Mishra Infrastructures Pvt. Ltd., Pune V. ITO, Wd.-11(1), Pune

ITA 512/PUN/2010

• Counselvise Citation: 51224514 RSA 2010
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 09-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Unexplained cash credit; Source of fund; Additional evidence; Corroborative evidences; Accommodation entries
• Section: 44AD; 131; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NOS. 512/PN/2010 (ASSTT. YEARS : 2005-06 ) MISHRA INFRASTRUCTURES PVT. LTD., 508, SAN MAHU COMPLEX, OPPOSITE POONA CLUB, ABOVE AAKAR FURNITURE, PUNE 411 001 .. APPELLANT PAN NO.AADCM7908F VS. ITO WARD-11(1),PUNE. .. RESPONDENT APPELLANT BY : SRI SUNIL GANOO RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 29-03-2012 DATE OF PRONOUNCEMENT : 24-05-2012 ORDER PER R.K. PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29-10- 2009 OF THE CIT(A)-I, PUNE RELATING TO THE ASSESSME NT YEAR 2005-06. 2. THE ASSESSEE IN ITS VARIOUS GROUNDS OF APPEAL HA S CHALLENGED THE ORDER OF THE LD. CIT(A) IN SUSTAINING ADDITION OF RS. 23,24,680/ - OUT OF ADDITION OF RS. 49,39,680/- MADE BY THE AO UNDER SECTION 68 OF THE IT ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT DURING THE C OURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT THE ASSESSEE HAS AVAILED UNSECURE D LOANS AMOUNTING TO RS. 49,30,680/- FROM THE FOLLOWING PERSONS : S.NO. NAME OF THE PERSON AMOUNT (RS.) 1 SMT. ANITA SINGH 4,95,000 2 MR. ROBIT DUBEY 4,90,000 3 MRS. RAM MURTY DEVI MISHRA 1,90,000 4 MR. RAM DEO AWASTHI 90,000 5 MR. RAM AVTAR SHUKLA 90,000 2 6 V.M. SANGLE 2,00,000 7 AVITECH ENGINEERING PVT. LTD., 50,000 8 VIRANGANA MISHRA 40,000 9 VIDHANCHANDRA MISHRA 65,000 10 CHANDRAHAS MISHRA 95,000 11 PRITI MISHRA 3,16,000 12 ANIL KUMAR MISHRA (HUF) 1,00,000 13 ANIL KUMAR MISHRA 27,09,680 TOTAL 49,30,680 4. THE AO ASKED THE ASSESSEE TO PRODUCE THE ABOVE P ERSONS ALONG WITH SUPPORTING EVIDENCES TO PROVE THE IDENTITY AND CRED IT WORTHINESS OF THE LOAN CREDITORS AND THE GENUINENESS OF THE TRANSACTIONS. 5. THE ASSESSEE PRODUCED THE PERSONS MENTIONED AT S L.NOS. 1,2, 4, 8, 9 AND 10. THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE PAR TIES MENTIONED AT SL.NOS. 3, 5 AND 6. THE AO NOTED FROM THE BANK STATEMENTS FURNISHE D BY THE ASSESSEE THAT IN MOST OF THE CASES THERE WAS CASH DEPOSIT IN THE BANK ACC OUNT OF THE RESPECTIVE PERSONS IMMEDIATELY BEFORE ISSUING OF DD/CHEQUES TOWARDS TH E LOANS. IT WAS OBSERVED BY THE AO THAT IN SOME CASES WHERE SOURCES OF FUNDS WE RE STATED TO BE OUT OF AGRICULTURAL INCOME, NO SUPPORTING EVIDENCES SUBSTA NTIATING RECEIPT OF AGRICULTURAL INCOME WAS FILED. IT WAS FURTHER OBSERVED BY THE A O THAT THE BANK ACCOUNTS THROUGH WHICH THE DDS WERE OBTAINED, WERE OPENED FOR MERELY CARRYING OUT THE LOAN TRANSACTIONS EVEN THOUGH THE PERSONS CLAIMED TO BE HAVING HUGE AGRICULTURAL INCOME. ACCORDING TO THE AO IN OTHER CASES ALSO WH ERE THE SOURCE OF FUNDS WERE CLAIMED TO BE AGRICULTURAL INCOME, THE CREDIT WORTH INESS OF THE CONCERNED PERSONS WAS NOT ESTABLISHED. SIMILARLY, THE AO NOTED THAT THE ASSESSEE HAS CREATED A CHAIN OF FLOW OF FUNDS WHEREIN THE CASH DEPOSITS MADE IN DIF FERENT PERSONS ACCOUNTS THROUGH EACH OTHERS ACCOUNTS AND FINALLY FOUND ITS WAY TO T HE ACCOUNTS OF THE ASSESSEE. ON THE BASIS OF THESE OBSERVATIONS AND FINDINGS, THE A O HELD THAT ASSESSEE FAILED TO SUBSTANTIATE THE UNSECURED LOANS IN QUESTION AND TH E LOANS SO CLAIMED TO HAVE BEEN 3 RECEIVED WERE ADDED BY THE AO AS UNEXPLAINED CASH C REDIT UNDER SECTION 68 OF THE IT ACT. 6. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT TH OUGH IT HAD PRODUCED ALL THE CREDITORS BEFORE THE ASSESSING OFFICER, HE RECORDED STATEMENTS U/S. 131 IN RESPECT OF ONLY 7 PERSONS AND THE REASONS FOR NOT RECORDING TH E STATEMENTS OF THE REMAINING PERSONS WERE NOT DISCLOSED. REFERRING TO THE OBSER VATION OF THE ASSESSING OFFICER THAT ALL THE PERSONS HAVE ADOPTED THE SAME MODUS OP ERANDI FOR GIVING THE LOANS, I.E., DEPOSITING CASH IMMEDIATELY BEFORE GIVING CHEQUES/D RAFTS, IT WAS SUBMITTED THAT SUCH AN ACTION ON THE PART OF THE CREDITORS MAY HAV E BEEN PROMPTED FOR COMPLYING WITH THE PROVISIONS OF SEC.269SS WHICH SPECIFIES TH AT NO CASH DEPOSITS OF RS. 20,000/- OR MORE SHOULD BE GIVEN. THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ITO, WD(5)(1), PUNE VS. SHRI JAYNARA YAN AGARWAL IN THE ITA NO.843/PN/97 FOR A.Y. 1994-95 WAS BROUGHT TO THE NO TICE OF THE CIT(A). 7. AS REGARDS THE OBSERVATION OF THE ASSESSING OFFI CER REGARDING NON PRODUCTION OF SUPPORTING DOCUMENTS FOR AGRICULTURAL INCOME, IT WAS SUBMITTED THAT PROOF REGARDING OWNERSHIP OF LAND IN THE FORM OF KISAN V AHI ISSUED BY THE GOVT. OF U.P. WHICH IS EQUIVALENT TO 7/12 EXTRACTS ISSUED IN MAHA RASTRA WAS SUBMITTED BEFORE THE ASSESSING OFFICER. SIMILARLY, OTHER VALID DOCUMENT S IN THE FORM OF KHASARA/KHATUVANI GIVING DETAILS OF SALE OF AGRICU LTURAL PRODUCTS WERE ALSO CLAIMED TO HAVE BEEN SUBMITTED BEFORE THE ASSESSING OFFICER . HOWEVER, ACCORDING TO THE AR, THE SAME WERE IGNORED BY THE ASSESSING OFFICER. IT WAS FURTHER POINTED OUT THAT THE ASSESSING OFFICER HAS ALSO DOUBTED THE EXISTENC E OF AGRICULTURAL LAND HOLDINGS BY THE DIRECTOR OF THE COMPANY, SHRI A.K. MISHRA AND H IS RELATIVES. IT WAS SUBMITTED THAT SHRI A.K. MISHRA, WHO IS DIRECTOR OF THE COMPA NY, IS A NATIVE OF HARDOL DIST. IN U.P. AND IT IS NATURAL FOR HIM TO HAVE HIS LAND HOL DINGS AT HIS NATIVE PLACE. AS 4 REGARDS VARIATION IN THE QUANTUM OF AGRICULTURAL IN COME FROM AGRICULTURAL LANDS, IT WAS CLARIFIED THAT AGRICULTURAL PRODUCE DEPENDS ON SO MANY FACTORS LIKE AVAILABILITY OF WATER, LABOUR, PERSONAL ATTENTION OF THE OWNER, QUALITY OF SOIL, SEEDS, FERTILIZERS USED AND SO ON. AS REGARDS THE INTER-TRANSFER OF F UNDS TO THE ACCOUNT OF VARIOUS PERSONS, IT WAS SUBMITTED THAT ALL THE PERSONS REFE RRED TO BY THE ASSESSING OFFICER ARE CLOSE RELATIVES AND SUCH PRACTICE OF TRANSFERRING F UNDS TO EACH OTHER HAVE BEEN FOLLOWED FOR YEARS TOGETHER. IT WAS ARGUED THAT SO FAR AS THERE IS NO VIOLATION OF THE PROVISIONS OF THE ACT, MERE INTER-TRANSFER OF TRANS ACTIONS CANNOT BE TAKEN AS A GROUND FOR DOUBTING THE GENUINENESS OF THE TRANSACTIONS. IT WAS STATED THAT ALL THE DOCUMENTARY EVIDENCES ESTABLISHING THE IDENTITY, AN D CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF THE LOANS WERE PRODUCE D BEFORE THE ASSESSING OFFICER AND SUCH DETAILS WERE AVAILABLE WITH HIM WHILE FINA LIZING THE ASSESSMENT. IT WAS ALSO STATED THAT THOUGH THERE WERE SOME CORRECTIONS IN ACTUAL AMOUNTS GIVEN BY SOME INDIVIDUALS, IT WILL NOT AFFECT THE TOTALITY OF LOA NS. THEY WERE ALSO PRODUCED BEFORE THE AO AT THE TIME OF HEARING. IT WAS ARGUED THAT NO ADDITIONAL EVIDENCE IS BEING PRODUCED AND THE REQUEST IS TO RECONSIDER THE EVIDE NCES ALREADY PRODUCED IN ORDER TO RENDER JUSTICE TO THE ASSESSEE. 8. ON THE ISSUE OF IDENTITY OF THE CREDITORS, IT WA S SUBMITTED THAT ALL THE CREDITORS WERE IDENTIFIED AND 8 PERSONS WERE FILING THEIR RET URNS IN THE SAME BUILDING, PROOF OF WHICH WAS SUBMITTED BEFORE THE ASSESSING OFFICER IN THE FORM OF PHOTOCOPIES OF THE RETURNS. VARIOUS DECISIONS WERE ALSO CITED BEFORE THE CIT(A) TO THE PROPOSITION THAT NO ADDITION U/S.68 CAN BE MADE IN THE INSTANT CASE. 9. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND EVIDENCES FILED THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. AFT ER CONSIDERING THE SAME THE 5 LEARNED CIT(A) DELETED THE ADDITIONS AMOUNTING TO R S. 26,06,000/- AND SUSTAINED THE ADDITION OF RS. 23,24,680/- IN THE CASE OF THE FOLL OWING PERSONS. S.NO. NAME OF THE PERSON ADDITION MADE BY THE A.O. ADDITION UPHELD 1 SMT. ANITA SINGH 4,95,000 4,95,000 2 MR. ROHIT DUBEY 4,90,000 4,90,000 3 MRS. RAM MURTY DEVI MISHRA 1,90,000 1,90,000 4 MR. RAM DEO AWASTHI 90,000 90,000 5 MR. RAM AVTAR SHUKLA 90,000 90,000 6 V. M. SANGLE 2,00,000 2,00,000 7 AVITECH ENGINEERING PVT. LTD. 50,000 0 8 VIRANGANA MISHRA 40,000 40,000 9 VIDHANCHANDRA MISHRA 65,000 0 10 CHANDRAHAS MISHRA 95,000 95,000 11 PRITI MISHRA 3,16,000 0 12 ANILKUMAR MISHRA (HUF) 1,00,000 1,00,000 13 ANILKUMAR MISHRA 27,09,680 5,34,680 TOTAL 49,30,680 23,24,680 10. IN THE CASE OF VIRANGANA MISHRA THE LEARNED CIT (A) NOTED THAT AN AMOUNT OF RS. 5,50,000/- WAS OUTSTANDING AS ON 31-03-2005 OUT OF WHICH AN AMOUNT OF RS. 40,000/- CLAIMED TO HAVE BEEN RECEIVED DURING THIS YEAR. HE NOTED THAT THE ABOVE LOAN CREDITOR IS A SMALL CONTRACTOR AND THE ENTIRE AMOUNT IS SHOWN TO HAVE BEEN ADVANCED OUT OF CAPITAL BUILT UP FROM 1992-1993 TO 2004-2005. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2005-06 WAS FILED ON LY ON 18-12-2007 AFTER THE SCRUTINY PROCEEDINGS STARTED. THE PERSON HAD NO FI NANCIAL CAPACITY TO ADVANCE RS. 5,50,000/- WHICH INCLUDES RS. 40,000/- ADVANCED DUR ING THE YEAR. HE THEREFORE DISBELIEVED THE CREDIT WORTHINESS OF THE LOAN CREDI TOR AND UPHELD THE ADDITION MADE BY THE AO AMOUNTING TO RS. 40,000/- IN THE CASE OF VIRANGANA MISHRA. 