Sh. Jawahar Lal, Ahmedgarh. V. ITO, Malerkotla

ITA 75/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77123 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 06-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S KAHLON
• Keywords: Unexplained cash credit; Gift; Income from undisclosed sources; Transactions in derivatives; Source of fund; Difference of opinion
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.75/CHD/2012 ASSESSMENT YEAR: 2008-09 SHR JAWAHAR LAL, VS. THE ITO, WARD-IV(3), AHMEDGARH MALERKOTLA PAN NO. AAKPTL8201A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI J.S.KAHLON DATE OF HEARING : 06.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 11.11.2013 OF CIT(A)-II, LUDHIANA. 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS:- 1. THAT THE WORTHY COMMISSIONER OF INCOME TA X (APPEALS), LUDHIANA HAS ERRED IN DISMISSING THE APPEAL AND CON FIRMING THE ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS. 15,96,000/- U/S 68 OUT OF LOAN AMOUNT RECEIVED FROM CREDITORS AND RS. 3,00,000/- ON ACCOUNT OF SO-CALLED LOW WITHDRAW ALS. 2. THAT THE ADDITION HAS BEEN CONF IRMED AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE AND SUBMISSIO NS MADE DURING THE COURSE OF HEARING HAS NOT BEEN CONSIDERED PROPE RLY. 3. THAT THE WORTHY CIT (A) HAS E RRED IN NOT CONSIDERING THAT THE CONFIRMATION FROM THE CRED ITORS, PAN, COPY OF INCOME TAX RETURN AND COPY OF BANK ACCOUNT PERTA INING TO THE 2 CREDITORS HAD BEEN FILED BEFORE THE ASSESSING OFFI CER AND, AS SUCH, THE ADDITION WAS CONFIRMED ON ASSUMPTION AND PRESUM PTION. 4. THAT THE CIT (A) HAS ALSO ERRED IN NOT CO NSIDERING THAT M/S SATYAM COMMODITIES PROP. ANKIT GARG (FROM WHOM CRED ITORS EARNED INCOME BY WAY OF TRADING IN COMMODITIES) IS REGULAR INCOME TAX ASSESSEE AND HIS ASSESSMENT FOR THE RELEVANT YEAR V IZ. ASSTT. YEAR 2008-09 WAS ALSO MADE BY THE SAME ASSESSING OFFICER I.E. ITO, RANGE-IV (3), MALERKOTLA U/S 143(3) OF THE INCOME T AX ACT AND DURING THE ASSESSMENT OF M/S SATYAM COMMODITIES, TH E ASSESSING OFFICER HAS ACCEPTED HIS BOOKS OF ACCOUNT AND ALSO HAS ACCEPTED NATURE OF BUSINESS DONE BY HIM AS GENUINE. 5. THAT THE CIT(A) HAS ALSO ERRED IN CONFIRMING THE ADDITION OF RS. 3,00,000/- (THREE LACS) MADE BY THE ASSESSING O FFICER ON ESTIMATION FOR SO CALLED LOW HOUSEHOLD WITHDRAWALS. 3. OUT OF THE ABOVE, GROUND NO.5 WAS NOT PRESSED AN D, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 4. GROUND NOS. 1 TO 4: AFTER HEARING BOTH THE PAR TIES, WE FIND THAT DURING ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE ASSESSIN G OFFICER THAT ASSESSEE HAS SHOWN NEW UNSECURED LOANS AMOUNTING TO RS. 30,56,50 0/- OUT OF WHICH LOANS AMOUNTING TO RS. 19,56,000/- WERE INTRODUCED FROM P ERSONS SPECIFIED U/S 40A(2)(B) OF THE ACT. OUT OF THESE LOANS HE FURTHER NOTED THAT SOURCE OF INVESTMENT BY THESE PARTIES