ACIT, Muzaffarnagar V. Sh. Mukesh Jain., Muzaffarnagar

ITA 1635/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97752 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 03-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Unexplained cash credit; Question of law
• Section: 133(6); 68; 69; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SH. C. M. GARG, JM AND SH. PRASHANT MAHARISHI, AM ITA NO. 1635/DEL/201 2 : ASSTT. YEAR: 2008-09 ACIT CIRCLE-2. MEERUT ROAD MUZAFFARNAGAR VS MUKESH JAIN, PROP. M/S. MUKESH KUMAR & CO., G.R.ROAD, KHATAULI MUZAFFARNAGAR (APPELLANT) (RESPONDENT) PAN NO. ASSESSEE BY : SH. NAVIN GUP TA, ADV. REVENUE BY : SH. P. DAM KANUNJNA , SR. DR DATE OF HEARING : 03 . 1 1 .2015 DATE OF PRONOUNCEMENT : 06 . 1 1 .2015 ORDER PER PRASHANT MAHARISHI, AM: 01. THIS APPEAL IS PREFERRED BY REVENUE AGAINST THE ORD ER OF CIT (A) MUZAFFARNAGAR DATED 13.12.2011 RAISING FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 15,33,000/- OUT OF RS. 16,33,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 68 OF I.T.ACT, 1961 ON ACCOUNT OF UNSECURED LOANS AS THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINES S AND GENUINENESS OF TRANSACTION OF THE PERSONS/PARTIES BY IGNORING THE DECISION OF HONBLE APEX COURT IN THE CASE SUMATI DAYAL VS. CIT (214 ITR-801) AND HONBLE HIGH COURT OF CHHATISGARH IN THE CASE OF KUSHAL PRASAD MANHAR VS. CIT, { (2010) 236-CIT-192)}, WITHOUT APPRECIATING THE FULL FACTS OF THE CASE. 2. THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT O F AO BE RESTORED. 02. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DEALS IN TIMBER, TRADING, SAWING AND IMPORTING OF TIMBERS AND DERIVING INCOME FROM TRADI NG OF TIMBER ETC. HE FILED HIS RETURN OF INCOME ON 29.09.2008 SHOWING INCOME OF RS . 7,54,640/-. HIS CASE WAS SELECTED FOR SCRUTINY AND IN ASSESSMENT PROCEEDINGS ; IT IS FOUND THAT THE ASSESSEE HAS AVAILED UNSECURED LOANS FROM FOLLOWING PARTIES. SR NO NAME AMOUNT OF LOAN IN RS 1 JALCO FINANCIAL SERVICES PRIVATE LIMITED 8,00,000/ - 2 PRADEEPKUMAR JAIN HUF 685000/ - ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 2 3 S HASHANK JAIN HUF 48500/ - 4 SA R ITA JAIN 1,00,000/ - 03. THEREFORE, HE WAS REQUIRED TO FURNISH DOCUMENTARY EVIDENCE TO ESTABLISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS OF THE LOAN. AO WAS NOT SATISFIED WITH EXPLANATION OF THE ASSESSEE MADE ADDITION OF ALL ABOVE FOUR PARTIES AND THEREFORE LOAN AMOUNTS WERE ADDED U/S 6 8 OF INCOME TAX ACT. ASSESSEE CARRIED MATTER BEFORE CIT (A) AND WHO AFT ER OBTAINING THE REMAND REPORT FROM AO DELETED THE ADDITION WITH RESPECT TO FIRST THREE PARTIES AMOUNTING TO RS 15,33,000/- AND CONFIRMED THE ADDIT ION WITH RESPECT TO FOURTH PARTY MS. SARITA JAIN OF RS 1,00,000/-. AGAINST THE DELETION OF THE AMOUNT OF RS 15,33,000/- U/S 68 BY CIT (A) , REVENUE IS IN APPEA L BEFORE US RAISING THE SOLITARY GROUND OF APPEAL. 04. BEFORE US, LD. DR SUBMITTED THAT CIT (A) HAS DELETE D THE ADDITION BUT HAS GIVEN A FINDING THAT THESE AMOUNTS SHOULD BE ADDED IN THE H ANDS OF THE LENDERS INSTEAD OF THE ASSESSEE. THEREFORE, THE GENUINENESS OF THE TRA NSACTION IS NOT ESTABLISHED. HENCE, THE DELETION OF ADDITION OF THESE PARTIES U/ S 68 IS NOT PROPER. 