I.T.O.- Ward-1(2), Aligarh V. Smt. Meena Gupta, Aligarh

ITA 115/AGR/2011

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0447 (ITAT-AGRA)
• Duration Of Justice: 8 year(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-06-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Question of law; Accommodation entries; Set aside
• Section: 205; 131; 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 115/AGRA/2011 ASSTT. YEAR : 2006-07 INCOME-TAX OFFICER, VS. SMT. MEENA GUPTA, WARD 1(2), ALIGARH. 4/14, MILAN VIHAR COLONY, JAIL ROAD, ALIGARH. (PAN : AAVPG 1206 D) ITA NO. 132/AGRA/2011 ASSTT. YEAR : 2006-07 SMT. MEENA GUPTA, VS. INCOME-TAX OFFICER, 4/14, MILAN VIHAR COLONY, WARD - 2, ALIGARH. JAIL ROAD, ALIGARH (APPELLANT) (RESPONDENT) REVENUE BY : SHRI WASEEM ARSHAD, SR. D.R. ASSESSEE BY : SHRI DEEPENDRA MOHAN, C.A. DATE OF HEARING : 18.06.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.06.2013 ORDER PER BHAVNESH SAINI, J.M.: BOTH THE CROSS APPEALS BY THE REVENUE AND THE ASSES SEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 14.02.2011 FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 115 & 132/AGRA/2011 2 2. THE REVENUE ON GROUND NO. 1 CHALLENGED THE DELET ION OF ADDITION OF RS.12,75,000/- ON ACCOUNT OF UNSECURED LOANS U/S. 6 8 OF THE IT ACT. THE ASSESSEE ON ALL THE GROUND OF APPEAL CHALLENGED THE CONFIRMA TION OF ADDITION OF RS.24,25,000/- MADE BY THE AO U/S. 68 OF THE IT ACT ON ACCOUNT OF UNSECURED LOANS. 3. THE REVENUE ON GROUNDS NOS. 2 & 3 ALSO CHALLENGE D THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.7,01,635/- ON ACCOUNT OF DISALLOWANCE OF 1/5 TH OF THE SUNDRY CREDITORS AND THAT THE LD. CIT(A) ER RED IN ACCEPTING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE WITHOUT ADJUDICATING THE ADMISSIBILITY OF THE SAME AS PER RULE 46A OF THE RULES. 4. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. 5. THE FIRST ISSUE INVOLVED IN BOTH THE CROSS APPEA LS IS ADDITION MADE U/S. 68 OF THE IT ACT PARTLY DELETED AND PARTLY SUSTAINED B Y THE LD. CIT(A). THE ASSESSING OFFICER FOUND THAT THERE ARE 16 UNSECURED LOANS TAK EN BY THE ASSESSEE FROM 16 PARTIES IN A SUM OF RS.37,00,000/-, WHICH REMAINED UNEXPLAINED. THEREFORE, THE ADDITION OF RS.37,00,000/- WAS MADE U/S. 68 OF THE IT ACT. THE AO DISCUSSED ITA NO. 115 & 132/AGRA/2011 3 EACH AND EVERY CREDITOR IN THE ASSESSMENT ORDER BEF ORE MAKING THE ADDITION. THE ADDITION WAS CHALLENGED BEFORE THE LD. CIT(A) AND A SSESSEE FILED DETAILED SUBMISSIONS BEFORE THE LD. CIT(A) SUPPORTED BY EVID ENCES AND MATERIAL. THE LD. CIT(A) CALLED FOR THE REMAND REPORT FROM THE AO AND THEREAFTER DECIDED THE ISSUE. THE LD. CIT(A) DELETED THE ADDITION ON ACCOU NT OF UNEXPLAINED CREDITS IN RESPECT OF SEVEN PARTIES AND GRANTED RELIEF TO THE ASSESSEE IN A SUM OF RS.12,75,000/-, WHICH IS UNDER CHALLENGE IN THE DEP ARTMENTAL APPEAL. THE LD. CIT(A), HOWEVER, CONFIRMED THE ADDITION U/S. 68 OF THE IT ACT IN RESPECT OF 9 CREDITORS AND CONFIRMED THE ADDITION OF RS.24,25,00 0/- WHICH IS UNDER CHALLENGE IN THE ASSESSEES APPEAL. 6. THE LD. DR RELIED UPON THE ORDER OF THE AO AND S UBMITTED THAT ONLY TWO CREDITORS WERE PRODUCED BEFORE THE AO FOR EXAMINATI ON, BUT THE REST OF THE CREDITORS WERE NOT PRODUCED. THERE ARE CASH DEPOSIT S IN THE ACCOUNTS OF THE CREDITORS EITHER ON THE SAME DAY OR JUST BEFORE GIV ING THE CREDIT ENTRY TO THE ASSESSEE. NO REGULAR BOOKS OF ACCOUNT HAVE BEEN MAI NTAINED BY THE CREDITORS. THEREFORE, THE ASSESSEE HAS FAILED TO PROVE THE IDE NTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S. THE LD. DR RELIED UPON THE ORDER OF THE HONBLE ALLAHABAD HIGH COURT IN THE CA SE OF SMT. SUMAN GUPTA VS. CIT IN INCOME-TAX APPEAL NO. 680/2012 DATED 07.08.2 012. THE LD. DR ALSO RELIED ITA NO. 115 & 132/AGRA/2011 4 UPON THE DECISION IN THE CASE OF CIT VS. SHIV SHAKT I TIMBERS, REPORTED IN 229 ITR 505 AND ORDER OF ITAT HYDERABAD BENCH IN THE CA SE OF PARAS COLLINS DISTILLERIES VS. ITO, 130 ITD 114. THE LD. DR, THER EFORE, SUBMITTED THAT THE LD. CIT(A) SHOULD HAVE NOT DELETED EVEN THE PART ADDITI ONS. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO THE DETAILED PAPER BOOK FILED ON RECORD, WHICH CONTAINED ALL THE DOCUMENTS FILED BEFORE THE AUTHORITIES BELOW IN RESPECT OF THE CREDITORS TO PROVE THEIR IDENTITY, CREDITWORTHINESS AND GENUINEN ESS OF THE TRANSACTIONS. HE HAS ALSO FILED CHART OF EACH AND EVERY CREDITOR INDICAT ING PAGE NUMBERS WITH REFERENCE TO THE PAPER BOOK. HE HAS SUBMITTED THAT IN SOME OF THE CASES, EVEN THE AMOUNTS OF LOAN HAVE BEEN REPAID DURING THE YEAR ITSELF AND THE ACCOUNTS HAVE BEEN SQUARED UP. INTEREST HAS BEEN ALLOWED ON THE LOANS AND THAT COPY OF CONFIRMATIONS, IT RETURN, PANS, BANK ACCOUNT ETC., HAVE BEEN FILED IN RESPECT OF THE GENUINE CREDITS. HE HAS SUBMITTED THAT EVEN IN CASES WHERE CASH IS FOUND TO BE DEPOSITED ON THE DATE OF ISSUE OF CREDIT ENTRY IN F AVOUR OF THE ASSESSEE, SAME IS SUPPORTED BY CASH FLOW STATEMENT AND THE BALANCE SH EETS. TWO CREDITORS WERE PRODUCED BEFORE THE AO FOR EXAMINATION. HE HAS, THE REFORE, SUBMITTED THAT THE BURDEN UPON THE ASSESSEE HAS BEEN FULLY DISCHARGED. THEREFORE, ALL THE ADDITIONS SHOULD HAVE BEEN DELETED BY THE LD. CIT(A). HE HAS RELIED UPON THE ORDER OF THE ITT, AGRA BENCH IN THE CASE OF SANJAY GUPTA VS. ITO (ITA NO. 401/2012 DATED ITA NO. 115 & 132/AGRA/2011 5 10.05.2013, DECISION OF HONBLE RAJASTHAN HIGH COUR T IN THE CASE OF ARAVALI TRADING CO. VS. ITO, 8 DTR 99, IN WHICH IT WAS HELD THAT ONCE THE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSON OWNED THE C REDITS, WHICH ARE FOUND IN THE BOOKS OF ACCOUNT, THE ASSESSEES ONUS STANDS DISCHA RGED. HE HAS ALSO RELIED UPON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. PANCHAM DAS JAIN, 205 CTR 444, IN WHICH IT WAS HELD THAT PROVISIONS O F SECTION 68 ARE NOT ATTRACTED TO THE AMOUNTS REPRESENTING PURCHASES MADE ON CREDI T. HE HAS ALSO RELIED UPON THE ORDER OF ITAT, AHMEDABAD BENCH IN THE CASE OF D HIRAJ R. RUNGTA VS. ITO IN ITA NO. 1687/2010. HE HAS, THEREFORE, SUBMITTED THA T ALL THE ADDITIONS SHOULD HAVE BEEN DELETED U/S. 68 OF THE IT ACT. THE LD. CO UNSEL FOR THE ASSESSEE ALSO REFERRED TO EACH AND EVERY DOCUMENTS FROM THE PAPER BOOK TO SUPPORT HIS CONTENTION THAT BURDEN UPON THE ASSESSEE TO PROVE T HE GENUINE CREDITS HAVE BEEN DISCHARGED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE FINDINGS OF THE AUTHORITIES BELOW. IT IS WELL SETTLED LAW THAT BURD EN IS UPON THE ASSESSEE U/S. 68 OF THE IT ACT TO PROVE IDENTITY OF THE CREDITORS, THEI R CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. WE FIND THAT IN ALL THE CASES, THE ASSESSEE HAS FILED DOCUMENTARY EVIDENCES TO SUPPORT THE GENUINENESS OF THE CREDITS AND IN SOME OF THE CASES, THERE WAS CASH DEPOSITS IN THE ACCOUNTS OF SOME OF THE CREDITORS EITHER ITA NO. 115 & 132/AGRA/2011 6 ON THE SAME DAY OF GIVING CHEQUE/DRAFT IN FAVOUR OF THE ASSESSEE OR JUST PRIOR TO THE SAME. BEFORE DISCUSSING