6 11. SIMILARLY IN THE CASE OF SRI A.K. MISHRA THE LE ARNED CIT(A) NOTED THAT THE DIRECTOR HAD ADVANCED A LOAN OF RS. 27,09,680/- AND HAS ALSO FILED RETURN OF INCOME DECLARING INCOME AT RS. 19,06,072/-. FROM THE DETA ILS OF BANK ACCOUNT FURNISHED BY THE ASSESSEE TO SUBSTANTIATE THE SOURCE OF LOAN OF RS. 27,09,680/- THE LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS CLAIMED TO HAVE RECEIVE D RS. 5,34,680/- TRANSFERRED FROM SMT. PRITI MISHRA, WIFE OF THE ASSESSEE, THE DETAIL S OF WHICH ARE AS UNDER : RS.1,20,000/- 19-07-2004 RS.3,00,000 /- 17-03-2005 RS.1,14,680/- 18-03-2005 IT WAS EXPLAINED THAT SMT. PRITI MISHRA IS THE PROP RIETOR OF M/S. OMKARESHWAR CONSTRUCTION AND THE LOAN GIVEN BY PRITI MISHRA IS OUT OF SOURCES AVAILABLE WITH HER AND OMKARESHWAR CONSTRUCTION. THE LEARNED CIT(A) N OTED FROM THE REMAND REPORT FURNISHED BY THE AO THAT IN THE MONTHS OF FEBRUARY AND MARCH, 2005 SMT. PRITI MISHRA HAS INCURRED EXPENDITURE WITHOUT HAVING SUFF ICIENT CASH BALANCE WHICH WAS VERIFIED FROM THE CASH BOOK. THEREFORE, THE LEARN ED CIT(A) HELD THAT THE TRANSFER OF FUNDS FROM SMT. PRITI MISHRAS ACCOUNT TO THE ASSES SEE EXPLAINING SOURCE DOES NOT INSPIRE CONFIDENCE SINCE THE CASH WAS DEPOSITED IN HER ACCOUNT PRIOR TO THE ISSUE OF CHEQUES TO SRI A.K. MISHRA. FURTHER, NO PROPER BOOK S OF ACCOUNTS ARE MAINTAINED BY SMT. PRITI MISHRA AND THE PROFIT IS BEING DISCLOSED U/S. 44AD OF THE I.T. ACT, HE, THEREFORE, WAS OF THE OPINION THAT THE AMOUNTS TRAN SFERRED FROM THE ACCOUNT OF SMT. PRITI MISHRA HAS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE FOR WHICH THE AO WAS JUSTIFIED IN TREATING THE CREDIT AS UNEXPLAINED CREDIT. 12. SO FAR AS THE LOAN OF RS. 1 LAKH FROM SRI A.K. MIRHSA (HUF) THE LD. CIT(A) NOTED THAT THE MODUS OPERANDI IN THIS CASE ALSO IS SAME, I.E. CASH OF EQUIVALENT AMOUNT WAS DEPOSITED PRIOR TO THE ISSUE OF CHEQUES TO THE ASSESSEE. THE ASSESSEE 7 COULD NOT EXPLAIN THE SOURCE OF CASH DEPOSIT SATISF ACTORILY EXCEPT GIVING THE STATEMENT THAT THE CREDITOR HAS GOT INDEPENDENT SOU RCE OF INCOME AND HAS FILED THE RETURN OF INCOME. HE NOTED THAT VERIFICATION OF T HE CAPITAL ACCOUNT OF THE CREDITOR SHOWS THAT IT HAS RECEIVED MEAGER PROFIT OF RS. 60, 030/- AND 89, 820/- FROM INDIRECT INCOME AND FROM MANGALAM CONSTRUCTION RESPECTIVELY. AFTER CONSIDERING THE DRAWINGS OF RS. 60,000/- SHOWN IN THE CAPITAL ACCOU NT, THE CREDITOR IS HARDLY LEFT WITH ANY SAVING TO ADVANCE LOAN TO THE ASSESSEE COM PANY. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, THE LEARNED CIT (A) UPHELD THE ADDITION OF RS. 1 LAKH ON THIS ACCOUNT ON THE GROUND THAT THE ASSESSE E FAILED TO PROVE THE CREDIT WORTHINESS OF THE CREDITOR. 13. SO FAR AS THE AMOUNT OF ADVANCE OF RS. 4,90,000 /- RECEIVED FROM ROHIT DUBEY THE LEARNED CIT(A) WHILE UPHOLDING THE ADDITION MAD E BY THE AO NOTED THAT THE CREDITOR IS RELATED TO THE DIRECTORS OF THE COMPANY . IDENTICAL AMOUNT WAS FOUND TO HAVE BEEN DEPOSITED IN THE BANK ACCOUNT OF THE CRED ITOR MAINTAINED WITH BANK OF MAHARASTRA EITHER ON THE SAME DAY OR A FEW DAYS PRI OR TO ISSUE OF CHEQUES TO THE ASSESSEE. FROM THE BALANCE SHEET FILED BY THE LOAN CREDITOR ALONG WITH THE RETURN OF INCOME FOR ASSESSMENT YEAR 2005-06 HE OBSERVED THAT CASH ON HAND SHOWN IN THE BALANCE SHEET AS ON 31-03-2005 WAS ONLY RS. 11,429/ - WHICH SHOWS THAT THE CREDITOR IS NOT IN THE HABIT OF KEEPING HUGE CASH ON HAND. FURTHER THE INCOME DECLARED FROM CONTRACT WORK HAS BEEN ESTIMATED U/S. 44AD. HE NOT ED FROM THE BANK ACCOUNT FURNISHED BY THE ASSESSEE THAT APART FROM THE CASH DEPOSIT WHICH WERE UTILIZED FOR ISSUE OF CHEQUES TO THE ASSESSEE THERE ARE NO OTHER CASH DEPOSITS OF SUCH MAGNITUDE. ALL THESE FACTS ACCORDING TO THE CIT(A) CLEARLY EST ABLISH THAT THE CREDITS ARE ONLY ACCOMMODATION ENTRIES AND THE AMOUNTS WERE TRANSFER RED AFTER RECEIPT OF EQUIVALENT AMOUNT IN CASH FOR THE ENTRY AMOUNT. THE LOAN CRED ITOR ALSO IN HIS STATEMENT 8 RECORDED DURING THE COURSE OF SCRUTINY PROCEEDINGS, COULD NOT FURNISH THE EVIDENCE TO PROVE THAT THE CASH DEPOSITS WERE MADE IN THE B ANK ACCOUNT OUT OF THE CONTRACT RECEIPTS AND NOT RECEIVED FROM THE ASSESSEE COMPANY . FURTHER, THERE WAS ALSO NO EVIDENCE PRODUCED BEFORE THE AO OR BEFORE HIM TO SU BSTANTIATE THAT THE CONTRACT RECEIPT WAS RECEIVED BY WAY OF CASH. HE OBSERVED THAT AFTER EXCLUDING THE TAX ON THE INCOME RETURNED AND THE AMOUNT PAID TOWARDS LIC , PPF AND AFTER DEDUCTING THE PERSONAL DRAWINGS CLAIMED TO BE RS. 60,000/- PER A NNUM THE LOAN CREDITOR IS HARDLY LEFT WITH ANY AMOUNT TO ADVANCE RS. 4,90,000/- TO THE ASSESSEE IN ONE FINANCIAL YEAR, I.E., 2004-05. THE OPENING CAPITAL OF THE ABOVE LO AN CREDITOR WAS LOCKED UP IN FIXED ASSETS ACQUIRED BY THE CREDITOR LIKE FLAT ETC. AFT ER EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE LEARNED CIT(A) DISBELIEVED THE CREDIT WORTHINESS OF THE ABOVE LOAN CREDITOR AND THE GENUINENESS OF THE TRANSACTION AND THEREFORE SUSTAINED THE ADDITIO N MADE BY THE AO ON THIS ACCOUNT. 14. SO FAR AS AMOUNT OF RS. 4,95,000/- OBTAINED FRO M ANITA SINGH HE OBSERVED THAT THE ABOVE NAMED PERSON IS ALSO HAVING A BANK A CCOUNT WITH BANK OF MAHARASTRA, SANGAMWADI BRANCH LIKE ROHIT DUBEY. THE BANK ACCOU NT STATEMENT OF THE ABOVE CREDITOR SHOWING FROM WHERE THE AMOUNTS WERE TRANSF ERRED WAS NOT FILED BEFORE THE CIT(A). IN THE ABSENCE OF BANK ACCOUNT EXTRACT FOR CONSIDERING THE MODUS OPERANDI OF DEPOSITING CASH IN THE BANK ACCOUNT OF THE CREDI TOR BEFORE TRANSFER OF AMOUNTS TO THE ACCOUNT OF THE ASSESSEE THE LEARNED CIT(A) HELD THAT THE ASSESSEE COULD NOT EXPLAIN SATISFACTORILY THE SOURCE OF THE LOAN. SIN CE THE ASSESSEE FAILED TO PRODUCE THE BANK ACCOUNT OF THE CREDITOR AND PROVE THE SOURCE O F CREDITS SATISFACTORILY IN THE BANK ACCOUNT THE LEARNED CIT(A) UPHELD THE ACTION OF THE AO MAKING ADDITION OF RS. 4,95,000/-. 