TMI Blog2009 (7) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... see for asst. yr. 2002-03 is directed against the order of learned CIT(A) dt. 20th March, 2006. 2. The only issue involved in this appeal is with regard to sustained addition of Rs. 17,00,000 made on account of unexplained cash creditors under s. 68 of the IT Act, 1961 (hereinafter referred to as 'the Act' for short). 3. Briefly stated, the facts of this issue are that the perusal of balance sheet appended to the return filed by the assessee for asst. yr. 2002-03 on 25th Oct., 2002 revealed that the assessee had credited Rs. 60,07,400 as unsecured loans. When called for to explain these loans, the learned Authorised Representative of the assessee filed details and confirmation letters regarding unsecured loans on 11th Dec., 2003 and 20th Jan., 2004. From the copy of the account furnished by the assessee it was noticed that the assessee has taken unsecured loans from the following parties during financial year 2001-02: "Sl.No. Name Date Amount 1. Shri S.K. Sharma 5-5-2001 10,00,000 2. Swati Sharma 27-3-2002 2,00,000 3. Shri S.P. Sharma 23-3-2002 4,00,000 4. Tushti Sharma 23-3-2002 2,00,000 5. Shri B.D. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as heavily relied on the orders of the authorities below and has further submitted that since the deposits were made in the bank account of the cash creditors prior to issuance of cheque in their respective accounts, even if these were made through banking channels, raise a strong doubt about the genuineness of these deposits and hence the creditworthiness of all the cash creditors cannot be treated as proved on record. According to him the assessee was also required to prove the creditworthiness and genuineness of the transactions. 6. We have examined the entire records and the evidences produced before us. The learned Authorised Representative has taken us through each and every evidence in relation to all the cash creditors separately. Before we deal with the finding of learned CIT(A), it is worthwhile to refer to the evidences which were filed before the learned AO during assessment proceedings to explain all the cash creditors. In relation to Smt. Swati Sharma the assessee has filed a confirmation by the cash creditor, a copy of which is placed at page No.5 of paper book. At p. 6 of the paper book a copy of her bank pass book is enclosed. A copy of account statement of Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 ITR 465 (Cal) and by referring to pp. 470 and 471 has repelled the argument of the assessee that the deposits are through cheques by mentioning that mere payment by account payee cheque is not sacrosanct nor it makes a non-genuine transaction as genuine. We are afraid, the learned CIT(A) has picked up one or two sentences of this decision without really analyzing the ratio of that decision. In that case the assessee had refused to prove identity of the cash creditors by filing reply that since the amount was received through an account payee cheque it would explain all the three requirements of s. 68 i.e., the identity of the depositors, creditworthiness of the depositor and of course the genuineness of the transaction. In these facts and the circumstances, the Hon'ble Calcutta High Court has held that by merely receiving deposits through an account payee cheque, all the three ingredients of s. 68 cannot be taken to have been proved. In that case the assessee was of the opinion that because the depositor has a bank account so his identity is proved and because he is making payment through banking channel so his capacity is proved and because the deposit is in assessee's bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a are devised after long evolution of judicial view for a particular subject. In the case of cash creditors, the assessee is required to prove the identity and the creditworthiness of the cash creditor along with genuineness of the transaction. All of these three requirements are distinct, separate and independent and would never overlap with each other. So many a times the genuineness of a transaction is confused with the genuineness of a deposit or to make it simpler we can put in other words that when a question of gift is being negotiated it is often confused between the genuineness of the gift itself and the genuineness of giving that amount as gift. In this case, the assessee has received an amount through account payee cheque. He has filed confirmations of all the cash creditors. He has filed acknowledgements of IT returns filed for many years by all of them. It is not a case where one or two returns which were filed after the fact of cash credit was detected or was being considered by the AO. In those cases, usually the stand taken by the Department is that this was an afterthought action of the assessee. We fail to understand that when the assessee has produced overwhelmin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case by observing that the cash creditors had received such and such amount of interest in the bank and before and after giving of these cheques, no such heavy amount were either deposited or withdrawn. In our considered opinion, these are irrelevant remarks and have nothing to establish that