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2024 (3) TMI 248 - AT - Income TaxUnexplained creditor u/s. 68 - onus to prove - AO based on the fact that the immediate source of the money advanced to the assessee was deposit of cash disbelieved the loan accepted by the assessee and has considered it as unexplained creditor and has added the same as income u/s. 68 - HELD THAT:- As per the provisions of section 68 when any sum found credited in the books maintained by the assessee, and the assessee offers no explanation about the nature and source of that sum then it may be treated as unexplained cash credit whereas in this case the assessee has established the identity of the creditor by giving the PAN card, affidavit and his presence was marked before the ld. AO and the same is not doubted. As regards the genuineness of the transaction the assessee has received the money by an account payee cheque and the same has been given back this itself shows that the transaction was short period loan and the same is established by filling the details of the cheque and the bank account number. As regards the capacity he has explained the nature and source of the money advanced to the assessee and the ld. AO has not doubted that the fact that the assessee is engaged in the producing the sarbat and the source of the cash deposit is the amount received as sales proceeds of the sarbat. Thus, based on the various case laws cited by the assessee wherein it is held that when the identity and genuineness of the transaction is established then capacity of the lender to advance the money to the assessee cannot be a matter which the assessee could be required to established [ Labh Chand Bohra Vs. ITO[2008 (4) TMI 731 - RAJASTHAN HIGH COURT]. The jurisdictional high court has also held that when the cash creditor have affirmed in their examination that they have advanced the money to the assessee from their own respective bank account. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then such an addition cannot be sustained [ CIT Vs. Jai Kumar Bakiwal [2014 (8) TMI 685 - RAJASTHAN HIGH COURT]. The relevant finding of the jurisdictional high court is as under When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion. We direct the ld. AO to delete the addition made in the hands of the assessee. Assessee appeal of Allowed.
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