TMI Blog2012 (7) TMI 371X X X X Extracts X X X X X X X X Extracts X X X X ..... ness CIT(A) has wrongly deleted the addition shifting the burden on the Assessing Officer to establish the creditworthiness of the depositors - only genuineness of few parties have been proved furnishing relevant bank statement of the creditors explaining that the source of loan - partly in favour of assessee. - ITA Nos.518/Agr/2008 - - - Dated:- 22-6-2012 - SHRI BHAVNESH SAINI, AND SHRI A.L. GEHLOT, JJ Appellant by : Shri Waseem Arshad, Sr. D.R. Respondent by : Shri A.R. Ojha, C.A. ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: This is an appeal filed by the Revenue against the order dated 29.04.2008 passed by the ld. CIT(A)-I, Agra for the Assessment Year 2004-05. 2. The Revenue has raised as many as 14 grounds of appeal wherein effective ground is in respect of deletion of addition of Rs.43,80,000/- being unexplained cash credit of 12 persons. 3. The brief facts of the case are that the assessee derives income from construction and engineering work on contract basis. During the assessment proceedings, the Assessing Officer noticed that the assessee has taken approximately loans from100 different persons. Some of the loans were taken in cash and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the appellant s own unaccounted money and accordingly added Rs.5,00,000/-to the appellant s income. In the course of appellate proceedings, the appellant filed detailed written submissions stating therein as under:- (a) the loan was received on 2 dates i.e. 12.03.2004 Rs.2,50,000/- 27.03.2004 Rs.2,50,000/- Rs.5,00,000/- Thus, the loan was held by the appellant for less than 1 month during the relevant accounting year. Therefore, there was no reason for giving interest for the whose year. However, interest has been paid in the subsequent year. (b) Sri Gopal Maheshwari is doing money lending business. His cash-in-hand is his stock-in-trade. He had sufficient balance in his a/c with State Bank of India from which the impugned loan has been received through a/c payee cheques. (c) Sri Gopal Masheswari has further explained the source of deposits in his bank a/c as under:- Ch.no.139118 dt.12.3.04 Rs.2,50,000 from M/s Nand Kishore Arvind Kumar (Dall mill and commission Agent) Ch. No. 143768 dt.27.3.04 Rs.1,00,000 Balmukand Bhagwan Das (Dall mill commission agent) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of appellate proceedings, vide written submission filed on 7.2.2008 the appellant stated that the impugned loans of Rs.3,35,000/- each were received on 19.3.2004 and therefore there was no liability to pay interest during the relevant previous year. The appellant also furnished photocopy of the relevant joint bank account of Sri Gopy Shyam Pathak and Sri Dharmendra Pathak in State Bank of India, Pata which was produced before the Assessing Officer and examined by her as apparent from the statement of Sri Gopal Shyam Pathak recorded by the Assessing Officer on 6.12.2006. It is observed that there are deposits of Rs.6,67,072/- by transfer on 30.1.2004, 5.2.2004 and 7.2.2004 which are stated by the creditor to be encashment of FDRs in the same bank. The 2 loans of Rs.3,35,000/- each have been given by cheques and transferred to the appellant s a/c in the same bank. The cash deposit of Rs.1,00,000/- on 17.3.2004 is stated to be the amount of Rs.1,00,000/- withdrawn on 14.2.2004 which was redeposited. In view of the aforesaid facts and in the absence of any evidence to the contrary the loans cannot be treated as unexplained. Consequently, the addition of Rs.6,70,000/- (Rs.3,35,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the credit balance, against which the DD for the impugned loan was obtained by the said creditor. I have considered the rival contentions and find that the said creditor has given and affidavit which has not been refuted by the AO. The appellant also appears to have purchased some material from the said person. The repayment is stated to comprise the loan and the price of the material. There is no evidence on record to show that the creditor does not exist or that he has not entered into the above transactions with the appellant. No enquiries in Mahewa, Etawah or with the bank through which the DD has been obtained by M/s Sharda Traders has been carried out by the AO to disprove the existence and creditworthiness of M/s Sharda Traders and the genuineness of the transaction. Thus, there is no basis to reach the conclusion that the nature and source of the loan of Rs.2,50,000/- in the name of Sharda Traders is unexplained. In these circumstances, the addition of Rs.2,50,000/- is not sustainable and hence deleted. (iv) Sri Anand Kumar Rs.1,00,000/- The appellant has shown a loan of Rs.1,00,000/- from one Sri Anand Kumar r/o Dibiyapur. On perusal of the said creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter a period of more than 1 month and that this is not a case where cash is deposited immediately prior to advance of loan. Vide written submissions dated 12.3.2008, the appellant has further contended as under:- - Interest amounting to Rs.8,075 was paid during the year. TDS of Rs.888 was made therefrom - The: closing balance of Rs.1,07,187/- was repaid in the subsequent year on 31.3.2005 along with interest of Rs.12,862/- from which TDS of Rs.1,312/- was made. - The creditor is not willing to cooperate as the appellant does not have any dealings with the said person at present. I have considered the rival contentions and perused the documents furnished by the appellant. As evident from the assessment order, the creditor is assessed to income tax. The appellant has claimed to have paid interest to the said lender and done TDS therefrom for the year in appeal as well as the subsequent year. The loan has been received by DD and repaid by cheque. The lender is stated to be a dealer of building materials. Thus, it is not established that the lender is non-existent or that he lacks creditworthiness. It is also not proved that the bank account does not belong to the lender or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is savings. The appellant also pointed out that the loan was advanced through a bank draft which was issued after a period of more than 1 month and that this is not a case where cash is deposited immediately prior to advance of loan. Vide written submissions dated 12.3.2008, the appellant has further contended as under:- - Interest amounting to Rs.8,075 was paid during the year. TDS of Rs.888 was made therefrom. - The closing balance of Rs.1,07,187/- was repaid in the subsequent year on 31.3.2005 along with interest of Rs.12,862/- from which TDS of Rs.1,312/- was made. - The creditor is not willing to cooperate as the appellant doe not have any dealings with the said person at present. I have considered the rival contentions and perused the documents furnished by the appellant. As evident from the assessment order, the creditor is assessed to income tax. The appellant has claimed to have paid interest to the said lender and done TDS therefrom for the year in appeal as well as the subsequent year. The loan has been received by DD and repaid by cheque. The lender is stated to be a dealer of building materials. Thus, it is not established that the lender is non-existent or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the written submissions filed in the course of appellate proceedings, the appellant has stated that the real name of the said person is Jitendra Pratap Singh. The AO has wrongly written it as Mahendra Pratap Singh. He advanced a sum of Rs.1,39,249/- by draft out of his savings out of agricultural income. The lender is an income tax assessee. His PAN is ANSPS 8070M. The DO was given by the lender in favour of a car vendor for purchase of a Tata Safari jeep and that he is not prepared to divulge the sources of the funds. In view of the vague explanation given by the appellant, the addition of Rs.1,39,249/- is hereby confirmed. (b) Sri K.K. Dubey Rs.60,000/- The AO has added this loan stating that no information was given by the appellant to establish its genuineness. In the course of appellate proceedings, the appellant stated that Sri K.K. Dubey is an employee of State Bank of India, Mahewa who has given loans by drafts as under:- . 22.1.2004 Rs.20,000/- 22.1.2004 Rs.40,000/- Rs.60,000/- A confirmation letter to such effect has been filed. On perusal of the assessment records, it is seen that vide letter dated 13.12.2006, the appellant has submitted the above fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 8.2.08 and 4.3.2008, the appellant has given detailed explanation, with regard to the loan stating as under:- - The creditor has joint a/c no.10093 with his wife in Allahabad Bank, Auraiya in which he deposited loan of Rs.1,35,000/- on 26.3.2004 received from the said bank. He withdrew Rs.49,000/- on 25.3.2004 and Rs.1.20,000/- on 27.3.2004 from the said bank and deposited the said amounts along with savings of Rs.31,000/- (2,00,000 1,69,000) in his a/c of Mishra Arms in State Bank of India Auraiya and gave a draft of Rs.2,00,000/- on 27.3.2004 to