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TMI Blog2024 (3) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... cheque and the bank account number. As regards the capacity he has explained the nature and source of the money advanced to the assessee and the ld. AO has not doubted that the fact that the assessee is engaged in the producing the sarbat and the source of the cash deposit is the amount received as sales proceeds of the sarbat. Thus, based on the various case laws cited by the assessee wherein it is held that when the identity and genuineness of the transaction is established then capacity of the lender to advance the money to the assessee cannot be a matter which the assessee could be required to established [ Labh Chand Bohra Vs. ITO[ 2008 (4) TMI 731 - RAJASTHAN HIGH COURT] . The jurisdictional high court has also held that when the cash creditor have affirmed in their examination that they have advanced the money to the assessee from their own respective bank account. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then such an addition cannot be sustained [ CIT Vs. Jai Kumar Bakiwal [ 2014 (8) TMI 685 - RAJASTHAN HIGH COURT] . The relevant finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t A.O. should not have made the addition and CITA should not sustain the addition because the assessee discharge the burden casted upon him by the statue. 7. The addition is illegal in the light of judgment of Lalchand Bohra vs Income Tax Officer 189 Taxman 141 Rajasthan High Court Capacity of creditor is not a matter FOLLOWING S.C.. So far as capacity of the lender is concerned, in our view, on the face of the judgment of Hon'ble Supreme Court, in Daulat Ram's case (supra), and other judgments, capacity of the lender to advance money to the assessee, was not a matter which could be required of the assessee to be established, 8. That the charging of interest is illegal and against the law. 3. Succinctly, the fact as culled out from the records is that the taxpayer filed its return of income for the A.Y 2017-18 on 31.10.2017 declaring total income at Rs. 78,040/-. The case of the assessee wass selected for limited scrutiny. Notices were issued u/s. 143(2) and 142(1) to the assessee. The details were called for by issuing questionnaire to the assessee. The assessee is engaged in the business of Grain Merchant and Commission agent (Kachha Aadat). 3.1 During the assessment proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations of Hidayatullah, Chief Justice (as His Lordship then was) in Sunderlal Mannalal Vs. Nandramdas Dwarkadas AIR 1958 MP 260 wherein it was observed:- Now the Act does not give any power of dismissal. But it is axiomatic that no court or tribunal is supposed to continue a proceeding before it when the party who has moved it has not appeared nor cared to remain present. The dismissal, therefore, is an inherent power which every tribunal possesses... 6.3 There is a well known dictum of law VIGILANTIBUS, NO DORMENTIBUS, JURA SUBVENIUNT which means law will help only those who are vigilant. Law will not assist those who are careless of his/her right. In order to claim one's right, s/he must be watchful of his/her right. Only those persons, who are watchful and careful of using his/her rights, are entitled to the benefits of law. Law confers rights on persons who are vigilant of their rights. Hon'ble Madhya Pradesh High Court in the case of Estate of Late Tukojirao Holkar vs. CWT (223 ITR 480) has held as under: if the party, at whose instance the reference is made, fails to appear at the hearing, or fails in taking steps for preparation of the paper books so as to ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to prove that the creditor is a person of means . Further, reference has also been made to the decision given by the Honorable High Court, Calcutta in case of C. Kant CO. Vs. CIT [1980] 126 ITR 63 (cal), wherein decision was given as In case of cash credit entry it is necessary for the assessee to prove not only the identity of the creditors but also to prove the capacity of the creditors to advance the money and genuiness of the transaction . Since the assessee had taken an unsecured loan of amount Rs. 5,00,000/- and failed to prove the genuineness of the transaction and credit worthiness of the creditor, the whole amount of cash credit made in his bank account to the tune of Rs. 5,00,000/- was treated as unexplained cash credit in his bank account and the said cash deposit of Rs. 5,00,000/- was held to be unexplained cash credit u/s 68 of IT. Act, 1961. Further, during the course of present appellate proceedings, the assessee has failed to rebut the findings of the AO regarding genuineness of cash credit u/s 68 of IT. Act, 1961 which leads to penalty u/s 271AAC of the Act. In the appellants proceeding, the appellant also failed to offer any explanation with regard to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the advance of money. The condition of advancement is fulfilled. IN VIEW OF ABOVE SUBMISSION OF AFFIDAVIT AND PRODUCING FOR STATEMENT YOUR HONOR WILL OBSERVE THAT THE ASSESSEE DISCHARGE HIS BURDEN AND ON US HAS BEEN SHIFTED ON THE DEPARTMENT. In case of this creditor the assessing officer also not raised any further query. As regards ground no 1, The order passed by the Income Tax Officer and sustained by the Commissioner of Income Tax (Appeals) is illegal against the law and without any application of a mind, therefore, is liable for quash u/s 143 (3) with 115 BBE. The creditor came forward with the fact from where the amount was brought by him for depositing in the bank account which was advanced to the assessee. The Income Tax Officer, however, took different view and not appreciated the explanation of the assessee. The assessee is not under compulsion so as to show the sources of source of creditor in view of judgment reported in 224 ITR page 180 Ram Narain Goyal vs CIT (P H) is at page 1 of the Case law paper book. Without prejudice to above, it is further submitted that the Income Tax Officer, at the time of finalizing the assessment, no where observed or held that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirement of discharge of burden on the part of the assessee to prove the genuineness of the transactions- CAPACITY OF THE LENDER TO ADVANCE MONEY TO THE ASSESSEE WAS NOT A MATTER WHICH THE ASSESSEE COULD BE REQUIRED TO ESTABLISH AS THAT WOULD AMOUNT TO CALLING UPON HIM TO ESTABLISH THE SOURCE OF THE SOURCE Therefore addition in respect of entries in the names of said creditors cannot be sustained. Furthermore the Hon ble ITAT, Jodhpur Bench observe as under: Bansilal Malhotra vs. DCIT ITAT, Jodhpur Bench ITA No-1902/JP/1994) Whether assessee can be treated to have discharged the onus of explaining the cash credit as soon as creditor is produced before the AO and the creditor has also satisfactorily explained the source thereof Held Yes Further held that affidavit/statement of creditor has to be believed unless the AO refutes the same. The judgment is judgment of jurisdictional High Court and also covered of the this Hon ble Bench. you are requested to kindly delete the addition illegal and arbitrarily sustained. As regards ground no 3, with due respect, the case on which the lower authority relies has a different fact not identical to the ASSESSEE as such no adverse inference can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt portion is being reproduced here under: 76 ITR Page 719 Commissioner Of Income-Tax, West Bengal. vs Padamchand Ramgopal. Facts The assessee, a HUF carrying on business in various items including money- lending produced his account books. The ITO rejected those accounts as unreliable and assessed the assessee on the basis of best judgment by adding to the income returned by him various sums ranging from Rs. 17,951 for the asst. yr. 1956-57 to Rs. 21,536 for the asst. yr. 1954-55. The five assessments years are 1953-54, 1954-55, 1955-56, 1956-57 and 1957-58. The ITO in his order did not give any reason for not relying on the accounts submitted. Issue Whether the Tribunal was justified in holding that the ITO had rightly added income in the subsequent assessment years. Findings Appeal dismissed. Reasoning It was not justified in holding that the additions made by the ITO were in accordance with law. Those additions were arbitrarily made. No reasons were given to reject the accounts relating to the asst. yrs. 1954-55, 1955-56, 1956- 57, and 1957-58. Further, the method adopted for determining the escaped income appears to be highly capricious. From the perusal of entire order you wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore the name may kindly be treated as Labh chand Bohra . The ratio of judgment is applicable in case of the assessee. You are therefore requested that the addition made may kindly be deleted. THE AO AND CIT RELIED ON RAJASTHAN HIGH COURT BUT SUBSEQUENT DESCISION ARE IN FAVOR OF THE ASSESSEE REFERRED IN THE CASE LAW CHART THEREFORE SAME ARE APPLICABLE IN VIEW OF JUDGMENT OF 144 ITR 62 COPIES IS AT PAGE NO 13 OF THE CASE LAW PAPER BOOK. AS PER GOLDEN RULE THE SUPREME COURT THE JUDGMENT IN THE FAVOR OF THE ASSESSEE HAS TO BE ACCEPTED . IN VIEW OF 192 ITR 252 IS AT PAGE NO 14-15 OF THE CASE LAW PAPER BOOK. In view of above submission you are requested to kindly accept the appeal by declaring the order as illegal, against the law and against judicial decorum and discipline. 6. In addition to the above written submission the ld. AR of the assessee also placed reliance to the following judicial precedent cited in support of the grounds so taken by the assessee: S. No Case law Observation Page No. The payments were made by account-payee cheques. The money was returned by the assessee to Ishwar Chand with interest amounting. 1 Ram Narain Goel Vs CIT (P H) 224 ITR page 180 The Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by us, the order of the CIT (A) is confirmed here by us. 5-6 Creditors have affirmed in their examination, no addition. 4 CIT Vs Jai Kumar Bakiwal (RAJ High Court) DB IT APPEAL NO 269 OF 2011 When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion. 7-9 Capacity of the lender to advance money to the assessee, was not a matter which could be required of the assessee to be established 5. Labh Chand Bohra Vs ITO, Pali (HC Raj) ITA No: 92 of 2005 So far as capacity of the lender is concerned, in our view, on the face of the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent cited by both the parties to drive home to their respective contentions. The bench noted that the assessee has received a sum of Rs. 5,00,000/- from Shri Mangal Chand Proprietor of M/s. Royal Rose Industries on 30.03.2017 by an account payee cheque. The assessee has also repaid the said money to Shri Mangal Chand on 06.04.2017 by an account payee cheque. The ld. AO based on the fact that the immediate source of the money advanced to the assessee was deposit of cash disbelieved the loan accepted by the assessee and has considered it as unexplained creditor and has added the same as income u/s. 68 of the Act. In the first appeal the ld. CIT(A) has issued three notices to the assessee and found that the assessee has not rebutted the finding of the ld. AO and therefore, he has dismissed the appeal of the assessee. Before us the ld. AR of the assessee submitted that the as per the provisions of section 68 of the Act when any sum found credited in the books maintained by the assessee, and the assessee offers no explanation about the nature and source of that sum then it may be treated as unexplained cash credit whereas in this case the assessee has established the identity of the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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