05. LD. AR OF THE APPELLANT SUBMITTED THE PAPER BOOK A ND ADVANCED ORAL ARGUMENTS STATING THAT BEFORE CIT (A) AND AO, APPELLANT HAS E STABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION OF THE ABOVE LOANS. BEFORE CIT (A), AO HAS ALSO SUBMITTED REMAND REPORT THEREF ORE THE ADDITIONS HAVE BEEN RIGHTLY DELETED BASED ON THE DOCUMENTS SUBMITTED BY THE ASSESSEE. HE THEREFORE SUBMITTED THAT ORDER OF CIT (A) MA Y BE UPHELD. 06. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE REC ORDS. THE LOAN AMOUNT OF ALL THREE PARTIES ARE ANALYZED WITH RESPECT TO THE EV IDENCES PRODUCED BY THE ASSESSEE AS UNDER :- SR NO NAME AMOUNT OF LOAN IN RS EVIDENCE SUBMITTED BEFORE AO & CIT (A) REMARKS OF THE AO IN REMAND PROCEEDINGS 1 JALCO FINANCIAL SERVICES PRIVATE LIMITED 8,00,000/- COPY OF ITR OF THE LENDER FOR AY 2008-09, COPY OF THE BANK ACCOUNT OF THE LENDER WITH CENTURION BANK ,CONFIRMATION OF THE LENDER NOTICE U/S 133(6) OF THE ACT WAS NOT RECEIVED BY THE LENDER 2 PRADEEP KUMAR JAIN HUF 685000/- CONFIRMATION OF THE LENDER, COPY OF ITR OF THE LENDER FOR YA 2008-09, NOTICE U/S 133(6) WAS COMPLIED ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 3 COPY OF BALANCE SHEET OF THE LENDER WHERE THE AMOUNT OF LOAN TO ASSESSEE IS SHOWN, BANK ACCOUNT OF THE LENDER HOWEVER, THE BANK ACCOUNT OF THE LENDER SHOWS CASH DEPOSIT AND THEREFORE ADDITION IS RIGHTLY MADE. 3 SHASHANK JAIN HUF 48500/- CONFIRMATION OF THE LENDERS, BALANCE SHEET OF THE LENDER SHOWING THE AMOUNT OF LOAN GIVEN TO ASSESSEE, COPY OF BANK P[ASS BOOK OF THE LENDER WITH PUNJAB NATIONAL BANK NOTICE U/S 133(6) WAS COMPLIED HOWEVER, THE BANK ACCOUNT OF THE LENDER SHOWS CASH DEPOSIT AND THEREFORE ADDITION IS RIGHTLY MADE. 07. THEREFORE IT IS APPARENT IN ALL THE THREE CASES THA T ASSESSEE HAS SUBMITTED THE FULL DETAILS OF THE LENDERS STATING THEIR NAME, ADDRESS AND PERMANENT ACCOUNT NUMBER AND THEREFORE THE IDENTITY OF THE ALL THE THREE CREDITORS ARE PROVED. REGARDING THE CREDIT WORTHINESS OF THE PARTIES ON VERIFICATION OF DETAILS SUBMITTED IT IS APPARENT TH AT (A) JALCO FINANCIALS SERVICE PRIVATE LIMITED I HAS FIL E THE RETURN OF INCOME AND SHOWN GROSS TOTAL INCOME IN THAT RETURN FOR AY 2008-09 OF RS 1,35,65,016/-. BANK ACCOUNT SUBMITTED BY THE PARTY SHOWS THE SUBSTANTIAL SUMS FOR A LONG TIME AVAILABLE IN THE A CCOUNT OF THE LENDER. THEREFORE, THE ASSESSEE ESTABLISHES THE CREDITWORTH INESS OF THIS PARTY. (B) IN CASE OF PRADEEP KUMAR JAIN HUF WHO HAS ADVANCED RS 6,85,000/- IS HAVING INCOME OF RS 1,59,000/- AND OPENING CAPITAL BALANCE OF RS 7,03,467/-. THEREFORE, IT IS APPARENT THAT LENDER H AS THE SUMS AVAILABLE WITH HIM. IN THE BANK ACCOUNT OF THE LENDER WITH OR IENTAL BANK OF COMMERCE LENDER HAS MAINTAINED THE BANK BALANCE O F RS 70,000/- TO 1, 00,000/-. THEREFORE, THE CREDITWORTHINESS OF THE LE NDER CANNOT BE DOUBTED. (C) IN CASE OF SHASHANK JAIN WHOSE LOAN OF RS 48,000/- HAS BENE ADDED HAS CAPITAL OF RS 3,28,306/- AND IN HIS BANK ACCOUNT SU BMITTED BALANCE OF RS 58,000/- TO 8,000/- IS MAINTAINED. THEREFORE, IT CA NNOT BE SAID THAT THE ASSESSEE FAILED TO ESTABLISH THE CREDITWORTHINESS OF THIS CREDITOR. 