9911796707
TMI Blog1983 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... e head office of the creditor is situated, that the loans and advances and other transactions recorded in their books at their head office at Bombay and at the branch office at Calcutta were not genuine, came to the conclusion that the transactions were not genuine and, accordingly, added Rs. 41,500 and disallowed interest thereon. The order of the ITO is marked annexure 'A' to the statement of case. The assessee went in appeal before the AAC and contended that the confirmatory letter was filed from the creditor and the creditor had also stated in the certificate that the books of the appellant for the relevant year were lost. The AAC confirmed the addition on the sole ground that the creditor having made a confession before the ITO, Bombay, the confirmatory letter issued subsequently became meaningless. The AAC further observed that it was the duty of the appellant-assessee to satisfy the ITO by producing the creditor and his books of account which was not done. The AAC thus also confirmed the disallowance of interest. The order of the AAC is marked annexure 'B' to the statement of case. The assessee thereafter went before the Tribunal and contended that it had filed a confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to the conclusion that the confession made in a third party case by the creditor could not be used against the assessee and, thus, the Tribunal deleted the addition. The order of the Tribunal is marked annexure 'C' to the statement of case. It is desirable to mention here that, in the ends of justice, we directed the learned senior standing counsel for the Department to produce the original records before us so that we could find out the true nature of the confession made by the Bombay party in a third party case. The learned senior standing counsel, despite his efforts, was not able to produce the so-called confessional statement before us, though other papers on the record were there. Thus, the position remains that the confession was never made available either to the assessee or to the Tribunal or to us. Learned senior standing counsel for the Department contended that the assessee cannot be said to have discharged the initial onus under s. 68 of the I.T. Act, 1961 (hereinafter referred to as " the Act ") as, in law, it is necessary for the assessee to prove prima facie the transaction which results in a cash credit in his books of account and such proof includes the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the matter went to the Calcutta High Court, it was held by the Bench that it could not be said that there was no material or evidence to support the inference or the conclusions of the Tribunal that the loan represented the assessee's income from undisclosed sources. Thus, in that case, from the facts mentioned above, it was abundantly clear that after the confirmatory letter was filed by the assessee, a notice under s. 131 of the Act was issued to the creditor by the Department in order to verify the statements in the confirmatory letter ; and it was further clear that the creditor having received the notice could not produce its books of account for one reason or the other. The proprietor of the creditor-company was also examined in that case and the Tribunal disbelieved the evidence of the proprietor of the creditor company. In this background, the Tribunal agreed with the orders of the ITO and the AAC and affirmed the addition as income of the assessee from undisclosed sources. Thus, that case is clearly distinguishable and does not support the contention put forth by the learned senior standing counsel for the Revenue in the instant case. The other case, Bharati Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The so-called confession by the creditor is not in relation to the amount in question but it seems clear that the so-called confession was made by the creditor in third party case. The ITO while dealing with the confession has observed in his order as quoted below : " It is seen that Laxmi Narayan Atma Ram of Calcutta is the Branch of Ramgopal Nand Kishore of 4/8, Kalbadevi Road, Bombay-2, who have made confession before the income-tax authorities at Bombay that the loans and advances or any other transaction, recorded in their books (Both of the head office at Bombay and branch office at Calcutta) were bogus and not genuine. In order to satisfy ourselves whether the so-called confession contained the part in parenthesis, we directed the learned senior standing counsel to produce the original record, but as already stated above, the learned senior standing counsel was not able to produce the confession before us. It is apparently clear that the words in parenthesis is a gloss by the income-tax authority himself. If the confirmatory letter was issued by the creditor subsequent to the so-called confession, it was much more incumbent upon the Department to summon the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned brother has already observed, the assessee had given the identity of the creditor against whose name cash credit was shown for sum of Rs. 41,500. He had also furnished the G.I.R. number of the creditor as well as the correct address. The question then remains in such cases as to how the capacity to prove the competence of the creditor for furnishing such a loan can be decided. The answer, to my mind, is very plain and simple. The very object of s. 131 of the Act is for that purpose. It can never be within the exclusive knowledge of the debtor to know the sources of income of the creditor. Once he is supplied the credit that he wants, he is satisfied. Once he has furnished the true identity, the correct address, the correct G.I.R. number of the creditor, he fulfils his obligation under the Act. The question then still remains with regard to the genuineness of the transaction and the capacity of the creditor to furnish the loan concerned. It is for that specific purpose that s. 131 has been engrafted in the Act. Section 131 provides, inter alia, that the ITO, the AAC, the IAC and the Commissioner shall, for the purpose of this Act, have the same powers as are vested in a court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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