Rajni Kant Agrawal Prop. Rajni Kant & Co., Mathura V. A.C.I.T.-3, Mathura

ITA 246/AGR/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0501 (ITAT-AGRA)
• Duration Of Justice: 6 year(s) 11 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 30-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: NAVIN GARGH
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Search and seizure; Question of law; Corroborative evidences; Accommodation entries; TDS; Set aside
• Section: 133(6); 131; 68

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. 246/AGRA/2012 ASSESSMENT YEAR: 2007-08 SHRI RAJNI KANT AGRAWAL, VS. ASSTT. COMMISSIONER OF INCOME PROP. OF RAJNI KANT & CO., TAX 3, MATHURA. GALI DURGA CHAND, CHOWK BAZAR, MATHURA (U.P.) (PAN: AAWPA 2057 R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN GARGH, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 26.02.2013 DATE OF PRONOUNCEMENT : 08.03.2013 ORDER PER A.L. GEHLOT,ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 09.01.2012 PASSED BY THE LD. CIT(A)-I, AGRA FOR THE ASSESSMENT YEAR 2007-08 2. THE ASSESSEE HAS RAISED AS MANY AS 6 GROUNDS OF APPEAL BUT EFFECTIVELY ONLY TWO ISSUES ARE INVOLVED IN THIS APPEAL WHICH ARE AS UNDER :- 2 ITA NO.246/AGR/2012 A.Y. 2007-08 (1) ADDITIONS ON ACCOUNT OF ADVANCES FOR PURCHASE O F SILVER ORNAMENTS FROM FOLLOWING PARTIES. A) AMBRISH BHAI SONI RS.2,00,000/- B) KRISHNA VERMA RS.1,00,000/- C) KULDEEP KUMAR SONI RS.1,00,000/- (2) ADDITIONS ON ACCOUNT OF LOAN AND DEPOSITS. A) NARANYAN DAS RS.2,00,000/- B) NITIN KUMAR VERMA RS.1,00,000/- 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF SILVER ORNAMENTS AND BULLION AND JOB WORK. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT CASH IN LAND AS ON 10.01.2007 AS PER CASH BOOK PRODUCED WAS RS.2,62,230/-. HE FURTHER NOTICED THAT CASH OF RS. 2,00,000/- WAS DEPOSITED IN BANK ON 11.01.2007 AND CLOSING BALANCE WAS SHOWN AT RS.2 ,62,230/-. THE A.O. ASKED FOR THE EXPLANATION FROM HE ASSESSEE. THE ASSESSEE SUBMITTED THAT RS.2,00,000/- WAS RECEIVED FROM SHRI AMBRISH BHAI AS ADVANCE FOR PURCHASING SILVER ORNAMENTS. BUT DUE TO OVERSIGHT, THIS ENTRY WAS NOT PASSED IN CASH BOOK AS ON 11.01.2007. THE A.O. DID NOT SATISFY WITH THE EXPLANATION OF THE AS SESSEE AND MADE ADDITION OF RS.2,00,000/- UNDER SECTION 68 OF THE ACT. 3 ITA NO.246/AGR/2012 A.Y. 2007-08 4. THE A.O. FURTHER NOTICED THAT THE ASSESSEE TAKEN LOANS AND ADVANCES OF RS.1,00,000/- FROM SHRI KISHAN SINGH VERMA, RS.1,00 ,000/- FROM SHRI KULDEEP KUMAR SONI, RS.2,00,000/- FROM SHRI NARAYAN DAS AND RS.2,00,000/- FROM SHRI NITIN KUMAR VERMA. IT WAS EXPLAINED BY THE ASSESSE E THAT SRI KISHNA SINGH VERMA AND SRI KULDEEP KUMAR HAVE GIVEN ADVANCE OF R S.1,00,000/- EACH TO THE ASSESSEE FOR PURCHASE OF ORNAMENTS BUT DUE TO INCRE ASE IN PRICES, THE ASSESSEE DID NOT PURCHASE THE SILVER ORNAMENTS. THIS WAS A TRAD ING TRANSACTION. THE A.O. DID NOT AGREE WITH THE EXPLANATIONS FILED BY THE ASSESS EE. 5. IN RESPECT OF LOAN FROM SHRI NARAYAN DAS RS.2,00 ,000/- AND SHRI NITIN KUMAR VERMA RS.1,00,000/- IT WAS EXPLAINED BY THE A SSESSEE THAT LOAN AMOUNTS WERE RECEIVED THROUGH BANKING CHANNELS. BUT THE A.O . NOTICED THAT JUST CHEQUE WAS ISSUED IN FAVOUR OF THE ASSESSEE AND CASH WAS DEPOS ITED IN BANK ACCOUNT OF DEPOSITORS. THE A.O. MADE ADDITION UNDER SECTION 6 8 OF THE ACT. THE CIT(A) HAS CONFIRMED THE ADDITIONS. 6. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORDS PERUSED. WE FIND THAT THE FIRST ASPECT OF THE ISSUE IS COVER ED AGAINST THE ASSESSEE BY THE ORDER DATED 28.12.2012 OF I.T.A.T. AGRA BENCH IN IT A NO.245/AGR/2012 IN THE 4 ITA NO.246/AGR/2012 A.Y. 2007-08 CASE OF SHRI RAM BABOO AGARWAL VS. ACIT. THE RELEV ANT FINDING OF THE I.T.A.T. ARE AS UNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL AND ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTE RFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS RECEIVED LARGE NUMBER OF CASH CREDITS FROM 20 PERSO NS, WHICH WAS ENTERED INTO THE BOOKS OF ACCOUNT OF THE ASSESSEE. ALL THE AMOUNTS ARE RECEIVED IN CASH. THE LD. COUNSEL FOR THE ASSESSEE THUS ADMITTED THAT THE PROVISIONS OF SECTION 68 OF THE IT ACT ARE APPL ICABLE IN THE CASE OF THE ASSESSEE. FOR PROVING THE INGREDIENTS OF SECTIO N 68 OF THE IT ACT, THE BURDEN IS UPON THE ASSESSEE TO PROVE THE IDENTI TY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANS ACTION. HOWEVER, THE ASSESSEE HAS NOT PROVED ANY OF THE ABOVE CONDIT IONS U/S. 68 OF THE IT ACT. THE ASSESSEE FILED MERE CONFIRMATION LETTER S FROM THE CREDITORS WITHOUT FILING SUPPORTING EVIDENCE TO PROVE THE IDE NTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION. THE