08. MAIN REASON OF AO DOUBTING THE LOAN IS GENUINENESS OF THE CREDITS FOR THE SOLE REASON THAT IN CASE OF PRADEEPKUMAR JAIN HUF AND SHASHANK JAIN HUF BEFORE THE ISSUE OF CHEQUE THE CASH AMOUNT IS DEPOSITED IN THEIR BANK ACCOUNT AND AFTER ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 4 THAT, THE LOAN CHEQUES ARE ISSUED TO THE ASSESSE. H OWEVER, IN CASE OF JALCO FINANCIAL, SERVICES THERE ARE SUCH FACTS AND THEREF ORE IN THE REMAND REPORT AO HAS NOT DOUBTED THE TRANSACTIONS. THE ISSUE IS THAT M ERELY BECAUSE CASH IS DEPOSITED IN THE BANK ACCOUNT BEFORE ISSUE OF CHEQUES TO THE MAY LEAD TO THE ADDITION IN THE HANDS OF THE ASSESSEE DESPITE THE LENDERS , CON FIRMING THE SAME SUBMITTING THEIR INCOME TAX RETURNS AND BANK PASSBOOK. IN 131 ITD 127 IN THE ITAT AGRA BENCH THIRD MEMBER UMESH ELECTRICALS V. ASSIST ANT COMMISSIONER OF INCOME-TAX WHERE IN IT IS HELD THAT :- 11. IN THE CASE BEFORE ME THE PERSON M/S OM PRAKASH HA RESH CHAND FROM WHOM THE LOANS HAVE BEEN RECEIVED BY THE ASSESSEE AMOUNTING TO RS. 1,50,000 VIDE DRAFT NO. 045754 DATED 6-8- 1999 DRAWN ON CANARA BANK BELAN GANJ AGRA IS INCOME -TAX ASSESSEE. HE IS HAVING PAN NUMBERS. THE CONFIRMATION FROM THIS PERSON WAS FILE D. THE AMOUNTS HAVE BEEN RECEIVED THROUGH BANKING CHANNEL. XEROX COPY OF THE BANK STA TEMENT OF ACCOUNT OF THE LENDER WAS ALSO FILED. M/S OM PARKASH HARESH CHAND HAS DEPOSITED A SUM OF RS. 1,50,000 IN ITS BANK ACCOUNT ON 6-8-1999 BEFORE THE DRAFT NO. 045754 WAS TAKEN B Y ISSUING A CHEQUE NO. 522129 DATED 6-8- 1999. THE ASSESSEE HAS SUBMITTED A COPY OF CASH BOO K OF M/S OM PARKASH HARESH CHAND AVAILABLE AT PAGES 11 TO 20 OF THE PAPER BOOK. CASH BOOK CLEARLY SHOWS OPENING BALANCE OF THE CASH IN HAND OF RS. 1,26,748.50 AS ON 16-6-1999 AND ON 6-8-1999 THE OPENING BALANCE WAS RS. 1,56,748.50 AFTER THE ASSESSEE HAS SHOWN WITHDRAWAL OF RS. 6,000 FROM CANARA BANK AND RS. 27,000 FROM PUNJAB NATIONAL BANK. ON 6-8-1999, M/S. OM PRAKASH HARESH CHAND, AS PER CASH BOOK, HAVE RECEIVED A SUM OF RS. 17,250 FROM N AVIN GOEL AND HAS ALSO DEPOSITED A SUM OF RS. 1,50,000 IN CANARA BANK BELANGANJ BRANCH, AGRA AND ACCORDINGLY WITHDRAWN A SUM OF RS. 1,50,150 - RS. 1,50,000 BY WAY OF DRAFT NO. 045754 AND RS. 150 AS BANK CHARGES LEAVING CASH IN HAND OF RS. 6,748. M/S. OM PRAKASH HARESH CHAND IS A REGULAR ASSESSEE HAVING PERMANENT ACCOUNT NUMBER, WHICH IS AVAILABLE ON THE CONFIRMAT ION. M/S. OM PRAKASH HARESH CHAND HAS DEPOSITED THE CASH ON 6-8-1999, DOES NOT MEAN THAT THE ASSESSEE HAS NOT PROVED THE GENUINENESS OF THE TRANSACTION. THE ASSESSEE BY FIL ING THE COPY OF THE CASH BOOK OF M/S. OM PRAKASH HARESH CHAND HAS DISCHARGED THE ONUS AND EV EN PROVED THE SOURCE OF SOURCES WHICH HE IS NOT OBLIGED TO PROVE. THE ASSESSEE HAS DULY E XPLAINED IN RESPECT OF THE DEPOSIT AND THE CIRCUMSTANCES UNDER WHICH THE DEPOSITS WERE RECEIVE D. THE IDENTITY OF THE PERSONS IS NOT BEYOND THE DOUBT. THE SOURCE OF CASH WAS DULY EXPLA INED. THE IDENTITY AND CAPACITY OF THE CREDITORS WAS DULY ESTABLISHED. THE ASSESSING OFFIC ER ONLY DOUBTED THE GENUINENESS OF THE TRANSACTIONS. UNDER THESE FACTS IN MY OPINION, THE AMOUNT RECEIVED BY THE ASSESSEE FROM M/S. OM PRAKASH HARESH CHAND CANNOT BE REGARDED TO BE UN EXPLAINED ONE. 12. I HAVE GONE THROUGH THE DECISION IN THE CASE OF BI JU PATNAIK (SUPRA). THE FACTS INVOLVED IN THIS CASE WERE THAT THE ASSESSEE HAD CLAIMED DEDUCT ION IN RESPECT OF PAYMENT OF INTEREST ON LOAN TAKEN FROM KALINGA FOUNDATION TRUST FOR THE AS SESSMENT YEARS 1962-63 TO 1964-65. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE EVIDENCE AND TO PROVE (I) THAT THE CASH CREDITS IN THE NAME OF THE TRUST WERE GENUINE, AND (II) THAT 39,000 SHARES OF KALINGA TUBES LTD. STANDING IN THE NAMES OF CERTAIN PERSONS, WERE NOT REALLY HIS OWN INVESTMENTS. THE CASH CREDIT WAS CLAIMED BY THE ASSESSEE TO BE LOANS FROM THE TR UST. THE TRUST WAS FORMED IN 1947 AND IT WAS CLAIMED THAT IT COLLECTED LARGE AMOUNT OF DONAT IONS OVER A DECADE AND HAD KEPT ALL THE MONEY COLLECTED BY IT WITH THE MAHARAJA OF SONEPUR WITHOUT EARNING INTEREST. THE AMOUNT WAS NOT DEPOSITED IN BANK. THE EVIDENCE OF THE PERSONS WHO HAD COLLECTED THE DONATIONS WAS GIVEN BUT THE RESPONDENT DID NOT PRODUCE EVIDENCE AS TO W HO WERE THE PERSONS FROM WHOM THE MONEY WAS COLLECTED, HOW THE MONEY WAS RECEIVED OR HOW IT WAS INVESTED. THE ASSESSING OFFICER AFTER MAKING ENQUIRIES TOOK THE VIEW THAT KALINGA FOUNDAT ION TRUST DID NOT EXIST AND EVEN IF IT EXISTED IT HAD NO FUNDS; AND THAT THE NAME OF THE T RUST WAS USED AS A CAMOUFLAGE BY THE RESPONDENT TO PUT THROUGH HIS UNACCOUNTED MONEY AND TREATED THE CASH CREDIT AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. SIMILARLY, AFTER THE DECISION OF SUPREME COURT IN THE CASE ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 5 ON SHANTI PRASAD JAIN V. KALINGA TUBES LTD. [1965] 35 COMP. CAS. 351 THE ITO ALSO HELD THAT THE 39,000 SHARES ACQUIRED IN THE NAME OF SEVEN PER SONS WITH MONEYS ADVANCED IN THE NAME OF THE TRUST ACTUALLY BELONGED TO THE ASSESSEE, THE HO LDERS BEING BENAMIDARS AND BROUGHT TO TAX THE DIVIDENDS ON THOSE SHARES IN THE HANDS OF THE A SSESSEE. THE INCOME-TAX OFFICER REFERRED TO THE FINANCIAL INCAPACITY OF ONE OF THEM WHO WAS NOT ASSESSED TO TAX AS AN INDIVIDUAL AND WHO HAD NEVER FILED HIS WEALTH-TAX RETURN TO HOLD SHARE S WORTH RS. 2.5 LAKHS TO 7.5 LAKHS. WHEN THE MATTER TRAVELLED TO THE TRIBUNAL, THE TRIBUNAL HELD THAT THE TRUST WAS COMPRISED OF AND UNDER THE EFFECTIVE CONTROL OF PERSONS OF PUBLIC REPUTE A ND HELD THAT THE INVESTMENTS MADE BY THE TRUST WITH THE ASSESSEE'S GROUP OF INDUSTRIES OR WI TH THE ASSESSEE WERE FROM ITS OWN RESOURCES AND FUNDS AND, THEREFORE, THE CASH CREDITS, INCOME FROM INTEREST, DIVIDEND ETC. SHOULD BE EXCLUDED. THE TRIBUNAL AS WELL AS HIGH COURT REJECT ED THE APPLICATION OF THE DEPARTMENT FOR A REFERENCE. WHEN THE MATTER WENT BEFORE THE HON'BLE SUPREME COURT, THE HON'BLE COURT HELD THAT THE TWO BASIS QUESTIONS WERE WHETHER THE DONAT IONS COLLECTED BY THE TRUST WERE GENUINE AND WHETHER THE DEPARTMENT COULD RELY UPON THE LARG E AMOUNT OF MATERIAL COLLECTED BY THE DEPARTMENT SUBSEQUENT TO THE DECISION OF THE SUPREM E COURT IN JAIN'S CASE. THE IDENTITY AND CREDITWORTHINESS OF THE DONORS HAD NOT BEEN ESTABLI SHED AND THE LARGE AMOUNTS RECEIVED AS DONATIONS BY THE TRUST WERE FOR OVER A DECADE LYING AS CASH WITHOUT BEING INVESTED ANYWHERE. THE QUESTION WHETHER THE MONEYS WERE RAISED BY THE TRUST AS DONATIONS FROM VARIOUS PEOPLE OR NOT WAS NOT CONSIDERED BY THE TRIBUNAL IN ITS PROPE R PERSPECTIVE. IN NOT APPRECIATING THE BASIC QUESTION OR DISCUSSING THE EVIDENCE IN RESPECT THER EOF, THERE WAS NON-CONSIDERATION OF A RELEVANT FACTOR ON A FACTUAL ASPECT AND THE QUESTIO N WHETHER THE TRIBUNAL'S DECISION WAS PERVERSE IN THE SENSE THAT NO MAN INSTRUCTED PROPER LY IN LAW COULD HAVE ACTED AS THE TRIBUNAL DID AND WHETHER THERE WAS IGNORING OF MATERIAL AND RELEVANT FACTS IN CONSIDERING THIS ASPECT AROSE OUT OF THE ORDER OF THE TRIBUNAL. IGNORING TH E POINT AS TO WHO MADE THE DONATIONS AND WHAT WAS THEIR CAPACITY TO MAKE THE DONATIONS WHICH WAS A VITAL FACT, GAVE RISE TO THE QUESTION OF LAW. 13. THIS CASE IN MY OPINION IS NOT APPLICABLE TO THE F ACTS OF THE CASE BEFORE ME. IN THE CASE BEFORE ME, THE IDENTITY OF THE LENDER IS NOT DENIED EVEN BY THE DEPARTMENT. THE LENDER IS AN INCOME-TAX ASSESSEE AND IS BEING REGULARLY ASSESSED TO INCOME-TAX. IN THE CASE BEFORE THE SUPREME COURT, THE IDENTITY AND CREDITWORTHINESS OF THE DONORS WERE NOT ESTABLISHED, BUT IN THE CASE BEFORE ME, THE ASSESSEE HAS DULY PRODUCED EVID ENCE REGARDING THE CASH IN HAND AVAILABLE WITH THE LENDER IN HIS REGULAR BOOKS OUT OF WHICH T HE LENDER HAS DEPOSITED THE MONEY IN HIS BANK ACCOUNT. 