INCOME TAX OFFICER Vs. A C SARKAR
LAWS(IT)-1994-11-6
INCOME TAX APPELLATE TRIBUNAL
Decided on November 29,1994

Appellant
VERSUS
Respondents

JUDGEMENT

R. Acharya, Accountant Member - (1.) THIS appeal has been instituted by the department against the order of the CIT(A) for the assessment year 1987-88 on the following grounds : 1. That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in holding that the assessee cannot be held to be the owner of the amount of Rs. 1,60,000 received by him from his wife and the Income Tax Officer is at liberty to take action in this respect in the hands of the assessee's wife and in that view deleting the addition of Rs. 1,60,000 made as assessee's income from the undisclosed sources.
(2.) That on the facts and in the circumstances of the case, the order of the Learned Commissioner of Income Tax (Appeals) be vacated and the order of the Income Tax Officer be restored. 2. While explaining the source of investment of Rs. 3,38,958 in house property at Delhi the assessee stated that he took a loan of Rs. 3,38,110 from his wife, Mrs. Aruna Sarkar. It was further explained that Mrs. Aruna Sarkar had advanced the loan of Rs. 1,92,480 and Rs. 1,60,000 to the assessee after taking loan from ITC and M/s Esskey Pictures International (EPC for short) respectively. The Assessing Officer (A.O.) requested the assessee to furnish the PA No. of EPC but the assessee failed to do so. The A.O. also issued a summon under Section 131 which was served on EPC fixing the case for hearing on 26-3-1990 but there was no compliance. Under these circumstances the A.O. treated the loan transaction with EPC as bogus and accordingly the amount of Rs. 1,60,000 alleged to have been advanced to the assessee by his wife is treated as assessee's income from undisclosed sources. Before the CIT(A) the assessee submitted a copy of Mrs. Sarkar's statement of affairs, confirmation as to her accommodating loan of Rs. 3,38,110 to the assessee, copies of demand notice under Section 156 for assessment years 1983-84 and 1987-88 in her case and statement of account she had with EPC for financial years 1985-86 and 1986-87. On the basis of these documents it was submitted before the CIT(A) that in her assessment the sources of funds for advancing the loan of Rs. 3,38,110 to the assessee has been accepted in her hands. The CIT(A) considered the submissions made by the assessee and observed that as the assessee did not have any loan transaction with EPC he was not bound to furnish the PA No. of the aforesaid creditor and similarly he could not be held responsible for non-compliance of the above party to the summons issued by the A.O. According to CIT(A) the assessee has established the identity of the person from whom he received loan by furnishing the confirmation of loan transaction by the creditor and by proving that the wife is an existing income-tax and wealth-tax assessee as GIR No. is given in the confirmation. According to CIT(A) the assessee has also proved the creditworthiness of his wife and has discharged the onus by furnishing the statement of account, his wife had with EPC for financial years 1985-86 and 1986-87. According to him since the aforesaid statements have been accepted in the assessment of assessee's wife till the assessment year 1987-88 the assessee has discharged the onus of establishing the creditworthiness of his wife in so far as the amount of Rs. 1,60,000 is concerned. According to CIT(A) the assessee has also discharged the onus of establishing the genuineness of loan of Rs. 1,60,000 as the relevant confirmation in support of the loan transaction has been filed and, therefore, the onus had shifted to the A.O. to prove that the loan transaction under consideration was not genuine. The CIT(A) placed reliance on Madras High Court decision in the case of S. Hastimal v. CIT [1963] 49 ITR 273 wherein it was held that the loan debtor cannot be presumed to have special knowledge on the source of source or origin of origin of the loan received by him. He also relied on Assam High Court decision in the case of Tolaram Daga v. CIT[1966] 59 ITR 632 wherein it has been held that the fact that the assessee was unable to satisfy the authorities as to source from which his loan creditor derived the money lent to him cannot be used against the assessee. Accordingly the CIT(A) held that the assessee cannot be held responsible if particulars of creditor of his wife could not be furnished or aforesaid creditor failed to comply with the notices and, therefore, he deleted the addition of Rs. 1,60,000 as according to him the assessee cannot be treated to be the owner of the amount and the A.O. is at liberty to take action in this respect in the hands of the assessee's wife. Being aggrieved by this order of the CIT(A) the revenue has preferred this appeal to Tribunal.
(3.) THE learned departmental representative (D.R.) relied on the order of A.O. and submitted that this is a loan taken by the assessee from his wife and, therefore, this case is altogether different from other cases in which relatives are not creditors. He further argued that in this case the assessee has established only the identity of the creditor. It was further contended by him that the assessee has completely failed to establish the creditworthiness of the creditor and genuineness of the transaction. In order to support his contention the learned D.R. placed reliance on the following decisions : 1. Shankar Industries v. CIT [1978] 114 ITR 689 (Cal.); 2. Jamnaprasad Kanhaiyalal v. CIT [1981] 130 ITR 244 (SC); 3. Oriental Wire Industries (P.) Ltd. v. CIT [1981] 131 ITR 688 (Cal.); 4. Addl. CIT v. A. L. N. Rao Charitable Trust [1976] 103 ITR 44 (Kar.). Learned counsel for the assessee, on the other hand, filed paper book containing a letter of confirmation, statement of total income of Mrs. Aruna Sarkar for F.Y. 1986-87, statement of affairs of Mrs. Aruna Sarkar for financial year 1986-87, statement of net wealth of Mrs. Aruna Sarkar as at 31-3-1987, cash flow statement of Mrs. Aruna Sarkar for the financial year 1986-87 i.e., assessment year 1987-88, cash statement excluding bank drawings for financial year 1986-87, a copy of demand notice of Mrs. Aruna Sarkar for assessment years 1983-84 to 1986-87 under Amnesty Scheme and a copy of demand notice-cum-assessment order in the case of Mrs. Aruna Sarkar for assessment year 1987-88. THE learned counsel for the assessee explained that the identity of the creditor is established on the basis of confirmation placed at p. 1 of the paper book in which GIR No. of the creditor is also given. He also invited our attention to pp. 9 & 10 which is a demand notice in the case of Mrs. Aruna Sarkar for the assessment year 1987-88 and submitted that this document proves the creditworthiness of the creditor. It was further argued that notice or summon were issued to Mr. D. Bansal, Proprietor of EPC and not to assessee. He also placed reliance on the order of CIT(A) and contended that since the identity of the creditor, creditworthiness of the creditor and genuineness of the transactions are established in this case the CIT(A) was justified in deleting the addition. In order to support his arguments and contentions the counsel for the assessee relied on the following decisions: 1. S. Hastimal's case (supra) 2. Tolaram Daga's case (supra) 3. CIT v. Orissa Corporation (P.) Ltd. [1986] 159 ITR 78 (SC).;


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