the appellant. Photocopies of certificate of loan of Rs.1,35,000/- to the appellant by Allahabad Bank, statement of savings bank a/c no.10093 in Allahabad Bank and photocopy of relevant statement of a/c in SBI, Auraiya have been filed. As regards savings of Rs.31,000/-, the appellant has filed photocopy of savings a/c pass book a/c No.01190018058 in SBI Auraiya of Smt. Munni Devi Mishra, mother of the depositor, from which the appellant has been utilizing funds available. Smt. Munni Devi Mishra has given a declaration on 22.1.2008, stating that she was employed as a teacher in Junior High School Jamuhi, Dibiyapur and received pensio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rusal of relevant materials, we noticed that Shri Anand Kumar, aged 45 years, is doing business of building material. He is an income tax assessee. His father is an agriculturist having his own agricultural income. Shri Anand Kumar has shown gross total income of Rs.88,900/- as per return of income for Assessment Year 2004-05. The loan was given through cheques. 7. Similarly, Shri Ashok Kumar, aged 40 years is also a trader dealing in building material. His father is also an agriculturist. He is also filing income tax return declaring gross total income of Rs.79,900/-. Shri Anand Kumar, before issuing cheque to the assessee of Rs.1,00,000/-, has deposited cash in his Bank account dated 22.03.2003. Shri Ashok Kumar has also deposited cash in his Bank account on 22.03.2003 before issuing cheque. Affidavits and confirmations of both the parties have been filed. Shri Rajesh Kumar, aged 42 years is a teacher in college. His father is also agriculturist. He has shown gross total income of Rs.78,687/- in his return of income. It has been noticed that the amounts of advances of Rs.1,00,000/- each by Shri Anand Kumar, Ashok Kumar and Rajesh Kumar had been stated to be given on 28.04.2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein it has been held that it is true that the apparent must be considered real until it is shown that there are reasons to believe that the apparent is not real. The Court further observed that in such cases the party who relies on a recital in a deed has to establish the truth of those recitals, otherwise it will be very easy to make self- serving statements in documents either executed or taken by a party and rely on those recitals. Further if all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax. The taxing authorities were not required to put on blinkers while looking at the documents produced before them. They were entitled to look into the surrounding circumstances to find out the reality of the recitals made in those documents. As cited above and on perusal of records, we notice that the assessee in respect of all the three parties did not furnish sufficient material to show creditworthiness and genuineness of their transactions. The copy of affidavits and confirmations do not help in the light of the law laid down by the Apex Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of arguments before the Tribunal, the ld. counsel for the assessee did not show his willingness to produce remaining creditors for examination before the AO. It is, therefore, clear that the assessee has failed to produce the remaining creditors for examination by the Revenue Department in order to find out truth in the matter. 9.1 The AO discussed each and every creditor in the assessment order and the crux of the findings of the AO had been that there were very small bank balances in the bank accounts of the creditors and they were having meager income and as such, they were not men of means to advance any loan to the assessee. In the case of Abhay Maheshwari, there was very small balance of Rs.3528/- in his bank account. He was examined on oath and he was not able to give source of cash deposit to the satisfaction of the AO. He was earning hardly one lac rupees and spent 40,000/- to 50,000/- for household purposes. During his examination on oath, he was not able to satisfactorily explain the availability of funds with him for giving loan to the assessee. In his case, he has filed return of income for the assessment year under appeal at Rs.1,02,850/- (PB-60). In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditors recorded by the AO, Shri Ambhay Maheshwari, he was not able to explain his source of deposit or advancing loan to the assessee through genuine source. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity and creditworthiness of the creditors and genuineness of the transactions. The assessee has, however, failed to prove the creditworthiness of the creditors who were having only meager income. No details of their savings have been filed. The assessee has never shown his willingness to produce the remaining creditors for examination before the AO. Therefore, the genuineness of the transaction could not have been examined by the AO. The smallness of the bank balance in the bank accounts of the creditors prior to issue of cheques would clearly reveal that they were not having any source and it was the money of the assessee which was routed through the bank accounts of the creditors for the purpose of giving credits to the assessee. These were, therefore, accommodation entries only and as such, could not be considered as genuine transactions. Merely because the loans have been received through banking cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to prove the credit-worthiness of the alleged lenders. A number of other assessees had also admitted that loans obtained from these bankers against hundis were not genuine and such hundi loans really represented their own concealed income. The assessee had not discharged its burden of proving that the loans in question were genuine. 10.2 Hon ble Calcutta High Court in the case of M/s. Precision Finance Pvt. Ltd., 208 ITR 465 held that even the loan through bank cannot be accepted as genuine unless the identity and creditworthiness of the creditors are proved. Mere payment of account payee cheque is not sacrosanct nor can it make a nongenuine transaction genuine. 10.3 The Hon ble Supreme Court in the case of Durga Prasad More, 82 ITR 540 and Sumati Dayal, 214 ITR 801 held that the Courts and Tribunal have to judge the evidences before them by applying the test of human probabilities after considering the surrounding circumstances. 11. On consideration of the facts of the case in the light of above discussion and decision, we do not find any justification to interfere with the order of the ld. CIT(A). The assessee has failed to prove the creditworthiness of all the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts and circumstances of the case in the light of findings of the authorities below, we do not find any irregularity or illegality in the orders of the authorities below. We confirm their findings and dismiss the appeal of the assessee on this ground. Concise grounds Nos. 1 2 are, accordingly, dismissed. 10. In the case under consideration we noticed that all the three parties have deposited the cash in their bank account before issuing cheques to the assessee, which apparently show that these were accommodation entries, not genuine and all the three creditors were not having creditworthiness. The assessee has failed to furnish the relevant and sufficient material in this regard. We find that the CIT(A) has wrongly deleted the addition shifting the burden on the Assessing Officer to establish the creditworthiness of the depositors. In the light of the facts, the addition of Rs.3,00,000/- loans taken from S/Shri Anand Kumar Rs.1,00,000/-, from Ashok Kumar Rs.1,00,000/- and from Rajesh Kumar Rs.1,00,000/- are confirmed. 11. In respect of loan from Shri K.K. Dubey Rs.60,000/-, it was stated that Shri Dubey is an employee of State Bank of India and loan was given by drafts for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.2,00,000/- 7) M/s Mishra Arms Rs.2,00,000/- Total ----------------- Rs.10,10,000/- ---------------- . 15. In respect of other creditors, we notice that the CIT(A) after detailed discussions found that the assessee has discharged the burden in respect of section 68 of the Act by furnishing necessary evidences to prove the identity, creditworthiness and genuineness of transactions. In case of Shri Gopal Maheshwai from whom the assessee has taken loan of Rs.5,00,000/-, the assessee has furnished creditor s bank statement to show the creditworthiness of the creditor. In case of Gopi Shyam Pathak Shri Dharmendra Pathak, loan of Rs.3,35,000/- each have been taken by the assessee and in support of the creditworthiness the assessee has furnished relevant bank statement of the creditors explaining that the source of loan was out of encashment of FDRs. In respect of loan from M/s. R.G. Finlease (P) Ltd. of Rs.20,00,000/-, the assessee has furnished relevant materials to show the creditworthiness that M/s R.G. Finlease (P) Ltd. has deposited the amount out of maturity amount of fixed deposit of creditor. As regards loan from Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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