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TMI Blog2012 (4) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... s transferred to company's account. Later, when the returns of loans done by the company were verified, it is seen that the same is withdrawn from the account on same day either by cash or by transfer to the other account. Many of the loan givers has either same address of the assessee company or has account in same bank. Perusal of the bank account of loan givers shows clearly that there are very less other transactions and account has been used merely to transfer the amount". He further observed that in A.Y. 2001-02 same modus operandi was followed and the CIT(A) had confirmed addition made u/s.68 of the Act to the tune of Rs. 12.50 lacs. The AO in length discussed the loans received from various persons and reached to the conclusion that the loan received by the appellant was unexplained income of the assessee company and hence taxable u/s. 68 of the Act. 4. Assessee filed an appeal before the FAA and vide her above referred order dated 02-03-2007 deleted the addition made u/s.68 of the Act except for one creditor. CIT(A) also deleted the addition on account of interest payments made to the creditors except for the interest paid to one Shri G. Hingorani. In para 6 of pages 4/5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record to prove that the cash credits in the books of accounts of the assessee represents its income from undisclosed sources. Therefore it cannot be charged as the assessee's income in the absence of any material to indicate that they belong to the assessee. The AO has to take cognizance of the evidence filed by the appellant like income-tax details, PAN No., bank account, mode of payment (by account payee cheques), confirmations etc. unless proved otherwise. The Hon'ble Guj. HC in the case of Murlidhar Lahorimal v. Commissioner of Income-tax 280 ITR 0512 has held that "an assessee can be asked to prove the source of credit in the books, but cannot be asked to prove the source of the source." Under the circumstances and facts of the case, the AO is directed to delete the addition with regard to the opening balance as discussed above and also other additions except the cash credit of Rs. 5,00,000/- taken from Gangu Hingorani who is a non-resident and not assessed to tax since no evidence in support of the genuineness of the transaction has been furnished by the assessee. In view of my finding given above, the addition on account of interest amounting to Rs. 6,41,500/- is also delet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is not a new concept introduced by the Act. The position under the 1922 Act, in respect of income from undisclosed sources was that such income from an undisclosed source could be assessed by making an assessment on the basis that the previous year for such an income would be the financial year. The effect of section 68 of the Act is that a sum found credited in the books of the assessee can be charged to income-tax as his income. Over the years law regarding cash credits have evolved and has taken a definite shape. A few important aspects of the law with regard to Section 68 can be enumerated here- (i) Section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assessee (b) such credit has to be a sum of money during the previous year (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the AO, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. (ii) The expression the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction can be proved by showing that the money was received by an account payee cheque or by draft. Credit worthiness of the lender can be established by attending circumstances. Once the assessee produces evidences about identity, genuineness and credit worthiness of the lender onus of proof shifts to the Revenue. 8. If above referred principles are applied to the facts and circumstances of the case under consideration, it becomes absolutely clear that the CIT(A) had rightly deleted the additions made u/s.68 of the Act by the AO. Assessee had filed PANs., bank statements and return acknowledgements of the creditors. We are of the opinion that by furnishing above details the assessee had discharged his burden of proof. If AO had any doubt about the credit worthiness or identity of the creditors, he had all the rights under the Act to hold further inquiry and confront the assessee with such inquiry. AO did not make any attempt to discharge his burden to rebut the evidences produced by the assessee. AO cannot brush aside the evidences submitted during assessment proceedings and make additions. It is beyond comprehension that when the new loans received from the various cred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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