1991 (4) TMI 180 - AT - Income Tax

Summary

Issues Involved:
1. Limitation of the assessment order.
2. Addition of Rs. 1,00,000 as non-acceptance of cash credit.
3. Disallowance of interest of Rs. 6,990 on the cash credit.

Detailed Analysis:

1. Limitation of the Assessment Order:
The assessee argued that the assessment order dated 30-12-1981 was time-barred, as per the provisions of sub-section (2A) of section 153 of the Income-tax Act, 1961. The original assessment was completed on 31-3-1969, and the Appellate Assistant Commissioner set aside the assessment on 10-2-1972, directing a fresh assessment. The assessee contended that the fresh assessment should have been completed within two years from the end of the financial year in which the order was received, i.e., by 31-3-1974.

However, the Tribunal, agreeing with the Departmental Representative, held that sub-section (2A) of section 153, which was inserted by the Taxation Laws (Amendment) Act, 1970 with effect from 1-4-1971, applied only to assessment years 1971-72 and subsequent years. Since the assessment in question pertained to the assessment year 1964-65, no time limit was applicable. Consequently, the order passed on 30-12-1981 was deemed valid and not barred by limitation.

2. Addition of Rs. 1,00,000 as Non-Acceptance of Cash Credit:
The assessee showed a borrowing of Rs. 1,00,000 on 2-1-1963 from M/s. Ram Gopal Nand Kishore, which was returned on 19-7-1965. The creditor, in statements dated 2-2-1970, 21-10-1970, and 31-3-1972, affirmed that the transactions were not genuine and were mere accommodation entries. The assessing officer, following the directions of the Inspecting Assistant Commissioner under section 144B, added back the sum of Rs. 1,00,000.

The Tribunal noted that the assessee failed to prove the genuineness of the transaction despite the opportunity to cross-examine the creditor. The creditor consistently affirmed that no genuine money was advanced, and the transaction was a mere Havala entry. The Tribunal held that the onus was on the assessee to prove the genuineness of the transaction, which was not discharged. Thus, the addition of Rs. 1,00,000 was upheld.

3. Disallowance of Interest of Rs. 6,990 on the Cash Credit:
The interest of Rs. 6,990 paid on the cash credit of Rs. 1,00,000 was also disallowed by the assessing officer and confirmed by the Commissioner of Income-tax (Appeals). The Tribunal upheld this disallowance, noting that the primary onus to prove the genuineness of the transaction was on the assessee, which was not met. The creditor's consistent statements negated the genuineness of the transaction, and thus, the interest claimed on such a non-genuine transaction was rightly disallowed.

Conclusion:
The appeal was dismissed, with the Tribunal upholding the validity of the assessment order dated 30-12-1981, the addition of Rs. 1,00,000 as non-acceptance of cash credit, and the disallowance of interest of Rs. 6,990 on the cash credit.