TMI Blog2012 (12) TMI 696X X X X Extracts X X X X X X X X Extracts X X X X ..... tor or the genuineness of the transaction of loan. - Addition confirmed - Decided against the assessee. - I.T.A.No.6 of 2012 - - - Dated:- 27-11-2012 - Goda Raghuram And M.S. Ramachandra Rao, JJ. Appellant Rep. by : Sri A.V.A.Siva Kartikeya Senior Standing Counsel JUDGEMENT Per : M.S. Ramachandra Rao : This appeal is filed under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') by the assessee challenging the order dated 16-03-2007 in I.T.A.No.8/Vizag/2006 of the Income Tax Appellate Tribunal, "SMC", Visakhapatnam relating to the assessment year 2002-2003. 2. The Kartha of the appellant/assessee HUF by name Dr.D.Siva Sankara Rao is a medical practitioner running a hospital by name Siva Speciality Hospital at Jangareddygudem. On 22-10-2002, a survey was conducted under Section 133-A of the Act. Pursuant to the same, the assessee filed on 24-12-2002 his returns in the status of HUF for the assessment year 2001-2002 and 2002-2003 (besides returns in the status of individual). In the return for the assessment year 2002-2003, the assessee admitted taxable income of Rs.82,000/- and agricultural income of Rs.1.00 lakh. The assessee showed that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The CIT (Appeals) held that under Section 68, the assessee has to establish the identity and the creditworthiness of the creditor and the genuineness of the transaction in order to avoid any addition of cash credit to his income. He held that although the identity of the alleged creditor is known (being the wife of the Kartha of the assessee), her creditworthiness has not been established beyond a sum of Rs.15,000/-; that although she claimed that the amount of Rs.2.00 lakhs was gifted to her by her parents, there is nothing to show that her parents had indeed cash credit balances aggregating to Rs.2.00 lakhs as on a particular date, to gift such sums to their daughter (the creditor); and that the claim of having owned agricultural lands for leasing in connection with the fish ponds/tanks does not of itself establish that agricultural income, if any, had been accumulated over and above the expenditure for various purposes, so as to donate such sums as gift to the Kartha of the assessee HUF , who is her husband. He also held that the assessee's wife being a Government employee is bound by the Conduct Rules governing her service which mandate giving of intimation of cash transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in question cannot be treated as the income from undisclosed sources of the assessee. 11. The learned counsel for the Revenue refuted the above contentions and contended that the concurrent findings of fact about the lack of creditworthiness of the wife of the assessee by the assessing officer, the CIT (Appeals) and the I.T.A.T. are based on appreciation of evidence and cannot be said to be perverse warranting interference under Section 260-A of the Act. 12. We have considered the submissions of the parties. 13. Section 68 of the Act states as follows: "Section 68. Cash Credits: Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year." 14. In CIT Vs. P. Mohanakala (2007) 6 S.C.C. 21, at para 16, page 28, the Supreme Court while interpreting Section 68 of the Act observed as under: "16. The question is what is the true nature and scope of Section 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessees by holding that it was a receipt of an income nature. In the case in hand the authorities concurrently found the explanation offered by the assessees unacceptable. The authorities upheld the opinion formed by the assessing officer that the explanation offered was not satisfactory. The assessees did not take the plea that even if the explanation is not acceptable the material and attending circumstances available on record do not justify the sum found credited in the books to be treated as a receipt of an income nature. The burden in this regard was on the assessees. No such attempt has been made before any authority. All the decisions cited and referred to hereinabove are required to be appreciated and understood in the light of the law declared by this Court in Sumati Dayal (1995 Supp (2) SCC 453)." 15. In Tolaram Daga's case (1 supra) cited by the counsel for the appellant, a deposit was made in the accounts of a firm by a third party who was the wife of a partner of the firm (the assessee), it was held that the assessee firm or its partners cannot be compelled to prove the sources from which the deposit was made and that once the accounts of the firm had been acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1992-93. The amounts were paid by cheques by the creditors to the assessee. The creditors received the said amount by way of loans from their sub-creditors by means of cheques. The Assessing Officer declined to treat the loan amount of Rs.4,35,000 as genuine. As regads Rs.5 lakhs he declined to treat the loan amount to the extent of Rs.4,25,000 as genuine. The Assessing Officer added the two amounts to the total income of assessee as income from undisclosed sources. The Tribunal set aside the order passed by the Commissioner (Appeals) and upheld the order of the Assessing Officer on the ground that neither the sub-creditors nor the creditors in question had creditworthiness to advance the said loans. On appeal, the High Court held that the assessee had established the identity of the creditors. The assessee had also shown, in accordance with the burden, which rested on him under Section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors which was not in dispute. Once the assessee had established these, the assessee must e taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural land and her mother Ac.2.20 cts. of agricultural land which had allegedly been converted into fish ponds and granted on lease and therefore she was in a position to give a loan of Rs.2.00 lakhs to the HUF. Admittedly she was a government servant and under the applicable Conduct Rules, receipt of any gifts beyond a particular limit have to be intimated to the State Government and can be received only after obtaining permission from the State Government. There is no evidence that the wife of the Kartha of the HUF had sought permission or intimated to the State Government about the alleged gifts. There is no evidence adduced by the assessee or by her that her parents had granted on lease the agricultural lands possessed by them and no rent receipts or lease deeds were produced before any of the authorities under the Act. The loan by the wife to the Kartha of the HUF (the assessee) is not by way of cheque or demand draft and is claimed to be in cash. In this view of the matter, although the assessee was able to prove the identity of the creditor i.e the wife of the Kartha, it cannot be said that the assessee was able to prove the creditworthiness of the creditor or the genu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... touchstone of the aforenoted legal principles, we are of the opinion that in the instant case the High Court has correctly concluded that no substantial question of law arises from the order of the Tribunal. All the authorities below, in particular the Tribunal, have observed in unison that the assessee did not produce any evidence to rebut the presumption drawn against him under Section 68 of the Act, by producing the parties in whose name the amounts in question had been credited by the assessee in his books of account. In the absence of any cogent evidence, a bald explanation furnished by the assessee about the source of the credits in question viz. realisation from the debtors of the erstwhile firm, in the opinion of the assessing officer, was not satisfactory. It is well settled that in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year, the same may be charged to income tax as the income of the assessee of that previous year, if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the assessing officer, not satisfactory. (See Sumati Dayal v. CIT (1995 Supp (2) SCC 453) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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