I.T.O., Ward-1, Aligarh V. Sh. Sanjeev Prasar, Aligarh

ITA 42/AGR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67445 (ITAT-AGRA)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 06-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S D SHARMA
• Assessee Lawyers: SANJEEV PARASAR
• Keywords: Unexplained investment; Question of law
• Section: 142(1); 131; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 42/AGRA/ 2013 ASSESSMENT YEAR 2008-2009 INCOME TAX OFFICER (AO) VS. SHRI SANJEEV PARASAR WARD-1, ALIGARH. S/O RAMESH CHANDRA SHARMA A-6, MAHAVIR PARK EXTENSION, ALIGARH. (PAN AJOPP 3902 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.D.SHARMA, JR. D.R. RESPONDENT BY : SHRI SANJEEV PARASAR, ASSESSEE DATE OF HEARING : 14.08.2013 DATE OF PRONOUNCEMENT : 23.08.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(A), MUZAFFARNAGAR DATED 09.11.2012 FOR A.Y. 2008-09 ON THE FOLLOWING GROUNDS :- 1.THE ORDER OF THE LD. CIT(A) IS ERRONEOUS IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.20,70,000/- SINCE THE C REDITWORTHINESS OF LOANER AND GENUINENESS OF TRANSACTION WERE NOT PROV ED BY THE ASSESSEE AS REQUIRED U/S 68 OF THE I.T. ACT, 1961. 2. THE LD. CIT(A) ERRED IN LAW AND ON FACT IN DELET ING THE DISALLOWANCE OF RS.50,000/- MADE SINCE MOST OF THE EXPENDITURES CLAIMED WERE SUPPORTED BY SELF MADE VOUCHERS AND RE MAINED UNVERIFIED AND NOT JUSTIFIED. ITA NO.42/AGRA/2013 A.Y. 2008-09 2 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL DERIVING, INCOME FROM CONSTRUCTION WORK. RETURN DECLARING INC OME OF RS.L,46,480/- WAS FILED ON 19-01-2009. DURING THE COURSE OF ASSESSMEN T PROCEEDINGS IT WAS GATHERED BY THE AO THAT THE ASSESSEE HAD SHOWN UNSE CURED LOANS AGGREGATING TO RS.32,80,000/- IN THE BALANCE SHEET. THE A.O. VIDE ORDER SHEET ENTRY DATED 05.10.2009 REQUIRED THE ASSESSEE TO FURNISH THE NAM ES AND COMPLETE POSTAL ADDRESSES OF THE PERSONS FROM WHOM UNSECURED LOANS OF RS.32,80,000/- HAD BEEN SHOWN. IN RESPECT OF FRESH LOAN, THE A.O. REQU IRED THE ASSESSEE TO FURNISH COPY OF BANK ACCOUNTS, NAMES AND ADDRESSES OF THE L ENDERS. IN RESPONSE THE ASSESSEE FURNISHED ONLY COPIES OF BANK STATEMENTS O F SOME OF THE LENDERS. THUS THE A.O. VIDE NOTICE U/S 142(1) DATED 15-10-2010, A GAIN REQUIRED THE ASSESSEE TO PRODUCE THE COMPLETE DETAILS OF THE LENDERS VIZ. CO PIES OF ITRS ALONG WITH CAPITAL ACCOUNT, BANK STATEMENTS ETC. THE AO HAS RE PRODUCED NOTICE DATED 15.10.2010 WHICH IS NOT REPEATED HERE FOR THE SAKE OF BREVITY. 3. IN RESPONSE THE ASSESSEE FURNISHED EXPLANATION, DETAILS OF UNSECURED LOANS, COPIES OF ACCOUNT, BANK STATEMENTS. HOWEVER, FROM THE PERUSAL OF THE SUBMISSIONS MADE BY THE ASSESSEE, IT WAS INFERRED B Y THE A.O. THAT THE ASSESSEE FURNISHED WRONG FACTS THAT THE UNSECURED LOANS FOR A.Y. 2008-09 WERE AT RS.31,50,000/- IN PLACE OF RS.32,80,000/-. THE A.O. REQUIRED THE ASSESSEE TO PRODUCE THE CREDITORS FOR EXAMINATION. IN RESPONSE THE ASSESSEE PRODUCED CREDITORS NAMELY, SHRI INDRA PAL SINGH, SMT. POONAM SHARMA, SMT. RAJNI ITA NO.42/AGRA/2013 A.Y. 2008-09 3 SHARMA, SMT. KAMLA DEVI AND SH. RAKSHPAL SINGH WHOS E STATEMENTS WERE RECORDED BY THE A.O. ON OATH. THE A.O. IN THE ASSES SMENT ORDER HAS FURTHER REPRODUCED STATEMENTS RECORDS IN RESPECT OF THE AF ORESAID CREDITORS WHICH IS NOT REPEATED HERE FOR THE SAKE OF BREVITY. 4. THE AO ANALYZED STATEMENTS RECORDED ON OATH OF T HE AFORESAID CREDITORS AND INFERRED AS UNDER:- 1. IN RESPECT OF LOAN FROM SH. INDERPAL SINGH RS.1,00, 000/- (I) AS PER STATEMENT, SHRI INDERPAL SINGH HAS NO SO URCE OF INCOME EXCEPT AGRICULTURE INCOME. (II) LENDER DENIED ANY EVIDENCE REGARDING AGRICULTU RAL LAND. (III) YEARLY INCOME OF THE LENDER IS RS.25,000/- ON LY AND THE MEMBERS OF HIS FAMILY ARE 5. IT IS HARD TO BELIEVE THAT HE SPARE R S.L,00,000/- FOR ADVANCING WITHOUT INTEREST TO UNKNOWN PERSON. (IV) LENDER ACCEPTED IN HIS STATEMENT THAT HE HAS NOT KNOWN SHRI SANJEEV PARASHAR DIRECTLY, BUT MY FRIEND SHRI RISHI KUMAR R AGHAV KNOWN TO HIM. (V) FROM THE BANK ACCOUNT OF THE LENDER IT IS CLEAR THAT RS.90,000/- IN CASH WAS DEPOSITED JUST BEFORE ADVANCING THIS AS A LOAN TO THE ASSESSEE AND THE LENDER SAYS THAT HE DEPOSITED THIS AMOUNT FROM HIS PAST SAVINGS; WHICH IS NOT ACCEPTABLE. (VI) THE LENDER COULD NOT EXPLAIN THE DEPOSIT ENTRI ES IN THE BANK AT RS.90,000/-CASH DEPOSIT ON 17.05.2007 AND RS.100,00 0/-CASH DEPOSIT ON 22.05.2007 WHICH REFLECT THAT THE ASSESSEE HAS NO P ROPER SOURCE BUT IN FIVE DAYS HE DEPOSITED RS.L,90,000/. . . 2. IN RESPECT OF LOAN FROM SMT. POONAM SLTARMA,RS.2,00 ,000/- (I) AS PER STATEMENT, SMT.POONAM SHARMA HAS NO SOUR CE OF INCOME EXCEPT AGRICULTURE INCOME. (II) HER HUSBAND IS AN EMPLOYEE (CLERK) IN ELECTRIC ITY DEPARTMENT AT FIROZABAD. (III) YEARLY INCOME OF THE LENDER IS NIL AND THE ME MBERS OF HIS FAMILY ARE 6. IT IS HARD TO BELIEVE THAT IF ANYONE DOES NOT HAVE HER OWN SOURCE OF INCOME AND SHE ADVANCED THE LOAN AMOUNTING RS.2,00,000/- W ITHOUT INTEREST TO ANYONE. ITA NO.42/AGRA/2013 A.Y. 2008-09 4 (IV) LENDER ACCEPTED IN HER STATEMENT THAT SHE HAS NO MOVABLE OR IMMOVABLE PROPERTIES EXCEPT ONE SAVING BANK ACCOUNT AT VIJAYA BANK, FIROZABAD. (V) FROM THE BANK ACCOUNT OF THE LENDER IT IS CLEAR THAT RS.2,00,000/- IN CASH WAS DEPOSITED JUST BEFORE ADVANCING AND THE LENDER SAYS THAT SHE DEPOSITED THIS AMOUNT BY SELLING HER PLOT TO SMT. M AMTA PARASHAR W/O SHRI K.S. PARASHAR, SH. K.S. PARASHAR, WHO IS BROTH ER OF THE ASSESSEE. (VI) THERE IS NO EVIDENCE OF CASH DEPOSITED BY THE ASSESSEE AND THE SAME CASH, WHICH RECEIVED FROM SALE OF