TMI Blog1992 (3) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... getting yearly income of about Rs. 30,000 as agricultural income from her lands. The said income was all managed by Shri K. Kamalakarreddy on her behalf. It is the case of the assessee that from July 1980 to June 1981 Shri Kamalakarreddy had advanced a total sum of Rs. 1,17,000 to the assessee-company and he also received back an amount aggregating to Rs. 1,07,000 out of it. It is also the case of the assessee that Smt. Sashirekha came down and stayed in India from 10-6-1980 to 11-9-1980 and during her stay she had kept an amount of Rs. 38,000 with her sister Smt. Samanthakala for purposes of purchasing a flat to her, that Smt. Samanthakala deposited that amount of Rs. 38,000 in her Savings Bank Account in Andhra Bank, Narayanguda branch at Hyderabad. Smt. Samanthakala is the wife of Shri P. K. Reddy. Smt. Samanthakala is a Director whereas her husband Shri P. K. Reddy is the Managing Director of the assessee-company which is a private limited company. For assessment year 1982-83, on the ground that the assessee was not able to establish the identity or the capacity of the creditor and also the genuineness of the cash credit appearing in favour of Smt. Sashirekha, the ITO added a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation to which the assessee was due. Thus, the learned CIT(A) held agreeing with the assessee-company that the amount in fact represents the amount drawn from the SB Account of Smt. Samanthakala. On 4-3-1985, the ITO issued a letter calling upon the assessee to explain the genuineness of the cash credits inter alia standing in the name of Smt. Sashirekha in an amount of Rs. 1,17,000. A reply was sent to that letter on 11-3-1985, copy of which is furnished at pages 2 and 3 of the paper compilation filed before us. In the said letter it is informed that Smt. Sashirekha was residing in USA and her address was provided as follows : 10535, Chappal Hill Drive, Hoston, TEXAS-77099. Smt. Samanthakala was examined by the ITO under section 131 of the Act on 15-3-1985. Sworn statement recorded from her is found at page 4 of the paper compilation filed before us. In that examination it is stated that her parents gifted her, 3 acres of wet land and 8 acres of dry land, out of which she receives Rs. 10,000 as yearly agricultural income and from those realisation she had lent to her sister Smt. Shakuntala, invested Rs. 30,000 in the assessee-company and also invested another Rs. 30,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Managing Director. He had advanced a total sum of Rs. 1,17,000 on various dates between July 1980 to June 1981 and also received back a sum aggregating to Rs. 1,07,000. He further affirmed that he had been giving certain amounts to Smt. Sashirekha whenever she wanted during her stay in India on her visit. The ledger copy of the account of Smt. Sashirekha maintained by the assessee-company was furnished at pages 8 and 9. It discloses that the total amount borrowed was Rs. 1,17,000 and the amount repaid was Rs. 1,07,000. 4. In appeal, though the learned CIT(A) partly allowed the appeal filed, gave relief to the assessee only by deleting The addition of Rs. 31,931. However, he confirmed the addition of Rs. 32,000 which represents the peak of the cash credits standing in the name of Smt. Sashirekha. The learned CIT(A) held that the explanation furnished by the assessee to account for the cash credits suffers from serious infirmities and gaps which makes him difficult to acquiesce in the version of the assessee. Assuming that Smt. Sashirekha had agricultural land fetching Rs. 30,000 early it does not necessarily follow, according to the learned CIT(A) that the money was invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Thus, we have heard the arguments advanced on both sides and we have also gone deep into the records of the case. We are of the view that the assessee is able to establish both the identity and capacity of the creditor beyond reasonable doubt. Both the lower authorities never seemed to have doubted the identity of the creditor. The identity was established by the direct evidence of Smt. Samanthakala, the affidavit evidence of Shri Kamalakarreddy, who later died on 2-9-1988 due to heart-attack, the circumstantial evidence provided by the entries made in the SB Account of Smt. Samanthakala in Andhra Bank, Narayanguda branch and also by the confirmatory letter given by Smt. Sashirekha herself, and last but not the least, the ledger account copy maintained by the assessee-company in the name of Smt. Sashirekha. In civil matters, it is not proof beyond reasonable doubt which is required, but is only preponderance of probabilities which establish the case. Whether the volume of evidence let in is acceptable or not would depend upon proper appreciation of such evidence, according to law. The learned CIT(A) demands that there should be an immediate nexus between receipt of agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not follow automatically that an adverse inference should be drawn that the amount represented undisclosed income of the assessee and that the revenue was not justified in drawing the adverse inference and adding the amounts of the cash credits to the income of the assessee. The facts in that case were, that there were three cash credits aggregating to Rs. 1,50,000 appearing in the books of the assessee private limited company. The amounts were shown to have been received by way of loan from three individual creditors of Calcutta under Hundies. Letters of confirmation and discharged Hundies were produced before the ITO. Particulars of the creditors who were also Income-tax assessees along with central Index Numbers were furnished to the department. The assessee-company after making attempts could not produce the cash creditors, but got summons issued through ITO under section 131 of the IT Act to the cash creditors. However, those summons were returned unserved with remark " left ". The cash creditors in their individual assessment proceedings no doubt admitted that they allowed their names to be lent without giving loans and also gave a list of the persons (debtors) to whom th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence to establish her identity, her creditworthiness as well as the truth of the transaction.Thus, according to us, the ratio of the Supreme Court clearly applies to the facts of the case. Onus of proof has got two meanings --- onus to establish the case, in which case the burden never shifts and the second meaning is that after letting some evidence, the onus shifts from one party to the other. It is no doubt true that the onus to establish the genuineness of the cash credit is on the assessee. It does not mean that one onus always remain with the assessee despite adducing considerable evidence which is trustworthy and believable. In such a case, the burden shifts to the department. In fact this position in law is explained by the Calcutta High Court in S. C. Ghosal's case in that case while holding that no part of the cash credit amount added to the income of the assessee-company should be treated as undisclosed income of the assessee, the Tribunal took into consideration the positive evidence adduced by the assessee regarding (1) the existence of the creditors, (2) the assessment file numbers of the creditors, (3) the confirmatory letters of the creditors in support of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case about the genuineness of the credit was already adduced. However, the department did not adduce any evidence to disprove it. In those circumstances, the question was when the explanation of the assessee was rejected would it automatically follow that the cash credit should be treated as income of the assessee. The then Nagpur High Court held that it cannot be treated automatically as the assessee's income and it held as follows as per its head note at page 195 : " Held, that as the amount was not credited in the assessee's books and was presumably advanced by his wife to be deposited in her own bank account, even if his explanations were rejected, it would not ipso facto be traced to the assessee as his own income ; that as the assessee had made out a prima facie case and the department had no material or information to rebut it, the source of the receipt should be deemed to be established and the amount could not be treated as the assessee's income merely because he could not explain satisfactorily how his wife made the savings and why she did not deposit them in the bank earlier. " It is noteworthy that in this case, the Department did not produce any evidence whatsoeve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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