TMI Blog2010 (9) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... r return of income for assessment years 2001-02 to 2003-04 have been accepted by the department - Out of the total addition of Rs.12,55,000/- made u/s. 68 of the Act, the ld. C.I.T.(A) deleted the addition of Rs.9,70,000/- and sustained the same to the extent of Rs.2,85,000 - Appeal is partly allowed - ITA No. 1391 (Kol) of 2007 - - - Dated:- 30-9-2010 - Shri B.R.Mittal, Sri C.D. Rao, JJ. ORDER (B.R.Mittal), Judicial Member : These two appeals for assessment year 2003-04, one by the assessee and the other by the Revenue, arise out of the same order of ld. C.I.T.(A), Jalpaiguri dated 19.3.2007. As common issues are involved in these two cross appeals, they are being disposed of by this common order. 2. In this appeal by the assessee, the following grounds are raised :- 1. That keeping in view the facts that all the loan creditors are income tax assessees, they had confirmed the loan transactions and their respective balance sheet filed along with the relevant returns, reflected those loans, the appeal order of CIT(A) is obviously perverse to that extent. 2. That there is no reason for disallowing the loans subjectively in piecemeal when all other loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. He further observed that the said donor neither received any gift from anybody at her marriage ceremony, nor made any such gift to her parents, brothers sisters, which was against the human probability. In reply to question put by the A.O., the said donor stated that the gift was made to the assessee for his urgency of money. The A.O. also found no justification to buy bankers cheque from the banks at Siliguri when the banking facilities were available at her place of residence at Jalpaiguri. In the light of above, the A.O. treated the said gift of Rs.2 lakhs as assessee s unexplained cash credit u/s. 68 of the Act and added the same to the total income of the assessee. 4.2. On appeal, the ld. C.I.T.(A) accepted the said gift as genuine and deleted the addition with the following observation :- The donor, Smt. Minu Agarwal, has shown the returned income at Rs.81,400/- in the A.Y. 03-04, Rs.81,250/- in the A.Y. 02-03 and Rs.80,950/- in the A.Y. 01-02. Thus, her total returned income is at Rs.2,43,600/- in the A.Y. 03-04, 02-03 and 01- 02. The donor, Smt. Minu Agarwal has gifted to the appellant at Rs.2,00,000/-. In the light of the returned income for the three as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such huge capital and for purchasing banker s cheques on different dates from Siliguri instead of her place of residence at Jalpaiguri. According to him further, it was very unlikely that instead of making gift to his nearest and dearest one, the donor gifted huge amount to the assessee, who was in relation uncle to the donor. The Hon ble Supreme Court in the case of CIT v. Daulat Ram Rawatmull [87 ITR 349 (SC)] has observed that the onus of proving that the apparent is not real was on the party who claimed it to be so. The revenue could not bring any evidence to show that donor, from whom the gift was received, was non-existent or the gift was bogus. Further, no evidence could be brought on record by the revenue to show that the amounts which were received by the assessee from the donor had actually been received by the donor from the assessee. Therefore, the A.O. could not have treated the said amount of gift as the income derived by the assessee from undisclosed sources. The above position is also supported by the decision of the Hon ble Gauhati High Court in the case of Nemi Chand Kothari v. CIT [264 ITR 250]. It would be pertinent to mention the observation of their Lordships ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash credit are identical to the ingredients which are required to prove gift. Therefore, the ratio of a decision given in the case of cash credit would be squarely applicable in the case of gift also. In that view of the matter, in our considered opinion, the A.O. was not justified in alleging that the gift was undisclosed income of the assessee. We, therefore, uphold the order of ld. C.I.T.(A) on this issue deleting the addition of Rs.2,00,000/- made to the total income of the assessee u/s. 68 of the Act and ground No.2 of grounds of appeal of the Revenue stands dismissed. 5. The other grounds raised in the Revenue s appeal pertain to deletion of addition of Rs.9,70,000/- on account of bogus loan, whereas the assessee in his grounds of appeal has agitated the sustenance of addition of Rs.2,85,000/- u/s. 68 of the Act by the ld. C.I.T.(A) on account of bogus loan. The facts, in brief, relating to this issue are that during the assessment year under consideration, the assessee has obtained new unsecured loans of Rs.13,05,000/- through A/c. payee cheques from 10 (ten) persons, out of which loan totalling to Rs.12,55,000/- from the following 9 (nine) persons, who are relatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan creditors did not have the creditworthiness to give loans to the assessee and the assessee introduced his unaccounted money in the guise of bogus loan transactions. Accordingly, the loan of Rs.12,55,000/- was added as unexplained cash credit u/s. 68 of the Act relying on the decisions in the cases of Sumati Dayal vs. CIT [214 ITR 801 (SC)] and CIT vs. Precision Finance (P) Ltd. [208 ITR 465 (Cal)]. 7. Before the ld. C.I.T.