AO VIDE ORDER SHEET DATED 13.09.2009 ON FILING THE CONFIRMATIONS BY THE ASSESSEE GAVE SHOW CAUSE NOTICE TO THE ASSES SEE AS TO WHY THE ADDITION U/S. 68 OF THE IT ACT BE NOT MADE ON ACCOU NT OF UNEXPLAINED CASH CREDITS. INSPITE OF MATERIAL CONFRONTED TO THE ASSESSEE, THE ASSESSEE DID NOT FILE ANY EVIDENCE BEFORE THE AO IN SUPPORT OF THE CONFIRMATION LETTERS TO PROVE ALL THE ABOVE THREE I NGREDIENTS OF SECTION 68 OF THE IT ACT. HONBLE CALCUTTA HIGH COURT IN TH E CASE OF BHARTI 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 PROD UCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEF ORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INC OME TAX ACT, 1961, ON THE ALLEGED CREDITORS AND SINCE THOSE NOTI CES CAME BACK UNSERVED, THE INCOME-TAX OFFICER TREATED THE L OAN AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE APP ELLATE ASSISTANT COMMISSIONER DISMISSED THE ASSESSEES APP EAL ON THE GROUND THAT THE ASSESSEE COULD NOT EVEN ESTABLISH T HE IDENTITY OF 5 ITA NO.246/AGR/2012 A.Y. 2007-08 THE PARTIES. ON FURTHER APPEAL BY THE ASSESSEE, THE APPELLATE TRIBUNAL HELD THAT MERE FILING OF CONFIRMATORY LETT ERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND THE RE 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 UNDISCLOSED SOURCES WAS NOT PERVERSE OR UNREASONABL E. 4.1 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 NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF H IS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THES E THINGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER T HE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FAC TS DOES THE ONUS SHIFT ON TO THE DEPARTMENT. IT IS NOT ENOUGH T O ESTABLISH THE IDENTITY OF THE CREDITORS. MERE PRODUCTION OF THE C ONFIRMATION LETTERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT THE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN C REDITORS OR THAT THEY HAVE CREDIT-WORTHINESS. HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL MISDI RECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUIN E SIMPLY BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQU ES. THE ASSESSEE HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDERS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMIT TED THAT LOANS OBTAINED FROM THESE BANKERS AGAINST HUNDIS WE RE NOT GENUINE AND SUCH HUNDI LOANS REALLY REPRESENTED THE IR OWN CONCEALED INCOME. THE ASSESSEE HAD NOT DISCHARGED I TS BURDEN OF PROVING THAT THE LOANS IN QUESTION WERE GENUINE. 4.2 CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF ABOVE DECISIONS, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO ESTA BLISH GENUINE CREDITS IN THE MATTER. APART FROM THE ABOVE FINDINGS, WE MA Y ALSO NOTE THAT THE ASSESSEE HAS FILED COPIES OF CONFIRMATION LETTE RS IN THE PAPER BOOK, 6 ITA NO.246/AGR/2012 A.Y. 2007-08 IN SOME OF WHICH THE ALLEGED CREDITORS HAVE STATED THAT THE AMOUNTS IN CASH HAVE BEEN GIVEN TO THE ASSESSEE FOR PURCHASING SILVER, BUT BECAUSE OF THE RATES OF SILVER HAVE INCREASED, THE AMOUNTS HAVE BEEN TAKEN BACK. ALMOST SAME NARRATION IS GIVEN IN THE A LLEGED CONFIRMATION LETTERS. ALL THESE CONFIRMATION LETTER S ARE CONTRARY TO THE EXPLANATION OF THE ASSESSEE. THE ASSESSEE EXPLAINED BEFORE THE AO THAT HE IS DOING THE BUSINESS OF SILVER ORNAMENTS. EVEN IN THE COPIES OF SILVER JEWELLERY ACCOUNT, THE ASSESSEE HAS NOT MENT IONED ANYTHING IF THE ASSESSEE HAS PURCHASED ANY SILVER ON RECEIVING THE ADVANCE FROM THESE CREDITORS. THE LD. COUNSEL FOR THE ASSESSEE A LSO ADMITTED DURING THE COURSE OF ARGUMENTS THAT AS PER MARKET PRACTICE , RATES OF SILVER/SILVER ORNAMENTS HAVE TO BE TAKEN OF THE DAT E WHEN ADVANCE HAS BEEN GIVEN. THEREFORE, THERE WAS NO QUESTION OF WIT HDRAWING FROM THE TRANSACTION ON INCREASE OF THE VALUE OF SILVER. THE REFORE, THERE IS SERIOUS DOUBT ABOUT THE CONFIRMATION FILED BY THE A LLEGED CREDITORS. IN SUCH A SITUATION, IT IS THE DUTY OF THE ASSESSEE TO ESTABLISH THE IDENTITY OF THESE CREDITORS AND THEIR CREDITWORTHINESS THROU GH DOCUMENTARY EVIDENCE IN ORDER TO PROVE GENUINE TRANSACTION IN T HE MATTER. BUT THE ASSESSEE FAILED TO DO SO. THEREFORE, THE ONUS UPON THE ASSESSEE HAS NOT BEEN DISCHARGED AT ALL. THE ASSESSEE HAS BEEN GIVEN OPPORTUNITY BY THE AO VIDE SEPARATE ORDER SHEET DATED 13.09.2009 T O EXPLAIN THIS ISSUE AND TO PROVE ITS CASE U/S. 68 OF THE IT ACT, BUT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE BEFORE THE AO IN RESPECT O F HIS CLAIM. THEREFORE, IT IS NOT THE CASE OF DENIAL OF ANY OPPO RTUNITY TO THE ASSESSEE. THE ASSESSEE HAS NOT ESTABLISHED ON RECOR D IF THE ASSESSEE HAS MADE ANY REQUEST TO THE AO FOR SUMMONING OF