TMI Blog1994 (10) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Pabudan 2-3-1985 Rs. 30,000 3. Smt. Padam Lata 2-3-1985 Rs. 30,000 4. Smt. Suva Devi 2-3-1985 Rs. 30,000 5. Shri Mohan Lal Jain 8-2-1985 Rs. 35,000 6. Shri Surajmal Baid 8-2-1985 Rs. 55,000 7. Shri Zakir Hussain Old balanc Rs. 1,66,954 4. The Assessing Officer (AO) after conducting necessary enquiries came to the conclusion that though the identity of creditors S. Nos. 1 to 6 stood established, yet their creditworthiness was not acceptable. He, therefore, took the view that cash credits at S.No. 1 to 6 were unexplained and added to the income of the assessee. He, however, accepted the cash credit of Shri Zakir Hussain, appearing at S. No. 7. The assessee appealed to the CIT(A). 5. The learned CIT(A) examined the creditworthiness of all the creditors in sufficient details. He noted that Shri Mahabir Chand Bothra (S. No. 1) and his father Shri Vabudan Bothra (S. No. 2) had been earning business income as partners in a jute firm at Calcutta, called M/s Rajendra Jute Supply Co., for some time and on dissolution of the said fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of cash credits appearing in the names of Smt. Padam Lata, Smt. Suva Devi and Shri Mohanlal Jain, Mr. H.K. Ojha, the learned counsel for the assessee, vehemently urged that not only the identity of these creditors was fully established but also their creditworthiness was proved and, therefore, there were no good grounds to reject assessee's case in their respect. Mr. Ojha submitted that all these creditors had advanced the amounts in question through account payee cheques, that they were income-tax assessees and the amounts advanced by them had been duly reflected in their respective returns and assessments were duly made in their cases. The learned counsel further submitted that these creditors had not only filed confirmations of the credits but had also confirmed them as genuine in their sworn testimonies and thus the genuineness of the transactions was also proved. Mr. Ojha further submitted that the statements recorded behind the back of the assessee were of no value and only the cross-examined testimony of these and other creditors made substantive evidence in the case. He, therefore, urged that the IT authorities grossly erred in rejecting substantive evidence in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace the identity of the creditor has to be established. Once that is done the next step is to prove his creditworthiness. Both these ingredients having been proved, the very character of the transaction, as a genuine transaction, has to be shown. Whereas the first two ingredients are ordinarily proved by leading some positive evidence, the third one can be established by taking an overall view of the evidence brought on record and the facts and circumstances of a given case. If an assessee succeeds in proving these three ingredients, then his explanation cannot be rejected as being unsatisfactory. The satisfaction of the ITO must be reasonable satisfaction. It is not to depend upon his whims and caprices. In case he wants to demolish the explanation offered and proof adduced by an assessee, the ITO is required to bring some material on record which can justify his action. That he may do either by leading some positive evidence or relying upon the inferences to be drawn from the evidence existing on record. But before treating the amounts of the cash credit as income of the assessee, the ITO is required to refer to such facts and circumstances which may legitimately lead to the rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The advances were made through cheques. It is well on record that Shri Pabudan had been carrying on money-lending business and had advanced various amounts to different persons. He was an old IT assessee and was assessed for this year before filing the return by the assessee. We, therefore, fully agree with the learned CIT(A) that the identity of both these creditors, their creditworthiness and the genuineness of the transactions stood well established on record. The additions made in respect to the cash credits in their respective names have been deleted for quite valid and satisfactory reasons and the order of the learned CIT(A) in that behalf is confirmed. Accordingly, the appeal filed by Revenue has to be dismissed. 14. Now coming to the assessee's appeals, we find that the confirmations of the addition of Rs. 30,000 each made on account of cash credits appearing in the books of the assessee in the names of Smt. Padam Lata (S.No. 3) and Smt. Suva Devi (S. No. 4) and addition of Rs. 35,000 made on account of cash credit in the name of Shri Mohan Lal Jain has been challenged. The identity of these creditors is not in dispute. What is in dispute is their creditworthiness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain signatures on some papers. She denied to have herself advanced any amount to the assessee. But on being examined on 25th March, 1988, by the assessee, she not only admitted her signatures on the cheque issued in favour of the assessee but also on the return filed by her for this year. Thereafter she was cross-examined at length by the AO and in such cross-examination she explained that in her earlier statement the factum regarding receipt of gifts by her at various occasions and her signatures on various papers were not put to her. 18. Similarly in her statement recorded on 19th Sept., 1986, Smt. Suva Devi had stated that she was doing some moneylending business for the last 15 years but such business was being carried on by her husband on her behalf. When cross-examined by the assessee on 16th March, 1988, she confirmed to be running a bank account and advancing loan to needy persons, including the assessee. She was also cross-examined at length by the AO but no material contradictions could be obtained in such cross- examination. 19. In his statement recorded on 18th Sept., 1986, Shri Mohan Lal had stated that after leaving his studies in 1981-82 he had engaged himself i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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