9 15. IN THE CASE OF MRS. RAM MURTI DEVI MISHRA HE NO TED THAT DEMAND DRAFT WAS PURCHASED ON 14-08-2004 FROM THE SAME ORIENTAL BANK OF COMMERCE IN THE NAME OF THE ASSESSEE COMPANY FOR RS. 2 LAKHS OUT OF WHICH R S. 1,90,000/- WAS TRANSFERRED TO THE LOAN ACCOUNT AND RS. 10,000/- WAS TRANSFERRED T O SHARE CAPITAL ACCOUNT. FROM THE AFFIDAVIT FILED IN THE NAME OF THE CREDITOR STATING THAT THE AMOUNT WAS ADVANCED OUT OF GROCERIES SHOP RECEIPTS AND SALE OF BUFFALOES IN HIS NATIVE VILLAGE HE OBSERVED THAT THE LOAN CREDITOR HAS DECLARED INCOME U/S. 44AF AND NOT HAVING A BANK ACCOUNT. FROM THE COPY OF THE CAPITAL ACCOUNT HE OBSERVED TH AT OUT OF THE INCOME OF RS. 1,55,600/- DECLARED DURING THE YEAR THE LOAN CREDIT OR HAS WITHDRAWN ONLY RS. 15,000/- FOR HER HOUSEHOLD EXPENSES. ACCORDING TO THE CIT(A) IT IS HIGHLY IMPROBABLE THAT OUT OF MEAGER CAPITAL OF RS. 2,83,9 85/- THE LOAN CREDITOR HAS ADVANCED RS. 2 LAKHS TO THE ASSESSEE COMPANY DURING THE YEAR OUT OF WHICH RS. 1,90,000/- WAS TRANSFERRED TOWARDS LOAN ACCOUNT AND RS. 10,000/- WAS TRANSFERRED TOWARDS THE SHARE CAPITAL ACCOUNT. HE THEREFORE DI SBELIEVED THE GENUINENESS OF THE TRANSACTION AND CAPACITY OF THE LOAN CREDITOR AND U PHELD THE ADDITION MADE BY THE AO. 16. IN THE CASE OF SRI V.M. SANGLE THE LEARNED CIT( A) UPHELD THE ACTION OF THE AO ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUC E THE ABOVE PARTY BEFORE THE AO FOR HIS EXAMINATION. THEREFORE, THE IDENTITY OF TH E CREDITOR WAS NOT ESTABLISHED. FROM THE LIST OF THE UNSECURED LOAN ENCLOSED ALONGW ITH THE BALANCE SHEET FILED WITH THE RETURN OF INCOME AN AMOUNT OF RS. 6,90,000/- WA S SHOWN AS OUTSTANDING AS ON 31-03-2005. DURING THE ASSESSMENT PROCEEDINGS, IT WAS CLAIMED THAT RS. 6 LAKHS WAS WRONGLY CREDITED TO THIS CREDITOR INSTEAD OF CR EDITING TO OTHER CREDITORS NAMELY SRI RAM AVATAR SHUKLA AND SRI RAMDEV AVASTHI AND TH E OUTSTANDING BALANCE WAS ONLY RS. 90,000/-. HE OBSERVED THAT IN THIS CASE A LSO THE ASSESSEE WAS CHANGING ITS 10 CLAIM REGARDING THE ACTUAL AMOUNT RECEIVED FROM THE CREDITOR AND THE AMOUNT OUTSTANDING AS ON 31-03-2005. HE THEREFORE DOUBTED THE GENUINENESS OF THE TRANSACTION AND UPHELD THE ADDITION MADE BY THE AO. 17. AS REGARDS LOAN OBTAINED FROM SRI RAM AVTAR SH UKLA AND SRI RAM DEV AWASTHI THE LEARNED CIT(A) NOTED THAT THE ASSESSEE AND THE CREDITORS HAVE TAKEN DIFFERENT STANDS AT DIFFERENT POINTS OF TIME AND TH E AMOUNTS SHOWN TO HAVE BEEN RECEIVED AND OUTSTANDING AS ON 31-03-2005 VARIES FR OM TIME TO TIME. AS PER THE LIST OF CREDITORS ENCLOSED TO THE BALANCE SHEET THE AMOU NTS SHOWN AS OUTSTANDING IN THESE TWO CASES WAS RS. 90,000/- EACH AS ON 31-03-2005. HOWEVER IN THE CONFIRMATION LETTER FILED IN THE FORM OF LEDGER ACCOUNT AN AMOUN T OF RS. 90,000/- IS SHOWN TO HAVE BEEN RECEIVED FROM THESE TWO PERSONS IN AUGUST 2004 . AS PER THE DETAILS FURNISHED A SUM OF RS. 1 LAKH EACH WAS RECEIVED FROM THE ABOV E PERSONS BY WAY OF DEMAND DRAFT FROM THE SAME HARDOI BRANCH OF ORIENTAL BANK OF COMMERCE OUT OF WHICH RS. 90,000/- WAS CREDITED TO UNSECURED LOAN ACCOUNT AND RS. 10,000/- WAS CREDITED TO SHARE CAPITAL ACCOUNT. HE NOTED THAT DURING THE AS SESSMENT PROCEEDINGS THE ASSESSEE MADE A CLAIM THAT IT RECEIVED RS. 4 LAKHS THROUGH D D OBTAINED FROM ORIENTAL BANK OF COMMERCE FROM EACH OF THE CREDITORS IN THE EARLI ER YEAR. THEREFORE THE OUTSTANDING BALANCE IN THESE TWO CASES SHOULD HAVE BEEN RS. 4,90,000/-EACH AS ON 31-03-2005. WHEN THIS DISCREPANCY WAS CONFRONTED T O THE ASSESSEE IT WAS STATED THAT IN THE LIST OF UNSECURED LOANS ENCLOSED TO THE RETURN AN AMOUNT OF RS. 3 LAKHS EACH WAS WRONGLY CREDITED TO SRI. V.M. SANGLE AND B ALANCE OUTSTANDING IN THE NAME WAS SHOWN AS RS. 6,90,000/- WHEREAS IT SHOULD HAVE BEEN RS. 90,000/-. HOWEVER, DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE MADE ALTOGETHER DIFFERENT CLAIM REGARDING THE SOURCE OF INCOME OF THE CREDITOR AND STATED THAT THE COMPANY RECEIVED RS. 2 LAKHS FROM SRI V.M. SANGLE DURING THE YEAR. IN VIEW OF THE ABOVE AND IN 11 ABSENCE OF ANY SATISFACTORY EXPLANATION REGARDING T HE SOURCE OF ADVANCING THE LOAN AND IN ABSENCE OF ANY SATISFACTORY EXPLANATION AS T O WHY THEY KEPT SUCH HUGE AMOUNT OF CASH WITH THEM OUT OF THEIR ALLEGED SAVIN GS FROM AGRICULTURAL INCOME, THE LEARNED CIT(A) CONFIRMED THE ABOVE TWO ADDITIONS. 