2010-VIL-864-RAJ-DT

RAJASTHAN HIGH COURT

IT Appeal No. 107 of 2010

Date: 20.10.2010

COMMISSIONER OF INCOME TAX

Vs

BHAWANI OIL MILLS (P) LTD.

R.B. Mathur for the Revenue  

BENCH

Arun Mishra, Mohammad Rafiq, JJ.

JUDGMENT

Mohammad Rafiq, J:-  

1. This income-tax appeal has been filed by the Revenue against the judgment of the learned Income-tax Appellate Tribunal (for short, "Tribunal") dt. 22nd May, 2009 by which, appeal filed by the assessee against the order of Commissioner of Income-tax (Appeals) [for short, "CIT(A)"] was partly allowed and the cash credit of Rs. 24,86,866 claimed by the assessee, which was disallowed by the AO, was allowed and the AO was directed to delete the addition of the said amount made under s. 68 of the IT Act.  

2. Shri R.B. Mathur, learned counsel appearing for the appellant has argued that the Tribunal was wholly unjustified in reversing the order of the AO, which was reasoned and based on correct appreciation of documents and material on record. While Tribunal has not given any good reason to take a different view, AO has given detailed reasons for assessment by disallowing the cash credit amounting to Rs. 24,86,866 alleged to have been taken from eight different persons as 'unsecured loan'. Claim made by the assessee in his return to that effect was rightly disallowed by the AO because when notice was given to such eight persons, only one of them, namely, K.K. Sharma appeared in response to the notice under s. 131 and made statement on 27th Feb., 2002. Explanation was unsatisfactory raising doubt about number of facts as to how and in what manner he secured the said money. Explanation that was given was that he received Rs. 2 lacs from his grandfather out of which, Rs. 1 lac was taken back by his grandfather and his grandfather received this money from sale of the property but he failed to prove as to whom this property was sold. No details of property were furnished. Although, other persons did not appear in response to the notice before the AO but they filed confirmations by way of affidavits admitting advancement of loan to assessee. Unless, it was proved that those persons were capable of earning such money from known sources and could advance the loan, claim made by the assessee could not be accepted on its mere ipse dixit. CIT(A) rightly upheld the order passed by the AO. Tribunal however erred in law in allowing the appeal to that extent on ground No. 2.  

3. We have heard learned counsel for the Revenue and perused the material available on record.  

4. On perusal of the order passed by the Tribunal, we find that mere non-appearance of eight other persons in response to the notice given by the AO, by itself cannot be a reason to discard their version particularly when one of them had appeared and admitted advancement of loan. Even if others have subsequently filed their confirmations supported by their affidavits, it cannot be assumed that they would not have made same statements, if they had appeared in response to the notice issued by the AO. AO was required to have examined those confirmations and the contents of the affidavits on their merits treating as if they were statements given to him. Their version contained in the affidavits could not be treated as of a lesser importance than the statement given by one of the creditors i.e. Shri K.K. Sharma before the AO. Although, it is another matter that the AO would be entitled to evaluate reability of such version on its own merit.  

5. Even otherwise, we find that quantum of amount of Rs. 24,86,866 found to have been borrowed from eight different creditors by way of 'unsecured loan' to the tune of Rs. 3,25,000 each from two creditors, Rs. 3,00,000 from one creditor, Rs. 1,00,000 each from four creditors and Rs. 11,36,866 from one creditor. Maximum amount that has been borrowed by assessee, was Rs. 11,36,866 from Shri K.K. Sharma, director of the company. Tribunal in paras 7 and 8 of its judgment, which is running into four pages, has in detailed discussion dealt with the confirmations given by those creditors and observed that there was no reason to doubt correctness of the claimed cash credit amounting to Rs. 24,86,866 taken from the above named creditors.  

6. In our viewy the matter therefore touches upon appreciation and evaluation of evidence and does not raise any question of law, much less any substantial of law, so as to justify interference by this Court in the matter.  

7. Appeal being devoid of merit is accordingly dismissed in limine.  

 

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