PLOT. (VII) IT IS HARD TO BELIEVE THAT ANY PERSON MADE AD VANCE WITHOUT INTEREST TO OTHER PERSON AFTER SELLING ONE AND ONLY PROPERTY. (VIII) IT IS EVIDENCE THAT LOAN WAS NOT REPAID TILL DATE. 3. IN RESPECT OF LOAN FROM SMT. RAJNI SHARMA, RS.2,00, 000/- (I) AS PER STATEMENT, SMT.RAJNI SHARMA HAS IS EMPLO YEE WITH MANGALAYTAN UNIVERSITY FROM 01-08-2007 AND GETTING SALARY OF RS .9,600/-PER MONTH.. (II) HER HUSBAND IS EXPIRED IN JULY, 2007. (III) SHE STATED THAT HER TWO SONS, ONE SHRI TUSHAR PUNDIT (19 YEARS) WAS STUDENT OF XI CLASS OF MAHRSHI VIDHYA MANDIR AND OT HER SHRI ROHIT (18 YEARS) WAS A STUDENT XI CLASS OF THE SAME SCHOOL. (IV) FROM THE BANK ACCOUNT OF THE LENDER IT IS CLEA R THAT RS.2,00,000/- IN CASH WAS DEPOSITED JUST BEFORE ADVANCING LOAN TO THE ASS ESSEE. (V) THE LENDER SAYS THAT SHE DEPOSITED THIS AMOUNT FROM THE CASH LYING WITH HER, WHICH IS NOT ACCEPTABLE. IT IS EVIDENT THAT LE NDER STARTED SERVICE JUST AFTER HER HUSBAND'S DEATH, FROM 01.08.2007, .WHILE HER HUSBAND EXPIRED IN JULY, 2007, WHICH REFLECT NEED OF MONEY AND ECON OMIC POSITION OF THE LENDER. (VI) OUT OF THE ABOVE RS.1 LAC WAS RECEIVED BY SELL ING THE PLOT BY HER HUSBAND BEFORE DEATH TO SMT. NEELAM PARASHA. SMT. NEELAM PA RASHAR IS WIFE OF SHRI SANJEEV PARASHAR. (VII) IT IS HARD TO BELIEVE THAT ANY PERSON MADE AD VANCE WITHOUT INTEREST TO OTHER PERSON AFTER SELLING PROPERTY TO THE SAME PER SON OR HIS WIFE. (VIII) IT IS EVIDENCE THAT LOAN WAS NOT REPAID TILL DATE.' 4. IN RESPECT OF LOAN FROM SMT. KAMLA DEVI RS.70,000/- (I) AS PER STATEMENT, SMT. KAMLA DEVI HAS NO SOURCE OF INCOME . (II) SMT. KAMLA DEVI ACCEPTED TO GIVE THE LOAN OF R S.70,000/- TO SHRI SANJEEV PARASHAR OUT OF PENSION OF HER HUSBAND AND AGRICULT URE INCOME. (III) THE LENDER ACCEPTED THAT SHE HAS NO AGRICULTU RE LAND IN HER NAME AND ALSO DENIED TO PRODUCE ANY EVIDENCE OF AGRICULTURE LAND IN HER NAME. ITA NO.42/AGRA/2013 A.Y. 2008-09 5 (IV) FROM THE BANK ACCOUNT OF THE LENDER IT IS CLEA R THAT RS.70,000/- IN CASH WAS DEPOSITED JUST BEFORE ADVANCING THIS AS A LOAN TO THE ASSESSEE AND THE LENDER SAYS THAT HE DEPOSITED THIS AMOUNT FROM HER HUSBAND'S PENSION INCOME AND AGRICULTURE INCOME, WHICH NOT ACCEPTABLE . (V) IT IS EVIDENT THAT LOAN HAS NOT REPAID TILL DAT E.' 5. IN RESPECT OF LOAN FROM SH. RAKESH PAL SINGH RS.5,0 0,000/-: (VI) AS PER STATEMENT, SH.RAKSH PAL SINGH HAS NO RE GULAR SOURCE OF INCOME EXCEPT FEE AS A LAWYER . (VII) LENDER STATED THAT HE HAS NOT GIVEN ANY OWN M ONEY TO THE ASSESSEE BUT ACCEPTED RS.5,00,000/- HAS BEEN GIVEN FROM THE FIRM M/S RAGHAV ENTERPRISES, ALIGARH WHOSE PROPRIETOR IS SH.BHARAT SINGH. (VIII) FROM BANK ACCOUNT NO. 01632010019490 IT APPE ARS THAT AT THE TIME OF LOAN NO BALANCE, AMOUNT SHOWN BY THE ACCOUNT, AMOUN T OF RS.5,00,000/- GIVEN FROM THE LIMIT FACILITY. IT IS HARD TO BELIEV E ANY PERSON GIVING THE LOAN WITHOUT INTEREST OUT OF LIMIT FACILITY. (IX) THE LENDER PRODUCED PAN CARD AS AN ID PROOF WA S IN THE NAME OF BHARAT SINGH. (X) AS THE LENDER SUBMITTED THAT HE HAS NOT FILED T HE RETURN OF INCOME AND HE PRODUCED WRONG PAN, THEREFORE, CREDITWORTHINESS OF THE LENDER AND GENUINENESS OF TRANSACTION NOT PROVED.' 5. FROM THE ABOVE, IT WAS INFERRED BY THE A.O. THAT THE ASSESSEE COULD NOT PROVE CREDITWORTHINESS OF THE CREDITOR AND GENUINEN ESS OF TRANSACTIONS. 6. FURTHER, THE ASSESSEE NEITHER SUBMITTED ANY CONF IRMATION, COPIES OF ITRS, CAPITAL ACCOUNT OF SHRI YASH VARDHAN JAIN NOR PRODU CE THE AFORESAID CREDITOR FOR EXAMINATION. VIDE VARIOUS ORDER SHEET NOTING THE A. O. REQUIRED THE ASSESSEE TO PRODUCE THE AFORESAID CREDITOR BUT NEITHER THE ASSE SSEE FURNISHED THE REQUISITE DETAILS/EVIDENCES NOR THE CREDITOR WAS PRODUCED FOR EXAMINATION. IN SUCH CIRCUMSTANCES, THE LOAN RAISED FROM SHRI YASH VARDH AN JAIN AT RS.L0 LAC WAS NOT PROVED AS PER PROVISIONS OF SECTION 68 OF THE ACT. THE A.O. HAS REPRODUCED THE ITA NO.42/AGRA/2013 A.Y. 2008-09 6 DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F CIT VS. SOPHIA FINANCE PVT. LTD. 205 ITR 98 WHICH IS NOT REPEATED HERE FOR THE SAKE OF BREVITY. 7. THUS KEEPING IN VIEW THE ABOVE FACTS AND JUDICIA L PRONOUNCEMENT OF THE HON'BLE COURT (SUPRA), IT WAS HELD BY THE A.O. THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS AND GENUINENESS OF TRANSACTION S IN RESPECT OF THE AFORESAID FIVE CREDITORS IN RESPECT OF UNSECURED LOANS RAISED TOTALING TO RS.10,70,000/- AND SH. YASH VARDHAN JAIN AT RS.10 LACS. THUS THE A.O. PROCEEDED TO MAKE ADDITION TOTALING TO RS.20,70,000/- U/S 68 OF THE ACT TO THE INCOME OF THE ASSESSEE. 8. IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAD DE BITED VARIOUS EXPENSES AS UNDER:- (I) CONSTRUCTION EXPENSES RS.31,68,440/- (II) INTEREST ON CAR LOAN RS. 50,753/- (III) CONVEYANCE EXPENSES RS. 29,437/- (IV) SALARY EXPENSES RS.1,20,000/- (V) REPAIR & MAINTENANCE EXPENSES RS. 11,730/- (VI) TELEPHONE & MOBILE EXPENSES RS. 9,900/- 9. THUS THE A.O. SPECIFICALLY REQUIRED THE ASSESSEE TO FURNISH BILLS AND VOUCHERS ALONG WITH COPIES OF BANK ACCOUNTS. IN RES PECT OF PAYMENT OF SALARY, THE ASSESSEE WAS REQUIRED TO FURNISH THE NAMES AND ADDRESSES OF THE EMPLOYEES, MONTHLY SALARY PAID TO EACH, MODE OF PAYMENT ETC. T HE ASSESSEE WAS FURTHER REQUIRED TO FURNISH THE SALARY REGISTER. 10. IN RESPONSE THE ASSESSEE PRODUCED BOOKS OF ACCO UNT ALONG WITH SELF MADE VOUCHERS. AS SUCH, THE EXPENSES WERE NOT SUBJECTED TO CROSS VERIFICATION. ITA NO.42/AGRA/2013 A.Y. 2008-09 7 THEREFORE, THE A.O. DISALLOWED THE AMOUNT OF RS.1,0 0,000/- OUT OF SUCH EXPENSES WHICH WAS ADDED TO THE INCOME OF THE ASSES SEE TO PROTECT ANY LEAKAGES OF REVENUE. 