M/s Shreeji Exports, RAJKOT-GUJARAT V. The Asstt. Commr. Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 55/RJT/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1252 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D R CHHATRE
• Keywords: Unexplained cash credit; Onus to prove
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT (CONDUCTED THROUGH E-COURT AT AHMEDABAD) [CORAM: SHRI S. S. GODARA, JM & SHRI MANISH BORAD, AM ] ITA NO.55/RJT/2015 ASST. YEAR: 2009-10 M/S. SHREEJI EXPORTS, GANDHIDHAM, C/O KALPESH S. DOSHI & CO., CA, 411, COSMO COMPLEX MAHILA COLLEGE CIRCLE, RAJKOT. VS. ACIT, GANDHIDHAM CIRCLE, GANDHIDHAM- KUTCH. APPELLANT RESPONDENT PAN AAHFS 2746L APPELLANT BY SHRI KALPESH DOSHI, AR RESPONDENT BY SHRI D. R. CHHATRE, SR.DR DATE OF HEARING: 28/6/2016 DATE OF PRONOUNCEMENT: 18/7/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . ASSESSEE IS IN APPEAL AGAINST THE ORDER OF LD. CIT (A)-3, RAJKOT DATED 12/1/2015 VIDE APPEAL NO.CIT(A)-3,RJT/030/11- 12. ASSESSMENT U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) F OR ASST. YEAR 2009-10 WAS FRAMED BY ACIT, GANDHIDHAM CIRCLE, GANDHIDHAM-K UTCH ON 26/12/2011. FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE:- 1. THAT, THE LEARNED CIT(A) HAS NOT GIVEN PROPER O PPORTUNITY OF BEING HEARD AND CONFIRMED THE ADDITION. ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 2 2. THE ADDITION IS BASED ON STATEMENT RECORDED BEH IND THE BACK OF THE ASSESSEE, THE LD. CIT(A) HAS CALLED FOR STATEME NT VIDE LETTER DATED 16/01/2013, NO STATEMENT IS PROVIDED BY ID. A O AND STILL THE APPEAL IS FINALIZED AGAINST THE ASSESSEE. 3. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFI RMED THE ADDITION OF RS. 4,99,600/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOME TAX ACT, 1961. 4. THAT, THE FINDING OF THE LEARNED CIT (A) ARE NO T JUSTIFIED IN LAW AS WELL AS FACTS OF THE CASE AND REQUIRED TO BE DEL ETED THE APPELLANT CRAVES TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM AND ENGAGED IN THE BUSINESS OF WAREHOUSING, TRANSPORTAT ION, MANUFACTURING & EXPORT OF PLASTIC BAGS, STRINGS, ET C. RETURN OF INCOME WAS FILED ON 29.9.2009. CASE WAS SELECTED FOR SCRUT INY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT DATED 21.9.2010 WA S ISSUED AND DULY SERVED. DUE TO CHANGE OF INCUMBENT A NOTICE U/S 142 (1) & QUESTIONNAIRE DATED 9.6.2011, 30.06.2011, 24.10.11 & 143(2) R.W.S. 129 DATED 9.6.2011 WERE ISSUED AND SERVED. ASSESSME NT WAS COMPLETED AT AN ASSESSED INCOME OF RS.20,11,244/- A FTER MAKING ADDITION OF RS.7,91,344/- WHICH INCLUDED ADDITION O N ACCOUNT OF UNEXPLAINED CASH CREDIT OF RS.4,99,600/- U/S 68 OF THE ACT. 3. ASSESSEE WENT IN APPEAL BEFORE LD. CIT(A) WHEREI N ONLY GROUND RELATING TO ADDITION U/S 68 OF THE ACT AT RS.4,99,6 00/- WAS RAISED IN RELATION TO UNSECURED LOAN FROM YOGESH PARIKH RS.3, 49,600/- AND ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 3 DHARMENDRA D. MORABIA RS.1,50,000/-. HOWEVER, ASSES SEE COULD NOT SUCCEED AND THE APPEAL WAS DISMISSED BY LD. CIT(A) BY OBSERVING AS UNDER :- 4.4 I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE APPELLANT. I FOLLY AGREE WITH THE A.O. THAT LOOKING AT THE SALARIES AND THE INCOME PROFILE OF THE TWO PERSONS, IT IS VERY DIFFICULT TO IMAGINE THEM TO BE CAPABLE OF GIVING SUCH A BIG LOAN TO THE APPELLANT. THE A.O. HAS VERY CORREC TLY ANALYSED THE BANK ACCOUNT AND DISCOVERED THAT THERE ARE CASH DEPOSITS OF EQUIVALENT AMOUNT IN THE BANK JUST PRIOR TO THE GIVING OF THE LOAN BY CH EQUE. THE TWO PERSONS HAVE MISERABLY FAILED IN EXPLAINING THE SOURCE OF THESE CASH DEPOSITS. ONE OF THE PERSONS, SHRI YOGESH PARIKH, IS ALSO WORKING IN THE APPELLANT FIRM. THUS ONE OF THE ESSENTIAL LIMBS OF PROVING A CASH CREDIT, I.E. THE CAPACITY OF THE PER SONS ADVANCING THE LOAN STANDS TOTALLY UNEXPLAINED. THIS ISSUE HAS BEEN SQUARELY DEALT WITH BY THE HON'BLE ITAT, RAJKOT IN THE CASE OF VAJUBHAI KANANI IN ITA NO.368/RJT/2012 HAS HELD AS UNDER :- '7. WE HAVE HEARD BOTH THE PARTIES >AM? CAREFULLY C ONSIDERED THEIR SUBMISSIONS INCLUDING THE MATERIALS AVAILABLE ON RE CORD. THE FINDINGS RECORDED BY THE AO IN THE ASSESSMENT ORDER HAVE NOT BEEN CON TROVERTED EITHER BY THE CIT(A) IN HIS APPELLATE ORDER OR BY THE ASSESSEE BE FORE US. IT IS ABSOLUTELY CLEAR FROM THE ASSESSMENT ORDER THAT THE CREDITORS HAD TH EIR BANK ACCOUNTS BUT NO SIGNIFICANT DEPOSITS IN THEIR BANK ACCOUNTS WERE MA DE EITHER BEFORE OR AFTER THE IMPUGNED TRANSACTIONS. IF THE CREDITORS WERE PERSO NS OF SIGNIFICANT MEANS, IT WOULD THEN BE QUITE UNTIMELY THAT THEY WOULD KEEP S UCH HUGE AMOUNTS IN THEIR RESPECTIVE .HOUSES INSTEAD OF KEEPING THEM IN BANK ACCOUNTS. SECONDLY,CASH DEPOSITS WERE FIRST MADE IN THEIR BANK ACCOUNTS AND IMMEDIATELY THEREAFTER CHEQUES OF MATCHING AMOUNTS WERE ISSUED BY THEM IN FAVOUR OF THE ASSESSEE. THIS IS NOT A MATTER OF CO-INCIDENCE IN ONE OR TWO CASES BUT APART OF WELL- CALCULATED DESIGN TO FIRST DEPOSIT MATCHING AMOUNTS IN THE BANK ACCOUNTS OF CREDITORS AND THEREAFTER HAVE THE CHEQUES ISSUED IN FAVOUR OF THE ASSESSEE FROM THOSE BANK ACCOUNTS WITH A VIEW TO SHOW THAT THE TR ANSACTIONS HAVE BEEN ROUTED THROUGH BANKING CHANNELS AND THEREBY CREATE A CLOAK ABOUT THE GENUINENESS TO THE IMPUGNED TRANSACTIONS. IF THE CREDITORS HAD REQ UISITE CASH AVAILABLE WITH THEM, THERE WAS NO REASON AS TO WHY THEY WOULD HOLD THEM BACK IN CASH AND DEPOSIT THE SAME JUST BEFORE ISSUING CHEQUES IN FAV OUR OF THE ASSESSEE. THE WHOLE STORY MANUFACTURED BY THE ASSESSEE, RINGS FAL SE FROM BEGINNING TILL END. THE ASSESSING OFFICER HAS BROUGHT SUFFICIENT MATERI ALS ON RECORD TO