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TMI Blog2012 (10) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... holly and exclusively for the purpose of business - Only copies of the ledger account have been filed, but nothing is proved whether these expenses were incurred wholly and exclusively for the purpose of business – against assessee - IT APPEAL NO. 454 (AGRA) OF 2009 - - - Dated:- 16-3-2012 - BHAVNESH SAINI, AND A.L. GEHLOT, JJ. Rajendra Prasad for the Appellant. A.K. Sharma for the Respondent. ORDER Bhavnesh Saini, Judicial Member This appeal by the assessee is directed against the order of ld . CIT ( A), Ghaziabad dated 24.09.2009 for the assessment year 2005-06. 2. The assessee raised several grounds of appeal. The assessee has also filed concise grounds of appeal in which he has challenged the addition of Rs. 13,00,000/- on account of unexplained cash credits/loans u/s. 68 of the IT Act and disallowance of 20% expenditure out of conveyance and mobile phone expenses. 3. We have heard the ld . representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 4. On issue No. 1, i.e., unexplained cash credits of Rs. 13,00,000/-, from the copies of bank account of the lend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through account payee cheques only. Therefore, initial burden upon the assessee to prove the identity creditworthiness of creditors and genuineness of the transaction has been discharged. The assessee further explained that all the amounts have been received through account payee cheques and all the creditors are assessed to tax. In addition to that, copies of their filing of returns of income, balance sheets, cash flow statements and extract of cash books have been furnished to prove creditworthiness of the creditors and genuineness of the transactions. Affidavits of the creditors were also filed, in which they have confirmed giving of loan to the assessee . It was also explained that some of the creditors could not be produced because they have shown their inability to appear before the AO because either their close relations were ill or the creditors were suffering from chronic disease. It was, therefore, submitted that the assessee has discharged the initial onus to prove genuine credit in the matter. The counsel for the assessee also relied upon several decisions in support of the contentions. The submissions of the assessee regarding each creditor are repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-. The AO is accordingly take the correct total at Rs. 13,00,000/- instead of Rs. 14,00,000/-. As regards the discrepancy in mentioning the figures of credits appearing in the name of (1) Smt. Keerti Maheshwari (2) Smt. Mithilesh Maheshwari, it was submitted by the learned AR that the Tax Auditor while mentioning the figures of credits has wrongly mentioned the amount credit by Smt. Keerti Maheshwari against the name of Smt. Mithilesh Maheshwari and vice versa and this was a typographical mistake by the Auditor. It was further submitted that the AO while taking these figures has further made an error by taking these figures at Rs. 4,50,000/- instead of Rs. 4,00,000/-. The learned AR has clarified the position as under : Name of the Lenders Loan amounts Made actual figures as per confirmatory letter/bank Pass-book filed As per tax audit report (wrongly typed) Addition made by the AO 1. Smt . Kerti Maheshwari Rs . 1,50,000 2,50,000 2,50,000 2. Smt . Mithilesh Maheshwari Rs . 2,50,000 1,50,000 2,00,000 The above facts clearly indicates that as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has also brought on record that in spite of repeated opportunities to produce the lenders for examination, the assessee produced only of the 6 lenders and the remaining 5 lenders were not produced for examination. In the case of Shri Abhay Maheshwari, who was produced for examination, the AO upon examination of this lender has noticed that this person has no creditworthiness to give an unsecured loan of Rs. 2,00,000/-. As far as the copies of balance sheet, cash book and cash flow statement of the lenders furnished, the AO has stated that these documents were not furnished by the lenders along with their returns filed as such the same have no evidential value. It has been brought on record by the AO that even the details furnished by the assessee in respect of the above lenders also do not establish the creditworthiness and genuineness of the transactions and thus the addition has been rightly made u/s . 68 of IT Act. The issue has been considered. In all the above cases, there was cash deposit of equivalent amount just before advancing the loan. One of the lenders, namely Shri Abhay Maheshwari was produced for examination and upon examination of this lender, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmations, bank accounts, returns of income, cash flow statements in the paper book and also referred to paper book page 125, which is the order sheet to show that no sufficient time was given by the AO to produce the parties before him. The ld . counsel for the assessee , therefore, submitted that the assessee proved the genuine credits in the matter by satisfying all the ingredients of section 68 of the IT Act. The ld . counsel for the assessee , however, admitted that no request was made by the assessee for