Pune v. Shri Shriram Hiralal Soni

bsb IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1842 OF 2011ALONG WITHINCOME TAX APPEAL NOS.1702/2011, 1709/2011, 1736/2011, 1757/2011. The Commissioner of Income Tax-III Pune. … Appellant v/s Shri Shriram Hiralal Soni … Respondent Mr.Vimal Gupta, senior counsel with Mr.Vipul Arun Bajpayee for the appellant in all appeals. Mr.F.V. Irani with Mr.A.K. Jasani for the respondent in all appeals. CORAM: S.C. DHARMADHIKARI & G.S. KULKARNI, JJ. DATED : 2ND APRIL, 2014 P. C. : 1Heard Mr.Gupta, learned senior counsel appearing on behalf of the revenue. He would urge that the questions framed at page 5 paragraph 5 of the paper book are substantial questions of law. This is a case where the provision in question, namely, Section 68 was wholly applicable. To that extent the Tribunal was in favour of the revenue, however, the Tribunal erroneously held that the amount in question was not in the nature of the cash credit in the hands of the assessee as defined in Section 68 of the Income Tax Act, 1961. He submits that such conclusions would raise substantial questions of law because the facts denote that the entries made in the books of the assessee cannot be said to be without any corresponding obligation and liability. It cannot be said that the assessee had acted as conduit. It is erroneous to assume that he had no liability and particularly to repay the loan in case of default by the borrowers. For all these reasons the finding of fact is perverse and vitiated in law. 2We are unable to accept this contention of Mr.Gupta for more than one reason. The Tribunal has found that entries on the basis of cash books were written and maintained systematically. Therefore, they were in the books of accounts of the assessee in respect of his unaccounted business. 3However, it cannot be said that the books indicated any amount in the nature of cash credit in the hands of the assessee as defined by Section 68 of the Act. In the facts of the present case, the Tribunal found that the assessee acted as a conduit. He had no obligation to the investor, inasmuch as the investor came to him only to seek a proposed borrower or an introduction to him. That proposed borrower also indicated his name and interest in borrowing amount of the investor. The two persons were brought together and therefore beyond acting as conduit, the entries would not mean that the assessee had earned any credit or any cash. The borrowing and lending may be in cash but with no corresponding liability. The Tribunal rightly came to the conclusion that the provision of Section 68 could not have been invoked in the case of the subject assessee. Such findings of fact therefore do not raise any substantial question of law. The appeal is, therefore, devoid of any merit and is accordingly dismissed. 4Mr.Gupta fairly conceded that in so far as questions 5(b) and 5(c ) are concerned, the order of the Tribunal takes care of the issue, inasmuch as, there is a direction and order of remand. In these circumstances, these appeals do not raise any substantial question of law as formulated at paragraph 5 (b) and ( c ) are concerned. The appeals are disposed of accordingly. (G.S. KULKARNI, J.) (S.C.DHARMADHIKARI, J.)