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TMI Blog2010 (12) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... esh Saini, JJ. Hardik Vora, AR, for the Appellant M. Mathivanan, DR, for the Respondent ORDER Bhavnesh Saini: This appeal by the assessee is directed against the order of the learned CIT(A)-III, Surat dated 25-07-2008, for assessment year 2005-06, challenging the addition of Rs.4,00,000/- on account of unexplained cash credit u/s 68 of the IT Act. 2. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 3. The facts of the case are that the AO observed that this amount was received from Shri Maheshbhai Shah by demand drafts for Rs.2 lacs each issued on 16-06-2004 and 17-06-2004. A perusal of the bank account of the lender revealed that he had deposited Rs.2 lacs each in his bank account by cash on the same dates and purchased the demand drafts. The AO recorded his statement wherein he admitted that he was not having any bank account and was only an agriculturist and produced ledger account from Mahavir Fruit Centre, Varachha Road. The AO was of the view that there was no nexus between his agricultural receipt and cash deposited by him. The AO fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same dates when the cheques were issued to the appellant is not established. It could very well be the appellant's own unaccounted money which was deposited in the Bank in the name of the so called creditor which was subsequently introduced as cash credit in the appellant's books. Therefore, I am of the view that the genuineness of transactions has not been established and the AO's action in treating the credit as unexplained u/s 68 of the IT Act is in order. Addition on this account is therefore confirmed." 6. The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the creditor was produced before the AO who has confirmed giving of loan to the assessee in his statement recorded on oath u/s 131 of the IT Act. He has submitted that confirmation of the creditor was also filed. The certificate of Shree Ganesh Khand Udyog Sahkari Mandli Ltd., Bharuch was also filed to show that the creditor has sold sugarcane to them and received a substantial amount, copy of which is filed at page 7 of the paper book. He has further submitted that the assessee also produced ledger account from Mahavir Fruit Centre to which the credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficient payment has been made to the creditor in June, 2004. Even this party has not confirmed giving any amount to the creditor. He has submitted that the creditor was not assessed to tax and admittedly did not have any taxable income and no source of the deposit in June, 2004 is explained. Therefore, the authorities below have rightly rejected the claim of the assessee. The learned DR relied upon the decision of the Hon'ble Madras High Court in the case of Mangilal Jain vs ITO 315 ITR 105. 8. We have considered the rival submissions and the materials available on record. It is not in dispute that the creditor Shri Maheshbhai Shah obtained two demand drafts of Rs.2 lacs each on 16-06-2004 and 17-06-2004 for giving the same to the assessee. Perusal of his bank account revealed that he had deposited Rs.2 lacs each in his bank account by cash on the same dates for purchase of the demand drafts. In his statement, he has explained that he was not liable to income tax as his income never exceeded exemption limit. The creditor was, therefore, not assessed to tax. He has further explained that source of the deposit in his bank account is from sale of sugarcane crop to Shree Ganesh Kh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee that the creditor was wealthy agriculturist and did not make deposit in the bank account would not prove that the creditor was a man of means to make such deposit in the bank account. No explanation is given why the creditor has not made deposit in the bank account despite bank account was maintained earlier purposely for the purpose of obtaining the demand drafts. Assessee's explanation that the creditor did not believe in maintaining bank account was thus incorrect and false. The above facts would show that there remains doubt regarding the source of the deposit made in the bank account of the creditor. No evidence or material is produced on record to establish the source of the cash deposit in his bank account. No other heavy deposit in the bank account of the creditor on earlier occasion was found. Since the creditor was not assessed to tax and his income was blow taxable limit, therefore, it would support the findings of the authorities below that the creditor was not having source to make cash deposit in his bank account in June, 2004 and was not a man of means and that the transaction in question is not genuine. The Hon'ble Madras High Court in the case of Mang ..... X X X X Extracts X X X X X X X X Extracts X X X X
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