EACH AND EVERY CREDITOR , WHICH ARE 16 IN NUMBER AND EVIDENCES FILED IN THEIR CASES SEPARATELY, WE WOULD LIKE TO MENTION THAT IDENTICAL ISSUE WAS CONSIDERED BY ITAT, AGRA BENCH IN THE CAS E OF SMT. SUMAN GUPTA VS. ITO IN ITA NO. 454/2009 DATED 16.03.2012 (REPORTED IN 138 ITD 153), IN WHICH IN PARA 9 TO 13, IT WAS HELD AS UNDER : 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND T HE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THERE WERE CASH DEPOSITS OF THE EQUIVALENT AMOUNTS IN THE BANK ACCO UNTS OF THE CREDITORS JUST BEFORE ADVANCING LOAN TO THE ASSESSE E OR ON THE DATE OF ISSUING CHEQUES TO THE ASSESSEE. IN THE CASE OF THE CREDITOR, SHRI RAMPAL SINGH, HIS BANK STATEMENT IS FILED AT PAGE 4 5 OF THE PAPER BOOK, IN WHICH RS.2,50,000/- HAS BEEN DEPOSITED, BU T NEITHER IT IS MENTIONED THAT IT WAS CASH NOR IT IS MENTIONED HOW THE AMOUNT SIMILAR TO THE CREDIT WAS CREDITED IN HIS BANK ACCO UNT. NO EXPLANATION IS GIVEN BEFORE THE AUTHORITIES BELOW A ND EVEN DURING THE COURSE OF ARGUMENTS BEFORE US. NOTHING IS CLARI FIED AS TO HOW EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSITED IN H IS BANK ACCOUNT. IN THE CASE OF REMAINING CREDITORS, IT IS NOT A DEN YING FACT THAT EQUIVALENT AMOUNTS OF CASH CREDIT WAS DEPOSITED IN THEIR BANK ACCOUNTS IN CASH FOR ISSUING CHEQUES IN FAVOUR OF T HE ASSESSEE. THIS CREATED SERIOUS DOUBT IN THE EXPLANATION OF THE ASS ESSEE REGARDING GENUINENESS OF THE TRANSACTION IN THE MATTER. THE A O ASKED THE ASSESSEE TO PRODUCE ALL THE CREDITORS FOR EXAMINATI ON ON OATH IN ORDER TO FIND OUT TRUTH IN THE MATTER. THE ASSESSEE PRODU CED ONE OF THE CREDITORS BEFORE THE AO FOR EXAMINATION, BUT SHOWED HIS INABILITY TO PRODUCE OTHER CREDITORS, WHICH IS ALSO CLEAR FROM T HE ORDER SHEET DATED 18.12.2007 (PB-126). PRIOR TO THAT, THE ASSES SEE SOUGHT TIME FROM THE AO TO PRODUCE REMAINING CREDITORS FOR EXAM INATION, BUT LATER ON DID NOT PRODUCE THEM. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT DUE TO ONE OR OTHER PROBLEM OF THE R EMAINING CREDITORS ON ACCOUNT OF MEDICAL ADVICE, THE DEPOSITORS HAVE S HOWN THEIR INABILITY TO APPEAR BEFORE THE AO FOR EXAMINATION, BUT IT IS ADMITTED FACT THAT THE ASSESSEE DID NOT MAKE ANY REQUEST BEF ORE THE AO FOR ITA NO. 115 & 132/AGRA/2011 7 EXAMINATION OF THE REMAINING CREDITORS THROUGH THE COMMISSION AND NO WILLINGNESS WAS SHOWN BEFORE THE CIT(A) FOR PROD UCTION OF THE REMAINING CREDITORS FOR EXAMINATION EVEN AT THE REM AND STAGE IN THE APPELLATE PROCEEDINGS. EVEN DURING THE COURSE OF AR GUMENTS BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE DID NOT SHOW HIS WILLINGNESS TO PRODUCE REMAINING CREDITORS FOR EXAM INATION BEFORE THE AO. IT IS, THEREFORE, CLEAR THAT THE ASSESSEE H AS FAILED TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BY THE REVE NUE DEPARTMENT IN ORDER TO FIND OUT TRUTH IN THE MATTER. 9.1 THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASSESSMENT ORDER AND THE CRUX OF THE FINDINGS OF THE AO HAD BE EN THAT THERE WERE VERY SMALL BANK BALANCES IN THE BANK ACCOUNTS OF THE CREDITORS AND THEY WERE HAVING MEAGER INCOME AND AS SUCH, THE Y WERE NOT MEN OF MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. I N THE CASE OF ABHAY MAHESHWARI, THERE WAS VERY SMALL BALANCE OF R S.3528/- IN HIS BANK ACCOUNT. HE WAS EXAMINED ON OATH AND HE WAS NO T ABLE TO GIVE SOURCE OF CASH DEPOSIT TO THE SATISFACTION OF THE A O. HE WAS EARNING HARDLY ONE LAC RUPEES AND SPENT 40,000/- TO 50,000/ - FOR HOUSEHOLD PURPOSES. DURING HIS EXAMINATION ON OATH, HE WAS NO T ABLE TO SATISFACTORILY EXPLAIN THE AVAILABILITY OF FUNDS WI TH HIM FOR GIVING LOAN TO THE ASSESSEE. IN HIS CASE, HE HAS FILED RET URN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT RS.1,02,850/- (PB-6 0). IN THE CASE OF SHRI AMIT MAHESHWARI, HE WAS ALSO HAVING SMALL B ANK BALANCE OF RS.2429/- BEFORE ISSUE OF CHEQUE TO THE ASSESSEE AN D EQUAL AMOUNT OF THE CASH CREDIT WAS DEPOSITED IN THE BANK ACCOUN T. HE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPE AL AT RS.44972/- (PB-71). IN THE CASE OF SMT. KEERTI MAHESHWARI, IN HER BANK ACCOUNT, THERE WAS BALANCE OF RS.4688/- ONLY PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE AND EQUIVALENT AMOUNT OF CASH CREDI T WAS DEPOSITED FOR THE PURPOSE OF ISSUE OF CHEQUE IN FAVOUR OF THE ASSESSEE. FOR THE ASSESSMENT YEAR UNDER APPEAL, SHE HAS FILED RETURN OF INCOME AT RS.1,01,000/- ONLY. IN THE CASE OF SMT. MITHLESH MA HESHWARI, THE BANK BALANCE BEFORE ISSUE OF CHEQUE WAS RS.10,794/- AND EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSITED IN HER BANK ACC OUNT FOR ISSUE OF CHEQUE IN FAVOUR OF ASSESSEE. FOR ASSESSMENT YEAR U NDER APPEAL, SHE FILED RETURN OF INCOME AT RS.1,02,476/- ONLY. IN TH E CASE OF SH. RAMPAL SING, IT IS ALREADY NOTED ABOVE THAT THE DEP OSIT ENTRY IN HIS CASE IS NOT EXPLAINED AND PRIOR TO ISSUE OF CHEQUE, THERE WAS BANK BALANCE OF RS.3708/- ONLY. HE HAS FILED THE RETURN OF INCOME FOR THE ITA NO. 115 & 132/AGRA/2011 8 ASSESSMENT YEAR UNDER APPEAL AT LOSS WITH AGRICULTU RAL INCOME (PB- 102). IN THE CASE OF SHRI SHARIQ ALI KHAN, THE BANK BALANCE IS HIS ACCOUNT WAS RS.1055/- PRIOR TO ISSUE OF CHEQUE AND EQUIVALENT CASH AMOUNT WAS DEPOSITED FOR ISSUING CHEQUE IN FAVOUR O F THE ASSESSEE. HE HAS FILED RETURN OF INCOME AT RS.70,373/- PLUS A GRICULTURAL INCOME (PB-116). THESE DETAILS NOTED IN THE ASSESSMENT ORD ER AND THE DETAILS VERIFIED FROM THE PAPER BOOK WOULD CLEARLY SUPPORT THE FINDINGS OF THE AO THAT NONE OF THE CREDITORS WERE PERSONS OF S UFFICIENT MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. FILING OF BALANCE SHEETS, CASH FLOW STATEMENTS, CASH BOOKS ETC. HAVE NO EVIDENTIARY VAL UE BECAUSE ACCORDING TO THE REMAND REPORT FILED BY THE AO, THO SE DOCUMENTS WERE NOT FILED WITH THE RETURN OF INCOME. MOREOVER, NO REGULAR BOOKS OF ACCOUNT HAVE BEEN MAINTAINED BY ANY OF THE CREDI TORS AND MAJORITY OF THEM HAVE SHOWN ESTIMATED INCOME IN THE IR RETURNS OF INCOME. THEREFORE, SUCH BALANCE SHEET, CASH FLOW ST ATEMENTS ETC. WOULD NOT SUPPORT THE CONTENTION OF THE ASSESSEE TH AT GENUINE CREDITS HAVE BEEN RECEIVED. THE ORDER SHEET NOTED BY THE AO WOULD ALSO SHOW THAT THE ASSESSEE HAS MADE NO EFFORTS TO PRODU CE THE REMAINING CREDITORS BEFORE THE AO. EVEN IN THE STATEMENT OF O NE OF THE CREDITORS RECORDED BY THE AO, SHRI AMBHAY MAHESHWAR I, 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 6 8 OF THE ACT BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDIT ORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS WHO WER E HAVING ONLY MEAGER INCOME. NO DETAILS OF THEIR SAVINGS HAVE BEE N FILED. THE ASSESSEE HAS NEVER SHOWN HIS WILLINGNESS TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENESS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BANK ACCOUNTS OF THE CREDITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE ASSES SEE WHICH WAS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITORS F OR THE PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THESE WERE, THEREFO RE, ACCOMMODATION ENTRIES ONLY AND AS SUCH, COULD NOT BE CONSIDERED A S GENUINE TRANSACTIONS. MERELY BECAUSE THE LOANS HAVE BEEN RE CEIVED THROUGH BANKING CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GE NUINE TRANSACTION AS GENUINE TRANSACTION. ITA NO. 115 & 132/AGRA/2011 9 10. HONBLE CALCUTTA HIGH COURT IN THE CASE OF BHAR ATI PVT. LTD. VS. CIT, 111 ITR 951 HELD AS UNDER : IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE INCOM E-TAX OFFICER FOUND THAT THE ASSESSEE HAD SHOWN RS.20,000 AS LOAN IN ITS BOOKS TAKEN FROM TWO PARTIES. THE ASSESSEE PRODUCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEFORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INCOME TAX ACT, 1961, ON THE ALLEGED CREDITORS AND SINCE THOSE NOTICES CAME BACK UNSERVE D, THE INCOME- TAX OFFICER TREATED THE LOAN AS ASSESSEES INCOME F ROM UNDISCLOSED SOURCES. THE APPELLATE ASSISTANT COMMISSIONER DISMI SSED THE ASSESSEES APPEAL ON THE GROUND THAT THE ASSESSEE C OULD NOT EVEN ESTABLISH THE IDENTITY OF THE PARTIES. ON FURTHER A PPEAL BY THE ASSESSEE, THE APPELLATE TRIBUNAL HELD THAT MERE FIL ING OF CONFIRMATORY LETTERS DID NOT DISCHARGE THE ONUS THA T LAY ON THE ASSESSEE AND THERE WAS NO MATERIAL ON THE RECORD TO ESTABLISH THE IDENTITY OF THE CREDITORS: HELD, THAT THE TRIBUNAL HAD TAKEN ALL THE RELEVANT FACTS INTO CONSIDERATION AND THE CONCLUSION ARRIVED AT BY THE TRIBUNAL THAT THE LOANS REPRESENTED THE ASSESSEES INCOME FROM UNDISC LOSED SOURCES WAS NOT PERVERSE OR UNREASONABLE. 10.1 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD., 187 ITR 596 HELD AS UNDER: THE PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDITS IN ITS ACCOUNT. IT IS NECESSA RY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUI NENESS 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 O N TO THE DEPARTMENT. IT IS NOT ENOUGH TO ESTABLISH THE IDENT ITY OF THE CREDITORS. MERE PRODUCTION OF THE CONFIRMATION LETT ERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT T HE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN CREDITORS OR THAT THE Y HAVE CREDIT- WORTHINESS. ITA NO. 115 & 132/AGRA/2011 10 HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL MISDI RECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUINE SIMPL Y BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQUES. THE ASSES SEE HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDE RS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMITTED THAT LOANS OBTAIN ED FROM THESE BANKERS AGAINST HUNDIS WERE NOT GENUINE AND SUCH HU NDI LOANS REALLY REPRESENTED THEIR OWN CONCEALED INCOME. THE ASSESSEE HAD NOT DISCHARGED ITS BURDEN OF PROVING THAT THE LOANS IN QUESTION WERE GENUINE. 10.2 HONBLE CALCUTTA HIGH COURT IN THE CASE OF M /S. PRECISION FINANCE PVT. LTD., 208 ITR 465 HELD THAT EVEN THE LOAN THROUGH BANK CANNOT BE ACCEPTED AS GENUINE UNLESS THE IDENT ITY AND CREDITWORTHINESS OF THE CREDITORS ARE PROVED. MERE PAYMENT OF ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT M AKE A NON- GENUINE TRANSACTION GENUINE. 10.3 THE HONBLE SUPREME COURT IN THE CASE OF DU RGA PRASAD MORE, 82 ITR 540 AND SUMATI DAYAL, 214 ITR 801 HELD THAT THE COURTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCES BEF ORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONS IDERING THE SURROUNDING CIRCUMSTANCES. 11. ON CONSIDERATION OF THE FACTS OF THE CASE IN TH E LIGHT OF ABOVE DISCUSSION AND DECISION, WE DO NOT FIND ANY JUSTIFI CATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF ALL THE CREDITORS AND NO SOURCE OF THEIR INCOME HAS BEEN FILED. AT THE BEST THE ASSESSEE IS ABLE TO PROVE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GENUINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOU ND TO BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILE D TO PROVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORD ER TO GIVE LOANS TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNT O F THE DEPOSITORS, IT WAS SPECIFICALLY FOUND THAT THERE WERE NO SUFFICIEN T FUNDS AVAILABLE IN THEIR BANK ACCOUNT AND THEY WERE HAVING ONLY SMA LL BANK BALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOU SEHOLD EXPENSES OR DAY-TO-DAY REQUIREMENTS. THEREFORE, IT IS UNBELI EVABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT SAID PERSONS WE RE HAVING CREDITWORTHINESS TO ADVANCE ANY LOAN TO THE ASSESSE E. THE DOCUMENTS PRODUCED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK ITA NO. 115 & 132/AGRA/2011 11 MERELY PROVE THE CASE OF ASSESSEE SUPERFICIALLY, WH ICH IS FAR FROM REALITY OR TRUTH. WHEN THE TEST OF HUMAN PROBABILIT IES AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AS IS PRO POUNDED BY HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD M ORE (SUPRA) AND SUMATI DAYAL VS. CIT (SUPRA), IS APPLIED TO THE FACTS OF THE CASE, IT IS CLEAR THAT THE LD. CIT(A) WAS JUSTIFIED IN CO NFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN THE PRESENT CASE, THE ASS ESSEE HAS NOT ADDUCED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORIT IES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GEN UINENESS OF THE TRANSACTIONS IN THE MATTER. THEREFORE, THE ASSESSEE HAS NOT SATISFIED THE ESSENTIAL INGREDIENTS OF SECTION 68 OF THE IT A CT. 12. IN THE CASE OF ROHINI BUILDERS AND U.M. SHAH (S UPRA), THE DEPARTMENTAL APPEAL WAS DISMISSED FINDING NO SUBSTA NTIAL QUESTION OF LAW BECAUSE THE FINDINGS OF THE TRIBUNAL WERE BA SED ON APPRECIATION OF EVIDENCE. 12.1 IN THE CASE OF CIT VS. ORISSA CORPORATION P. L TD (SUPRA), IT WAS ALSO HELD THAT THE REVENUE DID NOT EXAMINE SOUR CE OF INCOME OF THE SAID ALLEGED CREDITORS WHEN THEY WERE ASSESSED TO TAX TO FIND OUT WHETHER THEY WERE CREDITWORTHY. HOWEVER, IN THE PRE SENT CASE, THE AUTHORITIES BELOW HAVE SPECIFICALLY FOUND THAT ALL THE CREDITORS WERE NOT MEN OF MEANS AND AS SUCH, THEIR CREDITWORTHINES S WAS NOT PROVED AT ALL. THEREFORE, THE DECISION CITED BY THE LD. CO UNSEL 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 N OT FIND ANY IRREGULARITY OR ILLEGALITY IN THE ORDERS OF THE AUT HORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DISMISS THE APPEAL OF TH E ASSESSEE ON THIS GROUND. CONCISE GROUNDS NOS. 1 & 2 ARE, ACCORDINGLY , DISMISSED. 7.1 THE ABOVE ORDER OF THE TRIBUNAL HAS BEEN CONFIR MED BY HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SMT. SUMAN GUPTA VS. CIT IN INCOME-TAX APPEAL NO. 680 OF 2012 DATED 07.08.2012 AND THE APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. SIMILAR ISSUE HAS BEEN CONSIDERED BY HONBLE GUJRAT HIGH COURT IN THE RECENT ITA NO. 115 & 132/AGRA/2011 12 DECISION DELIVERED ON 13.03.2013 IN THE CASE OF BLE SSING CONSTRUCTION VS. ITO, 32 TAXMAN.COM 366, IN WHICH THE HONBLE HIGH COURT IN PARA 7 HELD AS UNDER : 7. WITH RESPECT TO THE LEGAL CONTENTION THAT THE RE VENUE CANNOT INSIST ON ASSESSEE SUPPLYING THE SOURCE OF S OURCE IS IMPECCABLE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE VASTLY DIFFERENT. IT IS OF-COURSE TRUE THAT SOME OF THE OB SERVATIONS MADE BY THE TRIBUNAL MAY SUGGEST THAT THE TRIBUNAL DID CON CERN ITSELF WITH THE SOURCE OF THE SOURCE. HOWEVER, SUCH OBSERVATION S CANNOT BE PICKED IN ISOLATION AS TO TREAT THAT AS THE CONCLUS ION OF THE TRIBUNAL. WHEN ONE READS THE ORDER OF THE ASSESSING OFFICER, THAT OF THE COMMISSIONER (APPEALS) AND ALSO OF THE TRIBUNAL, IN ESCAPABLE CONCLUSION ONE ARRIVES AT, IS THAT THE REVENUE AUTH ORITIES AS WELL AS THE TRIBUNAL FOUND THE ENTIRE TRANSACTION NOT GENUI NE. THERE WAS SUFFICIENT EVIDENCE ON RECORD TO SUGGEST THAT IN TH E CASE OF ALL THE DEPOSITORS, THEIR BANK ACCOUNTS CONTAINED MEAGER BA LANCE SHORTLY BEFORE SIZABLE AMOUNT OF RS.1 LAKH AND UPWARD WERE GIVEN TO THE ASSESSEE THROUGH SUCH ACCOUNT. IN SUCH BANK ACCOUNT S, CASH AMOUNTS WERE CREDITED AND IMMEDIATELY ENTIRE AMOUNT S WERE WITHDRAWN THROUGH ISSUANCE OF SUCH CHEQUES IN FAVOU R OF THE ASSESSEE. IT WAS NOTICED THAT SUCH CREDITORS DID NO T MAINTAIN ANY BOOKS OF ACCOUNT. NOWHERE THEIR CAPACITY TO RAISE S UCH AMOUNT FOR DRAWING CHEQUES OF SIZABLE AMOUNTS WAS ESTABLISHED. IN SHORT THEREFORE, THE VERY GENUINENESS OF THE TRANSACTION WAS NOT ESTABLISHED. THIS THEREFORE, IS NOT A CASE WHERE TH E REVENUE MAKES ADDITION ON THE ASSESSEE FAILING TO ESTABLISH SOURC E OF THE SOURCE. ALL ISSUES ARE ESSENTIALLY BASED ON FACTS AND APPRECIAT ION OF EVIDENCE ON RECORD. NO QUESTION OF LAW ARISES. TAX APPEAL IS DI SMISSED. 7.2 IN THE LIGHT OF THE FACTS OF THE CASE AND THE J UDGMENTS CITED BY BOTH THE PARTIES AND THE JUDGMENTS REPRODUCED ABOVE, WE DISC USS AND CONSIDER ALL THE 16 CREDITORS SEPARATELY IN DEPARTMENTAL APPEAL AS WELL AS IN APPEAL OF THE ASSESSEE AS UNDER : ITA NO. 115 & 132/AGRA/2011 13 DEPARTMENTAL APPEAL : (1). SHRI DEEPAK VARSHNEY: 8. THE LD. CIT(A) DELETED THE ADDITION OF RS.1,00,0 00/- ON ACCOUNT OF THE REASON THAT PAN, COPY OF BANK ACCOUNT, COPY OF THE RETURN SHOWING SUFFICIENT CASH BALANCE AND THE LOAN SHOWN IN THE BALANCE SHEE T HAVE BEEN FILED AND THAT THERE IS NO CASH DEPOSIT IMMEDIATELY AT THE TIME OF GIVING OF THE LOAN TO THE ASSESSEE. THE ASSESSEE IN THE PAPER BOOK FILED DOCU MENTS IN SUPPORT OF HIS CONTENTION FROM PAGE 71 TO 80, WHICH ARE COPY OF TH E ACCOUNT GIVING LOAN THROUGH DEMAND DRAFT ON 22.10.2005, CONFIRMATION OF LOAN AM OUNT, PAN CARD, COPY OF DEMAND DRAFT, COPY OF ACCOUNT, BANK STATEMENT OF AS SESSEE, COPY OF RETURN FOR ASSESSMENT YEAR 2006-07 OF THE CREDITOR SUPPORTED B Y BALANCE SHEET IN WHICH LOAN GIVEN TO THE ASSESSEE IS MENTIONED. COPY OF BANK AC COUNT OF THE CREDITOR IS FILED AT PAGE 80 IN WHICH THERE IS NO IMMEDIATE CASH DEPO SIT IN HIS ACCOUNT BEFORE GIVING LOAN TO THE ASSESSEE AND THERE IS AN ENTRY O F CLEARING OF AMOUNT BEFORE GIVING LOAN. THE LD. CIT(A), THEREFORE, ON THE BASI S OF THESE EVIDENCES AND MATERIAL ON RECORD RIGHTLY ACCEPTED THE GENUINENESS OF LOAN. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) BECAUSE SUFFICI ENT EVIDENCES HAVE BEEN FILED TO PROVE THE GENUINE LOAN U/S. 68 OF THE IT ACT. (2). SHRI MUKESH VARSHNEY : ITA NO. 115 & 132/AGRA/2011 14 9. THE LD. CIT(A) ON THE BASIS OF SAME REASONS AS C ONSIDERED IN THE CASE OF DEEPAK VARSHNEY, DELETED THE ADDITION OF RS.1,00,00 0/- AS LOAN TAKEN BY THE ASSESSEE FROM THIS CREDITOR. THE ASSESSEE SIMILARLY HAS FILED ALL THE EVIDENCES IN RESPECT OF THE GENUINE CREDIT IN THE PAPER BOOK FRO M PAGES 132 TO 140. THE LOAN IS TAKEN ON 22.10.2005 THROUGH DEMAND DRAFT. THE ASSES SEE FILED COPY OF ACCOUNT, CONFIRMATION, PAN CARD, COPY OF DEMAND DRAFT AND LE DGER ACCOUNT WITH THE RETURN OF INCOME AND BALANCE SHEET TO SHOW LOAN GIV EN TO THE ASSESSEE. COPY OF BANK ACCOUNT IS FILED AT PAGE 140 OF THE PAPER BOOK , IN WHICH THERE WAS TRANSFER OF AMOUNT BY CLEARING AND THEREAFTER LOAN HAS BEEN GIVEN TO THE ASSESSEE. THE LD. CIT(A), THEREFORE, ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION. WE CONFIRM HIS ORDER IN TREAT ING THE GENUINE CREDIT. (3). POORNA FINANCE : 10. THE LD. CIT(A) DELETED THE ADDITION OF RS.2,75, 000/- AS LOAN TAKEN FROM AFORESAID CREDITOR. THE LD. CIT(A) FOUND THAT ASSES SEE HAS FILED CONFIRMATION FROM CREDITOR, PAN, CHEQUE TRANSACTION SUPPORTED BY COPY OF BANK ACCOUNT AND THAT SIMILAR LOAN WAS TREATED AS GENUINE IN ASSESSM ENT YEAR 2007-08. THE ASSESSEE FILED DOCUMENTS IN SUPPORT OF THE CONTENTION AT PAG ES 204 TO 212 OF THE PAPER BOOK, WHICH ARE COPY OF ACCOUNT, SHOWING LOAN TAKEN ON 16.11.2005 THROUGH DEMAND DRAFT, COPY OF PAN, DEMAND DRAFT. AT PAGE 20 8, COPY OF BANK ACCOUNT ITA NO. 115 & 132/AGRA/2011 15 OF THE CREDITOR IS FILED, IN WHICH IT IS SHOWN THAT DEMAND DRAFT WAS PREPARED IN THE NAME OF ASSESSEE FIRM ON 14.11.2005 IN A SUM OF RS. 2,75,606/- AND ON THE SAME DAY, I.E., 14.11.2005, THE CREDITOR HAS DEPOSITED C ASH OF RS.2,80,000/- IN THEIR ACCOUNT FOR GIVING DEMAND DRAFT IN FAVOUR OF THE AS SESSEE ON THE SAME DAY IN A SUM OF RS.2,75,606/-. THUS, PRIOR TO THE DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE CREDITOR ON THE SAME DAY OF GIVING LOAN, THERE WAS MEAGER BALANCE OF RS.6,172/- IN THE BANK ACCOUNT OF THE CREDITOR. THE LD. COUNSE L FOR THE ASSESSEE CONTENDED THAT THE CREDITOR IS A FINANCER AND THERE IS AVAILA BILITY OF CASH EVERY TIME WITH THEM AND OUT OF THE CASH AVAILABLE WITH THE CREDITO R, THE AMOUNT HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR FOR G IVING LOAN TO THE ASSESSEE. HOWEVER, THE SUBMISSIONS OF THE ASSESSEE ARE NOT SU PPORTED BY ANY EVIDENCE. NO COPY OF ANY CASH BOOK TO SUPPORT THE AVAILABILITY O F CASH WITH THE CREDITOR OR ANY FINANCIAL STATEMENT OR COPY OF RETURN HAVE BEEN FIL ED IN SUPPORT OF THE SAME STATEMENT. THUS, NOWHERE, THE CAPACITY OF THE CREDI TOR TO RAISE AMOUNT OF RS.2,80,000/- IN CASH FOR DRAWING DEMAND DRAFT OF T HE AMOUNT OF RS.2.75 LACS WAS ESTABLISHED. THEREFORE, GENUINENESS OF THE TRANSACT ION HAS NOT BEEN ESTABLISHED THROUGH ANY EVIDENCE. THE DECISION OF HONBLE ALLAH ABAD HIGHCOURT IN THE CASE OF SMT. SUMAN GUPTA VS. CIT (SUPRA) AND GUJRAT HIGH COURT IN THE CASE OF BLESSING CONSTRUCTION (SUPRA) WOULD SQUARELY APPLY AGAINST THE ASSESSEE. THE LD. CIT(A), THEREFORE, WAS NOT JUSTIFIED IN DELETING TH E ADDITION OF RS.2,75,000/- ITA NO. 115 & 132/AGRA/2011 16 BECAUSE THE ASSESSEE HAS FAILED TO PROVE CREDITWORT HINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. WE, A CCORDING SET ASIDE AND REVERSE THE ORDER OF THE LD. CIT(A) AND RESTORE THE ORDER O F THE AO IN MAKING ADDITION OF RS.2,75,000/-. (4). KUMAR TRADING CO. : 11. THE LD. CIT(A) DELETED THE ADDITION OF RS.5,00, 000/- ON THE REASONS THAT CONFIRMATION OF THE CREDITOR IS FILED WITH RETURN O F INCOME, PAN CARD, COPY OF BANK ACCOUNT AND THAT IN ASSESSMENT YEAR 2007-08, S IMILAR CREDIT HAS BEEN ACCEPTED BY THE AO. THEREFORE, THE ADDITION WAS DEL ETED. THE ASSESSEE FILED DOCUMENTS/EVIDENCES IN RESPECT OF GENUINE CREDITS F ROM PAGE 194 TO 203 OF THE PAPER BOOK, WHICH ARE COPY OF ACCOUNT SHOWING LOAN TAKEN ON 05.09.2005 THROUGH CHEQUE SUPPORTED BY CONFIRMATION, PAN, ACKN OWLEDGMENT OF RETURN OF INCOME. COPY OF BANK ACCOUNT IS FILED AT PAGE 198 T O SHOW THAT BEFORE ISSUING CHEQUE IN FAVOUR OF THE ASSESSEE, THERE WERE TRANSF ER ENTRIES THROUGH BANKING CHANNEL APPEARING IN THE BANK ACCOUNT OF THE CREDIT OR. THUS, THERE WAS NO CASH DEPOSIT BEFORE ISSUE OF CHEQUE IN FAVOUR OF THE ASS ESSEE. COPY OF LEDGER ACCOUNT OF THE SUBSEQUENT YEAR IS ALSO FILED TO SHOW SIMILA R TRANSACTIONS HAVE BEEN ACCEPTED. THE LD. CIT(A), THEREFORE, ON PROPER APPR ECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY DELETED THE ADDITION BECAUSE THE ASSESSEE HAS PROVED THE ITA NO. 115 & 132/AGRA/2011 17 CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. WE, THEREFORE, CONFIRM THE ORDER THE LD. CIT(A). (5). SMT. ANGOORI DEVI : 12. THE LD. CIT(A) DELETED THE ADDITION OF RS.1,00, 000/- BECAUSE THE CREDITOR HAS CONFIRMED GIVING OF LOAN TO THE ASSESSEE IN HER STATEMENT AND EXPLAINED THE SOURCE OF FUNDS IN HER HANDS. THE LD. CIT(A) ALSO N OTED THAT THE AO MAY INFORM HIS COUNTERPART, I.E. ASSESSING OFFICER OF THE CRED ITOR FOR EXAMINING THE LOAN IN THE CASE OF THE CREDITOR AFTER VERIFICATION. THE AD DITION WAS ACCORDINGLY DELETED. THE ASSESSEE IN THE PAPER BOOK FILED DOCUMENTS IN R ESPECT OF GENUINENESS OF THE TRANSACTION AT PAGES 54 TO 63 OF THE PAPER BOOK, WH ICH ARE COPY OF ACCOUNT GIVING LOAN TO THE ASSESSEE ON 13.03.2006 THROUGH CHEQUE, WHICH IS CONFIRMED BY THE CONFIRMATION AND COPY OF RETURN AND PAN NUMBER. THO UGH SHE HAS CONFIRMED GIVING OF LOAN IN HER STATEMENT RECORDED BY THE AO AT THE REMAND PROCEEDINGS, BUT THE LD. CIT(A) FAILED TO NOTE THAT PRIOR TO GIV ING OF CHEQUE OF RS.1,00,000/- IN FAVOUR OF THE ASSESSEE, THE CREDITOR HAS MADE SEVER AL DEPOSITS OF CASH IN HER BANK ACCOUNT, I.E., RS. 25,000/- ON 01.03.2006, RS. 35, 000/- ON 06.03.06 AND AGAIN ON 11.03.06, CASH OF RS.10,000/- HAS BEEN DEPOSITED IN BANK ACCOUNT OF THE CREDITOR. PRIOR TO DEPOSIT OF CASH IN FIRST WEEK OF MARCH, 20 06, THERE WAS BANK BALANCE TRANSFERRED ON 16.09.2005 IN A SUM OF RS.1042/-. TH US, THERE WAS A MEAGER BANK ITA NO. 115 & 132/AGRA/2011 18 BALANCE AVAILABLE IN THE BANK ACCOUNT OF THE CREDIT OR. THIS FACT HAS NOT BEEN CONSIDERED BY THE LD. CIT(A) IN PROPER PERSPECTIVE. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, SUBMITTED THAT THE CREDITOR HAS FILED RECEIPT AND PAYMENT ACCOUNT WITH RETURN OF INCOME IN WHICH SUFFICIENT C ASH BALANCE WAS AVAILABLE TO THE CREDITOR. BUT ADMITTEDLY, NO REGULAR BOOKS OF A CCOUNT HAVE BEEN MAINTAINED BY THE CREDITOR TO SHOW FLOW OF CASH AVAILABLE WITH THE CREDITOR. THUS, THERE IS IMMEDIATE CASH DEPOSIT PRIOR TO GIVING OF LOAN TO T HE ASSESSEE, BUT THE ASSESSEE FAILED TO PROVE THE SOURCE OF CASH AVAILABLE WITH T HE CREDITOR. THEREFORE, THE CREDITWORTHINESS OF THE CREDITOR HAS NOT BEEN PROVE D. THE DECISIONS IN THE CASE OF SMT. SUMAN GUPTA VS. CIT(SUPRA) AND BLESSING CONSTR UCTION (SUPRA) SQUARELY APPLY AGAINST THE ASSESSEE. THEREFORE, THE LD. CIT( A) SHOULD NOT HAVE DELETED THE ADDITION MERELY ON THE REASONS THAT THE CREDITOR HA S CONFIRMED GIVING OF CREDIT TO THE ASSESSEE IN HER STATEMENT. THUS, THE ASSESSEE F AILED TO PROVE THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF TRANSACTION IN THE MATTER. WE, THEREFORE, SET ASIDE AND REVERSE THE ORDER OF THE L D. CIT(A) AND RESTORE THE ORDER OF THE AO IN MAKING ADDITION OF RS.1,00,000/-. (6). SMT. NEETA VARSHNEY : 13. THE LD. CIT(A) DELETED THE ADDITION OF RS.1,00, 000/- FOLLOWING THE SAME REASONS AS HAVE BEEN GIVEN IN THE CASE OF SMT. ANGO ORI DEVI. THE ASSESSEE FILED ITA NO. 115 & 132/AGRA/2011 19 SAME TYPE OF DOCUMENTS IN THE PAPER BOOK FROM PAGE 154 TO 163 OF THE PAPER BOOK, WHICH INCLUDES THE STATEMENT OF CREDITOR RECO RDED BY THE AO IN THE REMAND PROCEEDINGS. THE LOAN IS TAKEN ON 13.03.2006 SUPPOR TED BY PAN, CONFIRMATION. COPY OF BANK ACCOUNT IS FILED AT PAGE 158 OF THE PA PER BOOK, WHICH SHOWS THAT PRIOR TO ISSUE OF CHEQUE OF RS.1,00,000/- IN FAVOUR OF THE ASSESSEE, THE CREDITOR HAS MADE SEVERAL CASH DEPOSITS IN HER BANK ON 1 ST MARCH IN A SUM OF RS.25,000/-, ON 06.03.2005 AGAIN CASH OF RS.35,000/- HAS BEEN DE POSITED IN BANK, ON 10 TH MARCH RS. 35,000/- AND ON 11.03.2005, RS. 10,000/-. THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR HAS N OT BEEN PROVED. THUS, THERE ARE IMMEDIATE CASH DEPOSITS IN THE ACCOUNT OF THE CREDI TOR PRIOR TO GIVING OF LOAN IN FAVOUR OF THE ASSESSEE. THEREFORE, THE LD. CIT(A) S HOULD NOT HAVE DELETED THE ADDITION MERELY BECAUSE CREDITOR HAS CONFIRMED GIVI NG OF LOAN TO THE ASSESSEE IN HER STATEMENT. THE LD. COUNSEL FOR THE ASSESSEE SIM ILARLY SUBMITTED THAT AS PER RECEIPT AND PAYMENT ACCOUNT, CASH IS AVAILABLE TO T HE CREDITOR, BUT THE CREDITOR HAS NOT MAINTAINED ANY REGULAR BOOKS OF ACCOUNT. THEREF ORE, AVAILABILITY OF CASH WITH THE CREDITOR IS NOT PROVED AT ALL. THUS, THE ASSESS EE HAS FAILED TO PROVE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE DECISIONS IN THE CASE OF SMT. SUMAN GUPTA VS. C IT(SUPRA) AND BLESSING CONSTRUCTION (SUPRA) SQUARELY APPLY AGAINST THE ASS ESSEE. WE, THEREFORE, SET ASIDE ITA NO. 115 & 132/AGRA/2011 20 AND REVERSE THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. THE ORDER OF THE AO IS RESTORED IN MAKING ADDITION OF RS.1,00,000/-. (7). PRAMOD VARSHNEY : 14. THE LD. CIT(A) DELETED THE ADDITION OF RS.1,00, 000/- CONSIDERING THAT THERE IS NO CASH DEPOSIT IN HIS BANK ACCOUNT BEFORE GIVIN G OF LOAN TO THE ASSESSEE AND FURTHER THE INCOME-TAX RECORDS WERE PRODUCED, POSIT ION OF RECEIVABLE CAPITAL BALANCE AS WELL AS REASONABLE INCOME BEING RETURNED . THEREFORE, THE CREDIT WAS CONSIDERED GENUINE AND ADDITION WAS DELETED. THE AS SESSEE FILED DOCUMENTS IN SUPPORT OF THE CONTENTION OF THE GENUINE DEPOSITS F ROM PAGES 176 TO 184 OF THE PAPER BOOK. THIS SHOWS THAT THE LOAN IS TAKEN ON 10 .11.2005 THROUGH CHEQUE SUPPORTED BY CONFIRMATION, AND BANK STATEMENT. COPY OF BANK STATEMENT IS FILED AT PAGE 180 OF THE PAPER BOOK TO SHOW THAT BEFORE G IVING OF CHEQUE TO THE ASSESSEE, THERE WERE SEVERAL CLEARINGS THROUGH BANK ING CHANNEL AND THE CREDITOR HAD SUFFICIENT BALANCE TO GIVE LOAN TO THE ASSESSEE . COPY OF RETURN OF INCOME IS ALSO FILED ALONG WITH BALANCE SHEET IN RESPECT OF T HE GENUINE CREDIT. THEREFORE, THE LD. CIT(A) ON PROPER CONSIDERATION OF FACTS AND MAT ERIAL ON RECORD, RIGHTLY DELETED THE ADDITION OF RS.1,00,000/- BECAUSE THE A SSESSEE HAS BEEN ABLE TO PROVE THE GENUINE CREDIT IN THE MATTER. ITA NO. 115 & 132/AGRA/2011 21 14.1 WE MAY NOTE HERE THAT THE AO MADE ADDITIONS IN THE CASES BECAUSE THE ASSESSEE FAILED TO PRODUCE THE LENDERS AND THAT THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN ESTABLISHED AND FURTHER THERE ARE CASH DEPOSITS IN THE CASES OF THE SOME OF THE LENDERS BEFORE GIVING LOAN