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TMI Blog2022 (7) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... nd genuineness of the transaction. Therefore since the assessee has failed to establish both the genuineness of transaction and creditworthiness of party, in our view, he has not been able to discharge the onus cast upon him u/s 68 - Therefore, we are of the considered view that Ld. CIT(A) has not erred both in law and on the facts of the case in confirming the action of AO of making an addition as unexplained cash credit u/s.68 in respect of loan taken from lender. - Decided against assessee. - ITA No. 645/Ahd/2012 - - - Dated:- 27-7-2022 - Shri P.M. Jagtap, Vice President And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Kiran C. Shah, A.R. For the Revenue : Shri Purushottam Kumar, Sr. D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-XX, Ahmedabad in Appeal no. CIT(A)-XX/127/10-11 vide order dated 16/01/2012 passed for the assessment year 2005-06. 2. The assessee has taken the following grounds of appeal:- The learned Commissioner of Income-tax (Appeals) - XX Ahmedabad has erred on facts and in law in: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him; the PAN, confirmation and bank statement of the creditor had been furnished; the contention of the AO that the appellant had provided cash to buy cheques from the creditor is mis-interpretation of the statement; the identity and creditworthiness of the creditor as well as the genuineness of the transactions stand explained and in support thereof he relied on a number of case laws. In the additional submission filed a request was made to admit additional evidence in the form of Affidavit dated 30- 01-2009 from the creditor wherein it was stated that he had advanced money through account payee cheques only and had not received any cash from the appellant for that purpose. 3 . 4 In the remand report, the AO observed that the creditor could not be traced; the address shown by the creditor in the affidavit pertains to slum type area as against the substantial amount of loan allegedly given by him; the creditor had not filed return of income for A. Y.2005-06. In the rejoinder to the remand report the learned AR contended that all the 3 ingredients required under section 68 were satisfied. In the additional submission filed on 24-11-2011, it was contended that in the F.Y.s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le property. Given the contents of the statements (on which the appellant company relied on during the course of appellate proceedings) it is clear that the creditor has no means whatsoever to give a loan of such substantial amount. The learned AR's contention that (once the PAN is furnished and the creditor confirms the transaction the onus on the appellant to establish the creditworthiness stands discharged) does not hold substance. There are any number of judicial pronouncements wherein it has been held that it is for the assessee to establish the three ingredients - identity and creditworthiness of the creditor and genuineness of the transactions - for the purpose of section 68. In the instant case, the appellant has miserably failed to establish the creditworthiness of the creditor. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 3.8 One more contention raised by the learned AR is that in the F.Ys. 2009-10 and 2010-11, the appellant had sold goods to the creditor and it offered such sales to Income-tax and therefore the amount received in advance cannot be treated as unexplained ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o establish proof of identity of creditors, capacity of creditors and genuineness of creditors in order to discharge onus cast on assessee. Mere production of party or confirmation from party will not suffice, unless the assessee is also able to substantiate their creditworthiness i.e. ability to advance the sum to the assessee. 6.1 The Supreme Court of India in the case of Sadiq Sheikh v. Commissioner of Income Tax, Bangalore [2021] 124 taxmann.com 202 (SC) dismissed SLP against High Court ruling that where Tribunal deleted addition under section 68 made to assessee's income on account of cash receipts in its bank account by accepting assessee's explanation that said amount was transferred in his bank account from out of bank accounts of his brother-in-law and a close friend, since Tribunal ignored vital fact emanating from record that said creditors had not produced evidence to establish their capacity to raise such a huge amount, its order was to be set aside . The facts of the case were that the Assessing Officer made certain addition owing to unaccounted cash receipts on ground that assessee failed to establish identity and creditworthiness of creditors from whom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer was justified in passing assessment order making additions under section 68 for share capital / premium received by assessee company. 6.4 The High Court of Andhra Pradesh in the case of Gayathri Associates [2014] 41 taxmann.com 526 (Andhra Pradesh) has held that Identity, creditworthiness and genuineness of transaction is not established merely by filing bank account details. 6.5 The High Court of Allahabad in the case of Sagittraious Builders Colonisers 2012] 17 taxmann.com 198 (Allahabad)/[2012] held that not only the identity of parties, but their creditworthiness also needs to be established by the assessee. 6.6 The Pune ITAT in the case of Sanjay Waman Co. [2002] 81 ITD 1 (Pune) (TM) held that it is part of the duty of the assessee to furnish evidence regarding the creditworthiness of the creditors. 6.7 The Delhi ITAT in the case of Anandtex international (P.) Ltd. v. ACIT [2022] 137 taxmann.com 146 (Delhi - Trib.) held that where assessee received share application money and claimed that same was invested by its director by taking advance from a company P, however assessee failed to establish creditworthiness of share applicant or genuineness o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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