WAS PROFIT FROM THE TRA DING AND COMMODITY BUSINESS. THE ASSESSING OFFICER DIRECTED TO PRODUCE THOSE PER SONS. DURING ASSESSMENT PROCEEDINGS THOUGH CONFIRMATION OF LOANS, THEIR PAN NUMBERS ETC. WERE FILED BUT THOSE PERSONS WERE NOT PRODUCED. THE ASSESSING OFFICER FURTHER NOTED THAT FROM THE INFORMATION RECEIVED FROM ITO WARD-4 MASL ERKOTA, IT WAS INTIMATED BY THE MULTI COMMODITY EXCHANGE (MCX) THAT M/S SATY AM COMMODITIES WAS NOT A MEMBER OF THE STOCK EXCHANGE. THE ASSESSING O FFICER OBSERVED THAT SINCE M/S SATYAM COMMODITIES WAS NOT AUTHORIZED TO TRADE IN COMMODITIES, THEREFORE, 3 THE SUM OF RS. 15,96,000/- IS NOTHING BUT THE ASSES SEES OWN INCOME WHICH HAS BEEN CHANNELISED THOUGH DIFFERENT NAMES IN THE SHAP E OF LOANS AND ACCORDINGLY DISALLOWED THE SUM OF RS. 15,96,000/-. 5. ON APPEAL, THE ACTION OF THE ASSESSING OFFICER H AS BEEN CONFIRMED BY THE LD. CIT(A). 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTE D THAT ASSESSEE OFFERED TO PRODUCE ALL THOSE PERSONS BEFORE LD. CIT(A) WHO IN TURN ASKED TO PRODUCE THOSE PERSONS BEFORE THE ASSESSING OFFICER DURING REMAND PROCEEDINGS AND MATTER WAS REMANDED TO THE ASSESSING OFFICER. ALL THOSE PERSO NS WERE PRODUCED BEFORE THE ASSESSING OFFICER AND IN THIS REGARD HE REFERRED TO THE VARIOUS DOCUMENTS FILED AND COPIES OF THE STATEMENTS RECORDED BY THE ASSESS ING OFFICER OF VARIOUS PERSONS WHICH ARE PLACED IN THE PAPER BOOK. HE ALSO REFERRED TO THE STATEMENT OF SHRI ANKIT GARG WHO IS OWNER OF M/S SATYAM COMMODIT IES WHICH IS FILED IN THE PAPER BOOK AT PAGES 123 TO 126. AFTER RECORDING T HE STATEMENTS, THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND COPY OF TH E ASSESSMENT ORDER IS FILED AT PAGE 136 WHERE ONLY THE NOMINAL ADDITION HAS BEE N MADE AND RETURNED INCOME HAS BEEN ACCEPTED. THUS, ASSESSEE HAS CLEARL Y PROVED THE THREE INGREDIENTS I.E. (I) NAME OF THE LENDER, (II) GENUI NENESS OF THE TRANSACTION AND (III) SOURCE OF THE CREDIT. EVEN THE PERSONS FROM W HOM LOANS WERE TAKEN WERE PRESENTED BEFORE THE ASSESSING OFFICER WHEREIN THEY HAVE CONFIRMED THE LOANS. IN ANY CASE, THE TRIBUNAL IN THE SIMILAR CIRCUMSTA NCES HAS DELETED THE ADDITION IN THE CASE OF SHRI SEVA RAM V ITO IN ITA NO. 327/C HD/2011, COPY OF THE ORDER IS FILED ON RECORD. 7. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE R OF THE CIT(A) AND ASSESSING OFFICER. HE FURTHER POINTED OUT THAT HON' BLE SUPREME COURT IN THE CASE OF CIT VS. MOHANKALA 291 ITR 278 (SC) HAS CL EARLY OBSERVED THAT ONCE CREDIT ENTRY WAS FOUND IN THE BOA OF THE ASSESSEE T HEN THE SAME MAY BE CHARGED 4 TO TAX IF THE EXPLANATION OFFERED BY THE ASSESSEE I N THE OPINION OF ASSESSING OFFICER IS NOT SATISFACTORY. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND THAT IN IDENTICAL CIRCUMSTANCES IN THE CASE OF SHRI SEVA RA M VS. ITO (SUPRA) THE ISSUE WAS ADJUDICATED VIDE PARA 9 TO 10 BY THE TRIBUNAL, WHICH ARE AS UNDER:- 9. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND IT HAS TO BE NOTED THAT ADDITION HAS NOT BEEN MADE U/S 68 OF THE ACT BUT THE ADDITION HAS BEEN MADE BY OBSERVING THAT COMMODITY PROFIT EA RNED BY EIGHT FAMILY MEMBERS IS INCOME FROM UNDISCLOSED SOURCES OF THE A SSESSEE. IT IS VERY STRANGE THAT THE AO HAS NOWHERE STATED THAT INCOME FROM COMMODITY TRANSACTIONS IS BOGUS OR NOT GENUINE. IN FACT THE ASSESSEE HAS SHOWN AN AMOUNT FROM EIGHT MEMBERS AS PER DETAILED BELOW AS LOANS:- SEWA RAM (HUF) RS. 2,09,700.00 SMT. SHAKUNTLA RS. 2,12,300.00 SMT. RAJ KUMARI RS. 2,16,000.00 SMT. JYOTI KINGER RS. 2,17,100.00 SHRI VIJAY KUMAR RS. 2,15,000.00 VIJAY KUMAR (HUF) RS. 2,14,050.00 SHRI VINOD KUMAR RS. 2,14,600.00 VINOD KUMAR (HUF) RS. 2,22,150.00 RS. 17,21,100/- IN RESPONSE TO ENQUIRY COPIES OF THE ACCOUNT, PAN N O., INCOME-TAX RETURN, BANK STATEMENT AND EVEN BILLS OF COMMODITY BROKER W ERE FURNISHED TO EXPLAIN THE SOURCE OF FUNDS IN THE HANDS OF THE ABO VE FAMILY MEMBERS. WE FURTHER FIND THAT PERUSAL OF SAMPLE COPY OF ACCOUNT OF SEWA RAM HUF AT PAGE 23 OF THE PAPER BOOK CLEARLY SHOWS THAT SEWA R AM HUF HAD ALREADY GIVEN LOANS TO THE ASSESSEE AND IN FACT THERE WAS O PENING BALANCE AMOUNTING TO RS. 6,56,554/-. COPY OF ACCOUNT OF SE WA RAM HUF IS REPRODUCED HEREUNDER:- DATE PARTICULARS DEBIT CREDIT BALANCE 1.4.2006 BY OP. BALANCE -- 656,554.00 6,56,554.00 23.5.2006 TO CHEQUE NO. 805339 1500.00 -- 655,054.00 12.9.2006 TO CHEQUE NO. 291454 5,000.00 -- 650,054.00 28.9.2006 BY CHEQUE NO. 809838 -- 36,466.00 686,520.00 13.10.2006 BY CHQUE NO. 058588 -- 48,200.00 734,720.00 25.10.2006 TO CHEQUE NO. 291480 6894.00 -- 727,826.00 3.11.2006 BY CHEQUE NO. 058589 -- 60,200.00 788,026.00 30.1.2007 BY CHEQUE NO. 058590 -- 101,300.00 889,326.00 5 15.3.2007 TO CHEQUE NO. 311117 7,000.00 -- 882,326.00 19.3.2007 TO CHEQUE NO. 813878 70,000.00 -- 812,326.00 19.3.2007 TO CHEQUE NO. 813881 30,000.00 -- 782,326.00 31.3.2007 BY AMOUNT OF INTEREST -- 87,325.00 869,651.00 31.3.2007 TO AMOUNT OF TDS 8,907.00 -- 860,744.00 TOTAL 129,301.00 990,045.00 CREDIT BALANCE AS ON 31.3.2007 860,744.00 ABOVE CLEARLY SHOWS THAT DURING THE YEAR SEWA RAM H UF HAS FURTHER GIVEN FOUR CHEQUES AMOUNTING TO RS. 36,466/-, RS. 48,200/ -, RS. 60,200/- AND RS. 101,300/- ON 28.9.2006, 13.10.2006, 3.11.2006, 30.1 .2007. OUT OF THESE LAST THREE CHEQUES I.E. RS. 48,200/-, RS. 60,200/- AND RS. 101,300/- HAVE BEEN DOUBTED BY THE AO ON THE BASIS THAT THESE AMOU NTS HAVE BEEN RECEIVED AS PROFIT FROM THE COMMODITY TRANSACTIONS. FIRST OF ALL ONCE IF THERE WAS ANY DOUBT REGARDING PROFIT IT SHOULD HAVE BEEN EXAMINED IN THE HANDS OF THE INDIVIDUAL OR HUF AND NOT IN THE HANDS OF TH E ASSESSEE WHO HAS SIMPLY TAKEN THIS AMOUNT AS LOAN AND THE LOAN TRANS ACTION IS SUPPORTED BY COPY OF ACCOUNT, CONFIRMATION, INCOME-TAX RETURN, B ANK STATEMENT AND SOURCES OF FUNDS FROM COMMODITY TRANSACTIONS. THER EFORE, AS FAR AS BURDEN U/S 68 IS CONCERNED, THE SAME STANDS DISCHAR GED. IT IS SETTLED POSITION OF LAW THAT IN CASE OF CASH CREDITS THREE INGREDIENTS ARE REQUIRED TO BE PROVED I.E. IDENTITY OF THE CREDITOR, GENUINENES S OF THE TRANSACTIONS AND CAPACITY OF THE CREDITOR. IDENTITY HAS BEEN PROVED BYCOPY OF ACCOUNT AND GENUINENESS OF THE TRANSACTIONS HAS BEEN PROVED BEC AUSE LOANS WERE RECEIVED THROUGH GENUINE TRANSACTIONS AND EVEN CONF IRMATIONS WERE FILED. CAPACITY STANDS PROVED BY DISCLOSURE OF THE SOURCE OF FUND BY WAY OF PROFIT FROM COMMODITY TRANSACTIONS. THEREFORE, THE MATTE R SHOULD HAVE ENDED THERE ONLY. IF THE AO WAS OF THE VIEW THAT THESE P ROFITS ARE NOT GENUINELY EARNED BY THESE FAMILY MEMBERS THEN INITIALLY ASSES SMENTS OF SUCH FAMILY MEMBERS SHOULD HAVE BEEN TAKEN UP FOR SCRUTINY AND ENQUIRY SHOULD HAVE BEEN MADE BY RECORDING THE STATEMENTS OF SUCH FAMI LY MEMBERS WHICH HAS NOT BEEN DONE. THE FACT REMAINS THAT EARNING THE P ROFIT THROUGH COMMODITY TRANSACTIONS HAS NOT BEEN DOUBTED. ONLY ASPECT WHI CH HAS BEEN DOUBTED IS THAT CHEQUES HAVE BEEN ISSUED BY THE ASSESSEE ON BEHALF OF THE MEMBERS OF THE FAMILY. AGAIN REFERRING TO THE COPY OF ACCOUNT, IT IS CLEAR THAT SEWA RAM HUF HAS BEEN TREATING ITS ACCOUNT WITH THE ASSESSEE AS CURRENT ACCOUNT AND SOME OTHER PAYMENTS PERHAPS FOR PAYMENT OF INCOME-TAX AND DEPOSIT IN THE SAVING SCHEMES HAS BEEN ALSO ISSUED BY THE ASSESSEE ON BEHALF OF SEWA RAM HUF. IN FACT CHEQUE FOR RS. 150 0/-, RS. 5,000/-, RS. 6,894/-, RS. 7,000/-, RS. 70,000/- AND RS. 30,000/- HAVE BEEN ISSUED ON VARIOUS DATES. ONLY A SUM OF RS. 5,000/- HAS BEEN PAID AS MARGIN MONEY AND REST OF THE PAYMENTS HAVE BEEN MADE TOWARDS OTH ER PURPOSES. THERE IS NO BAR UNDER THE LAW OR UNDER NORMAL ACCOUNTING ON SUCH WITHDRAWAL. IF A PERSON WHO HAS GIVEN LOAN TO ANY OTHER PERSON CAN ALWAYS DIRECT OTHER PERSON TO ISSUE SMALL CHEQUES IN FAVOUR OF OUTSIDE RS. IN FACT THIS IS A COMMON PRACTICE WHERE THE TRANSACTIONS ARE ENTERED IN THE FAMILY CONCERNS. COPIES OF ACCOUNT OF ALL THE FAMILY MEMB ERS ARE ALSO SAME AND WE ARE NOT DISCUSSING EACH AND EVERY COPY OF ACCOUN T SEPARATELY. OTHER 6 SERIOUS OBJECTION RAISED BY THE AO IS THAT PROFITS HAVE BEEN EARNED IN THE EQUAL INSTALLMENTS BY ALL THE FAMILY MEMBERS, THIS MAY BE MATTER OF CHANCE. THIS MAY EVEN RAISE SOME DOUBT ALSO BUT IN THAT CAS E THE AO SHOULD HAVE SPECIFICALLY ENQUIRED FROM EACH OF THE FAMILY MEMBE RS BUT NO SUCH ENQUIRIES HAVE BEEN MADE. THIRD SERIOUS OBJECTION RAISED BY THE AO IS THAT SINCE INCOME OF VARIOUS FAMILY MEMBERS WAS LOWER AN D THAT IS WHY IT CANNOT BE ACCEPTED AND IT MUST HAVE BEEN EARNED BY THE ASSESSEE. THIS OBJECTION IS NOT CORRECT BECAUSE THERE IS NO FINDIN G THAT SUCH INDIVIDUAL FAMILY MEMBERS WERE ACTING AS BENAMIDAR OF THE ASSE