DCIT, Central Circle - 2(4), Kolkata , Kolkata V. M/s. Maa Annapurna Transport Agency Ltd., , Kolkata

ITA 822/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8959 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 25-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHRUBAJYOTI ROY
• Assessee Lawyers: S S GUPTA; ARVIND AGARW
• Keywords: Unexplained investment; Onus to prove; Bogus loan; TDS; Set aside
• Section: 68; 133(6); 37(1); 264; 113; 13

Judgement Text

1 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH: KOL KATA [BEFORE SHRI A.T. VARKERY, JM & DR. ARJUN LAL SA INI, AM ] I.TA NO. 822/KOL/2018 A.Y 2013-14 DCIT, C.C-2(4), KOLKATA VS. M/S. MAA ANNAPURNA TRAN SPORT AGENCY LTD. PAN: AADCM 0917A APPELLANT RESPONDENT DATE OF HEARING 02-01-2020 DATE OF PRONOUNCEMENT 15.01-2020 FOR THE APPELLANT SHRI DHRUBAJYOTI ROY, JCIT, LD.D R FOR THE RESPONDENT SHRI S.S. GUPTA, FCA & SHRI ARVIND AGARWAL, ADVOCATE, LD.AR ORDER SHRI A.T. VARKERY, JM THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) [ IN SHORT, TH E LD. CIT (A)], KOLKATA-4 DATED 23-01-2018 FOR THE ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL OF THE REVENUE ARE AS U NDER:- 1 THAT ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD. CIT (A) DID NOT CALL FOR REMAND REPORT AND ERRED IN DELETING THE ADDITIO N OF RS. 2,60,67,315/- U/S. 68 OF THE ACT, ONLY KEEPING RELIANCE UPON SUBMISSION OF THE A/R OF THE ASSESSEE. NONE OF THE TWELVE COMPANIES COULD BE LOCATED ON THE GIVEN ADDRESS FROM WHOM THE ASSESSEE COMPANY HAD CLAIMED TO HAVE TAKEN UNSECURED LOAN. 2 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12,75,987/- ON ACCOUNT OF INTEREST PAYMENT TO BOGUS LOAN CREDITORS. 3 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ACCEPTING THE APPEAL OF THE ASSESSEE, WHEREAS THE A SSESSEE COMPANY HAD NOT DEPOSITED THE DEDUCTED AMOUNT OF RS. 8,46,634/- ON ACCOUNT OF EMP LOYEES' CONTRIBUTION TO PF AND ESI WITHIN THE TIME OF DUE DATE. 4 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE AMOUNT OF RS. 3,15,107/- BEING THE INT EREST ON LATE PAYMENT OF TDS. 5 THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THE IDENTITY OF THE LOAN CREDITORS WAS PROVED RELYING SOLELY ON THE BASIS OF PAPER DOCUMENTATION WHEREAS IN REALITY THE LOAN CRE DITORS WERE NON-EXISTENT AT THE ADDRESSES 2 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. GIVEN AS FOUND OUT AFTER PHYSICAL VERIFICATION AND DECIDED THE APPEAL WITHOUT CALLING FOR ANY REPORT FROM THE A.O ON THE SUBMISSION MADE BY ASSES SEE BEFORE HIM. 6 THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND/O R ALTER, AMEND, MODIFY OR RESCIND THE GROUNDS HEREINABOVE BEFORE OR HEARING OF THIS APPEAL. 3. GROUND NOS. 1 & 5 ARE THE SAME AND THEREFORE, ARE BEING DEALT WITH . 4. THE MAIN GRIEVANCE OF THE REVENUE AS PER GROUND S OF APPEAL RAISED BEFORE US IT THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 2,60,67,315/- U/S. 68 OF THE INCOME-TAX ACT, 1961 ( IN SHORT, THE ACT), WHICH WAS ADDED BY THE AO WITHOUT CALLING FOR THE REMAND REPORT WHEN 12 (TWELVE) COMP ANIES, WHICH HAD PROVIDED THE LOAN TO THE ASSESSEE COULD NOT BE LOCATED AT THE GI VEN ADDRESSES; AND THAT THE LD. CIT(A) HAS ERRED IN CONCLUDING THAT THE IDENTITY OF THE LO AN CREDITORS WERE PROVED SOLELY ON THE BASIS OF PAPER DOCUMENTATION PLACED BY THE ASSESSEE BEFORE THE LD. CIT(A) WHEREAS IN THE REALITY THE LOAN CREDITORS WERE NON-EXISTENT AT THE ADDRESSES FURNISHED BY THE ASSESSEE. 5. BRIEF FACTS OF THE CASE AS NOTED BY THE AO ARE T HAT DURING THE ASSESSMENT PROCEEDINGS WHILE PERUSING THE ACCOUNTS AND DETAILS OF THE ASSESSEE, THE AO OPINED THAT THE ASSESSEE COMPANY HAD RECEIVED UNSECURED LO ANS FROM VARIOUS ENTITIES OUT OF WHICH THE FOLLOWING COMPANIES HAVE BEEN FOUND TO BE PAPER COMPANIES AND HAVING NO WORTH AND HE DREW THIS CHART/TABLE AT PAGE 2&3 OF T HE ASSESSMENT ORDER GIVING OUT THE DETAILS AS BELOW: SL. NO. NAME AND ADDRESS OF THE LOAN CREDITOR INTEREST PAID AMOUNT OF LOAN RECEIVED FATE OF NOTICE U/S. 133(6) FIELD ENQUIRY REPORT 1 AMIT REALTORS PVT. LTD 20/1 ASHUTOSH CHOWDHURY AVENUE, 1 ST FLOOR, KOLKATA, WEST BENGAL- 700019 74,795 2,567,315 THE COMPANY COULD NOT BE LOCATED AT THE GIVEN ADDRESS 2 AYUSH FINTRADE PVT. LTD, 27 SHAKESPEARE SARANI, GROUND FLOOR, KOLKATA, WEST BENGAL- 700 017. 42,082 1,000,000 RETURNED BACK DO 3 BRAIN BUSINESS PVT .LTD 132,821 4,000,000 DO- 3 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. . 33 BRABOURNE ROAD, 5 TH FLOOR, PS-HARE STREET, KOLKATA, WEST BENGAL- 700 001. 4 CAMELLIA VINCOM PVT LTD 1 B NATORE PARK, 4 TH ROAD, KOLKATA-700 039. WEST BENGAL 23,178 1,000,000 DO- 5 GENUINE RETAILS PVT LTD4 G.C AVENUE, 1 ST FLOOR, KOLKATA, WEST BENGAL-700 013 142,520 3,500,000 DO- 6 GREEN LINE TRADE LINKS PVT. LTD 104 S.P MUKHERJEE ROAD, 4 TH FLOOR, ROOM NO. 404, KOLKATA, WEST BENGAL- 70026 423,001 5,500,000 DO- 7 JAGADAMBA DEALCOM PVT. LTD BLOCK-A, 3 RD FLOOR, 9 LAL BAZAR STREET, KOLKATA,700 001, WEST BENGAL 189,247 2,500,000 DO- 8 MEMARI COLD STORAGE PRIVATE LIMITED 12 MAYFAIR ROAD, KOLKATA, WEST BENGAL- 700 019. 72,329 2,000,000 DO- 9 ORIENTATION ACADEMICS (P) LIMITED 12 MANGOE LANE, 1 ST FLOOR, KOLKATA, WEST BENGAL- 700 001 48,658 2,000,000 RETURNED BACK DO- 10 RAJSHREE ENTERPRISES 53,753 2,000,000 NO ADDRESS GIVEN BY THE ASSESSEE - 11 RAJSHREE SERVICES & SALES PRIVATE LIMITED, GREEN VIEW, FLAT NO. K- 001,27/1 B.T ROAD, WEST BENGAL-700 058 27,370 1,000,000 DO- 12 RANBHUMI MARKETING PVT. LTD 3 EZRA STREET, 4 TH FLOOR, ROOM NO. 412, KOLKATA, WEST BENGAL- 700001 46,233 2,500,000 DO- TOTAL 12,75,987/- 2,85,67,315 4 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. 6. AFTER REPRODUCING THE AFORESAID CHART AT PAGES 2 & 3 OF THE ASSESSMENT ORDER, THE AO ASKED THE LD.AR OF THE ASSESSEE COMPANY TO E XPLAIN THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT ORS FOR THE LOAN RECEIVED DURING THE YEAR UNDER CONSIDERATION. 7. THE AO ACKNOWLEDGES THAT PURSUANT TO THE SAME, T HE LD. AR OF THE ASSESSEE COMPANY FILED THE REPLY, BALANCE SHEETS, BANK STATE MENTS AND ITRS OF SOME OF THE LOAN CREDITORS. HOWEVER, THE AO NOTES THAT THE REPLY CO ULD NOT BE ACCEPTED BY HIM, THEREAFTER FROM PARA 3.2 ONWARDS HE DESCRIBED THE G ENERAL MODUS OPERANDI CARRIED OUT BY THE JAMAKHARCHA COMPANIES/PAPER COMPANIES FROM P AGES 3-7 OF HIS ORDER AND THEN AT PARA 3.9 ADDED RS.2,60,67,315/- U/S. 68 OF THE A CT BY OBSERVING THE FOLLOWING: 3.9 THE TOTAL OF UNSECURED LOANS RECEIVED FROM BOG US COMPANIES AS MENTIONED IN THE TABLE ABOVE IS RS. 2,85,67,315/-.THE ASSESSEE HAS ALSO RE PAID BACK UNSECURED LOANS DURING THE YEAR ITSELF TO THESE PAPER COMPANIES AND HAS TAKEN AGAIN AFRESH FROM THE SAME COMPANY OR THE OTHER PAPER COMPANIES. HENCE, A PEAK HAS BEEN CALCU LATED BASED ON THE INCOMING AND OUTGOING OF THESE UNSECURED LOANS OF RS. 2,85,67,31 5/-, WHICH COMES TO RS. 2,60,67,315/-. IN THE LIGHT OF THE RATIO OF THE DECISIONS AS DISCUSSE D ABOVE VIS-A-VIS THE FACTS AND CIRCUMSTANCES IN THE INSTANT CASE AS WELL AS THE ASSESSEE'S INABI LITY TO DISCHARGE ITS OWN BURDEN OF PROOF TO SUBSTANTIATE THE GENUINENESS OF INTRODUCTION OF UNS ECURED LOANS, IT IS HELD THAT THE PURPORTED UNSECURED LOANS AGGREGATING TO RS. 2,60,67,315/- AR E NOTHING BUT THE ASSESSEE'S OWN MONEY CONDUCED UNDER THE GARB OF FRESH UNSECURED LOANS IN TO THE ASSESSEE'S BUSINESS. THEREFORE, RS. 2,60,67,315/-. IS HEREBY TREATED AS UNEXPLAINED CAS H CREDIT FOUND IN THE BOOKS OF THE ASSESSEE DURING THE A.Y 2013-14 AND ACCORDINGLY ADDED BACK T O THE TOTAL INCOME OF THE ASSESSEE. 8. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A), WHO WAS PLEASED TO DELETE THE ADDITION. AGGRIEVED, THE REVE NUE IS BEFORE US. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE ( IN SHO RT, THE LD. DR) ASSAILING THE ACTION OF THE LD. CIT(A) CONTENDED THAT SINCE THE AO COULD NOT TRACE OUT THE LOAN CREDITORS IN THE ADDRESSES FURNISHED BY THE ASSESSE E, THE AO HAD NO OTHER ALTERNATIVE TO MAKE THE ADDITION. ACCORDING TO HIM, SINCE THE LO AN CREDITORS WERE NOT TRACEABLE, THEY ARE NON-EXISTENT. THEREFORE, ACCORDING TO HIM, THE LOAN IS NOTHING, BUT CAMOUFLAGE TO BRING THE ASSESSEES UNACCOUNTED MONEY AND THEREFOR E, THE AO HAS RIGHTLY ADDED THE BOGUS LOAN. ACCORDING TO HIM, THE LD. CIT(A) FAILE D TO TAKE NOTE OF THIS FACT THAT THE TWELVE(12) LOAN CREDITORS COULD NOT BE TRACED OUT I N THE ADDRESSES FURNISHED BY THE ASSESSEE AND THEREFORE, WHILE DECIDING THE APPEAL H E SIMPLY SHOULD NOT HAVE ACCEPTED THE AVERMENTS MADE BY THE ASSESSEE AND SHOULD NOT H AVE SIMPLY BELIEVED THE 5 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. SUBMISSIONS OF THE ASSESSEE AND THUS ERRED IN DELET ING THE IMPUGNED ADDITION, WHICH ACTION IS PERVERSE AND NEED TO BE INTERFERED WITH A ND THEREFORE, THE LD. DR PRAYS THAT THE IMPUGNED ORDER OF THE LD. CIT(A) BE REVERSED AN D AOS ORDER BE UPHELD. 10. PER CONTRA, THE LEARNED AUTHORISED REPRESENTATI VE ( IN SHORT, THE LD.AR) OF THE ASSESSEE SUBMITTED THAT FROM PERUSAL OF THE GR OUNDS RAISED BY THE REVENUE [I.E GROUND NOS. 1 & 5], IT IS CLEAR THAT THE REVENUE HA S NOT CHALLENGED THE CATEGORICAL FINDINGS OF THE LD. CIT(A) IN RESPECT OF THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF ALL THE LOAN CREDITORS AND THEIR TRANSACTION WI TH THE ASSESSEE. ACCORDING TO THE LD.AR THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS BELIEVED WHATEVER THE ASSESSEE HAS STATED BEFORE HIM, AND WITHOUT CAL LING FOR REMAND REPORT HAS GIVEN RELIEF TO THE ASSESSEE. SO, FIRSTLY THE LD. AR TAKI NG ON THE REVENUES CHALLENGE AS TO THE CIT(A) PASSING THE IMPUGNED ORDER WITHOUT CALLI NG FOR THE REMAND REPORT, SUBMITTED THAT THE ASSESSEE HAD FILED THE ENTIRE DO CUMENTS BEFORE THE LD. CIT(A) AS WELL AS THE AO AND DREW OUR ATTENTION TO THE 2(TWO) VOLUMINOUS/BULKY PAPER BOOK (RUNNING TO MORE THAN 653 PAGES-PB-I AND PB-II), WH ICH WERE FILED BEFORE THE AO AS WELL AS BEFORE THE LD. CIT(A). HE DREW OUR ATTENTIO N TO THE CERTIFICATE RENDERED ON THE COVER OF THE PAPER BOOK TO PROVE HIS BONAFIDE ON TH IS ASPECT. THEREFORE, ACCORDING TO THE LD. AR WHEN ALL THE DOCUMENTS WERE FILED BEFORE THE AO DURING ASSESSMENT PROCEEDINGS AND NO NEW DOCUMENTS WERE PRODUCED BEFO RE THE LD. CIT(A) DURING THE APPELLATE PROCEEDINGS, THEREFORE, QUESTION OF THE L D. CIT(A) CALLING FOR REMAND REPORT AS ENVISAGED IN RULE 46A OF THE INCOME-TAX RULES, 1 962 ( HEREINAFTER TO IN SHORT REFERRED TO THE RULES) DOES NOT ARISE. ACCORDING TO THE LD.AR FROM PERUSAL OF THE GROUNDS OF APPEAL, IT IS CLEARLY VIVID THAT THE REV ENUE HAS RAISED A VAGUE AND GENERAL GROUND WITHOUT POINTING OUT, WHICH DOCUMENTS WERE P RODUCED BY THE ASSESSEE BEFORE THE LD. CIT(A) FOR THE FIRST TIME AND NOT FILED BEF ORE THE AO. THEREFORE, ACCORDING TO HIM, THE GROUNDS OF APPEAL RAISED BY THE REVENUE LA CKS MERIT ON THE ISSUE OF NOT CALLING FOR REMAND REPORT AND SINCE THE LD. CIT(A) HAS GON E THROUGH EACH AND EVERY DOCUMENT AND HAS RECORDED A FINDING THAT ALL THE 12 (TWELVE) LOAN CREDITORS INCLUDED CORPORATE ENTITIES WERE HAVING THEIR CIN NUMBER GIVEN BY THE MINISTRY OF CORPORATE AFFAIRS, R.O.C DETAILS, PAN, ITRS, WHICH, INTER ALIA, SHOW T HAT ALL THE 12 LOAN CREDITORS ARE INCOME-TAX ASSESSEES AND ON PERUSAL OF THEIR RESPEC TIVE BALANCE SHEETS WOULD REVEAL 6 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. THEIR CREDITWORTHINESS AND SINCE ALL THE TRANSACTIO NS HAVE TAKEN PLACE THROUGH BANKING CHANNEL AND TDS HAVING BEEN DULY DEDUCTED WHILE ASS ESSEE PAID INTEREST TO THESE LOAN CREDITORS CLEARLY SHOW THE GENUINENESS OF THE TRAN SACTION. THE LD. AR ALSO CONTESTED THE CLAIM OF THE REVENUE RAISED IN THE GROUNDS OF A PPEAL THAT THE LOAN CREDITORS WERE NOT TRACED IN THEIR ADDRESS. ACCORDING TO HIM, OUT OF 12 CREDITORS THE AO HAS REMARKED IN THE CHART ONLY OF ONE CREDITOR I.E. M/S. AMIT RE ALTY THAT THE COMPANY COULD NOT BE LOCATED AT THE GIVEN ADDRESS AND FOR THE OTHER TWO I.E. M/ S. ORIENTATION ACADEMICS & RAJASHREE ENTERPRISES THAT NOTICE RETURNED BACK . (PAGE 2 & 3 OF ASSESSMENT ORDER). SO, ACCORDING TO LD. AR, THE GROUNDS OF APPEAL OF D EPARTMENT ARE PER-SE WRONG AND MISLEADING. ACCORDING TO LD. AR., EVEN THE CHART W HICH DEPICTS THAT NOTICE HAVE RETURNED BACK IS INCORRECT. ACCORDING TO HIM, THE NOTICE U/S 133(6) WAS SERVED UPON ALL LOAN CREDITORS EXCEPT ONE CREDITOR I.E. OF M/S. RAJSHREE ENTERPRISES. THAT TOO (I.E. M/S. RAJSHREE ENTERPRISES) ACCORDING TO LD. AR, IS A PROPRIETARY CONCERN; AND THE PROPRIETOR OF THE SAID COMPANY IS THE DIRECTOR OF CORPORATE CREDITOR M/S. RAJASHREE SERVICES & SALES PVT. LTD. WHICH HAD DULY REPLIED TO THE AOS NOTICE U/S. 133(6) OF THE ACT. SO, THE GROUND OF APPEAL REGARDING THE NO N-TRACEABILITY OF CREDITORS IS A FIGMENT OF IMAGINATION OF AO, AND THAT TOO WHEN HIS CONCLUSION IS NOT BASED ON ANY INSPECTORS REPORT AFTER PHYSICAL VERIFICATION OF A DDRESS ETC. THUS, ACCORDING TO LD. AR, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE BER EFT OF MERITS. THE LD. AR ALSO DREW OUR ATTENTION TO THE DOCUMENTS PRODUCED BY THE LOAN CREDITORS PURSUANT TO NOTICES ISSUED BY THE AO U/S. 133(6) OF THE ACT TO SUBSTANT IATE THEIR IDENTITY, CREDITWORTHINESS AND GENUINENESS OF EACH AND EVERY TRANSACTION, WHIC H WILL BE DISCUSSED IN DETAILS BELOW. THEREFORE, ACCORDING TO THE LD. AR, THE LD . CIT(A) HAS RIGHTLY DELETED THE ADDITION, WHICH DECISION NEED NOT BE INTERFERED BY THIS TRIBUNAL. IN HIS REJOINDER THE LD. DR COULD NOT CONTROVERT THE FACTUAL ASSERTIONS MADE BY LD. AR. 11. HAVING HEARD BOTH THE PARTIES AND AFTER PERUSIN G THE RECORDS AND CASE LAWS CITED BY BOTH THE PARTIES, WE NOTE THAT THE ASSESSE E HAD TAKEN LOAN FROM SAID [ NAME AND AMOUNT LEND FROM CHART AT PAGE 2& 3 SUPRA] TWELVE ( 12) PARTIES TO THE TUNE OF RS. 2,85,67,31/-. DURING THE ASSESSMENT PROCEEDINGS, TH E AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AND ASKED THE ASSESSEE TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDITORS/LOAN TRANSACTION. THEREAFTER, HE HAS DRAWN A CHART, 7 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. WHICH HAS ALREADY BEEN REPRODUCED BY US (SUPRA) AND FROM A PERUSAL OF THE SAME, WE NOTE THAT OUT OF 12 LOAN CREDITORS, AO NOTES THAT T WO NOTICES U/S 133 (6) OF THE ACT HAVE BEEN RETURNED BACK, WHICH MEANS THE OTHER LOAN CREDITORS HAVE DULY RECEIVED 133(6) NOTICES. OUT OF WHICH, ONE ENTITY M/S. RAJA SHREE ENTERPRISES WHICH IS SHOWN AS ITEM NO. 10, THE AO REMARKS THAT THE ADDRESS HAS NO T BEEN FURNISHED. THUS, THE AO HIMSELF ACCEPTS THAT OUT OF TWELVE (12) LOAN CREDIT ORS 9 (NINE) LOAN CREDITORS HAVE RECEIVED NOTICES U/S 133(6) OF THE ACT SENT BY THE AO. MOREOVER, THE AO HIMSELF HAS ACCEPTED/ENDORSED AT PARA 3.1 OF THE ASSESSMENT ORD ER THAT THE ASSESSEE COMPANY HAD FILED BALANCE SHEETS, BANK STATEMENTS AND ITRS OF S OME OF THE LOAN CREDITORS. FROM A PERUSAL OF PAPER BOOK VOL-I&II, WE NOTE THAT THE AO HAS NOT BEEN FAIR WHILE ACKNOWLEDGING THAT ASSESSEE HAD FILED BALANCE SHEET , BANK STATEMENTS OF SOME OF THE LOAN CREDITORS WHEREAS IN FACT ASSESSEE HAD FILED V OLUMINOUS PAPER DOCUMENTATION ABOUT ALL 12 LOAN CREDITORS PURSUANT TO HIS SHOW CA USE NOTICE (SCN). IT HAS TO BE KEPT IN MIND THAT WHILE THE AO DISCHARGES THE DUTIES OF QUASI JUDICIAL AUTHORITY, HE HAS TO BE FAIR IN HIS ACTION. FROM A PERUSAL OF THE RECORDS SUBMITTED BEFORE US, WE NOTE THAT BEFORE THE AO VOLUMINOUS DOCUMENTS RUNNING MORE TH AN 600 PAGES WERE FILE TO SUBSTANTIATE THE IDENTITY, CREDITWORTHINESS AND GEN UINENESS OF THE LOAN CREDITORS/LOAN TRANSACTION. WE NOTE THAT OUT OF 12 LOAN CREDITORS, THE AO HIMSELF ACCEPTS THAT 9 (NINE) OUT OF 12 REPLIED TO HIS 133(6) NOTICES. WE ALSO NO TE THAT OUT OF 3 (THREE) LOAN CREDITORS ACCORDING TO AOS CHART, DID NOT RESPOND TO NOTICE U/S. 133(6), WE FIND THAT TWO HAD REPLIED TO AO, VIZ. M/S. AYUSH FINTRADE PVT. LTD ( IN SHORT, M/S. AYUSH) AND M/S ORIENTATION ACADEMICS PVT. LTD. ( IN SHORT, M/S. O RIENTATION ) AND THEY HAVE ALSO FILED THEIR RESPECTIVE REPLIES BEFORE THE AO, THE R EMAINING ONE (1) LOAN CREDITOR WHICH DID NOT RESPOND TO NOTICE U/S. 133(6) WAS M/S. RAJA SHREE ENTERPRISES ( IN SHORT, M/S. RAJASHREE ENTERPRISES ). IT WAS BROUGHT TO OUR NO TICE THAT THIS IS A PROPRIETARY CONCERN AND THE PROPRIETOR OF THIS CONCERN WAS SHRI AKHILE SH AGARWAL, WHO IS ALSO THE DIRECTOR OF M/S. RAJESH SERVICES & SALES P.LTD, WHICH IS ALS O A LOAN CREDITOR AND HAS DULY REPLIED TO THE NOTICE OF AO ISSUED U/S. 133(6) OF T HE ACT. WE NOTE THAT AO IN THE CHART IN RESPECT OF M/S. AYUSH (LOAN CREDITOR), HAS STAT ED THAT THE NOTICE U/S. 133(6) HAS BEEN RETURNED BACK TO HIM, WHICH WE FIND IT TO BE WRONG ASSERTION. ON THE CONTRARY, WE FIND THAT PURSUANT TO THE NOTICE OF AO U/S. 133(6), M/S. AYUSH REPLIED AND SAME HAVE BEEN FOUND FILED AT PAGES 113 OF THE PB-I. WE ALSO NOTE FROM PERUSAL OF PAGE-113 OF THE PB- 8 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. I, THE AO HIMSELF HAS ENDORSED BY OFFICE SEAL TO HA VE RECEIVED THE LETTER DT. 8-2-2016 SENT BY M/S. AYUSH I.E. THE OFFICE OF AO/ DCIT, C- 11(1) KOLKATA, WHICH IS OFFICIALLY STAMPED HAVING BEEN RECEIVED ON 15-02-2016. ALONG WITH THE SAID REPLY, WE NOTE THAT M/S. AYUSH HAS FILED COMPANY MASTER DATA/CHART, WHI CH IS FOUND AT PAGE-114 OF THE PB-I, LOAN CONFIRMATION FOUND AT PAGE-124 OF THE PB -I, BANK STATEMENT OF THE LOAN CREDITOR IS FOUND AT PAGES 125-128 OF THE PB-I, ITR ACKNOWLEDGEMENTS FOUND AT PAGES 129-131 OF PB-I AND AUDITED ACCOUNTS OF THE LOAN C REDITORS HAVE BEEN FOUND PLACED AT PAGES 132-147 OF PB-I FOR THE YEAR ENDING 31/3/2012 AND 31/3/2013 FOUND PLACED AT PAGES 1-147 OF THE PB, FOR THE YEAR ENDING 31-03-20 14 FOUND PLACED AT PAGES 148-167 AND COMPUTATION OF INCOME AS ON 31-03-2014 FOUND AT PAGE 168 OF THE PB-I. SO, THE FACTUAL ASSERTION OF AO IN THE CHART THAT THE NOTIC E SENT U/S. 133(6) TO M/S. AYUSH RETURNED BACK IS PERVERSE AND INCORRECT. 12. COMING NEXT TO M/S. ORIENTATION, WE ALSO NOTE T HAT AO HAS GIVEN HIS REMARK IN THE CHART IN RESPECT OF M/S ORIENTATION THAT NOT ICE U/S. 133(6) HAVE BEEN RETURNED BACK. WE NOTE THAT M/S ORIENTATION HAS FILED ITS R EPLY BEFORE THE AO, WHICH HAS ALSO BEEN DULY STAMPED BY THE O/O THE DCIT ENDORSING THE FACT THAT IT HAD RECEIVED LETTER ON 18-02-2016. WE ALSO NOTE THAT THE SAID M/S. ORIENT ATION HAD FILED THE AFORESAID DOCUMENTS, WHICH IS BEING STATED IN THE CASE OF M/S . AYUSH ( IN SHORT) AT PAGE-482 TO 520 OF PB-II. 13. NOW COMING TO M/S. RAJASHREE ENTERPRISE, WHERE THE AO HAS GIVEN HIS REMARK NO ADDRESS HAS BEEN GIVEN BY THE ASSESSEE. WE NOTE THAT THE SAID PROPRIETARY CONCERN, WHOSE PROPRIETOR IS SHRI AKHILESH AGARWAL IS ALSO DIRECTOR OF ANOTHER CORPORATE LOAN CREDITOR, M/S. RAJSHREE SERVICES & S ALES P.LTD ( IN SHORT, M/S. RAJSHREE PVT. LTD. ) AND HAS DULY FILED ITS LOAN CONFIRMATI ON WITH BANK STATEMENT OF LOAN CREDITOR, ITR ACKNOWLEDGEMENTS, AUDITED ACCOUNTS OF THE LOAN CREDITORS, WHICH ARE FOUND ENCLOSED AT PAGES 612-639 OF THE PB II. 14. WE FIND THAT ALL OTHER 9 (NINE) CREDITORS HAVE REPLIED DIRECTLY TO THE AOS NOTICE U/S. 133(6), WHICH HAS BEEN DULY ACKNOWLEDGE D BY THE AO IN THE GIVEN CHART ITSELF ( NO ADVERSE REMARK HAS BEEN GIVEN AGAINST T HESE 9 LOAN CREDITORS). WE ALSO FIND THAT ALL THE NINE (9) COMPANIES HAVE ALSO FILED THE COPY OF THEIR REPLIES TO 133(6) 9 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. NOTICES IN THE PAPER BOOK I & II. WE ALSO FIND THA T ALL THE ENDORSEMENTS OF THE O/O THE DCIT THAT REPLIES HAVE BEEN RECEIVED BY THE AO HAVE BEEN FOUND ON IT. WE ALSO NOTE THAT MAIN PLANK ON WHICH THE AO HAS DRAWN ADVERSE I NFERENCE AGAINST THE LOAN CREDITORS WAS THAT THE TWELVE (12) ENTITIES/LOAN CR EDITORS COULD NOT BE TRACED OUT IN THEIR ADDRESSES FURNISHED BEFORE HIM. IN ORDER TO COME T O SUCH CONCLUSION THAT THESE LOAN CREDITORS WERE NOT FOUND IN THE ADDRESSES, THE AO H AS NOT SPELT OUT IN HIS ASSESSMENT ORDER AS TO HOW HE CAME TO SUCH A CONCLUSION WHEN T HE EVIDENCE ON RECORD WITH THE OFFICIAL STAMP OF HIS OFFICE HAVING RECEIVED IT (TH E REPLIES). THE SAID EVENT CONVEYS THAT THESE LOAN CREDITORS HAVE RECEIVED THROUGH POS TAL AUTHORITIES THE NOTICE SENT BY AO U/S. 133(6) OF THE ACT AND THEY IN TURN DULY REPLIE D IT BACK TO AO WHICH HAS BEEN RECEIVED BY THE AO. SO, IN SUCH A SCENARIO, THE AO S ASSERTION THAT THEY COULD NOT BE TRACED IN THE ADDRESS IS MISPLACED AND CANNOT BE AC CEPTED. MOREOVER, IN THIS AFORESAID BACK-DROP WE WONDER AS TO HOW THE AO MADE THIS WRO NG FACTUAL ASSERTION AND FURTHER IT CANNOT BE DISCERNED FROM THE ASSESSMENT ORDER AS TO WHETHER THE AO CARRIED OUT ANY PHYSICAL VERIFICATION ABOUT THE ADDRESSES OF THE LO AN CREDITORS AND THE AO HAS NOT SPELT OUT WHETHER HE HIMSELF HAS PHYSICALLY VERIFIED OR H E HAS DEPUTED ANY INSPECTOR TO VERIFY THE ADDRESS OF THE LOAN CREDITORS. HE HAS N OT REFERRED TO ANY INSPECTORS REPORT ABOUT ANY INSPECTION CARRIED OUT BY ANY OF THE AUTH ORITIES OF THE DEPARTMENT TO DRAW AN ADVERSE CONCLUSION THAT LOAN CREDITORS WERE NOT TR ACEABLE/FOUND IN THE ADDRESSES. ON THE OTHER HAND, WE NOTE