The ITO, Ward-2(4), AMRELI V. Shri Vajubhai N. Kanani, Prop. of M/s. Krishna Construction,

ITA 368/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0198 (ITAT-RAJKOT)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DR ADHIA
• Section: 68

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH: RAJKOT . .. . . . . . . .. . . . . . # # # # BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTA VA AM ITA NO. 368/RJT/2012 / ASSESSMENT YEAR 2007-08 ITO, WARD 2 (4) V. VAJUBHAI N KANANI AMRELI PROP.OF M/S. KRISHNA CONSTRUCTION AT: MALSIKA, TAL: DHARI DIST: AMRELI. PAN: AFPPK0597L DATE OF HEARING: 27.09.2012 DATE OF PRONOUNCEMENT:05.10.2012 FOR THE REVENUE: AVINASH KUMAR DR FOR THE ASSESSEE: D R ADHIA AR / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A) ON 19-03-2012, ON THE FOLLOWING GROUNDS: 1. THE LD. CIT (A), RAJKOT HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ADDITION OF RS.24,90,000/- MADE BY THE AO BEING UNE XPLAINED UNSECURED LOAN OBTAINED BY THE ASSESSEE FROM DIFFERENT PARTIE S WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE AO. 2. ON THE FACTS OF THE CASE AND IN LAW THE LD. CIT (A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. ANY OTHER GROUND THAT THE REVENUE MAY RAISE BEFO RE OR DURING HEARING PROCEEDINGS BEFORE THE HONBLE ITAT. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A), RAJKOT MAY KINDLY BE SET-ASIDE AND THAT OF ASSESSING OFFICER BE RESTO RED. 2. GROUND NOS.2, 3 AND 4 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 3. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. HE FILED HIS RETURN OF INCOME ON 29-1 0-2007 RETURNING TOTAL INCOME AT RS.6,18,060/-. AFTER PROCESSING, THE RETURN WAS SEL ECTED FOR SCRUTINY DURING WHICH IT WAS FOUND THAT THE ASSESSEE HAD CREDITED A SUM OF R S.24,90,000/- IN HIS BOOKS OF ACCOUNT AS CASH CREDIT IN THE NAMES OF 8 CREDITORS AS PER DETAILS GIVEN IN PARA 3 OF THE ASSESSMENT ORDER. AFTER HEARING THE ASSESSEE, T HE ASSESSEE TREATED THE 2 ITA 368/RJT/2012 IMPUGNED CASH CREDITS AS UNEXPLAINED AND CONSEQUENT LY BROUGHT THE SAME TO TAX UNDER SECTION 68, WITH THE FOLLOWING OBSERVATIONS:- 4.1 SONALBEN VAJUBHAI KANANI, VILL: MALSIKA, DIST AMRELI DEPOSIT OF RS.3,50,000/- IN THE LETTER DATED 23.11.2009 IT IS MENTIONED BY T HE ABOVE LADY THAT SHE IS RESIDING AT VILLAGE MALSIKA WITH HER HUSBAND , IN LAW AND TWO CHILDREN. IT IS SUBMITTED THAT THERE IS NO AGRICULTURAL LAND AND SHE IS DOING BUSINESS IN SHARIES AND CARPETS AT THE ABOVE VILLAGE. IT IS ST ATED THAT SHE HAD FILED RETURN OF INCOME WITH I.T.O., WARD 2 (4), AMRELI AND SHE H AS DEPOSITED CASH OF RS.3,50,000/- IN THE BANK ACCOUNT FROM WHICH CHEQUE HAS BEEN GIVEN TO THE ASSESSEE. COPY OF BANK STATEMENT