High Court Of Rajasthan : Jaipur Bench
Indian Woollen Carpet Factory vs. Income Tax Appellate Tribunal & Ors.
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Appeal No. 66 of 2000
22nd July, 2002
Counsel Appeared
Anil Mehta with Sameer Jain, for the Appellant : R.B. Mathur, for the Respondents
JUDGMENT
Y.R. MEENA, J. :
This appeal is directed against the order dt. 19th July, 2000. The appeal has been admitted in terms of the following questions :
(1) “Whether the Tribunal can make out a new case under s. 68 of the Act treating credit balance in account of the appellant and making additions accordingly without there being any ground in the appeal ?”
(2) “Whether the Tribunal was justified in holding purchase as bogus on the basis of incomplete enquiry report in which the addresses of the purchasers were found to be correct and only because they were not available due to their nomadic characteristic no further efforts were made by the enquiry officer to trace the sellers and enquire about the fact of purchase ?”
(3) “Whether the order of addition passed by the respondent No. 3 is vitiated because the principles of natural justice were not followed ?”
2. The relevant assessment year is 1982-83. In the returns assessee declared a total income of Rs. 1,35,653. Assessee-firm is a manufacturer of woollen carpets and has its own weaving factory at Jaipur maintaining looms at outside Jaipur especially in Tonk District. In the earlier year assessee shown G.P. @ 17.7 per cent for asst. yrs. 1979-80, 10 per cent for asst. yr. 1980-81, 9.2 per cent for asst. yr. 1981-82 and in the year under consideration, assessee has now shown 9.04 per cent G.P. During the course of assessment, AO noticed that assessee has shown purchase of wool from various parties, but the payment has not been made and the amount payable to them has been shown as credit in their favour in the books of accounts. The names of those parties from whom the wool was purchased, rate of purchased wool and total amount expended have been shown in para 6 of the original order.
The AO was of the view that purchases are not genuine and he added Rs. 2,75,000 in the assessment order dt. 6th March, 1986. Assessee carried the matter in appeal before CIT(A). CIT(A) vide order dt. 6th Dec., 1978, set aside the assessment order dt. 6th March, 1986, with a direction to give opportunity to the assessee to explain the genuineness of the transactions entered into with the parties referred to in para 6 of the original assessment order. Thereafter again enquiry was made from the assessee and assessee was directed to produce those parties or to give the details of those parties, from whom the wool was purchased. Summons were issued to those parties on the given address. One or two parties appeared and considering their submissions, the addition was reduced to Rs. 2,25,000. Again assessee went in appeal before CIT(A). CIT(A) again setaside the assessment order on 14th Feb., 1990, with a direction to make further necessary enquiries. AO in compliance of the direction of CIT(A) deputed the Inspector of Income-tax. Inspector, Income-tax, went and contacted some parties. As per his report, some parties had expired and whereabouts of most of the parties were not available as they belong to Khatic community and Khatics are nomadics. Again opportunity was given to the assessee to produce those parties and to prove the genuineness of the purchase made from those parties, as referred in para 6 of the original assessment order. Many opportunities were given, but the assessee could not produce those parties neither any other evidence was adduced to prove the purchases from those parties. Considering the report of the Inspector of the Income-tax and submissions of some parties, who are available, from whom the wools were purchased, third time addition have been reduced to Rs. 1,12,500. In third round before CIT(A), CIT(A) has deleted this addition holding that when the summons were issued to the parties, who are nomadics and whereabouts are not known to the assessee, the addition was not justified.
In appeal before the Tribunal, Tribunal found that many opportunities were given to the assessee, twice assessment order was set aside, thereafter, assessments were made one after the other, but in spite of that assessee failed to prove the genuineness of the transactions or the credits. Therefore, Tribunal confirmed the addition invoking the provisions of s. 68 holding that once the credit entry has been made in the books of accounts in the names of various parties and if the genuineness of these cash credits could not be proved, the AO was justified in making the addition of Rs. 1,12,500.
Heard learned counsel for the parties. Whether transactions with the parties referred to in para 6 of the original order is genuine or not, that is basically a question of fact. Three times assessment has been made to find out as to whether the purchases from the persons referred to in para 6 is genuine or not. The case of the assessee is that the persons aforestated belong to Khatic community and they are nomadics. In our view it is basically wrong as Khatics are not come in the category of nomadics, they have their permanent houses. If for some period, they carry their sheep for grazing in some nearby places, they cannot be termed as nomadics and at least it cannot be said that they do not have their permanent houses. On verification it is found that whereabouts of many persons, from whom the wool was purchased are not known.
We can understand that they will not be available at one point of time. When the parties from whom the wool was purchased are not nomadics, it cannot be said that they have no permanent address and if they are the genuine parties, they should have some address. No person in the name of such party was found particularly when the summons were issued under s. 131 to those parties. If the transactions are genuine and if the parties have migrated somewhere else, their latest address should have been supplied and burden is on the assessee to prove the genuineness of the transaction, when the assessee claimed that the purchases are genuine.
Mr. Mehta also argued that the Tribunal has considered new ground, which was not before the authorities below and that Tribunal has invoked the provisions of s. 68 of the IT Act, 1961. It is true that no loan has been taken from those parties. The case before the AO was that assessee claimed some purchases from some parties, to whom he could not produce or those parties were not available when the summon under s. 131 was issued. Therefore, the initial dispute was with regard to genuineness of the transaction regarding purchase of wool from the parties referred in para 6 in the original assessment order. Tribunal has taken the view when the payment has not been made to those parties and for that amount credit entry has been made in favour of those parties, that is cash credit as commonly known in the income-tax, when credit entry has been made in favour of persons, there is nothing wrong in it. Even otherwise the assessee had failed to discharge the onus to prove the genuineness of the transactions, mere mentioning of s. 68 does not affect the addition made when transaction found bogus.
In our view on these facts it cannot be said that the finding of the Tribunal is perverse and when the finding of the
Tribunal is not perverse, we cannot interfere in the finding of the Tribunal.
In the result, we find no justification to interfere in the order of Tribunal. Consequently the appeal standsdismissed.
[Citation : 260 ITR 658]
