Shiv Rice And General Mills v. Commissioner Of Income-Tax

Rajesh Bindal, J.:— The assessee has approached this court by filing the present appeal raising the following substantial questions of law arising out of order dated January 13, 2006, passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (for short, “the Tribunal”) in I.T.A No. 468(ASR) 2001 for the assessment year 1998-99:

“(i) Whether the order of the income-tax authorities treating the cash credits in question as the income of the assessee suffer from perversity and is arbitrary and is based upon mere assumptions and presumptions and surmises and conjectures and more so when the creditors themselves have been produced and their statements have been recorded and their affidavits have been adduced and they have confirmed the advancement of the credits and repayment of the credits and the advances made by most of the creditors have been believed by the income-tax authorities themselves?

(ii) Whether without rejecting the account books additions can be made of various cash creditors in the facts and circumstances of the case?

(iii) Whether the impugned orders of the income-tax authorities are ultra vires section 68 of the Income-tax Act?

(iv) Whether, on the facts and circumstances of the case, the appellant-assessee had discharged the burden of taking the amount in question on credit:?”

2. During the course of assessment proceedings, it was found that the assessee had introduced cash credits in his books of account in the names of 17 persons, the details whereof mentioned in the order of assessment are extracted below:

Sr. No. Name of the creditor Date of deposit Amount Rs. 1 Bhola Singh 4-3-1998 19,000 2 Gurpreet Kumar 30-11-1997 15,000 19,000 21-3-1998 2,000 23-3-1998 2,000 19,000 3 Jagir Singh 1-12-1997 15,000 4 Bhagwan Singh 25-1-1998 1,900 19,000 5 Jagmail Singh 2-12-1997 10,000 6 Amrit Lal 26-1-1998 18,000 7 Darshan Lal 27-2-1998 18,000 8 Sukhwinder Singh 15-3-1998 11,500 9 Sukhdarshan Singh 23-2-1998 19,000 10 Balkaran Singh 2-4-1997 19,000 11 Pawan Kumar 27-3-1998 10,000 12 Madan Lal. 19-3-1998 10,000 13 Nachhatar Singh 1-4-1997 6,000 14 Natha Singh 18-4-1997 11,000 15 Avtar Singh 25-6-1997 15,000 18,000 5-3-1998 3,000 16 Jagir Singh Numberdar 4-3-1998 18,000 17 Surinder Kumar 26-3-1998 17,000

3. As the genuineness of the credit was doubted by the Assessing Officer, the issue was confronted to the assessee. Considering the explanations furnished by the assessee, the Assessing Officer vide its order of assessment dated March 12, 2001, held cash credits to the tune of Rs. 2,57,500 introduced in the books of account, during the year in question, to be not genuine and accordingly made additions on that account.

4. In appeal before the Commissioner of Income-tax (Appeals), Bathinda, the explanation furnished by the assessee to the tune of credits of Rs. 52,000 was found to be genuine and accordingly the additions were deleted to that extent, however, the addition of balance amount of Rs. 2,05,500 was confirmed. In further appeal before the Tribunal, each and every transaction was examined by the Tribunal vis-a-vis, the evidence on record and the explanations furnished by the assessee and after a detailed discussion, some of the additions were deleted while some of them were confirmed where, as a fact, it was found that though the amounts had been credited by the assessee in its books of account in the names of those persons and even though the persons were existing but the genuineness of the entry could not be proved for the reason that the persons were not capable of advancing the amount to the assessee keeping in view their financial position.

5. Some of the creditors of the assessee were found to be mere labourers, milk vendors or some low paid employees who had their own families to support out of the income earned by them instead of advancing the loans to the assessee even without carrying any interest. Accordingly, on appreciation of the material on record, the authorities below concurrently found that the assessee had not been able to satisfy about the creditworthiness of the creditors and consequently the genuineness of the transaction.

6. The contention raised by counsel for the assessee to support the case built up by him is on the basis of the statements made before the authorities during the course of assessment proceedings. It was submitted that though other material in the form of affidavits was considered by the Assessing Officer but the statements were not considered which resulted in miscarriage of justice. We have even perused the statements, the same also do not advance the case of the assessee any further. All what has been stated in the statements is already considered and dealt with by the authorities below. Merely because in some cases the amount was also shown to have been returned does not prove that the transaction in question was genuine or bona fide. No explanation could be furnished as to why and how a person who is running a electric repair shop in his house only or a person who is running a fruit rehri, a small time tent house, a jamadar at BKO and a milk vendor would advance amount to the assessee without any interest. The entire evidence does not inspire confidence.

7. Counsel for the assessee has further relied upon the judgments in Orient Trading Co. Ltd. v. Commissioner Of Income-Tax (Central), Calcutta., [1963] 49 ITR 723 (Bom), Chhabildas Tribhuvandas Shah v. CIT, [1966] 59 ITR 733 (SC), Sarogi Credit Corporation v. CIT, [1976] 103 ITR 344 (Patna), Nemi Chand Kothari v. CIT, [2003] 264 ITR 254 (Gauhati) and CIT v. Metachem Industries, [2000] 245 ITR 160 (MP). The ratio of the judgments relied upon by the assessee does not support the case of the assessee rather it is evident that the views expressed by the authorities below are in conformity with the principles laid down in the judgments referred to above where it is held that to prove the genuineness of a cash credit entry, identity of the creditor, his creditworthiness and the genuineness of the transaction has to be proved. The assessee in the present case has failed to discharge the burden placed on him.

8. In Oceanic Products Exporting Co. v. CIT, [2000] 241 ITR 497 (Ker) and R.B Mittal v. CIT, [2000] 246 ITR 283 (AP), the view taken is that the findings on cash credits are findings of fact. Under similar circumstances, this court in I.T.C No. 1 of 1998 titled as Maru Ram Makhan Lal v. Commissioner Of Income-Tax, [2008] 300 ITR 12 (P&H), vide judgment dated October 11, 2004, held that the findings recorded on cash credits are findings of fact giving rise to no question of law, much less a substantial question of law being the requirement under section 260A of the Act, for entertainment of the appeal.

9. Keeping in view the principles of law laid down in the judgments referred to above and also perusing the findings recorded by the authorities, we find that the view taken by the Tribunal is the only possible view keeping in view the material on record and the explanations furnished by the assessee. Reappraisal of evidence does not fall within the domain of jurisdiction of this court under section 260A of the Income-tax Act, 1961.

10. While agreeing with the view expressed by the Tribunal, we do not find any question of law much less a substantial question of law arising in the present case.

11. Accordingly, the appeal is dismissed.