SHOW THAT ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 4 THE IMPUGNED CASH CREDITS WERE NOT AT ALL GENUINE. HIS ORDER DESERVES TO BE CONFIRMED AND IS ACCORDINGLY CONFIRMED. ' 8. THE LD. CIT (A) HAS PROCEEDED ON THE BASIS THAT 'THE CAPACITY OF A CREDITOR MAY BE PRESUMED TO BE THERE TO ADVANCE LOAN TO APPELLANT IF SUCH CREDITOR IS AN INCOME TAX ASSESSEE AND NOTHING ADVANCE HAS BEEN PR OVED FROM HER INCOME TAX RETURN OF INCOME AGAINST HER CAPACITY. ' WE ARE UNA BLE TO AGREE WITH THE AFORESAID OBSERVATIONS MADE BY THE CITFAJ. THE CREDITWORTHINE SS OF A CREDITOR IS NOT A MATTER OF PRESUMPTION BUT A MATTER OF FACT TO BE ES TABLISHED BY THE ASSESSEE ON THE BASIS OF EVIDENCE. THE MERE FACT THAT THE CREDITORS ARE INCOME-TAX PAYEE DOES OT BY ITSELF ESTABLISH THE AVAILABILITY OF CASH IN THE IR HAND; OR THEIR CREDITWORTHINESS TO ADVANCE ANY SUM OF MONEY. THE ID. CIT(A) FURTHER OBSERVES THAT THE SOURCE OF SOURCE NEED NOT BE PROVED BY THE ASSESSEE. WE ARE U NABLE TO ACCEPT THE AFORESAID REASONING ALSO THE QUESTION HERE IS NOT TO PROVE TH E. SOURCE OF SOURCE BUT OF SATISFACTORILY ESTABLISHING THE NATURE AND SOURCE O F CASH CREDITS FOUND RECORDED IN THE BOOKS OF THE ASSESSEE. IN THE FACE OF MATERIALS BROUGHT ON RECORD BY THE AO, WE ARE UNABLE TO CONCUR WITH THE OBSERVATION OF THE CI T(A) THAT THE ASSESSEE HAS PROVED THE CAPACITY OF CREDITORS AS ALSO THE GENUIN ENESS OF THE IMPUGNED TRANSACTIONS. IT IS ALSO SEEN THAT THIS DECISION HAS BEEN SUBSEQU ENTLY CONFIRMED BY THE HON'BLE GUJARAT HIGH COURT IN TAX APPEAL NO.835 OF 2012. 4.5 IT IS ALSO CONTENDED BY THE APPELLANT THAT HE W AS NOT PROVIDED A COPY OF THE STATEMENTS RECORDED. HOWEVER, IN MY OPINION, TH E RELEVANT PART OF THE STATEMENTS HAS ALREADY BEEN REPRODUCED IN THE ASSES SMENT ORDER. IN VIEW OF THIS, I DO NOT FORESEE ANY NEED FOR THE STATEMENTS TO BE GIVEN TO THE APPELLANT. IT HAS ALSO BEEN OFFERED SUFFICIENT OPPORTUNITY DUR ING THE COURSE OF APPELLATE PROCEEDINGS TO REBUT THE FINDINGS OF THE A.O. 4.6. RESPECTFULLY FOLLOWING THE DECISION OF THE HON 'BLE ITAT (SUPRA) AND THE OTHER DISCUSSION, IT IS HELD THAT THE APPELLANT HAS NOT DISCHARGED ITS ONUS PROPERLY IN RESPECT OF THE LOANS. THE ADDITION MADE BY THE A.O. U/S.68 IS UPHELD. THESE GROUNDS OF APPEAL ARE DISMISSED. 4. AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 5. LD. AR SUBMITTED THAT ASSESSEE HAS SUBMITTED ALL NECESSARY DOCUMENTS BEFORE BOTH THE LOWER AUTHORITIES TO PROV E THE IDENTITY, ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 5 GENUINENESS AND CREDITWORTHINESS OF LOAN CREDITORS MR. YOGESH PARIKH AND DHARMENDRA D. MORABIA BY WAY OF SUBMITTI NG COPY OF PAN CARD, INCOME-TAX RETURN, PROOF OF LOAN RECEIVED THROUGH BANKING CHANNEL, SOURCE OF INCOME OF THE LOAN CREDITORS AND CONFIRMATION LETTERS. LD. AR SUBMITTED THAT WHATEVER POSSIBLE DO CUMENTS A PERSON CAN ARRANGE WITH REGARD TO LOAN RECEIVED WERE DULY COLLECTED AND SUBMITTED BEFORE THE LOWER AUTHORITIES AND THERE WA S NO MECHANISM ON THE PART OF THE ASSESSEE TO PROVE THE SOURCE OF SOURCE IN A SITUATION WHEN BOTH THE LOAN CREDITORS WERE ASSESSE D TO TAX. LD. AR PLACED RELIANCE ON FOLLOWING JUDGMENTS & DECISIONS :- 1. CIT VS. RANCHOD JIVABHAI NAKHAVA TAX APPEAL NO.5 0 OF 2011 GUJARAT HIGH COURT. 2. ACIT VS. RADHEY SHYAM BANSAL 68 TTJ 436, RAJKOT. 3. CIT VS. MEHROTRA BROTHERS 270 ITR 157 (MP) 4. CIT VS. OASIS HOSPITALITIES (P) LTD. 238 CTR 402 (DDELHI HC) 5. CIT VS. VALUE CAPITAL SERVICE P. LTD. (2008) 307 ITR 334 (DELHI) 6. CIT VS. REAL TIME MARKETING (P) LTD.221 DTR 716( DELHI HC) 6. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES AND SUBMITTED THAT IN BOTH THE UNSECURE D LOANS, THE LOAN CREDITORS HAD DEPOSITED CASH JUST BEFORE ISSUING TH E CHEQUE TO THE ASSESSEE AND THE SOURCE OF INCOME OF THE LOAN CREDI TORS WAS TOO MEAGER TO SUFFICE THE DEPOSIT OF CASH IN THE BANK A CCOUNT AND, THEREFORE, THE IMPUGNED CREDIT OF RS.4,99,600/- IS THE INCOME OF THE ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 6 ASSESSEE ITSELF WHICH HAS BEEN BROUGHT IN BY WAY OF UNSECURED LOANS AND, THEREFORE, LD. CIT(A) HAS RIGHTLY CONFIRMED TH E ADDITION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ASSESSEE HAS RAISED FOUR GROUNDS OUT OF WHICH GROUND NOS. 1 & 4 ARE GENERAL IN NATURE, WHICH NEED NO ADJ UDICATION. GROUND NO.2 RELATING TO ALLEGATION OF ASSESSEE FOR NOT PRO VIDING THE STATEMENT BY ASSESSING OFFICER WE FIND THAT THE STATEMENTS OF BOTH THE LOAN CREDITORS MR. YOGESH PARIKH AND DHARMENDRA D. MORAB IA FORM PART OF THE ASSESSMENT ORDER ITSELF AND ASSESSEE COULD NOT REBUT ANY OF THE FACTS PROVIDED IN THE STATEMENTS BY THE LOAN CREDIT ORS BEFORE LD. CIT(A) AND, THEREFORE, THIS GROUND NO.2 IS NOT SUST AINABLE AND DISMISSED. 8. GROUND NO.3 TAKEN BY THE ASSESSEE IS AGAINST THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.4,99,600/- AS UNEXPLAINED CASH CREDIT U/S 68. WE FIND THAT ASSESSEE TOOK UNSE CURED LOANS OF RS.3,49,600/- FROM YOGESH PARIKH AND RS.1,50,000/- FROM DHARMENDRA D. MORABIA. HOWEVER, DURING THE COURSE O F ASSESSMENT PROCEEDINGS ASSESSEE SUBMITTED NECESSARY DOCUMENTS IN THE FORM OF INCOME-TAX RETURN, PAN, ADDRESSES DETAILS, CONFIRMA TION LETTERS AND SOURCE OF INCOME OF BOTH THE LOAN CREDITORS. BUT SI MULTANEOUSLY WE OBSERVE THAT IN THE CASE OF LOAN CREDITOR YOGESH PA RIKH CASH SUM OF RS.3,49,600/- WAS DEPOSITED IN HIS BANK ACCOUNT ON 30/3/2009 AND ON 31 ST MARCH CHEQUE OF RS.3,49,600/- WAS ISSUED TO THE AS SESSEE AND SIMILARLY, IN THE CASE OF ANOTHER LOAN CREDITOR DHARMENDRA D. MORABIA CASH SUM OF RS.1,50,000/- WAS DEPOSITED ON 31.3.2009 AND ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 7 IMMEDIATELY THE SAME WAS TRANSFERRED TO THE ASSESSE E. THIS FACT OF DEPOSITING OF CASH IN BANK ACCOUNT OF BOTH THE LOAN CREDITORS AND ISSUING THE CHEQUES IMMEDIATELY, HAS NOT BEEN CONTR OVERTED BY THE ASSESSEE. WE FURTHER OBSERVE THAT BOTH THE LOAN CRE DITORS WERE SUMMONED U/S 131 OF THE ACT AND STATEMENTS HAVE BEE N RECORDED ON OATH AND THE YEARLY INCOME OF YOGESH PARIKH WAS DEC LARED AT RS.96,000/- WHEREAS LOAN OF RS.3,49,600/- WAS RECEI VED FROM HIM AND SIMILARLY, ANOTHER LOAN CREDITOR DHARMENDRA D. MORABIA HARDLY RECALLED ABOUT THE PERSON TO WHOM LOAN OF RS.1,50,0 00/- WAS GIVEN AND WAS NOT ABLE TO SATISFY THE AUTHORITIES ABOUT H IS CREDITWORTHINESS OF GIVING THE LOAN AMOUNT. 9. FROM GOING THROUGH OUR ABOVE OBSERVATIONS, WE FI ND THAT ASSESSEE WAS ABLE TO PROVE THE IDENTITY AND GENUINE NESS OF THE LOAN TAKEN BUT COULD NOT SATISFY THE THIRD LIMB I.E. CRE DITWORTHINESS OF BOTH THE LOAN CREDITORS. WE HAVE GONE THROUGH THE JUDGME NTS AND DECISIONS REFERRED AND RELIED BY THE ASSESSEE BUT T HE FACTS DEALT THEREIN ARE DIFFERENT FROM THE FACTS OF THE CASE BE FORE US IN THIS APPEAL. WE FURTHER FIND THAT HON. JURISDICTIONAL HI GH COURT IN THE CASE OF UMESH KRISHNANI VS. ITO IN TAX APPEAL NO.800 OF 2012 HAS DEALT WITH SIMILAR ISSUE IN WHICH CASH WAS DEPOSITED JUST A DAY BEFORE THE DATE OF ISSUING ACCOUNT PAYEE CHEQUE AS LOAN. HON. HIGH COURT DISMISSED THE APPEAL BY OBSERVING AS UNDER :- 18. THREE BASIC INGREDIENTS VIZ., [A] IDENTITY: [B] CREDITWORTHINESS AND [C] GENUINENESS OF THE TRANSACTION, WHEN ARE CONSIDERED , IT CANNOT BE DISPUTED THAT ALL THE THREE OF THEM REQUIRE INDEPENDENT CONSIDERATION AND YET THEY ARE NOT MUTUALLY EXCLUSIVE OR CAN BE CONSIDERED IN ISOLATION. IT HAR DLY NEEDS TO BE SPECIFIED THAT THE ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 8 WELL RECOGNIZED PRINCIPLE OF NOT INSISTING UPON SOU RCE OF THE SOURCE NEEDS NO ELABORATION. UPON APPRECIATION OF MATERIALS ON RECO RD AND TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE REVENUE AUTHORITIES AND THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ENTIRE TRANSACTION WAS A CIRCUI TOUS ROUTE TO BRING ON BOOKS THE ASSESSEE S OWN ACCOUNTED MONEY. THE FACTOR THAT THE DONORS DID NOT POSSESS INDEPENDENT SOURCE TO MAKE SUCH DEPOSITS MUST BE VI EWED IN LIGHT OF THE FINDINGS THAT THE ASSESSEE HAD NO JUSTIFICATION FOR BORROWIN G SUCH AMOUNTS AT SUCH HIGH RATE OF INTEREST. THESE ASPECTS WOULD HAVE A BEARING ON THE GENUINENESS OF THE TRANSACTION AND THE CREDIT WORTHINESS OF THE DONORS AND CANNOT BE SEEN AS AN ATTEMPT TO THROW THE BURDEN TO PROVE SOURCE OF THE .SOURCE ON THE ASSESSEE. AS IS VERY ELOQUENT FROM THE RECORD ITSELF, SUBSTANTIAL A MOUNT OF CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF ALL THE CREDITORS SHORTLY PRIO R TO ISSUANCE OF CHEQUES AND INSUFFICIENCY OF THE FUND WITH THE CREDITORS WHEN C OULD BE DULY ESTABLISHED FROM THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE AND WHE N IT IS FURTHER FOUND AS A MATTER OF FACT THAT THE ASSESSEE HAD NO JUSTIFICATION FOR BOR ROWING SUCH AMOUNTS AT HIGH RATE OF INTEREST, EVEN WITHOUT DISTURBING THE WELL ESTABLIS HED PRINCIPLE OF NOT INSISTING ON THE ASSESSEE PROVING SOURCE OF THE SOURCE, ON THE ROBUS T FACTS OF THE REVENUE AUTHORITIES HAVE RIGHTLY NOT CONCLUDED IN FAVOUR OF THE ASSESSE E. ALL ISSUES ARE ESSENTIALLY IN THE REALM OF APPRECIATION OF FACTS NO ERROR IS COMMITTE D BY ANY OF THESE AUTHORITIES TO TERM THE FINDINGS AS PERVERSE LEADING TO RAISE QUES TION OF LAW. TAX APPEAL IS RESULTANTLY DISMISSED. 10 . WE FURTHER OBSERVE THAT CO-ORDINATE BENCH IN THE CA SE OF ITO VS. VAJUBHAI N. KANANI IN ITA NO.368/RJT/201 2 VIDE ITS ORDER DATED 05/10/2012 DEALING WITH SIMILAR ISS UE, ALLOWED THE APPEAL OF REVENUE BY OBSERVING AS FOLLO WS :- 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS INCLUDING THE MATERIALS AVAILABLE ON RECORD. THE FINDINGS RECORDED BY THE A O IN THE ASSESSMENT ORDER HAVE NOT BEEN CONTROVERTED EITHER BY THE CIT(A) IN HIS APPELLATE ORDER OR BY THE ASSESSEE BEFORE US. IT IS ABSOLUTEL Y CLEAR FROM THE ASSESSMENT ORDER THAT THE CREDITORS HAD THEIR BANK ACCOUNTS BUT NO SIGNIFICANT DEPOSITS IN THEIR BANK ACCOUNTS WERE MADE EITHER BEFORE OR A FTER THE IMPUGNED TRANSACTIONS. IF THE CREDITORS WERE PERSONS OF SIGNIFICANT MEANS, IT WOULD THEN BE QUITE UNLIKELY THAT THEY WOULD KEEP SUCH HUGE AMOUNTS IN THEIR RESPECTIVE HOUSES INSTEAD OF KEEPI NG THEM IN BANK ACCOUNTS. SECONDLY, CASH DEPOSITS WERE FIRST MADE IN THEIR BANK ACCOUNTS AND IMMEDIAT ELY THEREAFTER CHEQUES OF MATCHING AMOUNTS WERE ISSUED BY THEM IN FAVOUR OF THE ASSESSEE. THIS IS N OT A MATTER OF CO-INCIDENCE IN ONE OR TWO CASES BUT A PART OF WELL-CALCULATED DESIGN TO FIRST DEPOSIT M ATCHING AMOUNTS IN THE BANK ACCOUNTS OF CREDITORS A ND THEREAFTER HAVE THE CHEQUES ISSUED IN FAVOUR OF THE ASSESSEE FROM THOSE BANK ACCOUNTS WITH A VIEW TO ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 9 SHOW THAT THE TRANSACTIONS HAVE BEEN ROUTED THROUGH BANKING CHANNELS AND THEREBY CREATE A CLOAK ABOUT THE GENUINENESS TO THE IMPUGNED TRANSACTIONS. IF THE CREDITORS HAD REQUISITE CASH AVAILABLE WITH THEM, THERE WAS NO REASON AS TO WHY THEY WOULD HOLD THEM BACK IN CASH AND DEPOSIT THE SAME JUST BEFORE ISSUING CHEQUES IN FAVOUR OF THE ASSESSEE. T HE WHOLE STORY MANUFACTURED BY THE ASSESSEE RINGS FALSE FROM BEGINNING TILL END. THE ASSESSING OFFICER HAS BROUGHT SUFFICIENT MATERIALS ON RECORD TO SHOW THAT THE IMPUGNED CASH CREDITS WERE NOT AT ALL GENUINE. HIS ORDER DESERVES TO BE CONFIRMED AND IS ACCORDINGLY CONFIRMED. 8. THE LD. CIT (A) HAS PROCEEDED ON THE BASIS THAT 'THE CAPACITY OF A CREDITOR MAY BE PRESUMED TO BE THERE TO ADVANCE LOAN TO APPELLANT IF SUCH CREDITOR IS AN INCOME TAX ASSESSEE AND NOTHING ADVANCE HAS BEEN PROVED FROM HER INCOME TAX RETURN OF INCOME AG AINST HER CAPACITY.' WE ARE UNABLE TO AGREE WITH THE AFORESAID OBSERVATIONS MADE BY THE CIT (A). THE CREDITWORTHINESS OF A CREDITOR IS NOT A MATTER OF PRESUMPTION BUT A MATTER OF FACT TO BE ESTABLISHED BY THE ASSESSEE ON THE BASIS OF EVIDENCE. THE MERE FACT THAT THE CREDITORS ARE INCOME-TAX PAYEE DOES N OT BY ITSELF ESTABLISH THE AVAILABILITY OF CASH IN THEIR HANDS OR THEIR CREDITWORTHINESS TO ADVANCE ANY SUM OF MONEY. THE ID. CIT (A) FURTHER OBSERVES THAT THE SOURCE OF SOURCE NEED NOT BE PROVED BY THE ASSE SSEE. WE ARE UNABLE TO ACCEPT THE AFORESAID REASONING ALSO. THE QUESTION HERE IS NOT TO PROVE T HE SOURCE OF SOURCE BUT OF SATISFACTORILY ESTABLISH ING THE NATURE AND SOURCE OF CASH CREDITS FOUND RECORDE D IN THE BOOKS OF THE ASSESSEE. IN THE FACE OF MATERIALS BROUGHT ON RECORD BY THE AO, WE ARE UNABL E TO CONCUR WITH THE OBSERVATION OF THE CIT (A) THAT THE ASSESSEE HAS PROVED THE CAPACITY OF CREDIT ORS AS ALSO THE GENUINENESS OF THE IMPUGNED TRANSACTIONS. 9. IN VIEW OF THE AFORESAID, THE ORDER OF THE CIT ( A) IS REVERSED AND THAT OF THE AO IS RESTORED. APPE AL FILED BY THE DEPARTMENT IS ALLOWED. 11. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON. JUR ISDICTIONAL HIGH COURT IN THE CASE OF UMESH KRISHNANI VS. ITO (SUPRA ) AND THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. VAJUBHAI N. KANANI (SUPRA), WE ARE OF THE CONSIDERED VIEW TH AT IT IS INCUMBENT ON THE PART OF THE ASSESSEE TO PROVE THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE LOAN TAKEN U/S 68 AND NON-FULFILLING OF ANY OF THE THREE CONDITIONS, MAKES A QUESTION MARK ON THE IMPUGNED TRANSACTION. THEREFOR E, WE ARE OF THE VIEW THAT ASSESSEE HAS BEEN UNABLE TO PR OVE THE ITA NO. 55/RJT/2015 ASST. YEAR 2009-10 10 CREDITWORTHINESS OF BOTH THE LOAN CREDITORS AND THE REFORE, ADDITION U/S 68 OF THE ACT FOR UNEXPLAINED CASH CRE DIT OF RS.4,99,600/- IS CONFIRMED AND ORDER OF LD. CIT(A) IS UPHELD. AS A RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. 12. OTHER GROUNDS ARE OF GENERAL NATURE, WHICH NEED NO ADJUDICATION. 13. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2016 SD/- SD/- (S. S. GODARA) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 18/7/2016 MAHATA/- 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, RAJKOT. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, RAJKOT 1. DATE OF DICTATION: 15/07/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 18/07/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 18/7/2016 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: