The ITO, Ward-9(3), Surat V. Smt. Rekhaben Rameshbhai Patel, Surat

ITA 2672/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9947 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 28-07-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: M G PATEL
• Keywords: Unexplained cash credit; Non compliance; Onus to prove
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT MUKUL SHRAWAT, , , , JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :8-9-10 DRAFTED ON: 8-9-10 ITA NO. 2672 /AHD/ 2008 ASSESSMENT YEAR :2005-06 INCOME TAX OF FICER, WARD 9(3), ROOM NO.420, AAYAKAR BHAVAN, MAJURA GATE, SURAT. VS. REKHABEN RAMESHBHAI PATEL, C/27,SAGAR INDUSTRIAL ESTATE, VASTA DEVDI ROAD, SURAT. PAN/GIR NO. : AAOPP 2120 L (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI K. M. MAHESH, SR. D.R. RESPONDENT BY: SHRI M. G. PATEL. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-V, SURAT DATED 28-5-2008. 2. THE SOLE GROUND OF APPEAL OF THE REVENUE READS A S UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) HAS ERRED IN DELETING THE ADDITION OF `.17,87,787/- MAD E BY THE LEARNED ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE I. T. ACT DATED 31- 12-2007. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VERIFICATION OF THE BALANCE SHEET REVEALS THAT, DURING THE YEAR UNDER ASSESSMENT THE ASSESSE E HAS OBTAINED UNSECURED LOANS AMOUNTING TO `.85,20,419/- FROM AS MANY AS 28 PARTIES. IT IS NOTICED THAT SOME OF THE LOANS HAVE BEEN SQUARED UP DURING THE YEAR ITSELF. DURING THE COURSE OF HEARIN G DESPITE REPEATED REQUESTS THE ASSESSEE DID NOT FURNISH CONF IRMATION FROM - 2 - THESE PARTIES. HOWEVER, ON 27-11-2007 THE ASSESSEE SUBMITTED CONFIRMATION FROM SOME OF THE PARTIES ALONG WITH BA NK STATEMENT OF THE DEPOSITORS. ON VERIFICATION OF THE BANK STAT EMENT IT IS NOTICED THAT CASH HAS BEEN DEPOSITED IN THE BANK ACCOUNT OF THE DEPOSITORS BEFORE ISSUING CHEQUES TOWARDS LOAN AMOUNT. FURTHER ON VERIFICATION OF THE BANK STATEMENT OF SHRI DILIP ME HTA, FULCHAND AND THAKARLAL ENTRY OF THE LOAN GIVEN ARE NOT REFLECTED IN THE BANK STATEMENT. IN ORDER TO VERIFY THE GENUINENESS OF TH E DEPOSITS SHOWN BY THE ASSESSEE, THE ASSESSEE WAS ASKED TO PRODUCE ALL THE DEPOSITORS FOR PERSONAL EXAMINATION ON 7-12-2007 HO WEVER, ON THE APPOINTED DATE THE ASSESSEE HAS FAILED TO PRODUCE T HE DEPOSITORS. CONTRA COPY OF CONFIRMATION OF ACCOUNT AND BANK STA TEMENT WERE FILED BY THE ASSESSEE IN SOME OF THE CASES. IN THE CIRCUMSTANCES VIDE ORDER SHEET ENTRY DATED 7-12-2007 THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY, THE DEPOSITS SHOWN IN THE NAM E OF DEPOSITORS IN WHOSE CASE CONFIRMATION HAVE NOT BEEN FURNISHED AND IN THE CASES WHERE CASH