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TMI Blog2013 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... f interest, even without disturbing the well established principle of not insisting on the assessee proving source of the source, on the robust facts of the revenue authorities have rightly not concluded in favour of the assessee - Decided against Assessee. - Tax Appeal No. 800 of 2012 - - - Dated:- 15-4-2013 - Akil Kureshi And Sonia Gokani,JJ. For the Petitioner : Mr. B. S. Soparkar, Advocate JUDGMENT (Per : Honourable Ms. Justice Sonia Gokani) The facts in a capsulized form are necessary to be reproduced for comprehending the controversy in question in this Tax Appeal preferred by the assessee under Section 260A of the Incometax Act, 1961 [ Act for short], being aggrieved by the order of the Income Tax Appellate Tribunal, Ahmedabad [ Tribunal for short] dated 20th April 2012. 2. The assessee is an authorized dealer of M/s. Reliance Industries Limited for sale of POY and filament yarn. He is also authorized dealer of M/s. Silvasa Industries Private Limited for texturized yarn. For the Assessment Year 200304, assessee filed his return of income declaring his total income at Rs. 3,75,861/=. 2.1 It was noticed by the Assessing Officer, during the course of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as she was concerned, the cash was deposited in her bank immediately before a cheque for Rs.75,000/was issued in favour of the assesseerespondent. Out of other five creditors, Smt. Nirmal B. Kansal was found to be earning Rs.1,45,370/and one Shri Bishnu Kumar Kansal was earning Rs.1,27,400/and remaining three persons earning ranges between Rs50,000/to Rs.75,000/per year. In their cases also, cash amount had been deposited in their respective accounts soon before the cheques were issued and therefore, it was concluded by the CIT[A] that only to give authenticity and genuineness, these transactions were structured though there was no sufficiency of fund with the creditors. From the totality of the facts and circumstances, it concluded the case of the assessee that the creditors who were having very small means allegedly gave loans of huge sum which did not seem to be an act of prudence and in consonance with the normal human behaviour. It further held that the confirmation letters and evidence of transactions were produced. From the totality of circumstances, the Assessing Officer was held right to conclude that the loans claimed by the assessee were not genuine. 4. Assessee, aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act. Accordingly, we confirm the addition of Rs. 7,25,000/= . 4.2 Respondent also preferred Misc. Application for rectification under Section 154 of the Act being Misc. Application No. 38/Ahd/10 and vide order dated 20th April 2012, the Tribunal dismissed such application by following order: 4. We have heard the rival submission and carefully perused the materials on record. We have also gone through the order of the Tribunal dated 16122009 supra in the case of the assessee for AY 200304 and we find that the Tribunal while deciding the issue for the year under consideration considered the view taken by the Tribunal in the case of the assessee for the AY 200102, and also from the materials produced for the relevant assessment year has given a specific convincing that whatever documents filed by the assessee was resourcefulness available with the creditors to advance any funds to the assessee. Para five of the order of the Tribunal contains a detailed discussion on the issue. Hence, there is no mistake apparent on record in the order of the Tribunal as argued by the learned AR. We find no merit in the Misc. Application of the assessee resulting in mere waste of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent had already duly discharged his burden of proving identity of the creditors and all necessary documents were already produced before these authorities, no further aspect was needed to be proved at his end. All the persons were assessed to tax and four, out of six creditors, had appeared before the Assessing Officer. Therefore, there was no justification in treating such loans as unexplained cash credit . He also further urged that it is a wellestablished principle that the source of the source need not be proved by the assessee. The revenue could tax those creditors; if they are found liable, however, in the assessee s hands, these loans could not be held to be bogus and therefore, this Court need to intervene. He has produced the paperbook to indicate that the statements were recorded of the four of the creditors by the Assessing Officer, which according to the learned counsel, clearly indicate how the transactions are genuine. Moreover, when payments are made by way of account payee cheques deposited in the bank account of the assessee, genuineness of transaction is duly established as well. 6.1 Following are the authorities sought to be relied upon by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Society engaged in the business of banking. During the search proceedings under Section 132 of the Act at the premises of the Bank, various discrepancies came to the fore. Certain additions were made by the Assessing Officer holding such income from undisclosed sources . ITAT deleted such findings. This Court held that the assessee had furnished details discharging the onus that the deposits were made of the third party ie., the customers of the Bank and it was since not the case of anybody that these deposits were the Directors of the assessee Bank or any other relatives of the Directors and when the activities of Bank were regulated by the provisions of the Banking Regulations Act, 1949 as well as by the guidelines of the Reserve Bank of India; coupled with the fact that the entire income from the banking activities were exempt in the hands of the assessee, which is a cooperative Bank, the Court confirmed the findings of the Tribunal of deleting the entire amount added by the Assessing Officer as undisclosed income in respect of the fixed deposits. 9. In case of Murlidhar Lahorimal [Supra], the assessee, an individual, was also a partner in a firm, who filed his return of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d down principle that the assessee, when once discharges initial burden of proving the source, he is not required to prove the source of the source. 11.1 It would be relevant to produce, at this stage, Section 68 of the Act, which read, thus 68. Cash credits Where any sum is found credited in the books of an 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 incometax as the income of the assessee of that previous year. 11.2 It is also required to be noted that Section 68 requires that the credit in the books of account maintained by the assessee of the sum will need to be of the previous year and if the source of such credit; if is not explained by the assessee, or that the explanation offered by him is not, in the opinion of the Assessing Officer, is satisfactory, then the sum so credited can be charged to tax as the income of the assessee of the previous year and the primary duty of the assessee to offer explanation as and when the nature and source of such credit. Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harged its burden of proving that the loans in question were genuine. 14. In case of Commissioner of Incometax v. Precision Finance Private Limited [Supra], the Assessing Officer during the course of assessment proceedings found various cash credits in the books of the assessee. On inquiring through the Inspector, it was found that either the files did not exist as per the details furnished or the records did not tally with the facts presented by the assessee. Several letters were issued to the assessee bringing to its notice that the loans could not be verified for want of adequate proof. In such circumstances, it is held that, it is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. Mere furnishing of the particulars is not enough. Mere payment by account payee cheque is not sacrosanct nor can it make a nongenuine transaction genuine. 14.1 The Apex Court in case of Commissioner of Income Tax v. Mohankala [Supra] observed that in respect of nature and source of amount credited in the books of account of assessee, explanation tendered if is not found satisfactory, that would amount to prima facie evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue makes addition on the assessee failing to establish source of the source. All issues are essentially based on facts and appreciation of evidence on record. No question of law arises. Tax Appeal is dismissed. 16. It would be worth recapitulating that in the case on hand during the course of assessment, Assessing Officer noted the cash credit worth Rs. 7,25,000/= in the accounts of the assessee. Six persons were found to have issued the cheques in favour of the assessee for lending such amount. Out of these six persons, case of one person ie., Smt. Sunita Krishnani for the earlier Assessment Year also was held to be ingenuine and therefore five other lenders details were examined by the Assessing Officer. 17.1 It may be that identity of the lenders/creditors was duly proved. Vital defect noticed by all the three revenue authorities was the creditworthiness of these lenders. On inquiry, it was brought on record that their yearly earnings were either less or almost similar to what they gifted to the assessee. And again, assessee having his earning through agency commission had no reason to borrow such amount at a high rate of interest of 24% per annum. Cumulatively, this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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