THAT THE AO HAD ISSUED 133( 6) NOTICES TO THESE COMPANIES/LOAN CREDITORS, OUT OF WHICH THE AO HIMSELF HAS NOT DRAW N ANY ADVERSE INFERENCE AGAINST 9 (NINE) COMPANIES [ AS TO THE ASPECT OF THE NOTICES BEING RETURNED BACK]. THEN, IN SUCH A SCENARIO, THE INFERENCE DRAWN IS THAT THE NOTICES S ENT BY THE AO TO THE ADDRESS OF THE LEGAL ENTITIES HAS BEEN DULY SERVED UPON THEM [AT L EAST THAT OF NINE LOAN CREDITORS]. AND WE HAVE FOUND FROM EXAMINATION OF DOCUMENTS AS STATED IN PARA 11 AND 12 (SUPRA) THAT ALL OTHER LOAN CREDITORS HAVE RESPONDED EXCEPT ONE (M/S. RAJASHREE ENTERPRISES) TO AOS NOTICE U/S. 133(6) AND HIS OFFICE STAMP ACKNOW LEDGES THAT IT WAS RECEIVED. ABOUT M/S. RAJASHREE ENTERPRISES, WE HAVE GIVEN OUR FACTUAL FINDING AT PARA 13 (SUPRA). THEREFORE, THE FINDING/THE CONCLUSION DRAW N BY THE AO THAT LOAN CREDITORS WERE NOT FOUND IN THE ADDRESSES IS WITHOUT ANY BASI S/MATERIAL, SO THE FINDING OF AO IS PERVERSE AND THAT CANNOT BE THE BASIS FOR DRAWING ANY ADVERSE INFERENCE AGAINST THE LOAN CREDITORS. WE NOTE THAT IN ORDER TO PROVE THE IDENTITY, CREDITWORTHINESS AND 10 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. GENUINENESS OF THE TRANSACTION, THE ASSESSEE HAD FI LED BEFORE US 2(TWO) VOLUMINOUS PAPER BOOK (PB-I & PB- II) RUNNING MORE THAN 653 PA GES, WHEREIN WE NOTE THAT THE ASSESSEE HAD FILED THE FOLLOWING DETAILS OF EACH AN D EVERY LOAN CREDITORS BEFORE US AND LD. CIT(A) AND AO:- A) REPLY TO NOTICE U/S. 133(6) B) COMPANY MASTER C) LOAN CONFIRMATION WITH BANK STATEMENT D) BANK STATEMENT OF LOAN CREDITOR E) IT RETURN ACKNOWLEDGMENT F) AUDITED ACCOUNTS OF LOAN CREDITORS YEAR ENDING ON 31.03.2012, 31.03.2013 & 31.03.2014 G) COMPUTATION OF INCOME 31.03.2014 15. THUS, WHEN ALL THIS AFORESAID DOCUMENTS IN RESPECT OF EACH AND EVERY LOAN CREDITORS HAVE BEEN FILED AND CORPORATE ENTITIES HA D DISCLOSED THEIR RESPECTIVE CIN NOS. PAN DETAILS, ITRS. SO, WE FIND THAT THEY ARE ALL R EGULAR INCOME-TAX ASSESSEES HAVE CIN, PAN ETC. GO ON TO ESTABLISH THEIR IDENTITY. T HEIR CREDITWORTHINESS CAN BE VERIFIED FROM THE AUDITED ACCOUNTS OF THE RESPECTIVE LOAN CR EDITORS AND ON PERUSAL OF THE BALANCE SHEETS WILL REVEAL THE CREDITWORTHINESS OF EACH AND EVERY LOAN CREDITORS, PAGE 652-653 OF PB WHICH IS REPRODUCED BELOW GIVES THE BIRDS EY E VIEW OF THEIR RESPECTIVE CAPITAL, RESERVE ETC. 11 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. 16. FROM THE AFORESAID CHART, THE CREDITWORTHINESS OF EACH LOAN CREDITOR CAN BE SEEN AND WE FIND THAT THEY ALL HAVE ENOUGH CREDITWO RTHINESS TO GIVE LOAN OF RESPECTIVE SUMS TO THE ASSESSEE. AND THE GENUINENESS OF THE T RANSACTION HAS BEEN ESTABLISHED BY THE FACT THAT THE ENTIRE LOAN GIVEN BY THE SAID LOA N CREDITORS TO THE ASSESSEE WAS THROUGH BANKING CHANNEL. FURTHER, THE TDS HAS BEEN DEDUCTED BY ASSESSEE WHILE PAYING THE INTEREST TO THE LOAN CREDITORS AND MOREOVER, WE NOT E THAT THE ASSESSEE HAD SQUARED UP FEW LOAN IN THIS AY AS WELL AS IN THE SUBSEQUENT AY S. IN SUCH SCENARIO AND TAKING NOTE OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THA T THE LD. CIT(A) AFTER EXAMINING THE DOCUMENTS HAS GIVEN FACTUAL FINDING THAT THE IDENTI TY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN TRANSACTION HAS BEEN CLEARL Y DISCHARGED BY THE ASSESSEE. WE NOTE THAT THE LD. CIT(A) HAS GIVEN CLEAR FINDING AB OUT THE IDENTITY OF THE LOAN CREDITORS [FOUND AT PAGE-11, PARA 6.3 OF THE IMPUGNED ORDER O F THE LD. CIT(A)] AND [AT PARA 6.4 PAGE-12], THE LD. CIT(A) HAS GIVEN A SPECIFIC FINDI NG IN RESPECT OF CREDITWORTHINESS OF THE LOAN CREDITORS AND [AT PAGE 18 PARA 6.5], THE L D. CIT(A) HAS GIVEN A CLEAR FINDING ABOUT THE GENUINENESS OF THE LOAN CREDITORS. SINCE THE ASSESSEE HAS BEEN ABLE TO DISCHARGE THE ONUS CASTED UPON IT IN RESPECT OF THE LOAN CREDITORS IDENTITY AND GENUINENESS OF THE TRANSACTION AND THE FACT THAT TH E REVENUE HAS NOT CHALLENGED THE SPECIFIC FINDING RETURNED BY THE LD. CIT(A) THEN TH E SAME CRYSTALLISES AND BECOMES FINAL, AND THUS WE FIND THAT THERE IS NO MERIT IN T HE GROUND OF APPEAL RAISED BY THE REVENUE ON THIS ISSUE AND SO, WE CONFIRM THE IMPUGN ED ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. FOR THAT, WE RE LY ON THE FOLLOWING JUDICIAL PRECEDENTS;- 17. THE HON'BLE APEX COURT IN THE CASE OF ORISSA CO RPN. (P) LTD. (SUPRA) 159 ITR 78 AND THE HON'BLE GUJARAT HIGH COURT, IN THE CASE OF DY. CIT V. ROHINI BUILDERS [2002] 256 ITR 12 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. 360 /[2003] 127 TAXMAN 523 , HAS HELD THAT ONUS OF THE ASSESSEE (IN WHOSE BOOKS OF ACCOUNT CREDIT APPEARS) STANDS FULLY DISCHARGED IF THE IDEN TITY OF THE CREDITOR IS ESTABLISHED AND ACTUAL RECEIPT OF MONEY FROM SUCH CREDITOR IS PROVED. IN C ASE, THE ASSESSING OFFICER IS DISSATISFIED ABOUT THE SOURCE OF CASH DEPOSITED IN THE BANK ACC OUNTS OF THE CREDITORS, THE PROPER COURSE WOULD BE TO ASSESS SUCH CREDIT IN THE HANDS OF THE CREDITOR (AFTER MAKING DUE ENQUIRIES FROM SUCH CREDITOR). IN ARRIVING AT THIS CONCLUSION, THE HON'BLE COURT HAS FURTHER STRESSED THE PRESENCE OF WORD 'MAY' IN SECTION 68. RELEVANT OBSE RVATIONS AT PAGES 369 AND 370 OF THIS REPORT ARE REPRODUCED HEREUNDER:- 'MERELY BECAUSE SUMMONS ISSUED TO SOME OF THE CREDI TORS COULD NOT BE SERVED OR THEY FAILED TO ATTEND BEFORE THE ASSESSING OFFICER, CANNOT BE A GR OUND TO TREAT THE LOANS TAKEN BY THE ASSESSEE FROM THOSE CREDITORS AS NON-GENUINE IN VIE W OF THE PRINCIPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF ORISSA CORPORATION [19 86] 159 ITR 78. IN THE SAID DECISION THE SUPREME COURT HAS OBSERVED THAT WHEN THE ASSESSEE F URNISHES NAMES AND ADDRESSES OF THE ALLEGED CREDITORS AND THE GIR NUMBERS, THE BURDEN S HIFTS TO THE DEPARTMENT TO ESTABLISH THE REVENUE'S CASE AND IN ORDER TO SUSTAIN THE ADDITION THE REVENUE HAS TO PURSUE THE ENQUIRY AND TO ESTABLISH THE LACK OF CREDITWORTHINESS AND MERE NON-COMPLIANCE OF SUMMONS ISSUED BY THE ASSESSING OFFICER UNDER SECTION 131, BY THE ALLEGED CREDITORS WILL NOT BE SUFFICIENT TO DRAW AND ADVERSE INFERENCE AGAINST THE ASSESSEE. IN THE CASE OF SIX CREDITORS WHO APPEARED BEFORE THE ASSESSING OFFICER AND WHOSE STATEMENTS WERE RECORDE D BY THE ASSESSING OFFICER, THEY HAVE ADMITTED HAVING ADVANCED LOANS TO THE ASSESSEE BY A CCOUNT PAYEE CHEQUES AND IN CASE THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE CASH A MOUNT DEPOSITED BY THOSE CREDITORS IN THEIR BANK ACCOUNTS, THE PROPER COURSE WOULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY' TREATING THE CASH DEPOSITS IN THEIR B ANK ACCOUNTS AS UNEXPLAINED INVESTMENTS OF THOSE CREDITORS UNDER SECTION 69. 