DEPOSITS ARE APPEARING JUST BEFORE ADVANCING LOAN/DEPOSIT TO THE ASSESSEE. IN RESPONSE TO SHOW CAUSE THE ASSESSEE VIDE HIS REPLY DATED 19-12-2007 REPLIE D AS UNDER :- WE HAVE TO PRODUCE FOLLOWING PARTIES BEFORE YOU, BUT FOLLOWING PARTIES SAID THAT WE HAVE ALREADY GIVEN CONFIRMATION ALONG WITH COPY OF BANK STATEMENT AND FURTHER TILL DATE DEPARTMENT HAS NOT ISSUED ANY SUMMONS OR WE HAVE NOT RECEIVED ANY SUMMONS FOR CALLING OR APPEARING B EFORE THE ASSESSING OFFICER AND HENCE WE ARE NOT CAME. HO WEVER, IS DEPARTMENT CAN SEND US ANY NOTICE REGARDING THIS MATTER THEN WE ARE APPEAR BEFORE ASSESSING OFFICER. RAJSHREE HARSHADBHAI SHAH RUPA KAMLESH KHANDHAR VARSHA JAGDISH KANDHAR 4. IN THIS CONNECTION SUMMONS UNDER SECTION 131 OF THE I. T. ACT WAS ISSUED TO THE FOLLOWING 11 DEPOSITORS ON TEST C HECK BASIS REQUIRING THEIR PERSONAL ATTENDANCE WITH BOOKS OF A CCOUNTS ON 27- 12-2007. 1. SHRI ROSHANLAL P. NAVLAKHA. 2. SMT. KANGUBEN R. NAVLAKHA 3. SHRI MAHESHBHAI R. NAVLAKHA. - 3 - 4. SMT. JAGRATI P. SHAH 5. SMT. RAJSHREE HARSHADBHAI SHAH 6. SMT. RUPA KAMLESH KHANDAR 7. SMT. VARSHA JAGDISH KHANDAR 8. SMT. SUDHA MAHESHKUMAR SHAH 9. M/S. SHREE CORPORATION. 10.SMT. DARSHITA N. SHAH 11.SMT.ARUNA L. NAVLAKHA. 5. IN RESPONSE TO SUMMONS ISSUED TO THE ABOVE PERSO NS, NO BODY ATTENDED ON THE APPOINTED DATE OR TILL FINALIZ ATION OF THIS ORDER. BEFORE ADDING THE LOAN AMOUNTS APPEARING IN THE NAME OF ABOVE PERSONS TREATING THE SAME AS UNEXPLAINED CASH CREDITS, SOME OF THE SALIENT FEATURES OF THE CASE ARE DISCUS SED AS UNDER. 6. FROM THE CONFIRMATION FURNISHED BY THE ASSESSEE, IN RESPECT OF ABOVE ELEVEN PERSONS, IT IS NOTICED THAT THE LOA N TRANSACTIONS ARE NOT REFLECTED IN THE BANK ACCOUNT OF SMT. JAGRUTI P . SHAH. IN THE CASE OF ARUNA L. NAVLAKHA THE ASSESSEE HAS NOT FURN ISHED BANK ACCOUNT SO THAT THE TRANSACTION MADE THROUGH BANK C OULD NOT BE VERIFIED. NO CONFIRMATION WAS FILED FROM SMT. SHAR MILA D. JAIN, SONAL P. RAMANI AND ILLABEN NARENDRA KUMAR. FURTHER , THE CONFIRMATION AND ACCOUNT FURNISHED IN RESPECT OF RE ST OF THE ABOVE SAID PERSONS, IT IS NOTICED THAT CASH HAS BEEN DEPO SITED IN THE BANK ACCOUNT OF THESE PERSONS EQUIVALENT TO THE DEPOSIT, IMMEDIATELY BEFORE ISSUING CHEQUES FROM THESE ACCOUNTS. THEREFO RE, THE CREDIT WORTHINESS OF THE DEPOSITORS ARE NOT PROVED. THE AS SESSEE FAILED TO DISCHARGE ONUS CASTED UPON HIM TO ESTABLISH THAT PE RSON FROM WHOM LOANS HAVE BEEN ACCEPTED ARE MEN OF MEANS TO ALLOW CASH CREDIT AS WELL AS FAILED TO FURNISH GENUINENESS OF THE DEPOSIT. IT IS VERY PERTINENT TO NOTE HERE THAT MERE FILING OF CON FIRMATION AND I. T. RETURN IS NOT SUFFICIENT PROOF OF CASH CREDIT; THE AMOUNT MUST BE AVAILABLE AT THE TIME OF ADVANCING