11. THE ASSESSEE CHALLENGED THE ADDITION OF RS.20,7 0,000/- BEING UNEXPLAINED LOAN UNDER SECTION 68 OF THE ACT BEFORE LD. CIT(A) AND IT WAS SUBMITTED THAT CONFIRMATIONS AND COPIES OF BANK ACC OUNTS OF ALL THE LENDERS WERE FILED BEFORE THE A.O. ALL THE LOANS WERE RECEI VED BY ACCOUNT PAYEE CHEQUES. IT HAS BEEN EMPHASIZED THAT THE CREDITORS FROM S. NOS.(I) TO (V) WERE PRODUCED BEFORE THE A.O. FOR EXAMINATION AND THEIR STATEMENTS ON OATH WERE RECORDED BY THE AO. THAT THE IDENTITY OF ALL THE AF ORESAID FIVE PERSONS STANDS PROVED AS THEY WERE PHYSICALLY PRODUCED BEFORE THE A.O. AND HE WAS SATISFIED WITH THEIR IDENTITY WHILE RECORDING THE STATEMENT. THAT ALL THE FIVE PERSONS IN THEIR STATEMENT HAVE ACCEPTED THAT THEY HAVE GIVEN THE LOANS TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES FROM THEIR BANK ACCOUNT. AS S UCH THE ASSESSEE HAS DISCHARGED HIS BURDEN BY PRODUCING THE LENDERS WHO HAVE ACCEPTED HAVING ADVANCED LOAN TO THE ASSESSEE. IT HAS BEEN CONTENDE D THAT REPAYMENT OF LOANS HAVE BEEN MADE TO SHRI RAKSH PAL SINGH AND INDRA PA L SINGH THROUGH ACCOUNT PAYEE CHEQUES. THE ASSESSEE HAS ALSO FURNISHED SUCH DETAILS. IT HAS BEEN ARGUED THAT THE AO HAS NOT REFERRED TO ANY MATERIAL WHICH LED HIM TO CONCLUSIVELY PROVE THAT THE LOAN RECEIVED FROM THE AFORESAID FIV E PERSONS WERE ACCOMMODATION ENTRY. THE OBSERVATIONS OF THE A.O. A RE GENERAL/CASUAL BASED ON ITA NO.42/AGRA/2013 A.Y. 2008-09 8 PURE PRESUMPTIONS AND SURMISES. IT HAS BEEN EMPHASI ZED THAT THE ASSESSEE HAS DISCHARGED INITIAL ONUS WHICH LAID ON HIM IN TERMS SECTION 68 BY PROVING THE IDENTITY OF THE CREDITORS BY FURNISHING COMPLETE AD DRESSES, CONFIRMATION AND PRODUCING THEM BEFORE THE A.O. FURTHER, THE CAPACIT Y OF THE CREDITORS HAVE BEEN PROVED AS THE TRANSACTIONS HAVE BEEN MADE THROUGH B ANKING CHANNEL AND THE ASSESSEE CANNOT BE EXPECTED TO PROVE THE SOURCE OF SOURCE. IT HAS BEEN CONTENDED THAT WHEN THE DETAILS AND EVIDENCES IN RE SPECT OF THE AFORESAID CREDITORS WERE FURNISHED TO THE A.O., HE SHOULD HAV E PURSUED THE ENQUIRIES IN THE. HANDS OF THE CREDITORS WHO APPEARED BEFORE HIM . THE PROPER COURSE COULD HAVE BEEN TO MAKE ASSESSMENTS IN THE CASES OF THOSE CREDITORS BY TREATING THE CASH DEPOSITS IN THEIR BANK ACCOUNTS AS UNEXPLAINED INVESTMENTS U/S 69 OF THE ACT. 12. THAT THE AMOUNT OF RS.10,00,000/- RECEIVED FROM SHRI YASH VARDAN JAIN WAS NOT A LOAN BUT IT WAS AN ADVANCE GIVEN FOR PURC HASE OF A FLAT WHICH SUBSEQUENTLY RETURNED TO HIM BY CHEQUE NO.859925 OF PUNJAB NATIONAL BANK, CIVIL LINES, ALIGARH DATED 14.11.2009. ALL THE TRAN SACTIONS WERE THROUGH ACCOUNT PAYEE CHEQUES. HIS CONFIRMATION, COPY OF BA NK ACCOUNT, COPY OF ITR WERE FILED BEFORE THE AO. THE AFORESAID PERSON ALSO SENT LETTER CONFIRMING THE ADVANCE, HOWEVER, THE AFORESAID PERSON EXPRESSED HI S INABILITY TO APPEAR BECAUSE OF ILL HEALTH AND AS HE WAS RESIDING AT AGR A. ITA NO.42/AGRA/2013 A.Y. 2008-09 9 13. IT HAS BEEN ARGUED THAT WHILE IT WAS THE ASSESS EE 'S BURDEN TO FURNISH EXPLANATION RELATING TO CASH CREDITS, THE ASSESSEE S BURDEN DID NOT EXTEND BEYOND PROVING THE EXISTENCE OF THE CREDITOR AND FU RTHER PROVING THAT SUCH CREDITOR OWNS TO HAVE ADVANCED THE AMOUNT CREDITED IN THE ACCOUNT OF ASSESSEE TO HIM. HOWEVER, THE BURDEN DOES NOT GO BEYOND TO P UT THE ASSESSEE UNDER AN OBLIGATION TO FURTHER PROVE THAT WHEREFROM THE CRED ITOR HAD GOT OR PROCURED THE MONEY TO BE DEPOSITED OR ADVANCED TO THE ASSESSEE . UNLESS IT CAN BE SHOWN BY THE DEPARTMENT ITSELF, NO ADDITION CAN BE MADE ON T HIS COUNT. IN VIEW OF ABOVE FACTUAL AND LEGAL POSITION THE ASSESSEE IS PLEADED TO DELETE THE ADDITION OF RS.20,70,000/- 14. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF T HE ASSESSEE WITH REGARD TO ADDITION MADE UNDER SECTION 68 OF THE ACT DELETED T HE ADDITION. HIS FINDINGS IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER :- THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE B Y THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THA T THE A.O. HAD MADE ADDITION OF RS.20,70,000/- ON THE GROUND T HAT CREDITWORTHINESS OF THE CREDITORS COULD NOT BE ESTA BLISHED BY THE APPELLANT. ON THE OTHER HAND, IT HAS BEEN VEHEMENTL Y CONTENDED BY THE APPELLANT THAT BY FURNISHING REQUISITE DETAILS AND EVIDENCES AND ALSO BY PHYSICALLY PRODUCING THE CREDITORS FOR EXAMINATI ON BEFORE THE A.O., HE HAS ESTABLISHED THE IDENTITY AND CREDITWORTHINES S OF THE CREDITORS AND GENUINENESS OF TRANSACTIONS. ADMITTEDLY, THE AP PELLANT BY FURNISHING REQUISITE DETAILS/EVIDENCES HAS DISCHARG ED ONUS U/S 68 OF THE ACT. FURTHER, THE APPELLANT ALSO PRODUCED THE A FORESAID FIVE CREDITORS FOR EXAMINATION AND THEIR STATEMENTS RECO RDED ON OATH THEY ALL HAVE DEPOSED TO HAVE MADE LOANS TO THE APPELLAN T. FURTHER, THE A.O. HAS NOT BROUGHT ANY ADVERSE MATERIAL ON RECORD TO ESTABLISH THAT LOANS REPRESENTED UNDISCLOSED INCOME OF THE APPELLA NT ROUTED IN THE ITA NO.42/AGRA/2013 A.Y. 2008-09 10 BOOKS OF ACCOUNT IN THE GARB OF LOANS. THUS NO ADDI TION CAN BE MADE IN THE HANDS OF THE APPELLANT. FROM THE ANALYSIS MA DE BY THE AO IN RESPECT OF STATEMENT RECORDED ON OATH OF THE CREDIT ORS, PRIME FACIE SUCH LOANS HAVE REMAINED UNEXPLAINED IN THE HANDS O F THESE CREDITORS. THEREFORE, THE AO IS DIRECTED TO INFORM THE JURISDI CTIONAL A.O'S OF THE AFORESAID FIVE CREDITORS WHO ARC DIRECTED U/S 150 O F THE ACT TO TAKE REMEDIAL ACTION IN RESPECT OF THE CREDITORS FOR THE RELEVANT ACCOUNTING PERIOD AND BRING THE IMPUGNED SUMS TO TAX NET. THE ADDITION OF RS.L 