18. IN THE CASE OF NEMI CHAND KOTHARI 136 TAXMAN 21 3, (SUPRA), THE HON'BLE GUAHATI HIGH COURT HAS THROWN LIGHT ON ANOTHER ASPECT TOUCH ING THE ISSUE OF ONUS ON ASSESSEE UNDER SECTION 68, BY HOLDING THAT THE SAME SHOULD BE DECI DED BY TAKING INTO CONSIDERATION THE PROVISION OF SECTION 106 OF THE EVIDENCE ACT WHICH SAYS THAT A PERSON CAN BE REQUIRED TO PROVE ONLY SUCH FACTS WHICH ARE IN HIS KNOWLEDGE. T HE HON'BLE COURT IN THE SAID CASE HELD THAT, ONCE IT IS FOUND THAT AN ASSESSEE HAS ACTUALL Y TAKEN MONEY FROM DEPOSITOR/LENDER WHO HAS BEEN FULLY IDENTIFIED, THE ASSESSEE/BORROWER CA NNOT BE CALLED UPON TO EXPLAIN, MUCH LESS PROVE THE AFFAIRS OF SUCH THIRD PARTY, WHICH HE IS NOT EVEN SUPPOSED TO KNOW OR ABOUT WHICH HE CANNOT BE HELD TO BE ACCREDITED WITH ANY KNOWLED GE. IN THIS VIEW, THE HON'BLE COURT HAS LAID DOWN THAT SECTION 68 OF INCOME-TAX ACT, SHOULD BE READ ALONG WITH SECTION 106 OF EVIDENCE ACT. THE RELEVANT OBSERVATIONS AT PAGE 260 TO 262, 264 AND 265 OF THE REPORT ARE REPRODUCED HEREIN BELOW:- 'WHILE INTERPRETING THE MEANING AND SCOPE OF SECTIO N 68, ONE HAS TO BEAR IN MIND THAT NORMALLY, INTERPRETATION OF A STATUTE SHALL BE GENE RAL, IN NATURE, SUBJECT ONLY TO SUCH 13 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. EXCEPTIONS AS MAY BE LOGICALLY PERMITTED BY THE STA TUTE ITSELF OR BY SOME OTHER LAW CONNECTED THEREWITH OR RELEVANT THERETO. KEEPING IN VIEW THES E FUNDAMENTALS OF INTERPRETATION OF STATUTES, WHEN WE READ CAREFULLY THE PROVISIONS OF SECTION 68 , WE NOTICE NOTHING IN SECTION 68 TO SHOW THAT THE SCOPE OF THE INQUIRY UNDER SECTION 68 BY T HE REVENUE DEPARTMENT SHALL REMAIN CONFINED TO THE TRANSACTIONS, WHICH HAVE TAKEN PLAC E BETWEEN THE ASSESSEE AND THE CREDITOR NOR DOES THE WORDING OF SECTION 68 INDICATE THAT SE CTION 68 DOES NOT AUTHORIZE THE REVENUE DEPARTMENT TO MAKE INQUIRY INTO THE SOURCE(S) OF TH E CREDIT AND/OR SUB-CREDITOR. THE LANGUAGE EMPLOYED BY SECTION 68 CANNOT BE READ TO IMPOSE SUC H LIMITATIONS ON THE POWERS OF THE ASSESSING OFFICER. THE LOGICAL CONCLUSION, THEREFOR E, HAS TO BE, AND WE HOLD THAT AN INQUIRY UNDER SECTION 68 NEED NOT NECESSARILY BE KEPT CONFI NED BY THE ASSESSING OFFICER WITHIN THE TRANSACTIONS, WHICH TOOK PLACE BETWEEN THE ASSESSEE AND HIS CREDITOR, BUT THAT THE SAME MAY BE EXTENDED TO THE TRANSACTIONS, WHICH HAVE TAKEN P LACE BETWEEN THE CREDITOR AND HIS SUB- CREDITOR. THUS, WHILE THE ASSESSING OFFICER IS UNDE R SECTION 68, FREE TO LOOK INTO THE SOURCE(S) OF THE CREDITOR AND/OR OF THE SUB-CREDITOR, THE BUR DEN ON THE ASSESSEE UNDER SECTION 68 IS DEFINITELY LIMITED. THIS LIMIT HAS BEEN IMPOSED BY SECTION 106 OF THE EVIDENCE ACT WHICH READS AS FOLLOWS: 'BURDEN OF PROVING FACT ESPECIALLY WITHIN KNOWLEDGE .-WHEN ANY FACT IS ESPECIALLY WITHIN THE KNOWLEDGE OF ANY PERSON, THE BURDEN) OF PROVING THAT FACT IS UPON HIM. ' ******** WHAT, THUS, TRANSPIRES FROM THE ABOVE DISCUSSION IS THAT WHITE SECTION 106 OF THE EVIDENCE ACT LIMITS THE ONUS OF THE ASSESSEE TO THE EXTENT OF HIS PROVING THE SOURCE FROM WHICH HE HAS RECEIVED THE CASH CREDIT, SECTION 68 GIVES AMPLE FREEDOM TO THE ASSESSING OFFICER TO MAKE INQUIRY NOT ONLY INTO THE SOURCE(S)OF THE CREDITOR BUT ALSO OF HIS (CREDITOR'S) SUB-CREDITORS AND PROVE, AS A RESU LT, OF SUCH INQUIRY, THAT THE MONEY RECEIVED BY THE ASSESSEE, IN THE FORM OF LOAN FROM THE CREDITOR, THOUGH ROUTED THROUGH THE SUB-CREDITORS, ACTUALLY BELONGS TO, OR WAS OF, THE ASSESSEE HIMSELF. IN OTHER WORDS, WHILE SECTION 68 GIVES THE LIBERTY TO THE ASSESSING OFFICER TO ENQUIRE INTO THE SOURCE/SOURCE FROM WHERE THE CREDITOR HAS RECEIVED THE MONEY, SECTION 106 MAKES THE ASSESSEE LIABLE TO DISCLOSE ONLY THE SOURCE(S) FROM WHERE HE HAS HIMSELF RECEIVED THE CREDIT AND IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE CREDITWORTHINESS OF THE SOURCE(S) OF THE SUB-CREDITORS. IF SECTION 106 AND SECTION 68 ARE TO STAND TOGETHER, WHICH THEY MUST, THEN, THE INTERPRETATION OF SECTIO N 68 ARE TO STAND TOGETHER, WHICH THEY MUST, THEN THE INTERPRETATION OF SECTION 68 HA S TO BE IN SUCH A WAY THAT IT DOES NOT MAKE SECTION 106 REDUNDANT. HENCE, THE HARMONIOUS C ONSTRUCTION OF SECTION 106 OF THE EVIDENCE ACT AND SECTION 68 OF THE INCOME- TAX ACT WILL BE THAT THOUGH APART FROM ESTABLISHING THE IDENTITY OF THE CREDITOR, THE ASSE SSEE MUST ESTABLISH THE GENUINENESS OF THE TRANSACTION AS WELL AS THE CREDITWORTHINESS OF HIS CREDITOR, THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIO NS AS WELL AS THE CREDITWORTHINESS OF THE CREDITOR MUST REMAIN CONFINED TO THE TRANSAC TIONS, WHICH HAVE TAKEN PLACE BETWEEN THE ASSESSEE AND THE CREDITOR. WHAT FOLLOWS , AS A COROLLARY, IS THAT IT IS NOT THE BURDEN OF THE ASSESSEE TO PROVE THE GENUINENESS OF THE TRANSACTIONS BETWEEN HIS CREDITOR AND SUB-CREDITORS NOR IS IT THE BURDEN OF THE ASSESSEE TO PROVE THAT THE SUB- CREDITOR HAD THE CREDITWORTHINESS TO ADVANCE THE CA SH CREDIT TO THE CREDITOR FROM WHOM THE CASH CREDIT HAS BEEN. EVENTUALLY, RECEIVED BY THE ASSESSEE. IT, THEREFORE, FURTHER LOGICALLY FOLLOWS THAT THE CREDITOR'S CREDI TWORTHINESS HAS TO BE JUDGED VIS-A-VIS THE TRANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN TH E ASSESSEE AND THE CREDITOR, AND IT IS NOT THE BUSINESS OF THE ASSESSEE TO FIND OUT THE SOURCE OF MONEY OF HIS CREDITOR OR OF THE GENUINENESS OF THE TRANSACTIONS, WHICH TOOK BET WEEN THE CREDITOR AND SUB-CREDITOR AND/OR CREDITWORTHINESS OF THE SUB- CREDITORS, FOR, THESE ASPECTS MAY NOT BE WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. ' ********** 14 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. ' ... IF A CREDITOR HAS, BY ANY UNDISCLOSED SOURCE, A PARTICULAR AMOUNT OF MONEY IN THE BANK, THERE IS NO LIMITATION UNDER THE LAW ON THE P ART OF THE ASSESSEE TO OBTAIN SUCH AMOUNT OF MONEY OR PART THEREOF FROM THE CREDITOR, BY WAY OF CHEQUE IN THE FORM OF LOAN AND IN SUCH A CASE, IF THE CREDITOR FAILS TO S ATISFY AS TO HOW HE HAD ACTUALLY RECEIVED THE SAID AMOUNT AND HAPPENED TO KEEP THE S AME IN THE BANK, THE SAID AMOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FROM UN DISCLOSED SOURCE. IN OTHER WORDS, THE GENUINENESS AS WELL AS THE CREDITWORTHINESS OF A CREDITOR HAVE TO BE ADJUDGED VIS-A-VIS THE TRANSACTIONS, WHICH HE HAS WITH THE A SSESSEE. THE REASON WHY WE HAVE FORMED THE OPINION THAT IT IS NOT THE BUSINESS OF T HE ASSESSEE TO FIND OUT THE ACTUAL SOURCE OR SOURCES FROM WHERE THE CREDITOR HAS ACCUM ULATED THE AMOUNT, WHICH HE ADVANCES, AS LOAN, TO THE ASSESSEE IS THAT SO FAR A S AN ASSESSEE IS CONCERNED, HE HAS TO PROVE THE GENUINENESS OF THE TRANSACTION AND THE CR EDITWORTHINESS OF THE CREDITOR VIS-A-VIS THE TRANSACTIONS WHICH HAD TAKEN PLACE BE TWEEN THE ASSESSEE AND THE CREDITOR AND NOT BETWEEN THE CREDITOR AND THE SUB-CREDITORS, FOR, IT IS NOT EVEN REQUIRED UNDER THE LAW FOR THE ASSESSEE TO TRY TO FIND OUT AS TO W HAT SOURCES FROM WHERE THE CREDITOR HAD RECEIVED THE AMOUNT, HIS SPECIAL KNOWLEDGE UNDE R SECTION 106 OF THE EVIDENCE ACT MAY VERY WELL REMAIN CONFINED ONLY TO THE TRANSACTI ONS, WHICH HE HAD' WITH THE CREDITOR AND HE MAY NOT KNOW WHAT TRANSACTION(S) HA D TAKEN PLACE BETWEEN HIS CREDITOR AND THE SUB-CREDITOR ' ********** 'IN OTHER WORDS, THOUGH UNDER SECTION 68 AN ASSESSI NG OFFICER IS FREE TO SHOW, WITH THE HELP OF THE INQUIRY CONDUCTED BY HIM INTO THE T RANSACTIONS, WHICH HAVE TAKEN PLACE BETWEEN THE CREDITOR