the transactions of cash creditors are ingenuine or that the money flowed through the assessee. It was always open to the AO to enquire into the fact as to wherefrom those payments were deposited in the bank accounts of the cash creditor. In case he found that there was some irregularity in the deposit of those cheques, then he could have got a valid point which could give him a right to further enquire from the assessee but before doing that the AO has to have some material evidence in his possession which can disprove the claim of the assessee. Learned CIT(A) has discussed much about the evidences filed on record to show that all these cash creditors are income-tax assessees. But learned CIT(A) has missed one point that from the records the identity of cash creditor is at least established. The learned CIT(A) has wrongly construed the decision of Hon'ble Allahabad High Court given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor and the creditor could not be produced but the assessee filed GIR No, balance sheet, confirmation letter before the AO, the AO should have verified the records of the creditor but instead he chose the easier course of ordering production of the creditor which cannot be appreciated. The Hon'ble High Court of Madhya Pradesh went on saying that the AO should realise the inconvenience to the assessee in such cases. The learned Authorised Representative has also relied on the decision of Hon'ble Agra Bench rendered in the case of Subhash Dal Mill vs. Asstt. CIT (2002) 124 Taxman 169 (Agra)(Mag) in ITA Nos. 6609 and 6455/Del/1993/26th Nov., 2001, copy of which is enclosed at p. 51 of the paper book in which it has been held that the source of source cannot be enquired from the assessee by the AO. The Hon'ble Supreme Court while deciding the case of CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC) has gone to the extent by holding that when the AO issued notice to the creditor for appearance which was returned back with the endorsement "left" and the AO did not make any further attempt to examine the source of credit and the assessee had produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would form one aspect thereof; the other being, whether in the facts and circumstances of the case the AO, as an assessing authority, ought to have been satisfied on the basis of the material on record as to the nature and source of the impugned credits. Clearly, if not, s. 68 of the Act stands rightly invoked by him, and there is no question of assessee having discharged the onus that lies on it thereunder. In fact, the two represent two facets of the same question. This satisfaction or, rather, non-satisfaction, of the AO, on which hinges the applicability of the provision of s. 68 in the given case, i.e., as per the law, is to be arrived at in a judicial manner. Its parameters stand clearly defined and spelt out by the apex Court, time and again, as it must necessarily be, for this satisfaction (or non-satisfaction) to meet the test of objectivity, which any judicial decision must if it is not to be dismissed as arbitrary. These three parameters are, 'identity' and 'capacity' of the creditor(s), and the 'genuineness' of the credit transaction(s), each of which is a separate and distinct requirement qua which the 'satisfaction' is to be arrived at, so that if there is a failure o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether the explanation as tendered by the assessee is one which ought to have, reasonably speaking, satisfied a person of normal prudence, acting in relation to his own affairs or under like circumstances. The three ingredients afore-referred represent only the three facets from which the explanation is to be examined, which in all cases has to be viewed holistically, being in relation to a single and same transaction. The other thing that needs to be clarified is that the matter of maintainability or otherwise of the application of s. 68 in any case is based solely on the factual findings, including inferential ones, and on the touchstone of the reasonability. As held in the recent case of CIT vs. P. Mohanakala Ors., the explanation must satisfy the test of reasonableness and that the expression "the assessee offers no explanation" means the assessee offers no proper, reasonable or acceptable explanation as regards the sums found credited in the books maintained by the assessee. And that the opinion of the AO for not accepting the explanation offered by the assessee as satisfactory is required to be based on proper appreciation of material and other attending circumstances av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bank accounts. As per the copies of these banks accounts in the name of creditors, the AO noted that there were credit entries unexplained and unsubstantiated in these bank accounts just prior to the money transferred in the name of the appellant invariably in each and every case as has also been noted by the AO in para 2 of p. 3 of assessment order. The photocopies of said accounts filed during the course of appeal proceedings make it clear that the bank accounts of the respective creditors hardly show any deposits or balances, so as to prove their creditworthiness. Rather the only credit appearing just