IN THE HIGH COURT OF JHARKHAND AT RANCHI

Transcription

1 IN THE HIGH COURT OF JHARKHAND AT RANCHI 1 T.A. No. 38 of 2010 Ajay Prakash Verma Appellant Vrs. Income Tax officer, Range-1, Ward-1, Dhanbad... Respondents CORAM: HON BLE THE CHIEF JUSTICE HON BLE MRS. JUSTICE JAYA ROY For the Appellant: Mr. Binod Poddar, Sr. Advocate Mr. Mahendra Choudhary, Adv. Ms. Darshana Poddar, Adv. Mr. Piyush Poddar, Adv. Ms. Amrita Sinha, Adv. For the Respondents: Mr. Deepak Roshan, Sr. S.C.(I.T.) Mr. Amit Kumar, Adv. Ms. Rupa Kumari, Adv Reportable Dated 25 th July, Heard learned counsel for the parties. 2. This tax appeal under Section 260 A of the Income Tax Act, 1961(for short-act of 1961) has been preferred against the order passed by the Assessing Officer dated and the order passed by the Commissioner of Income-Tax (Appeal) dated and the order passed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi, dated The A.O. passed assessment order under Section 147/143(3) of the Act of 1961, in a case where the assessee Ajay Prakash Verma submitted original returns on for the assessment year , showing his total income of Rs.84,200/-. The assessee had shown his income from tuition, sale of cow milk, income of other sources including agricultural income amounting to Rs.6000/-. The case of the assessee was duly processed on However, a notice under Section 147 was issued on for the same assessment year which was duly served upon the assessee on The reasons for re-opening the case is based on the fact that the assessee had taken loans from 148 different persons amounting to Rs lakhs during the financial year (relevant to the assessment year ). All these loans were taken in cash and are below Rs.20000/-. On the basis of this fact, the A.O. had reasons to believe that because of this clandestine deal, the

2 2 assessee had escaped assessment of income for the assessment year In response to the notice under Section 142(1), the assessee filed a petition dated and requested the Department to accept original returns filed on , as returns was filed under Section 148 of the Act of In view of the above, the case was fixed for hearing by issuing notice under Section 143(2) afresh. In course of scrutiny, the assessee was asked to file the details of the names and addresses of the persons from whom he had taken loan of Rs.32 lakhs for having allegedly advanced loan to another person, Sri Ajay Kumar of Hazaribagh, later on. 5. Upon this, the assessee submitted a list of the name of the persons, who were 148 in number with their addresses from whom he had taken loan of Rs lakhs. As already noticed, all loans were claimed to have been taken in cash and all were below Rs.20000/-. 6. The assessee also submitted that the said loan from 148 persons and others were taken to advance the loan of Rs.32 lakhs to one Sri Ajay Kumar,S/o Bhagat Kishan, Director of M/s Dahanu Agency (P) Ltd., Mumbai, resident of 'Kishan House', Dipugarh, Hazaribagh, Jharkhand. In support of that transaction with said Ajay Kumar, the assessee submitted a photo copy of the agreement dated However, even after demanding by the A.O., the original agreement was not submitted. The A.O. finding the peculiar situation of loans from 148 alleged creditors, who alleged to have advanced the huge cash money to the assessee who claimed that he is a politician and his source of income was from the tuition, sale of cow milk with income from other sources including agricultural income amounting to Rs.6000/-. The A.O. demanded further proof from the assessee, who in turn, submitted the loan confirmation form alleged to have been signed by the creditors who are in one proforma and alleged to have been duly signed by 148 persons. The A.O. issued summons under Section 131 of the Act of 1961 to 26 person out of 148 person and also issued enquiry letters under Section 133(6) of the Act, in 30 cases. This method was adopted to test check the genuineness of the assessee's claim that he had taken loan in cash

