- (1.) THIS appeal has been admitted in terms of the following questions : "Whether the learned Income-tax Appellate Tribunal was right in its wisdom to hold that entries reflected in the regular books of account cannot be considered for the block assessment period ? Whether the learned Income-tax Appellate Tribunal was justified in deleting additions by holding that the assessee had discharged its onus by producing the creditors ? Whether it can be said that the mere production of creditors is sufficient to discharge the onus of the assessee and the creditworthiness/paying capacity is of no relevancy at all ? Whether the learned Income-tax Appellate Tribunal was justified in deleting the additions without rejecting the findings of the Assessing Officer with regard to the creditworthiness and genuineness of the transactions ? Whether the learned Income-tax Appellate Tribunal was justified in not applying the ratio in the case of Shankar Industries v. CIT [1978] 114 ITR 689 (Cal), as decided by the court to the present matter ?"
(2.) A search and seizure operation was carried out under Section 132 of the Income-tax Act, 1961, on August 2, 1996, at the business premises of Om Shanti and Sons, Bapu Bazar, Jaipur, Marcopolo, Choudhary House and at Rajdeep Hotel, Bapu Bazar, Jaipur. During the course of search incriminating documents and loose papers pertaining to the assessee, Ajay Kumar Sharma, partner of Holiday India Travels "N" Tours, were seized. Accordingly, on June 26, 1997, notice under Section 158BD of the Act was issued to the assessee, that was served on him on June 30, 1997. In response to the notice, the assessee filed returns for the assessment years 1995-96 and 1996-97 on January 16, 1998. The assessee was also asked to file return for the block period, i.e., from 1986-87 to 1996-97. In response to that notice, the assessee filed the return for the block period also. During the course of scrutiny of the returns and relevant material available for assessing the income for the block period, the Assessing Officer made an addition of Rs. 1,11,000 on account of unexplained cash credits. It is noticed by the Assessing Officer that the assessee has shown loans from the following parties : JUDGEMENT_240_ITR259_2003Html1.htm The summons were issued to these cash creditors. They, except Savitri Devi, appeared before the Assessing Officer and they were examined by the Assessing Officer. The Assessing Officer disbelieved the genuineness of the loans advanced by the aforesaid cash creditors. The Assessing Officer added Rs. 1,11,000 on account of bogus cash credits shown in the books. In appeal before the Tribunal, the Tribunal has deleted the addition holding that cash credits are genuine. Otherwise also the Tribunal has taken the view that once the cash credits have been shown in the books of account maintained by the assessee in the regular course of business activities, no addition is warranted. He deleted the addition so made.
(3.) HEARD learned counsel for the parties. Mr. Singhi, learned counsel for the Revenue, submits that when the cash credits are not genuine, the Assessing Officer has rightly taxed that amount in the hands of the assessee. He placed reliance on the decision of the Calcutta High Court in the case of CIT v. Korlay Trading Co. Ltd. [1998] 232 ITR 820. He further submits that even if the cash credits have been shown in the cash books, unless that has been disclosed as income in the relevant assessment years, that can be taxed in the block assessment year treating that income as undisclosed income of the assessee. We have considered the submissions of learned counsel and also perused the orders of the authorities below, i.e., the Assessing Officer and the Tribunal. The statements of cash creditors have been recorded, reasons have been given as to why the cash credits should not be treated as genuine. In appeal before the Tribunal, after considering the contents of the statements of the cash creditors, the Tribunal has concluded the issue in para. 10 of its order, which reads as under : "We have heard the rival parties and have perused the material placed on record. We are of the opinion that in regard to the cash creditors, the asses-see has discharged his primary onus by producing the creditors, another person who were duly examined by the Assessing Officer on oath. These creditors have accepted the fact of advancing loans. Besides, these loans are duly reflected in the books of account maintained by the assessee in the regular course of business activities. We, therefore, feel that the Assessing Officer was not justified in making the addition on these accounts. The additions are, therefore, deleted." ;