ANY OF THE CREDITORS, THEREFORE, THE AO IS NOT BOUND TO ISSUE ANY SUMMON TO THE CREDITORS. SINCE THE ASSESSEE HAS NOT DISCHARGED IN ANY WAY THE ONUS UPON HIM TO PROVE THE GENUINENESS OF THE CREDITS IN THE MATTER, THEREFORE, IT IS NOT THE DUTY OF THE AO TO ISSUE SU O MOTU SUMMONS TO THE CREDITORS TO PROVE THE CASE OF THE ASSESSEE. TH E LD. COUNSEL FOR THE ASSESSEE ALSO ARGUED THAT THE BOOKS OF ACCOUNT HAVE BEEN ACCEPTED BY THE AO, THEREFORE, THE ENTRIES OF CASH CREDITS SHOU LD ALSO BE ACCEPTED BY THE AO. WE ARE AFRAID TO ACCEPT SUCH CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BECAUSE THE PROVISIONS OF SECTION 68 ARE DEEMING PROVISIONS TO CONSIDER THE CASH CREDITS ENTERED INT O THE BOOKS OF ACCOUNT AND IT HAS NO RELATION WITH THE ACCEPTANCE OR REJECTION OF BOOKS OF ACCOUNT. THIS ISSUE HAS BEEN CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DEVI PRASAD VI SHWANATH PRASAD, 72 ITR 194, IN WHICH IT WAS HELD 7 ITA NO.246/AGR/2012 A.Y. 2007-08 THERE IS NOTHING IN LAW WHICH PREVENTS THE INCOME- TAX OFFICER IN AN APPROPRIATE CASE IN TAXING BOTH THE C ASH CREDIT, THE NATURE AND SOURCE OF WHICH IS NOT SATISFACTORIL Y EXPLAINED, AND THE BUSINESS INCOME ESTIMATED BY HIM UNDER SECT ION 13 OF THE INDIAN INCOME-TAX ACT, 1922, AFTER REJECTING TH E BOOKS OF ACCOUNT OF THE ASSESSEE AS UNRELIABLE. THEREFORE, THE CONTENTION OF THE LD. COUNSEL FOR TH E ASSESSEE IS REJECTED. CONSIDERING THE ABOVE DISCUSSION, IT IS C LEAR THAT IT IS A CASE OF NO EVIDENCE FILED BY THE ASSESSEE TO PROVE THE I DENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION. THEREFORE, NONE OF THE DECISIONS CITED BY THE LD. C OUNSEL FOR THE ASSESSEE ARE APPLICABLE TO THE FACTS OF THE PRESENT CASE. THE LD. COUNSEL FOR THE ASSESSEE WAS ALSO REQUESTED TO CITE ANY CASE LAW WHERE ON MERE FILING OF THE CONFIRMATION, ADDITIONS HAVE BEEN DELETED U/S. 68, BUT THE LD. COUNSEL FOR THE ASSESSEE HAS N OT BEEN ABLE TO CITE ANY RELEVANT CASE LAW TO SUPPORT HIS CONTENTION. WE MAY ALSO NOTE HERE THAT EVEN BEFORE THE LD. CIT(A) OR BEFORE THE TRIBUNAL, THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO PROVE ID ENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTION IN THE MATTER. THEREFORE, IN THE ABSENCE OF ANY EVIDEN CE ON RECORD TO ESTABLISH THE INGREDIENTS OF SECTION 68 OF THE IT A CT, IT IS DIFFICULT TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW. HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE, 82 ITR 540 AND SUMATI DAYAL, 214 ITR 801 HELD THAT THE COURTS AND TRIBUN AL HAVE TO JUDGE THE EVIDENCES BEFORE THEM BY APPLYING THE TEST OF H UMAN PROBABILITIES AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES. I N THE PRESENT CASE, THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE BEF ORE THE AUTHORITIES BELOW TO PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER AND WH ATEVER CONFIRMATIONS WERE FILED WERE CONTRADICTORY TO THE EXPLANATION OF THE ASSESSEE. THE SILVER IS NOT A RARE COMMODITY FOR W HICH ADVANCE SHOULD BE GIVEN TO THE ASSESSEE FOR PURCHASE AND PA RTICULARLY WHEN THE ASSESSEE DID NOT DEAL IN SILVER BECAUSE THE ASS ESSEE DEALS ONLY IN SILVER JEWELLERY. EVERYTHING IS AFTERTHOUGHT STORY MADE UP TO COVER THE UNACCOUNTED MONEY. THEREFORE, IT WOULD LEAD TO IRRE SISTIBLE CONCLUSION THAT THE ASSESSEE HAS FABRICATED ALL THE CONFIRMATIONS AND IT WAS THE UNACCOUNTED MONEY OF THE ASSESSEE ONLY W HICH IS ENTERED INTO THE BOOKS OF ACCOUNT UNDER THE GARB OF CASH CR EDITS GIVEN BY 20 8 ITA NO.246/AGR/2012 A.Y. 2007-08 PERSONS. THUS, THE ASSESSEE MISERABLY FAILED TO PRO VE HIS CASE. WE DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE AUTHORI TIES BELOW. THE ORDERS OF THE AUTHORITIES BELOW ARE, THEREFORE, CON FIRMED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. AS REGARDS THE SECOND ASPECT OF THE MATTER THAT LOANS WERE TAKEN WHEREIN BEFORE ISSUING CHEQUES IN FAVOUR OF ASSESSEE CASH W ERE DEPOSITED IN BANK ACCOUNT. WE FIND THAT THIS ISSUE IS ALSO COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. SUMAN GUPTA, INCOME TAX APPEAL NO.680 OF 2012. THE SAID JUDGEMENT HAS BEEN FOLLOW ED IN ITA NO.266/AGRA/2011, ORDER DATED 30.11.2012. THE RELE VANT FINDING OF THE I.T.A.T. ARE REPRODUCED AS BELOW :- UNDER THIS CIRCUMSTANCES, THE I.T.A.T., AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS. ITO IN ITA NO.454/AGR/2009, OR DER DATED 16.03.2012, 138 ITD 153 (AGRA) WHICH HAS BEEN CONFI RMED BY THE HONBLE HIGH COURT IN INCOME TAX APPEAL NO.680 OF 2012, JUD GEMENT DATED 07.08.2012, HELD THAT UNDER THESE CIRCUMSTANCES THE RE ARE NO SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS IN TH E MATTER.. THE RELEVANT FINDINGS