before the alleged loan transaction mostly in the span of merely one or two days from the date the loan is stated to have been given to the appellant assessee. To elaborate it further in the name of Ku. Swati Sharma, the balance was merely Rs. 26,776 brought forward in which only the interest accrual of Rs. 89 is shown on 10th July, 2001. After that there is a transfer of merely Rs. 446 on 25th July, 2001 and the subsequent entry is again of interest of Rs. 454 on 31st Dec., 2001. After this, on 27th March, 2002, the credit of Rs. 2,00,000 is shown while on the very next day, i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In most of the cases, these are of below taxable amounts showing the tax as nil while in some of the acknowledgements negligible taxes are shown on such income which does not in any way prove the creditworthiness of the parties to advance the huge loans as wrongly contended. All the acknowledgements are of the returns in Saral forms with no enclosures whatsoever in support of providing the alleged unsecured loans. Rather such returns totally disprove the capacities of the creditors beyond any arena of doubts and that those parties were not creditworthy of advancing such loans as shown in the books of the appellant assessee. The learned counsel's further contention was that the AO has desired to know the source of the source of such credit whereas in view of the latest judgment of Hon'ble Allahabad High Court in the case of CIT vs. Jauharimal Goel (2006) 201 CTR (All) 54 : (2005) 147 Taxman 448 (All), it has been held that the assessee cannot be asked to prove the source of source or origin of origin of a deposit. I have perused the judgment of Hon'ble Allahabad High Court in the above case. Their Lordships of Hon'ble Allahabad High Court have very clearly held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e source which remained unexplained what to say about the source of the source. Further, finding regarding partner introducing the money in the firm was also not relevant of the appellant's case. On the other hand, there is ample authority for the proposition that where an assessee fails to prove satisfactorily the source and nature of a certain amount of cash received during the accounting year, the AO is entitled to draw the inferences that the receipts are of an assessable nature (A. Govindarajulu Mudaliar vs. CIT (1958) 34 ITR 807 (SC), 810). The onus of proving the source of a sum of money found to have been received by the assessee is on him. On this point, other cases relied upon are as under: 1. Mahabir Prasad Munna Lal vs. CIT (1947) 15 ITR 393 (All); 2. CIT vs. G.M. Chennabasappa (1959) 35 ITR 261 (AP); 3. Laxmidas Co. vs. CIT (1969) 72 ITR 88 (Bom); 4. Badri Pd. Sons vs. CIT (1975) 98 ITR 657 (All); 5. Nanak Chandra Laxman Das vs. CIT (1982) 28 CTR (All) 280 : (1983) 140 ITR 151 (All). The burden of proving the source of cash credit is on the assessee-when a cash credit entry appears in the assessee's books of account in an accounting year, the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1994) 208 ITR (Cal) 465, 470, 471. When a question arises as to whether a cash credit appearing in the books of account of an assessee has to be accepted or to be rejected and addition to be made in accordance with s. 68, the assessee is required to establish the identity of his creditor, the capacity of the creditor to advance the money and the genuineness of the transaction. In order to establish the fact of the receipt of the cash credit as required under s. 68, the assessee must prove three important conditions, viz. (1) the identity of the person (2) the genuineness of the transaction and (3) the capacity of the person giving the cash credit (Jalan Timbers vs. CIT (1997) 137 CTR (Gau) 649 : (1997) 223 ITR 11 (Gau), 17. It should be borne in mind that mere filing of the income-tax file numbers of the creditors is not enough to prove the genuineness of the cash credit(s). The creditor should be identified. There should be creditworthiness. There should be genuine transaction (CIT vs. Korlay Trading Co. Ltd. (1999) 152 CTR (Cal) 17 : (1998) 232 ITR 820 (Cal), 824. In the facts of that case, it has been held that the finding of the Tribunal that the identity of the creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is in May, 2001 (as against the rest which is only in the last week of March, 2002), as out of the amount of retirement benefit received by him. The same, it may be clarified, does not represent source of source, but only establishes the capacity of the said creditor. In case of the credit(s) under reference, it is the creditworthiness (of the creditors) and the genuineness of the impugned transactions that stands considered as not proved. It is difficult to arrive at a different conclusion as would be evident from a bare reading of the findings of the learned CIT(A) as above. In each case, the creditor concerned is a person of small means, as established from the returns of the income furnished by him. The return of income for the preceding years is even lower, at below taxable amounts in some cases, so that the tax liability is either at nil or marginal. Further, in each case, there is no explanation as to the source from which the impugned amount stands credited in the creditor's bank account, and which is only a couple of days prior to the transaction under reference. It needs to be clarified that it is not necessary that the loan or credit must flow from creditor's curr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well have borrowed and so on, so that the assessee's borrowing would have to be reasonably proved as a genuine one. This is so as the premise of the section, and the sale criterion on which its application hinges, is the satisfaction as to the credit. of which the assessee is the beneficiary (as borne out of the books), as flowing from a genuine source. The section places no restriction on either the assessee's onus or obligation, or on the AO's right, in the matter, except that it can rightfully extend to as much as is necessary to arrive at a 'satisfaction' on the truth of the transaction. If the Revenue has material with it to show that the creditor's creditor or sub-creditor (hereinafter), i.e., from whom the funds in question are sourced on credit by the creditor, is not creditworthy, the creditworthiness, it must be appreciated, is not proved, but merely shifts to another. But this material, to be relevant, must be confronted to the assessee, and if so, the onus would shift back thereto. The matter is, thus, entirely factual and requires to be looked at with a common sense approach, guided, at all times, by the standard of, or the touchstone of, reasonableness. It is in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fact that the assessee stands benefited by an amount is an evidence against it, and it is for it to prove that the sum does not represent its income. In other words, there is no estoppel against the law. As long as the AO is acting within the framework of law, his action cannot be questioned on the basis that he could have also acted differently. It is also trite that an authority may for a particular purpose could possibly rely on more than one provision, so that where he prefers one to another, his action could not be faulted on that score. In fact, s. 69 talks of undisclosed asset(s), while s. 68 of disclosed credit(s), so that it is either/or situation and not and/or one, i.e., between the applicability of the two provisions. It is only where the Revenue finds as a fact that the amount under reference belongs to the creditor, it has to, if the same is undisclosed, proceed only against the creditor under s. 69/69A, and any action under s. 68 would fail, pointing out again an either/or situation, and not and/or one. Thirdly, one has to keep in mind that the primary purpose of assessment is to assess and collect taxes. The benefit of the amount being availed by the latter (asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... past 3 years ------------------------------------------------------- Swati Sharma 2,00,000 91,858 69,230 ------------------------------------------------------- S.P. Sharma 4,00,000 92,464 85,817 ------------------------------------------------------- Tushti Sharma 2,00,000 91,072 74,214 ------------------------------------------------------- B.D. Sharma 4,00,000 75,571 73,707 ------------------------------------------------------- Late Smt. Vimla Sharma 5,00,000 50,400 47,721 ------------------------------------------------------- Table Continues... ------------------------------------------------------- Whether Vacation or Source Back ground responded to occupation of credit summons with the creditor ------------------------------------------------------- No Business/ Not Not profession specified specified ------------------------------------------------------- No Business/ N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to do so, specifying the reasons. Lastly, that the assessee was in constant or regular touch with the creditors, besides even otherwise a valid assumption in view of a debtor-creditor relationship, is borne out by the fact that the assessee submitted their IT returns for the preceding years at the first appellate stage. As it appears, the assessee rather wanted to avoid their examination. In any case, furnishing of the correct address is a primary obligation that remains to be fulfilled. The sum and substance of the decision in the case of Orissa Corporation (P) Ltd. is that where the assessee is unable to furnish the same, which inability is to be bona fide and genuine, with the Revenue having the requisite information to proceed with its verification in the matter, the Revenue should not have insisted thereon the same thus only advocates taking a reasonable view of the matter under the facts and circumstances of the case. There is thus no discharge of the burden of creditworthiness or capacity of the creditors by the assessee in the present case. Finally, it needs to be appreciated that the AO as well as learned CIT(A) have not based their findings solely on the fact of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been stated to exist. And, neither the assessee shown to be facing a financial crisis or the like to call on his friends for a bail out. Any person of common prudence, as the assessee's creditors must necessarily be assumed to be, would, reasonable speaking, in such a situation, only prefer