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TMI Blog2012 (10) TMI 470X X X X Extracts X X X X X X X X Extracts X X X X ..... officer to identify the cash credits which were made prior to the commencement of business and delete the additions made in that behalf. As for the other cash credits relating to the period subsequent to the commencement of business, the CIT(A) confirmed the additions made by the assessing officer in that behalf. Aggrieved by the relief granted by the CIT(A), Revenue is in appeal, whereas the assessee preferred its appeal objecting to the addition sustained by the CIT(A). Held that:- It is for the assessee to prove the genuineness of a cash credit not only by establishing the identity of the creditor, but also his creditworthiness and the genuineness of the transaction, and unless all the three ingredients are satisfied, genuineness of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00-20,000 and addresses of the alleged creditors were vague and they were unverifiable. Giving the assessee benefit only in respect of those credits in respect of which confirmations are verifiable, which aggregated to Rs.12,00,000, the assessing officer disallowed an amount of Rs.30,27,977, out of the total credits of Rs.42,27,977, treating the same as unproved credits under S.68 of the Act, while completing the assessment on a total income of Rs.33,45,310, vide order of assessment dated 29.12.2008 passed under S.143(3) of the Act. 3. During the appellate proceedings before the CIT(A), the assessee provided a list of names and addresses alongwith amounts with respect of 84 credits. It was stated that these details could not be provided d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishorilal Santoshilal(216 ITR 9); and of the Allahabad High Court in the case of CIT V/s. Kapur Bros(118 ITR 741), the CIT(A) held that any cash credit introduced before the commencement of business cannot be added in the hands of the firm, as the firm has not earned any income or made any sale. He accordingly directed the assessing officer to identify the cash credits which were made prior to the commencement of business and delete the additions made in that behalf. As for the other cash credits relating to the period subsequent to the commencement of business, the CIT(A) confirmed the additions made by the assessing officer in that behalf. 5. Aggrieved by the relief granted by the CIT(A), Revenue is in appeal before us, whereas the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letters were received by the Revenue through postal authorities. Learned counsel submitted that the assumptions of the assessing officer in his remand report and the CIT(A) are based only on surmises and conjectures and not supported by any enquiries or culled out from the factual position of the transactions. He further submitted that once transaction is confirmed by the loan creditor, the burden of disproving such a transaction is shifted to the party who is alleging that it is not true. He also submitted that the amounts advanced in the instant case are very meager, viz. below Rs.20,000, and for advancing such a small amount one need not be an income tax assessee and need not have a bank account. He submitted that there is no provision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made any sale or business, could not have income to cover the aggregate amount of unsecured loans of the relevant period. As such, the CIT(A) in our opinion, was justified in directing the assessing officer to delete the additions in respect of unsecured loans pertaining to the period prior to commencement of business. The decision of the Hon ble Allahabad High Court in the case of Kapur Bros. (supra) clearly applies to the facts of the present case. We accordingly uphold the order of the CIT(A) on that aspect and dismiss the grounds of the Revenue. 9. With regard to the unsecured loans pertaining to the period subsequent to the commencement of business by the assessee, we find that the CIT(A) has sustained the addition made by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the period subsequent to the commencement of business by the assessee. The case-law relied upon by the learned counsel for the assessee is distinguishable on facts. It is settled position of law, as laid down even by the Apex Court in several cases, that it is for the assessee to prove the genuineness of a cash credit not only by establishing the identity of the creditor, but also his creditworthiness and the genuineness of the transaction, and unless all the three ingredients are satisfied, genuineness of a cash credit cannot be accepted. In the circumstances, we uphold the order of the CIT(A), even with regard to cash credit additions relating to the period subsequent to the commencement of business by the assessee. Consequently, grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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