OF I.T.A.T ARE REPRODUCED AS BELOW :- (138 ITD 160 TO 164):- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH (AGRA)E 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 ACCOUNT. NO EXPLANATION IS GIVEN BEFORE THE AUTHORITIES BELOW AND EVEN DURING THE CO URSE OF ARGUMENTS BEFORE US. NOTHING IS CLARIFIED AS TO HOW EQUIVALEN T AMOUNT OF CASH 9 ITA NO.246/AGR/2012 A.Y. 2007-08 CREDIT WAS DEPOSITED IN HIS BANK ACCOUNT. IN THE CA SE OF REMAINING CREDITORS, IT IS NOT A DENYING FACT THAT EQUIVALENT AMOUNTS OF CASH CREDIT WAS DEPOSITED IN THEIR BANK ACCOUNTS IN CASH FOR ISSUING CHEQUES IN FAVOUR OF THE ASSESSEE. THIS CREATED SER IOUS DOUBT IN THE EXPLANATION OF THE ASSESSEE REGARDING GENUINENESS O F THE TRANSACTION IN THE MATTER. THE AO ASKED THE ASSESSEE TO PRODUCE ALL THE CREDITORS FOR EXAMINATION ON OATH IN ORDER TO FIND OUT TRUTH IN THE MATTER. THE ASSESSEE PRODUCED ONE OF THE CREDITORS BEFORE THE A O FOR EXAMINATION, BUT SHOWED HIS INABILITY TO PRODUCE OTHER CREDITORS , WHICH IS ALSO CLEAR FROM THE ORDER SHEET DATED 18.12.2007 (PB-126 ). PRIOR TO THAT, THE ASSESSEE SOUGHT TIME FROM THE AO TO PRODUCE REM AINING CREDITORS FOR EXAMINATION, BUT LATER ON DID NOT PRODUCE THEM. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT DUE TO ONE OR OTHER PROBLEM OF THE REMAINING CREDITORS ON ACCOUNT OF MEDICAL ADVICE, T HE DEPOSITORS HAVE SHOWN THEIR INABILITY TO APPEAR BEFORE THE AO FOR E XAMINATION, BUT IT IS ADMITTED FACT THAT THE ASSESSEE DID NOT MAKE ANY REQUEST BEFORE THE AO FOR EXAMINATION OF THE REMAINING CREDITORS THROU GH THE COMMISSION AND NO WILLINGNESS WAS SHOWN BEFORE THE CIT(A) FOR PRODUCTION OF THE REMAINING CREDITORS FOR EXAMINATI ON EVEN AT THE REMAND STAGE IN THE APPELLATE PROCEEDINGS. EVEN DUR ING THE COURSE OF ARGUMENTS BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE DID NOT SHOW HIS WILLINGNESS TO PRODUCE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. IT IS, THEREFORE, CLEAR THAT THE ASS ESSEE HAS FAILED TO PRODUCE THE REMAINING CREDITORS FOR EXAMINATION BY THE REVENUE 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 TH E CREDITORS AND THEY WERE HAVING MEAGER INCOME AND AS SUCH, THEY WE RE NOT MEN OF MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. IN THE C ASE OF ABHAY MAHESHWARI, THERE WAS VERY SMALL BALANCE OF RS.3528 /- IN HIS BANK ACCOUNT. HE WAS EXAMINED ON OATH AND HE WAS NOT ABL E TO GIVE SOURCE OF CASH DEPOSIT TO THE SATISFACTION OF THE AO. HE W AS EARNING HARDLY ONE LAC RUPEES AND SPENT 40,000/- TO 50,000/- FOR H OUSEHOLD PURPOSES. DURING HIS EXAMINATION ON OATH, HE WAS NOT ABLE TO SATISFACTORILY EXPLAIN THE AVAILABILITY OF FUNDS WITH HIM FOR GIVI NG LOAN TO THE ASSESSEE. IN HIS CASE, HE HAS FILED RETURN OF INCOM E FOR THE ASSESSMENT YEAR UNDER APPEAL AT RS.1,02,850/- (PB-60). IN THE CASE OF SHRI AMIT MAHESHWARI, HE WAS ALSO HAVING SMALL BANK BALANCE O F RS.2429/- 10 ITA NO.246/AGR/2012 A.Y. 2007-08 BEFORE ISSUE OF CHEQUE TO THE ASSESSEE AND EQUAL AM OUNT OF THE CASH CREDIT WAS DEPOSITED IN THE BANK ACCOUNT. HE HAS FI LED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT RS.4 4972/- (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 CREDIT 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 MAHESHWARI, THE BANK BALA NCE BEFORE ISSUE OF CHEQUE WAS RS.10,794/- AND EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSITED IN HER BANK ACCOUNT FOR ISSUE OF CHEQUE I N FAVOUR OF ASSESSEE. FOR ASSESSMENT YEAR UNDER APPEAL, SHE FIL ED RETURN OF INCOME AT RS.1,02,476/- ONLY. IN THE CASE OF SH. RA MPAL SING, IT IS ALREADY NOTED ABOVE THAT THE DEPOSIT ENTRY IN HIS C ASE IS NOT EXPLAINED AND PRIOR TO ISSUE OF CHEQUE, THERE WAS BANK BALANC E OF RS.3708/- ONLY. HE HAS FILED THE RETURN OF INCOME FOR THE ASS ESSMENT YEAR UNDER APPEAL AT LOSS WITH AGRICULTURAL INCOME (PB-102). I N THE CASE OF SHRI SHARIQ ALI KHAN, THE BANK BALANCE IS HIS ACCOUNT WA S RS.1055/- PRIOR TO ISSUE OF CHEQUE AND EQUIVALENT CASH AMOUNT WAS D EPOSITED FOR ISSUING CHEQUE IN FAVOUR OF THE ASSESSEE. HE HAS FI LED RETURN OF INCOME AT RS.70,373/- PLUS AGRICULTURAL INCOME (PB-116). T HESE DETAILS NOTED IN THE ASSESSMENT ORDER AND THE DETAILS VERIFIED FR OM THE PAPER BOOK WOULD CLEARLY SUPPORT THE FINDINGS OF THE AO THAT N ONE OF THE CREDITORS WERE PERSONS OF SUFFICIENT MEANS TO ADVANCE ANY LOA N TO THE ASSESSEE. FILING OF BALANCE SHEETS, CASH FLOW STATEMENTS, CAS H BOOKS ETC. HAVE NO EVIDENTIARY VALUE BECAUSE ACCORDING TO THE REMAN D REPORT FILED BY THE AO, THOSE DOCUMENTS WERE NOT FILED WITH THE RET URN OF INCOME. MOREOVER, NO REGULAR BOOKS OF ACCOUNT HAVE BEEN MAI NTAINED BY ANY OF THE CREDITORS AND MAJORITY OF THEM HAVE SHOWN ES TIMATED INCOME IN THEIR RETURNS OF INCOME. THEREFORE, SUCH BALANCE SH EET, CASH FLOW STATEMENTS ETC. WOULD NOT SUPPORT THE CONTENTION OF THE ASSESSEE THAT GENUINE CREDITS HAVE BEEN RECEIVED. THE ORDER SHEET NOTED BY THE AO WOULD ALSO SHOW THAT THE ASSESSEE HAS MADE NO EFFOR TS TO PRODUCE THE REMAINING CREDITORS BEFORE THE AO. EVEN IN THE STAT EMENT OF ONE 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 68 OF THE ACT BY PROVING IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE 11 ITA NO.246/AGR/2012 A.Y. 2007-08 CREDITWORTHINESS OF THE CREDITORS WHO WERE HAVING O NLY MEAGER INCOME. NO DETAILS OF THEIR SAVINGS HAVE BEEN FILED . THE ASSESSEE HAS NEVER SHOWN HIS WILLINGNESS TO PRODUCE THE REMAININ G CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENE SS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BANK ACCOUNTS OF THE CRE DITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WER E NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE ASSESSEE WHICH W AS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITORS FOR THE PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THESE WERE, THEREFORE, ACCOMMODATION ENTRIES ONLY AND AS SUCH, COULD NOT BE CONSIDERED AS GENUINE TRANSAC TIONS. MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKIN G CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GEN UINE TRANSACTION. 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 PROD UCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEF ORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INC OME TAX ACT, 1961, ON THE ALLEGED CREDITORS AND SINCE THOSE NOTI CES CAME BACK UNSERVED, THE INCOME-TAX OFFICER TREATED THE L OAN AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE APP ELLATE ASSISTANT COMMISSIONER DISMISSED THE ASSESSEES APP EAL ON THE GROUND THAT THE ASSESSEE COULD NOT EVEN ESTABLISH T HE IDENTITY OF THE PARTIES. ON FURTHER APPEAL BY THE ASSESSEE, THE APPELLATE TRIBUNAL HELD THAT MERE FILING OF CONFIRMATORY LETT ERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND THE RE 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 UNDISCLOSED SOURCES WAS NOT PERVERSE OR UNREASONABL E. 12 ITA NO.246/AGR/2012 A.Y. 2007-08 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 NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF H IS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THES E THINGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER T HE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FAC TS DOES THE ONUS SHIFT ON TO THE DEPARTMENT. IT IS NOT ENOUGH T O ESTABLISH THE IDENTITY OF THE CREDITORS. MERE PRODUCTION OF THE C ONFIRMATION LETTERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT THE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN C REDITORS OR THAT THEY HAVE CREDIT-WORTHINESS. HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL MISDI RECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUIN E SIMPLY BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQU ES. THE ASSESSEE HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDERS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMIT TED THAT LOANS OBTAINED FROM THESE BANKERS AGAINST HUNDIS WE RE NOT GENUINE AND SUCH HUNDI LOANS REALLY REPRESENTED THE IR OWN CONCEALED INCOME. THE ASSESSEE HAD NOT DISCHARGED I TS 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 DUR GA 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. 13 ITA NO.246/AGR/2012 A.Y. 2007-08 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 PRO VE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GEN UINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOUND T O BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILED TO PR OVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORDER TO GIVE LOANS TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNT OF TH E DEPOSITORS, IT WAS SPECIFICALLY FOUND THAT THERE WERE NO SUFFICIENT FU NDS AVAILABLE IN THEIR BANK ACCOUNT AND THEY WERE HAVING ONLY SMALL BANK B ALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOUSEHOLD EXPENSES OR DAY- TO-DAY REQUIREMENTS. THEREFORE, IT IS UNBELIEVABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT SAID PERSONS WERE H AVING CREDITWORTHINESS TO ADVANCE ANY LOAN TO THE ASSESSE E. THE DOCUMENTS PRODUCED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE PAPER BOOK MERELY PROVE THE CASE OF ASSESSEE SUPERFICIALLY, WHICH IS FAR FROM REALITY OR TRUTH. WHEN THE TEST OF HUMAN PROBABILITIES AFTER C ONSIDERING THE SURROUNDING CIRCUMSTANCES AS IS PROPOUNDED BY HONB LE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE (SUPRA) AND SUMATI DAYAL VS. CIT (SUPRA), IS APPLIED TO THE FACTS OF THE CAS E, IT IS CLEAR THAT THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN THE PRESENT CASE, THE ASSESSEE HAS NOT ADDU CED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORITIES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS I N THE MATTER. THEREFORE, THE ASSESSEE HAS NOT SATISFIED THE ESSEN TIAL INGREDIENTS OF SECTION 68 OF THE IT ACT. 