Sh. Sewa Ram Prop., Rajpura V. ITO, Rajpura

ITA 327/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64008 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Transactions in derivatives; Source of fund; Assessment record; Sham transactions
• Section: 143(3); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 327/CHD/2011 ASSESSMENT YEAR : 2007-08 SHRI SEWA RAM V I.T.O. WARD PROP. M/S SEWAK TIMBER RAJPURA STORE, LAKKAR MANDI RAJPURA ABKPR 1775 L (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUDHIR SEHGAL RESPONDENT BY SHRI MANJIT SINGH DATE OF HEARING 08.10.2012 DATE OF PRONOUNCEMENT 31.10.2012 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), PATIALA DATED 24.2.2011. 2. IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED BUT AT THE TIME OF HEARING THE LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT ONLY GROUNDS NO. 1(A) AND 2(A) CAN BE TAKEN AS EFFE CTIVE GROUNDS FOR ADJUDICATION. GROUNDS NO. 1(A) AND 2(A ) READ AS UNDER: 1(A) THAT THE LD. CIT(A) PATIALA HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 17,21,100/- IN RESPECT OF THE FOLLOWING CREDITS: SEWA RAM (HUF) RS. 2,09,700.00 SMT. SHAKUNTLA RS. 2,12,300.00 SMT. RAJ KUMARI RS. 2,16,000.00 SMT. JYOTI KINGER RS. 2,17,100.00 SHRI VIJAY KUMAR RS. 2,15,000.00 VIJAY KUMAR (HUF) RS. 2,14,050.00 SHRI VINOD KUMAR RS. 2,14,600.00 VINOD KUMAR (HUF) RS. 2,22,150.00 2(A) THAT THE LD. CIT(A) HAS ALSO GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 24 LAKHS ON ACCOUNT OF AMOUNT RECE IVED FROM SHRI VIJAY KUMAR S/O OF THE PROPRIETOR, DESPITE CONFIRMA TION AND SOURCE OF SOURCE OF SHRI VIJAY KUMAR EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE HIM. 2 3. BRIEF FACTS IN RESPECT OF FIRST ISSUE ARE THAT DU RING ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THA T THE ASSESSEE HAD SHOWN VARIOUS LOANS FROM FRIENDS AND R ELATIVES AT RS. 1,40,50,668/- OUT OF WHICH LOANS AMOUNTING TO R S. 17,21,100/- WERE RECEIVED DURING THE YEAR FROM FAMI LY MEMBERS. IT WAS NOTICED THAT CERTAIN ADDITIONS HAV E BEEN MADE IN THE LOANS IN THE NAME OF THESE FAMILY MEMBE RS AS UNDER: SEWA RAM (HUF) RS. 2,09,700.00 SMT. SHAKUNTLA RS. 2,12,300.00 SMT. RAJ KUMARI RS. 2,16,000.00 SMT. JYOTI KINGER RS. 2,17,100.00 SHRI VIJAY KUMAR RS. 2,15,000.00 VIJAY KUMAR (HUF) RS. 2,14,050.00 SHRI VINOD KUMAR RS. 2,14,600.00 VINOD KUMAR (HUF) RS. 2,22,150.00 RS. 17,21,100/- ON ENQUIRY THE ASSESSEE FURNISHED THE COPIES OF ACC OUNT, INCOME TAX RETURN, BANK STATEMENTS AND ALSO THE BIL LS OF COMMODITY BROKERS FROM WHOM THE ALLEGED COMMODITY P ROFIT WAS EARNED BY THE ABOVE PARTIES. ACCORDING TO THE AO APPARENTLY THESE PROFITS WERE NOT GENUINE BECAUSE A CCORDING TO HIM THE ASSESSEE OPENED EIGHT COMMODITY TRADING ACC OUNTS IN THE NAME OF AFORESAID EIGHT PERSONS WITH M/S SATYA NARAYAN ONLINE TRADING PVT LTD., LUDHIANA BY ISSUING EIGHT CHEQUES FROM HIS OWN BANK ACCOUNT WITH HDFC BANK. FURTHER A CHEQUE FOR MARGIN MONEY AMOUNTING TO RS. 5,000/- EACH WERE ISSUED TO THE COMMODITY BROKERAGE BY THE ASSESSEE ON THE SAME DATE. PROFIT WAS RECEIVED THRICE BY ALL THE PARTIES. AGA INST ALL THESE EIGHT PERSONS ACCOUNTS WERE OPENED SIMULTANEOUSLY O N 12.9.2006 AND WERE ALSO CLOSED ON 18.1.2007 AND 25. 1.2007. IT WAS FURTHER NOTICED THAT MAJOR CHUNK OF PROFITS WAS RECEIVED IN EQUAL INSTALLMENTS SIMULTANEOUSLY BY ALL THE PAR TIES AS DETAILED BELOW: DATE NAME RELATION/ CHEQUE NO AMOUNT (RS.) TOTAL (RS.) 10.10.2006 SEWA RAM HUF SELF (KARTA) 200 48,200 10.10.2006 SHAKUNTLA RANI WIFE 201 49,500 10.10.2006 RAJ KUMARI D-IN-LAW 202 49,900 10.10.2006 JYOTI KINGER D-IN-LAW 203 50,200 11.10.2006 VIJAY KUMAR SON 204 50,400 11.10.2006 VIJAY KUMAR HUF SON (KARTA) 206 49,300 3 11.10.2006 VINOD KUMAR SON 207 50,800 11.10.2006 VINOD KUMAR HUF SON (KARTA) 208 51,700 4,00,000 1.11.2006 SEWA RAM HUF SELF (KARTA) 215 60,200 1.11.2006 SHAKUNTLA RANI WIFE 217 60,400 1.11.2006 RAJ KUMARI D-IN-LAW 218 60,300 1.11.2006 JYOTI KINGER D-IN-LAW 219 62,700 1.11.2006 VIJAY KUMAR SON KARTA 220 62,900 1.11.2006 VIJAY KUMAR HUF SON KARTA 221 61,300 1.11.2006 VINOD KUMAR SON 222 61,500 1.11.2006 VINOD KUMAR HUF SON KARTA 223 63,300 4,92,600 18.1.2007 SEWA RAM HUF SELF KARTA 313 1,01,900 18.1.2007 SHAKUNTLA RANI WIFE 314 1,02,300 18.1.2007 RAJ KUMARI D-IN-LAW 315 1,05,800 18.1.2007 JYOTI KINGER D-IN-LAW 316 1,04,200 25.1.2007 VIJAY KUMAR SON KARTA 329 1,02,400 25.1.2007 VIJAY KUMAR HUF SON KARTA 330 1,01,300 25.1.2007 VINOD KUMAR SON 331 1,03,450 25.1.2007 VINOD KUMAR HUF SON KARTA 332 1,07,150 8,28,500 17,21,100 ACCORDING TO THE AO THE ASSESSEE HAD ROUTED THE TRA NSACTIONS THROUGH THESE PEOPLE BECAUSE MOST OF THESE PERSONS HAD VERY LOW INCOME WITHOUT THE COMMODITY PROFIT. INFORMATI ON WAS CALLED FROM M/S SATYA NARAYAN ONLINE TRADING PVT LT D., LUDHIANA. COPIES OF THE CLIENT REGISTRATION FORM W ERE FURNISHED BY THIS COMPANY WHICH DEPICTED THAT ALL THE FORMS B EAR SAME DATE I.E. 2.9.2006. THE STATEMENT OF SHRI KAWITANSH KHANA, DIRECTOR OF THE COMPANY WAS ALSO RECORDED. IN REPL Y TO THE QUESTION WHO SIGNED THESE FORMS, SHRI KHANNA STATED THAT HE KNEW ONLY ONE PERSON I.E. SHRI VIJAY KUMAR WHO CAM E FOR REGISTRATION OF THESE PERSONS AND ALSO FOR OTHER DI SCUSSIONS AND HE COULD NOT STATE WHO HAD SIGNED THESE FORMS. THE AO NOTED THAT SHRI VIJAY KUMAR IS THE SON OF THE ASSES SEE. IT WAS ALSO NOTED THAT VOTER CARD IN MOST OF THE CASES AS PART OF THE IDENTITY PROOF WERE GIVEN LATER ON BECAUSE VOTER CA RDS HAVE BEEN ISSUE ON 20.11.2006 WHEREAS THE REGISTRATION F ORMS WERE FURNISHED ON 2.9.2006. IN REPLY TO THE SHOW CAUSE NOTICE, IT WAS SUBMITTED THAT THE ASSESSEE WAS GIVING DIFFEREN T ACCOUNT PAYEE CHEQUES FOR DIFFERENT MEMBERS AS REQUIRED BY THE FAMILY MEMBERS DIRECTLY TO THE PERSON TO WHO PAYMENT WAS S UPPOSED TO BE MADE THAT IS WHY THE MARGIN MONEY CHEQUES WER E ISSUED OUT OF ACCOUNT OF SUCH FAMILY MEMBERS DIRECTLY BY T HE 4 ASSESSEE. IT WAS FURTHER STATED THAT ALL FAMILY ME MBERS ARE REGULAR INCOME TAX ASSESSEES AND HAVE FILED THEIR R ETURNS AND COMMODITY PROFITS EARNED BY SUCH FAMILY MEMBERS HAV E BEEN DULY DISCLOSED BY THEM IN THEIR RETURN. HOWEVER, T HE AO DID NOT ACCEPT THE SUBMISSIONS AND HELD THAT PROFIT BEL ONGED TO THE ASSESSEE AND MADE ADDITION OF RS. 17,21,100/- AS IN COME FROM UNDISCLOSED SOURCES. 4. ON APPEAL THE SUBMISSIONS MADE BEFORE THE AO WER E REITERATED AND IT WAS SUBMITTED THAT THESE PARTIES HAVE GIVEN OTHER LOANS ALSO WHICH HAVE NOT BEEN DISPUTED BY TH E AO. ALL THESE PERSONS WERE ASSESSED TO INCOME-TAX AND THEIR COPIES OF THE BANK ACCOUNT AND COPIES OF INCOME-TAX WERE FILE D BEFORE THE AO. DETAILS REGARDING COMMODITY PROFIT WERE FU RNISHED AS PROOF OF SOURCE OF THE MONEY. THE AO HAS NOWHERE D OUBTED THE GENUINENESS OF THE COMMODITY PROFIT AND MERELY BECAUSE CHEQUES WERE ISSUED FROM THE FIRM, CANNOT BE A BASI S FOR THE ADDITION. THE CHEQUES WERE ISSUED BY THE ASSESSEE BECAUSE ACCOUNTS OF THESE FAMILY MEMBERS WERE JUST LIKE CUR RENT ACCOUNTS AND WHENEVER THESE FAMILY MEMBERS WANTED TO MAKE ANY PAYMENT, THE ASSESSEE WAS ASKED TO ISSUE CHEQUE S. FURTHER SIMPLY BECAUSE SHRI VIJAY KUMAR WAS NEGOTIA TING WITH THE COMMODITY BROKER, M/S SATYA NARAYAN ONLINE TRAD ING PVT LTD., LUDHIANA WILL NOT MAKE ANY DIFFERENCE BECAUSE USUALLY IN A FAMILY FOR FINANCIAL TRANSACTIONS ONLY ONE PERSON WOULD REPRESENT. THE LD. CIT(A) DID NOT FIND FORCE IN TH ESE SUBMISSIONS AND CONFIRMED THE ADDITION. 5. BEFORE US THE LD. COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE THEN REFERRED TO PAGE 23,24 AND 25 WHICH IS A COPY OF AC COUNT OF SEWA RAM HUF AND BANK ACCOUNT. FROM THE COPY OF AC COUNT HE POINTED OUT THAT HUF HAD ALREADY GIVEN A LOAN OF RS. 6,56,554/-. SOME OTHER CHEQUES HAVE ALSO BEEN ISSU ED TO OTHER PARTIES LIKE A CHEQUE FOR RS. 1500/- ON 23.5. 2006. ANOTHER CHEQUE FOR RS. 6894/- ON 25.10.2006, RS. 70 00/- ON 15.3.2007, RS. 70,000/- ON 9.3.2007 AND RS. 30,000/ - ON 19.3.2007. IN FACT THESE ACCOUNTS ARE BEING TREATED BY THE ASSESSEE AS WELL AS FAMILY MEMBERS LIKE CURRENT ACC OUNT AND WHENEVER ANY PAYMENT IS REQUIRED TO BE MADE TO ANY BODY SUCH 5 CHEQUES ARE ISSUED BY THE ASSESSEE ON THE INSTRUCTI ONS OF THE FAMILY MEMBERS DIRECTLY TO SUCH PARTIES. PAGE 24 & 25 IS COPY OF BANK ACCOUNT WHICH SHOWS RECEIPT OF THE PROFIT F ROM COMMODITY BROKER AND PAYMENT TO THE ASSESSEE. THER EFORE, MERELY BECAUSE THE ACCOUNT WITH ASSESSEE HAVE BEEN USED AS CURRENT ACCOUNT AND CHEQUES FOR MARGIN HAVE BEEN IS SUED BY THE ASSESSEE WILL NOT MAKE ANY DIFFERENCE PARTICULA RLY BECAUSE FAMILY MEMBERS HAD SUFFICIENT CREDIT BALANCE WITH T HE ASSESSEE. HE ALSO REFERRED TO PAGE NO. 27 TO 29 WH ICH ARE COPY OF CONTRACT NOTE ISSUED BY M/S SATYA NARAYAN O NLINE TRADING PVT LTD., LUDHIANA TO SEWA RAM HUF SHOWING VARIOUS PROFITS EARNED. PAGE 30 & 31 IS COPY OF RETURN FIL ED BY SEWA RAM HUF. FURTHER IT IS USUAL IN EVERY FAMILY THAT FINANCIAL MATTERS ARE LOOKED AFTER BY ONE PERSON OF THE FAMIL Y AND THEREFORE, SHRI VINOD KUMAR WENT TO THE COMMODITY BROKER TO OPEN ACCOUNTS ON BEHALF OF THE FAMILY MEMBERS AND T HAT SHOULD NOT MAKE ANY DIFFERENCE. HE THEN REFERRED TO PAGE 101 WHICH IS A COPY OF STATEMENT OF SHRI KAWITANSH KHANNA, DI RECTOR OF M/S SATYA NARAYAN ONLINE TRADING PVT LTD., LUDHIANA IN WHICH IT WAS CONFIRMED THAT VARIOUS FAMILY MEMBERS HAD OP ENED ACCOUNT WITH THEM. NOWHERE EARNING OF PROFIT HAS B EEN DOUBTED BY THE AO. IN FACT SIMILAR PROFIT WAS EARN ED IN LAST YEAR ALSO WHICH HAS BEEN ACCEPTED BY THE DEPARTMENT . IN THIS REGARD HE REFERRED TO PAGE 162 TO 173 WHICH ARE COP IES OF CONTRACT NOTE FOR THE PREVIOUS YEAR. HE THEN REFER RED TO PAGE 129 WHICH IS A COPY OF CLIENT REGISTRATION FORM AND POINTED THAT THERE IS NO COLUMN FOR VOTER CARD NO. WHICH MEANS T HAT AT THE TIME OF REGISTRATION NO SUCH VOTER CARD WAS FURNISH ED. BUT SINCE COMMODITY BROKER M/S SATYA NARAYAN ONLINE TRA DING PVT LTD., LUDHIANA WAS ASKING FOR RESIDENTIAL PROOF, VO TER CARD WERE GOT MADE AND FURNISHED ACCORDINGLY. IN FACT E ARLIER RATION CARDS WERE FURNISHED (COPY OF WHICH IS PLACE D AT PAGE 139 OF THE PAPER BOOK). IT IS TOTALLY WRONG ON THE PART OF THE AO TO STATE THAT REGISTRATION FORMS WERE INCOMPLETE WITHOUT POINTING OUT ANY ERROR IN THE REGISTRATION FORM. I N FACT VOTER CARD WAS FILED AS A IDENTITY PROOF MUCH BEFORE ANY TRANSACTION TOOK PLACE. HE SUBMITTED THAT THERE IS NO FORCE IN THE CONTENTION OF THE AO THAT INCOME OF THE FAMILY MEMB ERS WAS VERY LOW THAT IS WHY THE PROFITS HAVE BEEN GENERATE D IN THE HANDS OF THE VARIOUS FAMILY MEMBERS BECAUSE SUCH FA MILY 6 MEMBERS ARE ASSESSED TO INCOME TAX AND FILED THEIR PERSONAL RETURN. THERE IS NO FINDING BY THE AO THAT SUCH PE RSON ARE BENAMI OF THE ASSESSEE. EVEN THE INTEREST INCOME E ARNED BY SUCH FAMILY MEMBERS HAS BEEN ASSESSED IN THEIR INDI VIDUAL ASSESSMENTS. IN THIS REGARD HE RELIED ON THE DECISI ON OF HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. PRESSTIME INFORMATION BEARING ITA NO. 284 OF 2011 ( COPY OF DECISION FILED) WHEREIN FINDING OF THE TRIBUNAL THA T THE ASSESSEE HAD ESTABLISHED IDENTITY, CREDIT WORTHINES S AND GENUINENESS OF THE TRANSACTIONS THEN NO ADDITION WA S CALLED FOR AND THESE FINDINGS HAVE BEEN CONFIRMED BY THE HON'B LE COURT. HE ALSO REFERRED TO DECISION OF HON'BLE SUPREME COU RT REGARDING DISMISSAL OF SLP REPORTED AT 211 ITR 11 ( STATUTE) WHEREIN THE SLP WAS DISMISSED. IN THIS CASE CERTAI N CASH CREDITS WERE RECEIVED IN THE NAME OF ASSESSEES WIF E, SON AND DAUGHER-IN-LAW BY THE FIRM WHICH WERE ADDED BACK BY THE OFFICER AS UNEXPLAINED CASH CREDITS. THE TRIBUNAL ALLOWED ASSESSEES APPEAL BECAUSE CASH CREDITS CAME FROM BA NK ACCOUNT HELD BY THE WIFE, SON AND D-IN-LAW. IT WAS OBSERVED THAT SINCE CASH CREDIT CAME THROUGH BANK ACCOUNT TH E SAME COULD NOT BE ADDED TO THE INCOME UNLESS IT WAS PROV ED THAT SUCH PERSONS WERE BENAMIDAR OF THE ASSESSEE. HE AL SO RELIED ON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH CO URT IN CASE OF CIT V. RAM NARAIN GOEL, 224 ITR 180. IN TH AT CASE THE ASSESSEE HAD RECEIVED FOUR CREDIT ENTRIES WHICH ACC ORDING TO THE AO WERE FICTITIOUS AND UNACCOUNTED INCOME OF T HE ASSESSEE. HOWEVER, THE TRIBUNAL GAVE A FINDING THA T MONEYS HAD BEEN ADVANCED BY ACCOUNT PAYEE CHEQUE AND HAD B EEN RETURNED BY THE ASSESSEE WITH INTEREST THROUGH ACCO UNT PAYEE CHEQUE AND SINCE COPY OF THE BANK ACCOUNT HAVE BEEN FILED ALONG WITH THE CONFIRMATION, NO ADDITION COULD BE M ADE. THESE FINDINGS WERE CONFIRMED BY THE HON'BLE COURT. IN C ASE BEFORE US THE ASSESSEE HAD FILED THE COPIES OF THE CONFIRM ATION, BANK ACCOUNT AND PROOF OF FILING OF INCOME-TAX RETURN, T HEREFORE, CREDIT IN THE NAMES OF THESE FAMILY MEMBERS COULD N OT HAVE BEEN ADDED AS INCOME OF THE ASSESSEE. 6. HE POINTED OUT THAT THE LD. CIT(A) HAS GIVEN A L OT OF EMPHASIS ON THE DECISION OF HON'BLE CALCUTTA HIGH C OURT IN CASE OF CIT V. KORLAY TRADING CROSS-OBJECTIONS. LTD . 232 ITR 7 820. IN THAT CASE THERE WAS CERTAIN CASH CREDITS I N THE NAME OF CREDITOR. THE ASSESSEE FAILED TO FILE THE CONFIRMA TION. THEY WERE TREATED AS INCOME FROM UNDISCLOSED SOURCES. T HE LD. CIT(A) CONFIRMED THE ORDER OF THE AO. HOWEVER, THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THA T EVEN THEY INITIALLY COULD NOT CONFIRM THE CREDITS BUT AT THE APPELLATE STAGE INCOME-TAX FILE NO. WAS GIVEN. HON'BLE COURT OBSER VED THAT THE TRIBUNAL HAS NOT REFERRED TO ANY CONFIRMATION B UT HAS REFERRED TO FILE NO. BUT IT WAS NOT KNOWN WHEN IT W AS GIVEN AND MERE FILING OF THE INCOME-TAX, FILE NO. WAS NOT SUF FICIENT. WHERE AS IN CASE BEFORE US, IN ADDITION TO THE PAN, PROOF REGARDING FILING OF RETURN ALONG WITH CONFIRMATION WAS FURNISHED BEFORE THE AO HIMSELF. THEREFORE, RELIANCE ON THE DECISION OF LD. CIT(A) IS TOTALLY UNWARRANTED. 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE ST RONGLY SUPPORTED THE ORDER OF AO AND PARTICULARLY INVITED OUT ATTENTION TO THE OBSERVATIONS MADE BY THE AO AT PAGE 2 & 3 OF HIS ORDER. HE ALSO RELIED ON THE ORDER OF HON'BLE SUPREME COUR T IN CASE OF CIT V. P. MOHANKALA, 291 ITR 278 AND PARTICULARL Y INVITED OUT ATTENTION TO THE OBSERVATIONS MADE BY THE COURT AT PARA 24 WHEREIN IT HAS BEEN OBSERVED WE ARE REQUIRED TO NOTICE THAT SECTION 68 OF THE A CT ITSELF PROVIDES, WHETHER ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEARS THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABO UT THE NATURE AND SOURCE OF SUCH SUMS FOUND CREDITED IN TH E BOOKS OF THE ASSESSEES IS IN THE OPINION OF THE AO NOT SATIS FACTORY. SUCH OPINION FORMED ITSELF CONSTITUTES A PRIMA FACI E EVIDENCE AGAINST THE ASSESSEES, VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEES BY HOLDING THAT IT WAS A RECEIPT OF AN INCOME NATURE. 8 IN THE REJOINDER THE LD. COUNSEL OF THE ASSESSEE SUBMITTED IN CASE OF CIT V. P. MOHANKALA (SUPRA), THE ISSUE WAS THAT THE ASSESSEE AND HIS FAMILY MEMBERS HAD RECEIVED GIFTS WORTH RS. 1.79 CRORES AND CERTAIN FINDINGS WERE RECORDED AGAI NST THE ASSESSEE BY THE AO. THE COMMENTS MADE BY THE HON'B LE SUPREME COURT WERE IN THE CONTEXT OF THOSE FINDINGS AND IN THE LINE RELIED ON BY THE LD. DR FOR THE REVENUE, THE C OURT HAS 8 MADE CLEAR THAT THE ADDITION WOULD BE CONFIRMED IF THE ASSESSEE FAILED TO REBUT THE EVIDENCE WHEREAS IN CA SE BEFORE US, THE AO HAS NEVER DOUBTED THE PROFIT MADE FROM C OMMODITY TRANSACTIONS. HE HAS SIMPLY OBSERVED THAT PROFIT H AS NOT BEEN MADE OR EARNED BY SUCH INDIVIDUAL BUT BY THE ASSESS EE WITHOUT POINTING OUT ANY EVIDENCE IN THIS REGARD. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND IT HAS TO BE NOTED THAT ADDITION HAS NOT BEEN MADE U/S 68 OF THE ACT BUT THE ADDITION HAS BEEN MADE BY OBSERVING THAT COMMODITY PROFIT EARNED BY EIGHT FAMILY MEMBERS IS INCOME FROM UNDISCLOSED SOURCES OF THE ASSESSEE. IT IS VERY STRANGE THAT THE AO HAS NOWHE RE STATED THAT INCOME FROM COMMODITY TRANSACTIONS IS BOGUS OR NOT GENUINE. IN FACT THE ASSESSEE HAS SHOWN AN AMOUNT FROM EIGHT ME MBERS AS PER DETAILED BELOW AS LOANS:- SEWA RAM (HUF) RS. 2,09,700.00 SMT. SHAKUNTLA RS. 2,12,300.00 SMT. RAJ KUMARI RS. 2,16,000.00 SMT. JYOTI KINGER RS. 2,17,100.00 SHRI VIJAY KUMAR RS. 2,15,000.00 VIJAY KUMAR (HUF) RS. 2,14,050.00 SHRI VINOD KUMAR RS. 2,14,600.00 VINOD KUMAR (HUF) RS. 2,22,150.00 RS. 17,21,100/- IN RESPONSE TO ENQUIRY COPIES OF THE ACCOUNT, PAN N O., INCOME- TAX RETURN, BANK STATEMENT AND EVEN BILLS OF COMMOD ITY BROKER WERE FURNISHED TO EXPLAIN THE SOURCE OF FUNDS IN TH E HANDS OF THE ABOVE FAMILY MEMBERS. WE FURTHER FIND THAT PER USAL OF SAMPLE COPY OF ACCOUNT OF SEWA RAM HUF AT PAGE 23 O F THE PAPER BOOK CLEARLY SHOWS THAT SEWA RAM HUF HAD ALRE ADY GIVEN LOANS TO THE ASSESSEE AND IN FACT THERE WAS O PENING BALANCE AMOUNTING TO RS. 6,56,554/-. COPY OF ACCOU NT OF SEWA RAM HUF IS REPRODUCED HEREUNDER:- DATE PARTICULARS DEBIT CREDIT BALANCE 1.4.2006 BY OP. BALANCE -- 656,554.00 6,56,554.00 23.5.2006 TO CHEQUE NO. 805339 1500.00 -- 655,054.00 12.9.2006 TO CHEQUE NO. 291454 5,000.00 -- 650,054.00 28.9.2006 BY CHEQUE NO. 809838 -- 36,466.00 686,520.00 13.10.2006 BY CHQUE NO. 058588 -- 48,200.00 734,720.00 25.10.2006 TO CHEQUE NO. 291480 6894.00 -- 727,826.00 3.11.2006 BY CHEQUE NO. 058589 -- 60,200.00 788,026.00 9 30.1.2007 BY CHEQUE NO. 058590 -- 101,300.00 889,326.00 15.3.2007 TO CHEQUE NO. 311117 7,000.00 -- 882,326.00 19.3.2007 TO CHEQUE NO. 813878 70,000.00 -- 812,326.00 19.3.2007 TO CHEQUE NO. 813881 30,000.00 -- 782,326.00 31.3.2007 BY AMOUNT OF INTEREST -- 87,325.00 869,651.00 31.3.2007 TO AMOUNT OF TDS 8,907.00 -- 860,744.00 TOTAL 129,301.00 990,045.00 CREDIT BALANCE AS ON 31.3.2007 860,744.00 ABOVE CLEARLY SHOWS THAT DURING THE YEAR SEWA RAM H UF HAS FURTHER GIVEN FOUR CHEQUES AMOUNTING TO RS. 36,466/-, RS. 4 8,200/-, RS. 60,200/- AND RS. 101,300/- ON 28.9.2006, 13.10.2006 , 3.11.2006, 30.1.2007. OUT OF THESE LAST THREE CHEQUES I.E. RS . 48,200/-, RS. 60,200/- AND RS. 101,300/- HAVE BEEN DOUBTED BY THE AO ON THE BASIS THAT THESE AMOUNTS HAVE BEEN RECEIVED AS PROF IT FROM THE COMMODITY TRANSACTIONS. FIRST OF ALL ONCE IF THERE WAS ANY DOUBT REGARDING PROFIT IT SHOULD HAVE BEEN EXAMINED IN TH E HANDS OF THE INDIVIDUAL OR HUF AND NOT IN THE HANDS OF THE ASSES SEE WHO HAS SIMPLY TAKEN THIS AMOUNT AS LOAN AND THE LOAN TRANS ACTION IS SUPPORTED BY COPY OF ACCOUNT, CONFIRMATION, INCOME- TAX RETURN, BANK STATEMENT AND SOURCES OF FUNDS FROM COMMODITY TRANS ACTIONS. THEREFORE, AS FAR AS BURDEN U/S 68 IS CONCERNED, T HE SAME STANDS DISCHARGED. IT IS SETTLED POSITION OF LAW THAT IN CASE OF CASH CREDITS THREE INGREDIENTS ARE REQUIRED TO BE PROVED I.E. ID ENTITY OF THE CREDITOR, GENUINENESS OF THE TRANSACTIONS AND CAPAC ITY OF THE CREDITOR. IDENTITY HAS BEEN PROVED BYCOPY OF ACCOU NT AND GENUINENESS OF THE TRANSACTIONS HAS BEEN PROVED BEC AUSE LOANS WERE RECEIVED THROUGH GENUINE TRANSACTIONS AND EVEN CONFIRMATIONS WERE FILED. CAPACITY STANDS PROVED BY DISCLOSURE O F THE SOURCE OF FUND BY WAY OF PROFIT FROM COMMODITY TRANSACTIONS. THEREFORE, THE MATTER SHOULD HAVE ENDED THERE ONLY. IF THE AO WAS OF THE VIEW THAT THESE PROFITS ARE NOT GENUINELY EARNED BY THESE FAM ILY MEMBERS THEN INITIALLY ASSESSMENTS OF SUCH FAMILY MEMBERS SHOULD HAVE BEEN TAKEN UP FOR SCRUTINY AND ENQUIRY SHOULD HAVE BEEN MADE BY RECORDING THE STATEMENTS OF SUCH FAMILY MEMBERS WHI CH HAS NOT BEEN DONE. THE FACT REMAINS THAT EARNING THE PROFI T THROUGH COMMODITY TRANSACTIONS HAS NOT BEEN DOUBTED. ONLY ASPECT WHICH 10 HAS BEEN DOUBTED IS THAT CHEQUES HAVE BEEN ISSUED B Y THE ASSESSEE ON BEHALF OF THE MEMBERS OF THE FAMILY. AG AIN REFERRING TO THE COPY OF ACCOUNT, IT IS CLEAR THAT SEWA RAM HUF HAS BEEN TREATING ITS ACCOUNT WITH THE ASSESSEE AS CURRENT A CCOUNT AND SOME OTHER PAYMENTS PERHAPS FOR PAYMENT OF INCOME-TAX AN D DEPOSIT IN THE SAVING SCHEMES HAS BEEN ALSO ISSUED BY THE ASSE SSEE ON BEHALF OF SEWA RAM HUF. IN FACT CHEQUE FOR RS. 1500/-, RS . 5,000/-, RS. 6,894/-, RS. 7,000/-, RS. 70,000/- AND RS. 30,000/- HAVE BEEN ISSUED ON VARIOUS DATES. ONLY A SUM OF RS. 5,000/- HAS BEEN PAID AS MARGIN MONEY AND REST OF THE PAYMENTS HAVE BEEN MADE TOWARDS OTHER PURPOSES. THERE IS NO BAR UNDER THE LAW OR U NDER NORMAL ACCOUNTING ON SUCH WITHDRAWAL. IF A PERSON WHO HAS GIVEN LOAN TO ANY OTHER PERSON CAN ALWAYS DIRECT OTHER PERSON TO ISSUE SMALL CHEQUES IN FAVOUR OF OUTSIDERS. IN FACT THIS IS A COMMON PRACTICE WHERE THE TRANSACTIONS ARE ENTERED IN THE FAMILY CO NCERNS. COPIES OF ACCOUNT OF ALL THE FAMILY MEMBERS ARE ALSO SAME AND WE ARE NOT DISCUSSING EACH AND EVERY COPY OF ACCOUNT SEPARATEL Y. OTHER SERIOUS OBJECTION RAISED BY THE AO IS THAT PROFITS HAVE BEEN EARNED IN THE EQUAL INSTALLMENTS BY ALL THE FAMILY MEMBERS , THIS MAY BE MATTER OF CHANCE. THIS MAY EVEN RAISE SOME DOUBT A LSO BUT IN THAT CASE THE AO SHOULD HAVE SPECIFICALLY ENQUIRED FROM EACH OF THE FAMILY MEMBERS BUT NO SUCH ENQUIRIES HAVE BEEN MADE . THIRD SERIOUS OBJECTION RAISED BY THE AO IS THAT SINCE IN COME OF VARIOUS FAMILY MEMBERS WAS LOWER AND THAT IS WHY IT CANNOT BE ACCEPTED AND IT MUST HAVE BEEN EARNED BY THE ASSESSEE. THIS OBJ ECTION IS NOT CORRECT BECAUSE THERE IS NO FINDING THAT SUCH INDIV IDUAL FAMILY MEMBERS WERE ACTING AS BENAMIDAR OF THE ASSESSEE. FAMILY MEMBERS ARE REGULAR INCOME TAX ASSESSEES AND EVEN S IMILAR INCOME FROM COMMODITY TRANSACTIONS WAS ACCEPTED IN THE HAN DS OF SUCH FAMILY MEMBERS IN THE IMMEDIATELY PREVIOUS YEAR ALS O. FOURTH SERIOUS OBJECTION RAISED IS IRREGULARITY IN THE FIL ING OF REGISTRATION FORMS BUT THE AO HAS NOT POINTED OUT WHAT IS THE IR REGULARITY. ONLY THING WHICH HAS BEEN POINTED OUT IS THAT SHRI VIJAY KUMAR I.E. SON OF THE ASSESSEE WAS INTERACTING WITH M/S SATYA NARAYAN ONLINE TRADING PVT LTD., LUDHIANA ON BEHALF OF THE FAMILY MEMBERS. THIS ITSELF CANNOT BE CALLED A IRREGULARITY BECAUSE IT IS COMMON PRACTICE THAT WHENEVER SOME FINANCIAL TRANSACTIONS ARE ENTERED INTO BY FAMILY MEMBERS EVEN WITH OUTSIDERS ONLY ONE MEMBER OF THE FAMILY, DOES THE INTERACTIONS. A COPY OF THE R EGISTRATION FORM PLACED AT PAGE 129 IN CASE OF SEWA RAM HUF, DO ES NOT 11 SHOW ANY DISCREPANCY OR INCOMPLETE DETAILS. THE FO RM WAS FURNISHED ON 2.9.2006 AND M/S SATYA NARAYAN ONLINE TRADING PVT LTD. WANTED FURTHER IDENTITY PROOF WHICH HAS BE EN FURNISHED BY WAY OF VOTER CARDS WHICH HAS BEEN OBTAINED BY TH E ASSESSEE ON A LATER DATE. IF THERE IS NO COLUMN FO R GIVING THE DETAILS OF VOTER CARD IN THE CLIENT REGISTRATION FO RM THEN THERE WAS NO NEED TO GIVE VOTER CARD ALONG WITH REGISTRAT ION FORM AND THEREFORE, THIS OBJECTION IS ALSO OF NO SUBSTAN CE. 10 WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF T HE LD. DR FOR THE REVENUE THAT THE OBSERVATIONS OF THE HON'BLE SU PREME COURT IN CASE OF CIT V. P. MOHANKALA (SUPRA) IS APPLICABLE T O THE CASE OF THE ASSESSEE. ACCORDING TO HIM ONCE THE AO HAS GIV EN A FINDING THAT THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY THEN SAME IS BINDING ON THE ASSESSEE. IN CASE OF C IT V. P. MOHANKALA (SUPRA) HON'BLE APEX COURT WAS CONCERNED WITH A CASE WHERE THE ASSESSEE AND HIS FAMILY MEMBERS HAVE RECEIVED GIFTS OF RS. 1,79,27,703/- IN VARIOUS YEAR S FROM NON RESIDENT INDIAN (NRI) WHO WAS NOT RELATED TO THE AS SESSEE. VARIOUS CONTRADICTIONS WERE FOUND IN THE STATEMENTS OF SHRI SAMPATHKUMAR WHO WAS A COMMON DONOR AND THE AO RECO RDED VARIOUS FINDINGS WHICH HAVE BEEN SUMMARIES BY THE C OURT AT PARA 8 WHICH IS AS UNDER:- THE AO AFTER AN ELABORATE CONSIDERATION OF THE MAT ERIAL AVAILABLE ON RECORD AND THE STATEMENTS OF THE ASSES SEES AS WELL AS THAT OF SAMPATH KUMAR NOTED THAT ALL THE GI FTS WERE RECEIVED FROM ARIAVAN THOTAN AND SUPROTOMAN. IT IS ONLY AFTER THE ENQUIRIES BY THE DEPARTMENT, IT WAS INFORMED B Y LETTER DATED APRIL 25, 1996, THAT ARIAVAN THOTAN AND SUPRO TOMAN ARE ONE AND THE SAME PERSON. EVEN AT THAT TIME, NO MEN TION WAS MADE ABOUT SAMPATHKUMAR. FOR THE FIRST TIME SAMPATHKUMARS NAME FIGURED IN THE LETTER DATED AUG UST 30, 1996 AND THEREAFTER IT W AS STATED THAT THE NAMES O F ARIAVAN THOTAN AND SUPROTOMAN ARE THE OTHER NAMES OF SAMPAT HKUMR. THE AO WHILE APPRECIATING THE CONTENTS OF THE LETTE RS BROUGHT ON RECORD CAME TO THE CONCLUSION THAT SAMPATHKUMAR HAD OBLIGED IN GIVING GIFTS TO SRINIVASAN AND HIS FAM ILY MEMBERS. IT IS FURTHER HELD THAT IN ALL PROBABILITIES SAMPAT HKUMAR MAY HAVE RECEIVED COMPENSATORY PAYMENTS IN LIEU OF THE GIFTS MADE BY HIM. THE LETTERS ACCORDING TO THE AO SUGGE ST THAT SAMPATHKUMAR RESERVED HIS RIGHT TO RECEIVE SUITABLE COMPENSATION FROM THE RESPONDENTS-ASSESSEES. THE A O IN THE CIRCUMSTANCES CAME TO THE CONCLUSION THAT THE GIFTS THOUGH APPARENT ARE NOT REAL AND ACCORDINGLY TREATED ALL T HOSE AMOUNTS CREDITED IN THE BOOKS OF THE ASSESSEE AS TH E INCOME OF THE ASSESSEES. 12 THE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A). TH E MATTER TRAVELED TO THE TRIBUNAL WHERE THERE WAS A DIFFERENCE OF OPI NION BETWEEN THE TWO MEMBERS, THEREFORE, THE MATTER WAS REFERRED TO THE SR. VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS OF THE AO . IN THIS BACKGROUND THE COURT REFERRED TO VARIOUS DECISIONS INCLUDING THE DECISION OF SUMATI DAYAL, 214 ITR 801 AND MADE VARI OUS OBSERVATIONS INCLUDING OBSERVATIONS IN PARA 24 WHIC H READS AS UNDER:- IT IS TRUE THAT EVEN AFTER REJECTING THE EXPLANATI ON GIVEN BY THE ASSESSEE IF FOUND UNACCEPTABLE, THE CRUCIAL ASPECT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT SHOUL D BE INFERRED THE SUMS CREDITED IN THE BOOKS OF THE ASSE SSEE CONSTITUTED INCOME OF THE PR3EVIOUS YEAR MUST RECEI VE THE CONSIDERATION OF THE AUTHORITIES PROVIDED THE ASSES SEE REBUT THE EVIDENCE AND THE INFERENCE DRAWN TO REJECT THE EXPLANATION OFFERED AS UNSATISFACTORY. WE ARE REQUIRED TO NOTI CE THAT SECTION 68 OF THE ACT ITSELF PROVIDES, WHETHER ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVI OUS YEARS THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IF THE EXPLANATION OF FERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF SUCH SUMS F OUND CREDITED IN THE BOOKS OF THE ASSESSEES IS IN THE OP INION OF THE AO NOT SATISFACTORY. SUCH OPINION FORMED ITSELF CO NSTITUTES A PRIMA FACIE EVIDENCE AGAINST THE ASSESSEES, VIZ., T HE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SA ID EVIDENCE THE SAME CAN BE USED AGAINST THE ASSESSEES BY HOLDI NG THAT IT WAS A RECEIPT OF AN INCOME NATURE. IN THE CASE IN H AND THE AUTHORITIES CONCURRENTLY FOUND THE EXPLANATION OFFE RED BY THE ASSESSEES UNACCEPTABLE. THE AUTHORITIES UPHELD THE OPINION FORMED BY THE AO THAT THE EXPLANATION OFFERED WAS NOT SATISFACTORY. THE ASSESSEES DID NOT TAKE THE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL AND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY TH E SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSES SEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. A LL THE DECISIONS CITED AND REFERRED TO HEREINABOVE ARE REQ UIRED TOBE APPRECIATED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI DAYAL (1995) SUPP 2 SCC 453. A PLAIN READING OF THE ABOVE PARA VERY CLEARLY SHOW S THAT THE EXPLANATION GIVEN BY THE ASSESSEE HAS TO BE LOOKED INTO ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND S INCE THERE WERE VARIOUS INCONSISTENCIES IN THE STATEMENT OF DONOR AND IT WAS A CASE OF GIFT, THEREFORE, THE ABOVE OBSERVATIONS ARE MAD E. THE OBSERVATION MADE BY THE HON'BLE APEX COURT CAN NOT BE INTERPRETED AS A RULE THAT WHEREVER A FINDING IS RECORDED BY TH E AO THAT EXPLANATION OFFERED BY THE ASSESSEE, IS NOT SATISFA CTORY THEN INVARIABLY ADDITION U/S 68 OF THE ACT HAS TO BE CON FIRMED. IN THAT 13 CASE IF THE OBSERVATION IS INTERPRETED IN THIS MANN ER THEN NOBODY WOULD BE ALLOWED TO REBUT THE FINDINGS OF THE AO BY ANY EVIDENCE HOWSOEVER STRONG IT MAY BE. IN ANY CASE THE HON'BL E SUPREME COURT HAS ITSELF MENTIONED IN THIS OBSERVATION THAT THE SAME IS REBUTTABLE AND WE AGAIN HIGHLIGHT THE OBSERVATION, SUCH OPINION FORMED ITSELF CONSTITUTES A PRIMA FACIE EVIDENCE AG AINST THE ASSESSEES, VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USED AGAINS T THE ASSESSEES BY HOLDING THAT IT WAS A RECEIPT OF AN IN COME NATURE . WHEREAS IN CASE BEFORE US THE ASSESSEE HAD DISCHARG ED ITS ONUS BY CLEARLY FILING COPY OF ACCOUNT, PAN NO., INCOME-TAX RETURN, BANK STATEMENT, SOURCE OF FUNDS REGARDING LOAN TO DISCHA RGE BURDEN ENVISAGED U/S 68 OF THE ACT. THE ABOVE OBSERVATION S ARE DEFINITELY IN THE CONTEXT OF GIFT RECEIVED IN THAT CASE AND CA NNOT BE MADE APPLICABLE IN ALL THE CASES OF CASH CREDITS. IN AN Y CASE, IT HAS NOT BEEN SHOWN BEFORE US HOW REPLY OF THE ASSESSEE IS N OT SATISFACTORY. AS POINTED OUT EARLIER THAT IN CASE OF LOAN TRANSAC TION ONLY THREE INGREDIENTS I.E. IDENTITY OF THE CREDITOR, GENUINEN ESS OF THE TRANSACTION AND CAPACITY OF THE DEPOSITOR OR LOANEE IS REQUIRED TO BE PROVED WHICH HAVE BEEN CLEARLY PROVED IN CASE BEFOR E US. IN FACT IN THIS CASE THE OBSERVATIONS OF HON'BLE SUPREME COURT WHILE DISCUSSING SLP OF THE DEPARTMENT REPORTED AT 211 IT R 11 (STA) IS MUCH MORE PERTINENT. THE ORDER OF THE COURT READS AS UNDER:- 7.11.1994: THEIR LORDSHIPS B.P. JEEVAN REDDY AND S .B. MAJMUDAR JJ. DISMISSED A SPECIAL LEAVE PETITION BY THE DEPARTMENT TO APPEAL AGAINST THE JUDGMENT DATED 24. 4.1994 OF THE PUNJAB & HARYANA HIGH COURT IN ITR NO. 138 OF 1 992, WHEREBY THE HIGH COURT UPHELD THE ORDER OF THE TRIB UNAL AND ANSWERED THE QUESTIONS REFERRED TO IT IN FAVOUR OF THE ASSESSEE. IN THIS CASE, CERTAIN CASH CREDITS IN TH E NAMES OF THE ASSESSEES WIFE, SON AND DAUGHTER-IN-LAW WERE A DDED BACK BY THE OFFICER AS UNEXPLAINED CASH CREDITS AND CERT AIN PAYMENTS IN CASH IN EXCESS OF RS. 2,500 WERE DISALL OWED. THE APPELLATE TRIBUNAL ALLOWED THE ASSESSEES APPEAL HO LDING THAT SINCE THE CASH CREDITS CAME FROM BANK ACCOUNTS HELD BY THE WIFE, THE SON AND THE DAUGHTER-IN-LAW, THE OFFICER COULD NOT ADD BACK THESE AMOUNTS UNLESS HE COULD PROVE THAT T HESE PERSONS WERE THE BENAMIDATS OF THE ASSESSEE. WITH RESPECT TO THE CASH PAYMENTS IN EXCESS OF RS. 2,500, THE TRIBU NAL HELD THAT THE MATTER WAS COVERED BY A BOARD CIRCULAR AND THE PAYMENTS HAD TO BE ALLOWED. COMMISSIONER OF INCOME -TAX V CHUNNILAL: SLP (CIVIL) NO. 21334 OF 1994. 14 THUS IT IS CLEAR THAT WHEN LOANS HAVE BEEN TAKEN FR OM THE FAMILY MEMBERS AND WHICH HAVE BEEN ROUTED THROUGH BANK BY MOST OF SUCH FAMILY MEMBERS, THEY CANNOT BE ADDED AS CASH CREDIT S UNLESS IT IS FOUND AS A FACT THAT SUCH BANK ACCOUNTS ARE BENAMI OF THE ASSESSEE. IN CASE BEFORE US, IT CANNOT BE ALLEGED THAT BANK ACCOUNT OF VARIOUS FAMILY MEMBERS ARE BENAMI OF THE ASSESSE E BECAUSE LOANS HAVE BEEN TAKEN FROM SUCH FAMILY MEMBERS FOR LAST MANY YEARS AND WHICH HAVE BEEN SHOWN AS OPENING BALANCE AND HAVE BEEN ACCEPTED BY THE DEPARTMENT. IN FACT SIMILAR OB SERVATIONS HAVE BEEN MADE BY HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. RAM NARESH GOEL (SUPRA) WHEREIN DELETION OF ADDI TION ON ACCOUNT OF CASH CREDIT WAS HELD TO BE JUSTIFIED WHEN SUCH PERSONS HAD ADMITTED TO GIVING OF LOAN AND CONFIRMATION LETTERS WERE FILED AND AMOUNTS WERE ROUTED THROUGH CHEQUE. WE WOULD LIKE TO POINT OUT THAT IT WAS STRONGLY CONTENDED BY THE LD. COUNSEL O F THE ASSESSEE THAT SIMILAR PROFITS WERE RECEIVED BY THE SAME FAMI LY MEMBERS IN THE EARLIER YEARS AND COPY OF CONTRACT NOTES FOR SUCH P ROFITS ARE PLACED IN THE PAPER BOOK AT PAGE 162 TO 163 WERE ACCEPTED BY THE DEPARTMENT. THEREFORE, EVEN IN THIS YEAR WITHOUT POINTING OUT ANY DEFECT IN SUCH AMOUNTS OR WITHOUT RECORDING THE FIN DING OF SUCH PROFIT WAS BOGUS, SAME COULD NOT HAVE BEEN ADDEDTO THE INCOME OF THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES OF T HE CASE WE SET ASIDE THE ORDER OF LD. CIT(A) AND DELETED THE ADDIT ION OF RS. 17,21,100/-. 11 GROUND NO. 2 WITH REGARD TO SECOND ISSUE AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PRO CEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS. 14.00 LAKHS ON 6.2.2007 AND ANOTHER SUM OF RS. 10.00 LAKHS ON 16.2 .2007 FROM SHRI VIJAY KUMAR. ON ENQUIRY IT WAS EXPLAINED THAT SHRI VIJAY KUMAR IN TURN HAS TAKEN A LOAN OF RS. 24.00 LAKHS FROM ONE S HRI SUBHASH KINGER. AFFIDAVIT OF SHRI SUBHASH KINGER WAS ALSO FURNISHED. SHRI SUBHASH KINGER WAS PRODUCED BEFORE THE AO AND HIS S TATEMENT WAS ALSO RECORDED. THE AO MADE FOLLOWING OBSERVATIONS ON THE BASIS OF AFFIDAVIT AND OTHER DOCUMENTS AS UNDER:- I) SHRI SUBHASH KINGER ISA MAN OF SMALL MEANS AND RUNNING A SMALL BUSINESS AND HAS FIELD THE RETURN O F INCOME FOR AY 2007-08 DECLARING AN INCOME OF RS. 1,02,500/- ON LY FROM HIS BUSINESS. 15 II) NO INTEREST HAS EITHER BEEN CREDITED OR PAID TO SHRI SUBHASH KINGER TILL DATE. III) SHRI SUBHASH KINGER WAS EARNING INTEREST ON BA NK FDR @ 9% PER ANNUM COMPOUNDED QUARTERLY. THE FDR WAS ENCASHED PRE-MATURE AND THE PROCEEDS ALLEGEDLY GIVE N TO SHRI VIJAY KUMAR @ 6% SIMPLE INTEREST AND THAT TOO HAS N OT BEEN CREDITED OR PAID TILL DATE. IV) THE INTEREST INCOME FROM FDR HAS NOT EVEN BEEN DISCLOSED BY HIM IN THE RETURN OF INCOME. V) THE ASSESSEE HAS NORMALLY CLAIMED TO BE PAYING I NTEREST @ 10% ON THE UNSECURED LOANS RAISED EVEN FROM CLOSE RELATIVES. AS FAR AS STATEMENT OF SHRI SUBHASH KINGER IS CONCE RNED, THE AO NOTICED THAT STATEMENT HAS MANY INCONSISTENCIES. FO R EXAMPLE THE LENDER DID NOT KNOW WHETHER HE HAD TAKEN ANY LOAN A GAINST HIS FDR. HE DID NOT KNOW ABOUT THE CASH TRANSACTIONS IN HIS ACCOUNT. THEREFORE, THE STATEMENT WAS NOT TRUSTWORTHY. IN FACT SHRI SUBHASH KINGER WAS A PERSON OF SMALL MEANS. THEREFORE, TH E ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE DATED 18.12.2009 CONFRON TING THESE OBSERVATIONS AND WAS ASKED AS TO WHY THE AMOUNT OF RS. 24.00 LAKHS SHOULD NOT BE TREATED AS INCOME FROM UNDISCLO SED SOURCES WHICH HAVE BEEN ROUTED THROUGH SHAM TRANSACTIONS. THE GENUINENESS OF TRANSACTION AND THE CREDITWORTHINESS AND CAPACITY OF THE LENDER COULD NOT BE PROVED. THE REPLY AND OBSE RVATIONS OF THE AO ARE CONTAINED IN PARA 4.3 OF ASSESSMENT ORDER WH ICH READ AS UNDER:- 4.3 IN RESPONSE THEREOF THE ASSESSEE HAS SUBMITTED THAT THE ALLEGED AMOUNT HAS BEEN TAKEN THROUGH ACCOUNT PAYEE CHEQUE AND NO INTE REST HAS BEEN PAID ON THE SAID AMOUNT. IT IS ACCEPTED THAT THE AMOUNT HAS BEEN REC EIVED THROUGH ACCOUNT PAYEE CHEQUE BUT TO PROVE THE TRANSACTION BEING ROUTED TH ROUGH BANKING CHANNEL IS NOT SUFFICIENT. THE CREDITWORTHINESS AND CAPACITY OF TH E LENDER IS ALSO IMPORTANT. IT IS EQUALLY IMPORTANT THAT THE PERSON WHO IS GIVING SUC H HUGE MONEY WITHOUT ANY INTEREST SHOULD ALSO BE A MAN OF MEANS. HOWEVER, IN THIS CASE IT IS PROVED THAT THE SO CALLED LENDER IS HARDLY ABLE TO MANAGE HIS FAMIL Y FROM HIS SOURCES OF INCOME. SECRET ENQUIRIES CONDUCTED BY THE INSPECTOR OF THIS OFFICE ALSO REVEAL THAT THE ALLEGED LENDER SH. SUBHASH KINGER, COULD NEVER HAVE OR NEVER HAD THAT CAPACITY TO LEND SUCH HUGE SUM OF MONEY TO ANYBODY WITHOUT ANY CONSIDERATION TO ANY BODY EVER HAVING BEEN RECEIVED. AS PER THE STATEMENT GIV EN BY SH. SUBHASH KINGER BEFORE THE UNDERSIGNED, HE HAD EARLIER BEEN LIVING IN JAPAN WHERE HE WAS WORKING AS A LABOURER AND HAD BEEN SENDING MONEY TO HIS FAM ILY IN INDIA FOR THEIR DAILY NEEDS. BUT THE COPY OF HIS BANK ACCOUNT SHOWS NO DE POSITS OR WITHDRAWALS MADE IN THIS MANNER. IT IS NOT POSSIBLE FOR A PERSON OF SUC H LEVEL OF INCOME AND STATUS HAVING GIVEN HIS ENTIRE HARD EARNED MONEY TO ANY TH IRD PERSON WITHOUT ANY CONSIDERATION WHATSOEVER AND HE HIMSELF NOT EVEN BE EN ABLE TO LEAD A LIFE BEYOND BASIC SUBSISTENCE LEVEL. IT HAS BEEN HELD IN JUDGEMENT OF KARNAL MOTORS V. C IT THAT 'THE RECORD REVEALED THAT CREDITOR 'M' WAS NOT A' MAN OF MEANS. THE ONUS WAS ON ASSESSEE TO DISCHARGE THAT 16 HE WAS A MAN OF MEANS TO ALLOW THE CASH CREDIT. THE RE SHOULD BE IDENTIFICATION OF THE CREDITORS AND HE SHOULD BE A PERSON OF MEANS. THERE FORE, THERE WAS NO JUSTIFICATION TO INTERFERE IN RESPECT OF ADDITION O N ACCOUNT OF CASHCREDIT SHOWN IN THE NAME OF M. IT IS CLEAR THAT THIS BANK ACCOUNT SEEMS TO HAVE B EEN OPERATED BY SOME OTHER PERSON AND NOT SHRI SUBHASH KINGER. THE ASSE SSEE HAS ADOPTED THIS MEANS TO ROUTE HIS MONEY EARNED FROM UNDISCLOSED SO URCES TO HIS BOOKS OF ACCOUNT. IN THE LIGHT OF ABOVE BACKGROUND, THE AO ADDED A SL UM OF RS. 24.00 LAKHS TO THE INCOME OF THE ASSESSEE. 12 ON APPEAL BEFORE THE LD. CIT(A), IT W AS MAINLY SUBMITTED THAT LOAN WAS BASICALLY TAKEN BY THE ASSESSEE FROM SHRI VIJAY KUMAR WHO HAS ALREADY FILED HIS CONFIRMATION COPY OF ACCOUNT OF SHRI VIJAY KUMAR WAS ALSO FILED. SINCE SHRI VIJAY KUMAR HAS A RRANGED LOAN FROM SHRI SUBHASH KINGER, NRI @ 6% PER ANNUM INTERE ST AFFIDAVIT OF SHRI SUBHASH KINGER WAS ALSO PRODUCED, THEREFORE, NO ADDITION WAS POSSIBLE IN CASE OF THE ASSESSEE WHEN SHRI VIJAY KU MAR BEING A REGULAR INCOME-TAX ASSESSEE HAS ALREADY CONFIRMED T HE LOAN. IT WAS FURTHER CONTENDED BEFORE THE LD. CIT(A) THAT IN FAC T THE AO HAS ALREADY REOPENED ASSESSMENT OF SHRI VIJAY KUMAR U/S 148 OF THE ACT. IN ANY CASE SHRI SUBHASH KINGER HAD WITHDRAWN MONEY FROM HIS BANK ACCOUNT AND HAD ALSO TAKEN CERTAIN LOANS A GAINST FDR, THEREFORE, SOURCES OF MONEY ALSO STOOD PROVED. TH E LD. CIT(A) DID NOT FIND FORCE IN THE SUBMISSIONS. HE ALSO CALLED FOR THE ASSESSMENT RECORD OF SHRI VIJAY KUMAR AND NOTED THAT IN THE A SSESSMENT ORDER PASSED U/S 143(3) OF THE ACT FOLLOWING OBSERVATIONS HAVE BEEN MADE:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF SHRI SEWA RAM IT WAS PROVED BEYOND DOUBT THAT SHRI SUBHASH KI NGER COULD NOT IN ANY CASE HAVE LENT HUGE SUM OF RS. 24 LAKHS TO ANYB ODY. THE ASSESSEES CONTENTION THAT HE HAS PAID INTEREST OF RS. 20,220/- FOR THE PERIOD FROM 5.2.2007 TO 31.3.2007 ON 15.3.2010 IS O NLY AN AFTERTHOUGHT SINCE THE ASSESSEE HAD NOT BEEN ABLE TO PROVE GENUI NENESS OF THE ALLEGED LOAN TRANSACTION OR CREDITWORTHINESS OF THE LENDER. ABOVE FACTS AND CIRCUMSTANCES SHOW THAT UNDISCLOSED INCOME HAS BEEN BROUGHT INTO THE BOOKS OF M/S SEWAK TIMBER STORE, R AJPURA (PROP. SHRI SEWA RAM). ACCORDINGLY, ADDITION OF RS. 24,00,000/ - IS MADE TO THE RETURNED INCOME OF THE ASSESSEE ON PROTECTION BASIS . IN THIS BACKGROUND THE LD. CIT(A) CONFIRMED THE ADD ITION OF RS. 24.00 LAKHS. 13 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAS RAISED LOAN OF RS. 24.00 LAKHS FROM SH RI VIJAY KUMAR WHO IS SON OF THE ASSESSEE. CONFIRMATION OF THE LO AN WAS FILED, COPY OF WHICH IS AVAILABLE AT PAGE 104 OF THE PAPER BOOK. SINCE SHRI VIJAY KUMAR HAD ARRANGED THESE FUNDS OUT OF LO ANS TAKEN FROM 17 SHRI SUBHASH KINGER WHO WAS CLOSE RELATIVES OF SHRI VIJAY KUMAR. HIS AFFIDAVIT WAS ALSO FILED, COPY OF WHICH IS PLAC ED AT PAGE 105 OF THE PAPER BOOK. COPY OF PASSPORT AS WELL AS BANK S TATEMENT OF SHRI SUBHASH KINGER AND BANK CERTIFICATE OF STATE BANK O F INDIA CONFIRMING THAT FDR AMOUNTING TO RS. 14,50,725/- WA S ENCASHED BY SHRI SUBHASH KINGER ON 3.2.2007, HAS ALSO BEEN FILE D AT PAGE 107 TO 112 OF PAPER BOOK. COPY OF CHEQUES WAS ALSO FILED WHICH IS PLACED AT PAGE 115 AND 116. ONCE ALL THESE DOCUMENTS WERE FILED THE AO SHOULD HAVE BEEN SATISFIED THAT THE LOAN WAS CORREC TLY TAKEN. HOWEVER, THE AO CALLED UPON THE ASSESSEE TO PRODUCE SHRI SUBHASH KINGER WHO WAS ACCORDINGLY PRODUCED AND HIS STATEM ENT WAS ALSO RECORDED. HOWEVER, THE AO WAS STILL NOT SATISFIED AND MADE ADDITION WHICH WAS CONFIRMED BY THE LD. CIT(A). HE DREW OUR ATTENTION TO ALL THOSE DOCUMENTS AND POINTED OUT THAT SHRI SUBHASH K INGER HAD GONE TO JAPAN IN THE YEAR 1993 WHERE HE WORKED AS L ABOURER AND HAD STAYED WITH HIS ELDER BROTHER. HE EARNED CERTA IN AMOUNTS OF MONEY WHICH WERE REGULARLY DEPOSITED IN HIS NR NR A CCOUNT OUT OF WHICH SOME MONEY WAS PUT IN FDR. ONE OF THE FDRS W AS ENCASHED ON 3.2.2007 AND PROCEEDS OF THIS FDR AMOUNTING TO R S. 14,05,275/- WAS CREDITED TO HIS ACCOUNT ON 3.2.2007 WHICH IS RE FLECTED IN THE BANK STATEMENT AT PAGE 108 FOR WHICH A SEPARATE CER TIFICATE HAS ALSO BEEN PLACED AT PAGE 112 OF PAPER BOOK. THE FIRST C HEQUE OF LOAN WAS GIVEN BY SHRI SUBHASH KINGER AMOUNTING TO RS. 1 4.00 LAKHS ON 5.2.2007 WHICH IS CLEARLY REFLECTED IN THE BANK STA TEMENT. THE SECOND CHEQUE WAS GIVEN BY SHRI SUBHASH KINGER ON 1 5.2.2007 WHICH IS ALSO CLEARLY REFLECTED IN THE BANK STATEME NT AT PAGE 109. FOR THIS SHRI SUBHASH KINGER HAD DEPOSITED CERTAIN CASH IN US DOLLARS WHEN HE HAS RETURNED FROM ABROAD. SINCE TH E TRANSACTIONS HAVE BEEN ROUTED THROUGH BANK AND ALL THE DOCUMENTS HAVE BEEN FURNISHED IN RESPECT OF SOURCES OF SOURCES, THE AD DITION WAS NOT CALLED FOR AND IN THIS REGARD HE RELIED ON THE DECI SION OF THE CHANDIGARH BENCH OF THE TRIBUNAL IN CASE OF ASHOK K UMAR PROP. SHREE SHANKARJEE RICE & GENERAL MILLS BEARING ITA N O. 825/CHD/2007 (COPY OF JUDGMENT HAS BEEN ENCLOSED AT PAGE 8 TO 21 OF PAPER BOOK REGARDING JUDGMENTS). HE ALSO SUBMIT TED THAT THE AO HAS MADE SOME OBSERVATIONS THAT SHRI SUBHASH KINGER DID NOT KNOW THE FACT THAT A LOAN WAS TAKEN AGAINST FDR, OR BALA NCE ON PARTICULAR DATE WHICH ARE MINOR THINGS AND IN FACT NOBODY WOUL D REMEMBER THE BALANCE IN ACCOUNTS ON A PARTICULAR DATE. FURTHER SHRI VIJAY KUMAR WAS VERY CLOSE TO SHRI SUBHASH KINGER AND DURING HI S ABSENCE OF 18 SHRI KINGER TO JAPAN, SHRI VIJAY KUMAR HAS BEEN HEL PING THE FAMILY OF SHRI KINGER WHICH IS CLEAR FROM THE STATEMENT OF SHRI SUBHASH KINGER BEFORE THE AO THAT HE HAS TOOK HELP OF SHRI VIJAY KUMAR WITH SMALL SUMS FOR DAILY EXPENSES BEFORE THE YEAR 1992. BECAUSE OF THESE CONSIDERATIONS SHRI SUBHASH KINGER WAS DEEPLY OBLIGED TO SHRI VIJAY KUMAR AND HE GAVE LOAN ON LOWER RATE OF INTEREST. 14 HE ALSO SUBMITTED THAT THE AO WAS NOT SURE WHETH ER THIS ADDITION WAS CALLED FOR IN THE HANDS OF THE ASSESSE E, THEREFORE, HE REOPENED THE ASSESSMENT OF SHRI VIJAY KUMAR AND ULT IMATELY MADE ADDITION IN THE HANDS OF SHRI VIJAY KUMAR AND IN TH IS REGARD HE REFERRED TO THE ASSESSMENT ORDER OF SHRI VIJAY KUMA R AT PAGES 121 TO 129 OF THE PAPER BOOK. 15 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S TRONGLY SUPPORTED THE ORDERS OF THE AO AND THE LD. CIT(A). 16 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT THE ASSESSEE HAS TAKEN THE LOAN FROM SHRI VIJAY KUM AR WHO IS REGULAR INCOME-TAX ASSESSEE AND HAD FILED HIS CONFI RMATION AND THE MATTER SHOULD HAVE ENDED THERE. HOWEVER, SINCE THE AO WAS NOT SATISFIED, AFFIDAVIT OF SHRI SUBHASH KINGER FROM WH OM SHRI VIJAY KUMAR ARRANGED FUNDS WAS ALSO FILED AND HE W AS PRODUCED BEFORE THE AO. THE AO MAINLY OBJECTED TO SOME OF T HE ANSWERS GIVEN IN THE STATEMENT LIKE SHRI SUBHASH KINGER DID NOT REMEMBER HOW MUCH BALANCE WAS THERE IN HIS ACCOUNT OR WHETHE R ANY LOAN AGAINST FDR WAS TAKEN. THE AO HAS ALSO EXPRESSED THAT WHY ANY PERSON WOULD TAKE LOAN AGAINST FDR ON WHICH HE WAS RECEIVING AN INTEREST OF 9% WHEREAS HE HAS GIVEN LOAN TO SHRI VI JAY KUMAR @ 6%. AS EXPLAINED BY THE LD. COUNSEL OF THE ASSESSEE NOR MALLY NO PERSON WOULD REMEMBER THE BALANCES OR SOME OF THE TRANSACT IONS IN THE BANK. AS FAR AS CHARGING OF LOWER INTEREST IS CONC ERNED, SHRI SUBHASH KINGER SEEMS TO BE DEEPLY OBLIGED BECAUSE S HRI VIJAY KUMAR HAS BEEN HELPING SHRI KINGER BEFORE HE WENT T O JAPAN IN HIS DAY TO DAY EXPENSES WHEN EVER REQUIRED IT BECOMES C LEAR FROM FOLLOWINGS QUESTION AND ANSWERS IN THE STATEMENT RE CORDED BY THE AO: QUESTION: HAVE YOU TAKEN ANY LOAN FROM HIM? 19 ANS: NO MAJOR LOAN OTHER THAN SMALL PETTY AMOUNTS OF RS. 100 TO RS. 1000 APPROXIMATELY WAS GIVEN BY HIM AT TIMES BEFORE THE YEAR 1992 FOR DAILY EXPENSES ON NEED BASIS. 