TMI Blog2014 (7) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Income Tax Act, 1961 was clear, that the legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income tax as the income of the assessee of that previous year, that the legislative mandate is not in terms of the words "shall be charged to income tax as the income of the assessee of that previous year", that the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as income of the assessee. The loan creditors who have advanced sum to the assessee were income tax assessees and have disclosed the sum advanced to the assessee in their return of income filed with the Income Tax Department and also admitted to above facts in their statement recorded u/s. 131 of the Act - the loans were received by the assessee through cheques drawn on the bank accounts of the creditors - the assessee has discharged its burden of proving the identity of the creditors, genuineness of the transactions and creditworthiness of the loan creditors – CIT(A) was fully justified in deleting the addition and there was no reason to interfere with the order of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s shown at ₹ 1,03,798/- and from this, he made withdrawals for household expenses of ₹ 36,000/-. From this, the Assessing Officer held that the creditor had no creditworthiness to advance loan of Rs two lakhs to the assessee. 4. The Assessing Officer found that the assessee has received loan of Rs four lakhs from the Nasiama Sabiir Dangra on 02.09.2006. He observed from the bank account of the creditor that she had deposited Rs four lakhs in cash on 01.09.2006 and on the very next day i.e. on 02.09.2006, Rs four lakhs was advanced by cheque to the assessee. During the course of her statement, she submitted that she was doing business of tailoring and sale of cut piece cloth and that sum of Rs four lakhs was advanced as loan out of sale proceeds and tailoring income. The creditor explained that she had made sales of ₹ 6,24,418/- and income from tailoring of ₹ 45,562/-. The Assessing Officer further observed that she has shown gross profit of ₹ 95,684/- from sale of cloth and the net profit shown was ₹ 1,25,720/-. She has also withdrawn ₹ 36,000/- for household expenses from her account. From this, Assessing Officer concluded that she did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd identity of the loan creditors are concerned, the same has not been disputed by the Assessing Officer. 4.2 In respect of the first two loan creditors, namely Shri Sabbir Haji Karim Dangra and Smt. Nasiama Sabbir Dangra, I find that both are husband and wife and are mainly in the business of trading of cloth for the last 6 to 7 years and have been filing return 4bcome for all these assessment years. Both these persons appeared before the assessing officer and produced their books of account, including cash book and it was submitted by them that the amount of ₹ 2 lac deposited in cash on 1.9.2006 by Shri Shabbir Dangra and ₹ 4 lac by Smt. Nasiama Dangra is by way of withdrawal from their cash book which was duly produced before the assessing officer. The assessing officer has nowhere held that the cash book was not produced or that the cash deposited in the bank account is not from withdrawal made from the cash book. He has observed that cash has been deposited on 01.09.2006 by the above persons and withdrawn from the bank on the very next date that is on 2.9.2006. The Assessing Officer has only held that since the above two persons' income is not much and GP fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 8 years and also maintaining books of account including cash book, Therefore, the finding given in this regard in respect of the first two creditors would also become applicable in the case of the third creditor. The appellant has also furnished details as to how the above amount was generated out of the business of Shri Yakub, who is trading in cloth and is a commission agent. It has further been submitted that the above amount was actually advance given for booking of flat, but since the project did not materialize during the year, the same has been treated as loan. I, therefore, for the reasons given in the case of first two creditors delete the addition of ₹ 5 lac, being the amount outstanding in the name of Shri Yakub. 4.4 The last creditor Smt. Jarina Jamalbhai Noorani is wife of Shri Yakub Gani Pothiwala, and is also trading in cloth and has filed return of income u/s 44 AF of the Act. The assessing officer observed that she has deposited cash of ₹ 1,25,000 in each of her two bank accounts on 7.9. 2006 and on the very next day, that is 8.9. 2006 withdrawn ₹ 2,50,000 from the above bank accounts and issued cheques in favour of the appellant firm. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey to the assessee and that cash was deposited on the previous day of advancing of loan to the assessee and therefore, held that the credits shown by the assessee in the books of account were not genuine and added the loan amount of ₹ 13,50,000/- to the income of the assessee. On appeal, the Commissioner of Income Tax (Appeals) deleted the addition on the ground that sums were withdrawn by the creditors from the cash book and deposited in the bank account and the Assessing Officer after investigation has not found the same to be not correct. 10. The Departmental Representative relied on the order of the Assessing Officer. 11. The Authorized Representative of the assessee has submitted that all the four creditors were examined on oath and in their statement recorded u/s. 131 of the Act they have admitted to having advanced sum of money to the assessee. It was thus his argument that as far as the assessee is concerned, the assessee has explained the source of his credits in the books of account. What the Assessing Officer was trying to require the assessee to explain was the source of the source which he cannot do u/s. 68 of the Act. Hence, it was his submission that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination of the creditors, no material could be brought on record by the Revenue to show that the cash which was deposited in the bank account of the creditors had flown from the assessee or creditors had actually no source of their own. 13. We find that it is not in dispute that all the four creditors were income tax assessee, advanced the loan to the assessee through banking channel and they all had their independent source of income and the only observation of the Assessing Officer is that in his subjective opinion, they are persons of small means. However, balance sheets filed alongwith return filed by the creditors shows that they have capacity to advance loan in question to the assessee. 14. We find that the assessee has filed before us in the paper book copy of acknowledgment of return of income filed together with the copies of balance sheet, profit and loss account and capital account of the creditors. We find from the balance sheet of the creditors that they have shown amount of loan advanced to the assessee in the balance sheet filed alongwith return of income. Thus, on the basis of these facts, we are of the considered view that where the loan creditors have sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which the conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case. Thus, after considering the entire facts and circumstances of the case, we find that the loan creditors who have advanced sum of ₹ 13,50,000/- to the assessee were income tax assessees and have disclosed the sum advanced to the assessee in their return of income filed with the Income Tax Department and also admitted to above facts in their statement recorded u/s. 131 of the Act. Further, the loans were received by the assessee through cheques drawn on the bank accounts of the creditors. Thus, in view of the above quoted decisions, the assessee has discharged its burden of proving the identity of the creditors, genuineness of the transactions and creditworthiness of the loan creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X
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