AND THE SUB-CREDITOR, THAT THE TRANSACTION BETWEEN THE TWO WERE NOT GENUINE AND THAT THE SUB-CREDITOR HAD NO CREDIT WORTHINESS, IT WILL NOT NECESSARILY MEAN THAT THE LOAN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR WAS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCE UNLESS THERE IS EV IDENCE, DIRECT OR CIRCUMSTANTIAL, TO SHOW THAT THE AMOUNT WHICH HAS BEEN ADVANCED BY THE SUB-CREDITOR TO THE CREDITOR, HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITOR FROM THE ASSESSEE .' ********** 'KEEPING IN VIEW THE ABOVE POSITION OF LAW, WHEN WE TURN TO THE FACTUAL MATRIX OF THE PRESENT CASE, WE FIND THAT SO FAR AS THE APPELLANT IS CONCERNED, HE HAS ESTABLISHED THE IDENTITY OF THE CREDITORS, NAMELY, NEMICHAND NAHATA AND SONS (HUF) AND PAWAN KUMAR AGARWALLA. THE APPELLANT HAD ALSO SHOWN, IN A CCORDANCE WITH THE BURDEN, WHICH RESTED ON HIM UNDER SECTION 106 OF THE EVIDEN CE ACT, THAT THE SAID AMOUNTS HAD BEEN RECEIVED BY HIM BY WAY OF CHEQUES FROM THE CRE DITORS AFOREMENTIONED. IN FACT THE FACT THAT THE ASSESSEE HAD RECEIVED THE SAID AMOUNT S BY WAY OF CHEQUES WAS NOT IN DISPUTE. ONCE THE ASSESSEE HAD ESTABLISHED THAT HE HAD RECEIVED THE SAID AMOUNTS FROM THE CREDITORS AFOREMENTIONED BY WAY OF CHEQUES, THE ASSESSEE MUST BE TAKEN TO HAVE PROVED THAT THE CREDITOR HAD THE CREDITWORTHINESS T O ADVANCE THE LOANS. THEREAFTER THE BURDEN HAD SHIFTED TO THE ASSESSING OFFICER TO PROV E THE CONTRARY. ON MERE FAILURE ON THE PART OF THE CREDITORS TO SHOW THAT THEIR SUB-CR EDITORS HAD CREDITWORTHINESS TO ADVANCE THE SAID LOAN AMOUNTS TO THE ASSESSEE, SUCH FAILURE, AS A COROLLARY, COULD NOT HAVE BEEN AND OUGHT NOT TO HAVE BEEN, UNDER THE LAW , TREATED AS THE INCOME FROM THE UNDISCLOSED SOURCES OF THE ASSESSEE HIMSELF, WHEN T HERE WAS NEITHER DIRECT NOR CIRCUMSTANTIAL EVIDENCE ON RECORD THAT THE SAID LOA N AMOUNTS ACTUALLY BELONGED TO, OR WERE OWNED BY, THE ASSESSEE. VIEWED FROM THIS ANGLE , WE HAVE NO HESITATION IN HOLDING THAT IN THE CASE AT HAND, THE ASSESSING OFFICER HAD FAILED TO SHOW THAT THE AMOUNTS, WHICH HAD COME TO THE HANDS OF THE CREDITORS FROM T HE HANDS OF THE SUB-CREDITORS, HAD ACTUALLY BEEN RECEIVED BY THE SUB-CREDITORS FROM TH E ASSESSEE. IN THE ABSENCE OF ANY SUCH EVIDENCE ON RECORD, THE ASSESSING OFFICER COUL D NOT HAVE TREATED THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM UND ISCLOSED SOURCES. THE LEARNED 15 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. TRIBUNAL SERIOUSLY FELL INTO ERROR IN TREATING THE SAID AMOUNTS AS INCOME DERIVED BY THE APPELLANT FROM. UNDISCLOSED SOURCES MERELY ON T HE FAILURE OF THE SUB-CREDITORS TO PROVE THEIR CREDITWORTHINESS. 19. FURTHER, IN THE CASE OF CIT V. S. KAMALJEET SIN GH [2005] 147 TAXMAN 18(ALL.) THEIR LORDSHIPS, ON THE ISSUE OF DISCHARGE OF ASSESSEE'S ONUS IN RELATION TO A CASH CREDIT APPEARING IN HIS BOOKS OF ACCOUNT, HAS OBSERVED AND HELD AS U NDER:- '4. THE TRIBUNAL HAS RECORDED A FINDING THAT THE AS SESSEE HAS DISCHARGED THE ONUS WHICH WAS ON HIM TO EXPLAIN THE NATURE AND SOURCE OF CASH CRE DIT IN QUESTION. THE ASSESSEE DISCHARGED THE ONUS BY PLACING (I) CONFIRMATION LETTERS OF THE CASH CREDITORS; (II) THEIR AFFIDAVITS; (III) THEIR FULL ADDRESSES AND GIR NUMBERS AND PERMANENT ACCOUN T NUMBERS. IT HAS FOUND THAT THE ASSESSEE'S BURDEN STOOD DISCHARGED AND SO, NO ADDIT ION TO HIS TOTAL INCOME ON ACCOUNT OF CASH CREDIT WAS CALLED FOR. IN VIEW OF THIS FINDING, WE FIND THAT THE TRIBUNAL WAS RIGHT IN REVERSING THE ORDER OF THE AA C, SETTING ASIDE THE ASSESSMENT ORDER. 20. WE ALSO TAKE NOTE OF THE DECISION OF THE HON' BLE HIGH COURT, CALCUTTA IN THE CASE OF S.K. BOTHRA & SONS, HUF V. INCOME-TAX OFFICER, WARD - 46(3), KOLKATA 347 ITR 347 WHEREIN THE COURT HELD AS FOLLOWS: 15. IT IS NOW A SETTLED LAW THAT WHILE CONSIDERING THE QUESTION WHETHER THE ALLEGED LOAN TAKEN BY THE ASSESSEE WAS A GENUINE TRANSACTION, THE INIT IAL ONUS IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICER CAN DISBELIEVE THE ALLEGED TRANSA CTION OF LOAN. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN IS DISCHARGED BY THE ASS ESSEE BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE LOAN TRANSACTION, THE ONUS SHIFTS UP ON THE ASSESSING OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FURTHER EXPLANATION F ROM THE ASSESSEE AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO ASSES SEE. 16. IN THE CASE BEFORE US, THE APPELLANT BY PRODUCI NG THE LOAN-CONFIRMATION-CERTIFICATES SIGNED BY THE CREDITORS, DISCLOSING THEIR PERMANENT ACCOUN T NUMBERS AND ADDRESS AND FURTHER INDICATING THAT THE LOAN WAS TAKEN BY ACCOUNT PAYEE CHEQUES, NO DOUBT, PRIMA FACIE, DISCHARGED THE INITIAL BURDEN AND THOSE MATERIALS D ISCLOSED BY THE ASSESSEE PROMPTED THE ASSESSING OFFICER TO ENQUIRE THROUGH THE INSPECTOR TO VERIFY THE STATEMENTS. 21. IN A CASE WHERE THE ISSUE WAS WHETHER THE ASSE SSEE AVAILED CASH CREDIT AS AGAINST FUTURE SALE OF PRODUCT, THE AO ISSUED SUMMONS TO TH E CREDITORS WHO DID NOT TURN UP BEFORE HIM, SO AO DISBELIEVED THE EXISTENCE OF CREDITORS A ND SADDLED THE ADDITION, WHICH WAS OVERTURNED BY LD. CIT(A). HOWEVER, THE TRIBUNAL RE VERSED THE DECISION OF THE LD. CIT(A) AND UPHELD THE AOS DECISION, WHICH ACTION OF TRIBU NAL WAS CHALLENGED BY THE HON'BLE HIGH COURT, CALCUTTA IN THE CASE OF CRYSTAL NETWORKS (P. ) LTD. V. COMMISSIONER OF INCOME-TAX 353 ITR 171 WHEREIN THE TRIBUNALS DECISION WAS OVE RTURNED AND DECISION OF LD. CIT(A) UPHELD AND THE HONBLE HIGH COURT HAS HELD THAT WH EN THE BASIC EVIDENCES ARE ON RECORD 16 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. THE MERE FAILURE OF THE CREDITOR TO APPEAR CANNOT B E BASIS TO MAKE ADDITION. THE COURT HELD AS FOLLOWS: 8. ASSAILING THE SAID JUDGMENT OF THE LEARNED TRIBU NAL LEARNED COUNSEL FOR THE APPELLANT SUBMITS THAT INCOME-TAX OFFICER DID NOT CONSIDER TH E MATERIAL EVIDENCE SHOWING THE CREDITWORTHINESS AND ALSO OTHER DOCUMENTS, VIZ., CO NFIRMATORY STATEMENTS OF THE PERSONS, OF HAVING ADVANCED CASH AMOUNT AS AGAINST THE SUPPLY O F BIDIS. THESE EVIDENCE WERE DULY CONSIDERED BY THE COMMISSIONER OF INCOME-TAX (APPEA LS). THEREFORE, THE FAILURE OF THE PERSON TO TURN UP PURSUANT TO THE SUMMONS ISSUED TO ANY WI TNESS IS IMMATERIAL WHEN THE MATERIAL DOCUMENTS MADE AVAILABLE, SHOULD HAVE BEEN ACCEPTED AND INDEED IN SUBSEQUENT YEAR THE SAME EXPLANATION WAS ACCEPTED BY THE INCOME-TAX OFF ICER. HE FURTHER CONTENDED THAT WHEN THE TRIBUNAL HAS RELIED ON THE ENTIRE JUDGMENT OF THE C OMMISSIONER OF INCOME-TAX (APPEALS), THEREFORE, IT WAS NOT PROPER TO TAKE UP SOME PORTIO N OF THE JUDGMENT OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AND TO IGNORE THE OTHER PORTIO N OF THE SAME. THE JUDICIAL PROPRIETY AND FAIRNESS DEMANDS THAT THE ENTIRE JUDGMENT BOTH FAVO URABLE AND UNFAVOURABLE SHOULD HAVE BEEN CONSIDERED. BY NOT DOING SO THE TRIBUNAL COMMITTED GRAVE ERROR IN LAW IN UPSETTING THE JUDGMENT IN THE ORDER OF THE COMMISSIONER OF INCOME -TAX (APPEALS). 9. IN THIS CONNECTION HE HAS DRAWN OUR ATTENTION TO A DECISION OF THE SUPREME COURT IN THE CASE OF UDHAVDAS KEWALRAM V. CIT [19671 66 ITR 462. IN THIS JUDGMENT IT IS NOTICED THAT THE SUPREME COURT AS PROPOSITION OF LAW HELD THAT THE T RIBUNAL MUST IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE, ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. 10. WE FIND CONSIDERABLE FORCE OF THE SUBMISSIONS O F THE LEARNED COUNSEL FOR THE APPELLANT THAT THE TRIBUNAL HAS MERELY NOTICED THAT SINCE THE SUMM ONS ISSUED BEFORE ASSESSMENT RETURNED UNSERVED AND NO ONE CAME FORWARD TO PROVE. THEREFOR E, IT SHALL BE ASSUMED THAT THE ASSESSEE FAILED TO PROVE THE EXISTENCE OF THE CREDITORS OR F OR THAT MATTER THE CREDITWORTHINESS. AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL THAT THE COMMISS IONER OF INCOME-TAX (APPEALS) HAS TAKEN THE TROUBLE OF EXAMINING OF ALL OTHER MATERIALS AND DOCUMENTS, VIZ., CONFIRMATORY STATEMENTS, INVOICES, CHALLANS AND VOUCHERS SHOWING SUPPLY OF B IDIS AS AGAINST THE ADVANCE. THEREFORE, THE ATTENDANCE OF THE WITNESSES PURSUANT TO THE SUM MONS ISSUED, IN OUR VIEW, IS NOT IMPORTANT. THE IMPORTANT IS TO PROVE AS TO WHETHER THE SAID CA SH CREDIT WAS RECEIVED AS AGAINST THE FUTURE SALE OF THE PRODUCT OF THE ASSESSEE OR NOT. WHEN IT WAS FOUND BY THE COMMISSIONER OF INCOME- TAX (APPEALS) ON FACTS HAVING EXAMINED THE DOCUMENT S THAT THE ADVANCE GIVEN BY THE CREDITORS HAVE BEEN ESTABLISHED THE TRIBUNAL SHOULD NOT HAVE IGNORED THIS -FACT FINDING. INDEED THE TRIBUNAL DID NOT REALLY TOUCH THE AFORESAID FACT FI NDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) AS RIGHTLY POINTED OUT BY THE LEARNED COU NSEL. THE SUPREME COURT HAS ALREADY STATED AS TO WHAT SHOULD BE THE DUTY OF THE LEARNED TRIBUN AL TO DECIDE IN THIS SITUATION. IN THE SAID JUDGMENT NOTED BY US AT PAGE 464, THE SUPREME COURT HAS OBSERVED AS FOLLOWS: 'THE INCOME-TAX APPELLATE TRIBUNAL PERFORMS A JUDIC IAL FUNCTION UNDER THE INDIAN INCOME-TAX ACT; IT IS INVESTED WITH AUTHORITY TO DE TERMINE FINALLY ALL QUESTIONS OF FACT. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSIDER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL THE CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. ' 11. THE TRIBUNAL MUST, IN DECIDING AN APPEAL, CONSI DER WITH DUE CARE ALL THE MATERIAL FACTS AND RECORD ITS FINDING ON ALL CONTENTIONS RAISED BY THE ASSESSEE AND THE COMMISSIONER, IN THE LIGHT OF THE EVIDENCE AND THE RELEVANT LAW. IT IS A LSO RULED IN THE SAID JUDGMENT AT PAGE 465 THAT IF THE TRIBUNAL DOES NOT DISCHARGE THE DUTY IN THE MANNER AS ABOVE THEN IT SHALL BE ASSUMED THE JUDGMENT OF THE TRIBUNAL SUFFERS FROM M ANIFEST INFIRMITY. 12. TAKING INSPIRATION FROM THE SUPREME COURT OBSER VATIONS WE ARE CONSTRAINED TO HOLD IN THIS MATTER THAT THE TRIBUNAL HAS NOT ADJUDICATED UPON T HE CASE OF THE ASSESSEE IN THE LIGHT OF THE 17 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. EVIDENCE AS FOUND BY THE COMMISSIONER OF INCOME-TAX (APPEALS). WE ALSO FOUND NO SINGLE WORD HAS BEEN SPARED TO UP SET THE FACT FINDING OF THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THERE ARE MATERIALS TO SHOW THE CASH CREDIT WA S RECEIVED FROM VARIOUS PERSONS AND SUPPLY AS AGAINST CASH CREDIT ALSO MADE. 13. HENCE, THE JUDGMENT AND ORDER OF THE TRIBUNAL I S NOT SUSTAINABLE. ACCORDINGLY, THE SAME IS SET ASIDE. WE RESTORE THE JUDGMENT AND ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). THE APPEAL IS ALLOWED. 22. WHEN A QUESTION AS TO THE CREDITWORTHINESS OF A CREDITOR IS TO BE ADJUDICATED AND IF THE CREDITOR IS AN INCOME TAX ASSESSEE, IT IS NOW W ELL SETTLED BY THE DECISION OF THE CALCUTTA HIGH COURT THAT THE CREDITWORTHINESS OF THE CREDITO R CANNOT BE DISPUTED BY THE AO OF THE ASSESSEE BUT THE AO OF THE CREDITOR. IN THIS REGARD S OUR ATTENTION WAS DRAWN TO THE DECISION OF THE HON'BLE HIGH COURT, CALCUTTA IN THE COMMISSI ONER OF INCOME TAX, KOLKA TA-ILL VERSUS DATAWARE PRIVATE LIMITED ITAT NO. 263 OF 2011 DATE: 21ST SEPTEMBER, 2011 WHEREIN THE COURT HELD AS FOLLOWS: IN OUR OPINION, IN SUCH CIRCUMSTANCES, THE ASSESSI NG OFFICER OF THE ASSESSEE CANNOT TAKE THE BURDEN OF ASSESSING THE PROFIT AND LOSS ACCOUNT OF THE CREDITOR WHEN ADMITTEDLY THE CREDITOR HIMSELF IS AN INCOME TAX ASSESSEE. AFTER GETTING TH E PAN NUMBER AND GETTING THE INFORMATION THAT THE CREDITOR IS ASSESSED UNDER THE ACT, THE AS SESSING OFFICER SHOULD ENQUIRE FROM THE ASSESSING OFFICER OF THE CREDITOR AS TO THE GENUINE NESS' OF THE TRANSACTION AND WHETHER SUCH TRANSACTION HAS BEEN ACCEPTED BY THE ASSESSING OFFI CER OF THE CREDITOR BUT INSTEAD OF ADOPTING SUCH COURSE, THE ASSESSING OFFICER HIMSELF COULD NO T ENTER INTO THE RETURN OF THE CREDITOR AND BRAND THE SAME AS UNWORTHY OF CREDENCE. SO LONG IT IS NOT ESTABLISHED THAT THE RETURN SUBMI TTED BY THE CREDITOR HAS BEEN REJECTED BY ITS ASSESSING OFFICER, THE ASSESSING OFFICER OF THE ASS ESSEE IS BOUND TO ACCEPT THE SAME AS GENUINE WHEN THE IDENTITY OF THE CREDITOR AND THE GENUINENE SS' OF TRANSACTION THROUGH ACCOUNT PAYEE CHEQUE HAS BEEN ESTABLISHED. WE FIND THAT BOTH THE COMMISSIONER OF INCOME TAX (A PPEAL) AND THE TRIBUNAL BELOW FOLLOWED THE WELL-ACCEPTED PRINCIPLE WHICH ARE REQUIRED TO B E FOLLOWED IN CONSIDERING THE EFFECT OF SECTION 68 OF THE ACT AND WE THUS FIND NO REASON TO INTERFERE WITH THE CONCURRENT FINDINGS OF FACT RECORDED BY BOTH THE AUTHORITIES. 23. IN THIS CASE ON HAND, THE ASSESSEE HAD DISCHARG ED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE LOAN CREDIT ORS, THEREAFTER THE ONUS SHIFTED TO AO TO DISPROVE THE DOCUMENTS FURNISHED BY ASSESSEE. THE D OCUMENTS FURNISHED BY ASSESSEE CANNOT BE BRUSHED ASIDE BY THE AO WITHOUT COGENT REASONS. THE AOS ACTION TO DRAW ADVERSE VIEW IN THE LIGHT OF THE DOCUMENTS DISCUSSED SUPRA CANNO T BE COUNTENANCED. IN THE ABSENCE OF ANY INVESTIGATION, MUCH LESS GATHERING OF EVIDENCE BY T HE ASSESSING OFFICER, WE HOLD THAT ADDITION CANNOT BE SUSTAINED MERELY BASED ON INFERE NCES DRAWN BY CIRCUMSTANCE. APPLYING 18 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. THE PROPOSITIONS LAID DOWN IN THESE CASE LAWS TO TH E FACTS OF THIS CASE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 24. TO SUM UP SECTION 68 OF THE ACT PROVIDES THAT IF ANY SUM FOUND CREDITED IN THE YEAR IN RESPECT OF WHICH THE ASSESSEE FAILS TO EXPLAIN T HE NATURE AND SOURCE SHALL BE ASSESSED AS ITS UNDISCLOSED INCOME. IN THE FACTS OF THE PRESENT CAS E, BOTH THE NATURE & SOURCE OF THE LOAN RECEIVED WAS FULLY EXPLAINED BY THE ASSESSEE. THE A SSESSEE HAD DISCHARGED ITS ONUS TO PROVE THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF T HE LOAN CREDITORS. THE PAN DETAILS, BANK ACCOUNT STATEMENTS, AUDITED FINANCIAL STATEMENTS AN D INCOME TAX ACKNOWLEDGMENTS WERE PLACED ON AO'S RECORD. ACCORDINGLY ALL THE THREE CO NDITIONS AS REQUIRED U/S. 68 OF THE ACT I.E. THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION WERE PLACED BEFORE THE AO AND THE ONUS SHIFTED TO AO TO DISPROVE THE MATER IALS PLACED BEFORE HIM. WITHOUT DOING SO, THE ADDITION MADE BY THE AO IS BASED ON CONJECT URES AND SURMISES CANNOT BE JUSTIFIED. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCU SSED ABOVE, NO ADDITION WAS WARRANTED UNDER SECTION 68 OF THE ACT. THEREFORE, WE DO NOT W ANT TO INTERFERE IN THE IMPUGNED ORDER OF LD. CIT(A) WHICH IS CONFIRMED AND CONSEQUENTLY THE APPEAL OF REVENUE IS DISMISSED. 25. GROUND NO. 2 OF REVENUE IS AGAINST THE ACTION O F THE LD. CIT(A) IN DELETING THE ADDITION OF RS.12,75,987/- ON ACCOUNT OF INTEREST P AYMENT TO BOGUS LOAN CREDITORS. 26. WE NOTE THAT THE AO DISALLOWED THE INTEREST EXP ENDITURE WHICH WERE PAID BY THE ASSESSEE TO THE AFORESAID TWELVE (12) LOAN CRE DITORS, ON THE REASON THAT THE LOAN CREDITORS WERE BOGUS ENTITIES/COMPANIES. HOWEVER, W HILE ADJUDICATING GROUND NOS. 1 & 5 WE HAVE FOUND THAT LOAN CREDITORS ARE NOT BOGUS COMPANIES AND THAT THE INTEREST WERE PAID THROUGH BANKING CHANNEL AND TDS HAVE BEEN DULY DEDUCTED BY THE ASSESSEE. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION. WE CONFIRM THE ACTION OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF REVENUE. 27. GROUND NO. 3 OF THE REVENUE IS AGAINST THE ACTI ON OF THE LD. CIT(A) IN DELETING THE ADDITION MADE BY THE AO ON THE REASON OF NON-DE POSIT OF RS. 8,46,634/- WITHIN DUE DATE AS PRESCRIBED IN PF/ESI ACT. WE NOTE THAT THE LD. CIT(A) HAS GIVEN THE RELIEF TO THE ASSESSEE AFTER TAKING NOTE THAT THE ASSESSEE HAD DEPOSITED RS. 8,46,634/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF/ESI BEFORE THE DUE DATE OF FILING OF RETURN OF 19 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. INCOME, WHICH FACTUAL FINDING IS CORROBORATED FROM PERUSAL OF PAGES 35-36 OF THE PB (TAX AUDIT REPORT) FROM WHERE, WE NOTE THAT THE ASS ESSEE, IN FACT, HAD REMITTED THE EMPLOYEES CONTRIBUTION OF PF/ESI BEFORE DUE DATE O F FILING OF RETURN OF INCOME. THEREFORE, WE CONFIRM THE ORDER OF THE LD. CIT(A) BY RELYING ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VI JAY SHREE LTD DT. 6-9-2011 IN ITAT NO. 245 OF 2011 AND GA NO. 2607 OF 2011. 28. GROUND NO. 4 IS AGAINST THE ACTION OF THE LD. C IT(A) IN ALLOWING THE AMOUNT OF RS. 3,15,107/- WHICH WAS DISALLOWED BY AO BEING THE INTEREST ON LATE PAYMENT OF TDS. WE NOTE THAT THE AO DISALLOWED RS.3,15,107/- S INCE THIS AMOUNT HAS BEEN REMITTED BY THE ASSESSEE FOR LATE PAYMENT OF TDS. WE NOTE THAT THE LD. CIT(A) HAS GIVEN RELIEF TAKING NOTE OF THE DECISION OF THIS TR IBUNAL IN THE CASE OF M/S. NARAYANI ISPAT PVT. LTD ITA NO. 2127/KOL/2014 AS WELL AS THE DECISION OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF TRIVENI ENGINEERING WORKS LTD. VS COMMISSIONER OF INCOME-TAX ( 144 ITR 732). WE NOTE THAT THIS ISSUE IS NO LONG ER RES INTEGRA . THIS TRIBUNAL IN NARAYANI ISPAT P. LTD. HAS DECIDED THIS ISSUE BY HOLDING AS UNDER: THE ISSUE OF DELAY IN THE PAYMENT OF SERVICE TAX I S DIRECTLY COVERED BY THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF LACHMANDAS MATHUR A VS. CIT REPORTED IN 254 ITR 799 IN FAVOUR OF ASSESSEE. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED BELOW: 'THE HIGH COURT HAS PROCEEDED ON THE BASIS THAT THE INTEREST ON ARREARS OF SALES TAX IS PENAL IN NATURE AND HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT IT IS COMPENSATORY IN NATURE. IN TAKING THE SAID VIEW THE HIGH COURT HAS PLACED RELIANCE ON ITS FULL BENCH'S DECISION IN SARAYA SUGAR MILLS (P.) LTD. V. CIT (L9 79) 116 ITR 387 (ALL.) THE LEARNED COUNSEL APPEARING FOR THE APPELLANT-ASSESSEE STATES THAT THE SAID JUDGMENT OF THE FULL BENCH HAS BEEN REVERSED BY THE LARGER BENCH OF THE HIGH COURT IN TRIVENI ENGG. WORKS LTD. V. CIT (L983) 144 ITR 732 (ALL.) (FB), WHEREIN IT HAS BEEN HELD THAT INTEREST ON ARREARS 0] TAX IS COMPENSAT01Y IN NATURE AND NOT PE NAL. THIS QUESTION HAS ALSO BEEN CONSIDERED BY MIS COURT IN CIVIL APPEAL NO. 830 OF 1979 TITLED SARRAYA SUGAR MILLS (P.) LTD. V. CFT DECIDED ON 29-2-1996. IN THAT VIEW OF T HE MATTER, THE APPEAL IS ALLOWED AND QUESTION NOS. 1 AND 2 ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE ... IN VIEW OF THE ABOVE JUDGMENT, THERE REMAINS NO DOU BT THAT THE INTEREST EXPENSE ON THE DELAYED PAYMENT OF SERVICE TAX IS ALLOWABLE DEDUCTI ON. THE ABOVE PRINCIPLES CAN BE APPLIED TO THE INTEREST EXPENSES LEVIED ON ACCOUNT OF DELAYED PAYMENT OF TDS AS IT RELATES TO THE EXPENSES CLAIME D BY THE ASSESSEE WHICH 'ARE - SUBJECT' TO THE -TDS PROVISIONS. THE ASSESSEE CLAIMS THE SPE CIFIED EXPENSES OF CERTAIN AMOUNT IN ITS PROFIT & LOSS ACCOUNT AND THEREAFTER THE ASSESSEE F ROM THE PAYMENT TO THE PARTY DEDUCTS CERTAIN PERCENTAGE AS SPECIFIED UNDER THE ACT AS TD S AND PAYS TO THE GOVERNMENT EXCHEQUER. THE AMOUNT OF TDS REPRESENTS THE AMOUNT OF INCOME TAX OF THE PARTY ON WHOSE BEHALF THE PAYMENT WAS DEDUCTED & PAID TO THE GOVE RNMENT EXCHEQUER. THUS THE TDS AMOUNT DOES NOT REPRESENT THE TAX OF THE ASSESSEE BUT IT IS THE TAX OF THE PARTY WHICH HAS BEEN PAID BY THE ASSESEE. THUS ANY DELAY IN THE PAY MENT OF TDS BY THE ASSESSEE CANNOT BE 20 I.T.A NO. 822/KOL/2018 A.Y 2013-14 M/S. MAA ANNAPURNA TRANSPORT AGENCY LTD. LINKED TO THE INCOME TAX OF THE ASSESSEE AND CONSE QUENTLY THE PRINCIPLES LAID DOWN B THE HON 'BLE APEX COURT IN CASE OF BHARAT COMMERCE IND USTRIES LTD. VS. CIT (199 ) REPORTED IN 230 ITR 733 CANNOT BE APPLIED TO THE CASE ON HAN D. THUS, IN OUR CONSIDERED VIEW, THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF BHARAT COMMERCE INDUSTRIES LTD. (SUP RA) IS NOT APPLICABLE IN THE INSTANT FACTS OF THE CASE. THUS, WE HOLD THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS WRONGLY APPLIED THE PRINCIPLE LAID DOWN BY THE HON'BLE SUPR EME COURT IN THE CASE OF BHARAT COMMERCE INDUSTRIES LTD.(SUPRA). WE ALSO FIND THAT THE HON'BLE SUPREME COURT IN THE CASE OF LACHMANDAS MATHURA (SUPRA) HAS ALLOWED THE DEDUC TION ON ACCOUNT OF INTEREST ON LATE DEPOSIT OF SALES TAX U/S 37(1) OF THE ACT. IN VIEW OF THE ABOVE, WE CONCLUDE THAT THE INTEREST EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF DEL AYED DEPOSIT OF SERVICE TAX AS WELL' AS TDS LIABILITY ARE ALLOWABLE EXPENSES U/S 37(1) OF THE ACT. IN THIS VIEW OF THE MATTER, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD.CIT( A) AND WE UPHOLD THE SAME. HENCE, THIS GROUND OF REVENUE IS DISMISSED. THEREFORE, RESPECTFULLY FOLLOWING THE SAID DECISION OF THE TRIBUNAL, WE CONFIRM THE IMPUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL OF THE REVENUE. 29. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 15TH JANUARY, 2019 SD/- SD/- (ARJUN LAL SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DA TED 15 -01-2020 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/REVENUE: THE DCIT, C.C-2(4), AAYKAR BHAWA N, POORVA, 110 SHANTIPALLY, KOLKATA-107. 2 RESPONDENT/ASSESSEE: M/S. MAA ANNAPURNA TRANSPORT A GENCY LTD. 5 FL., 84/1B, HI TECH CHAMBERS, TPOSIA ROAD SOUTH, KOLKATA-46. 3. CIT, 4. CIT(A), KOLKATA. 5. DR, KOLKATA BENCHES, KOLKATA **PP/SPS TRUE COPY BY BY ORDER ASSISTANT REGISTRAR ITAT KOLKATA