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TMI Blog2006 (1) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act but the creditor did not appear and the AO asked the assessee to produce him. Since the assessee could not produce the creditor, the AO treated this loan of Rs. 5 lakhs as unexplained and made the addition of Rs. 5 lakhs as unexplained cash credit and Rs. 75,000 paid as interest thereon. 3. Assessee preferred an appeal before the CIT(A) and furnished the bank certificate proving the transaction of loan performed through banking channel. The assessee has also furnished the PAN of the creditor and these informations were given to the AO for verification and for submission of the remand report. The AO accordingly verified the nature of transaction and submitted report that the loan was obtained through banking channels and there was no deposit of cash in the bank account of the creditor before the issuance of cheque. Being convinced with the creditworthiness of the creditor and genuineness of the transaction, the CIT(A) deleted the additions. 4. Aggrieved, the Revenue has preferred an appeal before the Tribunal with the submission that the assessee was badly failed to produce the creditor and as such, the creditworthiness of creditor and genuineness of transactions was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that such person has without lawful excuse, failed to attend or produce the document in compliance with such summons or has intentionally avoided service, it may issue a proclamation requiring him to attend to give evidence or to produce the document at the time and place to be named, therein; and a copy of the proclamation may be affixed on the outer door or conspicuous part of the house in which he ordinarily resides. Sub-r. (3) of r. 10 says that in lieu of or at the time of issuing such proclamation or at any time afterwards, the Court may in its discretion issue a warrant either with or without bail for the arrest of such person and may make an order for the attachment of the property to such amount as it thinks fit not exceeding the amount of cost of attachment and of any fine which may be imposed under r. 12. Once the AO has invoked the provisions of s. 131 of the IT Act, he will enjoy all powers of a Civil Court under the CPC for enforcing the attendance of a person for recording his statement and that powers include issuance of proclamations and bailable and nonbailable warrants when he is satisfied that the witness is avoiding the service or not complying the summons is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the document in compliance with such summons or has intentionally avoided service, it may issue a proclamation requiring him to attend to give evidence or to produce the document at a time and place to be named therein; and a copy of such proclamation shall be affixed on the outer door or other conspicuous part of the house in which he ordinarily resides. (3) In lieu of or at the time of issuing such proclamation, or at any time afterwards, the Court may, in its discretion, issue a warrant, either with or without bail, for the arrest of such person, and may make an order for the attachment of his property to such amount as it thinks fit, not exceeding the amount of the costs of attachment and of any fine which may be imposed under r. 12 : Provided that no Court of Small Causes shall make an order for the attachment of immovable property.' Admittedly, no such steps as are provided for by this statutory provision for the appearance of the witnesses were taken by the ITO for the appearance of Banarasidas. We are of the opinion that under these circumstances neither the ITO nor the IAC nor the Tribunal were justified in fastening the blame at the door of the assessee and disbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular provisions of the CPC but all the powers which the Civil Court has under the Code have been conferred on the ITO on some specified matters. One such matter is 'compelling the production of books of account and other documents'. Sec. 131(1) must, therefore, be construed to confer on the ITO all the relevant powers which the Civil Courts have under the CPC regarding the production of books of account and other documents. Since order 13, r. 10, confers such power on theCivil Courtto call for documents from other Courts, the ITO too has such powers unders. 