The Commissioner Of Income Tax,Faridabad v. N.p.garodia

IN THE HIGH COURTOF PUNJAB AND HARYANA, CHANDIGARH. ITA No. 808 of 2008 Date of decision: 13.1.2009 The Commissioner of Income Tax,Faridabad vs. ....Appellant N.P.Garodia ...Respondent CORAM:HON'BLE MR.JUSTICE J.S.KHEHAR.HON'BLE MR.JUSTICE NAWAB SINGH. --- Present:Mr.Yogesh Putney, Senior Standing Counsel,for the appellant.-- J.S.KHEHAR,J. (Oral) The respondent-assessee was assessed to tax while taking intoconsideration unexplained credit amounting to Rs.29 lacs as income undersection 69 of the Income Tax Act, 1961 (hereinafter referred to as “theAct”). The Assessing Officer had also declined the claim of the assessee indeduction of a sum of Rs.3,25,735/-, claimed as interest,which had allegedlybeen paid by the assessee on the aforestated loan. In furtherance of a noticeissued to the assessee under section 143(2) of the Act, the assessee madeavailable to the Assessing Officer confirmation letters and particularsdepicting that he had taken the aforesaid amount of Rs.29 lacs as loans. Healso revealed the source(s) from which the said loan(s) had been taken. It is not a matter of dispute before us, that the loans underconsideration were extended to the assessee by way of transactions throughnormal banking channels. It is also not a matter of dispute, that the loanees who had extended the loans to the respondent-assessee hadextended similar loans for earlier years as well. In the aforesaid view of thematter, there cannot be any dispute about the fact that the nature and thesource of the loans came to be appropriately disclosed by the respondent-assessee to the Assessing Officer. The case of the Revenue at the present juncture is, that theassessee had not placed any material before the Assessing Officer depictingthe creditworthiness of the loanees. It is also the case of the Revenue in theinstant appeal, that the veracity of the information furnished to theAssessing Officer by the respondent-assessee had not been verified onaccount of the fact that materials and particulars about creditworthiness hadnot been furnished to the Assessing Officer, and as such, it was imperativefor the Assessing Officer to take into consideration the amounts referred tohereinabove, as the income of the assessee, and to make him liable to paytax thereon. The final order passed by the Income Tax Appellate Tribunaldated 22.2.2008, which is subject matter of challenge at the hands of theRevenue through the present appeal, has taken into consideration the factthat the respondent-assessee had moved an application under section 131 ofthe Act, requiring the Assessing Officer to summon the loanees, and sincethe Assessing Officer had taken no action whatsoever to do so, therespondent-assessee had not been afforded an adequate opportunity ofdischarging the onus placed on his shoulder under section 68 of the Act. Having given our thoughtful consideration to the determinationrendered by the Income Tax Appellate Tribunal's order dated 22.2.2008, weare satisfied, that it was imperative for the Assessing Officer to summon the The final order passed by the Income Tax Appellate Tribunaldated 22.2.2008, which is subject matter of challenge at the hands of theRevenue through the present appeal, has taken into consideration the factthat the respondent-assessee had moved an application under section 131 ofthe Act, requiring the Assessing Officer to summon the loanees, and sincethe Assessing Officer had taken no action whatsoever to do so, therespondent-assessee had not been afforded an adequate opportunity ofdischarging the onus placed on his shoulder under section 68 of the Act. Having given our thoughtful consideration to the determinationrendered by the Income Tax Appellate Tribunal's order dated 22.2.2008, weare satisfied, that it was imperative for the Assessing Officer to summon the loanees, and to record their statements under sections 131 of the Act. It isonly thereafter, that the totality of the material placed by the assessee beforethe Assessing Officer could be taken into consideration to determine theveracity thereof, under section 68 of the Act. In these circumstances, we areof the view, that the Income Tax Appellate Tribunal, in its order dated22.2.2008, having remanded the matter to the Assessing Officer, and havingrequired the Assessing Officer to issue notices to the loanees under section131 of the Act, made way for the assessee to discharge the onus placed onhis shoulder under section 68 of the Act. It is only when the aforesaidstatements are recorded that the Assessing Officer will be in an effectiveposition to determine the veracity of the submission of the assessee. In thefacts and circumstances of the present case, no detrimental action can besaid to have been taken by the Income Tax Appellate Tribunal against theRevenue. For the reasons recorded by us hereinabove, the assertion inrespect of the cash credits and the veracity thereof, deduction of a sum ofRs.3,25,735/- claimed as interest paid on loans would depend on theoutcome of the issue determined hereinabove. For the reasons recorded hereinabove, we find no merit in theinstant appeal and the same is dismissed. ( J.S.Khehar) Judge January 13, 2009rk (Nawab Singh ) Judge