9911796707
TMI Blog2012 (8) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunil Kumar Yadav, Judicial Member This appeal is preferred by the assessee against the order of the ld. CIT(A) mainly on two grounds. One ground is with regard to the addition of Rs. 3.50 lakhs under section 68 of the Income-tax Act, 1961 (hereinafter in short "the Act") and the other is with regard to the disallowance of telephone expenses of Rs. 5,000 on estimate basis. 2. The farts in brief are that with regard to the addition of Rs. 3.50 lakhs, it is noticed by the Assessing Officer that the assessee has alleged to have received Rs. 3.50 lakhs as unsecured loan from three creditors namely Shri Sant Lal Jaiswal, Smt. Kiran Jaiswal and Shri Dheeraj Jaiswal. The assessee has claimed to have received a loan of Rs. 2.50 lakhs from Shri Sant Lal Jaiswal and Rs. 50,000 each from Smt. Kiran Jaiswal and Shri Dheeraj Jaiswal. The Assessing Officer has noted from the bank accounts of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal that before issuing cheques of the aforesaid loan amount, equivalent amount of cash were deposited in their respective accounts ostensibly to build up a credit balance and to ensure that the cheques are honoured. The source of these cash deposits wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to build-up a credit balance and to ensure that the cheques were honoured. The source of these cash deposits in the bank accounts of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal were not held satisfactorily explained though the source was sought to be attributed to past savings of the respective alleged loan creditors. Though the two loan creditors namely Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal were stated to be assessed to tax, the quantum of income returned by them and after deducting the probable amounts required for their own personal expenses they were not found to be capable of making such cash savings which could constitute a satisfactory source for cash deposits in their respective bank accounts immediately before issuing a cheque purportedly for loan to the appellant. As regards the alleged loan credit from Smt. Kiran Jaiswal no details of bank account were furnished. However the copies of acknowledgments of her returns furnished in the course of these proceedings show an income too meagre to explain any substantial savings which could possibly constitute the source of loan. 3.1 The particulars of income during the last several years for all the three alleged lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editors were beyond the scope of examination of their creditworthiness. The onus to substantiate the creditworthiness of the creditors was on the appellant and this could not be avoided or shifted by taking refuge behind a distorted logic and by relying, out of context, on judicial decisions rendered in different set of circumstances. 3.4 In view of the discussion above the AO was justified in holding the three alleged loan credits as non-genuine and treating the cumulative amount of Rs. 3,50,000/- of these credits as income of the appellant in terms of the provisions of section 68. The addition is therefore confirmed and the appellant's ground against this addition is dismissed." 4. The assessee has preferred an appeal before the Tribunal. None was present on behalf of the assessee. The assessee, however, filed written submission. The assessee has also filed copy of bank accounts of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal along with their confirmations. The assessee has filed copy of cash flow statements of the cash creditors to justify the availability of cash. The copy of acknowledgment of return of income is also placed on record. The assessee has also placed relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts filed in the cases of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal with the submission that in these cash flow statements, the household drawings were shown at Rs. 24,800 during assessment year 2006-07 which could not be sufficient to meet the household expenses even for a poor person. Since the assessee could not prove the creditworthiness of the creditors, the Revenue has rightly treated the unsecured loan as unexplained cash credit and made addition in the hands of the assessee. 7. Having given thoughtful consideration to the rival submissions and from the careful perusal of the orders of the lower authorities, we find that in the case of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal the assessee has filed bank statements before the Assessing Officer wherefrom it was noticed that the cash equivalent to the amount of loan was deposited in the bank account before issuing the cheques to the assessee. Source of deposits were not properly explained by the assessee. With regard to Smt. Kiran Jaiswal, she has declared annual income at Rs. 1,16,200 in the return filed in the relevant assessment year. Except this acknowledgment of return of income, no other evidence was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing has been brought on record from where cash creditors have got substantial amount for deposit, as their annual income were very meagre. In the light of these facts, we agree with the findings of the ld. CIT(A) in this regard and accordingly we confirm the addition. 8. The next ground is with regard to the disallowance of Rs. 5,000 which was made by the Assessing Officer on account of telephone expenses on adhoc basis for possible personal usage of telephone. In this regard, the Assessing Officer noted that the assessee has claimed a total sum of Rs. 72,128 under the head "telephone expenses" which is very excessive in comparison to the preceding year's expenses of Rs. 33,571 under this head. The Assessing Officer formed a view that there may be personal usage of telephone and he accordingly disallowed Rs. 5,000 on adhoc basis. 