18. AS REGARDS THE AMOUNT OF RS. 95,000/- OBTAINED FROM SRI CHANDRAHAS MISHRA, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY T HE AO ON THE GROUND THAT THERE IS SOME DISCREPANCY IN THE UNSECURED LOAN OUTSTANDI NG AS ON 31-03-2005 AT RS. 10,95,000/- WHEREAS CONFIRMATION LETTER SHOWS THE O UTSTANDING AT RS. 15,95,000/-. DURING THE COURSE OF APPEAL PROCEEDINGS THE ADDITIO NAL EVIDENCES FILED BY THE ASSESSEE WAS REJECTED BY THE CIT(A) AS INADMISSIBLE . FURTHER, HE OBSERVED THAT THE LOAN CREDITOR HAS FURNISHED EVIDENCES IN SUPPORT OF HAVING EARNED AGRICULTURAL INCOME IN THE FORM OF RECEIPTS ISSUED BY COLD STORA GE UNITS FOR PERIOD SUBSEQUENT TO THE ASSESSMENT YEAR IN APPEAL. HOWEVER, DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THE ENCLOSURES IN THE FORM OF CO LD STORAGE RECEIPTS WHICH PERTAIN TO THE PERIOD RELEVANT TO THE ASSESSMENT YEAR IN AP PEAL. HE FURTHER NOTED THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE FILED THE CONFI RMATION LETTER THAT HE HAS RECEIVED ONLY RS.95,000/- FROM THE CREDITOR DURING THE YEAR AND IN THE AFFIDAVIT IT HAS BEEN MENTIONED THAT IT HAS RECEIVED RS. 2,95,000/- FROM THE SAME PERSON. THEREFORE, HE WAS OF THE OPINION THAT NO CREDENCE CAN BE GIVEN TO THE SELF SERVING AFFIDAVIT FILED BY THE ASSESSEE IN THE NAME OF THE CREDITOR. HE AC CORDINGLY UPHELD THE ADDITION MADE BY THE AO. 19. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE, DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE HIM AND RELYING ON V ARIOUS OTHER CASE DECISIONS THE LEARNED CIT(A) SUSTAINED ADDITION TO THE TUNE OF RS . 23,24,680/- OUT OF THE TOTAL 12 ADDITION OF RS. 49,30,680/- ON THE GROUND THAT THE ASSESSEE FAILED TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS AND CREDIT WORTHINE SS OF THE CREDITORS. 20. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE AS SESSEE IN IN APPEAL BEFORE US. THERE IS NO APPEAL FILED BY THE REVENUE FOR THE PAR T-RELIEF GIVEN BY THE CIT(A). 21. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE CHAL LENGING THE ORDER OF THE LD. CIT(A) FOR PARTLY SUSTAINING THE ADDITION SUBMITTED THAT THE ASSESSEE HAS FURNISHED SUFFICIENT DETAILS TO ESTABLISH THE IDENTITY AND CR EDIT WORTHINESS OF THE THE LOAN CREDITORS AND GENUINENESS OF THE TRANSACTIONS. THE REFORE, THE INITIAL BURDEN HAS BEEN DISCHARGED BY THE ASSESSEE. 22. REFERRING TO THE LOAN OBTAINED FROM SMT. ANITA SINGH LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID LOAN CREDITOR IS N OT RELATED TO ANY OF THE DIRECTORS OF THE ASSESSEE COMPANY NOR SHE IS A SHARE HOLDER. RE FERRING TO PAGE NOS. 1 TO 10 OF THE PAPER BOOK HE SUBMITTED THAT THE ASSESSEE HAS F ILED THE COPY OF ACKNOWLEDGEMENT OF RETURN OF THE INCOME TAX RETURN, COPY OF COMPUTATION OF TOTAL INCOME ALONG WITH BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDING 31-03-2005. THE LOAN CONFIRMATION LETTER OF SMT. A NITA SINGH WAS FILED BEFORE THE AO. SHE HAD APPEARED BEFORE THE AO AND HER STATEM ENT WAS RECORDED U/S.131. DURING THE COURSE OF SUCH RECORDING OF STATEMENT SM T. ANITA SINGH HAS GIVEN HER PAN NUMBER, HER BANK ACCOUNT AND HAS CONFIRMED TO H AVE GIVEN THE LOAN OF RS. 4,95,000/- AND INVESTMENT IN SHARES AMOUNTING TO RS . 10,000/- . REFERRING TO PAGE NO. 31 OF THE CIT(A)S ORDER HE SUBMITTED THAT THE LEARNED CIT(A) HAS MENTIONED THAT IN THE ABSENCE OF BANK ACCOUNT EXTRACTS THE SO URCE OF LOAN COULD NOT BE VERIFIED. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAS NEVER ASKED THE CREDITOR TO FILE HER BANK ACCOUNT. REFERRING TO THE DECISIO N OF HONBLE SUPREME COURT IN THE 13 CASE OF CIT VS. ORISSA CORPORATION PVT. LTD., REPOR TED IN 159 ITR 78 HE DREW THE ATTENTION OF THE BENCH TO PARA 13 OF THE ORDER AND SUBMITTED THAT WHEN THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CR EDITOR AND WHEN IT WAS IN KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITOR WAS AN INCOME TAX ASSESSEE AND THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITOR TO FIND OUT WHETHER THE PERSON IS CREDIT WORTHY OR NOT AND WHE N THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITOR THEN IN THAT CIRCUMSTANCE THE ASSESSEE COULD NOT DO ANYTHING FURTHER. IN THAT PREMISES IF THE TRIBU NAL CAME TO THE CONCLUSION THAT ASSESSEE HAS DISCHARGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH CONCLUSION WAS UNREASONABLE OR PERVERSE OR BIA SED ON NO EVIDENCE. HE ACCORDINGLY SUBMITTED THAT NO ADDITION COULD HAVE B EEN MADE U/S. 68 IN THE CASE OF SMT. ANITA SINGH. 23. SO FAR AS THE AMOUNT RECEIVED FROM SRI ROHIT DU BEY AMOUNTING TO RS. 4,90,000/- THE LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSEE IS THE BROTHER OF WIFE OF THE MANAGING DIRECTOR SRI ANIL K UMAR SINGH. REFERRING TO PAPER BOOK PAGE NOS. 11 TO 19 HE SUBMITTED THE ACKNOWLEDG EMENT OF THE INCOME TAX RETURN, STATEMENT OF INCOME FOR ASSESSMENT YEAR 200 5-06, BALANCE SHEET AS ON 31-03- 2005, LOAN CONFIRMATION AND BANK ACCOUNT DETAILS OF THE ABOVE PERSON WAS FILED BEFORE THE AO. HE HAD APPEARED BEFORE THE AO IN RE SPONSE TO SUMMON U/S. 131 AND HAS GIVEN HIS STATEMENT CONFIRMING TO HAVE ADVANCED THE LOAN. THEREFORE, THE ASSESSEE HAS DISCHARGED THE ONUS CAST ON IT AND THE SAME ARGUMENTS AS MADE IN THE CASE OF SMT. ANITA SINGH WILL BE APPLICABLE. 24. AS REGARDS THE LOAN OBTAINED FROM SMT. RAM MURT I DEVI MISHRA AMOUNTING TO RS. 1,90,000/- LEARNED COUNSEL FOR THE ASSESSEE SUB MITTED THAT SHE IS THE MOTHER OF 14 DIRECTOR SRI A.K. MISHRA, HOLDS AROUND 100 ACRES OF LAND AND DERIVES INCOME FROM SALE OF BUFFALOES AS WELL AS INCOME FROM GROCERY SH OP. REFERRING TO PAPER BOOK PAGE NOS. 20 TO 26 HE SUBMITTED THAT HER ACKNOWLEDG EMENT OF INCOME TAX RETURN ALONG WITH CAPITAL ACCOUNT WAS FILED BEFORE THE AO, BALANCE SHEET AS ON 31-03-2005 AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDING 31- 03-2005 WERE ALSO FILED. THE LOAN CREDITOR HAS FILED A LOAN CONFIRMATION LETTER. COPY OF THE DEMAND DRAFT AND AFFIDAVIT CONFIRMING TO HAVE ADVANCED LOAN OF RS. 1 ,90,000/- AND INVESTMENT IN SHARES AMOUNTING TO RS.10,000/- WERE FILED BEFORE T HE AO. THEREFORE, NO ADDITION COULD HAVE BEEN MADE. 25. AS REGARDS THE LOAN OF RS. 90,000/- EACH OBTAIN ED FROM SRI RAMDEV AWASTHI AND SRI RAM AVATAR SHUKLA LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ABOVE LOAN CREDITORS HAVE FILED THEIR AFFIDAVITS, D ETAILS OF THEIR LAND HOLDINGS ALONG WITH KISAN BAHI AND RECEIPTS ISSUED BY KRISHI UTPAD AN MANDI SAMITHI, THEY HAVE APPEARED BEFORE THE AO AND HAVE GIVEN THEIR STATEME NTS IN RESPONSE TO SUMMONS U/S. 131 AND HAD CONFIRMED TO HAVE GIVEN THE LOAN O F RS. 90,000/- EACH. 26. AS REGARDS THE LOAN OF RS. 2,00,000/- OBTAINED FROM SRI VISHNU MOHAN SANGLE HE SUBMITTED THAT THE LOAN CREDITOR IS AN INCOME TA X ASSESSEE AND HIS INCOME TAX ACKNOWLEDGEMENT FOR ASSESSMENT YEAR 2005-06 ALONG W ITH COMPUTATION OF INCOME WAS FILED. HE HAS DECLARED AN INCOME OF RS. 4,66,6 90/- FOR THE ASSESSMENT YEAR 2005-06 AND HAS PAID TAX OF MORE THAN RS. 1,08,000/ - . TDS DURING THE YEAR WAS RS. 1,20,599/-. THEREFORE, THE LOAN COULD NOT HAVE BEE N SIMPLY DISBELIEVED. 27. AS REGARDS THE LOAN OF RS. 40,000/- OBTAINED F ROM SMT. VIRANGANA MISHRA THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO P APER BOOK PAGE NOS. 56 TO 66 15 DREW THE ATTENTION THE BENCH TO THE INCOME TAX ACKN OWLEDGEMENT, COMPUTATION OF TOTAL INCOME, BALANCE SHEET AS ON 31-03-2005, PROFI T AND LOSS ACCOUNT FOR THE YEAR ENDING 31-03-2005, LOAN CONFIRMATION LETTER ETC. H E SUBMITTED THAT THE LOAN CREDITOR HAS APPEARED BEFORE THE AO IN RESPONSE TO SUMMONS U /S. 131, HER STATEMENT WAS RECORDED AND SHE HAS CONFIRMED TO HAVE GIVEN THE LO AN OF RS. 5,50,000/- TO THE ASSESSEE COMPANY WHICH INCLUDES IMPUGNED LOAN OF RS . 40,000 DURING THE YEAR. 28. AS REGARDS THE LOAN OBTAINED FROM SRI CHANDRAHA S MISHRA THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE AFFIDAVIT FILED BY THE ABOVE PERSON ALONG WITH HIS LAND HOLDING RECORDS, KISAN B AHI ETC., WHICH IS PLACED AT PAPER BOOK PAGE NOS. 67 TO 93. HE SUBMITTED THAT THE ASS ESSEE VIDE LETTER DATED 21-12- 2007 HAS GIVEN THE CONFIRMATION TO THE AO STATING T HE REASON FOR GIVING THE AMOUNT BY DRAFT. HE SUBMITTED THAT THE ABOVE LOAN CREDITO R APPEARED BEFORE THE AO IN RESPONSE TO SUMMONS U/S. 131 AND HAS MADE A STATEME NT CONFIRMING TO HAVE GIVEN THE LOAN OF RS. 15,95,000/- TO THE ASSESSEE OUT OF HIS AGRICULTURAL INCOME. 29. AS REGARDS THE LOAN ADVANCED BY SRI ANIL KUMAR MISHRA (HUF) THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO PAPER BOOK PAGE NOS. 98 TO 106 AND SUBMITTED THAT THE COPY OF THE INCOME T AX ACKNOWLEDGEMENT, COMPUTATION OF TOTAL INCOME, CAPITAL ACCOUNT, BALAN CE SHEET AS ON 31-03-2005 ETC. WERE FILED. HE SUBMITTED THAT ALL THESE DETAILS WE RE FURNISHED BEFORE THE AO TO PROVE THE CREDIT WORTHINESS OF THE HUF. FURTHER TH E CAPITAL OF THE HUF AS ON 01-04- 2004 WAS RS. 10,24,817/-, THE PROFIT FROM INDIRECT INCOME WAS RS. 60,630/- AND PROFIT FROM MANGALAM CONSTRUCTION WAS RS. 89,826/-. THEREFORE, THERE WAS SUFFICIENT BALANCE IN THE HANDS OF THE HUF TO EXPLA IN THE SOURCE OF RS. 1 LAKH ADVANCED DURING THE YEAR. 16 30. AS REGARDS THE LOAN OBTAINED FROM SRI ANIL KUMA R MISHRA THE LEARNED COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO ASSESSMENT ORDER FOR A.Y. 2005- 06 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETE RMINED AS RS. 20,50,380/-. REFERRING TO THE BALANCE SHEET OF SRI ANIL KUMAR MI SHRA AS ON 31-03-2005, A COPY OF WHICH IS PLACED AT PAPER BOOK PAGE NO. 112, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT CAPITAL ACCOUNT OF SRI ANIL KUMAR MI SHRA AS ON 31-03-2005 WAS RS. 1,50,27,029/-. 31. REFERRING TO THE DECISION OF HONBLE GAUHATI HI GH COURT IN THE CASE OF NEMI CHAND KOTHARI VS. CIT REPORTED IN 264 ITR 254 (GAU) HE SUBMITTED THAT ONCE THE ASSESSEE HAS DISCLOSED THE SOURCE(S) FROM WHICH HE HAS RECEIVED LOANS HIS BURDEN STANDS DISCHARGED AND IT IS NOT THE BURDEN OF THE A SSESSEE TO SHOW THE SOURCE OF HIS CREDITOR OR TO PROVE THE CREDIT WORTHINESS OF THE S OURCE OF THE SUB CREDITORS. 32. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRADING CO. LTD. VS. CIT REPORTED IN 49 ITR 273 (BOM) HE SUBMITTED THAT WHEN THE ENTRY STANDS IN THE NAME OF A THIRD PARTY AND THE ASSESSEE SATISFIES THE AO AS TO THE IDENTITY OF THE THIRD PARTY AND ALSO SUPP LIES SUCH OTHER EVIDENCE WHICH WILL SHOW , PRIMA FACIE, THAT THE ENTRY IS NOT FICTITIOU S, THE INITIAL BURDEN WHICH LIES ON THE ASSESSEE CAN BE SAID TO HAVE BEEN DISCHARGED BY HIM AND IT WILL NOT THEREAFTER BE FOR THE ASSESSEE TO EXPLAIN FURTHER AS TO WHY OR IN WHA T CIRCUMSTANCES THE THIRD PARTY OBTAINED MONEY AND HOW OR WHY HE CAME TO MAKE A DEP OSIT OF THE SAME WITH THE ASSESSEE. THE BURDEN THEREAFTER SHIFTS ON TO THE R EVENUE TO SHOW THAT THE ENTRY REPRESENTED THE ASSESSEES SUPPRESSED INCOME. THE DEPARTMENT HAS TO BE IN POSSESSION OF SUFFICIENT AND ADEQUATE MATERIAL IN O RDER TO REACH TO SUCH CONCLUSION. 17 33. REFERRING TO THE DECISION OF HONBLE GAUHATI HI GH COURT IN THE CASE OF SRI P.K. SETHI VS. CIT REPORTED IN 286 ITR 319 (GAU) HE SUBMITTED THAT WHEN ALL THE CREDITORS ARE INCOME TAX ASSESSEES BEFORE THE SAME ITO AND THE LATTER HAVING ACCEPTED THE GENUINENESS OF THE LOAN TRANSACTIONS I N THE CASE OF THE CREDITORS, THE CASH CREDITS COULD NOT BE TREATED AS NON-GENUINE IN THE HANDS OF THE ASSESSEE. 34. REFERRING TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF KANHAIALAL JANGID VS. ACIT REPORTED IN 217 CTR 354 HE SUBMITTED THAT WHEN THE ASSESSEE FILED CONFIRMATION FROM THE CREDITOR AND P RODUCED THE CREDITOR BEFORE THE AO WHERE THE CREDITOR AFFIRMED ADVANCEMENT OF LOAN TO THE ASSESSEE, NO ADDITION U/S. 68 COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE GROUND THAT THE CREDITOR COULD NOT SATISFACTORILY EXPLAIN THE SOURCE OF THE LOAN. THE BURDEN OF THE ASSESSEE IN SUCH CASES DOES NOT EXTEND TO PROVE THE SOURCE OF T HE CREDITOR FROM WHERE HE MADE THE ADVANCE TO THE ASSESSEE. THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) HAS ADOPTED A PICK UP AND CHOOSE POL ICY. HE HAS ACCEPTED OTHER LOANS UNDER IDENTICAL CIRCUMSTANCES WHEREAS SUSTAIN ED THE ADDITION IN SOME OF THE LOANS. HE ALSO RELIED ON VARIOUS OTHER DECISIONS I NCLUDING THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF NEHA RATHI VS. ACIT VIDE ITA NO. 307/PN/2010 DATED 27-07-2011 FOR ASSESSMENT YEAR 20 04-05, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORTS LTD. REPORTED IN 216 CTR 195 (SC) AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DIVINE LEASING & FINANCE REPORTED IN 299 ITR 268 35. LEARNED D.R. ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT A COLOURABLE DEVICE HAS BEEN UTILIZE D BY THE ASSESSEE FOR INTRODUCING UNACCOUNTAL INCOME IN THE FORM OF LOAN CREDITORS. SINCE NO SATISFACTORY 18 EXPLANATION/EVIDENCE WAS FILED AND BANK ACCOUNTS WE RE NOT PRODUCED IN SOME OF THE CASES, THEREFORE, ADDITION SUSTAINED BY THE CIT(A) BEING JUSTIFIED SHOULD BE UPHELD. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE AO HAS ISSUED SUMMONS AND RECORDED STATEMENTS IN THE CASE OF SMT. ANITA SINGH, MR. ROHIT DUBEY, SRI RAMDEV AVASTHI, SMT. VIRANGANA MISHRA AN D SRI CHANDRAHAS ATMARAM MISHRA. ALL THESE PERSONS HAVE FILED THE VARIOUS D ETAILS BEFORE THE AO AND HAVE CONFIRMED TO HAVE GIVEN THE LOANS TO THE ASSESSEE C OMPANY. 37. IT HAS BEEN HELD BY THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF KANAIAHLAL VS. CIT(SUPRA) THAT WHEN THE ASSESSEE FI LED CONFIRMATION FROM THE CREDITOR AND PRODUCED THE CREDITOR BEFORE THE AO WH ERE THE CREDITOR AFFIRMED ADVANCEMENT OF LOAN TO THE ASSESSEE, NO ADDITION U/ S. 68 COULD BE MADE IN THE HANDS OF THE ASSESSEE ON THE GROUND THAT THE CREDITOR COU LD NOT SATISFACTORILY EXPLAIN THE SOURCE OF LOAN. BURDEN OF THE ASSESSEE FOR SUCH CA SES DOES NOT EXTEND TO PROVE THE SOURCE OF THE CREDITOR FROM WHERE HE MADE THE ADVAN CE TO THE ASSESSEE. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ORIENT TRA DING CO. LTD., (SUPRA) HAS HELD THAT WHEN THE ENTRY STANDS IN THE NAME OF A THIRD P ARTY AND THE ASSESSEE SATISFIES THE ITO AS TO THE IDENTITY OF THE THIRD PARTY AND ALSO SUPPLIES SUCH OTHER EVIDENCE WHICH WILL SHOW, PRIMA-FACIE, THAT THE ENTRY IS NOT FICTI TIOUS, THE INITIAL BURDEN WHICH LIES ON HIM CAN BE SAID TO HAVE BEEN DISCHARGED BY HIM AND IT WILL NOT THEREAFTER BE FOR THE ASSESSEE TO EXPLAIN HOW OR IN WHAT CIRCUMSTANCE S THE THIRD PARTY OBTAINED MONEY AND HOW OR WHY HE CAME TO MAKE A DEPOSIT OF THE SAM E WITH THE ASSESSEE. THE BURDEN THEREAFTER SHIFTS ON TO THE REVENUE TO SHOW THAT THE PARTY REPRESENTED 19 ASSESSEES SUPPRESSED INCOME. THE DEPARTMENT HAS T O BE IN POSSESSION OF SUFFICIENT AND ADEQUATE MATERIAL IN ORDER TO MAKE ADDITION U/S . 68 OF THE INCOME TAX ACT. THE HONBLE GAUHATI HIGH COURT IN THE CASE OF NEMI CHAN D KOTHARI VS. CIT AND ANOTHER (SUPRA) HAS HELD THAT ONCE THE ASSESSEE HAS DISCLOSED THE SOURCE FROM WHICH HE HAS RECEIVED THE LOANS, THE BURDEN STANDS DISCHA RGED. IT IS NOT THE BURDEN OF THE ASSESSEE TO SHOW THE SOURCE (S) OF HIS CREDITORS OR TO PROVE THE CREDIT WORTHINESS OF THE SOURCES OF THE SUB CREDITORS. SINCE IN THE INS TANT CASE THE ASSESSEE HAS PRODUCED THE ABOVE LOAN CREDITORS BEFORE THE AO WITH SUFFICI ENT DETAILS LIKE ACKNOWLEDGMENTS OF INCOME TAX RETURNS, COPIES OF PR OFIT AND LOSS ACCOUNTS, BALANCE SHEETS, CONFIRMATION LETTERS, BANK STATEMEN TS ETC. AND SINCE THEIR STATEMENT HAVE BEEN RECORDED BY AO U/S. 131 AND ALL OF THEM H AVE CONFIRMED TO HAVE GIVEN THE LOANS, THEREFORE, IN VIEW OF THE DECISIONS CITE D ABOVE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS DISCHARGED THE BURDEN CAST ON HIM IN TERMS OF SECTION 68 OF THE INCOME TAX ACT. NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE THAT THE ASSESSEES OWN MONEY HAS COME BACK TO HIM THROU GH THESE ALLEGED LOANS. THEREFORE, THE ORDER OF THE CIT(A) CONFIRMING THE A BOVE ADDITIONS IS SET-ASIDE AND AO IS DIRECTED TO DELETE THE ABOVE ADDITIONS. 38. SO FAR AS LOANS OF RS. 1,90,000 RECEIVED FROM S MT. RAM MURTI DEVI MISHRA, MOTHER OF THE DIRECTOR, WE FIND SHE IS AN INCOME TA X ASSESSEE AND DERIVES INCOME FROM GROCERY SHOP AND SALE OF BUFFALOES AND HOLDS A ROUND 100 ACRES OF AGRICULTURAL LAND. SHE HAS ALSO FILED AN AFFIDAVIT STATING THAT SHE IS FILING RETURN OF INCOME SINCE ASSESSMENT YEAR 1994-1995. THE AFFIDAVIT FILED BY THE LOAN CREDITOR HAS NOT BEEN PROVED TO BE FALSE OR INCORRECT. MERELY BECAUSE TH E PROFIT IS BEING DETERMINED U/S. 44AF OR THAT THE LADY DOES NOT HAVE ANY BANK ACCOUN T FOR WHICH SHE ADVANCED THE LOAN BY DEMAND DRAFT TO AVOID THE RIGOURS OF PROVIS ION OF SECTION 269SS, THE SAME IN 20 OUR OPINION, CANNOT BE A GROUND TO DISBELIEVE THE L OAN AMOUNT. WE, THEREFORE, SET- ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIR ECT THE AO TO DELETE THE ADDITION. 39. AS REGARDS THE LOAN FROM SRI ANIL KUMAR MISHRA, DIRECTOR, WE FIND OUT OF TOTAL AMOUNT OF RS. 27,09,680/- THE CIT(A) HAS SUST AINED RS. 5,34,680/- ON THE GROUND THAT THE AMOUNT OBTAINED BY HIM FROM SMT. PR ITI MISHRA DOES NOT INSPIRE CONFIDENCE BECAUSE SHE HAD NO SUFFICIENT CASH BALAN CE ON THOSE DAYS. WE FIND THE AMOUNT ADVANCED BY SMT. PRITI MISHRA AMOUNTING TO R S. 3,16,000/- HAS BEEN ACCEPTED BY THE CIT(A). MERELY BECAUSE HER INCOME IS ASSESSED U/S.44AD, THE SAME, IN OUR OPINION, CANNOT BE A GROUND TO DISBELI EVE THE LOAN OBTAINED FROM SMT. PRITI MISHRA BY SRI A.K. MISHRA WHO HAS ADVANCED A S LOAN TO THE ASSESSEE COMPANY. IN OUR OPINION, ADDITION, IF ANY, IN THE INSTANT CA SE COULD HAVE BEEN MADE IN THE HANDS OF SRI A.K. MISHRA BUT DEFINITELY NOT IN THE HANDS OF THE ASSESSEE COMPANY. WE, THEREFORE, SET-ASIDE THE ORDER OF THE CIT(A) AN D DIRECT THE AO TO DELETE THIS ADDITION. 40. SO FAR AS THE LOAN OF RS. 1 LAKH OBTAINED FROM SRI A.K. MISHRA (HUF) WE FIND THE HUF IS ASSESSED TO TAX AND THE COPY OF THE ACKN OWLEDGEMENT OF INCOME TAX RETURN, COMPUTATION OF INCOME, BALANCE SHEET ETC. W ERE FILED BEFORE THE AO. THE CREDITOR HAS SHOWN PROFIT OF RS. 60,630/- AS INDIRE CT INCOME AND RS. 89,820 AS PROFIT FROM MANGALAM CONSTRUCTION. AFTER CONSIDERING THE OPENING CAPITAL AND INCOME DURING THE YEAR AND THE PERSONAL DRAWINGS DURING TH E YEAR THE HUF IS LEFT WITH SUFFICIENT FUNDS TO ADVANCE LOAN OF RS. 1 LAKH DURI NG THE YEAR. IN VIEW OF THE ABOVE AND IN VIEW OF OUR OBSERVATIONS WHILE ACCEPTING LOA N FROM SMT. ANITA SINGH AND MR. ROHIT DUBEY, WE SET-ASIDE THE ORDER OF THE CIT( A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. 21 41. SO FAR AS THE LOAN OF RS. 2 LAKHS OBTAINED FROM SRI VISHNU MOHAN SANGLE, WE FIND ALTHOUGH VARIOUS DETAILS WERE FURNISHED BEFORE THE AO THE LOAN CREDITOR WAS NOT PRODUCED BEFORE HIM FOR HIS VERIFICATION. THEREFOR E, THE IDENTITY OF THE PERSON REMAINS TO BE VERIFIED. CONSIDERING THE TOTALITY O F THE FACTS OF THE CASE WE DIRECT THE AO TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUC E THE ABOVE LOAN CREDITOR AND SATISFY THE CREDIT WORTHINESS OF THE LOAN CREDITOR. ACCORDINGLY, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 42. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF MAY 2012. SD/- SD/- (I.C. SUDHIR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED THE 24 TH MAY 2012 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE ITO WARD-11 (1), PUNE 3. THE CIT(A)I, PUNE 4. THE CIT CONCERNED 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER PRIVAT E SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE 22