Kishorchandra Gulabbhai Desai, Valsad V. The Income tax Officer,Ward-2, Valsad

ITA 4353/AHD/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9847 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-09-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANDIP GARG
• Keywords: Unexplained cash credit; Income from undisclosed sources; Onus to prove
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.4353/AHD/2007 A. Y.: 2005-06 SHRI KISHORECHANDRA GULABBHAI DESAI, PROP. MARUTI LABOUR CONTRACT, 69- TADHEKESHWAR SOCIETY, NR. OVER BRIDGE, ABRAMA, VALSAD VS THE INCOME TAX OFFICER, WARD 2, DHARAMPUR ROAD, VALSAD PA NO. AEOPD 0847A (APPELLANT) (RESPONDENT) APPELLANT BY NONE (WRITTEN SUBMISSION) RESPONDENT BY SHRI SANDIP GARG, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE LEARNED CIT(A), VALSAD DATED 1 4-09-2007 FOR ASSESSMENT YEAR 2005-06. . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF THE NOTICE. SHRI RAJESH M. UPADHYAY, LEARNED COUNSEL F OR THE ASSESSEE HAS HOWEVER, FILED WRITTEN SUBMISSION STATING THAT HE D ID NOT FIND IT CONVENIENT TO ATTEND THE HEARING. THEREFORE, REQUES TED THAT THE APPEAL MAY BE DECIDED CONSIDERING THE WRITTEN SUBMISSION A ND MATERIAL ON RECORD. 3. WE HAVE HEARD LEARNED DR, PERUSED THE FINDINGS O F THE AUTHORITIES BELOW AND CONSIDERED THE MATERIALS AVAILABLE ON REC ORD. THE WRITTEN SUBMISSION FILED BY THE ASSESSEE IS ALSO TAKEN INTO CONSIDERATION. 3. ON GROUND NO.1, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.3.28 LACS ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE AO NOTED THAT THE ASSESSEE HAS SHOWN RECEIPTS OF LOANS FROM 20 CREDIT ORS/DEPOSITORS IN A ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 2 SUM OF RS.19,000/- EACH AND IN ONE CASE RS.5,000/- (TOTALING TO RS.3,28,000/-. THE NAMES ARE MENTIONED IN PARA 4 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS ASKED O PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS OF THESE LOANS. TH E ASSESSEE MERELY FURNISHED A STATEMENT GIVING DETAILS OF NAMES AND A DDRESSES OF THE DEPOSITORS WITH AMOUNTS AND DATE OF LOAN TAKEN. THE AO NOTED THAT ALL LOANS ARE TAKEN IN CASH BELOW RS.20,000/-. THE AO A LSO NOTED THAT EXPENSES HAVE BEEN INCURRED IN CASH AND IT APPEARS THAT THESE LOANS HAVE BEEN TAKEN FROM VARIOUS PERSONS. THE ASSESSEE WAS DIRECTED TO PRODUCE THE DEPOSITORS FOR EXAMINATION. THE ASSESSE E HOWEVER, DID NOT FURNISH ANY EXPLANATION AND NO DETAIL OF EXPENSES W AS FILED. THE ASSESSEE LATER ON HOWEVER, PRODUCED 4 PERSONS FOR EXAMINATIO N NAMELY SMT. LATABEN K. DESAI, VRUNDABEN K. DESAI, ASHWINBHAI RA MBHAI PATEL AND SHRI MUKESH BHAGWANJI DESAI OUT OF THE TOTAL 20 DEP OSITORS .THEIR STATEMENTS WERE RECORDED ON OATH IN WHICH THE AO FO UND THE FOLLOWING THINGS IN COMMON: (I) ALL THE DEPOSITORS ARE NOT ASSESSED TO TAX MEANS TH EY DO NOT