examination of rest of the creditors through the commission and no written request was made before the ld . CIT ( A) to produce rest of the creditors at the appellate stage. The ld . counsel for the assessee submitted that the addition could not be made merely because the cash was deposited prior to issue of cheques to the assessee and in the case of creditor Sri Rampal Singh, PB-45 is bank passbook, which shows transfer entry of Rs. 2,50,000/- on the date of clearing of the cheque in favour of the assessee and as such, it was not a deposit of cash in his bank account. The ld . counsel for the assessee relied upon following decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to find out truth in the matter. The assessee produced one of the creditors before the AO for examination, but showed his inability to produce other creditors, which is also clear from the order sheet dated 18.12.2007 (PB-126). Prior to that, the assessee sought time from the AO to produce remaining creditors for examination, but later on did not produce them. The ld . counsel for the assessee explained that due to one or other problem of the remaining creditors on account of medical advice, the depositors have shown their inability to appear before the AO for examination, but it is admitted fact that the assessee did not make any request before the AO for examination of the remaining creditors through the commission and no willingness was shown before the CIT(A) for production of the remaining creditors for examination even at the remand stage in the appellate proceedings. Even during the course of arguments before the Tribunal, the ld. counsel for the assessee did not show his willingness to produce remaining creditors for examination before the AO. It is, therefore, clear that the assessee has failed to produce the remaining creditors for examination by the Revenue Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6). These details noted in the assessment order and the details verified from the paper book would clearly support the findings of the AO that none of the creditors were persons of sufficient means to advance any loan to the assessee. Filing of balance sheets, cash flow statements, cash books etc. have no evidentiary value because according to the remand report filed by the AO, those documents were not filed with the return of income. Moreover, no regular books of account have been maintained by any of the creditors and majority of them have shown estimated income in their returns of income. Therefore, such balance sheet, cash flow statements etc. would not support the contention of the assessee that genuine credits have been received. The order sheet noted by the AO would also show that the assessee has made no efforts to produce the remaining creditors before the AO. Even in the statement of one of the creditors recorded by the AO, Shri Ambhay Maheshwari, he was not able to explain his source of deposit or advancing loan to the assessee through genuine source. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 Taxman 304 held as under: "The primary onus lies on the assessee to prove the nature and source of credits in its account. It is necessary for the assessee to prove prima facie the identity of his creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. It is not enough to establish the identity of the creditors. Mere production of the confirmation letters before the Income-tax Officer would not by itself prove that the loans have been obtained from those loan creditors or that they have credit-worthiness. Held, that, in the instant case, the Tribunal misdirected itself in holding that the transactions were genuine simply because some of the transactions were made by cheques. The assessee had failed to prove the credit-worthiness of the alleged lenders. A number of other assessees had also admitted that loans obtained from these bankers against hundis were not genuine and such hundi loans really represented their own concealed income. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sufficient evidence before the authorities below to prove the creditworthiness of the creditors and genuineness of the transactions in the matter. Therefore, the assessee has not satisfied the essential ingredients of section 68 of the IT Act. 12. In the case of Rohini Builders and U.M. Shah ( supra ), the departmental appeal was dismissed finding no substantial question of law because the findings of the Tribunal were based on appreciation of evidence. 12.1 In the case of Orissa Corpn. (P.) Ltd. ( supra ), it was also held that the Revenue did not examine source of income of the said alleged creditors when they were assessed to tax to find out whether they were creditworthy. However, in the present case, the authorities below have specifically found that all the creditors were not men of means and as such, their creditworthiness was not proved at all. Therefore, the decision cited by the ld. counsel for the assessee would not support the case of the assessee. 13. Considering the facts and circumstances of the case in the light of findings of the authorities below, we do not find any irregularity or illegality in the orders of the authorities below. We confirm their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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