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 BASED 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 SOURCE O F INCOME OF THE SAID ALLEGED CREDITORS WHEN THEY WERE ASSESSED TO T AX 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 14 ITA NO.246/AGR/2012 A.Y. 2007-08 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 NOT FIN D ANY IRREGULARITY OR ILLEGALITY IN THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. CONCISE GROUNDS NOS. 1 & 2 ARE, ACCORDINGLY, DISMIS SED. 26. THE RELEVANT FACTS, QUESTION BEFORE HIGH COURT AND FINDING THEREON IN CASE OF SUMAN GUPTA ; INCOME TAX APPEAL NO.680 OF 2 012, JUDGEMENT DATED 07.08.2012 BY THE HONBLE HIGH COURT OF ALLAHABAD ARE REPRODUCED AS BELOW :- 3. THE APPEAL HAS BEEN PREFERRED ON THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW, AS FOLLOWS :- (I) WHETHER THE ITAT, WAS CORRECT TO CONFIRM THE A DDITION OF RS.11 LACS UNDER SECTION 68 OF THE ACT, WHICH WAS T AKEN AS LOAN FROM 5 LENDERS WITHOUT SUMMONING THE LENDERS UNDER SECTION 131 OF THE ACT OR 133(6) OF THE ACT DESPITE REQUEST ED IN WRITING BEFORE A.O. ON 26.11.2007, 18.12.2007 AND 24.12.200 7 ? (II) WHETHER THE ITAT WAS RIGHT IN CONFIRMING THE A DDITION OF RS.2 LACS GIVEN BY ABHAY MAHESHWARI WHO PERSONALLY APPEARED BEFORE THE A.O. AND EXAMINED ON OATH AND HAVE ACCEP TED HAVING GIVEN THE LOAN TO THE APPELLANT BY ACCOUNT P AYEE CHEQUE ? (III) WHETHER THE ITAT WAS CORRECT TO CONFIRM THE A DDITION OF CASH CREDIT UNDER SECTION 68 OF THE ACT WHEN THE AP PELLANT HAS DISCHARGED THE PRIMARY BURDEN BY FURNISHING THE CON FIRMATORY LETTERS, COPY OF THE BANK PASS BOOK RETURNS OF PAST 3 YEARS, BALANCE SHEET, CASH FALLOW STATEMENTS AND PAN NUMBE RS, AFFIDAVITS OF ALL THE CREDITORS PROVING THE IDENTIT Y, CAPACITY OF THE GENUINENESS OF THE TRANSACTION, THE BURDEN SHIF TED OF THE REVENUE, WHICH THE REVENUE FAILED TO REBUT ? (IV) WHETHER THE ITAT WAS CORRECT TO HOLD THAT THE APPELLANT FAILED TO PROVE THE SOURCE OF SOURCE OF THE CREDITO RS ONCE THE 15 ITA NO.246/AGR/2012 A.Y. 2007-08 APPELLANT HAS GIVEN THE NAMES AND ADDRESS OF THE CR EDITORS OF AO AND ALL THE CREDITORS WERE INCOME TAX ASSESSEE A ND HAVING PAID LOAN BY GIVING ACCOUNT PAYEE CHEQUES AND THE I NTEREST WAS PAID TO THE CREDITORS BY MAKING TDS ON THE INTEREST AMOUNT, BUT THE REVENUE DID NOT EXAMINE THE CREDITORS ? (V) WHETHER THE ORDER OF THE ITAT CONFIRMING THE AD DITION OF RS.11,00,000/- AND RS.2,00,000/- WAS PERVERSE HAVIN G REGARD TO THE EVIDENCE AND MATERIAL ON RECORD.? 4. IT IS SUBMITTED BY LEARNED COUNSEL APPEARING FOR THE APPELLANT, RELYING UPON CIT V. ORISSA CEMENT (P) CORPORATION ( 1986) 159 ITR 78 (SC); DCIT V. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ); NEMI CHAND KOTHARI V. CIT (2003) 264 ITR 254 (GUH); CIT V. DIVINE LEASING AND FINANCE LTD (2008) 299 ITR 268 (DEL); C IT V. DWARIKADISH INVESTMENT (P) LTD. (2011) 330 ITR 298 (DEL) AND CIT V. OASIS HOSPITALITIES (P) LTD (2011) 333 ITR 199 (DEL ), THAT THE APPELLANT-ASSESSEE DISCHARGED ITS BURDEN UNDER SECT ION 68 OF THE INCOME TAX ACT BY GIVING THE NAMES, PAN NUMBERS, AN D PRODUCING THE ASSESSMENT ORDERS AND ACCOUNTS BOOKS OF THE UNS ECURED CREDITORS. THE LOANS WERE TAKEN BY THE BANKING CHANNELS. IT I S SUBMITTED THAT ONCE THE BURDEN WAS DISCHARGED BY THE ASSESSEE, IT WAS OPEN TO THE ASSESSING OFFICER TO HAVE CALLED THE CREDITORS BY I SSUING NOTICES UNDER SECTION 131 OF THE ACT TO EXAMINE THEIR CREDITWORTH INESS AND THE GENUINENESS OF TRANSACTIONS. IT WAS NOT OPEN TO TH E AO TO EXAMINE THE ASSESSMENT ORDERS AND PASS BOOKS AND DRAW CONCLUSIO NS ON THE CREDITWORTHINESS OF THE CREDITORS, TO ADD BACK AT T HE ENTIRE LOAN AMOUNT TO ASSESSEES INCOME. 