14. COMING TO THE CASE OF SUMATI DAYAL (SUPRA), I NOTE D THAT IN THIS CASE THE HON'BLE SUPREME COURT HAS HELD THAT IN VIEW OF SECTION 68 OF THE IN COME-TAX ACT, 1961, WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEAR IT MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., THE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT THE SAID EVIDENCE, IT CAN BE U SED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. WHILE CONSIDERING THE EXPLANAT ION OF THE ASSESSEE, THE DEPARTMENT CANNOT, HOWEVER, ACT UNREASONABLY. IN THIS CASE, DU RING THE ASSESSMENT YEAR 1971-72, THE ASSESSEE CLAIMED THAT SHE RECEIVED A TOTAL AMOUNT O F RS. 3,11,831 BY WAY OF RACE WINNINGS IN JACKPOTS AND TREBLE EVENTS IN RACES AT TURF CLUBS I N BANGALORE, MADRAS AND HYDERABAD. THE SAID AMOUNT WAS SHOWN BY THE ASSESSEE IN THE CAPITA L ACCOUNT IN HER BOOKS. FOR THE ASSESSMENT YEAR 1972-73, SHE CLAIMED RECEIPTS OF RS. 93,500 AS RACE WINNINGS IN TWO JACKPOTS AT BANGALORE AND MADRAS AND THE SAID AMOUNT WAS CREDIT ED IN THE CAPITAL ACCOUNT IN THE BOOKS. THE ASSESSING OFFICER INCLUDED THESE AMOUNTS AS INC OME FROM OTHER SOURCES AND ASSESSED THEM. THE AAC CONFIRMED THE ADDITION. THE MATTER WE NT TO SETTLEMENT COMMISSION WHO BY A MAJORITY HELD THAT THE EXPLANATION OF THE ASSESSEE WAS NOT GENUINE DUE TO THE REASONS (I) THAT THE ASSESSEE'S KNOWLEDGE OF RACING WAS VERY MEAGER, (II) THAT A JACKPOT IS A STAKE OF FIVE EVENTS IN A SINGLE DAY AND ONE CAN BELIEVE A REGULAR AND E XPERIENCED PUNTER CLEARING A JACKPOT OCCASIONALLY BUT THE CLAIM OF THE ASSESSEE OF HAVIN G WON A NUMBER OF JACKPOTS IN THREE OR FOUR SEASONS NOT MERELY AT ONE PLACE BUT AT THREE DIFFER ENT CENTRES, NAMELY MADRAS, BANGALORE AND HYDERABAD APPEARED, PRIMA FACIE, TO BE WILD AND CON TRARY TO STATISTICAL THEORIES AND ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 6 EXPERIENCE OF FREQUENCIES AND PROBABILITIES, (III) THE ASSESSEE'S BOOKS DID NOT SHOW ANY DRAWINGS ON RACE DAYS OR ON THE IMMEDIATELY PRECEDI NG DAYS FOR THE PURCHASE OF JACKPOT COMBINATION TICKETS, WHICH ENTAILED SIZABLE AMOUNTS VARYING GENERALLY BETWEEN RS. 2,000 AND RS. 3,000, (IV) THE ASSESSEE'S CAPITAL ACCOUNT WAS CREDITED WITH THE GROSS AMOUNT WITHOUT SHOWING ANY EXPENSES AND PURCHASES OF TICKETS OR FO R LOSSES, (V) IN VIEW OF THE EXCEPTIONAL LUCK CLAIMED TO HAVE BEEN ENJOYED BY THE ASSESSEE, HER L OSS OF INTEREST IN RACES FROM 1972 WAS VERY SIGNIFICANT. THE SETTLEMENT COMMISSION TOOK THE VIE W THAT ONE WOULD NOT LOSE INTEREST IN RACE FROM 1972 AND INCOME YIELDING ACTIVITIES MERELY BEC AUSE THE INCOME FROM THAT SOURCE BECOME CHARGEABLE TO TAX. WHEN THE MATTER WENT BEFORE THE SUPREME COURT, IT DISMISSED THE APPEAL OF THE ASSESSEE. FROM THE FACTS OF THIS CASE, IT IS AP PARENT THAT THIS CASE DOES NOT RELATE TO THE CASE WHERE THE ASSESSEE HAS TAKEN LOAN FROM ANY PARTIES BUT IT IS A CASE WHERE THE ASSESSEE HIMSELF HAS SHOWN THE INCOME FROM A PARTICULAR SOURCE AND I NCOME SHOWN BY THE ASSESSEE WAS NOT FOUND TO BE GENUINE. THIS CASE, IN MY OPINION, WILL NOT ASSIST THE REVENUE. 15. IN THE CASE OF ROHINI BUILDERS (SUPRA), THE FACTS ARE THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE HAD TAKEN LOANS FROM VA RIOUS PARTIES AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED THE LOAN CONFIRMATIONS GIVING FULL ADDRESSES, GIR NUMBERS/PERMANENT ACCOUNT NUMBERS ET C. OF ALL THE DEPOSITORS. THE ASSESSING OFFICER ISSUED SUMMONS TO SOME OF THE CREDITORS AND ALSO CONDUCTED INQUIRIES INTO THE GENUINENESS OR OTHERWISE OF THE LOANS TAKEN BY THE ASSESSEE. ULTIMATELY, THE ASSESSING OFFICER MADE AN ADDITION OF RS. 12,85,000 TO THE RETURNED I NCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE CIT(A). ON FURTHER APPEAL, THE TRIBUNAL HELD THAT THE PHRASEOLOGY OF SECTION 68 OF THE ACT WAS CLEAR THAT THE LEGISLATURE HAS LAID DOWN TH AT IN THE ABSENCE OF A SATISFACTORY EXPLANATION, THE UNEXPLAINED CASH CREDIT MAY BE CHA RGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR, THAT THE LEGISLATIV E MANDATE IS NOT IN TERMS OF THE WORDS 'SHALL BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEARS', THAT THE UNSATISFACTORINESS OF THE EXPLANATION DOES NOT AND NEED NOT AUTOMATICALLY RESULT IN DEEMING THE AMOUNT CREDITED IN THE BOOKS AS INCOME OF THE ASSES SEE. THE TRIBUNAL FOUND THAT THE ASSESSEE HAD DISCHARGED THE INITIAL ONUS WHICH LAY ON IT IN TERMS OF SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY GIVING THEIR COMPLETE ADDRESSES, G IR NUMBERS/PERMANENT ACCOUNT NUMBERS AND THE COPIES OF ASSESSMENT ORDERS WHEREVER READIL Y AVAILABLE, THAT IT HAD ALSO PROVED THE CAPACITY OF THE CREDITORS BY SHOWING THAT THE AMOUN TS WERE RECEIVED BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUES DRAWN FROM BANK ACCOUNTS OF THE CREDI TORS AND THE ASSESSEE WAS NOT EXPECTED TO PROVE THE GENUINENESS OF THE CASH DEPOSITED IN THE BANK ACCOUNTS OF THOSE CREDITORS BECAUSE UNDER LAW THE ASSESSEE CAN BE ASKED TO PROVE THE SO URCE OF THE CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT THE SOURCE OF THE SOURCE. THUS, TAKING INTO CONSIDERATION THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AND, IN PARTICULAR THE F ACT THAT THE ASSESSING OFFICER HAD NOT DISALLOWED THE INTEREST CLAIMED/PAID IN RELATION TO THESE CREDITS IN THE ASSESSMENT YEAR UNDER CONSIDERATION OR EVEN IN THE SUBSEQUENT YEARS, AND TAX HAD BEEN DEDUCTED AT SOURCE OUT OF THE INTEREST PAID/CREDITED TO THE CREDITORS, THE TRIBUN AL HELD THAT THE DEPARTMENTAL AUTHORITIES WERE NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 12,85,0 00. THE HON'BLE HIGH COURT DISMISSED THE APPEAL OF THE DEPARTMENT. HON'BLE SUPREME COURT ALS O DISMISSED THE SPECIAL LEAVE PETITION. THIS DECISION CLEARLY LAYS DOWN THE PROPOSITION THA T THE ASSESSEE IS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE. THE ASSESSEE CAN BE ASKED ONLY TO PROVE THE SOURCE OF THE CREDIT. THIS DECISION, IN MY OPINION, IS CLEARLY APPLICABLE TO T HE FACTS OF THE CASE BEFORE ME. THE ASSESSEE IN THE CASE BEFORE ME HAS DULY DISCHARGED HIS ONUS BY FILING THE CONFIRMATION, ADDRESS, PERMANENT ACCOUNT NUMBER AND THE COPY OF BANK ACCOUNT OF THE CREDITOR. EVEN THOUGH THE ASSESSEE WAS NOT REQUIRED TO PROVE THE SOURCE OF SOURCE BUT STIL L THE ASSESSEE IN THE CASE BEFORE ME HAS FILED THE COPY OF CASH BOOK OF THE LENDER FROM WHICH IT I S APPARENT THAT THE LENDER WAS HAVING THE CASH IN HAND ON THE DATE WHEN HE HAS DEPOSITED THE AMOUNT IN HIS BANK ACCOUNT. 16. I HAVE ALSO GONE THROUGH THE DECISION IN THE CASE OF JUAHARIMAL GOEL (SUPRA). IN THIS CASE, THE ASSESSING OFFICER FOUND TWO DEPOSITS IN THE BOO KS OF ACCOUNT OF ASSESSEE IN THE NAME OF HIS DAUGHTERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THESE DEPOSITS. THE ASSESSEE EXPLAINED THAT THE AMOUNTS WERE PAID BY THE TWO LAD IES THROUGH CHEQUE AND THAT BOTH OF THEM HAD BEEN ASSESSED TO TAX UNDER THE AMNESTY SCHEME. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD INTRODUCED HIS BLACK MONEY BY FILI NG VOLUNTARY RETURNS OF HIS DAUGHTERS AND, ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 7 THEREFORE, ADDED THE AMOUNTS AS HIS INCOME UNDER SE CTION 68. THE CIT(A) TOOK THE VIEW THAT THE TWO LADIES CREDITED THE AMOUNT IN THEIR BANK ACCOUN T IN MARCH, 1986. THEREFORE, IF THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LADIES D ID NOT HAVE ANY INDEPENDENT SOURCE OF INCOME AND THE TWO BANK ACCOUNTS ACTUALLY BELONGED TO THE ASSESSEE THEN PROPER COURSE FOR THE ASSESSING OFFICER WAS TO ADD ENTIRE AMOUNTS OF DEPO SITS IN THEIR BANK ACCOUNTS IN THE HANDS OF THE ASSESSEE AND THE PROVISIONS OF SECTION 69 WOULD HAVE BEEN ATTRACTED AND THE CORRECT ASSESSMENT YEAR WOULD HAVE BEEN 1986-87 AND NOT THE RELEVANT ASSESSMENT YEAR 1987-88. THE TRIBUNAL CONFIRMED THE ORDER OF CIT(A). WHEN THE MA TTER WENT BEFORE THE HIGH COURT, THE HIGH COURT HELD AS UNDER : 'UNDER SECTION 68 IF ANY SUM IS FOUND CREDITED IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE 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 OFFIC ER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THEREFORE, WHAT HAS TO BE ENQUIRED INTO BY THE ASSESSING AUTHORITY IS A BOUT THE NATURE AND SOURCE OF THE DEPOSIT. IF THE EXPLANATION WITH REGARD TO NATURE AND SOURCE IS FOUND UNSATISFACTORY, ONLY THEN THE AMOUNT SO CREDITED MAY BE TREATED AS INCOME. IN THE INSTAN T CASE, THE ASSESSEE OFFERED THE EXPLANATION BOTH ABOUT THE NATURE AND SOURCE OF THE MONEY. IT W AS EXPLAINED THAT THE MONEY WAS DEPOSITED BY THE TWO LADIES, WHICH THEY HAD DEPOSITED AFTER W ITHDRAWING FROM THEIR BANK ACCOUNT. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAD FOUND T HAT THE ASSESSEE HAD DISCHARGED HIS BURDEN IN PROVING THE SOURCE OF THE MONEY, WHICH HA D FLEW FROM THE BANK ACCOUNT. IT WAS FURTHER HELD THAT IN ADDITION TO THE SOURCE OF MONE Y FROM THE BANK ACCOUNT BOTH THE LADIES WERE THE INCOME-TAX ASSESSEES AND ASSESSED TO TAX UNDER THE AMNESTY SCHEME AND THE AMOUNT DEPOSITED IN THEIR BANK ACCOUNT WAS AS A RESULT OF THEIR DISCLOSURE OF INCOME UNDER THE AMNESTY SCHEME. THE COMMISSIONER (APPEALS) AND THE TRIBUNAL FOUND THE EXPLANATION SATISFACTORY AND, ACCORDINGLY, DELETED THE ADDITION. IT WAS NOT A CAS E WHERE THE ASSESSEE CLAIMED ANY IMMUNITY FROM TAX ON ACCOUNT OF THE DISCLOSURE OF INCOME BY THE TWO LADIES. IT WAS A CASE WHERE THE ASSESSEE WAS ASKED TO EXPLAIN THE DEPOSITS IN HIS B OOKS OF ACCOUNT ABOUT THE NATURE AND SOURCE, WHICH THE ASSESSEE HAD EXPLAINED. THE ASSESSING AUT HORITY HAD NOT ACCEPTED THE EXPLANATION BUT THE COMMISSIONER (APPEALS) AND THE TRIBUNAL HAD ACCEPTED THE EXPLANATION. THE FINDING OF THE TRIBUNAL WAS A FINDING OF FACT IN THAT REGARD A ND IT WAS NOT SHOWN THAT THE FINDING RECORDED BY THE TRIBUNAL WAS PERVERSE. VARIOUS COURTS HAVE HELD THAT THE ASSESSEE HAS TO P ROVE THREE CONDITIONS : (1) IDENTITY OF THE CREDITOR (2) CAPACITY OF SUCH