9. In appeal, the ld. CIT(A) confirmed the same finding no force in the submissions of the assessee. 10. Now the assessee is before the Tribunal with the submission that the telephone was installed in the business premises of the assessee and therefore there is no personal use. 11. Having given thoughtful consideration to the rival submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64 ITR 254 (Gau.) which has also been relied by Hon'ble CIT Appeals-I in the Appeal No. CIT(A)-I/Lko/06-07/01 that once the assessee discloses the sources from which he had received the loans the burden under section 106 of the Evidence Act is discharged it is not the burden of the assessee to prove the creditworthiness of the sources of the creditors or to find out the source of money of his creditor. Similarly in Tola Ram Daga v. CIT [1966] 59 ITR 632 (Assam) the court has held that "In the account of the firm deposit made by the party the genuineness and regularity of the account has not been challenged the account are relevant any prima facie proof of entry and correctness thereof under section 34 of the Evidence Act to require the firm to adduce the source of depositors from where the deposit was made not required under the law." The Supreme Court in CIT v. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC) has held that if the assessee has given names and addresses of the creditors and it was in the knowledge of the revenue that the said creditors were being assessed to tax, the onus on the revenue to pursue the matter with the creditors. The ITAT Delhi in Vinod Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration. The Assessing Officer considering the earning for assessment year 2005-2006 in the range of Rs. 30,000/- to Rs. 40,000/- was of the opinion that such amount would hardly be sufficient for any saving after meeting personal expenses of the creditor. As the said creditor could not have saved the amount equivalent to that deposited in cash in his bank account for the year under consideration, he entertained the view that creditworthiness of Shri Sant Lal Jaiswal is not proved so for as amount of loan of Rs. 2,50,000/- to the assessee is concerned. He took this amount as diversion of assessee's undisclosed income to the account of Shri Sant Lal Jaiswal in cash and then taking the same as loan from him through cheque and accordingly added the same u/s 68 of the I.T. Act, 1961. 3.2 As regards Shri Dheeraj Jaiswal, the cash deposit of Rs. 50,000/- in his bank account on 06/06/2005 i.e. just one day before giving loan, the assessee explained that the said deposit was made by the creditor in his account of his own past savings. As the assessee failed to substantiate the source of cash deposit of Rs. 50,000/- in the bank account of Shri Dheeraj Jaiswal, the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h banking channels to make these transactions look genuine. The learned CIT(A) thus entertained the view that the onus to substantiate creditworthiness of the creditors was on the appellant but merely because the monies have come to the appellant from their own bank accounts being rested on distorted logic was not taken to have been discharged. Accordingly, he found Assessing Officer justified in holding the three alleged loan credits as non-genuine and treating the accumulation amount of Rs. 3,50,000/- of these credits income of the appellant in terms of provisions of section 68 of the Act. 5. None attends on behalf of the assessee. At the time of hearing, the learned D.R. has been heard ex parte qua assessee with reference to written submissions on record. 6. The assessee in his written submissions, laid on record, has submitted as under: "That the leaned CIT(A) has made addition of the unsecured loan credits of the appellant amounting to Rs. 3,50,000/- which is contested before your honour as per grounds of appeals as well as the following judicial decisions: ( i ) That the Hon'ble ITAT, Allahabad has held in Anand Prakash Agarwal v. Asstt. CIT [2008] 6 DTR (Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ib), the money was kept by creditors at home they deposited in bank the same at the time of giving loans. On facts circumstances the Tribunal upheld the order of CIT(A) deleting the additions. ( vi ) That the Hon'ble I.T.A.T. Delhi in Vinod Kumar Bhandari v. ACIT [2003] 174 Taxation 49 (Trib.) has Held that the source could not be enquired by the Department, the loan transactions having been confirmed by the creditor, confirmed copies of accounts and copy of affidavits have been filed, the transaction through account payee cheque and creditor being assessed to tax, the transaction to be treated as genuine. The Hon'ble Tribunal accordingly deleted the addition of cash credits as well as interest claimed thereon. Supreme Court in the case of CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78 (SC), has also considered the similar issue wherein it was held that if the assessee has given news and addresses of the creditor and it was in the knowledge of Revenue that the said creditor were being assessed to tax, the onus is on the Revenue to pursue matter with the creditor. Also the Delhi ITAT observed at (page 54) the decision of the Patna HC in the case of Sarogi Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ledge of the assessee. ( viii ) That the very fact that all the transactions were entered into between the parties through account payee cheques makes the question of identity of creditors fall into oblivion and it becomes absolutely irrelevant - Addl. CIT v. Bahri Bros. (P.) Ltd. [1985] 154 ITR 244 (Pat.)" 7. On the other hand the learned D.R. contends that both the authorities below have given a concurrent finding that the unsecured loans from the aforesaid three creditors are not genuine. This finding is found recorded in internal para 3.4 of the impugned order of learned CIT(A). Since the loans are not genuine, addition made u/s 68 of the Act upheld by learned CIT(A) needs no interference. 