SSEE. FAMILY MEMBERS ARE REGULAR INCOME TAX ASSESSEES AND EVEN S IMILAR INCOME FROM COMMODITY TRANSACTIONS WAS ACCEPTED IN THE HANDS OF SUCH FAMILY MEMBERS IN THE IMMEDIATELY PREVIOUS YEAR ALSO. FOURTH SERIO US OBJECTION RAISED IS IRREGULARITY IN THE FILING OF REGISTRATION FORMS BU T THE AO HAS NOT POINTED OUT WHAT IS THE IRREGULARITY. ONLY THING WHICH HAS BEE N POINTED OUT IS THAT SHRI VIJAY KUMAR I.E. SON OF THE ASSESSEE WAS INTERACTIN G WITH M/S SATYA NARAYAN ONLINE TRADING PVT LTD., LUDHIANA ON BEHALF OF THE FAMILY MEMBERS. THIS ITSELF CANNOT BE CALLED A IRREGULARI TY BECAUSE IT IS COMMON PRACTICE THAT WHENEVER SOME FINANCIAL TRANSACTIONS ARE ENTERED INTO BY FAMILY MEMBERS EVEN WITH OUTSIDERS ONLY ONE MEMBER OF THE FAMILY, DOES THE INTERACTIONS. A COPY OF THE REGISTRATION FORM PLACED AT PAGE 129 IN CASE OF SEWA RAM HUF, DOES NOT SHOW ANY DISCREPANCY OR INCOMPLETE DETAILS. THE FORM WAS FURNISHED ON 2.9.2006 AND M/ S SATYA NARAYAN ONLINE TRADING PVT LTD. WANTED FURTHER IDENTITY PRO OF WHICH HAS BEEN FURNISHED BY WAY OF VOTER CARDS WHICH HAS BEEN OBTA INED BY THE ASSESSEE ON A LATER DATE. IF THERE IS NO COLUMN FOR GIVING THE DETAILS OF VOTER CARD IN THE CLIENT REGISTRATION FORM THEN THERE WAS NO NEED TO GIVE VOTER CARD ALONG WITH REGISTRATION FORM AND THEREFORE, THIS OBJECTIO N IS ALSO OF NO SUBSTANCE. 10 WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF T HE LD. DR FOR THE REVENUE THAT THE OBSERVATIONS OF THE HON'BLE SUPREM E COURT IN CASE OF CIT V. P. MOHANKALA (SUPRA) IS APPLICABLE TO THE CASE O F THE ASSESSEE. ACCORDING TO HIM ONCE THE AO HAS GIVEN A FINDING TH AT THE EXPLANATION OF THE ASSESSEE IS NOT SATISFACTORY THEN SAME IS BINDI NG ON THE ASSESSEE. IN CASE OF CIT V. P. MOHANKALA (SUPRA) HON'BLE APEX CO URT WAS CONCERNED WITH A CASE WHERE THE ASSESSEE AND HIS FAMILY MEMBE RS HAVE RECEIVED GIFTS OF RS. 1,79,27,703/- IN VARIOUS YEARS FROM NO N RESIDENT INDIAN (NRI) WHO WAS NOT RELATED TO THE ASSESSEE. VARIOUS CONTR ADICTIONS WERE FOUND IN THE STATEMENTS OF SHRI SAMPATHKUMAR WHO WAS A COMMO N DONOR AND THE AO RECORDED VARIOUS FINDINGS WHICH HAVE BEEN SUMMAR IES BY THE COURT AT PARA 8 WHICH IS AS UNDER:- THE AO AFTER AN ELABORATE CONSIDERATION OF THE MAT ERIAL AVAILABLE ON RECORD AND THE STATEMENTS OF THE ASSESSEES AS WELL AS THAT OF SAMPATH KUMAR NOTED THAT ALL THE GIFTS WERE RECEIVE D FROM ARIAVAN THOTAN AND SUPROTOMAN. IT IS ONLY AFTER THE ENQUIR IES BY THE DEPARTMENT, IT WAS INFORMED BY LETTER DATED APRIL 25, 1996, THAT ARIAVAN THOTAN AND SUPROTOMAN ARE ONE AND THE SAME PERSON. EVEN AT THAT TIME, NO MENTION WAS MADE ABOUT SAMPAT HKUMAR. FOR THE FIRST TIME SAMPATHKUMARS NAME FIGURED IN THE L ETTER DATED AUGUST 30, 1996 AND THEREAFTER IT W AS STATED THAT THE NAMES OF ARIAVAN THOTAN AND SUPROTOMAN ARE THE OTHER NAMES O F SAMPATHKUMR. THE AO WHILE APPRECIATING THE CONTENT