5. WE HAVE CONSIDERED THE SUBMISSIONS, AND HAVE GON E THROUGH THE JUDGMENTS CITED BY THE APPELLANT. IN ALL THESE JUDGEMENTS, IT HAS BEEN REITERATED THAT AFTER THE ASSESSEE HAS LED THE EVIDENCE OF IDENTIFYING THE PERSONS, WITH NAMES, PAN NUMBERS, B ANK ACCOUNT NUMBERS AND ASSESSMENT ORDERS, THE BURDEN UNDER SEC TION 68 OF THE ACT SHIFTS UPON THE DEPARTMENT TO DISPROVE THE GENU INENESS OF THE TRANSACTIONS. THE AO COULD NOT MAKE DETAILED ENQUI RIES INTO THE SOURCES OF SOURCE, OR DOUBT THE GENUINENESS AND CRE DITWORTHINESS OF THE CREDITORS ON ARBITRARY REASONING OR MERE IPSE D IXIT. HIS ENQUIRY SHOULD BE BONAFIDE AND CONCERNED WITH THE GENUINENE SS OF THE TRANSACTIONS. IN CASE OF SHARE APPLICATION MONEY, IT WAS HELD IN CIT 16 ITA NO.246/AGR/2012 A.Y. 2007-08 V. LOVELY EXPORTS P. LTD. (2009) 319 ITR (ST) 5 (SC ), THAT THE GENUINENESS OF THE TRANSACTION IS TO BE DEMONSTRATE D BY SHOWING THAT THE ASSESSEE HAD, IN FACT, RECEIVED MONEY FROM THE SAID SHAREHOLDER AND IT CAME FROM THE COFFERS OF THAT VERY SHAREHOLD ER. IT WAS FURTHER HELD AS FOLLOWS :- AS FAR AS CREDITWORTHINESS OR FINANCIAL STRENGTH O F THE CREDITOR/SUBSCRIBER IS CONCERNED, THAT CAN BE PROVE D BY PRODUCING THE BANK STATEMENT OF THE CREDITOR/SUBSCR IBER SHOWING THAT IT HAD SUFFICIENT BALANCE IN ITS ACCOU NTS TO ENABLE IT TO SUBSCRIBE TO THE SHARE CAPITAL. THIS JUDGEME NT FURTHER HOLDS THAT ONCE THESE DOCUMENTS ARE PRODUCED, THE A SSESSEE WOULD HAVE SATISFACTORILY DISCHARGED THE ONUS CAST UPON HIM. THEREAFTER, IT IS FOR THE ASSESSING OFFICER TO SCRU TINIZE THE SAME AND IN CASE HE NURTURES ANY DOUBT ABOUT THE VERACIT Y OF THESE DOCUMENTS TO PROBE THE MATTER FURTHER. HOWEVER, TO DISCREDIT THE DOCUMENTS PRODUCED BY THE ASSESSEE ON THE AFORE SAID ASPECTS, THERE HAVE TO BE SOME COGENT REASONS AND M ATERIALS FOR THE ASSESSING OFFICER AND HE CANNOT GO INTO THE REA LM OF SUSPICION. 6. IN THE PRESENT CASE, WE FIND THAT AFTER THE INIT IAL BURDEN WAS DISCHARGED BY THE APPELLANT-ASSESSEE, THE AO DID NO T ACCEPT THE APPLICATION TO SUMMON THE CREDITORS AND PROCEEDED T O EXAMINE THE RECORDS NAMELY THE BANK ACCOUNTS TO FIND OUT WHETHE R THE UNSECURED LOAN TRANSACTIONS WERE GENUINE. HE CONSIDERED EACH AND EVERY LOAN TRANSACTION AND FOUND THAT NONE OF THE INDIVIDUAL U NSECURED CREDITORS COULD BE SAID TO BE CREDITWORTHY TO ADVANCE LOANS F OR SUCH AMOUNTS. THE OBSERVATIONS MADE BY THE AO DISCUSSED BY THE IT AT ARE RE- PRODUCED AS FOLLOWS :- 9.1 THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASSESSMENT ORDER AND THE CRUX OF THE FINDINGS OF TH E AO HAD BEEN THAT THERE WERE VERY SMALL BANK BALANCES I N THE BANK ACCOUNTS OF THE CREDITORS AND THEY WERE HAVING MEAGER INCOME AND AS SUCH, THEY WERE NOT MEN OF MEA NS TO ADVANCE ANY LOAN TO THE ASSESSEE. IN THE CASE OF ABHAY MAHESHWARI, THERE WAS VERY SMALL BALANCE OF RS.3528 /- IN HIS BANK ACCOUNT. HE WAS EXAMINED ON OATH AND HE 17 ITA NO.246/AGR/2012 A.Y. 2007-08 WAS NOT ABLE TO GIVE SOURCE OF CASH DEPOSIT TO THE SATISFACTION OF THE AO. HE WAS EARNING HARDLY ONE L AC 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 WITH HIM FOR GIVING LOAN TO THE ASSESSEE. IN HIS CASE, H E HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDE R APPEAL AT RS.1,02,850/- (PB-60). IN THE CASE OF SH RI AMIT MAHESHWARI, HE WAS ALSO HAVING SMALL BANK BALANCE O F RS.2429/- BEFORE ISSUE OF CHEQUE TO THE ASSESSEE AN D EQUAL AMOUNT OF THE CASH CREDIT WAS DEPOSITED IN TH E BANK ACCOUNT. HE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT RS.44972/- (PB-71). IN THE CASE OF SMT. KEERTI MAHESHWARI, IN HER BANK ACC OUNT, THERE WAS BALANCE OF RS.4688/- ONLY PRIOR TO ISSUE OF CHEQUE TO THE ASSESSEE AND EQUIVALENT AMOUNT OF CAS H CREDIT WAS DEPOSITED FOR THE PURPOSE OF ISSUE OF CH EQUE IN FAVOUR OF THE ASSESSEE. FOR THE ASSESSMENT YEAR UND ER APPEAL, SHE HAS FILED RETURN OF INCOME AT RS.1,01,0 00/- ONLY. IN THE CASE OF SMT. MITHLESH MAHESHWARI, THE BANK BALANCE BEFORE ISSUE OF CHEQUE WAS RS.10,794/- AND EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSITED IN H ER BANK ACCOUNT FOR ISSUE OF CHEQUE IN FAVOUR OF ASSES SEE. FOR ASSESSMENT YEAR UNDER APPEAL, SHE FILED RETURN OF INCOME AT RS.1,02,476/- ONLY. IN THE CASE OF SH. RA MPAL SING, IT IS ALREADY NOTED ABOVE THAT THE DEPOSIT EN TRY IN HIS CASE IS NOT EXPLAINED AND PRIOR TO ISSUE OF CHE QUE, THERE WAS BANK BALANCE OF RS.3708/- ONLY. HE HAS FI LED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT LOSS WITH AGRICULTURAL INCOME (PB-102). I N THE CASE OF SHRI SHARIQ ALI KHAN, THE BANK BALANCE IS H IS ACCOUNT WAS RS.1055/- PRIOR TO ISSUE OF CHEQUE AND EQUIVALENT CASH AMOUNT WAS DEPOSITED FOR ISSUING CH EQUE IN FAVOUR OF THE ASSESSEE. HE HAS FILED RETURN OF I NCOME AT RS.70,373/- PLUS AGRICULTURAL INCOME (PB-116). THES E DETAILS NOTED IN THE ASSESSMENT ORDER AND THE DETAI LS VERIFIED FROM THE PAPER BOOK WOULD CLEARLY SUPPORT THE FINDINGS OF THE AO THAT NONE OF THE CREDITORS WERE PERSONS OF SUFFICIENT MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. FILING OF BALANCE SHEETS, CASH FLOW STATE MENTS, 18 ITA NO.246/AGR/2012 A.Y. 2007-08 CASH BOOKS ETC. HAVE NO EVIDENTIARY VALUE 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 CREDITORS AND MAJORITY OF THEM HAVE SHOWN ESTIMATED INCOME IN THEIR RETURNS OF INC OME. THEREFORE, SUCH BALANCE SHEET, CASH FLOW STATEMENTS 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 H AS MADE NO EFFORTS TO PRODUCE THE REMAINING CREDITORS BEFORE THE AO. EVEN IN THE STATEMENT OF ONE 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 SOUR CE. IT IS WELL SETTLED LAW THAT BURDEN IS UPON THE ASSE SSEE TO PROVE INGREDIENTS OF SECTION 68 OF THE ACT BY PROVI NG IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CREDITWORTHINESS OF TH E CREDITORS WHO WERE HAVING ONLY MEAGER INCOME. NO DETAILS OF THEIR SAVINGS HAVE BEEN FILED. THE ASSES SEE HAS NEVER SHOWN HIS WILLINGNESS TO PRODUCE THE REMAININ G 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 BALAN CE IN THE BANK ACCOUNTS OF THE CREDITORS PRIOR TO ISSU E OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAV ING ANY SOURCE AND IT WAS THE MONEY OF THE ASSESSEE WHI CH WAS ROUTED THROUGH THE BANK ACCOUNTS OF THE CREDITO RS FOR THE PURPOSE OF GIVING CREDITS TO THE ASSESSEE. THES E WERE, THEREFORE, ACCOMMODATION ENTRIES ONLY AND AS SUCH, COULD NOT BE CONSIDERED AS GENUINE TRANSACTIONS. ME RELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKIN G CHANNEL, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GENUINE TRANSACTION. 7. WE DO NOT FIND THAT THE AO FAILED TO EXERCISE HI S JURISDICTION IN REFUSING TO SUMMON THE FILE OF UNSECURED CREDITORS OTHER THAN SHRI 19 ITA NO.246/AGR/2012 A.Y. 2007-08 ABHAY MAHESHWARI, WHO HAD APPEARED AND WAS EXAMINED . WE ALSO DO NOT FIND THAT THE AO HAS COMMITTED ANY ERROR IN EXAMINING THE ACCOUNT BOOKS. NONE OF THE CREDITORS UNDER EXAMINA TION COULD PROVE THEIR CREDITWORTHINESS. EACH ONE OF THEM HAD A VER Y SMALL BANK BALANCE OF A FEW THOUSAND RUPEES ONLY AND THAT IN A LL THE CASES THE ENTIRE SUM GIVEN AS UNSECURED LOAN WAS DEPOSITED ON THE SAME DAY, WHEN IT WAS ADVANCED TO THE ASSESSEE-APPELLANT. 8. WE DO NOT FIND THAT ANY OF THE SUBSTANTIAL QUEST IONS OF LAW FRAMED BY THE APPELLANT ARISES FOR CONSIDERATION OF THE COURT. THE FINDINGS RECORDED BY THE AO ABOUT THE CREDITWORTHIN ESS OF THE UNSECURED LOANS OF RS.13,00,000/- AS AGAINST THE TO TAL UNSECURED LOANS OF RS.78,75,249/-, DOES NOT SUFFER FROM ANY E RROR OF LAW. 27. TO MAINTAIN CONSISTENCY, WE FOLLOW THE ABOVE OR DER OF I.T.A.T IN THE CASE OF SMT. SUMAN GUPTA VS. ITO IN ITA NO.454/AGR/ 2009, ORDER DATED 16.03.2012, 138 ITD 153 (AGRA), WHERE IN THE RATIOS OF JUDGMENTS RELIED UPON BY THE ASSESSEE AND CONTENTION OF THE ASSESSEE HAVE BEEN CONSIDERED. IN THE LIGHT OF THAT, THE ADDITION TO THE EXTENT OF RS.5,75,000/- ON ACCOUNT OF SMT. MAMTA AGARWAL RS.1,00,000/-, SHRI ATUL KUMAR ( HUF) RS.2,00,000/-, SHRI RAJIV KUMAR (HUF) RS.1,50,000/- AND SMT. SUMAN AGARWAL RS.1,25,000/- ARE REQUIRED TO BE CONFIRMED. BECAUSE THE ASSESSEE HAS FILED TO PRODUCE SUFFICIENT EVIDENCE IN SUPPORT OF CREDIT WO RTHINESS OF CREDITORS. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTOR E THE ORDER OF A.O IN RESPECT OF ADDITIONS IN RESPECT OF THESE CREDITORS. IN THE LIGHT OF THE FACT, ADDITION TO THE EXTENT OF RS.5,75,000/- IS CONFIRME D. HOWEVER, THE ADDITION TO THE EXTENT OF RS.2,50,000/- ON ACCOUNT OF SMT. P RIYANKA GUPTA RS.70,000/- , SMT. AKANSHA GUPTA RS.1,20,000/- AND SHRI NARAYAN DAS & SONS RS.60,000/- HAVE BEEN RIGHTLY DELETED BY THE CIT(A) AS THERE SUFFICIENT FUNDS WERE AVAILABLE IN BANK ACCOUNTS BEFORE ISSUING CHEQ UES TO THE ASSESSEE. THEREFORE, ORDER OF THE CIT(A) REGARDING DELETION O F ADDITION OF RS.2,50,000/- IS UPHELD. 8. IN THE LIGHT OF THE JUDGMENT OF JURISDICTIONAL H IGH COURT, THE CITATIONS GIVEN BY THE LD. AUTHORISED REPRESENTATIVE OF I.T.A.T., A GRA BENCH IN THE CASE OF SUBHASH DALL MILL VS. ACIT, 257 ITR (AT) 115 AND CI T VS. ORISSA CORPORATION 20 ITA NO.246/AGR/2012 A.Y. 2007-08 PVT. LTD., 159 ITR 78 (SC) DOES NOT HELP TO THE ASS ESSEE. THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. ORISSA CORPORATIO N PVT. LTD. ALSO DOES NOT HELP TO THE ASSESSEE AS IN THAT CASE THE APEX COURT HELD THAT WHEN THE ASSESSEE FILED DETAILS, THE BURDEN IS ON THE REVENUE FOR FURTHER E XAMINATION. IN THE CASE UNDER CONSIDERATION, THE A.O. HAS FURTHER EXAMINED AND FO UND THAT DEPOSITORS HAD DEPOSITED CASH IN THEIR BANK ACCOUNT JUST BEFORE IS SUING CHEQUES TO THE ASSESSEE. FURTHER CONTENTION OF THE LEARNED AUTHORISED REPRES ENTATIVE THAT THE DEPOSITORS ARE ASSESSED TO TAX ALSO DOES NOT HELP TO THE ASSESSEE. WE FOLLOW THE ABOVE ORDER OF JURISDICTIONAL HIGH COURT AND IN THE LIGHT OF THAT WE CONFIRM THE ORDER OF CIT (A). 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY