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TMI Blog2017 (12) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... ng aside the order passed by the Commissioner of Income Tax under Section 263 - Decided in favour of assessee. - C.M.P No.492 of 2010 With Tax Appeal No.38 of 2008 - - - Dated:- 12-10-2017 - MR. D. N. Patel, A.C.J And Mr. Amitav K. Gupta, JJ. For The Petitioner : Ms. Darshana Poddar Mishra, Advocate on behalf of applicant in C.M.P For The Opposite Party : Mr. Deepak Roshan, Advocate ORDER Per D.N. Patel, A.C.J 1. This Civil Miscellaneous Petition has been preferred under Order XLI Rule 21 of the Code of Civil Procedure wherein tax appeal being Tax Appeal No.38 of 2008 was dismissed ex-parte, as submitted by the counsel for the petitioner (original respondent). Counsel appearing for the petitioner has submitted that the aforesaid Order XLI Rule 21 is to be read with Section 260A (7) of the Income Tax Act, 1961. 2. Counsel appearing for the petitioner (original respondent) has relied upon the decision of the Hon'ble High Court of Madhya Pradesh, in the case of Shrinath Buliyan Refinery V. Commissioner of Income-tax, reported in (2002) 125 TAXMAN 1018 (M.P.). 3. Having heard counsel for both the sides, looking to the reasons stated in para 04 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the donors, genuineness of the transaction and the creditworthiness of the donors. These aspects of the matter have not been properly investigated by the Assessing Officer, and hence, the order passed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi dated 23.11.2007 in Income Tax Appeal No.48/ PAT/ 06 for the assessment year 2001-02, deserves to be quashed and set aside. 3. Counsel appearing for the respondent (assessee) has submitted that no error has been committed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi in allowing the appeal preferred by the assessee mainly for the reasons that the assessee is the partnership firm which has received amount by cheques or demand drafts, details whereof are on record. These cheques or demand drafts have been given by Ranjan Jaiswal and Anju Jaiswal for the amount of ₹ 9,46,126/- and for the amount of ₹ 9,51,563/- respectively. It is submitted by the counsel for the respondent that this assesseepartnership firm has already explained that without any ambiguity and without any equivocalness of the source of the amount. It is submitted by the counsel for the respondent that the department is in search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d bank drafts. The said amount is at ₹ 9,46,126/- and at ₹ 9,51,563/- respectively. III. After the assessment was made by the Assessing Officer, the same was taken up in Revision, by the Commissioner of Income Tax under Section 263 of the Income Tax Act by exercising revisional power and the said order was passed by the Commissioner of Income Tax vide order dated 03.06.2005. The said order is at Annexure 2 to this memo of this Tax Appeal. IV. This order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act dated 03.06.2005 was challenged by the respondent assessee before the Income Tax Appellate Tribunal, Circuit Bench, Ranchi and the Income Tax Appellate Tribunal allowed the appeal by the order dated 23.1.2007, and hence, this Tax Appeal has been preferred by the department. V. It appears from the facts of the case that the respondent is an assessee which is a partnership firm. The amount received by the assessee is by cheques or bank drafts, the details whereof have already been mentioned in detail, which are as under :- 1 . Sri Ranjan Jaiswal Date Amount Mode of Paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be shown by this respondent assessee. This aspect of the matter has been properly appreciated by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi, while allowing the appeal preferred by the respondent. VII. It appears that department has given a notice to the respondent assessee giving details as to how Ranjan Jaiswal and Anju Jaiswal got cash and from whom. This is an error apparent on the face of the record. Respondent assessee cannot explain the source of , source of income of the partnership firm. If the department wants to reopen the assessment of Ranjan Jaiswal and Anju Jaiswal, it is always permissible in eye of law subject to the restriction imposed by the Income Tax Act of limitation etc. VIII. It is an admitted fact that this respondent partnership firm has received the amount from Ranjan Jaiswal and Anju Jaiswal by account payee cheques or by Bank drafts. Thus, source of income of the respondent assessee is absolutely a legal one. This aspect of the matter has properly been appreciated by the Income Tax Appellate Tribunal by allowing the appeal preferred by the respondent assessee. IX. It has been held by Hon'ble Gujarat High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by Bombay High Court in the case of Orient Trading Co. Ltd. V. CIT MANU/MH/0055/1962. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as cheques and the interest is also paid by the assessee to be depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as not-genuine in view of the principles laid down by the Supreme Court in the case of Orisa Corporation MANU/SC/0249/1986. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the correct name, address and the G.I.R. number of the creditor, as my learned brother has observed, he has discharged his onus and unless a notice in due form under Sec.131 of the Act is issued by the revenue authority concerned to test the veracity or the genuineness of the transaction or the capacity of the creditor to pay, the assessee has to succeed. ( Emphasis supplied) XI. It has been held by Hon'ble Delhi High Court in the case of Commissioner of Income-tax Vs. Diamond Products Ltd., reported in (2009) 177 TAXMAN 331 (Delhi) in paragraph no.5 as under :- 5. We have heard the learned counsel for the appellant and have examined the findings returned by the Tribunal as well as those returned by the Commissioner of Income-tax (Appeals) and find ourselves to be in agreement with the conclusions arrived at by the Tribunal. The Assessing Officer is not permitted to examine the source of the source once the assessee has been able to establish that the transaction with his creditors is genuine and that the creditors' identities and creditworthiness have been established. In this case, this had been done, therefore, it was not open to the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase was made out for addition to the income of the firm even if deposits made with the firm by the partners were unexplained income of the partners. These view has been taken by us in our recent order passed on 6-11-2006 in CIT V. Metal Metals of India [IT Appeal No.370 of 2006], wherein it was observed as under : In the present case, the firm has given explanation about the source namely Suresh Bhandari, partner, who himself is an assessee. The said partner has admitted having made deposit with the firm. Thus, as far as the firm is concerned, even if the gift claimed to have been received by Suresh Bhandari is to be rejected, the said Suresh Bhandari may be liable to be taxed by treating the said amount as undisclosed income, but the firm cannot be subjected to tax on that ground. ( Emphasis supplied) XV. It has been held by Hon'ble Madras High Court in the case of Commissioner of Income-tax Vs. Taj Borewells, reported in (2007) 291 ITR 232 (Madras) in paragraph no.13 as under :- 13. Inthe present case, the assessee-firm had explained the source of capital. So, there was an explanation offered by the assessee-firm. The said explanation has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I. It has been held by Hon'ble Madhya Pradesh High Court in the case of Commissioner of Income-tax Vs. Matachem Industries, reported in (2000) 245 ITR 160 (Madhya Pradesh) in paragraph no.3 as under :- 3. We have heard learned counsel for the parties. Section 68 of the Act of 1961 says that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. Therefore, according to Section 68, the first burden is on the assessee to satisfactorily explain the credit entry in the books of account of the previous year. If the explanation given by the assessee is satisfactory, then that entry will not be charged with the income of the previous year of the assessee. In case the explanation offered by the assessee is not satisfactory or the source offered by the assessee-firm is not satisfactory, then in that case, the amount should be taken to be the income of the assessee. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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