to keep it in bank or some other safe avenue, yielding safety of capital and nominal return, which, nevertheless, would be very valuable, given the low income level and thus the need therefor, besides satisfying the paramount need of the security of the capital i.e., given the state of heightened risk averseness. The transaction is, thus, unproved from the genuineness stand-point as well, and which in the present case, impinges directly on the 'nature' aspect of the credit(s), which is attribute thereof, along with 'source', that the assessee is required to establish under the clear mandate of s. 68 of the Act. 5.9 In view of the foregoing the assessee has singularly failed to prove the credit aggregating to Rs. 17 lacs appearing in its books, which, rather, stands disproved, even as held by the Revenue. Case law 6.1 The assessee has relied on certain case law. In this regard it is stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in calling for the concerned creditors, especially where the assessee has not spelt out his inconvenience in doing so. Secondly, only when the assessee furnishes the correct addresses, explaining his inability to produce the creditor, can it be said to have discharged the onus in this respect, which is absent in the present case. The onus under s. 68, even as explained earlier, is not necessarily fixed but keeps changing, and there has been no initial discharge thereof by the assessee in the present case. The AO as well as learned CIT(A) have, as also stated hereinbefore, not based their findings solely on the fact of non-attendance of the creditors, but an appreciation of the entirety of facts and circumstances of the case, i.e., on its merits. Finally, Hon'ble Court in the said case has upheld the findings of fact by the Tribunal, stating that no substantial question of law arises. 6.3 The decision in the case of Jhamatonal Takhatmal Karia Merchant vs. CIT (2007) 7 ITJ 322 (MP) is, again, rendered on the peculiar facts of the case, with the assessee claiming peak credit with the Hon'ble High Court, rather, upholding its non-acceptance by the Revenue. 6.4 The decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be examined, therefore, their identity, genuineness and creditworthiness could not be proved. The AO provided another opportunity to the assessee to prove the identity, genuineness and creditworthiness of these creditors. A written reply was filed in response to that notice in which copies of bank statement of creditors were filed. From the bank statements, the AO noticed that there was meagre balances before the date on which the deposits were given to the assessee and immediately before the deposit was given, there was deposit in the account of the creditor. Thus, the AO observed that creditworthiness and genuineness could not be proved as the assessee remained unable to explain the source of deposits in the bank accounts of the creditors. It is for that reason, the AO added the above-mentioned credits to the income of the assessee. 4. Before CIT(A), it was submitted that the assessee had submitted ample evidences to prove the identity, creditworthiness and genuineness of the cash credits. It was contended that the AO asked the assessee to prove the source of source which could not be asked as per the decision of Hon'ble Allahabad High Court in the case of CIT vs. Jau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has filed GIR number, balance sheet, confirmation letter before the AO, the AO was required to verify the records of the creditor and where he chose the easier course of ordering the production of the creditors, such course is not appreciable. 7. Further, it has been held by the learned JM that the assessee cannot be required to explain the source of source and according to the decision of Hon'ble Supreme Court in the case of CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC), when the notice issued by the AO to creditor was received back with the remark 'left' and the AO did not make any further attempt to examine the source of credit, and the assessee had produced letter of confirmation etc., no adverse inference could be drawn that the said amount represented assessee's undisclosed income. 8. Further reference is made to the decision of Gauhati High Court in the case of Nemi Chand Kothari vs. CIT (2003) 185 CTR (Gau) 635 : (2003) 264 ITR 254 (Gau) wherein it has been held that failure of creditor to show creditworthiness of his sub-creditor cannot lead to addition in the hands of the assessee. The assessee must be taken to have pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit for the in the year past 3 years ------------------------------------------------------- Swati Sharma 2,00,000 91,858 69,230 ------------------------------------------------------- S.P. Sharma 4,00,000 92,464 85,817 ------------------------------------------------------- Tushti Sharma 2,00,000 91,072 74,214 ------------------------------------------------------- B.D. Sharma 4,00,000 75,571 73,707 ------------------------------------------------------- Late Smt. Vimla Sharma 5,00,000 50,400 47,721 ------------------------------------------------------- Table Continues... ------------------------------------------------------- Whether