TO THE ASSESSEE. WE HAVE EXAMINED EACH AND EVERY CASE OF THE CREDITORS IN WHOSE CASES, THE LD. CIT(A) DELETED TH E ADDITIONS. HOWEVER, ON EXAMINATION OF THE MATERIAL, WE FIND THAT IN SOME O F THE CASES OF THE CREDITORS, THE ASSESSEE HAS BEEN ABLE TO PROVE CREDITWORTHINESS AN D GENUINENESS OF THE TRANSACTION AND THERE IS NO IMMEDIATE CASH DEPOSIT IN THEIR ACCOUNTS. THEREFORE, THE LD. CIT(A) RIGHTLY DELETED PART OF ADDITIONS M ERELY BECAUSE THE ASSESSEE DID NOT PRODUCE ALL THE CREDITORS FOR EXAMINATION IS NO T SUFFICIENT TO CONFIRM THE ADDITIONS IN THE FACTS AND CIRCUMSTANCES OF THE CAS E SUPPORTED BY EVIDENCE. HONBLE SUPREME COURT IN THE CASE OF CIT VS. ORISSA CORPORATION PVT. LTD., 159 ITR 79 HELD AS UNDER : HELD, THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAME S AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN T HE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTA NCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CR EDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EF FORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CI RCUMSTANCES, THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE PR EMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RESPONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN IT COULD NOT BE SAI D THAT SUCH A ITA NO. 115 & 132/AGRA/2011 22 CONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHI CH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARO SE. THE HIGH COURT WAS RIGHT IN REFUSING TO STATE A CASE. 14.2 HOWEVER, IN SOME OF THE CASES, WE FIND THAT TH ERE ARE IMMEDIATE CASH DEPOSITS IN THE BANK ACCOUNTS OF THE CREDITORS EITH ER ON THE SAME DAY OF GIVING LOAN TO THE ASSESSEE OR PRIOR TO THAT AND THEY DID NOT MAINTAIN ANY BOOKS OF ACCOUNT TO PROVE THE AVAILABILITY OF CASH WITH THEM . THE LD. CIT(A) WAS, THEREFORE, NOT JUSTIFIED IN DELETING THE ADDITIONS IN THOSE CASES AND WE HAVE SET ASIDE HIS ORDER AND RESTORED THE ORDER OF THE AO. I N TOTALITY WE ALLOW THE DEPARTMENTAL APPEAL PARTLY. ASSESSEES APPEAL : (1). CHANDRAKANTA : 15. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.2,2 5,000/- BECAUSE THE CASH WAS DEPOSITED BEFORE ISSUANCE OF CHEQUES. COPY OF I T RETURN AND COMPUTATION OF INCOME AND BANK ACCOUNT WAS NOT FILED. THEREFORE, C REDITWORTHINESS OF THE CREDITORS IS NOT PROVED. THE ASSESSEE IN RESPECT OF THE GENUINE CREDIT FILED DOCUMENTS IN PAPER BOOK AT PAGES 64 TO 70, WHICH AR E COPY OF LEDGER ACCOUNT, SHOWING GIVING OF LOAN ON 09.11.2005 THROUGH CHEQUE SUPPORTED BY CONFIRMATION, COPY OF CHEQUE AND IT RETURN FOR ASSE SSMENT YEAR 1999-2000 AND ITA NO. 115 & 132/AGRA/2011 23 2000-01 SHOWING INCOME OF RS.1,01,150/- EACH IN BOT H THE YEARS, WHICH IS NOT SUFFICIENT TO GIVE LOAN TO THE ASSESSEE. COPY OF BA NK ACCOUNT IS FILED AT PAGE 66 OF THE PAPER BOOK TO SHOW THAT CASH OF RS.2,25,000/- H AS BEEN DEPOSITED IN HER BANK ACCOUNT ON 08.11.2005, I.E., BEFORE GIVING OF LOAN TO THE ASSESSEE. PRIOR TO THAT, THE BANK BALANCE IN HER ACCOUNT WAS MERELY IN HUNDR EDS ONLY (NOT FULLY LEGIBLE). NO EVIDENCES HAVE BEEN FILED TO SUPPORT THE SOURCE OF HER INCOME AND AVAILABILITY OF FUNDS. NO REGULAR BOOKS OF ACCOUNT HAVE BEEN MAI NTAINED BY THE CREDITOR. THEREFORE, THE DECISIONS IN THE CASES OF SMT. SUMAN GUPTA VS. CIT(SUPRA) AND BLESSING CONSTRUCTION (SUPRA) SQUARELY APPLY AGAINS T THE ASSESSEE. THE LD. CIT(A), THEREFORE, RIGHTLY CONFIRMED THE ADDITION O F RS.2,25,000/-. (2). KRISHNA GOPAL :- 16. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.4,0 0,000/- BECAUSE THE COPY OF BANK ACCOUNT AND INCOME-TAX RETURN WERE NOT FILE D. THEREFORE, IDENTITY AS WELL AS CREDITWORTHINESS OF THE CREDITOR IS NOT PROVED. THE ASSESSEE, HOWEVER, IN THE PAPER BOOK HAS FILED SEVERAL DOCUMENTS IN RESPECT O F THE GENUINENESS OF THE TRANSACTION FROM PAGES 81 TO 92 OF THE PAPER BOOK, WHICH ARE COPY OF LEDGER ACCOUNT SHOWING GIVING OF LOAN TO THE ASSESSEE THRO UGH DEMAND DRAFT ON 22.10.2005, SUPPORTED BY CONFIRMATION, COPY OF DEMA ND DRAFT, COPY OF THE ACCOUNT, COPY OF IT RETURN AND BANK ACCOUNT OF THE CREDITOR. THE ASSESSEE IN THE ITA NO. 115 & 132/AGRA/2011 24 PAPER BOOK CERTIFIED THAT ALL THESE PAPERS WERE FIL ED BEFORE THE AUTHORITIES BELOW WHICH STATEMENT HAS NOT BEEN DISPUTED BEFORE US. TH E BANK ACCOUNT OF THE CREDITOR REVEALED THAT THERE WAS SUFFICIENT FUND AV AILABLE TO THE CREDITOR IN A SUM OF RS.4,76,445/- BEFORE GIVING OF DRAFT OF RS.4,00, 000/- IN FAVOUR OF THE ASSESSEE AND THERE IS NO IMMEDIATE CASH DEPOSIT IN THE BANK ACCOUNT OF THE CREDITOR. THE CREDITOR IN HIS BALANCE SHEET ALSO MENTIONED THE FA CT OF GIVING LOAN TO THE ASSESSEE, WHICH IS FILED WITH THE RETURN OF INCOME. THEREFORE, THE ASSESSEE HAS BEEN ABLE TO PROVE IDENTITY OF THE CREDITOR, HIS CR EDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. THE LD. CIT(A) WAS, THEREFORE, NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.4,00,000/-. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OFRS.4,00,000/-. (3). RATAN KUMAR AGARWAL : 17. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.2,0 0,000/- ON THE SAME REASONING AS HAVE BEEN GIVEN IN THE CASE OF KRISHNA GOPAL. THE ASSESSEE, HOWEVER, IN THE PAPER BOOK FILED DOCUMENTS FROM PAG ES 93 TO 107 OF THE PAPER BOOK, WHICH ARE COPY OF LEDGER ACCOUNT SHOWING GIVI NG OF LOAN TO THE ASSESSEE ON 18.10.2005 THROUGH DEMAND DRAFT, WHICH IS SUPPORTED BY CONFIRMATION, PAN, COPY OF ACCOUNT, COPY OF DEMAND DRAFT, ACKNOWLEDGEM ENT OF RETURN OF INCOME SUPPORTED BY STATEMENT OF TOTAL INCOME COPY OF BANK ACCOUNT IS FILED AT PAGE 106 ITA NO. 115 & 132/AGRA/2011 25 OF THE PAPER BOOK, WHICH SHOWS THAT PRIOR TO ISSUE OF DEMAND DRAFT IN FAVOUR OF THE ASSESSEE ON 17.10.2005, THE CREDITOR HAS MADE D EPOSIT OF RS.2,01,000/- IN CASH ON THE SAME DAY AND PRIOR TO THAT, THERE WAS A MEAGER BANK BALANCE AVAILABLE IN THE ACCOUNT OF THE CREDITOR IN A SUM OF RS.698.5 0. THEREFORE, MERELY BECAUSE THE CREDITOR HAS SHOWN THE AMOUNT IN HIS BALANCE SH EET TO GIVE LOAN TO THE ASSESSEE IS NOT ENOUGH TO PROVE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE AVAILABLE OF CASH WITH THE CREDITOR IS NOT PROVED AND IT IS ALSO NOT EXPLAINED WHY THE CASH WAS DEPOSITED ON TH E SAME DAY FOR GIVING LOAN TO THE ASSESSEE ON THE SAME DAY. THE CASE OF THE ASSES SEE IS, THEREFORE, SQUARELY COVERED AGAINST THE ASSESSEE BY THE JUDGMENTS IN TH E CASES OF SMT. SUMAN GUPTA VS. CIT(SUPRA) AND BLESSING CONSTRUCTION (SUPRA). W E, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.2,00,000/-. (4). M/S. PRAKASH & CO. : 18. THE LD. CIT(A) ON THE SAME REASONING CONFIRMED THE ADDITION OF RS.2,00,000/-. THE ASSESSEE FILED SUPPORTING DOCUME NTS IN THE PAPER BOOK FROM PAGES 108 TO 114 OF THE PAPER BOOK TO SHOW THAT THE LOAN WAS GIVEN THROUGH DEMAND DRAFT ON 22.10.2005, WHICH IS SUPPORTED BY C ONFIRMATION, CONFIRMATION OF ACCOUNT AND THE CREDITOR IS ASSESSED TO TAX SUPPORT ED BY COPY OF THE DEMAND DRAFT AND NO COPY OF BANK ACCOUNT HAS BEEN FILED TO PROVE THE CREDITWORTHINESS OF THE ITA NO. 115 & 132/AGRA/2011 26 CREDITOR. IN THE ABSENCE OF SUFFICIENT EVIDENCES AV AILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO PROVE CREDITWORTHI NESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE L D. CIT(A), THEREFORE, CORRECTLY CONFIRMED THE ADDITION OF RS.2,00,000/-. (5). SMT. NIRAMAL KUMARI : 19. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.1,5 0,000/- IN THIS CASE. THE ASSESSEE FILED SUPPORTING DOCUMENTS FROM PAGE 115 T O 123 OF THE PAPER BOOK. COPY OF LEDGER ACCOUNT IS FILED TO SHOW LOAN AS GIV EN ON 01.03.2006 THROUGH CHEQUE SUPPORTED BY COPY OF CHEQUE, LEDGER ACCOUNT, ELECTION CARD AND BANK ACCOUNT. THERE ARE NO CASH DEPOSITS IN THE BANK ACC OUNT OF THE CREDITOR AND SUFFICIENT BANK BALANCE HAS BEEN AVAILABLE IN THE B ANK ACCOUNT TO SHOW THE CAPACITY OF THE CREDITOR TO GIVE LOAN TO THE ASSESS EE IN A SUM OF RS.1,50,000/-. EVEN ON EARLIER OCCASIONS, THE CREDITOR HAS WITHDRA WN SUFFICIENT AMOUNT THROUGH CHEQUE FROM HER ACCOUNT TO SHOW HER CAPACITY TO GIV E LOAN OF RS.1,50,000/-. THE ASSESSEE ON THE BASIS OF THESE EVIDENCES HAS BEEN A BLE TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. THE LD. CIT(A), THEREFORE, SHOULD NOT HAVE CONFIRMED THE AD DITION IN THIS MATTER. MERELY BECAUSE THE CREDITOR IS NOT ASSESSED TO TAX IS NO G ROUND TO MAKE OR CONFIRM ITA NO. 115 & 132/AGRA/2011 27 ADDITION. WE, THEREFORE, SET SIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.1,50,000/-. (6). MUKESH KUMAR GUPTA : 20. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.1,0 0,000/- BECAUSE THERE IS CASH DEPOSIT IN THE BANK ACCOUNT OF THE CREDITOR. T HE ASSESSEE IN THE PAPER BOOK FILED SUPPORTING DOCUMENTS FROM PAGES 124 TO 131 OF THE PAPER BOOK, WHICH ARE LEDGER ACCOUNT TO SHOW THAT THE LOAN IS GIVEN ON 13 .03.2006 THROUGH CHEQUE, COPY OF IT RETURN AND PAN. HOWEVER, BANK ACCOUNT OF THE CREDITOR REVEALED THAT PRIOR TO GIVE CHEQUE OF RS.1,00,000/-, THE CREDITOR HAS M ADE SEVERAL CASH DEPOSITS IN HIS BANK ACCOUNT, I.E., 03.03.2006 RS.30,000/-, 06.03.2 006 RS.30,000/-, 10.03.2006 RS.20,000/-, 11.03.2006 RS.20,000/- AND 13.03.2006 RS.10,000/- HAVE BEEN DEPOSITED. NO EVIDENCES HAVE BEEN FILED TO EXPLAIN THE SOURCE OF CASH DEPOSITS MADE IN THE BANK ACCOUNT OF THE CREDITOR. THE CREDI TOR DID NOT MAINTAIN ANY REGULAR BOOKS OF ACCOUNT. THEREFORE, THE ASSESSEE F AILED TO PROVE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THE ISSUE IS THEREFORE, COVERED AGAINST THE ASSESSEE BY THE JUDG MENTS IN THE CASES OF SMT. SUMAN GUPTA VS. CIT(SUPRA) AND BLESSING CONSTRUCTIO N (SUPRA). WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) IN CONFIRMING T HE ADDITION OF RS.1,00,000/-. ITA NO. 115 & 132/AGRA/2011 28 (7). SMT. NEELAM AGARWAL : 21. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.5,0 0,000/- BECAUSE COPY OF IT RETURN WAS NOT PRODUCED AND NO COPY OF BANK ACCOUNT IS FILED. THE ASSESSEE IN THE PAPER BOOK FILED SUPPORTING DOCUMENTS FROM PAGES 14 1 TO 153 OF THE PAPER BOOK. COPY OF LEDGER ACCOUNT IS FILED AT PAGE 141 OF THE PAPER BOOK TO SHOW THAT LOAN WAS GIVEN THROUGH CHEQUE ON 01.10.2005 AND THE SAME IS SUPPORTED BY CONFIRMATION BY THE CREDITOR WHO IS ALSO ASSESSED T O TAX AS PAN IS GIVEN IN THE CONFIRMATION. IN THE CONFIRMATION, IT IS SPECIFICAL LY STATED THAT THE LOAN AMOUNT WAS RETURNED IN TWO INSTALLMENTS I.E., ON 11.02.200 6 CHEQUE OF RS.3,00,000/- AND ON 21.02.2006 CHEQUE OF RS.2,00,000/- HAVE BEEN ISS UED BY THE ASSESSEE IN FAVOUR OF THE CREDITOR. THUS, WHOLE AMOUNT IS SQUAR ED UP DURING THE ASSESSMENT YEAR ITSELF. THE ASSESSEE HAS ALLOWED INTEREST ON T HE CREDIT FOR THE SHORT PERIOD IN A SUM OF RS.22,685/-. COPY OF BANK ACCOUNT OF THE ASS ESSEE IS ALSO FILED IN THE PAPER BOOK TO PROVE THAT THE ASSESSEE HAS RETURNED THE AMOUNT OF LOAN IN TWO INSTALLMENTS TO THE CREDITOR ON THE DATES MENTIONED IN THE CONFIRMATION. THUS, THE SOURCE OF GIVING OF LOAN IS BANKING CHANNEL AS WELL AS RETURN OF LOAN AMOUNT IN THE SAME FINANCIAL YEAR IS ALSO THROUGH BANKING CHA NNEL. THE COPY OF ACKNOWLEDGEMENT OF RETURN OF THE CREDITOR ALONG WIT H BALANCE SHEET OF THE ASSESSEE / CREDITOR IS FILED IN THE PAPER BOOK TO S HOW THAT INTEREST DUE ON THE AFORESAID CREDIT IN A SUM OF RS.22,685/- HAS BEEN D ISCLOSED TO THE REVENUE ITA NO. 115 & 132/AGRA/2011 29 DEPARTMENT. THUS, THE ASSESSEE ON THE BASIS OF THE ABOVE DOCUMENTS, HAS BEEN ABLE TO PROVE IDENTITY OF THE CREDITOR WITH THEIR C REDITWORTHINESS AND GENUINENESS OF THE TRANSACTION, WHICH IS SUPPORTED BY THE RETUR N OF LOAN IMMEDIATELY IN THE SAME ASSESSMENT YEAR. WE, THEREFORE, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.5,00,000/-. (8). SMT. POONAM VARSHNEY : 22. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.1,5 0,000/- BECAUSE COPY OF THE IT RETURN IS NOT FILED. THE ASSESSEE IN THE PAP ER BOOK FILED SUPPORTING DOCUMENTS FROM PAGES 164 TO 172 OF THE PAPER BOOK, WHICH ARE LEDGER ACCOUNT, COPY OF CHEQUES SUPPORTED BY CONFIRMATION SHOWING G IVING OF LOAN ON 14.10.2005. HOWEVER, THE BANK ACCOUNT REVEALED THAT PRIOR TO GIVING OF CHEQUES IN FAVOUR OF THE ASSESSEE ON 17.10.2005, THE CREDIT OR HAS MADE CASH DEPOSITS OF RS.1,10,000/- ON 15.10.2005 AND MADE FURTHER DEPOSI T OF CASH OF RS.40,000/- ON 17.10.2005. THUS, THERE ARE MINIMUM CASH DEPOSITS P RIOR TO ISSUE OF CHEQUES IN FAVOUR OF THE ASSESSEE. THE SOURCE OF THE SAME IS N OT EXPLAINED ALONG WITH AVAILABILITY OF CASH WITH THE CREDITOR AND PRIOR TO THAT THERE WAS MEAGER BANK BALANCE AVAILABLE IN THE ACCOUNT OF THE CREDITOR IN A SUM OF RS.5,148/-.THEREFORE, THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE JU DGMENTS IN THE CASES OF SMT. ITA NO. 115 & 132/AGRA/2011 30 SUMAN GUPTA (SUPRA) AND BLESSING CONSTRUCTION (SUPR A). WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDIT ION OF RS.1,50,000/-. (9). RATHI BULK CARRIER : 23. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.5,0 0,000/- BECAUSE THE COPY OF BANK ACCOUNT WAS NOT FILED. THE ASSESSEE IN THE PAPER BOOK FILED SUPPORTING DOCUMENTS FROM PAGES 185 TO 193, WHICH ARE COPY OF LEDGER ACCOUNT SHOWING GIVING OF LOAN ON 09.11.2005 THROUGH DD SUPPORTED B Y PAN, COPY OF RETURN OF INCOME ALONG WITH BALANCE SHEET, COPY OF BANK ACCOU NT IS ALSO FILED AT PAGE 193 OF THE PAPER BOOK AND THE CERTIFICATE GIVEN IN THE PAPER BOOK OF FILING ALL THESE DOCUMENTS BEFORE THE LOWER AUTHORITIES HAVE NOT BEE N DISPUTED BEFORE US. THE BANK ACCOUNT WOULD REVEAL THAT BEFORE ISSUE OF CHEQ UES IN FAVOUR OF THE ASSESSEE, THERE WAS CLEARING ENTRY THROUGH BANKING CHANNEL ON THE SAME DAY. THEREFORE, THERE IS NO IMMEDIATE CASH DEPOSITS IN THE BANK ACC OUNT OF THE CREDITOR. THE CREDITOR IS ASSESSED TO TAX. THE DETAILS OF INTERES T PAID HAVE BEEN DISCLOSED TO THE REVENUE DEPARTMENT. AS PER LEDGER ACCOUNT THE LOAN AMOUNT IS ALSO RETURNED BY THE ASSESSEE IN THE SAME FINANCIAL YEAR THROUGH BAN KING CHANNEL. THUS, THE ASSESSEE HAS BEEN ABLE TO PROVE THE IDENTITY OF THE CREDITOR, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. T HE LD. CIT(A) SHOULD NOT HAVE ITA NO. 115 & 132/AGRA/2011 31 CONFIRMED THE ADDITION. WE ACCORDINGLY SET ASIDE TH E ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.5,00,000/-. 