0,70,000/- IS DIRECTED TO BE DELETED WITH THE ABOVE DIRECTIONS. REGARDING THE ADDITION OF RS.10,00,000/- BEING ADVA NCE RECEIVED FROM SHRI YASH VARDHAN JAIN, IT IS OBSERVE D THAT THE AFORESAID AMOUNT WAS RECEIVED BY THE APPELLANT AGAI NST PURCHASE OF FLAT. SINCE THE DEAL COULD NOT BE MATURED THEREFORE , THE AMOUNT OF RS.10,00,000/- WAS RETURNED BACK BY THE APPELLANT T HROUGH ACCOUNT PAYEE CHEQUE NO.859835 DATED 14.11.2009 OF PUNJAB N ATIONAL BANK, CIVIL LINES, ALIGARH. FURTHER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT HAD FILED CONFIRMATION LE TTER FROM THE CREDITOR CONFIRMING THE AMOUNT OF RS.L0,00,000/- BE ING PAID BY HIM TO APPELLANT BEING ADVANCE AGAINST PURCHASE OF FLAT. T HE APPELLANT BY FURNISHING REQUISITE DETAILS/EVIDENCES HAS DISCHARG ED ONUS U/S 68 OF THE ACT. THEREFORE NO ADDITION CAN BE MADE IN THE H ANDS OF THE APPELLANT. ON THE OTHER HAND, THE AO UTTERLY FAILED IN ESTABLISHING THAT THE AMOUNT OF RS.10,00,000/- REPRESENTED UNDISCLOSE D INCOME OF THE APPELLANT ROUTED IN HIS BOOKS OF ACCOUNT IN THE GAR B OF ADVANCE. SINCE THE APPELLANT HAS NOT FURNISHED COPY OF BANK ACCOUN T OF THE AFORESAID CREDITOR TO EXAMINE THE GENUINENESS OF TRANSACTION. THEREFORE, PRIME FACIE THE AMOUNT OF RS.10,00,000/- HAS REMAINED UNE XPLAINED IN THE HANDS OF SHRI YASH VARDHAN JAIN. THEREFORE, THE AO IS DIRECTED TO INFORM THE JURISDICTIONAL AO'S OF THE AFORESAID CRE DITOR WHO IS DIRECTED U/S 150 OF THE ACT TO TAKE REMEDIAL ACTION IN HIS HANDS FOR THE RELEVANT ACCOUNTING PERIOD. THE ADDITION OF RS.10,0 0,000/- IS DIRECTED TO BE DELETED WITH THE ABOVE DIRECTIONS. GROUNDS OF APPEAL NOS. 1- & 2 ARE ALLOWED/-. 15. AS REGARDS, THE ADDITION OF RS.1,00,000/- BEING DISALLOWANCE OF VARIOUS EXPENSES, THE ASSESSEE SUBMITTED BOOKS OF ACCOUNT A LONG WITH BILLS AND VOUCHERS HAVE BEEN PRODUCED AND A.O. MADE ADDITION WITHOUT POINTING OUT ANY SPECIFIC DEFECT. THE ADDITION IS MADE ON AD HOC BAS IS TO PROTECT ANY LEAKAGE OF ITA NO.42/AGRA/2013 A.Y. 2008-09 11 REVENUE. LD. CIT(A) CONSIDERING THE EXPLANATION OF THE ASSESSEE RESTRICTED THE ADDITION OF RS.1,00,000/- TO RS.50,000/- HIS FINDIN G IN THE APPELLATE ORDER ARE REPRODUCED AS UNDER :- THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE B Y THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE A.O. HAD MADE LUMP SUM ADDITION OF RS.100,000/- ON THE GROUND THA T THE EXPENSES DEBITED UNDER THE AFORESAID HEADS WERE INCURRED IN CASH AND AS SUCH WERE NOT SUBJECTED TO CROSS-VERIFICATION. THUS THE BASIS OF DISALLOWANCE MADE BY THE AO IS UPHELD IN PRINCIPLE BUT IS ON THE HIGHER SIDE. IT WOULD AMPLY MEET THE ENDS OF JUSTIC E IF THE AMOUNT OF DISALLOWANCE IS RESTRICTED TO RS.50,000/- AS AGAINS T RS.1,00,000/- MADE BY THE A.O. THUS THE APPELLANT IS ENTITLED FOR RELIEF AT RS.50,000/- ON THIS SCORE. GROUND 3 IS PARTLY' ALLO WED. 16. LD. D.R. RELIED UPON THE ORDERS AND FINDINGS OF THE A.O. AND SUBMITTED THAT IN THE CASE OF FIRST FIVE CREDITORS THERE ARE CASH DEPOSITS IN THEIR BANK ACCOUNTS JUST PRIOR TO ISSUANCE OF CHEQUES OF LOANS IN FAVOUR OF THE ASSESSEE. THE ASSESSEE FAILED TO PROVE CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTION. NO SOURCE OF GIVING CREDITS HAVE BEEN FILED, THEREFORE , LD. CIT(A) SHOULD NOT DELETE THE ADDITION. HE HAS RELIED UPON THE ORDERS OF I.T. A.T. AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS. I.T.O. REPORTED IN 138 ITD 153. LD. D.R. WITH REGARD TO SIXTH CREDITORS, SRI YASH VARDHAN JAIN SUBMITTED THAT THE CREDITOR WAS NOT PRODUCED BEFORE A.O. FOR EXAMINATION AND EVEN THE B ANK PASS BOOK OF THIS CREDITOR SHOWS THERE IS A CASH DEPOSIT AND FURTHER THERE ARE TRANSFER ENTRIES AND BANK BALANCE WAS VERY MEAGER PRIOR TO ISSUE OF CHEQ UES TO THE ASSESSEE. THEREFORE, IN THAT CASE THE ADDITION SHOULD NOT HAV E BEEN DELETED. ITA NO.42/AGRA/2013 A.Y. 2008-09 12 17. ON THE OTHER HAND, THE ASSESSEE IN PERSON ARGUE D THE APPEAL AND REITERATED THE SUBMISSION MADE BEFORE LD. CIT(A) HE HAS FILED PAPER BOOK CONTAINING ALL THE DOCUMENTS FILED BEFORE AUTHORITIES BELOW AND SU BMITTED THAT THE ASSESSEE HAS PROVED THE CREDITWORTHINESS OF THE CREDITOR AND GEN UINENESS OF THE TRANSACTION OF THE CREDITOR FOR GIVING CHEQUES TO HIM THROUGH BANK ING CHANNEL. THEREFORE, ASSESSEE SHOULD NOT BE ASKED TO PROVE SOURCE OF THE SOURCE AND IN CASE SOURCE IS TO BE EXPLAINED, ACTION SHOULD BE TAKEN IN THE CASE OF THE CREDITORS. HE HAS SUBMITTED THAT HE HAS PRODUCED FIVE CREDITORS BEFOR E A.O. FOR EXAMINATION WHO HAVE CONFIRMED GIVING OF LOAN TO THE ASSESSEE. IN T HE CASE OF THE YASH VARDHAN JAIN, THE AMOUNT WAS GIVEN FOR BOOKING OF THE FLAT AND ON CANCELLATION OF THE FLAT THE AMOUNT WAS REFUNDED THROUGH CHEQUE. THEREFORE, ASSESSEE PROVED THE IDENTITY OF THE CREDITORS, CREDITWORTHINESS AND GEN UINENESS OF THE TRANSACTION. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND THE MATERIAL ON RECORD. IN RESPECT OF GROUND NO.1 REGARDING DELETION OF ADDITI ON OF RS.20,70,000/- IN RESPECT OF SIXTH CREDITORS ABOVE, THE A.O. HAS DISC USSED EACH AND EVERY EVIDENCE AND MATERIAL FOR MAKING ADDITION AGAINST THE ASSESS EE. THE SAME WILL BE CONSIDERED IN THE LIGHT OF THE RECENT DECISION OF I .T.A.T. AGRA BENCH IN THE CASE OF SMT. SUMAN GUPTA VS. I.T.O. IN ITA NO. 454/AGRA/ 2009 DATED 16.03.2012 REPORTED IN 138 ITR 153 IN WHICH IN PARA NOS. 9 TO 13 IT WAS HELD AS UNDER :- 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THER E WERE CASH DEPOSITS OF THE EQUIVALENT AMOUNTS IN THE BANK ACCOUNTS OF THE CREDITORS JUST BEFORE ITA NO.42/AGRA/2013 A.Y. 2008-09 13 ADVANCING LOAN TO THE ASSESSEE OR ON THE DATE OF IS SUING CHEQUES TO THE ASSESSEE. IN THE CASE OF THE CREDITOR, SHRI RAMPAL SINGH, HIS BANK STATEMENT IS FILED AT PAGE 45 OF THE PAPER BOOK, IN WHICH RS.2,50,000/- HAS BEEN DEPOSITED, BUT NEITHER IT IS MENTIONED THA T IT WAS CASH NOR IT IS MENTIONED HOW THE AMOUNT SIMILAR TO THE CREDIT WAS CREDITED IN HIS BANK ACCOUNT. NO EXPLANATION IS GIVEN BEFORE THE AU THORITIES BELOW AND EVEN DURING THE COURSE OF ARGUMENTS BEFORE US. NOTH ING IS CLARIFIED AS TO HOW EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSIT ED IN HIS BANK ACCOUNT. IN THE CASE OF REMAINING CREDITORS, IT IS NOT A DENYING FACT THAT EQUIVALENT AMOUNTS OF CASH CREDIT WAS DEPOSITED IN THEIR BANK ACCOUNTS IN CASH FOR ISSUING CHEQUES IN FAVOUR OF THE ASSESS EE. THIS CREATED SERIOUS DOUBT IN THE EXPLANATION OF THE ASSESSEE RE GARDING GENUINENESS OF THE TRANSACTION IN THE MATTER. THE AO ASKED THE ASSESSEE TO PRODUCE ALL THE CREDITORS FOR EXAMINATION ON OATH IN ORDER TO FIND OUT TRUTH IN THE MATTER. THE ASSESSEE PRODUCED ONE OF THE CREDITORS BEFORE THE AO FOR EXAMINATION, BUT SHOWED HIS INABILITY TO PRODUCE OT HER CREDITORS, WHICH IS ALSO CLEAR FROM THE ORDER SHEET DATED 18.12.2007 (PB-126). PRIOR TO THAT, THE ASSESSEE SOUGHT TIME FROM THE AO TO PRODU CE REMAINING CREDITORS FOR EXAMINATION, BUT LATER ON DID NOT PRO DUCE THEM. THE LD. COUNSEL FOR THE ASSESSEE EXPLAINED THAT DUE TO ONE OR OTHER PROBLEM OF THE REMAINING CREDITORS ON ACCOUNT OF MEDICAL ADVIC E, THE DEPOSITORS HAVE SHOWN THEIR INABILITY TO APPEAR BEFORE THE AO FOR EXAMINATION, BUT IT IS ADMITTED FACT THAT THE ASSESSEE DID NOT MAKE ANY REQUEST BEFORE THE AO FOR EXAMINATION OF THE REMAINING CREDITORS THROU GH THE COMMISSION AND NO WILLINGNESS WAS SHOWN BEFORE THE CIT(A) FOR PRODUCTION OF THE REMAINING CREDITORS FOR EXAMINATION EVEN AT THE REM AND STAGE IN THE APPELLATE PROCEEDINGS. EVEN DURING THE COURSE OF AR GUMENTS BEFORE THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE DID NOT SHOW HIS WILLINGNESS TO PRODUCE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. IT IS, THEREFORE, CLEAR THAT THE ASSESSEE HAS FAILED TO PR ODUCE THE REMAINING CREDITORS FOR EXAMINATION BY THE REVENUE DEPARTMENT IN ORDER TO FIND OUT TRUTH IN THE MATTER. 9.1 THE AO DISCUSSED EACH AND EVERY CREDITOR IN THE ASSESSMENT ORDER AND THE CRUX OF THE FINDINGS OF THE AO HAD BE EN THAT THERE WERE VERY SMALL BANK BALANCES IN THE BANK ACCOUNTS OF TH E CREDITORS AND THEY WERE HAVING MEAGER INCOME AND AS SUCH, THEY WERE NO T MEN OF MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. IN THE CASE OF ABHAY MAHESHWARI, THERE WAS VERY SMALL BALANCE OF RS.3528/- IN HIS BA NK ACCOUNT. HE WAS EXAMINED ON OATH AND HE WAS NOT ABLE TO GIVE SOURCE OF CASH DEPOSIT TO THE SATISFACTION OF THE AO. HE WAS EARNING HARDLY O NE LAC RUPEES AND ITA NO.42/AGRA/2013 A.Y. 2008-09 14 SPENT 40,000/- TO 50,000/- FOR HOUSEHOLD PURPOSES. DURING HIS EXAMINATION ON OATH, HE WAS NOT ABLE TO SATISFACTOR ILY EXPLAIN THE AVAILABILITY OF FUNDS WITH HIM FOR GIVING LOAN TO T HE ASSESSEE. IN HIS CASE, HE HAS FILED RETURN OF INCOME FOR THE ASSESSM ENT YEAR UNDER APPEAL AT RS.1,02,850/- (PB-60). IN THE CASE OF SH RI AMIT MAHESHWARI, HE WAS ALSO HAVING SMALL BANK BALANCE OF RS.2429/- BEFORE ISSUE OF CHEQUE TO THE ASSESSEE AND EQUAL AMOUNT OF THE CASH CREDIT WAS DEPOSITED IN THE BANK ACCOUNT. HE HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT RS.44972/- (PB-71). IN THE CASE OF SMT. KEERTI MAHESHWARI, IN HER BANK ACCOUNT, THERE WAS BALANCE OF RS.4688/- ONLY PRIOR TO ISSUE OF CHEQUE TO THE ASSE SSEE AND EQUIVALENT AMOUNT OF CASH CREDIT WAS DEPOSITED FOR THE PURPOSE OF ISSUE OF CHEQUE IN FAVOUR OF THE ASSESSEE. FOR THE ASSESSMENT YEAR UNDER APPEAL, SHE HAS FILED RETURN OF INCOME AT RS.1,01,000/- ONLY. I N THE CASE OF SMT. MITHLESH MAHESHWARI, THE BANK BALANCE BEFORE ISSUE OF CHEQUE WAS RS.10,794/- AND EQUIVALENT AMOUNT OF CASH CREDIT WA S DEPOSITED IN HER BANK ACCOUNT FOR ISSUE OF CHEQUE IN FAVOUR OF ASSES SEE. FOR ASSESSMENT YEAR UNDER APPEAL, SHE FILED RETURN OF INCOME AT RS .1,02,476/- ONLY. IN THE CASE OF SH. RAMPAL SING, IT IS ALREADY NOTED AB OVE THAT THE DEPOSIT ENTRY IN HIS CASE IS NOT EXPLAINED AND PRIOR TO ISS UE OF CHEQUE, THERE WAS BANK BALANCE OF RS.3708/- ONLY. HE HAS FILED THE RE TURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AT LOSS WITH AGRIC ULTURAL INCOME (PB- 102). IN THE CASE OF SHRI SHARIQ ALI KHAN, THE BANK BALANCE IS HIS ACCOUNT WAS RS.1055/- PRIOR TO ISSUE OF CHEQUE AND EQUIVALENT CASH AMOUNT WAS DEPOSITED FOR ISSUING CHEQUE IN FAVOUR O F THE ASSESSEE. HE HAS FILED RETURN OF INCOME AT RS.70,373/- PLUS AGRI CULTURAL INCOME (PB- 116). THESE DETAILS NOTED IN THE ASSESSMENT ORDER A ND THE DETAILS VERIFIED FROM THE PAPER BOOK WOULD CLEARLY SUPPORT THE FINDINGS OF THE AO THAT NONE OF THE CREDITORS WERE PERSONS OF SUFFI CIENT MEANS TO ADVANCE ANY LOAN TO THE ASSESSEE. FILING OF BALANCE SHEETS, CASH FLOW STATEMENTS, CASH BOOKS ETC. HAVE NO EVIDENTIARY VAL UE BECAUSE ACCORDING TO THE REMAND REPORT FILED BY THE AO, THO SE DOCUMENTS WERE NOT FILED WITH THE RETURN OF INCOME. MOREOVER, NO R EGULAR BOOKS OF ACCOUNT HAVE BEEN MAINTAINED BY ANY OF THE CREDITOR S AND MAJORITY OF THEM HAVE SHOWN ESTIMATED INCOME IN THEIR RETURNS O F INCOME. THEREFORE, SUCH BALANCE SHEET, CASH FLOW STATEMENTS ETC. WOULD NOT SUPPORT THE CONTENTION OF THE ASSESSEE THAT GENUINE CREDITS HAVE BEEN RECEIVED. THE ORDER SHEET NOTED BY THE AO WOULD ALS O SHOW THAT THE ASSESSEE HAS MADE NO EFFORTS TO