3 3 from the said persons to advance the said amount to one Shri Ajay Kumar of Hazaribagh. In response to the notice, some of the persons appeared and some replied to the inquiries made under Section 133(6) in writing. Out of 26 cases, where summons under Section 131 were issued, two summons returned 'unserved' and in 15 cases, no reply to the summons was received and the A.O. found that some of the alleged creditors were salaried persons. However, many of them were farmers and a few were small shopkeepers having no concrete proof of their sources of income. It will be worthwhile to mention here that all 148 creditors of the assessee had advanced the loan to the assessee within a short period of two to three days i.e., from to This fact found support from the document filed in the L.P.A. by the appellant himself along with supplementary affidavit filed on The A.O. had doubt that how in the such short period, the assessee could have contacted so many persons and they were agreed to give the money in cash. To this suspicion of the A.O., the assessee's plea was that he being a politician, could collect cash money for advancing loan to Ajay Kumar of Hazaribagh by utilizing his personal contact as politician. 7. Be that as it may, the A.O., after taking note of the legal position that in such a situation, the assessee was required to show (1) genuineness of the loan creditors, (2) genuineness of the transaction and (3) creditworthiness of the loan creditors, considered the facts in detail and thereafter, declared that out of the entire transaction of taking loan of Rs.32 lakhs, Rs lakhs have been alleged to have been taken from 148 different persons, is absolutely bogus transaction and, therefore, added amount of Rs.2,88,000/- as taxable income of the assessee and assessed the total taxable income to the tune of Rs.38,66,230/-. The A.O. also ordered for initiation of penalty proceedings under Section 271(1)(c) of the Act of 1961 and also ordered to charge interest as per rule. 8. Being aggrieved against the order of A.O., dated , assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Dhanbad, Jharkhand, who also gave a detailed order and rejected the appeal of

4 4 the assessee and then, the further appeal of the assessee, being I.T.A. No. 169/RAN/2008 for the Assessment Year , was dismissed by the order dated passed by Income Tax Appellate Tribunal, Circuit Bench, Ranchi. Hence, this Tax Appeal. 9. Learned senior counsel for the appellant, Shri Binod Poddar, vehemently submitted that the A.O., who is the first fact finding authority, committed serious error of law by holding that all the transactions were sham transactions in a case where the assessee had disclosed the identities of the creditors and also produced the confirmation letters of the creditors admitting the advanced amount. Even the A.O. himself observed that some of the persons were salaried persons and in that situation, the appellant-assessee discharged his complete onus to show the genuineness of the transaction. After having knowledge of the creditors and their identities, if A.O. had any doubt, it was the incumbent duty of the A.O. to enquire about the transaction of each and every creditors and the A.O. had no jurisdiction to proceed for test check or have a sample evidence and reject the contention of the assessee and had no jurisdiction to declare the transaction to be sham transaction or a bogus transaction. It is submitted that the A.O. further committed serious error of law by taking double standard. At one place, the A.O. accepted the evidence given by creditors under Section 131 of the Act of 1961 when it went against the assessee but the evidence which came in favour of the assessee, had been rejected without any cogent reason. Therefore, the A.O. had committed serious error of law even in the assessment of the evidence. 10. Learned senior counsel for the appellant, Shri Binod Poddar, further submitted that even if the A.O. had any doubt about the transaction because of involvement of large number of persons who advanced money to the assessee, then the A.O., being the first authority, should have proceeded to examine each and every transaction and should have segregated the transaction which were genuine and could have rejected the transactions which were not true transactions. No genuine transaction can be rejected on the basis of other independent transaction which could not have been believed by the A.O.