CREDITOR TO ADVANCE M ONEY, AND (3) GENUINENESS OF THE TRANSACTIONS. IF ALL THE AFORESAID THREE CONDITIONS ARE PROVED, THE BURDEN WOULD SHIFT ON THE REVENUE TO PROVE THAT THE AMOUNT BELONGED TO THE AS SESSEE. IT HAS BEEN HELD BY THE VARIOUS HIGH COURTS THAT THE ASSESSEE CANNOT BE ASKED TO PR OVE THE SOURCE OF SOURCE OR THE ORIGIN OF DEPOSIT. UNDER THE AMNESTY SCHEME, THE NEW TAX PAYERS WERE A LLOWED TO DECLARE THEIR INCOME FOR VARIOUS YEARS AND THEIR RETURNS WERE ALLOWED TO BE ACCEPTED WITHOUT ANY CHARGE OF PENALTY AND INTEREST. IT APPEARED THAT BOTH THE LADIES HAD FILE D RETURNS UNDER THE AMNESTY SCHEME DECLARING CERTAIN INCOME AND AS A RESULT OF SUCH DECLARATION, SAVINGS HAD BEEN DEPOSITED IN THE BANK ACCOUNT WHICH HAD BEEN SUBSEQUENTLY PAID TO THE ASS ESSEE. THERE WAS NO DISPUTE THAT THE INCOME-TAX RETURNS UNDER THE AMNESTY SCHEME IN THE CASE OF BOTH THE LADIES HAD BEEN ACCEPTED. FURTHER, THERE WAS NO ERROR IN THE ORDER OF THE TRI BUNAL WHERE THE TRIBUNAL HELD THAT IN CASE THE AMOUNT DEPOSITED IN THE BANK ACCOUNT OF THOSE T WO LADIES WERE TO BE TREATED AS THE AMOUNT BELONGING TO THE ASSESSEE AND THE DEPOSITS MADE BY THE ASSESSEE, THEN IT WOULD BE A CASE OF INVESTMENT MADE BY THE ASSESSEE IN THE NAME OF THOS E TWO LADIES AND THE PROVISION OF SECTION 69 WOULD APPLY AND NOT SECTION 68 AND FOR THAT PURPOSE THE FINANCIAL YEAR WOULD BE RELEVANT AND THEN SUCH INVESTMENT MIGHT BE DEEMED TO BE THE INCO ME OF THE ASSESSEE OF SUCH FINANCIAL YEAR WHICH WOULD FALL IN THE ASSESSMENT YEAR 1986-87 AND NOT 1987-88. SECTION 68 APPLIES WHEN THE AMOUNT IS FOUND DEPOSITED IN THE BOOKS OF ACCOUNT O F AN ASSESSEE AND NOT IN THIRD PARTY. DEPOSIT IN THE ACCOUNT OF BANK WOULD AMOUNT TO INVE STMENT AND SECTION 69 WOULD APPLY AND NOT SECTION 68.' ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 8 IN MY OPINION, THE CASE OF THE ASSESSEE IS DULY COV ERED BY THE DECISION OF JURISDICTIONAL HIGH COURT WHICH I AM BOUND TO FOLLOW AND ON THE BASIS O F THIS DECISION ITSELF, THE ADDITION OF CASH CREDIT OF RS. 1,50,000 HAS TO BE TREATED AS EXPLAIN ED ONE. 09. IN THE ABOVE DECISION HON ITAT CONSIDERING THE DE CISION OF HONOURABLE SUPREME COURT IN CASE OF MS. SUMATI DAYAL, RELIED UP ON BY THE LD. DR HAS HE LD THAT MERELY BECAUSE CASH IS DEPOSITED IN THE BANK ACCOUNT OF THE LENDER IN VIEW OF OTHER OVERWHE LMING EVIDENCES, NO ADDITION CAN BE MADE IN THE HANDS OF THE BORROWER U/S 68 OF THE ACT. IN VIEW OF THE ABOVE DECISION OF AGRA BENCH WHERE IN THE LENDERS BEING ON RECORD OF INCOME TA X DEPARTMENT AND ARE FILING REGULAR RETURN OF INCOME, MERELY BECAUSE CASH HAS BEEN DEPOSITED IN THEIR BANK ACCOUNT BEFORE ISSUE OF CHEQUE CANNOT LEAD TO ADDIT ION IN THE HANDS OF THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY INFIRMITY I N THE ORDER OF CIT (A) IN DELETING THE ADDITION OF RS 13,55,000/- WITH RESPEC T TO THREE LENDERS IN THE HANDS OF THE ASSESSEE U/S 68 OF THE ACT. WE CONFIRM THE ORDER OF CIT (A). 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 06/11/2015. SD/- SD/- (C.M.GARG) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06 /11/2015 *B. RUKHAIYAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 1635/DEL/2012 A Y 2008-09 MUKESH JAIN. PAGE | 9 DATE INITIAL 1. DRAFT DICTATED ON 04/11 /2015 2. DRAFT PLACED BEFOR E AUTHOR 04/11 /2015 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WH ICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.