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TMI Blog1984 (9) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Bhaichandbhai. It was stated by him that he had 38.25 acres of land at village Raval and there were seven members in his family. It was stated that his net income from agricultural land was approximately at Rs. 20,000 per annum and his household expenses were Rs. 12,000. It was stated by him that he had no bills for sale of crops, etc. It was stated that there was a branch of Bank of India at Raval since 15 years but he used to keep cash with him. It was stated that before 8 years, he had obtained loan of Rs. 12,000 from Bank of India for installing pipeline to his field. It was contended by him that he had advanced loan of Rs. 40,000 to Shri Abhalbhai Makwana in cash, which represented his past savings. It was further stated by him that Shri Makwana wanted to be partner in Amber Cinema, so he had given him loan. It was also stated by him that his younger brother was studying with Shri Makwana and, thus, he knew him. It was stated by him that no receipt was obtained by him. It was stated that except that his brother was studying with him, he was in no other way connected with him. 7. It would be pertinent to note that the cash credit appears in the books of account of M/s Bad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any of the partners of the firm. In support of his submission, the learned counsel for the assessee relied on the decision of the Hon'ble Patna High Court in the case of Sarogi Credit Corpn. v. CIT [1976] 103 ITR 344. 6. On due consideration of the rival submissions of the parties as well as the material placed before us, we do not find any justification to interfere with the order of the Commissioner (Appeals) on this point. It would appear from the order of the ITO itself that the assessee had successfully discharged the initial onus, which laid upon it, by not only establishing the credit-worthiness and the genuineness of the loan of Rs. 40,000, but also had produced the creditor before the ITO who had confirmed the fact about advancing loan of Rs. 40,000 to the assessee. Under these circumstances, we are of the view that the ITO was not justified in considering the irrelevant material of obtaining loan of Rs. 12,000 by the creditor some 8 years back. Since, in our opinion, the assessee has discharged the initial onus, which lay upon it, to explain the nature and source of credit of Rs. 40,000 the Commissioner (Appeals) was fully justified in deleting the said amount from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1971, he had taken loan of Rs. 12,000 from Bank of India and only Rs. 4,000 was paid towards the amount of the loan by 1979 (Question No. 15). (This aspect is clearly against the version that he was saving Rs. 8,000 yearly in cash). 3. He was not in the habit of advancing any loan to any person but this was only one instance (no convincing reasons given). 4. In question No. 28, it is replied stating that he did not know in what denomination of notes the amount of Rs. 40,000 was paid (this is unbelievable because number of currency notes of each denomination was not asked). 5. Though loan (with interest) was outstanding to be paid to Bank of India, he had not received any interest on advance of Rs. 40,000 during the period of 4 years between 1975 and 1979---Question Nos. 28 and 29 (why this was so?). 6. Neither receipt nor promissory note was taken for such a big sum paid to Mr. Makwana (this raises doubt rather than removing it). 1.2 From the above the Inference drawn by the IAC that the claim like this one had to be viewed in the light of normal human conduct, was the correct inference. 1.3 The Commissioner (Appeals) has deleted the amount of cash credit on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be added to the income of the assessee ?" THIRD MEMBER ORDER Per Dr. V. Balasubramanian, Vice President -- The assessee is a registered firm, carrying on among other things the running of Cinema House. While making the assessment for the assessment year under appeal, the ITO included a sum of Rs. 40,000 as income from other sources. This represented an alleged loan of Rs. 40,000 taken on 15-4-1975 from one Shri Masri Jivabhai. The addition made by the ITO was deleted by the Commissioner (Appeals). It is, thus, that the matter came before the Tribunal. The two members who heard the appeal having differed, the following point of difference is referred to me as the Third Member for resolution : " Whether, on the facts and in the circumstances of the case, the amount of Rs. 40,000 represented by cash credit in books of the assessee is required to be added to the income of the assessee ?" 2. The learned counsel for the department, relying on the order of the ITO and the instructions of the IAC, has pointed out that the assessee has not brought on record any evidence to support the genuineness of the loan. In matters of this type ; especially in the context of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel has pointed out that a mere identification of the creditor only has been done in the present case. The assessee has not proved with any evidence that the creditor is in a position to lend the amount. More than that as the decision lays down, it has not been shown that the creditor did give the amount to the assessee. The decision in Sarogi Credit Corpn.'s case, referred to by the learned Judicial Member, has no application to the case. In fact, this decision has not taken note of the other important decision in Velji Deoraj Co.'s case. 5. For the assessee, stress is laid on the orders of the Commissioner (Appeals) and the learned Judicial Member. Referring to the assessment order and the directions issued by the IAC, it is pointed out that the ITO wanted to make an addition of more than Rs. 1 lakh but the IAC restricted the same to only a portion thereof. Even out of this, the Commissioner (Appeals) deleted a substantial amount. Ultimately, it is only this addition of Rs. 40,000, which is now for consideration before the Tribunal. The assessee has produced the creditor. The deposition of the creditor has been taken. No part of the deposition casts doubt on the genuinenes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s behaviour does not confirm to what one would regard as normal human behaviour, should not be a reason to cast an extraordinary burden on the assessee. The fact remains that the alleged creditor has substantial agricultural lands, nearly 40 acres. He has taken a loan and purchased a pump set for about Rs. 12,000. He would not have done this unless he has some income. What he has done with his income, why he did not put the money in the bank, etc., are relevant in his case but certainly, the assessee cannot explain or be responsible for these. The decisions are clear that in the case of a person who is not under the control of the assessee so as to manipulate things, the assessee cannot be held responsible for whatever oddities the creditor can be invested with. I have, therefore, no hesitation in holding that the assessee has done all in his power to prove the genuineness of the credit. The order of the learned Judicial Member should be upheld. 7. The two decisions referred to by the parties in Velji Deoraj Co.'s case and Sarogi Credit Corpn.'s case, in my opinion, cannot settle the issue. The circumstances of Velji Deoraj Co.'s case are entirely different. In fact, it refe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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