TMI Blog2014 (6) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... overted by the Revenue by placing any material on record – there was no infirmity of the orders of CIT(A) – Decided against Revenue. - I.T.A. No. 253/Ahd/2010 - - - Dated:- 23-5-2014 - Shri Kul Bharat And Shri T. R. Meena,JJ. For the Appellant : Shri O. P. Batheja, Sr. DR For the Respondent : Shri Ramesh Malpani, AR ORDER Per Shri Kul Bharat, Judicial Member : This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-I, Surat ( CIT(A) for short) dated 26.11.2009 pertaining to Assessment Year (AY) 2006-07. The Revenue has raised the following grounds of appeal:- 1) On the facts and in the circumstances of the case and in law, the learned CIT(A)-I, Surat has erred in restricting the addition made by AO of Rs.43,70,000 on account of unexplained cash credit u/s.68 of the Act to Rs.2,00,000. 2) On the facts and in the circumstances of the case and in law, the learned CIT(A)-I, Surat has erred in restricting the disallowance of interest made by the AO of Rs.1,82,648 claimed to have been paid by the assessee on the amount of unexplained cash credit to Rs.11,770. 3) On the facts and in the circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e concerned parties make it ample clear that the parties were having sufficient capital to advance loans to the assessee. The loans received and repaid with interest were through banking channels by way of account payee cheques . Reliance has been placed on the judgement of the Hon ble Gujarat High Court rendered in the case of CIT vs. Ranchhod Jivabhai Nakhava in Tax Appeal No.50 of 2011 dated 20/03/2012. He submitted that the Hon ble High Court has categorically held that once the AO gets hold of the PAN of the lenders, it was his duty to ascertain from the AO of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the AO of the lenders of the assessee, the AO decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, in our opinion, the AO did not follow the principle laid down under Section 68 of the Income Tax Act. He submitted that the Hon ble High Court further held that if on verification, it was found that those lenders did not disclose in thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn from bank account of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Hon ble Bombay High Court in the case of Orient Trading Co. vs. CIT (1963) 49 ITR 723(Bom). The ld.counsel for the assessee also placed reliance on the decision of the Hon ble Co-ordinate Bench (ITAT B Bench Ahmedabad) rendered in the case of ACIT vs. Shri Pareshbhai Chandrakant Jariwala in ITA No.2425/Ahd/2008 for A.Y. 2005-06 dated 25/03/2011. He submitted that in the said case, the Tribunal has held once the assessee produced the basic records of the creditors which show the identity of the creditors, capital accounts of the creditors and the bank accounts through which money was transferred through cheques to the assessee and evidence that all of them are income-tax assessees then it cannot be said that assessee has still to discharge the onus. The ld.counsel for the assessee has also relied on the judgement of Hon ble Madya Pradesh rendered in the case of CIT vs. Barjatiy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, inescapable conclusion one arrives at is that the Revenue authorities as well as the Tribunal found the entire transaction not genuine. There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meager balance shortly before sizable amount of Rs.1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such creditors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. In short therefore, the very genuineness of the transaction was not established. This therefore, is not a case where the Revenue makes addition on the assessee failing to establish source of the source. The Ld.Sr.DR also relied on the judgement of Hon ble High Court of Gujarat rendered in the case of Umesh Krishnani vs. ITO reported at (2013) 35 taxmann.com 598 (Gujarat) dated 15th April-2013. He submitted that the Hon ble High Court has held that three basic ingredients; i.e. (a) identi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee placed reliance on various case-laws as discussed in para 4.1 of this order. The facts of the present case are distinguishable, in the present case there is no dispute that transaction is effected through banking channel, the assessee has furnished the PANs, income-tax returns and in some cases produced the creditors who have confirmed the payment to the assessee. But dispute is with regard to creditworthiness of the creditors. It is brought on record that money was deposited in bank account a day or two prior to issuance of cheques. This fact is not disputed by the ld.counsel for the assessee. The explanation for cash deposit in bank account a day or two before is that there was cash in hand and in some cases the assessee has shown receivables in their accounts. The ld.CIT(A) has discussed elaborately this issue in his order. In para-5.12 of his order, the ld.CIT(A) has given a finding that all the depositors have explained the source of availability of cash with them. Some portion of their capital was in the form of outstanding receivables which were received in cash before depositing the same in their respective bank accounts. The ld.CIT(A) has reproduced a chart in para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Returns, balance sheet, profit and loss accounts and computation of the total income in respect of all the creditors/lender were furnished and when it has been found that the loans were received through cheques and the loan account were duly reflected in the balance sheet, the Assessing Officer was not justified in making the addition of Rs.33,55,011/-. Under the circumstances, no question of law, much less substantial question of law arises in the present Tax Appeal. Accordingly, the present Tax Appeal deserves to be dismissed and is accordingly dismissed . 6.2. However, in the present year, the explanation of the lenders are that there were receivables in the books of accounts which were received in the bank accounts. We find that the AO has given a finding that in all the cases the cash has been deposited one or two days before issuing the cheques and has suspected about the authenticity of the explanation given by the assessee. However, ld.CIT(A) has given finding on fact that out of 17 creditors, either appeared before the AO in remand proceedings and confirmed the loan to the assessee. It is also observed by the ld.CIT(A) that all the creditors have enclosed their ..... X X X X Extracts X X X X X X X X Extracts X X X X
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