S OF THE LETTERS BROUGHT ON RECORD CAME TO THE CONCLUSION THAT SAMPA THKUMAR HAD OBLIGED IN GIVING GIFTS TO SRINIVASAN AND HIS FAM ILY MEMBERS. IT IS FURTHER HELD THAT IN ALL PROBABILITIES SAMPATHKUMAR MAY HAVE RECEIVED COMPENSATORY PAYMENTS IN LIEU OF THE GIFTS MADE BY HIM. THE LETTERS ACCORDING TO THE AO SUGGEST THAT SAMPAT HKUMAR RESERVED HIS RIGHT TO RECEIVE SUITABLE COMPENSATION FROM THE 7 RESPONDENTS-ASSESSEES. THE AO IN THE CIRCUMSTANCES CAME TO THE CONCLUSION THAT THE GIFTS THOUGH APPARENT ARE NOT R EAL AND ACCORDINGLY TREATED ALL THOSE AMOUNTS CREDITED IN T HE BOOKS OF THE ASSESSEE AS THE INCOME OF THE ASSESSEES. THE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A). TH E MATTER TRAVELED TO THE TRIBUNAL WHERE THERE WAS A DIFFERENCE OF OPINION BE TWEEN THE TWO MEMBERS, THEREFORE, THE MATTER WAS REFERRED TO THE SR. VICE PRESIDENT WHO CONCURRED WITH THE FINDINGS OF THE AO. IN THIS BAC KGROUND THE COURT REFERRED TO VARIOUS DECISIONS INCLUDING THE DECISIO N OF SUMATI DAYAL, 214 ITR 801 AND MADE VARIOUS OBSERVATIONS INCLUDING OBS ERVATIONS IN PARA 24 WHICH READS AS UNDER:- IT IS TRUE THAT EVEN AFTER REJECTING THE EXPLANATI ON GIVEN BY THE ASSESSEE IF FOUND UNACCEPTABLE, THE CRUCIAL ASPECT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE IT SHOULD BE IN FERRED THE SUMS CREDITED IN THE BOOKS OF THE ASSESSEE CONSTITUTED I NCOME OF THE PR3EVIOUS YEAR MUST RECEIVE THE CONSIDERATION OF TH E AUTHORITIES PROVIDED THE ASSESSEE REBUT THE EVIDENCE AND THE IN FERENCE DRAWN TO REJECT THE EXPLANATION OFFERED AS UNSATISFACTORY . WE ARE REQUIRED TO NOTICE THAT SECTION 68 OF THE ACT ITSELF PROVIDE S, WHETHER ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEARS THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IF THE EXPLANATION OF FERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE OF SUCH SUMS F OUND CREDITED IN THE BOOKS OF THE ASSESSEES IS IN THE OPINION OF THE AO NOT SATISFACTORY. SUCH OPINION FORMED ITSELF CONSTITUT ES A PRIMA FACIE EVIDENCE AGAINST THE ASSESSEES, VIZ., THE RECEIPT O F MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SAID EVIDENCE THE S AME CAN BE USED AGAINST THE ASSESSEES BY HOLDING THAT IT WAS A RECE IPT OF AN INCOME NATURE. IN THE CASE IN HAND THE AUTHORITIES CONCURR ENTLY FOUND THE EXPLANATION OFFERED BY THE ASSESSEES UNACCEPTABLE. THE AUTHORITIES UPHELD THE OPINION FORMED BY THE AO THAT THE EXPLAN ATION OFFERED WAS NOT SATISFACTORY. THE ASSESSEES DID NOT TAKE T HE PLEA THAT EVEN IF THE EXPLANATION IS NOT ACCEPTABLE THE MATERIAL A ND ATTENDING CIRCUMSTANCES AVAILABLE ON RECORD DO NOT JUSTIFY TH E SUM FOUND CREDITED IN THE BOOKS TO BE TREATED AS A RECEIPT OF AN INCOME NATURE. THE BURDEN IN THIS REGARD WAS ON THE ASSESSEES. NO SUCH ATTEMPT HAS BEEN MADE BEFORE ANY AUTHORITY. ALL THE DECISI ONS CITED AND REFERRED TO HEREINABOVE ARE