8. After hearing learned D.R. ex parte qua assessee with reference to his written submissions on record, it is found that the learned CIT(A) in operative para 3.4 of the impugned order has recorded a finding that the three loan creditors are non-genuine. The Assessing Authority also in the operating paragraph 6 of the assessment order, took these three unsecured loans as non-genuine as the creditworthiness of the loans was not proved. It thus is apparent that both the authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries and established that the unsecured loans so raised from third parties by him are genuine as also the onus that lay upon him u/s 68 of the Act stood duly discharged after he had furnished the aforesaid information which he could do as a borrower. He was under no obligation to prove source of source nor origin of origin after the appellant had established the real source of such receipts as loans. It is an admitted position of law that once the assessee explains the credit entry and brings evidence to show that the entry is related to a third party and that credit was that of the third party, the burden would shift to the Assessing Officer to prove that it is not true. The Income Tax Officer thus has to establish that the entry was not real but was pseudonymous. This burden in the present case in appeal, however, has not been discharged by the Assessing Authority before making addition u/s 68 of the Act nor he has established that the entry was not real but was pseudonymous. This finds support from the judgment by Hon'ble Assam High Court in the case of Nabadwip Chandra Roy v. CIT [1962] 44 ITR 591 and has also been followed in the case of Tolaram Daga ( supra ) at pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question within the meaning of section 106 of the Evidence Act. In order to rely on this section, which lays down that when any fact is especially within the knowledge of any person, the burden of proving that fact is upon him, it must be established first that the person has special knowledge of that fact, having regard to the circumstances of the case. As illustration (b) to the section shows, when A is charged with travelling on a railway without a ticket, the burden of proving that he had a ticket is on him, obviously, because it is he alone that would have special knowledge regarding the possession of the ticket. The instant case is by no means a parallel and, in our opinion, section 106 of the Evidence Act cannot, therefore, be invoked in aid." 8.2 Proceeding further and admittedly also the principle embodied u/s 68 of the Act is only a statutory recognition of what was always considered to be the law based on Rule of Evidence that it is for the tax payer to prove the genuineness of the borrowings or other credits in his books, since the relevant facts are exclusively in his knowledge. Section 68 of the I.T. Act, 1961 incorporates only a Rule of Evidence placing the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their own rights. No part of the credits in the said bank accounts was generated from the appellant and/or from its associates, in any manner. The certificates issued by the banks are construable as evidence about the ownership of the transferors or their respective bank accounts, as per s.4 of the Bankers' Books evidence Act 1891, which read as under: "4. Where an extract of account was duly signed by the agent of the bank and implicit in its was a certificate that it was a true copy of an entry contained in one of the ordinary books of the bank and was made in the usual and ordinary course of business and that such book was in the custody of the bank, it was held admissible in evidence. Radheshyam v. Safiyabai Ibrahim AIR 1988 Bom. 361 : 1987 Mah. 725 : 1987 Bank J 552." In view of the position of law as discussed above, it is always open for a borrower to contend, that even the "creditworthiness" of the lender stands proved to the extent of credits appearing in his Bank Account and he should be held to be successful in this contention. 9. Keeping with the principle referred to above and by specifically relying on the decision of Hon'ble Apex Court in the case of O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." The phraseology of section 68 is clear. The Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words "shall be charged to income-tax as the income of the assessee of that previous year". The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570." Against the said decision of Hon'ble Gujarat High Court the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is under section 68, free to look into the source(s) of the creditor and/or of the sub-creditor, the burden on the assessee under section 68 is definitely limited. This limit has been imposed by section 106 of the Evidence Act which reads as follows: " Burden of proving fact especially within knowledge. When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him." ** ** ** "What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the extent of his proving the source from which he has received the cash credit, section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s) of the creditor but also of his (creditor's) sub-creditors and prove, as a result, of such inquiry, that the money received by