OF FUND. 7. THE ONUS TO PROVE THE GENUINENESS OF CASH CREDIT LIES ON THE ASSESSEE. SUCH PROOF INCLUDES PROOF OF IDENTITY OF THE CREDITOR, CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND THE GENUINENESS OF THE TRANSACTION. THE CRITERIA HAVE B EEN LAID DOWN IN - 4 - THE DECISIONS CITED BELOW THAT THE ASSESSEE MUST PR OVE THREE THINGS, PRIMA FACIE. (I) SHANKAR INDUSTRIES VS. CIT (1978) 114 ITR 689 (CAL. ) (II) C. KANT & CO. VS. CIT (1980) 126 ITR 63 (CAL.) (III) PRAKASH TEXTILE AGENCY VS. CIT (1980) 121 ITR-89( C AL) (IV) ORIENTAL WIRE INDUSTRIES P. LTD. VS. CIT (1981) 131 ITR 688(CAL.) (V) CIT VS. UNITED COMMERCIAL & INDUSTRIAL CO. P.LTD., (1991) 187 ITR 596, 599(CAL.) (VI) M.A., UNNEERI KUTTY VS. CIT (1992) 19 8 ITR 147,150(KER), (1993) 201 (ST.) 23 (SC). (VI) CIT VS. PRECISION FINANCE PVT.LTD. (1994) 208 ITR 465, 470 (CAL.). 8. IT HAS BEEN HELD IN THE CASE OF CIT VS. BAISHNAY CHARAN MOHANTY (1995) 212 ITR 199, 201 (ORISSA HIGH COURT) THAT THE THREE CONDITIONS I.E. IDENTITY OF THE CREDITOR, CAPACITY OF SUCH CREDIT TO ADVANCE THE MONEY AND THE GENUINENESS OF THE TRANS ACTION HAVE TO BE ESTABLISHED FOR ANY CASH CREDIT TO BE GENUINE . MERE FURNISHING OF THE PARTICULARS IS NOT ENOUGH. SIMILAR FINDINGS HAVE BEEN GIVEN BY THE GAUHATI HIGH COURT IN THE CASE OF JALAN TIMB ERS VS. C.I.T. (1997) 223 ITR 11, 17 (GAU.). 9. IN THE CASE OF CASH CREDITS, THE CONCLUSIVE FINDINGS HAVE BEEN GIVEN BY THE SUPREME COURT IN THE CASE OF SUMATI DA YAL VS. CIT 214 ITR 801 (1995) THAT THE ONUS TO PROVE THE GENUI NENESS OF CREDIT LIES ON THE ASSESSEE. THE FINDINGS HAVE BEEN GIVEN AS BELOW :- IN VIEW OF SECTION 68,WHERE ANY SUM IS FOUND CREDI TED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAM E MAY BE CHARGED TO INCOME TAX AS THE INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY TH E ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPIN ION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., T HE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT, THE SAID EVIDEN CE BEING UNREBUTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF ANY INCOME NATURE. 10. IN THE INSTANT CASE, THE ASSESSEE HAS NOT REBU TTED THE ALLEGATION OF DEPOSITS BEING NON-GENUINE BY FURNISH ING THE REQUIRED - 5 - DOCUMENTS OR ANY OTHER EVIDENCES CALLED FOR EVEN AF TER AN OPPORTUNITY PROVIDED TO HIM THROUGH SHOW-CAUSE NOTI CE. 11. FROM THE FACTS DISCUSSED ABOVE, IT IS CLEAR THAT THE ASSESSEE COULD NOT PROVE THE IDENTITY OF THE DEPOSITORS AND THE SOURCE OF INCOME WHICH ENABLED THEM TO GIVE LOAN TO THE ASSES SEE. IN VIEW OF FACTS AND CIRCUMSTANCES MENTIONED ABOVE, THE CASH C REDITS RECEIVED FROM THE FOLLOWING PARTIES/PERSONS HAVE NO T BEEN PROVED BY