REQUIRED TOBE APPRECIAT ED AND UNDERSTOOD IN THE LIGHT OF THE LAW DECLARED BY THIS COURT IN SUMATI DAYAL (1995) SUPP 2 SCC 453. A PLAIN READING OF THE ABOVE PARA VERY CLEARLY SHOW S THAT THE EXPLANATION GIVEN BY THE ASSESSEE HAS TO BE LOOKED INTO ON THE BASIS OF FACTS AND CIRCUMSTANCES OF THE CASE AND SINCE THERE WERE VARI OUS INCONSISTENCIES IN THE STATEMENT OF DONOR AND IT WAS A CASE OF GIFT, T HEREFORE, THE ABOVE OBSERVATIONS ARE MADE. THE OBSERVATION MADE BY THE HON'BLE APEX COURT CAN NOT BE INTERPRETED AS A RULE THAT WHEREVER A FI NDING IS RECORDED BY THE AO THAT EXPLANATION OFFERED BY THE ASSESSEE, IS NOT SATISFACTORY THEN INVARIABLY ADDITION U/S 68 OF THE ACT HAS TO BE CON FIRMED. IN THAT CASE IF THE OBSERVATION IS INTERPRETED IN THIS MANNER THEN NOBO DY WOULD BE ALLOWED TO REBUT THE FINDINGS OF THE AO BY ANY EVIDENCE HOWSOE VER STRONG IT MAY BE. IN ANY CASE THE HON'BLE SUPREME COURT HAS ITSELF ME NTIONED IN THIS OBSERVATION THAT THE SAME IS REBUTTABLE AND WE AGAI N HIGHLIGHT THE OBSERVATION, SUCH OPINION FORMED ITSELF CONSTITUTE S A PRIMA FACIE EVIDENCE AGAINST THE ASSESSEES, VIZ., THE RECEIPT OF MONEY, AND IF THE ASSESSEES FAIL TO REBUT THE SAID EVIDENCE THE SAME CAN BE USE D AGAINST THE 8 ASSESSEES BY HOLDING THAT IT WAS A RECEIPT OF AN IN COME NATURE . WHEREAS IN CASE BEFORE US THE ASSESSEE HAD DISCHARG ED ITS ONUS BY CLEARLY FILING COPY OF ACCOUNT, PAN NO., INCOME-TAX RETURN, BANK STATEMENT, SOURCE OF FUNDS REGARDING LOAN TO DISCHARGE BURDEN ENVISAG ED U/S 68 OF THE ACT. THE ABOVE OBSERVATIONS ARE DEFINITELY IN THE CONTEX T OF GIFT RECEIVED IN THAT CASE AND CANNOT BE MADE APPLICABLE IN ALL THE CASES OF CASH CREDITS. IN ANY CASE, IT HAS NOT BEEN SHOWN BEFORE US HOW REPLY OF THE ASSESSEE IS NOT SATISFACTORY. AS POINTED OUT EARLIER THAT IN CASE OF LOAN TRANSACTION ONLY THREE INGREDIENTS I.E. IDENTITY OF THE CREDITOR, GE NUINENESS OF THE TRANSACTION AND CAPACITY OF THE DEPOSITOR OR LOANEE IS REQUIRED TO BE PROVED WHICH HAVE BEEN CLEARLY PROVED IN CASE BEFORE US. IN FACT IN THIS CASE THE OBSERVATIONS OF HON'BLE SUPREME COURT WHILE DISCUSSING SLP OF TH E DEPARTMENT REPORTED AT 211 ITR 11 (STA) IS MUCH MORE PERTINENT. THE OR DER OF THE COURT READS AS UNDER:- 7.11.1994: THEIR LORDSHIPS B.P. JEEVAN REDDY AND S .B. MAJMUDAR JJ. DISMISSED A SPECIAL LEAVE PETITION BY THE DEPAR TMENT TO APPEAL AGAINST THE JUDGMENT DATED 24.4.1994 OF THE PUNJAB & HARYANA HIGH COURT IN ITR NO. 138 OF 1992, WHEREBY THE HIGH COUR T UPHELD THE ORDER OF THE TRIBUNAL AND ANSWERED THE QUESTIONS RE FERRED TO IT IN FAVOUR OF THE ASSESSEE. IN THIS CASE, CERTAIN CAS H CREDITS IN THE NAMES OF THE ASSESSEES WIFE, SON AND DAUGHTER-IN-L AW WERE ADDED BACK BY THE OFFICER AS UNEXPLAINED CASH CREDITS AND CERTAIN PAYMENTS IN CASH IN EXCESS OF RS. 2,500 WERE DISALL OWED. THE APPELLATE TRIBUNAL ALLOWED THE ASSESSEES APPEAL HO LDING THAT SINCE THE CASH CREDITS CAME FROM BANK ACCOUNTS HELD BY TH E WIFE, THE SON AND THE DAUGHTER-IN-LAW, THE OFFICER COULD NOT ADD BACK THESE AMOUNTS UNLESS HE COULD PROVE THAT THESE PERSONS WE RE THE BENAMIDATS OF THE ASSESSEE. WITH RESPECT TO THE CA SH PAYMENTS IN EXCESS OF RS. 2,500, THE TRIBUNAL HELD THAT THE MAT TER WAS COVERED BY A BOARD CIRCULAR AND THE PAYMENTS HAD TO BE ALLO WED. COMMISSIONER OF INCOME-TAX V CHUNNILAL: SLP (CIVIL) NO. 21334 OF 1994. THUS IT IS CLEAR THAT WHEN LOANS HAVE BEEN TAKEN FR OM THE FAMILY MEMBERS AND WHICH HAVE BEEN ROUTED THROUGH BANK BY MOST OF SUCH FAMILY MEMBERS, THEY CANNOT BE ADDED AS CASH CREDITS UNLES S IT IS FOUND AS A FACT THAT SUCH BANK ACCOUNTS ARE BENAMI OF THE ASSESSEE. IN CASE BEFORE US, IT CANNOT BE ALLEGED THAT BANK ACCOUNT OF VARIOUS FAMI LY MEMBERS ARE BENAMI OF THE ASSESSEE BECAUSE LOANS HAVE BEEN TAKEN FROM SUCH FAMILY MEMBERS FOR LAST MANY YEARS AND WHICH HAVE BEEN SHOWN AS OP ENING BALANCE AND HAVE BEEN ACCEPTED BY THE DEPARTMENT. IN FACT SIMIL AR OBSERVATIONS HAVE BEEN MADE BY HON'BLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT V. RAM NARESH GOEL (SUPRA) WHEREIN DELETION OF ADDITION ON ACCOUNT OF CASH CREDIT WAS HELD TO BE JUSTIFIED WHEN SUCH PERSONS HAD ADMI TTED TO GIVING OF LOAN AND CONFIRMATION LETTERS WERE FILED AND AMOUNTS WER E ROUTED THROUGH CHEQUE. WE WOULD LIKE TO POINT OUT THAT IT WAS STR ONGLY CONTENDED BY THE LD. COUNSEL OF THE ASSESSEE THAT SIMILAR PROFITS WERE R ECEIVED BY THE SAME FAMILY MEMBERS IN THE EARLIER YEARS AND COPY OF CON TRACT NOTES FOR SUCH PROFITS ARE PLACED IN THE PAPER BOOK AT PAGE 162 TO 163 WERE ACCEPTED BY THE DEPARTMENT. THEREFORE, EVEN IN THIS YEAR WITH OUT POINTING OUT ANY DEFECT IN SUCH AMOUNTS OR WITHOUT RECORDING THE FIN DING OF SUCH PROFIT WAS BOGUS, SAME COULD NOT HAVE BEEN ADDEDTO THE INCOME OF THE ASSESSEE. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE WE SET AS IDE THE ORDER OF LD. CIT(A) AND DELETED THE ADDITION OF RS. 17,21,100/- . 9 9. IN THE ABOVE NOTED PARAS EVEN THE DECISION OF HO N'BLE SUPREME COURT HAS BEEN CONSIDERED IN DETAIL. IN FACT, IF THE ASSESSI NG OFFICER HAS SUSPICION THAT COMMODITY PROFIT WAS NOT GENUINE IN THE HANDS OF VA RIOUS FAMILY MEMBERS, THE SAME COULD HAVE BEEN ADDED IN THEIR ASSESSMENTS BY REOPENING THE SAME BUT THE SAME CANNOT BE ASSESSED IN THE HAND OF ASSESSEE BEC AUSE SUCH PERSONS HAVE CONFIRMED THE TRANSACTIONS OF LOANS AND HAS FILED T HE RELEVANT PAPERS. THEREFORE, IN OUR OPINION THE VIEW TAKEN IN THE CASE OF SEVA R AM V ITO (SUPRA) IS SQUARELY APPLICABLE IN THIS CASE ALSO AND WE DECIDE THE ISSU E IN FAVOUR OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29.05.20 14 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 29 TH MAY,2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSTT REGISTRAR ITAT, CHANDIGARH