the assessee, in the form of loan from the creditor, though routed through the sub-creditors, actually belongs to, or was of, the assessee himself. In other words, while section 68 gives the liberty to the Assessing Officer to enquire into the source/source from where the creditor has received the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. In other words, the genuineness as well as the creditworthiness of a creditor have to be adjudged vis-a-vis the transactions, which he has with the assessee. The reason why we have formed the opinion that it is not the business of the assessee to find out the actual source or sources from where the creditor has accumulated the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not between the creditor and the sub-creditors, for, it is not even required under the law for the assessee to try to find out as to what sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had with the creditor and he may not know what transaction(s) had taken place between his creditor and the sub-creditor. ....." ** ** ** "In other words, though under section 68. an Assessing Officer is free to show, with the help of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived by the appellant from undisclosed sources. The learned Tribunal seriously fell into error in treating the said amounts as income derived by the appellant from undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness." 11. Further, in the case of CIT v. S. Kamaljeet Singh [2005] 147 Taxman 18 (All.) their lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AAC, setting aside the assessment order." 12. Furthermore in the matter of discharge of 'onus', an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. In that view of the matter, since this part of the judgement runs contrary to the judgment of the Hon'ble Supreme Court, in Daulat Ram's case ( supra ), while this Court in a subsequent judgment in Mangilal's case ( supra ) relying upon Daulat Ram's case ( supra ), has taken a contrary view, we stand better advised to follow the view, which has been taken in Mangilal's case ( supra )'" 13. It also needs emphasis that the difficulties in proving an explanation is a fact which cannot be ignored. It however, now is an admitted position that where a credit or borrowing is shown to have come from a person other than the assessee, like in the present case before me, there is no further responsibility on the assessee to show that it has come from the accounted sources of the lender. Reference may also be had to the judgment by Hon'ble M.P. High Court in the case of CIT v. Metachem Industries [2000] 245 ITR 160/2001] 116 Taxman 572. Furthermore, the Hon'ble Punjab Haryana High Court also in CIT v. Ram Narain Goel [1997] 224 ITR 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stands partly allowed. (THIRD MEMBER) ORDER D. Manmohan, Vice-President (MZ) (As a Third Member) - On account of difference of opinion between the Members constituting ITAT "B" Bench, Lucknow, the Hon'ble President nominated me to resolve the difference of opinion arising out of respective orders passed by the Members of the Division Bench. It may be noticed that the ld. Judicial Member passed the initial order wherein addition of Rs. 3,50,000/-made by the Assessing Officer u/s 68 of the Income-tax Act, 1961 was confirmed but the ld. Accountant Member having passed the dissent order, to resolve the difference, each Member framed a separate question; as per ld. Judicial Member, the question reads as under : "1. Whether addition can be made on account of unexplained cash credit under section 68 of the Income-tax Act where the creditor is failed to explain the source of cash deposited in his account before issuance of cheque of loan amount in favour of the assessee in order to prove his creditworthiness?" Ld. Accountant Member, on the other hand, framed the following question with a request to the Hon'ble President to nominate the Third Member to resolve the issue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lenders' bank account. In response thereto, it was submitted that Shri Sant Lal Jaiswal is assessed to tax since 1998-99 and furnished income/expenditure chart wherein accumulated capital savings of Rs. 3,21,100/- was shown. Similarly, a perusal of the bank accounts of Shri Dheeraj Jaiswal and Smt.Kiran Jaiswal showed cash deposits in their bank accounts immediately before advancing the amount to the assessee. 5. The AO observed that the income/ expenditure chart in the case of Shri Sant Lal Jaiswal is devoid of authenticity. In this regard he noticed that Shri Sant Lal Jaiswal earned income in the range of Rs. 37,000/- to Rs. 48,000/- which, in his opinion, is hardly sufficient for any saving after meeting his personal expenses. In the year under consideration Shri Sant Lal Jaiswal would not have saved an amount of Rs. 2,50,000/- which was shown to have been deposited on 10.6.2005/- in two instalments of Rs. 1,30,000/- and Rs. 1,20,000/- in his bank account. The AO therefore concluded that the creditworthiness of Shri Sant Lal Jaiswal is not proved. Thereupon he inferred that it is diversion of assessee's undisclosed income to Shri Sant Lal Jaiswal in cash in taking the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance, it is a facade of loan transactions through banking channels created only to make these transactions look genuine. Accordingly the addition made by the AO was confirmed by the ld. CIT(A). 