PRODUCE THE REMAINI NG CREDITORS BEFORE THE AO. EVEN IN THE STATEMENT OF ONE OF THE CREDITO RS RECORDED BY THE AO, SHRI AMBHAY MAHESHWARI, HE WAS NOT ABLE TO EXPL AIN HIS SOURCE OF ITA NO.42/AGRA/2013 A.Y. 2008-09 15 DEPOSIT OR ADVANCING LOAN TO THE ASSESSEE THROUGH G ENUINE SOURCE. IT IS WELL SETTLED LAW THAT BURDEN IS UPON THE ASSESSEE T O PROVE INGREDIENTS OF SECTION 68 OF THE ACT BY PROVING IDENTITY AND CREDI TWORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE ASSESSEE HAS, HOWEVER, FAILED TO PROVE THE CREDITWORTHINESS OF TH E CREDITORS WHO WERE HAVING ONLY MEAGER INCOME. NO DETAILS OF THEIR SAVI NGS HAVE BEEN FILED. THE ASSESSEE HAS NEVER SHOWN HIS WILLINGNESS TO PRO DUCE THE REMAINING CREDITORS FOR EXAMINATION BEFORE THE AO. THEREFORE, THE GENUINENESS OF THE TRANSACTION COULD NOT HAVE BEEN EXAMINED BY THE AO. THE SMALLNESS OF THE BANK BALANCE IN THE BANK ACCOUNTS OF THE CRE DITORS PRIOR TO ISSUE OF CHEQUES WOULD CLEARLY REVEAL THAT THEY WERE NOT HAVING ANY SOURCE AND IT WAS THE MONEY OF THE ASSESSEE WHICH WAS ROUT ED THROUGH THE BANK ACCOUNTS OF THE CREDITORS FOR THE PURPOSE OF G IVING CREDITS TO THE ASSESSEE. THESE WERE, THEREFORE, ACCOMMODATION ENTR IES ONLY AND AS SUCH, COULD NOT BE CONSIDERED AS GENUINE TRANSACTIO NS. MERELY BECAUSE THE LOANS HAVE BEEN RECEIVED THROUGH BANKING CHANNE L, IS NOT SACROSANCT TO MAKE A NON-GENUINE TRANSACTION AS GEN UINE TRANSACTION. 10. HONBLE CALCUTTA HIGH COURT IN THE CASE OF BHAR ATI PVT. LTD. VS. CIT, 111 ITR 951 HELD AS UNDER : IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE INCOM E-TAX OFFICER FOUND THAT THE ASSESSEE HAD SHOWN RS.20,000 AS LOAN IN ITS BOOKS TAKEN FROM TWO PARTIES. THE ASSESSEE PRODUCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEFORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INCOME TAX ACT, 1 961, ON THE ALLEGED CREDITORS AND SINCE THOSE NOTICES CAME BACK UNSERVED, THE INCOME-TAX OFFICER TREATED THE LOAN AS ASSESSEES I NCOME FROM UNDISCLOSED SOURCES. THE APPELLATE ASSISTANT COMMIS SIONER DISMISSED THE ASSESSEES APPEAL ON THE GROUND THAT THE ASSESSEE COULD NOT EVEN ESTABLISH THE IDENTITY OF THE PARTIE S. ON FURTHER APPEAL BY THE ASSESSEE, THE APPELLATE TRIBUNAL HELD THAT MERE FILING OF CONFIRMATORY LETTERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND THERE WAS NO MATERIAL ON THE RECORD TO ESTABLISH THE IDENTITY OF THE CREDITORS: HELD, THAT THE TRIBUNAL HAD TAKEN ALL THE RELEVANT FACTS INTO CONSIDERATION AND THE CONCLUSION ARRIVED AT BY THE TRIBUNAL THAT THE LOANS REPRESENTED THE ASSESSEES INCOME FROM UN DISCLOSED SOURCES WAS NOT PERVERSE OR UNREASONABLE. ITA NO.42/AGRA/2013 A.Y. 2008-09 16 10.1 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD., 187 ITR 596 HELD AS UNDER: THE PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDITS IN ITS ACCOUNT. IT IS NECESSA RY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS, THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THESE THINGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER THE ASSESSEE HA S ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FACTS DOES THE ONUS SHIFT ON TO THE DEPARTMENT. IT IS NOT ENOUGH TO ESTABLISH THE I DENTITY OF THE CREDITORS. MERE PRODUCTION OF THE CONFIRMATION LETT ERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT T HE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN CREDITORS OR THAT THE Y HAVE CREDIT- WORTHINESS. HELD, THAT, IN THE INSTANT CASE, THE TRIBUNAL MISDI RECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUINE SIMPL Y BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQUES. THE ASSES SEE HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDE RS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMITTED THAT LOANS OBTAIN ED FROM THESE BANKERS AGAINST HUNDIS WERE NOT GENUINE AND SUCH HU NDI LOANS REALLY REPRESENTED THEIR OWN CONCEALED INCOME. THE ASSESSEE HAD NOT DISCHARGED ITS BURDEN OF PROVING THAT THE LOANS IN QUESTION WERE GENUINE. 10.2 HONBLE CALCUTTA HIGH COURT IN THE CASE OF M /S. PRECISION FINANCE PVT. LTD., 208 ITR 465 HELD THAT EVEN THE LOAN THROUGH BANK CANNOT BE ACCEPTED AS GENUINE UNLESS THE IDENT ITY AND CREDITWORTHINESS OF THE CREDITORS ARE PROVED. MERE PAYMENT OF ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT M AKE A NON- GENUINE TRANSACTION GENUINE. 10.3 THE HONBLE SUPREME COURT IN THE CASE OF DU RGA PRASAD MORE, 82 ITR 540 AND SUMATI DAYAL, 214 ITR 801 HELD THAT THE COURTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCES BEF ORE THEM BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONS IDERING THE SURROUNDING CIRCUMSTANCES. 11. ON CONSIDERATION OF THE FACTS OF THE CASE IN TH E LIGHT OF ABOVE DISCUSSION AND DECISION, WE DO NOT FIND ANY JUSTIFI CATION TO INTERFERE ITA NO.42/AGRA/2013 A.Y. 2008-09 17 WITH THE ORDER OF THE LD. CIT(A). THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF ALL THE CREDITORS AND NO SOURCE OF THEIR INCOME HAS BEEN FILED. AT THE BEST THE ASSESSEE IS ABLE TO PROVE IDENTITY OF THE CREDITORS, BUT THE ASSESSEE FAILED TO PROVE THE GEN UINE CREDIT IN THE MATTER. ALL THE CREDITORS HAVE BEEN RIGHTLY FOUND T O BE MEN OF MEAGER MEANS AND NO SOURCE OF INCOME HAVE BEEN FILE D TO PROVE THAT THEY WERE HAVING SUFFICIENT FUNDS OR SAVINGS IN ORD ER TO GIVE LOANS TO THE ASSESSEE. ON VERIFICATION OF THE BANK ACCOUNT O F THE DEPOSITORS, IT WAS SPECIFICALLY FOUND THAT THERE WERE NO SUFFICIEN T FUNDS AVAILABLE IN THEIR BANK ACCOUNT AND THEY WERE HAVING ONLY SMA LL BANK BALANCE, WHICH WAS EVEN NOT SUFFICIENT TO MEET OUT THEIR HOU SEHOLD EXPENSES OR DAY-TO-DAY REQUIREMENTS. THEREFORE, IT IS UNBELI EVABLE TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT SAID PERSONS WE RE HAVING CREDITWORTHINESS TO ADVANCE ANY LOAN TO THE ASSESSE E. THE DOCUMENTS PRODUCED BY THE LD. COUNSEL FOR THE ASSES SEE IN THE PAPER BOOK MERELY PROVE THE CASE OF ASSESSEE SUPERFICIALL Y, WHICH IS FAR FROM REALITY OR TRUTH. WHEN THE TEST OF HUMAN PROBA BILITIES AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AS IS PRO POUNDED BY HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD M ORE (SUPRA) AND SUMATI DAYAL VS. CIT (SUPRA), IS APPLIED TO THE FACTS OF THE CASE, IT IS CLEAR THAT THE LD. CIT(A) WAS JUSTIFIED IN CO NFIRMING THE ADDITION U/S. 68 OF THE IT ACT. IN THE PRESENT CASE, THE ASS ESSEE HAS NOT ADDUCED ANY SUFFICIENT EVIDENCE BEFORE THE AUTHORIT IES BELOW TO PROVE THE CREDITWORTHINESS OF THE CREDITORS AND GEN UINENESS OF THE TRANSACTIONS IN THE MATTER. THEREFORE, THE ASSESSEE HAS NOT SATISFIED THE ESSENTIAL INGREDIENTS OF SECTION 68 OF THE IT A CT. 12. IN THE CASE OF ROHINI BUILDERS AND U.M. SHAH (S UPRA), THE DEPARTMENTAL APPEAL WAS DISMISSED FINDING NO SUBSTA NTIAL QUESTION OF LAW BECAUSE THE FINDINGS OF THE TRIBUNAL WERE BA SED ON APPRECIATION OF EVIDENCE. 12.1 IN THE CASE OF CIT VS. ORISSA CORPORATION P. L TD (SUPRA), IT WAS ALSO HELD THAT THE REVENUE DID NOT EXAMINE SOUR CE OF INCOME OF THE SAID ALLEGED CREDITORS WHEN THEY WERE ASSESSED TO TAX TO FIND OUT WHETHER THEY WERE CREDITWORTHY. HOWEVER, IN THE PRE SENT CASE, THE AUTHORITIES BELOW HAVE SPECIFICALLY FOUND THAT ALL THE CREDITORS WERE NOT MEN OF MEANS AND AS SUCH, THEIR CREDITWORTHINES S WAS NOT PROVED AT ALL. THEREFORE, THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE . ITA NO.42/AGRA/2013 A.Y. 2008-09 18 13. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF FINDINGS OF THE AUTHORITIES BELOW, WE DO N OT FIND ANY IRREGULARITY OR ILLEGALITY IN THE ORDERS OF THE AUT HORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DISMISS THE APPEAL OF TH E ASSESSEE ON THIS GROUND. CONCISE GROUNDS NOS. 1 & 2 ARE, ACCORDINGLY , DISMISSED.' 19. THE AFORESAID DECISION HAS BEEN CONFIRMED BY TH E HONBLE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO. 680 OF 2012 IN THE CASE OF SMT. SUMAN GUPTA VS. CIT AND VIDE JUDGMENT DATED 07.08.2012, H ONBLE ALLAHABAD HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMI SSED THE APPEAL OF THE ASSESSEE. WE MAY ALSO REFER TO DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF BLESSING CONSTRUCTION VS. ITO REPORTED IN 3 2 TAXMAN.COM 366 DATED 13.03.2013 IN WHICH HONBLE HIGH COURT ON THE SAME FACTS DEPOSIT OF CASH DEPOSIT PRIOR TO GIVING CREDIT IN PARA 7 DISMISSED THE APPEAL OF THE ASSESSEE. THE FINDING OF THE HONBLE HIGH COURT IN PARA 7 IS REPR ODUCED AS UNDER:- 7. WITH RESPECT TO THE LEGAL CONTENTION THAT THE RE VENUE CANNOT INSIST ON ASSESSEE SUPPLYING THE SOURCE OF SOURCE IS IMPEC CABLE. HOWEVER, THE FACTS OF THE PRESENT CASE ARE VASTLY DIFFERENT. IT IS OF-COURSE TRUE THAT SOME OF THE OBSERVATIONS MADE BY THE TRIBUNAL MAY SUGGEST THAT THE TRIBUNAL DID CONCERN ITSELF WITH THE SOURCE OF THE SOURCE. HOWEVER, SUCH OBSERVATIONS CANNOT BE PICKED IN ISOL ATION AS TO TREAT THAT AS THE CONCLUSION OF THE TRIBUNAL. WHEN ONE RE ADS THE ORDER OF THE ASSESSING OFFICER, THAT OF THE COMMISSIONER (AP PEALS) AND ALSO OF THE TRIBUNAL, INESCAPABLE CONCLUSION ONE ARRIVES AT , IS THAT THE REVENUE AUTHORITIES AS WELL AS THE TRIBUNAL FOUND T HE ENTIRE TRANSACTION NOT GENUINE. THERE WAS SUFFICIENT EVIDE NCE ON RECORD TO SUGGEST THAT IN THE CASE OF ALL THE DEPOSITORS, THE IR BANK ACCOUNTS CONTAINED MEAGER BALANCE SHORTLY BEFORE SIZABLE AMO UNT OF RS.1 LAKH AND UPWARD WERE GIVEN TO THE ASSESSEE THROUGH SUCH ACCOUNT. IN SUCH BANK ACCOUNTS, CASH AMOUNTS WERE CREDITED AND IMMED IATELY ENTIRE AMOUNTS WERE WITHDRAWN THROUGH ISSUANCE OF SUCH CHE QUES IN FAVOUR ITA NO.42/AGRA/2013 A.Y. 2008-09 19 OF THE ASSESSEE. IT WAS NOTICED THAT SUCH CREDITORS DID NOT MAINTAIN ANY BOOKS OF ACCOUNT. NOWHERE THEIR CAPACITY TO RAI SE SUCH AMOUNT FOR DRAWING CHEQUES OF SIZABLE AMOUNTS WAS ESTABLIS HED. IN SHORT THEREFORE, THE VERY GENUINENESS OF THE TRANSACTION WAS NOT ESTABLISHED. THIS THEREFORE, IS NOT A CASE WHERE THE REVENUE MAK ES ADDITION ON THE ASSESSEE FAILING TO ESTABLISH SOURCE OF THE SOURCE. ALL ISSUES ARE ESSENTIALLY BASED ON FACTS AND APPRECIATION OF EVID ENCE ON RECORD. NO QUESTION OF LAW ARISES. TAX APPEAL IS DISMISSED. 20. NOW, WE CONSIDER THE CASES OF EACH CREDITORS AS UNDER :- SHRI INDERPAL SINGH 20.1 AS PER STATEMENT HE HAS NO SOURCE OF INCOME E XCEPT AGRICULTURE INCOME. HE DENIED ANY EVIDENCE REGARDING AGRICULTUR AL LAND AND WAS HAVING ONLY MEAGER INCOME OF RS.25,000/-. THEREFORE, IT WA S DIFFICULT TO BELIEVE THAT HE COULD HAVE GIVEN LOAN OF RS.1,00,000/-. HE HAS GIVE N LOAN OF RS.1,00,000/- TO ASSESSEE ON 18.05.2007 AND THERE IS A CASH DEPOSIT OF RS.90,000/- IN HIS ACCOUNT ON 17.05.2007. HE WAS HAVING MEAGER BANK BALANCE PR IOR TO THAT OF RS.4,177/-. SMT. POONAM SHARMA 20.2 SHE HAS NO SOURCE OF INCOME EXCEPT AGRICULTUR E INCOME. YEARLY INCOME IS NIL. SOURCE OF FAMILY NOT SUFFICIENT TO G IVE LOAN OF RS.2,00,000/-. LOAN OF RS.2,00,000/- WAS STATED TO BE GIVEN ON 01. 