5 5 11. Learned senior counsel for the appellant, Shri Binod Poddar, also submitted that the same mistake had been committed by the appellate authority as well as by the Tribunal, who may have been influenced by the involvement of large number of persons who advanced money to the assessee as well as because of the fact that all the said amount had been paid in cash to the assessee. 12. Learned senior counsel for the appellant has relied upon a judgment delivered in the case of Commissioner of Income Tax Vrs. Orissa Corporation (Pvt.) Limited reported in (1986)159 ITR 78 (SC), wherein also in a case where the A.O. was informed about the details of the creditors who were the income tax assessees, and to whom notice under Section 131 of the Act was issued at the instance of assessee, the A.O. did not pursue the matter further, nor did he examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans, then it was held that there was no effort made by the A.O. to find out the genuineness of the transaction, therefore, the liability cannot be fastened upon the assessee, once he has discharged his burden of proof. In view of the above decision, the learned senior counsel for the appellant submitted that the present case is squarely covered of the said judgment. It is submitted by the learned counsel for the appellant that the judgment of the Hon'ble Supreme Court delivered in the case of Orissa Corporation (Pvt.) Ltd. (supra) has been followed by almost all the High Courts and in support of this, he has cited yet three more judgments including the judgment of Hon'ble Supreme Court delivered in the case of Income Tax Officer Vrs. M. Pirai Choodi reported in (2011)334 ITR 262 (SC) and two judgments of the Patna High Court delivered in the case of Commissioner of Income Tax Vrs. Hanuman Agarwal reported in (1985) 151 ITR 150(Pat.) and in the case of Sarogi Credit Corpn. Vrs. Commissioner of Income Tax reported in (1976)103 ITR 344 (Pat.).

6 6 13. We have considered the submissions of the learned senior counsel for the appellant and perused the record and the reasons given by all the three authorities below, whose orders are under challenge before us. So far as legal position is concerned, it is now well settled law that in a case of assessment, if the assessee gives the particular of the persons, who advanced the loan and from those particulars, the A.O. can enquire the matter from such creditors, then he before rejecting the plea of the assessee should proceed further inquiries from the creditors with respect to the genuineness of the creditors followed by the genuineness of the transaction and during that course, he may examine the source of income of the said alleged creditors to find out that they are credit worthy or/and they have advanced the money to the assessee. How far this proposition applies in the facts of this case is a core question because of the reason of peculiar facts of this case. We would like to mention here that the A.O. is required to see the genuineness of the loan creditors, genuineness of the transaction and creditworthiness of the loan creditors. Therefore, the A.O., if finds that assessee has given the particulars of the creditors, then one of the burden on the assessee stands discharged and then burden lies upon the A.O. to proceed further. One of the ways is to obtain the confirmation of the loan from the creditors and if, there is any doubt, the A.O. may summon such creditors under Section 131 of the Act of 1961 and may enquire about the genuineness of the transaction. If the A.O. feels satisfied about the genuineness of the creditors and then A.O. is required to examine the creditworthiness of the loan creditors. Thereafter, A.O. is required to examine, whether loan was advanced by the creditor to assessee. The question of consideration is that whether in all cases where assessee has given particulars of persons and also submitted the confirmation letters of such creditors, whether it is necessary in all cases to adopt only above procedure or there can be exception to above procedure? 14. Similar question came-up for consideration before the Division Bench of this Court in the case of Mukesh Shaw Vrs. Income Tax Officer reported in 2012 (1) JCR 230 (Jhr), wherein it has been held that the admission contrary to

7 7 the trustworthy evidence of donor cannot be accepted as binding upon the A.O. The admission binds the author of admission and operate as estoppel against him but is not binding upon any other persons or authority and ultimately, it has been held as under: Much stress has been given that in a number of judgments, it has been held that once identity of a donor or a creditor is disclosed by the assessee, then the Income Tax Officer can only proceed to register proceedings against such creditor and can give proper notice to such creditor to explain his income or the source from which he has given money to the assessee. Such plea do not applies in the facts of the case where from trustworthy evidence the Assessing Officer reaches to conclusion that the transaction itself is not genuine so as to have any doubt that the payment has been made by third person to assessee then issuing notice to a third party after taking stand that third party has not given the amount to the assessee will be nothing, but futile and unnecessary exercise. The judgment delivered in the case of Mukesh Shaw was challenged in Special Leave to Appeal (Civil) No. CC 3300/2012 and that was dismissed vide order dated This is one of the example case because of the reason that here, the assessee had given the particulars of the creditors and also submitted confirmation notes given by the creditors. But those are secondary facts and issue because of the reason that taking loan by the assessee is dependent upon another fact and that is assessee's agreement with Shri Ajay Kumar to whom, assessee claimed, he has to advance interest-free loan. There is no other purpose for taking loan by the assessee. If the assessee could have proved the said contract, there would have been necessity of further proof by the A.O. In this case, in addition to above, there are more glaring facts, which, on the basis of all testimonies, have been rejected by three below authorities. Thes surrounding circumstances considered by the A.O. and by the appellate

8 8 authority, have been summarized by the Tribunal in para-11 of the impugned order, which is quoted as under: 11. We have heard both the parties. Perusal of paragraph 2 of the assessment order shows that it was the assessee who had claimed to have given a loan of Rs.32 lakhs to Shri Ajay Kumar of Hazaribagh in terms of agreement executed on On being called upon to explain the nature and source of the aforesaid amount reportedly given by way of loan to Shri Ajay Kumar, it is the assessee who claimed before the AO to have raised loans aggregating to Rs lakhs from 148 persons and utilized the same for giving loan to Shri Ajay Kumar. Perusal of Annexure 'A' to the assessment order shows that majority of the creditors claimed to have given loan in cash on The short point is as to whether it was at all possible to raise loans of such magnitude by contacting 148 persons in two-three days in such a manner that all of them would be willing to give loan below Rs.20,000/- in cash immediately. In the ordinary course of human conduct, it is not possible to do so unless there are strong materials to believe so. In the present case, there is no such material. It is unlikely that a person would be able to contact 148 person over 2-3 days to raise loan of Rs lakhs from them. The finding recorded by the Assessing officer in this behalf and confirmed by the ld. CIT (A) is, therefore, in order. Secondly, it is highly improbable that a person of ordinary prudence would approach 148 person for raising loans in order to pass on the same as loan to another person. It would be basically an exercise as middleman without any gain and thus, an exercise in futility, which nobody would like to undertake. Thirdly, it is stated in the assessment order that all the confirmations are on pro-forma papers, i.e., they are identically worded. The assessee has not filed any evidence before us to rebut the aforesaid finding recorded by the Assessing Officer and confirmed by the ld. CIT (A). In this view of the matter, their findings stand confirmed that all the confirmations are identically worded and are on pro-forma papers. It would not have been possible to obtain confirmations from 148 creditors, which are identically worded and on proforma papers unless the assessee himself had prepared confirmation letters and obtained signatures of the concerned persons. This again does not inspire confidence. Fourthly, the fact that all the loans are of a sum below Rs.20,000/- so as to come out of the mischief of section 269SS of the Income-tax Act is equally

9 9 relevant and part of a design. Fifthly, the transactions have been deliberately kept outside the banking channels to avoid investigations. All the loans reportedly taken from 148 persons are in cash and thus outside banking channels. Sixthly, all the loans are claimed to have been taken from farmers and low paid salary earners. It is unlikely that low paid salary earners would easily part with the money and that too in cash. There is no material on record to hold that all of them were relatives or close friends of the assessee. Seventhly, there is no concrete evidence to establish the creditworthiness of the creditors or genuineness of the transactions and therefore the story set up by the assessee cannot be accepted. Every tax avoidance scheme involves a trick and a pretence. It is the task of the Revenue to unravel the trick and the duty of the court to ignore the pretence. The cloak and pretence created by the assessee has successfully been unravelled by the Revenue. Taking into account the totality of all the facts and circumstances of the case as available on record, the order passed by the ld. CIT(A) is confirmed. Ground No. 2 taken by the assessee is dismissed. 16. In addition to above, we may recapitulate that we have noticed from the order of the A.O. that assessee' contention is that, he being a politician (A.O. found, not a Star politician), could contact 148 persons and took loan in cash and that too in small amount of less than Rs.20,000/- and collected Rs lakhs in no time and that too, as interest-free loan and further to give it to a Company as interest free loan! These facts itself were sufficient reasons for serious doubt. However, mere doubt is not sufficient and, therefore, such transaction was not rejected by the A.O. on the basis of mere doubt. The assessee did not produce very basis and reason for taking loan from 148 persons in cash which is the original agreement dated However, a photo copy of this agreement has been placed on record by the assessee along with supplementary affidavit filed before us on in L.P.A. In this appeal also, original agreement was not produced. The agreement alleged to have been entered into between the parties on and it has been mentioned in the said agreement (copy of original agreement was not produced) that both the parties agreed to enter into this agreement on at

10 10 Dhanbad and Shri Ajay Kumar, who is one of the Directors of M/s Dhanu Agency (P) Limited, registered under the Companies Act, 1956 on and having its registered office at Mumbai, is carrying on business of Commission Agents traders and/or imports and exports in all kinds of paper and plastic stationery items and account books, diaries, files and allied etc. The assessee, by this agreement, agreed that the said Ajay Kumar accepted that, if the assessee invests a sum of Rs. 32 lakhs on loan basis in the Company of Shri Ajay Kumar, he will return a sum of Rs. 30 lakhs out of the total amount of Rs.32 lakhs, without interest to the assessee within one year and remaining Rs. 02 lakhs will be invested in the share capital of the Company against which the assessee will be the one of the Directors of the Company. This agreement runs into two pages and stamps paper was purchased on from Mumbai in the name of Dhanu Agency Pvt. Limited. We are proceeding further to examine this agreement because of the reason that copy of this agreement has been placed on record by the appellant before us in support of the contention that transaction was genuine, which was not believed by all the three authorities below. The above agreement is not by the Company and above contract is by one of the Director in his individual name with assessee and in the agreement it has not been mentioned that the said Director was authorized to enter into such agreement to take a loan of Rs. 32 lakhs for the Company which is registered Company under Companies Act, The Director of the Company, Ajay Kumar also has not put seal of the Company anywhere in the agreement. The agreement is not authenticated by Oath Commissioner or Notary Public. Not only above, but copy of the agreement which has been produced in L.P.A. as annexure E-4, it is apparent, the Company do not bear signatures of even both the executants at the bottom of the document. Signature of Ajay Kumar and assessee appear on the top of the contents of agreement, near seal of stamp vendor. Such transaction was liable to be rejected only on the basis of such circumstances. No proof in respect of said amount to Company has been produced by the assessee.

11 Learned counsel for the appellant submitted that the appellant would not have been benefited by not producing the original agreement before the authorities below and therefore, because of that reason, the adverse interference should not have been drawn. The argument of learned counsel for the appellant is apposite to legal principal of adverse inference, which provides that, if person in possession of best of evidence fails to produce that evidence, then inference can be drawn that if that evidence would have been produced, it would have gone against him. It is for the assessee to explain the reason for not filing original agreement. From the facts it is clear that, assessee failed to prove the agreement with Shri Ajay Kumar or his Company. 18. We may mention a few more facts again which are relevant evidence on record and which are the facts which were not disputed by the assessee. The appellant's own case is that his total income was of Rs.84,200/- for the relevant Assessment Year and his source of income was from tuition, sale of cow milk, income from other sources including agricultural income etc. It will be worthwhile to mention here that his agricultural income was of Rs.6000/- only. With this background, the assessee's contention that being a politician, he is a political leader(as per A.O., not star Politician and not disputed by the assessee) and, therefore, he could contact 148 persons in a very short period of three days and had collected Rs lakhs, does not inspire confidence. The assessee's further admitted case is that he is the brother of an Advocate and there is allegation of one of the persons that because of the assessee being brother of Advocate, he had to sign confirmation note. A person, who had a total income of Rs.84,200/-, could not have collected Rs lakhs from 148 persons in such a short period of three days, is a finding of fact and for this, we do not find any reason for which A.O. should have further proceeded to inquire into the matter even in a case where the identities of persons have been shown by the assessee and confirmation letters have been produced by the assessee and principle laid down by the Hon'ble Supreme Court in the case of Commissioner of Income Tax Vrs. Orissa Corporation (Pvt.) Ltd.(Supra) cannot be stressed to the extent that where genuineness of transaction itself is found to be

12 12 totally false, even then the A.O. will have to further inquire from all the alleged creditors, who are in number 148 and alleged to have advanced the cash loan to the assessee for alleged transaction of providing loan to one of the director of the company and in a case where the assessee failed to prove the transaction which such person/company. 19. Today, we are having a peculiar case before us and such type of case is example, which can be a modus operandi for grave tax evasion by the persons adopting such means, like the present assessee. The reason for this observations is that it is virtually impossible to question the creditworthiness of a person when he is advancing loan of only Rs.20,000/- and less than Rs.20,000/- or slightly more than Rs. 20,000/- in cash and in such type of cases any person can easily misguided or mislead the revenue to hold enquiry from those persons for creditworthiness for advancing loan of more or less than Rs. 20,000/-. If the A.O. would have proceeded further to enquire about the creditworthiness of those 148 persons, he may have found that all persons had capacity to advance a loan of Rs.20,000/- in cash. In such fact situation, it is heavy duty of the A.O. and other authorities to find out all truth from the evidence which includes acceptance or rejection of evidence of independent or interested witnesses. Only admission of every witness is neither required to be accepted nor binding. Therefore, by such mode, a person like the assessee, can certainly get the benefits of avoiding tax on undisclosed income. The facts considered by all the authorities below seriously questioned not only the genuineness in the original transaction and advancement of loan by the assessee to another person but certainly proved that transaction was carefully projected so as to unnecessary inquiry by revenue authorities and to run after 148 persons and that too for the purpose of finding out the creditworthiness of Rs.20000/- or less than Rs /- and to find out their source of income even of Rs.20000/ In the fact situation of the present case, even if the revenue would have run after 148 persons, then it would have been very easy for all 148 persons to prove their creditworthiness so as to lend Rs.20000/- or less or more to one

13 13 person. But that proof would not have proved the transaction of consequential advancement of loan to M/s Dahanu Agency (P) Ltd. or it's Director Ajay Kumar. The taking loan from 148 and other persons and advanced to said Company or person, in the facts of case is inseparable transaction. Therefore, in the fact situation, there was no need for further inquiry by the A.O. regarding the creditworthiness of all the creditors and sample inquiry was justified which finds support from findings recorded for other creditors. Therefore, we are of the considered opinion that when there is an exceptional case, then it is required to be dealt with and decided exceptionally. Such exceptional cases cannot be decided according to general cases. This is one of the example case. As we have already observed and we may further make it clear that in this case, in three days, the assessee himself, who was having no worth, alleged that he borrowed Rs lakhs from 148 persons as if every person was waiting for this person to come and demand the money and every person was ready to give him money. This type of modus-operandi can be adopted by many persons. 21. On this point though judgment has been brought to our notice by the learned Senior counsel for the appellant, Shri Binod Poddar, but we have examined this case according to special facts of the case to find out whether in the taxation matter, there can be a test check method for finding out the genuineness of the transaction as alleged by the assessee which can be examined independent to even creditworthiness of the creditors. We are making it clear that the principle which may laid down in this judgment may not be applicable to general cases which are squarely covered by the decision of the Hon'ble Supreme Court delivered in the case of Orissa Corporation (Pvt.) Limited(Supra). The test check method for the purpose of finding out the creditworthiness of individual creditor may not be a valid mode of proceeding in the other tax matter. But so far as to find out whether the transaction as a whole is absolutely unbelievable which may not be believed by a prudent man of slightest common sense, then in that situation, in addition to other facts and circumstances, test check can be the right mode so as to meet with the clever

14 14 mode of avoiding the tax as we have already observed that in this case that the facts in this case are very peculiar, which we are enumerating hereinbelow: (I) (ii) The assessee is a person who himself has total income of Rs.84200/-, His source of income is from tuition, sale of cow milk and income from other sources, (iii) His agricultural income is Rs.6000/-, (iv) The assessee claimed himself to be a politician who contacted 148 person in a short period of three days and obtained loan of Rs lakhs, (v) This loan was obtained for giving loan of Rs.32 lakhs to a registered Company that too, by cash, (vi) The registered Company accepted the cash loan not in its own name but in the name of one of the Directors of the Company, (vii) The resolution of Company was not placed before any of the authorities below. (viii) Original agreement with the Company dated was not produced before the A.O., (ix) The Agreement was executed between the Company on and the assessee collected the money prior to it, between and (Agreement is dated ), (x) The money, borrowed in this manner from 148 person in less than Rs.20000/- in cash, had been advanced to a registered Company as interest free loan, (xi) One of the close associates of the assessee, Shri Rakesh Kumar Singh, summoned under Section 131 of the Act of 1961, was found to be a person 'Benamidar' of the assessee, whose vehicle was financed by the assessee, (xii) The assessee, whose worth, as we have already stated above, must have prepared all the confirmation letters, which are verbatim same for all the creditors and as per the documents placed before us along with supplementary affidavit filed by the appellant (dated ) and endorsement has been obtained for repayment of the money by the assessee to such lenders,

15 15 (xiii) Total 148 persons in three days gave money as interest free loan to the assessee. In view of the above facts, thus, there were sufficient reasons before the authorities below to discard the stand of the assessee that he borrowed the amount of Rs.32 lakhs from 148 person, from his wife and from other persons. Further, test check was done and that test check itself was not sole ground for rejecting the stand of the assessee, then that set of test check is certainly permissible in that facts and circumstances. The A.O. was not required to call all such creditors who also, if called, may have admitted in favour of the assessee, then that admission itself would not have been sufficient proof of the genuineness of the transaction of loan to Ajay Kumar or his Company because of the reason that such person like the assessee, may have some interested persons, who may depose in his favour and this is the task of a prudent officer to find out from the verbal statement of the witness that where the truth is and what is the value of the evidence? 22. Every officer, who is required to assess the evidence of any witness/deponent, is required to evaluate the evidentiary value of the evidence. Therefore, we are of the considered opinion that in the facts and circumstances, there is no need for the A.O. to enquire the matter from the creditors whose identities were known to the A.O. and, therefore, it is an exceptional case and not squarely covered by the decision of the Hon'ble Supreme Court delivered in the case of Orissa Corporation (Pvt.) Limited(Supra). Therefore, on this ground, we do not find any merit in this appeal on above issue. 23. Learned counsel for the appellant submitted that it has been ordered by the A.O. that interest be charged as per rule. Interest can be levied under Sections 234 A and 234 B of the Act. It is submitted that in view of the Judgment of Full Bench of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej Kumari Vrs. Commissioner of Income-tax reported in [2001] 114 Taxman 404 (PAT.) (FB), the interest cannot be levied over the assessed income and it can be levied only on the income declared in the return. The

16 16 revenue preferred S.L.P. before Hon'ble Supreme Court against the said judgment of the Full Bench of Patna High Court, which was dismissed by the Hon'ble Supreme Court on merits vide order dated by saying that there is no merit in the appeal. 24. Learned counsel for the revenue could not dispute this legal position. Therefore, so far as question of law involved in this appeal that whether the interest could have been levied against the assessed income of the assessee under Sections 234 A and 234 B is concerned, in view of the Full Bench judgment of Ranchi Bench of Patna High Court delivered in the case of Smt. Tej Kumari, the revenue can levy the interest only on the total income declared in the returns and not on the income assessed and determined by the A.O. to that extent. The orders passed by the authorities below are accordingly modified and interest shall be chargeable in the light of the Full Bench judgment, referred above. This L.P.A. is partly allowed as above. (Prakash Tatia,C.J.) (Jaya Roy, J.) Sudhir