Vacation or Source Back ground responded to occupation of credit summons with the creditor ------------------------------------------------------- No Business/ Not Not profession specified specified ------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance with that firm as a sum of Rs. 3,67,500 as on 31st March, 2002 and besides signing the said confirmation, address has also been given below the signatures. Page 6 is the bank statement of creditor in which before giving the cheque to the assessee of Rs. 2,00,000 on 28th March, 2002, on 27th March, 2002 a sum of Rs. 2,00,000 was deposited by way of clearing. At p. 7, the copy of account in assessee's books of account is given. At pp. 8 to 13, the acknowledgements of IT returns filed by Swati Sharma for asst. yrs. 1996-97 to 2001-02 have been given. Similar evidences have been filed in respect of all the creditors which are placed at pp. 14 to 46 of the paper book. Thus, it was pointed out by the learned Authorised Representative that the assessee had placed the evidences on record to prove the identity, creditworthiness and genuineness of the creditors. He contended that the AO never asked the assessee to produce the creditors. All the creditors were income-tax asses sees and their PANs are given to the AO. The AO without verifying their income-tax records and without verifying the creditors whose identity could not be disputed, as they were on record of the IT Department, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition was deleted by the Tribunal. He also relied upon the decision of Allahabad High Court in the case of CIT vs. Jauharimal Goel to contend that in that case, the credit was appearing in the accounts of the assessee in the names of his daughters and it was explained that the money was deposited by the daughters after withdrawing from their bank accounts. The CIT(A) and the Tribunal found that both the daughters were income-tax assessees and were assessed to tax under the Amnesty Scheme and the assessee's explanation was accepted. It was held that the Tribunal had rightly deleted the addition. Thus, it was pleaded by the learned Authorised Representative that in view of the findings of learned JM, the addition should be deleted. 14. On the other hand, Shri Ratan Singh, senior Departmental Representative, has submitted before me the written submissions. Referring to those submissions, it was submitted by him that the Revenue strongly supports and relies upon the findings of learned AM for the reasons that: (i) so-called creditors have been found to be the persons with nominal income and resources; (ii) that no source of fund stood stated; (iii) that the case laws re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to substantiate the cash credit are not the copy of bank account of the creditors. If it is so, the AO could have verified either from the income-tax record or from the record of bank to establish that such creditor was unidentifiable, and the addresses given by the assessee were not correct addresses. From the entire assessment order, it cannot be made out that at any moment, the AO had asked the assessee to produce the creditors. It is only stated that the summons issued to the creditors could not be served and therefore, the assessee was required to submit evidences to substantiate the cash credits found in its books of accounts in respect of these creditors. Each of the creditors was having substantial opening credit balance in the books of the assessee which has also been confirmed in the confirmations filed before the AO. Unless it is established that the creditor is not found it the PAN given by him and the bank account of the creditor does not reveal the correct position, it cannot be presumed that the credit in the books of assessee is non-genuine. 18. According to s. 68 where any sum is found credited in the books of assessee maintained for any previous year, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase enquiry was made by the Department through Inspector which revealed that the creditors were not found at the income-tax files which were mentioned by the assessee and also the creditors were not found at the addresses given. It was found that the identity of the creditors was not established. However, in the present case, it is not the case of the AO that the creditors are not found in the record of Revenue at the PANs given by the assessee. 21. Similarly, in the case of CIT vs. United Commercial Industrial Co. (P) Ltd. relied upon by the learned CIT(A), the creditors have confessed before the AO and confirmatory letters filed by them were found to be collusive, fictitious and false. Thus, it was held that mere confirmation and the fact that the transaction was made through bank account, do not establish their genuineness. In the present case, there is no confession of the creditors and the confirmatory letters are also not found to be collusive, fictitious and false. 22. As against this, the judgment of Hon'ble Madhya Pradesh High Court in the case of CIT vs. Barjatiya Children Trust relied upon by the learned Authorised Representative clearly supports the case of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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