Soumitra Pal, J. - (1.) The present appeal under Section 260A of the IT Act, 1961, has been filed by the assessee against the order passed by the learned Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal").
(2.) The facts are the assessee was the director of M/s Cosmopolitan Construction (P) Ltd. (for short 'CCPL'). A diary marked UPD 10 was seized in course of search and seizure against CCPL. Particular entries in UPD 10 reflected that CCPL received consideration amount in cheque as well as in cash against the flats purchased under project P-206. The cheques were accounted for but it was alleged that the cash entries were unaccounted. This was sought to be alleged as income of the assessee out of his own business. Assessee contended that the sum of Rs. 2,95,002 belonged to the CCPL. CCPL had earlier moved the Settlement Commission and made disclosures with details pertaining to the asst. yrs. 1986-87 to 1989-90, CCPL filed an application before the Commission disclosing the said sum for the asst, yr. 1989-90. According to the assessee, since the said sum was subjected to tax at the hands of CCPL, it cannot be taxed in his hands. So far as the sum relating to Rs. 1,00,000 is concerned, the assessee requested one S.K. Pincha to make payment of the said sum to RICCO on his behalf and debit it to his account. Accordingly, on 16th Nov., 1988, Pincha got a draft of Rs. 1,00,000 and paid to RICCO. The said sum of Rs. 1,00,000 together with interest totalling Rs. 1,05,625 was credited by the assessee in his books in the name of said Pincha. Confirmation letter from said Pincha along with income-tax file number and copy of receipt for filing return were adduced. According to the assessee, since the identity of the creditor and genuineness of the loan were established, the order of the learned Tribunal regarding the addition of the said sum on the ground of unexplained loan credit is erroneous and thus perverse.
(3.) In this factual backdrop, let us examine how the Revenue dealt with the assessment. The assessee had filed its return of income. The AO passed the assessment order. The assessee being unsuccessful preferred an appeal before the learned Commissioner of Income-tax (Appeal) [for short "CIT(A)"]. As regards the sum of Rs. 2,95,002, the CIT(A) found that examination of the seized materials revealed that the persons from whom cash was received made payments in cash as well as through account payee cheques. Cheques were credited in the hands of CCPL, and the cash received by the assessee remained unexplained. The CIT(A) declined to interfere as the sum of Rs. 2,95,000 remained out of the books and, therefore, required to be taxed in the hands of the assessee. Regarding the addition of Rs. 1,05,625 on account of unexplained loan credit, the CIT(A) also declined to interfere as the assessee failed to produce any documentary evidence to prove the creditworthiness of the creditor. Still aggrieved, the assessee preferred an appeal before the learned Tribunal. The learned Tribunal while passing the order, inter alia, declined to interfere with the said two additions. Regarding the addition of Rs. 2,95,002 the Tribunal held as under : "We have considered the rival submissions. We are of the view that the assessee is trying to dodge the issue of specific finding of the learned AO regarding the cash transactions with the flat buyers and circumventing receipts therefrom various projects which may or may not form part of the projects before the Settlement Commission. Before us also, the learned Authorised Representative has not been able to establish the distinction between the disclosure before the Settlement Commission by the company and by the specific finding of the learned AO as per the diary serial marked UPD-10 pp. 96 and 97 which otherwise should have also been disclosed before the Settlement Commission. We are, therefore, of the view that the addition of Rs. 2,95,002 was made after specific enquiries by the IT authorities and the fact that the assessee has not been able to establish the complexity of number of projects undertaken, number of flats sold and those remaining unsold, cost of construction per sq. ft. as against the actual expenditure incurred by the company which could have left a residual income. All the cash transactions remained out of books of Cosmopolitan Construction (P) Ltd. These facts are not borne out of the order of the Settlement Commissioner under Section 245D. We, therefore, confirm the addition." While dealing with the addition of Rs. 1,05,625 the Tribunal held as follows : "We have considered the rival submissions and have gone through the paper book submitted by the learned Authorised Representative and we have also perused the orders of the lower authorities. Prima facie, it appears that the assessee had made an investment amounting to Rs. 1,05,625 in purchasing of land at Bhiwadi. This fact has been clearly brought out by both the lower authorities who in the absence of any documentary evidence, creditworthiness of the creditor, bank statement and/or other evidence, in support of the claim of investment in land at Bhiwadi was made disallowed/added under Section 68. The affidavit, copy thereof has been filed by the Authorised Representative, also leaves much to be desired which remained unfulfilled before the lower authorities. This affidavit speaks of refund of loan together with interest which has not been substantiated by the learned Authorised Representative before us. The creditworthiness of the deponent has also not been established. We are, therefore, in agreement with the CIT(A) in confirming the loan credit under Section 68 of the IT Act.";