IS HOWEVER NOT PR ODUCED BY THE DEPOSITOR OF THE ASSESSEE. NO PROOF WHAT SO EVER IS FILED REG ARDING SUCH HUGE ACCUMULATION OF CASH. THERE IS NO CREDIBLE EVIDENC E REGARDING TRADING IN SHARIES. NO BILLS OF PURCHASE OF SHARIES HAVE BEEN PRODUCED. THIS IS A VERY SMALL VILLAGE WERE SUCH KIND OF BUSINESS IS NOT POS SIBLE MERELY BECAUSE SOME INCOME IS SHOWN IN THE INCOME-TAX RETURN FILED IN THE NAME OF THE LADIES THE ONUS U/S.68 OF THE ACT DOES NOT GET DISCHARGED. IT IS THE DUTY OF THE ASSESSEE TO PROVE THE CAPACITY AND GENUINENESS OF T HE TRANSACTION ALL THE ABOVE INGREDIENT ARE TOTALLY MISSING AND THEREFORE I HOLD THAT THE ABOVE DEPOSIT IS UNEXPLAINED WITHIN THE MEANING OF SEC.68 OF THE ACT. 4.2 SHRI SHAMBHUBHAI NANJIBHAI KANANI, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.4,90,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 2.48.89 HECTORS OF LAND. NO EVIDENCE IN THE FORM OF BILLS FOR SALE OF AGRICULTU RE PRODUCE IS FILED TO PROVE THE CLAIM OF HUGE AGRICULTURAL INCOME FROM SUCH SMA LL AGRICULTURAL LAND. THE SAID DEPOSITOR IS HAVING BANK ACCOUNT WITH S.B.S., DHARI. THE SAID ACCOUNT IS VERY OLD I.E. OPENED BEFORE THE YEAR 2003. HOWE VER THERE ARE NO SIGNIFICANT DEPOSITS PRIOR TO THE LOAN AMOUNT GIVEN TO THE ASSESSEE. THERE ARE CASH DEPOSITS OF THE SAME AMOUNT PRIOR TO ISSUE OF CHEQUE AND ON EACH OCCASION THE DEPOSITOR IS LEFT WITH VERY NEGLIGIBLE BALANCE. THE QUESTION THAT ARISES IS WHY THE DEPOSITOR SHOULD KEEP SUCH HUGE C ASH ON HAND AT THIS VILLAGE WHEN HE IS ALREADY HAVING A BANK ACCOUNT. IT IS ALSO SIGNIFICANT TO NOTE THAT THERE ARE SMALL CASH WITHDRAWALS FROM THE BANK ACCOUNT WHICH ALSO DEFEATS THE CLAIM OF HUGE CASH ON HAND AT HIS VILLA GE. IN ANY CASE, IN ABSENCE OF COMPLETE DETAILS OF SALE OF AGRICULTURE PRODUCE WITH COPY OF SALE BILLS FOR AGRICULTURE PRODUCE AS ALSO THE DETAILS O F EXPENSES TOWARDS AGRICULTURE, HIS CAPACITY TO HAVE SUCH AMOUNT CANNO T BE ACCEPTED. THE AFFIDAVIT IS ONLY SELF SERVING STATEMENT TO HELP TH E ASSESSEE. AS I AM NOT SATISFIED ABOUT THE GENUINENESS OF THE SAME, IT IS TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 3 ITA 368/RJT/2012 4.3 SMT. SANTOKBEN NARSHIBHAI MATHUKIA, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.4,00,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 3.98.62 HECTORS OF LAND. IT IS SEEN FROM THE CERTIFICATE IN FORM BO.7/12 THAT THE SAID PERSON HAS TAKEN BANK LOAN OF RS.22,000/- FROM S.B.S., DHARI. THERE IS ONE MOR E BANK LOAN OF RS.20,000/- TAKEN BY HER FROM THE SAME BANK. NO EV IDENCE IN THE FORM OF BILLS FOR SALE OF AGRICULTURE PRODUCE IS FILED TO P ROVE THE CLAIM OF HUGE AGRICULTURAL INCOME FROM SUCH SMALL AGRICULTURAL LA ND. THE SAID DEPOSITOR IS HAVING BANK ACCOUNT WITH S.B.S., DHARI. THERE ARE C ASH DEPOSITS OF THE SAME AMOUNT PRIOR TO ISSUE OF CHEQUE AND ON EACH OCCASIO N THE DEPOSITOR IS LEFT WITH VERY NEGLIGIBLE BALANCE. THE QUESTION THAT ARI SES IS WHY THE DEPOSITOR SHOULD KEEP SUCH HUGE CASH ON HAND AT HER VILLAGE W HEN SHE IS ALREADY HAVING A BANK ACCOUNT. IF SHE HAD CAPACITY OF GIVIN G SUCH HUGE LOAN OF RS.4,00,000/-, THERE SHOULD HAVE BEEN NO NEED TO TA KE BANK LOAN OF SMALL AMOUNT OF RS.22,000/- AND RS.20,000/-. IT IS ALSO SIGNIFICANT TO NOTE THAT THERE ARE SMALL CASH WITHDRAWALS FROM THE BANK ACCO UNT WHICH ALSO DEFEATS THE CLAIM OF HUGE CASH ON HAND AT HER VILLAGE. IN ANY CASE, IN ABSENCE OF COMPLETE DETAILS OF SALE OF AGRICULTURE PRODUCE WIT H COPY OF SALE BILLS FOR AGRICULTURE PRODUCE AS ALSO THE DETAILS OF EXPENSES TOWARDS AGRICULTURE, HER CAPACITY TO HAVE SUCH AMOUNT CANNOT BE ACCEPTED. T HE AFFIDAVIT IS ONLY SELF SERVING STATEMENT TO HELP THE ASSESSEE. AS I AM NOT SATISFIED ABOUT THE GENUINENESS OF THE SAME, IT IS TREATED AS UNEXPLAIN ED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.4 SHRI (KANU) KANJIBHAI NANJIBHAI KANANI, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.3,90,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 4.75.52 HECTORS OF LAND IT IS SEEN FROM THE CERTIFICATE IN FORM NO.7/12 THE DEPOSITORS HAS HIMSELF TAKEN LOAN FROM THE S.B.S. DHARI. NO EVIDENCE IN THE FORM OF BILLS FOR SALE OF AGRICULTURE PRODUCE IS FILED TO PROVE THE CLAIM OF HUGE AGRICUL TURAL INCOME FROM SUCH SMALL AGRICULTURAL LAND. THE SAID DEPOSITOR IS HAVI NG BANK ACCOUNT WITH S.B.S., DHARI. HOWEVER THERE ARE NO SIGNIFICANT DE POSITS PRIOR TO THE LOAN AMOUNT GIVEN TO THE ASSESSEE. THERE ARE CASH DEPOS ITS OF THE SAME AMOUNT PRIOR TO ISSUE OF CHEQUE AND ON EACH OCCASION THE D EPOSITOR IS LEFT WITH VERY NEGLIGIBLE BALANCE. THE QUESTION THAT ARISES IS WH Y THE DEPOSITOR SHOULD KEEP SUCH HUGE CASH ON HAND AT THIS VILLAGE WHEN HE IS ALREADY HAVING A BANK ACCOUNT. IT IS ALSO SIGNIFICANT TO NOTE THAT THERE ARE SMALL CASH WITHDRAWALS FROM THE BANK ACCOUNT WHICH ALSO DEFEAT S THE CLAIM OF HUGE CASH ON HAND AT HIS VILLAGE. IN ANY CASE, IN ABSENCE OF COMPLETE DETAILS OF SALE OF AGRICULTURE PRODUCE WITH COPY OF SALE BILLS FOR AGR ICULTURE PRODUCE AS ALSO THE DETAILS OF EXPENSES TOWARDS AGRICULTURE, HIS CAPACI TY TO HAVE SUCH AMOUNT CANNOT BE ACCEPTED. THE AFFIDAVIT IS ONLY SELF SER VING STATEMENT TO HELP THE 4 ITA 368/RJT/2012 ASSESSEE. AS I AM NOT SATISFIED ABOUT THE GENUINEN ESS OF THE SAME, IT IS TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTIO N 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.5 SHRI VALLABHBHAI