HAVE TAXABLE INCOME. (II) THE LOAN IS GIVEN IN CASH. (III) THE LOAN IS GIVEN BELOW RS.20,000/-. (IV) NONE OF THEM COULD PRODUCE ANY EVIDENCE OF HAVING I NCOME. (V) SOME OF THEM EVEN DO NOT HAVE A BANK A/C. (VI) SOME OF THEM ARE MAINTAINING BANK A/C IN VALSAD CIT Y WHERE LOAN IS ALLEGEDLY GIVEN. DESPITE OF HAVING BA NK ACCOUNT LOAN IS SHOWN IN CASH. (VII) NONE OF THESE DEPOSITORS HAS MADE ANY INVESTMENT/PR OVISION FOR UNFORESEEN CIRCUMSTANCES WHICH MAY BEFAIL UPON THEIR OWN FAMILY MEMBERS DESPITE THE ALLEGED AVAILABILITY OF CASH FOR ADVANCING AS A LOAN. ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 3 SPECIFIC POINTS NOTED DURING THE RECORDING OF THE S TATEMENT ON OATH ARE DISCUSSED HERE BELOW SMT. LATABEN K. DESAI SHE IS A HOUSE WIFE AND HAS NO SOURCE OF INCOME AS SUCH. SHE MAINTAINS A BANK A/C WITH ICICI BANK, VALSAD, S TILL SHE HAS NEVER GIVEN ANY LOAN TO ANYBODY ELSE INCLUDING HER HUSBAND SONS AND DAUGHTERS. SHE HAS NOT MADE ANY PROVISION FOR C ONTINGENCY OR UNFORESEEN CIRCUMSTANCES FOR HER OWN FAMILY MEMBERS OR FOR HERSELF, SHE HAS ALLEGED TO HAVE GIVEN LOAN OF RS.1 9,000/- IN CASH IN MAY, 2004. SINCE SHE HAS NOT PRODUCED ANY EVIDENCE OF HER INCO ME, THE CAPABILITY OF THIS DEPOSITOR AND GENUINENESS OF TRA NSACTION IS NOT PROVED. SHE THEREFORE APPEARS INCAPABLE OF GIVING L OAN OF RS.19,000/- IN A YEAR AND THUS, THE TRANSACTION OF LOAN FROM HER IS NOT GENUINE. MS. VRUNDABEN K. DESAI SHE IS AGED 20 YEARS AND IS A STUDENT OF CIVIL ENGI NEERING. SHE STATED THAT SHE IS DOING PART TIME JOB IN CHARU L CONSTRUCTION. HOWEVER, SHE HAS NOT PRODUCED ANY EVIDENCE IN SUPPO RT OF HER INCOME. SHE EVEN DOES NOT HAVE A BANK ACCOUNT. THE ASSESSEE IS CLOSE RELATIVE AND AS VRUNDABEN DID NOT GAVE ADDRESS OF CHARUL CONSTRUCTION ALLEGED EMPLOYER OF HER WHEREFROM HER INCOME/EMPLOYMENT COULD BE VERIFIED, THE ASSESS EE WAS REQUESTED TO FURNISH COMPLETE ADDRESS WHICH HE HAS ALSO NOT GIVEN DESPITE OF REPEATED REQUEST. THUS, FOR WANT OF EVID ENCE THE LOAN FROM VRUNDABEN IS NOT SATISFACTORILY EXPLAINED. THI S ALSO SUPPORTS THE FORMATION OF BELIEF THAT LOAN IS STAGE MANAGED AND BOGUS. ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 4 SHRI ASWINBHAI RAMBHAI PATEL HE IS 28 YEARS AND IS AGRICULTURIST. HE STATED THAT HE HAS GIVEN LOAN FROM AGRICULTURAL INCOME OF HIS FATHERS HUF. HOWEVER, HE HAS NOT PRODUCED ANY EVIDENCE IN SUPPORT OF INCO ME. HE TOO EVEN DOES NOT HAVE A BANK ACCOUNT. THE ASSESSEE HAS SHOWN LOAN FROM SHRI ASWINBHAI WHI LE HE SAYS LOAN AMOUNT PERTAINS TO HUF. THUS FACTS ARE CO NTRADICTORY WHICH ITSELF SUPPORTS THE FORMATION OF BELIEF THAT LOAN IS STAGE MANAGED AND BOGUS. THIS LOAN HAS BEEN SHOWN IN LAST YEAR AND THUS DOES NOT PERTAIN TO PREVIOUS YEAR UNDER QUESTI ON. SHRI MUKESH BHAGHWANJI DESAI HE IS 48 YEARS AND IS AGRICULTURIST. HE INITIALLY S TATED THAT HE HAS