01.2008 AND CASH WAS DEPOSITED OF RS.1,00,000/- TWICE IN HER BANK ACCOUN T JUST PRIOR TO ISSUE OF CHEQUE. THE SALE-DEED IS DATED 24.12.2007 OF RS.2,0 0,000/- BUT NO CORRELATION WAS PROVED WITH THE SALE OF THE PLOT AND IT IS ALSO NOT EXPLAINED WHY CASH OF RS.1,00,000/- TWICE WAS DEPOSITED IF SALE-DEED WAS EXECUTED OF RS.2,00,000/-. ITA NO.42/AGRA/2013 A.Y. 2008-09 20 NO SOURCE OF INCOME HAS BEEN PROVED. THERE IS MEAGE R BANK BALANCE OF RS.2,518/- PRIOR TO ISSUE OF CHEUQE. SMT. RAJNI SHARMA 20.3 SHE STATED TO HAVE GIVEN LOAN OF RS.2,00,000/ - IN THREE INSTALLMENTS OF RS.1,30,000/- ON DATED 29.01.2008, RS.40,000/- O N 01.02.2008 AND RS.30,000/- ON 02.02.2008. ACCORDING TO BANK STATEM ENT, SHE HAS MADE DEPOSIT OF CASH OF RS.2,00,000/- JUST PRIOR TO ISSUE OF CH EQUE IN INSTALLMENTS IN JANUARY, 2008 I.E. RS.40,000/-, RS.45,000/-, RS.45,000/-, RS .30,000/- AND RS.40,000/-. NO SOURCE OF INCOME FOR GIVING LOAN IS PROVED. SMT. KAMLA DEVI 20.4 SHE HAS NO SOURCE OF INCOME. LOAN OF RS.70,00 0/- WAS GIVEN IN TWO INSTALLMENTS OF RS.30,000/- ON 30.04.2007, RS.4 0,000/- ON 17.12.2007. THERE IS A CASH DEPOSIT IN HER BANK ACCOUNT PRIOR T O GIVING OF THE CHEQUES TO THE ASSESSEE. THERE IS A MEAGER BANK BALANCE OF RS.4,40 8/-. SRI RAKSH PAL SINGH 20.5 HE HAS NO REGULAR SOURCE OF INCOME EXCEPT HE WAS A LAWYER. HE HAS GIVEN THREE CHEQUES OF RS.2,00,000/- ON 06.09.2007, RS.1,50,000/- ON 17.10.2007 AND RS.1,50,000/- ON 23.10.2007. HE IS N OT ASSESSED TO TAX. HE HAS NO PAN. HE HAS NOT GIVEN ANY PERSONAL LOAN. THESE C HEQUES WERE GIVEN OF OTHER FIRM M/S RAGHAV ENTERPRISES. NO PERSONAL LOAN IS GIVEN AND NO ITA NO.42/AGRA/2013 A.Y. 2008-09 21 CREDITWORTHINESS HAS BEEN PROVED. IT IS NOT EXPLAIN ED WHY CONCERNED PERSON HAS NOT GIVEN THE CONFIRMATION OF GIVING LOAN FROM HIS BANK ACCOUNT. SRI YASH VARDHAN JAIN 20.6 THIS CREDITOR WAS NOT PRODUCED FOR EXAMINATIO N BEFORE A.O. HE HAS GIVEN RS.10,00,000/- TO THE ASSESSEE IN THREE I NSTALLMENTS, RS. 5,00,000/- ON 25.09.2007, RS.3,00,000/- ON RS.28.09.2007 AND RS.2 ,00,000/- ON 05.10.2007. ACCORDING TO HIS BANK STATEMENT THERE WAS A MEAGER BANK BALANCE OF RS.8,639.15 PRIOR TO ISSUE OF THE CHEQUES TO THE AS SESSEE AND THERE IS A CASH DEPOSIT OF RS.80,000/- ON 04.10.2007. THERE ARE CER TAIN TRANSFER ENTRIES IN HIS BANK ACCOUNT FOR THE PURPOSE OF GIVING CHEQUES TO T HE ASSESSEE. THEREFORE, HIS IDENTITY IS NOT PROVED ALONG WITH THE CREDITWORTHIN ESS AND GENUINENESS OF THE TRANSACTION. 21. CONSIDERING THE OVERWHELMING EVIDENCE AND MATER IAL BROUGHT ON RECORD BY THE A.O., IT IS CLEARLY PROVED IN THE CASE OF FI RST FIVE CREDITORS THAT THE ASSESSEE HAS FAILED TO PROVE THEIR CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. THERE ARE CASH DEPOSITS IN THEIR BANK ACCOUNTS PRIOR TO ISSUE OF CHEQUES IN FAVOUR OF THE ASSESSEE. NO SOUR CE OF INCOME IS EXPLAINED OR PROVED. THERE IS NO CAPACITY OF SIX CREDITORS TO SA VE ANY AMOUNT.THEY DID NOT MAINTAIN ANY RECORD OR EVIDENCE TO PROVE GENUINENES S OF THE TRANSACTION IN THE MATTER. THEREFORE, THE CASES OF THESE CREDITORS I.E . INDERPAL SINGH, SMT. POONAM SHARMA, SMT. RAJINI SHARMA, SMT. KAMLA DEVI AND RAK SH PAL SINGH ARE CLEARLY ITA NO.42/AGRA/2013 A.Y. 2008-09 22 COVERED AGAINST THE ASSESSEE BY THE DECISIONS IN TH E CASES OF SMT. SUMAN GUPTA (SUPRA) AND BLESSING CONSTRUCTION (SUPRA). LD. CIT(A), THEREFORE, WAS NOT JUSTIFIED IN DELETING THE ADDITIONS UNDER SECTION 6 8 OF THE ACT IN THEIR CASES. WE ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT(A) IN THEIR CASE AND RESTORE THE ADDITION OF RS.10,70,000/- IN THE CASE OF THESE FIR ST FIVE CREDITORS AND RESTORE THE ORDER OF THE A.O. 22 AS FAR AS, THE CREDITORS SRI YASH VARDHAN JAIN I S CONCERNED, THIS CREDITOR WAS NOT PRODUCED BEFORE THE A.O. FOR EXAMINATION AN D HIS BANK ACCOUNT REVEALED THERE IS A MEAGER BANK BALANCE IN HIS ACCO UNT AS WELL AS THERE IS A CASH DEPOSIT PRIOR TO ISSUE OF THE CHEQUES IN FAVOUR OF THE ASSESSEE, BUT THE AMOUNT IS ONLY RS.80,000/- AND REST OF THE AMOUNT ARE THROUGH TRANSFER ENTRIES, THEREFORE, IT IS NECESSARY TO EXAMINE THESE TRANSFER ENTRIES TO P ROVE THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION IN THE MATTER. IN TH E LIGHT OF THE MEAGER BANK BALANCE IN THE ACCOUNT OF THIS CREDITOR, THE LD. CI T(A), THEREFORE, HELD THAT SINCE IT WAS A AMOUNT GIVEN AS ADVANCE AGAINST THE PROPER TY AND THE AMOUNT IS RETURNED, ADDITION WAS DELETED. LD. CIT(A) SHOULD H AVE CONSIDERED THE FACT THAT A.O. HAS DECIDED THE ISSUE AGAINST THE ASSESSEE BEC AUSE ASSESSEE FAILED TO PROVE CREDITWORTHINESS OF THAT CREDITOR AS WELL AS GENUIN ENESS OF THE TRANSACTION IN THE MATTER. 23 IN THE LIGHT OF THE ABOVE, WE SET ASIDE THE ORDE RS OF THE CIT(A) IN RESPECT OF THE CREDITORS SRI YASH VARDHAN JAIN AND RESTORE THE ISSUE TO HIS FILE WITH ITA NO.42/AGRA/2013 A.Y. 2008-09 23 DIRECTION TO RE-DECIDE THIS POINT IN THE LIGHT OF T HE DECISIONS ABOVE, AND HE SHALL ALSO VERIFY THE TRANSFER ENTRIES IN THE ACCOUNT OF THE CREDITOR BEFORE TAKING FINAL DECISIONS IN THE MATTER. LD. CIT(A) SHALL GIVE REAS ONABLE OPPORTUNITY ON BEING HEARD TO THE ASSESSEE IN THIS REGARD. 24. IN THE RESULT, GROUNDS NO.1 OF THE DEPARTMENTAL APPEAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. 25. ON GROUND NO.2 LD. CIT(A) CONSIDERING THE EXPLA NATION OF THE ASSESSEE RESTRICTED THE ADDITION OF RS.1,00,000/- TO RS.50,0 00/- WHICH IN OUR VIEW WOULD NOT REQUIRE ANY FURTHER INTERFERENCE IN THE MATTER. IN THE RESULT, GROUND NO2 DEPARTMENTAL APPEAL IS DISMISSED. 26. IN THE RESULT, DEPARTMENTAL APPEAL IS PARTLY AL LOWED AS INDICATED ABOVE. (ORDER PRONOUNCED IN THE OPEN COURT.) SD/- SD/- (A.L. GEHLOT) (BHAV NESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- APPELLANT, RESPONDENT, CIT (APPEALS) CONCERNED CIT CONCERNED, D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY