2008 (10) TMI 65 - HC - Income Tax

Cash credits additions - genuineness of the creditors could not be verified - case of assessee is that report was not made available with regard to one creditor (Sivagamasundari) - Tribunal was right in law in remitting the matter back to the file of the Assessing Officer only with regard to that particular report regarding the credit in the name of Smt. Sivagamasundari - Now this complaint that the matter should have been remitted in entirety is an after thought tribunal s order is valid

Summary

Issues:
1. Interpretation of the law regarding dismissal of an appeal by the Income-tax Appellate Tribunal.
2. Examination of the credit in the name of a specific individual in an assessment case.
3. Violation of principles of natural justice in relation to the Inspector's report.

Issue 1:
The case involved the interpretation of law regarding the dismissal of an appeal by the Income-tax Appellate Tribunal without properly appreciating the facts and evidence produced for proving entries in the books of account pertaining to a loan obtained from various creditors. Initially, a question of law was framed, which was later redrafted to focus on whether the Tribunal was correct in remitting the matter back to the Assessing Officer for specific purposes despite recording findings on the Inspector's report not being made available to the appellant-assessee. The assessment was found to be barred by limitation by the Tribunal, leading to a subsequent appeal by the Department.

Issue 2:
In the assessment year 1996-97, the appellant filed a return of income showing a total income of Rs. 69,380, which was later assessed at Rs. 9,84,080 by the Assessing Officer. The addition made was a sum of Rs. 9,14,700 representing cash credits in the name of 16 persons. The Tribunal found that the genuineness of most creditors could not be verified, focusing only on three creditors for whom details were furnished. The appellant raised concerns about the violation of natural justice due to the Inspector's report not being made available, specifically in the case of one creditor, leading to the Tribunal directing the Assessing Officer to pass a fresh order after providing adequate opportunity.

Issue 3:
The violation of principles of natural justice was a key aspect of the case, particularly in relation to the Inspector's report not being shared with the appellant for one specific creditor. The Tribunal acknowledged this violation only in the case of that creditor, Sivagamasundari, as the appellant did not raise objections regarding the Inspector's report for other creditors. The appellant's counsel argued that the remittal order should not have been restricted to one creditor, but the court disagreed, stating that the appellant's lack of information on most creditors and the specific complaint regarding Sivagamasundari justified the limited remittal. The court dismissed the appeal, emphasizing that no substantial question of law arose for consideration in remitting the matter in its entirety.