THE ASSESSEE AS GENUINE :- SR.NO. NAME OF THE PERSON AMOUNT OF LOAN(`) 1. SUDHA M. SHAH 2,09,040/ - 2. RAJSHREE H. SHAH 1,57,191/ - 3. RUPA K. KANDHAR 1,04,520/ - 4. VARSHA J. KANDHAR 2,09,452/ - 5. SHREE CORPORATION 1,74,869/ - 6. JAGRUTI P.SHAH 41,005/ - 7. ROSHANLAL P. NAVLAKHA 3,14,794/ - 8. KANKUBEN R. NAVLAKHA 3,14,794/ - 9. ARUNA L. NAVLAKHA 1,04 ,931/ - 10. SHARMILA D. JAIN 1,04,520/ - 11. MAHESH M.SHAH 1,57,191/ - 12. SONAL P. RAMANI 59,450/ - 13. ILLABEN NARENDRAKUMAR. 72,977/ - TOTAL. TOTAL. TOTAL. TOTAL. 20,24,734/ 20,24,734/ 20,24,734/ 20,24,734/ - -- - 12. IN THE CIRCUMSTANCES, THE CASH CREDIT RECEIVED FROM 13 PERSONS AS MENTIONED ABOVE, FROM WHOM HE HAS OBTAIN ED LOAN OF `.20,24,734/- IS TREATED AS INCOME OF THE ASSESSEE FROM HIS UNDISCLOSED SOURCES AND BROUGHT TO TAX UNDER SECTIO N 68 OF THE INCOME TAX ACT,1961 AS UNEXPLAINED CASH CREDIT. 13. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. TH E FACTS OF THE CASE HAVE BEEN LAID OUT IN SUBSTANTIAL DETAILS IN THE PRECEDING PARAGRAPHS. I FIND THAT THE ITO DREW AN A DVERSE INFERENCE FROM SUCH FACTS, MAINLY ON TWO GROUNDS. F IRSTLY, THE ASSESSEE HAD BEEN UNABLE TO PRODUCE THE ALLEGED DEP OSITORS OR THE LENDERS BEFORE THE ITO. SECONDLY, CASH WAS D EPOSITED IN THE BANK ACCOUNTS OF THE DEPOSITORS BEFORE ISSUI NG THE CHEQUES TO THE ASSESSEE. THIRDLY, THE TRANSACTIONS OF CERTAIN DEPOSITORS WERE NOT REFLECTED IN THEIR BANK STATEME NTS. - 6 - AS REGARDS NON-ATTENDANCE OF THE DEPOSITORS, I AM O F THE OPINION THAT SINCE THE ASSESSEE HAD GIVEN THE COMPE TE WHEREABOUTS OF THE DEPOSITORS AND EVEN THE SUMMONS UNDER SECTION 131 OF THE ACT ISSUED BY THE ITO ON THE GIV EN ADDRESSES OF THE DEPOSITORS WERE DULY SERVED, THE A SSESSEE HAD DISCHARGED THE ONUS CAST UPON HER UNDER SECTION 68 OF THE ACT. FURTHER, ON GOING THROUGH THE COPY OF 2 RE CEIPTED SUMMONS (COPIES WHICH HAVE BEEN ENCLOSED WITH WRITT EN SUBMISSIONS) ISSUED TO SMT.RAJSHREE HARSHADBHAI SHA H AND SHREE CORPORATION, IT IS NOTICED THAT THERE WAS A V ALID REASON WHY THE DEPOSITORS COULD NOT APPEAR BEFORE THE ITO, SINCE, THE SUMMONS UNDER SECTION 131 OF THE ACT WERE SERV ED LATE I.E. AFTER THE DATE ON WHICH THE PERSONAL ATTENDANC E WAS CALLED FOR. FOR OTHERS ALSO IT IS NOTED THAT ALL TH E SUMMONS WERE ISSUED CALLING FOR ATTENDANCE 27-12-2007AND TH E ASSESSMENT ORDER IS PASSED ON 31-12-2007. A HURRIED PROCEEDING IS EVIDENT PRIMA-FACIE. AS REGARDS CASH DEPOSITED IN THE BANK STATEMENTS OF CERTAIN DEPOSITORS, THE POINT TO NOTE HERE IS THAT, THE ASS ESSEE HAD FURNISHED THE NAMES AND ADDRESSES OF THE DEPOSITORS , THEIR PAN, THEIR I.T. DETAILS, COPIES OF THEIR BANK ACCOU NTS AND THUS, THE ASSESSEE HAD CLEARLY DISCHARGED THE INITIAL BUR DEN WHICH LAY ON HER UNDER SECTION 68 OF THE I. T. ACT AND SH E IS NOT FURTHER EXPECTED TO PROVE THE GENUINENESS OF CASH D EPOSITED IN BANK ACCOUNTS OF THE DEPOSITORS, AS HAS BEEN HEL D BY THE HIGH COURT OF GUJARAT IN THE CASE OF DCIT V. ROHINI BUILDERS (2002) 256 ITR 360 (GUJ) AND BY THE HIGH COURT OF B OMBAY IN THE CASE OF ORIENT TRADINGCO. LTD. VS. CIT (1963) 4 9 ITR 723 (BOM.). THE BURDEN HAD THEN SHIFTED ON TO THE ITO TO DISPRO VE THE ASSESSEES CLAIM, AND EXPLANATIONS AND THE EVIDENCE S FURNISHED BY HER. UNFORTUNATELY, THE ITO FAILED TO DISCHARGE HIS BURDEN. CONSEQUENTLY, HE WAS NOT IN A POSITION TO EITHER RAISE DOUBTS ABOUT THE EVIDENCES FURNISHED BY THE A SSESSEE. FURTHER, ON VERIFICATION OF THE COPY OF BANK ACCOUN T OF SMT. JAGRUTI P. SHAH AND ARUNA L. NAVLAKHA IT IS SEEN TH AT THE TRANSACTIONS WITH THE ASSESSEE ARE FULLY REFLECTED IN THEIR BANK ACCOUNT AND THE ITOS FINDINGS IN THIS REGARD ARE TOTALLY MISPLACED. HOWEVER, THE ASSESSEE HAS NO VALID REASON TO JUSTIF Y WHY SHE COULD NOT FILE THE CONFIRMATION AND BANK STATEMENT OF SMT. SHARMILA D. JAIN AND SONAL P. RAMANI BEFORE THE ITO DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN SPITE OF SU FFICIENT OPPORTUNITY GRANTED TO HER AND ACCORDINGLY, THE SAM E ARE NOT ACCEPTABLE AT THE APPELLATE STAGE AND THUS, I DECLI NE TO ACCEPT THE CONFIRMATIONS AND THE BANK STATEMENTS OF THE SAID DEPOSITORS SUBMITTED DURING THE COURSE OF APPE LLATE - 7 - PROCEEDINGS. FURTHER, THE ASSESSEE HAS BEEN UNABLE TO FURNISH THE CONFIRMATION AND BANK STATEMENT IN RESP ECT OF ONE DEPOSITOR VIZ. ILLABEN NARENDRA KUMAR, TILL DAT E. ACCORDINGLY, IN VIEW OF THE ABOVE, THE ADDITION UND ER SECTION 68 OF THE ACT AS MADE BY THE ITO IN RESPECT OF LOAN S RECEIVED FROM SHARMILA D. JAIN (`.1,04,520/-), SONAL P.RAMAN I (`. 59,450/-) AND ILLABEN NARENDRA KUMAR (`. 72,977/-) TOTALING TO `.2,36,947/- IS UPHELD ON THE GROUND THAT THE ASSES SEE HAS NOT BEEN ABLE TO DISCHARGE THE INITIAL ONUS OF PROV ING THE LOANS WHEREAS THE REMAINING ADDITION UNDER SECTION 68 AMOUNTING TO `.17,87,787/- (`. 20,24,734 - `.2,36,9 47) IS DIRECTED TO BE DELETED SINCE THE ASSESSEE HAD FURN ISHED THE NAME, ADDRESS, CONFIRMATION, BANK STATEMENTS AND I. T. RETURNS OF THE DEPOSITORS CLEARLY DISCHARGING THE O NUS LYING ON HER. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSEE AMONGST OTHER ACCEPTED LOANS FROM THE FOLLOWING 13 PERSONS TOTALLING TO `.20,24,734/-. SR.NO. NAME OF THE PERSON AMOUNT OF LOAN(`) 1. SUDH A M. SHAH 2,09,040/ - 2. RAJSHREE H. SHAH 1,57,191/ - 3. RUPA K. KANDHAR 1,04,520/ - 4. VARSHA J. KANDHAR 2,09,452/ - 5. SHREE CORPORATION 1,74,869/ - 6. JAGRUTI P.SHAH 41,005/ - 7. ROSHANLAL P . NAVLAKHA 3,14,794/ - 8. KANKUBEN R. NAVLAKHA 3,14,794/ - 9. ARUNA L. NAVLAKHA 1,04,931/ - 10. SHARMILA D. JAIN 1,04,520/ - 11. MAHESH M.SHAH 1,57,191/ - 12. SONAL P. RAMANI 59,450/ - 13. ILLABEN NARENDRAKUMAR. 72,977/ - TOTAL. TOTAL. TOTAL. TOTAL. 20,24,734/ 20,24,734/ 20,24,734/ 20,24,734/ - -- - 15. THE LEARNED ASSESSING OFFICER ISSUED SUMMONS UN DER SECTION 131 OF THE ACT REQUIRING THEIR PERSONAL ATT ENDANCE ON 27- 12-2007 WITH BOOKS OF ACCOUNTS. NONE ATTENDED ON TH E APPOINTED DATE OR TILL THE FRAMING OF THE ASSESSMENT ORDER BY THE LEARNED ASSESSING OFFICER. FROM THE CONFIRMATION OF ACCOUNT AND BANK STATEMENT THE LEARNED ASSESSING OFFICER OBSERVED TH AT THE LOAN IS NOT REFLECTED IN THE BANK ACCOUNT OF SMT. JAGRUTI P . SHAH AND IN THE - 8 - CASE OF SMT. ARUNA M. NAVALAKHA, THE ASSESSEE DID N OT FILE THE BANK STATEMENT SO THE TRANSACTION OF LOAN TAKEN BY THE ASSESSEE COULD NOT BE VERIFIED BY THE LEARNED ASSESSING OFFI CER FURTHER, NO CONFIRMATION OF ACCOUNT WAS FILED IN THE CASE OF SM T. SHARMILA D. JAIN, SMT. SONAL P. RAMANI AND SMT. ILABEN NARENDRA KUMAR. IN THE CASE OF THE REST OF THE PERSONS THE LEARNED ASSESSI NG OFFICER OBSERVED THAT CASH WAS DEPOSITED IMMEDIATELY BEFORE THE ISSUE OF CHEQUE TO THE ASSESSEE. THEREFORE, THE LEARNED ASSE SSING OFFICER CONCLUDED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTION, AND THE CREDIT WORT HINESS OF THE CREDITORS. HE OBSERVING THAT MERE FILING OF CONFIRM ATION WAS NOT PROOF OF CASH CREDIT, THE AMOUNT SHOULD BE AVAILABL E AT THE TIME OF ADVANCING OF FUND AND THAT IT WAS THE DUTY OF THE A SSESSEE TO PROVE THE IDENTITY OF THE CREDITORS TREATED THE AMOUNTS I N QUESTION AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 AND MADE T HE ADDITION TO THE INCOME OF THE ASSESSEE. 16. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER . 17. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS. ROHINI BUILDERS (2002) 256 ITR 360(GUJ. ) AND SUBMITTED THAT THE HON'BLE GUJARAT HIGH COURT HAS HELD THAT M ERELY DEPOSITING OF CASH BY THE CREDITOR IN THE BANK ACCOUNT BEFORE ISSUANCE OF THE CHEQUE TO THE ASSESSEE CANNOT BE VIEWED ADVERSELY A S THE CREDITORS DID NOT HAVE THE CREDIT WORTHINESS TO ADV ANCE THE LOAN TO THE ASSESSEE. THE ASSESSEE FILED CONFIRMATION OF A LL THE DEPOSITORS AND THUS DISCHARGED THE INITIAL BURDEN WHICH REST U PON TO PRIMA FACIE TO SHOW THAT THE LOANS ARE GENUINE. THEREFOR E, THE ADDITION MADE CANNOT BE SUSTAINED IN LAW AS THEREAFTER, THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON R ECORD TO SHOW THAT THE LOANS ARE NOT GENUINE OR THE CREDITORS DID NOT HAVE THE CAPACITY TO ADVANCE THE LOANS. - 9 - 18. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORT ED THE ORDERS OF THE LOWER AUTHORITIES. 19. WE FIND THAT DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE HAS CLAIMED TO HAVE RECEIVED LOANS FROM 28 PARTIES OF `.85,29,419/- OUT OF THE SAME THE LEARNED ASSESSING OFFICER ADDED `.20,24,734/- RELATING TO 13 PARTIES AS UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. IN RESPECT OF SMT. JA GRUTI P. SHAH FROM, WHOM THE ASSESSEE CLAIMED TO HAVE RECEIVED LOAN OF `.41,005/- THE LEARNED ASSESSING OFFICER OBSERVED THAT THE LOAN IS NOT REFLECTED IN HER BANK STATEMENT. WE FIND THAT THE ASSESSEE HAS N OT EXPLAINED THE ABOVE DISCREPANCY BEFORE US. THEREFORE, WE DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THIS ADDITION MADE BY THE LEARNED ASSESSING OFFICER 20. FURTHER, IT IS OBSERVED THAT IN RESPECT OF ALLE GED LOAN OF `.1,04,931/- FROM SMT. ARUNA L. NAVALAKHA THE LEARN ED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT FILED CO PY OF HER BANK ACCOUNT AND THEREFORE, THE SAME COULD NOT BE VERIFI ED. WE FIND THAT THE ASSESSEE HAS NOT FILED COPY OF BANK STATEM ENT OF THE SAID CREDITOR EITHER BEFORE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) OR BEFORE US ALSO. NO EXPLANATION WAS OF FERED IN THIS REGARD. IN ABSENCE OF ANY EXPLANATION WE DO NOT FI ND ANY GOOD REASON TO INTERFERE WITH THE ADDITION MADE BY THE L EARNED ASSESSING OFFICER. 21. FURTHER IN RESPECT OF LOAN OF `.1,04,520/- FROM SMT. SHARMILA D. JAIN, LOAN OF `.59,450/- FROM SMT. SONAL P. RAMA NI AND LOAN OF `.72,977/- FROM SMT. ILLABEN NARENDRA KUMAR, THE LE ARNED ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NO T FILED THEIR CONFIRMATION OF ACCOUNT. WE FIND THAT THE ASSESSEE HAS NOT FILED THE CONFIRMATION OF ACCOUNT EITHER BEFORE THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) OR BEFORE US ALSO. NO EXPLANAT ION WAS OFFERED IN THIS REGARD. IN ABSENCE OF ANY EXPLANATION WE DO NOT FIND ANY - 10 - GOOD REASON TO INTERFERE WITH THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. 22. WITH REFERENCE TO BALANCE 9 PARTIES INVOLVING A MOUNT OF `.16,41,851/- THE LEARNED ASSESSING OFFICER MADE TH E ADDITION ON THE GROUND THAT THEY HAVE DEPOSITED CASH IN THEIR B ANK ACCOUNT IMMEDIATELY BEFORE ISSUING OF CHEQUES TO THE ASSESS EE. WE FIND THAT IT IS NOT IN DISPUTE THAT THE 9 PARTIES IN QUE STION ARE ASSESSED TO TAX. IT IS ALSO NOT IN DISPUTE THAT THE NOTICES ISSUED TO THESE PARTIES BY THE LEARNED ASSESSING OFFICER WERE SERVE D UPON THEM. THUS, WE FIND THAT THE IDENTITY OF THE PARTIES ARE NOT IN DOUBT. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ACTION TAKEN FURTHER BY THE LEARNED ASSESSING O FFICER FOR NON COMPLIANCE OF NOTICES BY THESE PARTIES. IN OUR CON SIDERED VIEW NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE FOR NON COMPLIANCE OF THE NOTICES BY THE LOAN CREDITORS. F URTHER, IT IS OBSERVED THAT THE LOANS WERE GIVEN BY CHEQUES TO TH E ASSESSEE AND THE SAID TRANSACTIONS WERE ALSO REFLECTED IN TH E BANK ACCOUNT OF THE CREDITORS. THE LEARNED ASSESSING OFFICER DIS BELIEVED THE GENUINENESS ONLY ON THE GROUND THAT BEFORE ISSUING CHEQUES TO THE ASSESSEE CASH WAS DEPOSITED IN THE BANK ACCOUNT BY THE CREDITORS. UNDER LAWS THE ASSESSEE IS OBLIGED TO EXPLAIN THE S OURCE OF ITS CREDIT AND NOT SOURCE OF SOURCE. IT WAS FOR THE CR EDITORS TO EXPLAIN THE SOURCE OF THEIR DEPOSIT IN THEIR BANK ACCOUNT A ND IF THE LEARNED ASSESSING OFFICER IS NOT SATISFIED WITH THAT EXPLAN ATION THEN THE ADDITION MAY BE MADE IN THE HANDS OF THE CREDITORS. NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT T HE DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE CREDITORS FLOWN FRO M THE ASSESSEE. IT IS OBSERVED THAT THE PARTIES IN QUESTION WERE IN COME TAX ASSESSEE AND COPIES OF THEIR INCOME TAX RETURNS WER E FILED BEFORE THE LEARNED ASSESSING OFFICER. AFTER VERIFYING THE SAME THE LEARNED ASSESSING OFFICER COULD NOT POINT OUT ANY INSTANCE WHERE THE CREDITORS HAD NOT SHOWN THE LOAN GIVEN TO THE ASSES SEE IN THEIR RETURN OF INCOME. IN THE ABOVE FACTS AND CIRCUMSTA NCES, WE FIND FORCE IN THE SUBMISSION OF THE ASSESSEE BASED ON TH E DECISION OF - 11 - THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE O F ROHINI BUILDERS (SUPRA). WE THEREFORE, RESPECTFULLY FOLLOWING THE S AME ARE OF THE VIEW THAT THE ADDITION OF `.16,41,851/- ON ACCOUNT OF LOANS RECEIVED FROM THE PARTIES IN QUESTION ARE NOT SUSTAINABLE IN LAW. WE THEREFORE, DELETE THE ADDITION OF `.16,41,851/-. 23. THUS, THE APPEAL OF THE ASSESSEE IS PARTLY ALLO WED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 15 TH DAY OF SEPTEMBER, 2010. SD/- SD/- (MUKUL SHRAWAT ) ( N.S.SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: ON THIS 15 TH DAY OF SEPTEMBER, 2010 COMPILED AND COMPARED BY: PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V,SURAT. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 08-9-2010 --------- -------- 2. DRAFT PLACED BEFORE AUTHORITY 13-9-2010 -- ----------------- 3. DRAFT PROPOSED & PLACED 13-9-2010 ------------------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 14-9-2010 --- -------------JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 15-9-2010 -- ------------------ 6. KEPT FOR PRONOUNCEMENT ON 15-9-2010 -- ------------------ 7. FILE SENT TO THE BENCH CLERK 15-9-2010 -------------------- 8. DATE ON WHICH FILE GOES TO THE ------------ ---- -------------------- 9. DATE OF DISPATCH OF ORDER ------------- --- ---------------------