24. CONSIDERING THE ABOVE DISCUSSION, AS DISCUSSED IN THE CASES OF VARIOUS CREDITORS, WE FIND THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS I N CERTAIN CASES OF THE CREDITORS, FOR WHICH THE ADDITIONS HAVE BEEN DELETED. HOWEVER, IN OTHER CASES, THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITO RS AND GENUINENESS OF THE TRANSACTION, FOR WHICH THE ADDITIONS HAVE BEEN SUST AINED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 25. THE SECOND ISSUE IN THE DEPARTMENTAL APPEAL IS REGARDING DELETION OF ADDITION OF RS.7,01,635/-. THE AO FOUND THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN SUNDRY CREDIT ORS IN A SUM OF RS.35,36,042/- . THE ASSESSEE WAS REQUIRED TO FILE CONFIRMATION BU T ONLY ONE CONFIRMATION WAS FILED. THEREFORE, THE AO DISALLOWED 20% OUT OF SUND RY CREDITORS AND MADE ADDITION OF RS.7,01,635/-. THE ASSESSEE FILED DETAI LED WRITTEN SUBMISSION SUPPORTED BY DOCUMENTS AND CONFIRMATION BEFORE THE LD. CIT(A) WHICH WERE REMANDED TO THE AO FOR FILING THE REMAND REPORT AFT ER VERIFICATION. THE REMAND REPORT OF THE AO IS INCORPORATED IN THE APPELLATE O RDER, IN WHICH THE AO HAS ITA NO. 115 & 132/AGRA/2011 32 SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED CONFI RMATION AT THE STAGE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS NOW FILED THE CONFIRMATION OF THE SUNDRY CREDITORS BEFORE THE LD. CIT(A), COPIES OF T HE SAME HAS BEEN RECEIVED FOR REMAND REPORT. THE AO OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCES BECAUSE THE SAME WERE NOT FILED AT THE ASSESSMENT STAGE. TH E AO ON PERUSAL OF THE COPY OF ACCOUNT OF THE SUNDRY CREDITORS FILED AT THE APPELL ATE STAGE FOUND THAT PAYMENTS IN MOST OF THE CASES AGAINST PURCHASES TO THESE PARTIE S HAVE BEEN MADE THROUGH BANK, BUT THIS EVIDENCE WAS NOT FILED BEFORE THE AO . THE ASSESSEE IN THE REJOINDER BEFORE THE LD. CIT(A) SUBMITTED THAT COPIES OF THE ACCOUNT OF SUNDRY CREDITORS AND CONFIRMATION HAVE BEEN SUBMITTED IN THE PAPER BOOK AND ALL THE SUNDRY CREDITORS HAVE CONFIRMED THEIR BALANCE. THE DIFFERENCE NOTED BY THE AO IN SOME CASES WAS DUE TO ALLOWANCE OF DISCOUNT BY THESE PARTIES, WHIC H HAVE BEEN ACCOUNTED FOR IN THE NEXT YEAR. IT WAS SUBMITTED THAT ALL THE PAYMEN TS HAVE BEEN MADE THROUGH BANKING CHANNEL. THEREFORE, THE ADDITION OF 20% OUT OF SUNDRY CREDITORS IS WHOLLY UNJUSTIFIED. THE LD. CIT(A) CONSIDERING THE ISSUE I N THE LIGHT OF MATERIAL ON RECORD AND THE REMAND REPORT FILED BY THE AO FOUND THAT TH E DISALLOWANCE OF 20% OUT OF SUNDRY CREDITORS IS PURELY ADHOC DISALLOWANCE WHICH IS NOT TENABLE. THE ASSESSEE ALSO FILED ALL THE DETAILS DURING THE APPELLATE PRO CEEDINGS AND THE AO HAS NOT QUESTIONED THESE EVIDENCES ON MERITS. THEREFORE, TH E LD. CIT(A) HELD THAT THESE EVIDENCES ARE ADMISSIBLE IN EVIDENCE BEING RELEVANT TO A JUDICIOUS ASSESSMENT. ITA NO. 115 & 132/AGRA/2011 33 THE LD. CIT(A), CONSIDERING THE MERITS OF THE ISSUE AND EVIDENCES ON RECORD, DELETED THE ADDITIONS. 26. THE LD. DR RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT NONE OF THESE DOCUMENTS WERE FILED AT ASSESSMENT STAGE. THE REFORE, RULE 46A IS VIOLATED. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE ASSESSEE MAINTAINED PROPER BOOKS OF ACCOUNT WHICH HAVE NOT BEEN DOUBTED . THEREFORE, SUNDRY CREDITORS SHOULD NOT HAVE BEEN DISALLOWED BY THE AO . ALL THE PAPERS WERE FILED AT THE APPELLATE STAGE WHICH WERE SUBJECTED TO EXAMINA TION BY THE AO, IN WHICH NO DOUBT HAS BEEN RAISED BY THE AO, SINCE THE LD. CIT( A) ADMITTED THE ADDITIONAL EVIDENCES AT APPELLATE STAGE. THERE IS NO VIOLATION OF RULE 46A OF THE IT RULES IN THE MATTER. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE A SSESSEE FILED CONFIRMATION AND OTHER MATERIAL ON THIS ISSUE BEFORE THE LD. CIT (A) AT THE APPELLATE STAGE, UPON WHICH THE LD. CIT(A) CALLED FOR THE REMAND REPORT F ROM THE AO. THE AO DID NOT DOUBT THE GENUINENESS OF THE CONFIRMATION AND MATER IAL FILED ON RECORD, BUT HE HAS MERELY POINTED SOME DIFFERENCE IN TWO OF THE CASES AND OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCES BECAUSE SAME WERE NOT F ILED AT THE ASSESSMENT STAGE. ITA NO. 115 & 132/AGRA/2011 34 THE LD. CIT(A) CONSIDERING THE REMAND REPORT OF THE AO CORRECTLY FOUND THAT THE AO HAS NOT QUESTIONED THESE EVIDENCES ON MERIT. THE LD. CIT(A) ALSO RIGHTLY HELD THAT THESE ARE ADMISSIBLE BEING RELEVANT TO A JUDIC IOUS ASSESSMENT. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KULDEEP INDUSTRIAL CORPORATION 209 CTR 400 HELD THAT WHEN THE AO PRESENT BEFORE THE LD . CIT(A), DID NOT RAISE ANY OBJECTION, RULE 46AA IS NOT VIOLATED. IN THIS CASE, THE AO ON EXAMINATION OF THE EVIDENCE FILED AT THE APPELLATE STAGE DID NOT OBJEC T TO THE EVIDENCES ON MERITS. THEREFORE, THE SAME WERE RELEVANT FOR THE PURPOSE O F JUST DECISION IN THE MATTER. THEREFORE, THE LD. CIT(A) RIGHTLY HELD THEM TO BE A DMISSIBLE. THOUGH THE LD. CIT(A) HAS NOT GIVEN SPECIFIC FINDING ADMITTING ADD ITIONAL EVIDENCES AT APPELLATE STAGE, BUT THE CRUX OF HIS FINDING WOULD CLEARLY RE VEAL THAT THE LD. CIT(A) HOLDING THE ADDITIONAL EVIDENCES TO BE ADMISSIBLE HAS VIRTU ALLY ADMITTED THE ADDITIONAL EVIDENCES FOR HIS CONSIDERATION TO DECIDE THE MATTE R IN ISSUE. FURTHER, WE FIND THAT THE WAY THE ASSESSING OFFICER HAS DECIDED THIS ISSU E IS REALLY SURPRISING BECAUSE THERE IS NO PROVISION IN THE ACT TO DISALLOW 20% OU T OF SUNDRY CREDITORS. IF THE SUNDRY CREDITORS ARE NOT GENUINE, THE AO SHOULD HAV E MADE WHOLE OF THE ADDITION AGAINST THE ASSESSEE, BUT IT WOULD NOT ALLOW THE AO TO MAKE 20% OF DISALLOWANCE OUT OF SUNDRY CREDITORS FINDING THE REST OF THE AMO UNT OF THE CREDITORS TO BE GENUINE. IT APPEARS THAT THE AO HAS CONSIDERED THIS ISSUE WITH THE EYES OF DISALLOWANCE OF PART OF THE EXPENSES WHICH MAY NOT BE RELATED TO THE BUSINESS OF ITA NO. 115 & 132/AGRA/2011 35 THE ASSESSEE. THE WAY, THE AO HAS DECIDED THIS GROU ND AND MADE ADDITION OF 20% DISALLOWANCE OUT OF SUNDRY CREDITORS IS REALLY SURP RISING AND WOULD SHOW THAT THE AO HAS NOT APPLIED HIS MIND TO THIS ISSUE AS PER LA W AND THE ADDITION IS PURELY ADHOC IN NATURE. THE LD. CIT(A) ON PROPER APPRECIAT ION OF FACTS CORRECTLY DELETED THE ADDITION. CONSIDERING THE WAY THE AO HAS MADE A DDITION, WE DO NOT FIND IT APPROPRIATE TO INTERFERE WITH THE FINDINGS OF THE L D. CIT(A) IN DELETING THE ADDITION. GROUNDS NO. 2 & 3 OF THE APPEAL OF THE RE VENUE ARE ACCORDINGLY DISMISSED. THERE IS NO OTHER ISSUE INVOLVED IN BOTH THE APPEA LS. 28. IN THE RESULT, THE DEPARTMENTAL APPEAL AND THE APPEAL OF THE ASSESSEE ARE PARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. 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