(A) the assessee contended that the assessee filed confirmations given by all the loan creditors along with their income-tax returns, statement of accounts and balance sheets, which showed that all of them had sufficient available fund for advancing loan to the assessee. That all the loan creditors (except Sumit Kr. Agarwal Amit Kr. Agarwal, who were residing at Bangalore at the relevant time) appeared before the A.O. and confirmed the loan transactions, which were effected by cheques and/or drafts. It was, therefore, contended that the assessee was able to discharge his onus u/s. 68 of the Act to establish the identity of the loan creditors, genuineness of the transactions and creditworthiness of the loan creditors. Reliance in this connection was placed, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/- and the balance addition of Rs.2,85,000/- was sustained by him with the following detailed observations :- I have carefully considered the submission of the appellant along with the documents submitted i.e. the photo copies of the return of income along with the computation of total income, capital account and the balance sheet relevant for the AY 03-04, 02-03 and 01-02 in respect of the cash creditors i.e. Rajendra K m r Agarwala, Prahlad Kumar Agarwala, Bimla Devi Agarwala, Biharilal Agarwala (HUF), Sushila Devi Agarwala, Santa Agarwala, Rajendra Kumar Agarwala (HUF), Sumit Kumar Agarwala, Amit Kumar Agarwala and the donor, Smt. Minu Agarwala, in support of his contention in light of the judicial decision i.e. CIT Vs. Piara Singh 124 ITR 40(SC), CIT Vs. Lachatoorah Tea Co. Ltd.200 ITR 391 (Cal), CIT Gujrat Vs. SC Kothari 82 ITR 794, Muralidhar Lahorimal Vs. CIT (2006) 200 CTR 109, Nemichand Kothari Vs CIT Anr (2001) 185 CTR ( Gou) 635, CIT Vs. Orissa Corporation (P) Ltd. (1986) 159 ITR 89 (SC), Pritam Daftary Vs CIT, (2005) 195 CTR (CaI)304 and P.K. Sethi Vs. CIT( 2006) 206 CTR 445 (Gauhati). And I have also perused the assessment order of the AO. The cash creditors i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan has been found to be not genuine. Therefore, the addition of Rs. 2,00,000/- in respect of the loan taken from Prahalad Kumar Agarwala by the appellant is deleted. And balance amount of Rs.1,85,000/- as loan taken from Prahalad Kumar Agarwala, is hereby confirmed. The cash creditor, Bimala Devi Agarwala, has shown the returned income at Rs. 1,40,770/- in the AY 03-04, Rs. 89,287/- in the AY 02-03 and Rs. 82,820/- in the AY 01-02. Thus, her total returned income is at Rs. 3,12,877/- in the AY 03-04, 02-03 and 01-02. The cash creditor, Bimla Devi Agarwala has given loan to the appellant at Rs. 1,00,000/-. In light of the returned income for the three assessments years as stated above, the creditworthiness of Bimala Devi Agarwala, is accepted for the loan amount of Rs, 1,00,000/-. In view of these findings, the loan up to Rs.1,00,000/- from the Bimala Devi Agarwal is accepted as genuine. Therefore, the addition of Rs.1,00,000/- in respect of the loan taken from Bimala Devi Agarwala by the appellant is deleted. The cash creditor, Beharilal Agarwala (HUF), has shown the returned income at Rs. 53,032/-. In the AY 03-04, Rs. 52,723/- in the AY 02-03 and Rs. 52,102/- in the AY 01- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urned income is at Rs. 2,46,416/- in the AY 03-04, 02-03 and 01-02. The cash creditor, Rajendra Kurnar Agarwala (HUF) has given loan to the appellant at Rs.1,00,000/-. In light of the returned income for the three assessments years as stated above, the creditworthiness of Rajendra Kumar Agarwala (HUF), is accepted for the loan amount of Rs.1,00,000/-. In view of these findings, the loan up to Rs.1,00,000/- from the Rajendra Kumar Agarwal (HUF) is accepted as genuine. Therefore, the addition of Rs.1,00,000/- in respect of the loan taken from Rajendra Kumar Agarwala (HUF) by the appellant, is deleted. The cash creditor, Sumit Kumar Agarwala, has shown the returned income at Rs. 79,929/- in the AY 03-04, Rs.81,110/- in the AY 02-03 and Rs. 50,327/- in the AY 01-02. Thus his total returned income is at Rs. 2,11,366/- in the AY 03-04, 02-03 and 01-02. The cash creditor, Sumit Kumar Agarwala has given loan to the appellant at Rs. L,00,000/-. In light of the returned income for the three assessments years as stated above, the creditworthiness of Sumit Kumar Agarwala, is accepted for the loan amount of Rs. 1,00,000/-. In view of these findings, the loan up to Rs. 1,00,000/- from the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught cash to purchase bankers cheque in favour of the loan creditors. He thus concluded that the loan creditors did not have any creditworthiness to give loans to the assessee. We, however, observe from the appellate order that the returns of income of each of the nine loan creditors for assessment years 2001-02 to 2003-04 and tax paid for such assessments have been accepted by the department. Therefore, in our considered opinion, once the returned income of the loan creditors, wherein the gifts received by them have been shown, has been accepted by the department, we fail to understand how in that situation the transaction of the loan creditor with the assessee can be said to be non-genuine and assessee s income from undisclosed sources. It has been held by Hon ble Gauhati High Court in the case of P.K. Sethi vs. CIT [286 ITR 318 (Gau)] that when all the creditors were income-tax assesses before the same ITO and the latter having accepted the genuineness of loan transactions in the case of the creditors, the cash credits could not be treated as non-genuine in the hands of the assessee. As stated above, in the case before us, all the nine loan creditors are assessed to tax and thei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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