9911796707
TMI Blog1996 (10) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 3. In respect of Ground Nos. 4 and 5, the assessee has assailed the order of the CIT(A) on the ground that the CIT(A) has erred in setting aside the case for reconsidering the cash credit without appreciating the fact that the appellant had discharged the onus to prove the cash credit appearing in its books of account. 4. During the course of assessment, the Assessing Officer has observed that cash credit of Rs. 1,50,800 were introduced in the name of following persons :--- (1) S/Shri Suresh Joshi Rs. 20,000 (2) S/Shri Daulal Neema Rs. 20,000 (3) S/Shri Dineshkumar Pathak Rs. 20,000 (4) S/Shri Sharadkumar Saboo Rs. 25,000 (5) S/Shri Rameshwar Pansari Rs. 15,000 (6) S/Shri Hari Mohan Sharma Rs. 25,000 (7) S/Shri Rekabchand Jain Rs. 20,000 (8) Interest on these credits Rs. 5,800 --------------------------- Total Rs. 1,50,800 --------------------------- The assessee was asked to explain these credits and the appellant had furnished the confirmations from these creditors. The assessee was asked to produce the creditors in person to verify the genuineness of the transactions but the assessee showed his inability to produce these creditors on one ground or the other and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are placed at page Nos. 69, 70, 122, 123, 124 to 127 of the compilation of the revenue and to the confirmations placed at page Nos. 1 to 7 and affidavit of Shri Dineshkumar Jain placed at page Nos. 8 and 9 in the compilation of the assessee. It was argued on behalf of the appellant that the appellant was not afforded proper opportunity to rebut the statements of the creditors recorded in his absence. 6. In oppugnation the ld. D.R. has submitted that mere filing of the confirmations is not sufficient for the discharging of his onus lay upon the assessee. The assessee has to prove the genuineness of the transactions, genuineness of the creditors and their creditworthiness. He has drawn our attention to the confirmation letters in which the addresses of some of the creditors were not given and even the addresses of some of the creditors given in the confirmation letters are not co-related with the addresses given in the affidavit of Shri Dineshkumar Jain. In spite of various opportunities given to the assessee, assessee was failed to produce even a single creditor, and then the Assessing Officer summoned the creditors under section 131 of the Income-tax Act and recorded the sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecorded in the absence of the assessee and the assessee was not given an opportunity to cross-examine these creditors and the witnesses to rebut the statements. 8. No doubt primary onus is upon the assessee to prove the nature and source of credits in its account. It is also necessary for the assessee to prove the identity of the creditors, the capacity of the creditors to advance the money and the genuineness of the transactions. Only when these facts are prime facie proved by the assessee, the onus shifts on the department. In the instant case, we may agree with the view of the Assessing Officer that the assessee has not discharged the onus lay upon him properly but when the Assessing Officer has made the investigation about the genuineness of the creditors and the creditworthiness he should have at least afford an opportunity to the assessee to say something in rebuttal. Even the witnesses examined by the Assessing Officer were not cross-examined by the assessee. It is a settled principle of law that unless or until witnesses are not tested by way of cross-examination, the Presiding Officer should not rely upon them. The CIT(A) has taken a note of it and is properly justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shown by the assessee and made an addition of Rs. 65,810 as unexplained investment under section 69 of the Act. Aggrieved with the order of the Assessing Officer, the assessee preferred an appeal before the CIT(A) who, after examining the various factors set aside the order of the Assessing Officer with the directions to verify and enquire into the genuineness of the construction agreement filed before the CIT(A) regarding contract given to M/s. Badjatiya Construction Co. Dissatisfied the assessee is before us. 11. The ld. counsel for the assessee has submitted that he has entered in an agreement with the contractor for the construction of the building against the fixed amount stipulated in the construction agreement, which is placed at page No. 10 of the compilation of the assessee. Once all terms, conditions and payments are stipulated in an agreement between the assessee and the contractor, the assessee has no concern about the profit and loss suffered by the contractor during the course of construction of the building. The ld. counsel for the assessee has strongly taken objection that the Assessing Officer has no power to make a reference to the Valuation Officer for asce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the DVO about the cost of construction, if he is not in a position to ascertain the actual cost of construction. He further emphasized that as per the Law of Evidence an expert opinion can be called by a Presiding Officer for arriving at correct conclusion on a particular point. He has relied upon the judgment of Madras High Court in the case of C.T. Laxmandas v. Asstt. CIT [1994] 208 ITR 859 and submitted that section 55A of the Act is not confined to computation of Capital Gains. The main object and purport of section 55A of the Act to empower the ITO to find out the market value of the Capital Asset for the purpose of Chapter IV which is titled as "Computation of total income" and having regard to the language employed, viz, "For the purpose of this Chapter", there was no justification to confine enabling the power available under section 55A of the Act to only a limited purpose pertaining to a Capital Gains. The ld. D.R. has also relied upon the Andhra Pradesh judgment in the case of Daulatram v. ITO [1990] 181 ITR 119 (FB) in which the similar view was taken by their Lordship. 14. We have heard the submission of the parties and carefully examined the orders of the authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate object of empowering the Income-tax Officer to find out the market value of capital assets for the purpose of Chapter IV which is titled "Computation of total income". Though section 55A falls under the sub-chapter titled 'Capital gains' the intention of the Legislature is obvious as the words that have been employed are "for the purpose of this Chapter" denoting thereby that while computing the income, various factors might fall for determination and, therefore, whenever such contingency does arise, the Income-tax Officer can ascertain it through the agency of the Valuation Officer. On such reference, the provisions, inter alia, of sub-sections (2) to (6) of section 16A and sub-sections (3A) and (4) of section 23 of the Wealth-tax Act 1957, are ipso facto applicable by extension, as laid down under section 55A of the Act itself. So also, the 'Valuation Officer' in section 55A of the Act has the same meaning as in clause (r) of section 2 of the Wealth-tax Act. The power to do an act requires that the act is done properly, correctly and legally. Hence, if a first reference to the Valuation Officer is not valid, the Income-tax Officer can make a second reference. There is nothing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limited purpose pertaining to capital gains. The plea that except for the purpose of capital gains for no other purpose section 55A could be availed of cannot conform to either the language or the object of the said provision or to reason or logic. Even de hors the question of assessment of capital gains, the valuation of a particular capital asset acquired by the assessee in a particular year or more than one year would go a long way to show whether the same was acquired by utilising known means and resources of disclosed income and would help the assessing authorities to effectively prevent evasion of tax due to the State. When that is the main object and purport of the introduction of section 55A of the Act, assigning a restrictive meaning or limiting the operation of the section to assessment only of a particular category of income alone would amount to rewriting the provision and defeat the very object of enacting such a provision. " 15. Apart from above-mentioned judgements, we feel it proper to reproduce section 55A of the Act as under :--- " With a view to ascertaining the fair market value of a capital asset for the purposes of this Chapter, the Assessing Officer may ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn only because of the reasons that section 55A falls under sub-chapter (E), ie., Capital Gains of, Chapter IV of the Income-tax Act. Had it been the intention of the Legislature, the Legislature would have mentioned the word 'for the purpose of this Sub-Chapter' (E) in place of the word 'for the purposes of the Chapter'. But this was not done by Legislature. In these circumstances following the respectful observation of the Hon'ble High Court of Andhra Pradesh in the case of Daulatram and Madras High Court in C. T. Laxmandas' case. We are of the considered view that the Assessing Officer is fully empowered to make a reference for the purpose of computation of total income envisaged under Chapter IV of the I.T. Act. These powers of the Assessing Officer are not restricted only for ascertaining a fair market value of the capital assets for the purpose of capital gains. Hence the assessee fails in its grounds. 16. Since we have already observed that the Assessing Officer has not given sufficient time to the assessee for realising his objections against the valuation report submitted by the Valuation Officer, we are of the view that the CIT(A) was justified in setting aside the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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