INCOME FROM AGRICULTURE RANGING FROM RS.50,000 TO RS.60,000 PER YEAR WHICH IS SENT FOR HOUSEHOLD EXPENSES OR RE MAINING, IF ANY, IS SPENT ON LOOKING AFTER AGRICULTURE. HE HAS A BAN K ACCOUNT EVEN THEN LOAN IS CLAIMED IN CASH. THE DEPOSITOR HARDLY HAS ANY SURPLUS FUND TO GIVE ON LOAN. MOREOVER HE HAS NOT GIVEN LOA N TO ANY OTHER PERSON EXCEPT ASSESSEE. THIS LOAN TOO HAS BEEN SHOW N IN LAST YEAR AND THUS DOES NOT PERTAIN TO PREVIOUS YEAR UNDER QU ESTION. THE FOLLOWING POINTS WHICH EMANATE FROM VERIFICATIO N OF DEPOSITORS AND DETAILS FURNISHED HAVE BEYOND DOUBT THAT THESE LOANS ARE STAGE MANAGED BY THE ASSESSEE AND ARE NOT HING BUT ASSESSEES OWN MONEY INTRODUCED IN THE GUISE OF CAS H LOANS. 1. NONE OF THE DEPOSITORS IS TAXPAYER. 2. THE DEPOSITORS ARE NOT CAPABLE OF GIVING SUCH LOANS SINCE THEY HAVE NO INVESTMENT OR EVEN PROVISION FOR CONTI NGENCIES SUCH AS FLOOD, DRAUGHT, DISEASE OR EVEN THE DEMISE OF THE ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 5 BREAD WINNER OF THE FAMILY. IT IS A NATURAL INSTINC T IN ALL LIVING BEING THAT IT WILL FIRST BE INCLINED TO ITSELF OR I TS OWN FAMILY MEMBERS. HERE, MOST OF THE DEPOSITORS EVEN DONT HA VE A BANK ACCOUNT. IT IS ACCEPTED FACT THAT A PERSON STA YING IN A CITY WILL FIRST PREFER TO OPEN AN ACCOUNT WITH A BA NK IF HE HAS SURPLUS FUND. 3. THE ASSESSEE HAS NOT PAID INTEREST TO ANY OF HE ALL EGED DEPOSITORS, WHICH INDICATES THAT NO BENEFIT IS DERI VED BY THE CREDITORS WHICH IS AGAINST THE NORMAL BEHAVIOR. NO ONE WILL PART WITH HIS HARD EARNED MONEY WITHOUT CHARGING IN TEREST. 4. IT HAS ALSO PROVED ON RECORD THAT THE FINANCIAL/ECO NOMIC POSITION OF THE ASSESSEE IS FAR STRONGER THAN THOSE OF THE DONORS. IT IS A SOCIALLY ACCEPTED PHENOMENON THAT A WEAKER MAY BE SUPPORTED BY THE STRONGER. IN THE PRESENT CA SE IT IS REVERSE. 5. THE ASSESSEE HAS ADEQUATE BALANCE IN HIS BANK ACCOU NT, EVEN THEN HE HAS TAKEN SUCH A HUGE LOAN FROM VARIOU S PERSONAS IN CASH. AS DISCUSSED IN PARA 4 ABOVE THE LOAN IS TAKEN FOR THE PURPOSE OF INFLATING EXPENSES TO REDU CE TAXABLE INCOME. 6. MERE CONFIRMATION BY THE DEPOSITORS WITHOUT PROVING THEIR CAPABILITIES TO PART WITH SUCH SUMS INTEREST FREE C ANT TAKE THE TRANSACTION TO BE ACCEPTED TO BE TRUE. THE GENU INENESS OF THE TRANSACTION IS NOT PROVED. 7. THE ASSESSEE HAS RECEIVED ALL THESE LOANS DURING TH E PERIOD FROM APRIL, 2004 TO JUNE, 2004. IT CAN NEVER BE COI NCIDENTAL THAT A NUMBER OF PERSONS DECIDE ALL OF SUDDEN TO GI VE LOAN TO ASSESSEE THAT IN CASH AND WITHOUT CHARGING INTEREST . 8. ALL THESE LOANS ARE BELOW RS.20,000 AND TAKEN IN CA SH. ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 6 THE ASSESSEE WAS ASKED TO PRODUCE THE REMAINING DEP OSITORS FOR EXAMINATION. FURTHER INQUIRIES WERE MADE BY THE DEPARTMENT TO FIND AND ASCERTAIN AS TO WHETHER THE LOANS WERE GENUINE. NOTICES U/S 133(6) OF THE ACT INCORPORATING SPECIFIC QUESTI ONS RELATED TO LOAN WERE ISSUED AT THE ADDRESSES, HOWEVER, NO REPL Y HAS BEEN RECEIVED SO FAR. 4. THE AO FURTHER NOTED THAT DESPITE THE ASSESSEE H AS SUFFICIENT AS BALANCE IN HIS BANK ACCOUNT HAS STILL TAKEN THE ABO VE LOANS. NO BUSINESS EXIGENCY HAS BEEN EXPLAINED FOR TAKING THE LOAN; TH E ONLY PURPOSE TO INTRODUCE CASH CREDIT IN THE BOOKS WAS TO BOOK EXPE NSES TO REDUCE THE TAXABLE INCOME. THE AO, THEREFORE, NOTED THAT IN TH E CASE OF THE 4 PERSONS PRODUCED BY THE ASSESSEE FOR EXAMINATION, T HEIR IDENTITY HAD BEEN PROVED BUT CAPACITY OF THE CREDITORS TO ADVANC E LOAN AND GENUINENESS OF THE TRANSACTIONS HAS NOT BEEN ESTABL ISHED. IN THE REMAINING CASES OF THE CREDITORS EVEN THE IDENTITY IS NOT PROVED. THEIR CREDITWORTHINESS AS WELL AS GENUINENESS OF THE TRAN SACTION IS NOT PROVED. THE AO RELIED UPON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS SHRI DURGA PRASAD MORE 82 ITR 540 AN D IN THE CASE OF SMT. SUMATI DAYAL VS CIT 214 ITR 801 IN WHICH IT WA S HELD THAT TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDI NG CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATER HAS TO BE CON SIDERED BY APPLYING THE TEST OF HUMAN PROBABILITIES. THE AO FURTHER NOTED HAT THE FACTS AND CIRCUMSTANCES NOTED ABOVE WHEN TESTED BY APPLYING HUMAN PROBABILITIES, IT IS CLEAR THAT NONE OF THE LOANS A RE GENUINE. THE LOANS ARE NOTHING BUT UNACCOUNTED INCOME OF THE ASSESSEE GENE RATED BY INFLATING THE EXPENSES. THEREFORE, ADDITION OF RS.3,28,000/- WAS MADE U/S 68 OF THE IT ACT TREATING AS UNEXPLAINED CASH CREDIT. 5. THE ASSESSEE EXPLAINED BEFORE THE LEARNED CIT(A) THAT NAMES OF THE CREDITORS HAVE BEEN FILED AND MOST OF THEM HAVING I NCOME FROM SALARY, ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 7 AGRICULTURAL INCOME AND OTHER INCOME. THE LEARNED C IT(A) REPRODUCED THE GIST OF THE SAME IN THE APPELLATE ORDER. IT WAS ALS O EXPLAINED THAT TWO OF THE CREDITORS ARE ALSO ASSESSED TO TAX AND IN REPLY TO THE NOTICE OF THE AO THE ASSESSEE PRAYED THAT NO ADDITION SHOULD BE MADE AGAINST THE ASSESSEE. THE LEARNED CIT(A) HOWEVER, CONSIDERING T HE FACTS AND CIRCUMSTANCES NOTED ABOVE CONFIRMED THE ADDITION AN D NOTED THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS TO PROVE THE IDENTITY OF THE CREDITORS, CAPACITY OF THE CREDITORS AND GENUINENES S OF THE TRANSACTIONS. THE APPEAL OF THE ASSESSEE WAS ACCORDINGLY DISMISSE D. 6. THE LEARNED DR RELIED UPON THE ORDERS OF THE AUT HORITIES BELOW AND SUBMITTED THAT EXCEPT IN 4 CASES WHERE CREDITORS WE RE PRODUCED FOR EXAMINATION BEFORE THE AO, THE IDENTITY OF THE REMAINING CREDIT ORS HAVE NOT BEEN PROVED. WHEREAS IN ALL THE CASES OF THE CREDITORS T HEIR CAPACITY TO GIVE LOAN IS NOT PROVED BY ANY EVIDENCE AND THAT THE GEN UINENESS OF THE TRANSACTIONS IS ALSO NOT PROVED. THE