PREMJIBHAI, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.3,10,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 5.95.90 HECTORS OF LAND IT IS SEEN FROM THE CERTIFICATE IN FORM NO.7/12 THE DEPOSITORS HAS HIMSELF TAKEN LOAN OF RS.35,000/- FROM THE S.B.S. DHARI HE ALSO ANOTHER B ANK LOAN OF RS.2,50,000/- FROM THE SAME BANK. THERE IS STILL ONE MORE BANK LO AN TAKEN FROM AMRELI JILLA MADHYASTH SAHAKARI BANK DHARI BRANCH. NO DETAILS R EGARDING THE SOURCE OF REPAYMENT OF THE ABOVE THREE LOANS TAKEN BY THE DEP OSITOR HIMSELF IS FURNISHED BEFORE ME. THE DEPOSITOR HAS NOT PRODUCE D COPY OF THE RELEVANT BANK STATEMENT FROM WHICH ALLEGED CHEQUES HAVE BEEN GIVEN. THE DEPOSITOR HAS FILED COPY OF BANK STATEMENT IN RESPECT OF ACCO UNT NO.66017704872 WHICH IS NEWLY OPENED ONLY ON 05.010.2007 AND THERE FORE THE SAME IS NOT RELEVANT TO THE ASSESSMENT YEAR. NO EVIDENCE IN TH E FORM OF BILLS FOR SALE OF AGRICULTURE PRODUCE IS FILED TO PROVE THE CLAIM OF HUGE AGRICULTURAL INCOME FROM SUCH SMALL AGRICULTURAL LAND. THE QUESTION THA T ARISES IS WHY THE DEPOSITOR SHOULD KEEP SUCH HUGE CASH ON HAND AT HIS VILLAGE WHEN HE IS ALREADY HAVING A BANK ACCOUNT. IT IS ALSO SIGNIFIC ANT TO NOTE THAT THERE ARE SMALL CASH WITHDRAWALS FROM THE BANK ACCOUNT WHICH ALSO DEFEATS THE CLAIM OF HUGE CASH ON HAND AT HIS VILLAGE. IN ANY CASE, IN ABSENCE OF COMPLETE DETAILS OF SALE OF AGRICULTURE PRODUCE WITH COPY OF SALE BILLS FOR AGRICULTURE PRODUCE AS ALSO THE DETAILS OF EXPENSES TOWARDS AGR ICULTURE, HIS CAPACITY TO HAVE SUCH AMOUNT CANNOT BE ACCEPTED. THE AFFIDAVIT IS ONLY SELF SERVING STATEMENT TO HELP THE ASSESSEE. AS I AM NOT SATISF IED ABOUT THE GENUINENESS OF THE SAME, IT IS TREATED AS UNEXPLAINED WITHIN TH E MEANING OF SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESS EE. 4.6 SHRI BABULAL AMBABHAI KANANI, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.2,00,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 1.73.00 HECTORS OF LAND IT IS SEEN FROM THE CERTIFICATE IN FORM NO.7/12 THE DEPOSITORS HAS HIMSELF TAKEN LOAN OF RS.5,000/- FROM THE S.B.S. DHARI. THERE IS ANOTHER LOAN OF RS.4,000/- TAKEN BY HIM FROM MALSIKA SEVA SAHAKARI MANDALI. NO EVID ENCE IN THE FORM OF BILLS FOR SALE OF AGRICULTURE PRODUCE IS FILED TO PROVE T HE CLAIM OF HUGE AGRICULTURAL INCOME FROM SUCH SMALL AGRICULTURAL LAND. THE SAID DEPOSITOR IS HAVING BANK ACCOUNT WITH S.B.S., DHARI. THIS ACCOUNT IS OPENED WITH CASH DEPOSIT OF RS.1,000/- ON 13-10.2006. IN THE SAID ACCOUNT RS.2 ,00,000/- CASH IS DEPOSITED ON 26.10.2006 AND CHEQUE IS ISSUED ON 02. 11.2006. IN THE SAID ACCOUNT THOUGH THERE ARE SOME TRANSACTIONS OF CASH DEPOSIT AND WITHDRAWAL. THERE ARE CASH DEPOSITS OF THE SAME AMOUNT PRIOR TO ISSUE OF CHEQUE AND ON 5 ITA 368/RJT/2012 EACH OCCASION THE DEPOSITOR IS LEFT WITH VERY NEGLI GIBLE BALANCE. THE QUESTION THAT ARISES IS WHY THE DEPOSITOR SHOULD KEEP SUCH H UGE CASH ON HAND AT HIS VILLAGE WHEN HE IS ALREADY HAVING A BANK ACCOUNT. IN ANY CASE, IN ABSENCE OF COMPLETE DETAILS OF SALE OF AGRICULTURE PRODUCE WIT H COPY OF SALE BILLS FOR AGRICULTURE PRODUCE AS ALSO THE DETAILS OF EXPENSES TOWARDS AGRICULTURE, HIS CAPACITY TO HAVE SUCH AMOUNT CANNOT BE ACCEPTED. T HE AFFIDAVIT IS ONLY SELF SERVING STATEMENT TO HELP THE ASSESSEE. AS I AM NO T SATISFIED ABOUT THE GENUINENESS OF THE SAME, IT IS TREATED AS UNEXPLAIN ED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.7 SHRI NANJIBHAI RAJABHAI HIRPARA, VILL:- MALSIKA, TAL. DHARI, DIST AMRELI DEPOSIT OF RS.1,75,000/- THE ABOVE DEPOSITOR IS HAVING ONLY 2.95.42 HECTORS OF LAND NO EVIDENCE IN THE FORM OF BILLS FOR SALE OF AGRICULTU RE PRODUCE IS FILED TO PROVE THE CLAIM OF HUGE AGRICULTURAL INCOME FROM SUCH SMA LL AGRICULTURAL LAND. THE SAID DEPOSITOR IS HAVING BANK ACCOUNT WITH S.B.S., DHARI. THE SAID ACCOUNT IS VERY OLD I. E OPENED BEFORE THE YEAR 2003. HOWEV ER THERE ARE NO SIGNIFICANT DEPOSITS PRIOR TO THE LOAN AMOUNT GIVEN TO THE ASSE SSEE. THERE ARE CASH DEPOSITS OF THE SAME AMOUNT PRIOR TO ISSUE OF CHEQU E AND ON EACH OCCASION THE DEPOSITOR IS LEFT WITH VERY NEGLIGIBLE BALANCE. IT APPEARS FROM THE SAID BANK ACCOUNT THAT SUCH ACCOMMODATION CHEQUES SEEMS TO HAVE BEEN GIVEN TO MORE THAT ONE PARTIES. HOWEVER, SMALL CASH WITH DRAWALS FROM THE SAID BANK ACCOUNT CLEARLY SUGGEST THAT THE CLAIM OF HUGE CASH ON HAND AT HIS VILLAGE. IN ANY CASE, IN ABSENCE OF COMPLETE DETAI LS OF SALE OF AGRICULTURE PRODUCE WITH COPY OF SALE BILLS FOR AGRICULTURE PRO DUCE AS ALSO THE DETAILS OF EXPENSES TOWARDS AGRICULTURE, HIS CAPACITY TO HAVE SUCH AMOUNT CANNOT BE ACCEPTED. THE AFFIDAVIT IS ONLY SELF SERVING STATE MENT TO HELP THE ASSESSEE. AS I AM NOT SATISFIED ABOUT THE GENUINENESS OF THE SAME, IT IS TREATED AS UNEXPLAINED WITHIN THE MEANING OF SECTION 68 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. ON APPEAL, THE LD. CIT (A) HAS DELETED THE IMPUG NED ADDITIONS, WITH THE FOLLOWING OBSERVATIONS: 4. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND S UBMISSIONS OF APPELLANT. ASSESSING OFFICER HAS NARRATED THE DETA ILS OF THE CREDITORS OF LOAN IN THE MANNER AS UNDER: SR NO NAME OF AGRICULTURIST VILLAGE MALSIKA, TAL DHARI, DIST AMRELI. LAND OWNED AS PER AFFIDAVIT (IN HECTOR) LOAN GIVEN TO APPELLANT (RS.) 1 SONALBEN VAJUBHAI KANAI VILLAGE MALSIKA, TAL DHAR I, DIST AMRELI. 0 350000 2 SHAMBHUBHAI NANJIBHAI KANANI VILLAGE MALSIKA, TAL DHARI, DIST AMRELI. 2-48-89 490000 3 SANTOKBEN NARSHIBHAI MATHUKIA VILLAGE MALSIKA, TAL DHARI, DIST AMRELI. 3-98-62 400000 4 KANU KANJIBHAI NANJIBHAI VILLAGE MALSIKA, TAL DHA RI, 4-75-52 390000 6 ITA 368/RJT/2012 KANANI DIST AMRELI. 5 VALLABHBHAI PREMJIBHAI VILLAGE MALSIKA, TAL DHARI , DIST AMRELI. 5-95-90 310000 6 BALUBHAI AMBABHAI KANANI VILLAGE MALSIKA, TAL DHA RI, DIST AMRELI. 1-73-00 200000 7 NANJIBHAI RAJABHAI HIRPARA VILLAGE MALSIKA, TAL D HARI, DIST AMRELI. 2-95-42 175000 8 KANTABEN NANJIBHAI HIRPARA VILLAGE MALSIKA, TAL D HARI, DIST AMRELI. 3-60-18 175000 2490000 AS FAR AS SONALBEN VAJUBHAI KANANI IS CONCERNED, SH E IS ASSESSEE WITH ITO WARD 2(4), AMRELI AS STATED BY ASSESSING OFFICER IN THE ASSESSMENT ORDER. THE CAPACITY OF A CREDITOR MAY BE PRESUMED TO BE TH ERE TO ADVANCE LOAN TO APPELLANT IF SUCH CREDITOR IS AN INCOME TAX ASSESSE E AND NOTHING ADVANCE HAS BEEN PROVED FROM HER INCOME TAX RETURN OF INCOM E AGAINST HER CAPACITY. ASSESSING OFFICER SHOULD REFER TO THE RETURN OF INC OME FILED BY THE CREDITOR RATHER THAN REFERRING TO INABILITY OF THE APPELLANT TO PROVE THE SOURCE OF SOURCE. NORMALLY, THE SOURCE OF SOURCE NEED NOT BE EXPLAINE D BY THE APPELLANT BUT WHEN THE ASSOCIATION OF APPELLANT AND CREDITORS IS CLOSE, THE SOURCE OF ACQUISITION OF CASH BY THE CREDITOR MUST BE EXPLAIN ED AS HELD IN THE CASE OF BANARSI PRASAD V. CIT 304 ITR 239 (ALL). ASSESSING OFFICER HAS NOWHERE STATED IN THE ASSESSMENT ORDER THAT ANY OF THE APPE LLANT HAD SUFFICIENT CONTROL OVER THE CREDITOR TO ROUTE HIS OWN MONEY THROUGH TH E CREDITOR THEREFORE THE NORMAL PRINCIPLE OF NO REQUIREMENT OF PROVING THE S OURCE OF SOURCE IN CASE OF CASH CREDIT IS FOLLOWED. MOREOVER, IF ANY CASH DEP OSITED IN THE BANK ACCOUNT OF THE CREDITOR APPEARS TO BE UNEXPLAINED AFTER EXA MINING HER RETURN OF INCOME, A SEPARATE PROCEEDING MAY BE STARTED AGAINS T HER IN RESPECT OF OTHER CREDITORS. I FIND THAT THEY HAVE LAND HOLDING OF A BOUT 2 HECTARE OR MORE. GENERALLY A HOLDING OF ONE HECTARE IS CONSIDERED SM ALL BUT A HOLD OF LAND OF ABOUT 2 HECTARE TO ABOUT 6 HECTARE IS A MEDIUM HOLD ING ON WHICH AGRICULTURIST MAY MAKE SOME SAVING. THE SAVINGS MAY BE INVESTED BY THE AGRICULTURIST OR KEPT IN HAND AS CASH OR DEPOSITED IN BANK AS PER TH E WISHES OF THE AGRICULTURIST. THERE MAY BE QUESTION OF GENUINENES S OF TRANSACTION WHEN CASH IS DEPOSITED IN BANK ACCOUNT OF DEPOSITOR IMME DIATELY BEFORE IT WAS ADVANCED TO THE APPELLANT. HOWEVER, SUCH CASH MAY BE AVAILABLE WITH THE CREDITOR BY WAY OF SALE OF AGRICULTURAL PRODUCE OR RECALL OF ANY INVESTMENT MADE OUT OF EARLIER SAVING. MOREOVER, WHEN THE CRE DITOR OWNS UP THE TRANSACTION AND HAS SUFFICIENT CAPACITY TO ADVANCE THE LOAN TO APPELLANT, THE CREDITOR IS ANSWERABLE FOR SUCH CASH RATHER THAN TH E APPELLANT UNLESS IT IS PROVED THAT APPELLANT HAS CLOSE ASSOCIATION WITH SU CH CREDITORS OR HAD THE BANK ACCOUNT OF THE CREDITOR UNDER HIS CONTROL AND THE APPELLANT HIMSELF DEPOSITED THE CASH IN THE BANK ACCOUNT OF SUCH CRED ITOR WHO ADVANCED THE CHEQUE OF LOAN TO HIM. THEREFORE THE CIRCUMSTANTIA L EVIDENCE OF DEPOSIT OF CASH BY CREDITORS IN THEIR BANK ACCOUNTS BEFORE ADV ANCING THE CHEQUE OF LOAN CANNOT BE CONSIDERED AS SUFFICIENT EVIDENCE FOR THE CASH PERTAINING TO APPELLANT IN ABSENCE OF ANY OTHER EVIDENCE COLLECTE D BY THE ASSESSING 7 ITA 368/RJT/2012 OFFICER IN RESPECT OF CONTROL OF APPELLANT OVER THE BANK ACCOUNT OF SUCH CREDITORS AND AGAINST THE FACT THAT THE CREDITORS H AD SUFFICIENT LAND HOLDING TO ADVANCE SUCH LOANS OR WAS INCOME TAX ASSESSEE. I F IND THAT THE IDENTITY, CAPACITY OF CREDITORS AND GENUINENESS OF TRANSACTIO NS CANNOT BE SAID TO BE NOT PROVED BY THE APPELLANT IN THE PRESENT CASE AND ASSESSING OFFICER HAS NOT SUFFICIENTLY DISCHARGED HIS BURDEN TO DISPROVE THE SAME. I THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 24,90,000/- MADE BY HIM U/S.68 OF THE ACT. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS RECORDED IN THE ASSESSMENT ORDER AND SUBMITTED THAT MATCHING AMOUNT S WERE FIRST DEPOSITED IN THE BANK ACCOUNT OF THE CREDITORS AND THEREAFTER CHEQUE S WERE ISSUED BY THEM IN FAVOUR OF THE ASSESSEE. ACCORDING TO HIM, THE AFORESAID SE QUENCE OF EVENTS ITSELF SHOWS THAT THE IMPUGNED CASH CREDITS WERE NOT GENUINE. HE FURTHER SUBMITTED THAT THE CREDITORS HAD THEIR BANK ACCOUNTS BUT THERE WERE NO SIGNIFICANT DEPOSITS IN THEIR BANK ACCOUNTS BEFORE OR AFTER THE IMPUGNED TRANSACT IONS. 6. IN REPLY, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUPPORTED THE ORDER PASSED BY THE CIT (A). 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS INCLUDING THE MATERIALS AVAILABLE ON RECORD. THE FI NDINGS RECORDED BY THE AO IN THE ASSESSMENT ORDER HAVE NOT BEEN CONTROVERTED EITHER BY THE CIT(A) IN HIS APPELLATE ORDER OR BY THE ASSESSEE BEFORE US. IT IS ABSOLUTEL Y CLEAR FROM THE ASSESSMENT ORDER THAT THE CREDITORS HAD THEIR BANK ACCOUNTS BUT NO S IGNIFICANT DEPOSITS IN THEIR BANK ACCOUNTS WERE MADE EITHER BEFORE OR AFTER THE IMPUG NED TRANSACTIONS. IF THE CREDITORS WERE PERSONS OF SIGNIFICANT MEANS, IT WOU LD THEN BE QUITE UNLIKELY THAT THEY WOULD KEEP SUCH HUGE AMOUNTS IN THEIR RESPECTIVE HO USES INSTEAD OF KEEPING THEM IN BANK ACCOUNTS. SECONDLY, CASH DEPOSITS WERE FIRS T MADE IN THEIR BANK ACCOUNTS AND IMMEDIATELY THEREAFTER CHEQUES OF MATCHING AMOU NTS WERE ISSUED BY THEM IN FAVOUR OF THE ASSESSEE. THIS IS NOT A MATTER OF CO- INCIDENCE IN ONE OR TWO CASES BUT A PART OF WELL-CALCULATED DESIGN TO FIRST DEPOSIT M ATCHING AMOUNTS IN THE BANK ACCOUNTS OF CREDITORS AND THEREAFTER HAVE THE CHEQU ES ISSUED IN FAVOUR OF THE ASSESSEE FROM THOSE BANK ACCOUNTS WITH A VIEW TO SH OW THAT THE TRANSACTIONS HAVE BEEN ROUTED THROUGH BANKING CHANNELS AND THEREBY CR EATE A CLOAK ABOUT THE GENUINENESS TO THE IMPUGNED TRANSACTIONS. IF THE CR EDITORS HAD REQUISITE CASH AVAILABLE WITH THEM, THERE WAS NO REASON AS TO WHY THEY WOULD HOLD THEM BACK IN CASH AND DEPOSIT THE SAME JUST BEFORE ISSUING CHEQU ES IN FAVOUR OF THE ASSESSEE. THE WHOLE STORY MANUFACTURED BY THE ASSESSEE RINGS FALSE FROM BEGINNING TILL END. THE ASSESSING OFFICER HAS BROUGHT SUFFICIENT MATERI ALS ON RECORD TO SHOW THAT THE IMPUGNED CASH CREDITS WERE NOT AT ALL GENUINE. HIS ORDER DESERVES TO BE CONFIRMED AND IS ACCORDINGLY CONFIRMED. 8 ITA 368/RJT/2012 8. THE LD. CIT (A) HAS PROCEEDED ON THE BASIS THAT THE CAPACITY OF A CREDITOR MAY BE PRESUMED TO BE THERE TO ADVANCE LOAN TO APPE LLANT IF SUCH CREDITOR IS AN INCOME TAX ASSESSEE AND NOTHING ADVANCE HAS BEEN PR OVED FROM HER INCOME TAX RETURN OF INCOME AGAINST HER CAPACITY. WE ARE UNA BLE TO AGREE WITH THE AFORESAID OBSERVATIONS MADE BY THE CIT (A). THE CREDITWORTHIN ESS OF A CREDITOR IS NOT A MATTER OF PRESUMPTION BUT A MATTER OF FACT TO BE ESTABLISH ED BY THE ASSESSEE ON THE BASIS OF EVIDENCE. THE MERE FACT THAT THE CREDITORS ARE I NCOME-TAX PAYEE DOES NOT BY ITSELF ESTABLISH THE AVAILABILITY OF CASH IN THEIR HANDS OR THEIR CREDITWORTHINESS TO ADVANCE ANY SUM OF MONEY. THE LD. CIT (A) FURTHER O BSERVES THAT THE SOURCE OF SOURCE NEED NOT BE PROVED BY THE ASSESSEE. WE ARE U NABLE TO ACCEPT THE AFORESAID REASONING ALSO. THE QUESTION HERE IS NOT TO PROVE T HE SOURCE OF SOURCE BUT OF SATISFACTORILY ESTABLISHING THE NATURE AND SOURCE O F CASH CREDITS FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. IN THE FACE OF MATERIALS BROUGHT ON RECORD BY THE AO, WE ARE UNABLE TO CONCUR WITH THE OBSERVATION OF THE CI T (A) THAT THE ASSESSEE HAS PROVED THE CAPACITY OF CREDITORS AS ALSO THE GENUIN ENESS OF THE IMPUGNED TRANSACTIONS. 9. IN VIEW OF THE AFORESAID, THE ORDER OF THE CIT ( A) IS REVERSED AND THAT OF THE AO IS RESTORED. APPEAL FILED BY THE DEPARTMENT IS A LLOWED. ( * 05.10.2012 ( ORDER PRONOUNCED ON 05.10-2012 SD/- SD/- ( . . / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /RAJKOT: 05 -10-2012 NVA/- ( (( ( -. -. -. -. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1.2 / APPELLANT-THE INCOME-TAX OFFICER, WD.-2(4), AMRE LI 2 -42 / RESPONDENT-SHRI VAJUBHAI N. KANANI, PROP. OF M/S . KRISHNA CONSTRUCTION, AT: MALSIKA, TAL: DHARI, DIST: AMRELI 3. 8 / CONCERNED CIT-III, RAJKOT 4. 8- / CIT (A)-IV, RAJKOT 5. . -, , / DR, ITAT, RAJKOT 6. / GUARD FILE / BY ORDER TRUE COPY. SENIOR PRIVATE SECRETARY, ITAT , RAJKOT