TMI Blog2012 (12) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the AO u/s 68 of the I.T. Act at Rs. 26,83,750/-. 2. The assessee is an individual and she continues to file her returns of income in her maiden name, i.e. Poornima Narsaria. The facts emerging from the order of the AO is that during the course of assessment proceedings, the AO noticed Rs. 38,99,277/- standing as unsecured loans in the Balance Sheet filed by the assessee. On enquiry, with regard to amounts aggregating to Rs. 26,83,750, it was submitted that figures against Ms. Ambika Sonthalia and Ms. Anju Sonthalia were gifts of Rs. 9.00 lakhs each and rest were loans and interest thereon at Rs. 8,83,750/-. It was explained along with the confirmation that entire transactions were conducted within the present family members of the assessee, who had married in Sonthalia family. 3. The AO disregarded the evidence so placed before him and added the aggregate sum of Rs. 26,83,750/- u/s 68 of the I.T. Act, by quoting the section and holding, the explanation offered by him is not, in the opinion of the AO, satisfactory . 4. The assessee preferred appeal before the CIT(A), who examined each of the impugned transaction and gave independent finding on each of them which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich proves creditworthiness. WHETHER IT IS AFTERTHOUGHT No it is not an afterthough since Ambica Sonthalia has filed her Return of Income on 28.7.2006 along with Balance Sheet and Profit Loss A/c in which she has shown a Gift of Rs. 9,00,000/- to Poornima Narsaria while the security of Poorrnima Narsaria came after one year. In the light of the above it may be appreciated that the alleged transaction was genuine and fully verifiable. However, it is respectfully stated that the learned AO was wrong in holding the alleged amount as unexplained cash credit u/s 68 of the Act. (i) Smt Anita Sonthalia Rs. 11,96,208/- During the assessment it was categorically explained and clarified that (a) Rs. 9,00,000/- out of Rs. 11,96,208/- though appeared in the Balance Sheet under the head Unsecured Loans, was genuinely a gift. In fact the amount was paid by cheque, not only that a Gift Deed was also executed on a stamp paper of Rs. 100/- at the time of gift on 7th June, 2005. From the said Gift Deed it may be evident that the said gift was made in the presence of two witnesses. In this regard our client had submitted the following documents- (a) Color Xerox Gift Deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Poornima Narsaria 1196208 Loan amount as per Balance Sheet of Anita Sonthalia 242000 The reconciliation is as follows- Poornima Narsaria Loan Balance 1196208 Less: Gift wrongly shown as loan 900000 296008 Less: Interest wrongly payable by Poornima Narsaria but not reflected In Anita Sonthalia Loan Confirmation 54208 As per loan confirmation of Anita 242000 Thus interest payable by Rs. 54,208/- is wrongly shown by Poornima Narsaria in earlier years. The amount of interest of Rs. 54204/- was provided by our client in earlier period but it was mutually understood after the end of the financial year that the interest payable would be waived and therefore this amount of interest not paid. However with a view to avoid further litigation our client is offering this amount as income. It is bonafidely believed that no concealment / penalty proceedings would be initiated. (ii) Shri Anju Sonthalia Rs. 2,93,771/- During assessment proceedings following documents filed 1] Xerox copy of IT return filed on 30.7.2006 2] Balance Sheet, Profit Loss A/c 3] Loan Confirmation Letter Whether loan i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was clearly evident that she has clearly disclosed Rs. 2,40,000/- at the asset side as receivable from out client. The learned AO has rejected the banafide explanation mainly on the grounds- That the confirmation letter was signed by the Accountant. No PAN number was mentioned on the confirmationletters Assessee did not produce original documents for verifications With a view to meet the learned AO s above grounds we seek your Honor s kind permission to submit a frsh confirmation with PAN no. for the amount of loan Rs. 2,40,000/- Whether Loan is genuine or not following test is applicable Identity The assessee has filed IT return, In IT acknowledgement Name, address, PAN no. is appearing, hence identity is proved. Genuineness The done has given gift by cheque. She is having sufficient credit amount in his bank account which proves genuineness. Creditworthiness Nandini sonthalia is having capital of Rs. 13734449.73 in her Balance Sheet Total assets side of the balance sheet is Rs. 16056861.60-It shows that she is having sufficient creditworthiness at her disposal. In the light of the above it may be appreciated that the alleged transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitions- (a) Important facts to prove cash credit- (i)Identity of creditor (ii)Creditworthiness (iii)genuineness of the transaction From the record and submission it may be appreciated that our client has sufficiently discharges her initial burden by submitting all the relevant record of the creditors. In this regard reference may be drawn to the judgments of Hon ble Calcutta High Court n the case of Shanker Industries vs. CIT [114 ITR 689] - Of the Hon ble Rajasthan High Court in case of Labh Cand Bohra vs. ITO [219 CTR 571] (b) Material finding is required to hold cash credit as unexplained- On the facts and circumstances of our client it is respectfully submitted that the learned AO was wrong in rejecting the bonafide explanation in arbitrary manner. The learned AO had not brought any material finding that was contrary to the submissions of our client. In fact the bonafide explanation and submissions have been rejected in arbitrary manner. In this regard we may draw attention to the judgment of the Apex Court in thecase of Roshan Di Hatti vs. CIT [107 ITR 938] Shifting of burden Once confirmation letter, address and PAN no. of the party has been furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ift from the donor. No doubt that there was initially a confusion in the books of accounts in mentioning the amount as loan instead of gift but such mistakes are probable mistakes when a girl is married to some other family and despite this, her financial affairs are still managed primarily by her parents like in the instant case. The appellant Smt. Poornima Narsaria is married to the family of Sonthalias but the return of income is still being filed in her maiden name by her father. Therefore, the objections of Assessing Officer reported through his remand report dated 15th of February, 2010 through proper channel appears to be insignificant because Smt. Poornima S. Narsaria and Smt. Poornima A Sonthalia arenot two persons but the same single person i.e. the appellant. Thus, I find force in the arguments and submissions of the Ld. Authorized Representative that the gifts are genuine and are from the close relatives mentioned in the exceptions in Sec. 56(2)(v) (vi) of the IT act 1961 that are exempt from taxation. For the purposes of clarity, the submissions of ld. Aluthorized Representative are reproduced hereunder: As directed by you, we are furnishing herewith origina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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