ASSESSEE IN TH E WRITTEN SUBMISSION BRIEFLY EXPLAINED THAT THE ASSESSEE DISCHARGED THE BURDEN IN TERMS OF SECTION 68 OF THE IT ACT BECAUSE NAMES HAVE BEEN FI LED AND STATEMENTS OF 4 OF THE CREDITORS HAVE BEEN RECORDED. SINCE THE CR EDITORS DID NOT RESPOND TO THE NOTICES U/S 133 (6) OF THE IT ACT, NO PRESUM PTION COULD BE DRAWN AGAINST THE ASSESSEE. THE DECISION OF THE HONBLE R AJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO. VS ITO 220 CTR 6 22 WAS RELIED UPON IN WHICH IT WAS HELD ONCE EXISTENCE OF THE CREDITORS IS PROVED AND SUCH PERSONS OWNS THE CREDITS WHICH WERE FOUND IN THE BO OKS OF THE ASSESSEE, THE ASSESSEES ONUS STAND DISCHARGED AND IS NOT FURTHER REQUIRED TO PROVE THE SOURCES OF THE CREDITORS. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. IT IS SETTLED LAW THAT FOR PRO VING THE INGREDIENTS OF SECTION 68 OF THE IT ACT, THE ASSESSEE SHALL HAVE T O PROVE THE IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS TO GIVE LOAN AND TO PROVE ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 8 GENUINENESS OF THE TRANSACTIONS IN THE MATER. THE F ACTS AND CIRCUMSTANCES NOTED ABOVE CLEARLY PROVE THAT ALL TH E LOANS ARE GIVEN IN CASH WHICH WERE BELOW RS.20,000/-. NONE OF THE DEPO SITORS COULD PRODUCE ANY EVIDENCE OF HAVING ANY SOURCE OF INCOME . SOME OF THEM EVEN DO NOT HAVE BANK ACCOUNT. SOME OF THE CREDITORS EVE N MAINTAINED BANK ACCOUNT BUT LOANS HAVE BEEN GIVEN IN CASH. NONE OF THE DEPOSITORS HAVE MADE ANY INVESTMENT/PROVISION FOR ANY UNFORESEEN CI RCUMSTANCES FOR THEIR FAMILY. NO INTEREST IS PAID TO THE DEPOSITORS . THE FINANCIAL POSITION OF THE ASSESSEE WAS FOUND TO BE STRONGER AS AGAINST THE PERSONS WHO HAVE GIVEN LOANS TO THE ASSESSEE. IT WAS ALSO FOUND THAT THE ASSESSEE HAD ADEQUATE BALANCES IN HIS BANK ACCOUNT; EVEN THEN TH E ASSESSEE HAD TAKEN LOANS FROM VARIOUS PERSONS IN CASH. THE ASSE SSEE PRODUCED 4 OF THE CREDITORS BEFORE THE AO FOR EXAMINATION IN WHIC H THEY COULD NOT PROVE THEIR SOURCE OF INCOME AND SOURCE OF GIVING OF LOAN S TO THE ASSESSEE ALONG WITH THEIR CREDITWORTHINESS. THEY ALSO COULD NOT PR OVE GENUINENESS OF THE TRANSACTIONS IN THE MATTER. IN THE REMAINING CASES OF THE CREDITORS, NONE OF THEM WAS PRODUCED BEFORE THE AO FOR EXAMINATION OF THE GENUINENESS OF THE TRANSACTIONS IN THE MATTER. NONE OF THE CRED ITORS HAS RESPONDED TO THE STATUTORY NOTICES ISSUED BY THE AO TO CONFIRM T HE GENUINENESS OF THE TRANSACTIONS IN THE MATTER. THEREFORE, IN THE REMAI NING CASES OF THE CREDITORS NOT ONLY THEIR CREDITWORTHINESS AND GENUI NENESS OF THE TRANSACTIONS HAVE NOT BEEN PROVED BUT THEIR IDENTIT Y HAVE ALSO NOT BEEN PROVED. THE ASSESSEE IN THE PAPER BOOK HAS FILED SO ME OF THE MATERIALS WHICH ACCORDING TO THE FINDINGS OF THE AO WERE NOT PRODUCED BEFORE HIM BECAUSE THE AO HAS NOTED THAT NONE OF THE DEPOSITOR S ARE TAX PAYER. ON CONSIDERATION OF THE DETAILS FURNISHED IN THE PAPER BOOK WOULD SHOW THAT IN THE CASE OF BHUMIN V. DESAI ONE SALARY CERTIFICA TE IS FILED FOR MAY 2004 TO JULY 2005 OF SOME PRIVATE DEALER. IN THE CASES O F THE CREDITORS NAMELY DEEPAK DESAI, MANOJ M. DESAI, PANKAJBHAI DESAI AND NAYNA DESAI THOUGH FORM NO.16 REGARDING RECEIPT OF SALARY HAVE BEEN FILED BUT SAME PERTAIN TO THE ASSESSMENT YEARS 2003-04 AND 2004-05 AND THE ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 9 ASSESSMENT YEAR UNDER APPEAL IS 2005-06 AND NO SALA RY CERTIFICATE OR FORM NO.16 HAVE BEEN FILED FOR THE ASSESSMENT YEAR UNDER APPEAL I.E. 2005-06. IN THE CASE OF OTHER CREDITORS KRUSHANKANT S. DESAIAND NAYNA DESAI, COPY OF FILING OF ACKNOWLEDGEMENT OF THE RET URNS HAVE BEEN FILED FOR ASSESSMENT YEAR 2005-06 BUT THE SAME ARE NOT SU PPORTED BY ANY EVIDENCE OF THEIR SOURCE TO GIVE LOAN TO THE ASSESS EE. IN OTHER CASES ONLY CONFIRMATIONS HAVE BEEN FILED. THE ABOVE FACTS, THE REFORE, WOULD PROVE THAT EVEN IF TWO OF THE CREDITORS ARE ASSESSED TO T AX BUT IN ALL THE CASES NO SOURCE OF INCOME OR EVIDENCE OF CREDITWORTHINESS OF THE CREDITORS HAS BEEN FILED. SINCE THE CREDITORS COULD NOT BE PRODUC ED EXCEPT 4 CREDITORS, THE AO COULD NOT EXAMINE THE GENUINENESS OF THE TRA NSACTIONS WITH THEM. AS THE TRANSACTIONS ARE CONDUCTED THROUGH CAS H, THEREFORE, THE BURDEN WAS HEAVY UPON THE ASSESSEE TO PROVE ALL THE INGREDIENTS OF SECTION 68 OF THE IT ACT. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE NOTED ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BECAUSE THE ASSESSEE HAS FAILED TO DISCHARGE ONUS UPON HIM TO PROVE THE IDENTITY OF THE CREDITOR S (EXCEPT FOR 4 CREDITORS), CREDITWORTHINESS OF THE CREDITORS AND G ENUINENESS OF THE TRANSACTIONS IN THE MATTER. THE CIRCUMSTANCES OF TH E CASE WHEN TESTED BY APPLYING THE TEST OF HUMAN PROBABILITIES, IT WOULD PROVE THAT THE ASSESSEE HAS INTRODUCED UNEXPLAINED CASH CREDIT IN THE BOOKS OF ACCOUNT. THE ASSESSEE HAS, THEREFORE, FAILED TO DISCHARGE THE ON US U/S 68 OF THE IT ACT. WE, THEREFORE, CONFIRM THE FINDINGS OF THE AUTHORIT IES BELOW AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 8. ON GROUND NO.2 OF THE APPEAL, THE ASSESSEE HAS C HALLENGED THE DISALLOWANCE OF SALARY OF RS.1,56,000/- PAID TO OFF ICE STAFF AND RS.36,000/- CONVEYANCE CHARGES PAID TO OFFICE STAFF . THE AO NOTED THAT THE ASSESSEE RECEIVED PAYMENT FROM THE COMPANIES WH ERE HE SUPPLIED LABORS. THE RECEIPTS WERE THEN DISBURSED TO THE LAB ORERS. THE AMOUNTS RECEIVED HAVE BEEN SHOWN EITHER PAID TO THE WORKERS OR OUTSTANDING IN ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 10 THE MONTH OF MARCH, 2005 WHICH HAVE BEEN SUBSEQUENT LY PAID IN THE FOLLOWING MONTH. BY DOING THIS, THE ASSESSEE GOT SE RVICE CHARGES AMOUNTING TO RS.4,70,884/- DURING THE YEAR. IT WAS FOUND THAT THE ASSESSEE HAS CLAIMED PAYMENT OF SALARY OF RS.1,56,0 00/- AND CONVEYANCE OF RS.36,000/-. SALARY AS WELL AS CONVEYANCE HAS BE EN PAID IN CASH. LOOKING TO THE NATURE OF BUSINESS, THE ABOVE CLAIM WAS FOUND TO BE NON- BUSINESS PURPOSE. THE AO, THEREFORE, REQUESTED THE ASSESSEE TO PRODUCE THE PAYEES OF THE SALARY AND CONVEYANCE EXPENSES. THE ASSESSEE HAS NOT EVEN FURNISHED ADDRESSES DESPITE REPEATED REQUEST A ND REMINDERS. THE AO NOTED THAT THE ASSESSEE HAS SUFFICIENT BALANCES IN THE BANK ACCOUNT BUT SALARY AND CONVEYANCE CHARGES HAVE BEEN PAID IN CASH. THE AO ALSO NOTED THAT CASH IS TAKEN AS LOAN FROM DIFFERENT PER SONS AS NOTED IN GROUND NO.1 ABOVE AND BY THIS MODUS-OPERANDI CASH H AVE BEEN BROUGHT INTO BOOKS TO INFLATE EXPENSES TO REDUCE TAX LIABIL ITY. THE ASSESSEE HAS NEITHER ESTABLISHED GENUINENESS OF THE SALARY AND C ONVEYANCE EXPENSES AND NOR PRODUCED ANY EVIDENCE IN THE FORM OF BILL O R VOUCHERS WERE FILED NOR THE PAYEES HAVE BEEN PRODUCED FOR EXAMINATION. ADDITIONS WERE ACCORDINGLY MADE. THE LEARNED CIT(A) ON THE SAME RE ASON CONFIRMED THE ADDITIONS. 9. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. THE ASSESSEE IN THE WRITTEN STATEMENT TRIED TO EXPLAIN THE REASONS FOR MAKING THE EXPENSES AND TRIED TO CO-RELATE THE SAME WITH THE B USINESS PURPOSE. 10. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. THE AO HAS SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT CONSIDERING THE NATURE OF THE BUSINESS O F THE ASSESSEE THERE WAS NO NEED FOR THE ASSESSEE TO SPEND THE ABOVE EXP ENSES. SINCE THE ASSESSEE CLAIMED DEDUCTION OF THE EXPENDITURE, THER EFORE, BURDEN WAS UPON THE ASSESSEE TO PROVE THAT EXPENDITURE HAVE BE EN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. TH E ASSESSEE DID NOT ITA NO.4353/AHD/2007 SHRI KISHORCHANDRA GULABBHAI DESAI VS ITO W-2, VALS AD 11 PRODUCE ANY BILLS OR VOUCHERS BEFORE THE AO FOR EXA MINATION. THE ASSESSEE ALSO DID NOT PRODUCE ANY OF THE PERSONS WH O HAVE RECEIVED SALARY AND CONVEYANCE BEFORE THE AO FOR VERIFYING T HE TRUTH. THE ASSESSEE HAS SUFFICIENT BANK BALANCES BUT ABOVE EXPENDITURE WAS INCURRED IN CASH OUT OF THE UNEXPLAINED CREDITS AS NOTED BY THE AO. IT WOULD, THEREFORE, SHOW THAT THE ASSESSEE TRIED TO BRING THE CASH IN T HE BOOKS OF ACCOUNT TO ENTER THE EXPENSES TO REDUCE THE TAX LIABILITY. AS THE ASSESSEE HAS FAILED TO PROVE THAT EXPENDITURE HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, WE DO NOT FIND ANY JUSTIFI CATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). WE CONFIRM HIS FIN DINGS AND DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE ALSO. 11. NO OTHER POINT IS ARGUED OR PRESSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-09-2010 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 30-09-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITA T, AHMEDABAD