17 THE ABOVE CLEARLY SHOWS THAT SHRI VIJAY KUMAR WA S HELPING SHRI SUBHASH KINGER BEFORE HE WENT TO JAPAN. FURTH ER IN ADDITION TO THE CONFIRMATION FILED BY THE ASSESSEE EVEN AFFIDAV IT OF SHRI SUBHASH KINGER WAS FILED CONFIRMING THAT HE HAD GIV EN LOAN TO SHRI VIJAY KUMAR. SHRI SUBHASH KINGER WAS PRODUCED BEFO RE THE AO WHERE HE HAS EXPLAINED THAT HE HAD GONE TO JAPAN IN 1993 AND RETURNED LATER. THE AO HAS MADE OBSERVATION THAT S HRI SUBHASH KINGER HAD MEAGER INCOME BUT THE STATEMENT FILED BE FORE US SHOW THAT LOAN OF RS. 24.00 LAKHS WAS GIVEN BY SHRI SUBH ASH KINGER NOT OUT OF HIS CURRENT INCOME BUT OUT OF THE MONEY EARN ED ABROAD WHICH WAS DEPOSITED IN NR NR ACCOUNT WITH STATE BANK OF I NDIA. BOTH THE LOANS OF RS. 14.00 LAKHS AND RS. 10.00 LAKHS HAVE B EEN GIVEN BY SHRI SUBHASH KINGER BY ACCOUNT PAYEE CHEQUES OUT OF HIS FUNDS LYING IN THE BANK. FURTHER EVEN THE SOURCES OF THE SE FUNDS HAVE BEEN EXPLAINED INITIALLY IN A SUM OF RS. 14,05,275/ - CAME OUT OF ENCASHMENT OF FDR WHICH WAS MADE ON 26.8.2005. SEC OND SUM OF RS. 10.00 LAKHS CAME OUT OF BANK BALANCE LYING IN T HE ACCOUNT AND SOME MONEY CAME OUT OF TRANSFER FROM ANOTHER ACCOUN T AND SOME DEPOSIT IN US DOLLARS WHICH WAS STATED TO BE BROUGH T BY HIM FROM HIS EARNING ABROAD. THEREFORE, CLEARLY ALL DOCUME NTS HAVE BEEN FILED AND EVEN THE SOURCE OF SOURCE HAVE BEEN EXPLA INED. ONCE ALL THESE DOCUMENTS AND SOURCE OF MONEY ARE PROVED, THE AO SHOULD HAVE ACCEPTED THE LOANS. WE FIND THAT IN CASE OF S HRI ASHOK KUMAR PROP. M/S SHREE SHANKERJEE RICE & GENERAL MILLS, DI STT. SANGRUR V ACIT, ITA NO. 825/CHD/2007, SHRI ASHOK KUMAR PROP. (SUPRA) WHERE A SUM OF RS. 35.00 LAKHS WAS TAKEN AS LOAN BY THE A SSESSEE FROM HIS FATHER WHO WAS NOT AN INCOME-TAX ASSESSEE. THE ASSESSEE HAD FILED AN AFFIDAVIT AND STATED THAT THE MONEY HAD BE EN GIVEN OUT OF 20 AGRICULTURAL INCOME. WHEN THIS MATTER TRAVELED TO THE TRIBUNAL IT WAS CLEARLY OBSERVED IN PARA 18 TO 19 AS UNDER: 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING' THE YEAR HAD RECEIVED A LOAN OF RS. 35 LAKH S FROM HIS FATHER SHRI PARKASH CHAND. DURING IHE COURSE OF ASSESSMENT PROC EEDINGS, HE CLAIMS TO HAVE FILED THE COPY OF ACCOUNT ALONGWITH NECESSARY SUPPO RT JUSTIFYING THE AVAILABILITY OF SUCH MONEY WITH HIS FATHER. THE STATEMENT OF THE FA THER OF THE ASSESSEE WAS TAKEN BY THE ASSESSING OFFICER ON 6.12.2006 WHICH IS PLAC ED AT PAGES 43 TO 48 OF THE PAPER BOOK. SHRI PARKASH CHAND HAD IN HIS STATEMENT ADMITTED TO HAVE ADVANCED THE SAID SUM OF RS. 35 LAKHS TO HIS SON AND SOURCE WAS EXPLAINED TO HE OUT OF HIS AGRICULTURE INCOME ON HIS LAND HOLDING OF 50 AC RES IN LONGOWAL VILLAGE. THE SUPPORT BY WAY OF COPIES OF FORM *J N JUSTIFYING THE AGRICULTURE INCOME EARNED BY THE FATHER OF THE ASSESSEE WERE ALSO TILED DURING T HE COURSE OF ASSESSMENT PROCEEDINGS AND IS ADMITTED IN THE STATEMENT RECORD ED. THE DEPONENT FURTHER ADMITTED THAT OUT OF ADVANCE OF RS. 35 LAKHS, HE HA S YET TO RECEIVE ONLY SUM OF RS. 4,70,OOO/-. THE PERUSAL OF THE COPIES OF ACCOUNT OF SHRI PARKASH CHAND WITH M/S ASHOK KUMUR RAJ KUMAR PLACED AT PAGE 50 OF THE PAPER BOOK REFLECTS THE SOURCE OF MONEY I.E. THE AGRICULTURE P RODUCE WHICH IN TURN IS EVIDENCED BY THE COPIES OL FORM NO. *J* PLACED AT P AGES 51, 72 & 73 OF THE PAPER BOOK. FURTHER, THE ASSC-SSEE HAD ADVANCED LOA NS TO VARIOUS PARTIES BY WAY OF MORTGAGE DEED WHICH IN TURN WERE RETURNED IN CAS H AND WERE DEPOSITED WITH THE PROPRIETARY CONCERN M/S ASHOK KUMAR RAJ KUMAR. THE FATHER OF THE ASSESSEE CLAIMED TO HAVE RECEIVED BACK LOANS OF RS. 6 LAKHS H- RS. 3 LAKHS I RS. 3 LAKHS -T- RS. 4,50,0007- WHICH ARC FURTHER SUPPORTE D BY THE MORTGAGE DEED PLACED AT PAGES 52, 64, 65 AND 72 OF THE PAPER BOOK. THE SALE PROCEEDS ON ACCOUNT OF AGRICULTURE INCOME RECEIVED DURING THE YEAR ARE SHO WN AL RS. 2.16.177/- 36,429/- AND RS. 33,410/-. IN RESPECT OF THE OPENIN G BALANCE, THE ASSESSEE HAS FURNISHED THE 'J' FORMS OF THE EARLIER ORDERS JUSTI FYING THE ACCUMULATION OF THE OPENING BALANCE IN THE HANDS OF THE FATHER OF THE A SSESSEE. 19. THE ONUS ON THE ASSESSEE IN RESPECT OF ANY CASH LOAN RECEIVED DURING THE YEAR IS TO ESTABLISH THE IDENTITY, CREDITWORTHI NESS AND GENUINENESS OF THE TRANSACTIONS U/S 08 OF THE ACT. THE ASSESSEE BEFORE US HAS DISCHARGED HIS ONUS OF COMPLYING WITH THE THREE CONDITIONS IN RESPECT OF L OAN RECEIVED DURING THE YEAR. TLIC IDENTITY OF THE PERSON BEING FATHER OF THE ASS ESSEE STANDS ESTABLISHED IN VIEW OF THE STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE CREDIT WORTHINESS OF THE PERSON IS ALSO ESTABLISHED BY THE SERIES OF EVIDENCE FILED, WHEREIN IN ADDITION TO THE AGRICULTURE INCOME EARNE D BY HIM, THE FATHER OF ASSESSEE HAS SHOWN THE RECEIPT OF MONEY BY WAY OF R ETURN OF LOANS, WHICH WERE ADVANCED AS PER REGISTERED MORTGAGE DEED, PLACED BE FORE US IN THE PAPER BOOK. FURTHER, THE SAID AMOUNT THEN BEING TRANSFERRED TO THE BANK ACCOUNT OF THE FATHER OF THE ASSESSEE. FROM WHERE THE CHEQUES HAVE BEEN ISSU ED TO THE PROPRIETY CONCERN OF THE ASSESSED ESTABLISHES THE GENUINENESS OF TRAN SACTION. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE GENUINENESS OF T RANSACTIONS STANDS ESTABLISHED. THE AMOUNTS HAVE BEEN ADVANCED THROUGH ACCOUNT PAYEE CHEQUES AND WE FIND NO MERIT IN THE ADDITION BEING MADE ON THIS ACCOUNT. THEIR LORDSHIPS OF HON'BLE SUPREME COURT IN CIT VS. CHUNI LAI [211 ITR (ST) 11] HAD HELD THAT CASH CREDITS RECEIVED THROUGH BAN K ACCOUNT OF WIFE, SON AND DAUGHTER IN LAW COULD NOT BE ADDED UNLESS IT IS PRO VED THAT THEY WERE BENARMIDARS OF THE ASSESSEE. IN THE FACTS OF PRESENT CASE, FATH ER OF ASSESSEE HAS PROVED THE AVAILABILITY OF LAW IS NOT TO PROVE THE SOURCE OF SOURCE OF CASH C REDIT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDI TION OF RS. 35 LAKHS CREDITED TO THE BOOKS OF THE ASSESSEE, BEING ON ACCOUNT OF LOA N RECEIVED FROM THE FATHER OF THE ASSCSSEE. THUS THE GROUNDS NO. 8 & 9 RAISED BY THE ASSESSEE ARE ALLOWED . 21 18 IT IS CLEAR THAT ONCE THE BURDEN CASTED ON THE A SSESSEE TO PROVE THE IDENTITY OF CREDITOR, GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINESS OF THE PERSON GIVING LOAN, IS PRO VED THEN SUCH LOANS SHOULD HAVE BEEN ACCEPTED. THEREFORE, IN OU R OPINION, THE ADDITION IS NOT JUSTIFIED AND ACCORDINGLY WE SET A SIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION. 19 IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 31.10.2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 31.10. 2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR 22