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2013 (11) TMI 1277 - AT - Income TaxAddition of Unexplained Credit u/s. 68 - Held that - CIT(A) was justified in confirming the addition u/s. 68 of the IT Act Relying upon Smt. Suman Gupta vs. ITO 2012 (10) TMI 741 - ITAT AGRA - the assessee has not adduced any sufficient evidence before the authorities below to prove the creditworthiness of the creditors and genuineness of the transactions in the matter - the assessee has not satisfied the essential ingredients of section 68 of the IT Act. The assessee has failed to prove the creditworthiness of all the creditors and no source of their income has been filed - At the best the assessee is able to prove identity of the creditors, but the assessee failed to prove the genuine credit in the matter. All the creditors have been rightly found to be men of meager means and no source of income have been filed to prove that they were having sufficient funds or savings in order to give loans to the assessee - On verification of the bank account of the depositors, it was specifically found that there were no sufficient funds available in their bank account and they were having only small bank balance, which was even not sufficient to meet out their household expenses or day- to-day requirements - it is unbelievable to accept the contention of the assessee that said persons were having creditworthiness to advance any loan to the assessee - The documents produced by the ld. counsel for the assessee in the paper book merely prove the case of assessee superficially, which is far from reality or truth. Their affidavits could not be subjected to examination by the AO - The affidavit is like an Examination-in-Chief and unless the deponents of the affidavits have been produced, the same could not be subjected to cross-examination and such affidavits in their cases cannot be relied upon to explain their creditworthiness and genuineness of the transactions. assessee failed to prove creditworthiness of all the creditors and genuineness of the transactions in the mater - no interference is called for in the orders of the authorities below - Burden upon the assessee has not been discharged in accordance with law Decided against Assessee.
Issues Involved:
1. Addition of Rs.1,20,000/- on account of unexplained credit under Section 68 of the Income Tax Act in respect of five creditors. Issue-wise Detailed Analysis: 1. Background and Facts: - The assessee filed a return of income at Rs.2,09,850/- for the assessment year 2005-06. - The assessee derived income from house property, interest from a firm, income from a truck, and other sources. - The assessee purchased a house for Rs.16,84,000/- with a loan of Rs.12,00,000/- from HDFC Bank and loans from other persons, including five creditors whose credits were under challenge. - The Assessing Officer (AO) directed the assessee to prove the identity, creditworthiness, and genuineness of the transactions with these creditors. 2. Creditors' Examination: - Shri Om Prakash Gupta: - Gave loans of Rs.20,000/- and Rs.30,000/- by cheques. - Cash deposits were made in his bank account before issuing the cheques. - The AO accepted creditworthiness for Rs.30,000/- but added Rs.20,000/- as unexplained credit. - Shri Hari Prasad Gupta: - Gave a loan of Rs.40,000/- by cheque. - Cash of Rs.40,000/- was deposited in his bank account on the same day. - The AO added Rs.40,000/- as unexplained credit. - Shri Dinesh Chand Gupta: - Gave a loan of Rs.20,000/- by cheque. - Cash of Rs.20,000/- was deposited in his bank account on the same day. - The AO added Rs.20,000/- as unexplained credit. - Smt. Shanti Devi Barua: - Gave a loan of Rs.20,000/- by cheque. - Cash of Rs.20,000/- was deposited in her bank account a day before. - The AO added Rs.20,000/- as unexplained credit. - Smt. Sunita Barua: - Gave a loan of Rs.20,000/- by cheque. - Cash of Rs.20,000/- was deposited in her bank account a day before. - The AO added Rs.20,000/- as unexplained credit. 3. CIT(A) Decision: - The CIT(A) confirmed the addition of Rs.1,20,000/- and dismissed the appeal of the assessee. 4. Arguments by Assessee's Counsel: - Submitted affidavits and bank accounts of creditors. - Argued that the creditors were related to the assessee and loans were for property purchase. - Cited various judicial decisions to support the genuineness of the transactions. 5. Tribunal's Analysis: - The Tribunal considered the facts and found that cash deposits equivalent to the loan amounts were made in the creditors' bank accounts before issuing cheques. - The assessee failed to produce all creditors for examination. - The creditors had small bank balances and meager incomes, indicating they were not men of means. - The Tribunal referred to similar cases and legal precedents, emphasizing the need to prove the identity, creditworthiness, and genuineness of transactions. 6. Conclusion: - The Tribunal found that the assessee failed to prove the creditworthiness and genuineness of the transactions. - The Tribunal upheld the addition of Rs.1,20,000/- under Section 68 of the Income Tax Act. - The appeal of the assessee was dismissed. Final Judgment: - The appeal by the assessee was dismissed, and the addition of Rs.1,20,000/- on account of unexplained credit under Section 68 was confirmed.
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