2017 (2) TMI 1126 - HC - Income Tax

Unexplained cash credit - proof of creditworthiness - failure in discharging the onus of proving the creditworthiness - additional evidence taken on record at the appellate stage to deleted additions - Held that - In the matter of permitting additional evidence and thereafter in considering the same at the appellate stage, the Department through the assessing officer was granted reasonable opportunity to rebut the same and after considering various aspects of the matter, concurrent findings have been recorded by both the appellate authorities namely; Commissioner (Appeals) and the ITAT. Finding no error in not only accepting the additional evidence on record, but, also in analyzing the same and holding that the creditworthiness, trustworthiness of the credit transaction have been proved beyond reasonable doubt. The aforesaid is a concurrent findings of fact recorded by the both the appellate authorities, they are reasonable in nature and we find no reason to interfere into the aforesaid concurrent finding of fact. In our considered opinion, no substantial question of law arises for consideration. The judgments relied upon by Revenue are distinguishable on facts. They were cases where additional evidence was taken on record without granting proper opportunity to the assessing officer to rebut the same, whereas in these cases,we find that the additional evidence were placed to the notice of the assessing officer. The assessing officer did give his remand report on the same, did not raise any objection to its admissibility and it is only after granting of opportunity to the assessing officer that the orders in question have been passed. Accordingly, the judgments relied upon may not apply in the facts and circumstances of the present case. - Decided against revenue

Summary

Issues:
- Appeals filed by Revenue challenging orders of Commissioner (Appeals) and Income Tax Appellate Tribunal under section 260A of the Income Tax Act, 1961.
- Assessment of non-banking financial institute's income for issuing multi-city cheques.
- Addition to income due to doubtful deposits and failure to prove creditworthiness of creditors.
- Admissibility of additional evidence at appellate stage without opportunity for inquiry.
- Legal question of deletion of additions made under section 69 of the Income Tax Act.
- Examination of creditworthiness and genuineness of transactions.

Analysis:
1. The appeals were filed by the Revenue against orders of the Commissioner (Appeals) and the Income Tax Appellate Tribunal. The facts and legal questions were identical across cases, leading to a joint consideration of all appeals. The primary issue revolved around the assessment of a non-banking financial institute's income related to issuing multi-city cheques of amounts less than ?50,000, encashable nationwide. The assessing officer made additions to the income due to doubtful deposits, prompting the need to establish the creditworthiness of creditors.

2. The Revenue contended that the additional evidence accepted at the appellate stage without granting the assessing officer an opportunity for inquiry was erroneous. Citing relevant legal provisions and judgments, the Revenue sought to challenge the deletion of additions made under section 69 of the Income Tax Act based on the lack of proper examination of creditworthiness and genuineness of the transactions.

3. Upon detailed examination, the appellate authority found that the assessee had provided additional evidence before them, explaining the inability to present it before the assessing officer. The assessing officer, upon receiving the remand report, did not object to the admissibility of the additional evidence. The Commissioner (Appeals) extensively analyzed the evidence and allowed deductions based on the creditworthiness established through documents like agreements, PAN, bank statements, and more.

4. The Income Tax Appellate Tribunal upheld the Commissioner (Appeals)' decision, emphasizing that once the assessee had discharged its onus by providing relevant documents, the burden shifted to the Revenue to take action. The Tribunal found no fault in accepting the additional evidence and concluded that the creditworthiness of the transactions had been proven beyond doubt, citing precedents to support their decision.

5. The High Court, after considering the arguments presented by the Revenue, concluded that no substantial question of law arose for consideration. The court highlighted that the assessing officer had been given a fair opportunity to respond to the additional evidence, distinguishing the case from precedents where such opportunities were lacking. Consequently, the court dismissed all appeals, affirming the concurrent findings of fact by the appellate authorities.