8. Aggrieved by the order passed by the AO as well as ld. CIT(A), the assessee preferred an appeal before the Tribunal wherein it was contended that the assessee was neither asked to produce loan givers nor were they examined on oath by issuing notices individually. The assessee has fully cooperated in the proceedings and produced confirmations from the parties, bank accounts of Shri Sant Lal Jaiswal and Shri Dheeraj Jaiswal were produced. Bank account of Smt.Kiran Jaiswal could not be produced due to computerisation in the bank old ledgers and in spite of several requests bank could not furnish the account copy. However, the fact remains that Smt. Kiran jaiswal was assessed to tax every year and all the three loans were received by cheques and deposited in the assessee's bank account. Since the parties are identified, transactions were through account payee cheques and having furnished declaration that amount was advanced by them all the three ingredients provided u/s 68 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to arrive at a proper conclusion. The assessee is required to place some evidence on record to establish that the cash creditors were having sufficient funds. In the instant case prior to advancing the loan to the assessee equivalent amounts were deposited in their bank accounts and nothing has been brought on record to prove the source of source of such deposits. He, therefore, upheld the order passed by the ld. CIT(A) on this issue. 10 . Since the ld. Accountant Member was unable to agree with the proposed view taken by the Ld. Judicial Member, dissenting order was passed wherein he observed that unsecured loans were advanced through account payee cheques and there is no dispute with regard to the genuineness and identity of the creditors. He further observed that the amount has been received by account payee cheques and the parties having accepted the loan transactions initial onus that was thrust upon the assessee stood discharged and information which is within the personal knowledge of the cash creditors cannot be asked to be provided by the assessee. In other words, the AO is under obligation to bring on record some material to show that the lenders are not creditworth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court in the case of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570 (SC). The ld. Counsel adverted our attention to the written submissions, paper book and case law placed in the paper book in support of his contention that the initial onus placed upon the assessee stood discharged by proving identity and genuineness of the creditors and also proved source of source i.e. the fact that amount was advanced by respective parties by way of account payee cheques and confirmed by them, was placed on record. In the absence of any cross-verification by the AO addition cannot be made in the hands of the assessee. Source of deposits in the personal bank account of the creditors is not within the personal knowledge of the assessee and hence the AO has to make proper investigation. In the instant case, the parties were not examined by the AO and hence invoking the provisions of section 68 of the Act, in the circumstances of the case, is not in accordance with law. He strongly relied upon the decision of the Tribunal, Lucknow Bench in Shree Ram Hard Cock Allied Industries ( supra ), wherein the Lucknow Bench observed that upon proving the identity of depositors and genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the order passed by the ld. Judicial Member, he observed in this regard as under : "Since, in the instant case, the loan transactions are undertaken through banking channel, its genuineness cannot be doubted and since the cash creditors were produced before the Assessing Officer along with their identity proof, identity can also not be doubted " The difference is only on the limited issue i.e. while examining the creditworthiness of the creditors whether the AO is required to examine the cash creditors or he is required to examine the surrounding circumstances about the fund's movement in the account of the cash creditors. The ld. Judicial Member was of the opinion that in the bank account of the cash creditors deposit was made either on the same day or few days before the date of advancing the loan. The AO can take into consideration the surrounding circumstances such as the income declared by the cash creditors in their respective returns, the annual withdrawals etc. to come to a conclusion that they had no creditworthiness to advance the loan to the assessee. 14. On the other hand, the ld. Accountant Member observed that going by the so-called surrounding circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proving identity, genuineness of transactions and also creditworthiness of the three creditors by producing their respective bank accounts. Entry in the pass book of a third party can be taken as a primary evidence in proof of the fact that loan was advanced by third party. Thus, the initial onus shifts onto the Revenue to prove that the creditors lack creditworthiness and to come to such conclusion, the assessee cannot be asked to produce any evidence which is within the personal knowledge of the third party. In the instant case, the AO did not examine the parties and proceeded on the assumption that creditors would not have saved any money to advance the loan. In the circumstances of the case I hold that the view taken by the ld. Accountant Member is in accordance with law. In other words, it is not a fit case to make addition u/s 68 of the Act. The Registry is directed to place the matter before Regular Bench for deciding the appeal in conformity with the majority opinion. ORDER Sunil Kumar Yadav, Judicial Member - Pursuant to the majority view, the addition of Rs. 3.50 lakhs made under section 68 of the Income-tax Act, 1961 is not sustainable. Therefore, the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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