131(1) of the Act." 7. In Jamnadas Madhavji & Anr. &Co.vs. J.B. Panchal, ITO & Anr. (1986) 58 CTR (Bom) 1 : (1986) 162 ITR 331 (Bom) , the Hon'ble Bombay High Court also supported the view that ITO/AAC/IAC/CIT/CIT(A) are conferred with the same powers as are vested in a Court under the CPC, 1908 when trying a suit. In the above case, the Hon'ble Bombay High Court observed as under: "The officers mentioned in s. 131(1) of the IT Act, 1961, viz., the ITO, AAC, IAC, CIT(A) and CIT are conferred with the same powers as are vested in a Court under the CPC, 1908, when trying a suit. The CPC confers upon a Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r non-service of the summons. Such examination is compulsory if the certificate of the serving officer has not been verified by an affidavit and is optional if it has been as verified. (ii) If the ITO, has reason to believe that such evidence or productions material and that the person summoned has, without lawful excuse, failed to attend or procure the document in compliance with such summons or has intentionally avoided service, he may issue a proclamation requiring such person to the time and place named therein. A copy of the proclamation should be affixed on the outer door or other conspicuous part of the house in which the person ordinarily resides. (iii) Under sub-r. (3) of the r. 19 in lieu of or at the time of issuing such proclamation or at any time afterwards the ITO has also discretion to issue a warrant with or without bail for the arrest of such person and for making an order for the attachment of his property for such amount as he thinks fit. (iv) The property should be released from attachment if the witness appears and satisfies the ITO that he had not without lawful cause, failed to comply with the summons or intentionally avoided his services or that he has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by attachment by sale of movable property of the person obtaining summons. The Court may also discharge summons when required, in case, sufficient fund is not deposited by the party requesting for summons. 12. In our opinion, the procedure laid down in order 16 has to be followed by the party applying for issuance of summons to a witness, otherwise the witness cannot be compelled to be produced before the Court and subsequently, coercive powers provided in r. 10 of order 16 of CPC cannot be exercised. 13. Notwithstanding the power of AO as Civil Court, in enforcing attendance of a witness, the more relevant question is as to whether the onus cast on the assessee under s. 68 is deemed to have been discharged, the moment he makes a request to the AO for issuance of summons to the creditor or even where summons were issued and served on the creditor. In our opinion, it is not so. The decision of Hon'ble Allahabad High Court in the case of Nathu Ram Premchand vs. CIT was rendered for asst. yr. 1948-49 and the decision of Hon'ble Bombay High Court in Ramkumar Jalan was also rendered for the asst. yr. 1949-50. During those years, there was no provision equivalent to s. 68 of IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he source and nature of certain amount of cash received during the accounting year, the ITO is entitled to draw the inference that the receipts are of assessable nature. Following the decision of Hon'ble Supreme Court in the case of A. Govindarajulu Mudaliar, the Hon'ble Punjab & Haryana High Court in Gumani Ram Siri Ram vs. CIT (1975) 98 ITR 337 (P&H) held that onus of proving the source of sum of money found to have been credited in the accounts of the assessee is on him. It is for the assessee to prove that the third party, who is said to have advanced the money was in a position to lend such money and that he did and in fact money was lent to assessee. 17. In Shanker Industries vs. CIT (1978) 114 ITR 689 (Cal), the Hon'ble Calcutta High Court held that the burden of proof is on the assessee to prove the credit by proving the identity and creditworthiness of the creditor and genuineness of the transaction. Mere proof of identity of creditor or payment by account payee cheque or filing of confirmation letter is not sufficient to discharge the onus, as has been repeatedly held by various High Courts in the case of M.A. Unneeri Kutty vs. CIT (1992) 198 ITR 147 (Ker); C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement (P) Ltd. and in response to the query raised by the AO, the assessee has stated that he did not have a cordial relation with the creditor as such he may be summoned under s. 131 of the IT Act and be examined in this regard. Though the assessee did not deposit any diet money for summoning the creditor, yet the AO issued summons under s. 131 which was duly served upon the creditor but he did not respond to it. Thereafter, the AO directed the assessee to produce the creditor for examination. But, the creditor was neither produced nor the assessee established that he has made all possible efforts to produce it before the AO for examinations. Mere saying that the assessee did not have cordial relations with the creditor would not discharge a primary onus which lay upon the assessee. Even before the CIT(A), assessee did not establish with the evidence that he had made all possible efforts to produce the creditor and the onus which lay upon it was shifted to the Revenue to enforce the attendance of the creditor by invoking his power enshrined in order 16 of the CPC, 1908 being a Civil Court by virtue of s. 131 of the IT Act. He has simply filed the bankers certificate to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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