1996 (10) TMI 127 - AT - Income Tax

Issues Involved:
1. Addition of Rs. 1,15,000 on account of three cash credits.
2. Adequacy of evidence provided by the assessee.
3. Conduct of the Income-tax Officer and the Intelligence Wing in verifying the cash credits.
4. Legal precedents and their applicability to the case.
5. Onus of proof in establishing the genuineness of cash credits.

Detailed Analysis:

1. Addition of Rs. 1,15,000 on account of three cash credits:

The appeal concerns the addition of Rs. 1,15,000 due to three cash credits in the names of Shri Rakesh Kumar Gupta (Rs. 25,000), Shri Ramakant B. Banka (Rs. 60,000), and Shri Sushil Kumar Chiranjilal (Rs. 30,000). The Income-tax Officer added these amounts to the assessee's income, deeming them unexplained and from undisclosed sources.

2. Adequacy of evidence provided by the assessee:

The assessee provided confirmations, copies of accounts, particulars of permanent account numbers, income-tax ward details, bank account details, and sources of investment for the three creditors. Despite this, the Commissioner of Income-tax (Appeals) noted discrepancies such as differences in signatures, inadequate income levels of the creditors, and inconsistencies in bank details. The CIT (Appeals) concurred with the Income-tax Officer, confirming the additions.

3. Conduct of the Income-tax Officer and the Intelligence Wing in verifying the cash credits:

The Intelligence Wing's report indicated that the addresses provided by the assessee were incorrect or the creditors were untraceable. The Income-tax Officer relied heavily on this report without conducting independent verification. The Tribunal found that the Income-tax Officer should have verified the new addresses provided by the assessee and made further enquiries, but failed to do so.

4. Legal precedents and their applicability to the case:

The CIT (Appeals) and the Tribunal referred to several legal precedents:
- Bharati (P.) Ltd. v. CIT [1978] III ITR 951 (Cal.)
- CIT v. W.J Walker & Co. [1979] 117 ITR 690 (Cal.)
- Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC)
- Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC)
- CIT v. Biju Patnaik [1986] 160 ITR 674/26 Taxman 324 (SC)

The Tribunal also considered additional cases cited by the assessee:
- CIT v. Orissa Corpn. (P.) Ltd [1986] 159 ITR 78/25 Taxman 80F (SC)
- Addl CIT v. Hanuman Agarwal [1985] 151 ITR 150/[1984] 17 Taxman 19 (Pat.)
- Addl CIT v. Bahri Bros. (P.) Ltd [1985] 154 ITR 244/22 Taxman 3 (Pat.)
- Devamani Atha v. CIT [1978] 112 ITR 837 (Ori.)
- Udhavdas Kewalram v. CIT [1983] 140 ITR 392/[1982] 8 Taxman 185 (Bom.)

The Tribunal found that the assessee had discharged the onus of proof by providing substantial evidence, and the Income-tax Officer failed to rebut this evidence adequately.

5. Onus of proof in establishing the genuineness of cash credits:

The Tribunal emphasized that the onus of proof must be reasonable and that the assessee cannot be expected to perform the impossible. The Tribunal noted that the initial failure of the Income-tax Officer to conduct proper enquiries could not justify the addition based on suspicion alone. The Tribunal concluded that the assessee had provided sufficient evidence to prove the genuineness of the cash credits and that the Revenue failed to provide any rebuttal.

Conclusion:

The Tribunal allowed the appeal, deleting the aggregate addition of Rs. 1,15,000, and held that the assessee had discharged the onus of proof regarding the cash credits. The Tribunal found that the Income-tax Officer and the CIT (Appeals) had relied on suspicion rather than concrete evidence, and the legal precedents supported the assessee's case.

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