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2015 (6) TMI 570 - ITAT LUCKNOW

2015 (6) TMI 570 - ITAT LUCKNOW - TMI - Addition u/s 68 - Held that:- In the case of CIT vs. S. Kamaljeet Singh (2005 (1) TMI 676 - ALLAHABAD HIGH COURT), it was held that where the assessee has brought on record the confirmation of creditor, their affidavits, their full address, GIR/PAN, the assessee’s burden stood discharged and addition is not called for. Thus hen the assessee has established the identity of the creditor and the amount is received by account payee cheque, source of the credit .....

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as not made any effort to call any detail from the creditors or to verify the details from the A.O. of the creditors. Therefore no addition is justified u/s 68 of the Act in respect of any of the cash credits. - Decided in favour of assessee.

Disallowance of car expenses - Held that:- Element of personal use of car cannot be ruled out and disallowance is only 10% of the expenses and hence justified. It is not shown that the assessee was having any personal vehicle for personal use, ex .....

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e case of Shri Suresh Chandra, HUF. All these appeals were heard together and are being disposed of by way of this common order for the sake of convenience. In the assessee s appeal, in the case of Shri Suresh Chandra, Individual, i.e. I.T.A. No.184/Lkw/2010, in ground No. 1 to 7, the dispute is regarding addition made by the Assessing Officer of ₹ 59,65,729/- u/s 68 in respect of various cash credits received by the assessee in the present year. In the Revenue s appeal for the same assess .....

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sees, the assessee has bought on record sufficient evidence to establish the identity of loan creditors, their creditworthiness and also genuineness of the transactions. He submitted that the assessee has submitted confirmations from all the creditors and copy of bank statement of all the creditors along with the copy of income tax return filed by each of the creditors. He submitted that under these facts, it has to be accepted that the assessee has established the identity and creditworthiness .....

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id that the loan has not been explained and any addition is called for u/s 68 of the Act. Reliance was placed by him on a judgment of Hon'ble Gujarat High Court rendered in the case of CIT vs. Rohini Builders [2002] 256 ITR 360 (Guj). He submitted that in this case, it was held by Hon'ble Gujarat High Court that when the assessee has established the identity of creditors and the amount was received by account payee cheques, initial burden lying on the assessee of proving credits is disch .....

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54. Regarding various judgments cited by learned D.R. in the written submissions dated 10/07/2012, he submitted that these judgments are not applicable in the facts of the present case. 3. Learned D.R. of the Revenue submitted that the written submissions filed by him on 10/07/2012 may be considered for deciding these appeals. 4. We have considered the rival submissions. First of all we reproduce the written submissions dated 10/07/2012 filed by learned D. R., which is as under: 1. The assessee .....

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nd (c) the genuineness of the transaction, the contents of section 68, may be divided into two part, (a) It requires the assessee to explain the sum found credited in the books of the assessee about the nature and source thereof This part only requires the assessee to disclose the source from which the money has been received by the assessee. This does not require the assessee to disclose the source of that source, i.e., the source from which the donor or investor has received the money which ha .....

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ny amount is found credited in the books of account of the assessee, the burden lies upon the assessee to prove its nature and source, while proving the same the assessee has to prove the identity of the person, genuineness of the transactions and creditworthiness of the person, who has given the money. Held, that in the resent case though the identity of the person, who had given the money had been established the assessee had failed to prove the creditworthiness of those persons making the pay .....

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me into play? The a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be a sum during the previous year; and the assessee offer no explanation about the nature and source of such found in the books; or explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, ft is only them the sum so credited may be charged to income-tax as the income of the assessee of that previous year. .....

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quired to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion." (d) In the case of CIT Vs. Orissa Corporate (P) Ltd., 159 ITR 78 (SC) the Hon'ble Supreme Court held as under:- "25. ... The doubtful nature of the transaction and the manner in which the sums were found credited in the books of account maintained by the assessee have been duly taken into considerations by the authorities below. The t .....

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f 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., realization 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 .....

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he applicability of these judgments in the facts of the present case. 5.1 The first judgment cited by learned D. R. is the judgment of Hon'ble Allahabad High Court rendered in the case of Banarsi Prasad Vs. CIT (supra). We find that in this case, it was held by Hon'ble Allahabad High Court that u/s 68, the assessee has to prove three conditions i.e. the identity of creditor, the capacity of the creditors and genuineness of the transactions. It was also held in this case that section 68 r .....

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n the present case, the facts are different. The assessee has not only stated that money was received from whom, the assessee has furnished the complete address, confirmation, PAN, bank statement etc. of each of the creditors and therefore, this judgment is not applicable in the facts of the present case. 5.2 The second judgment cited by learned D. R. is also the judgment of Hon'ble Allahabad High Court rendered in the case of Ram Lal Agarwal Vs. CIT (supra). In this case, it is noted by Hon .....

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osit in the bank account of the creditor, it cannot be said that the creditor has no creditworthiness. Considering the facts of the present case, we are of the considered opinion that this judgment is not applicable in the facts of the present case. 5.3 The third judgment cited by learned D. R. is the judgment of Hon'ble Apex Court rendered in the case of CIT Vs. P. Mohankala (supra). In this case, it was noted by Hon'ble Apex Court that all the gifts were received from Ariavan Thotan an .....

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that Sampathkumar reserved his right to receive suitable compensation from the respondents-assessees. Under these facts, the Assessing Officer came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the assessee as the income of the assessee. Hence, it is seen that in this case, the dispute is regarding receipt of money from abroad and not a loan from local source and there is no contradiction in the present case regar .....

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ors along with their index number. The notices were issued to the creditors, which were returned unserved with the remark left and no further attempt was made to examine source of credits. Under these facts, it was held by Hon'ble Tribunal that the assessee has discharged its onus and this finding of the Tribunal was confirmed by Hon'ble High Court and also by Hon'ble Apex Court. In the present case also, the assessee has furnished the complete details of the creditors such as name, .....

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unar Talwar V CIT (supra). In that case, the search took place in assessee s premises on 27/05/83 and in course of search, certain incriminating documents were recovered and seized. One of the registers, so examined, revealed cash receipt of ₹ 3,49,991/- in the name of 15 persons, from most of whom were perpetual receipts during the period April 1982 to October 1982. When the Assessing Officer sought explanation with regard to said cash credit, the assessee stated that the cash receipts we .....

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see's submission that cash receipts of ₹ 3,49,991/- related to earlier years was not tenable. Under these facts, the Assessing Officer added this sum as assessee s income under the head unexplained cash receipts. These facts show that in that case, this was the fact that the assessee was not able to establish the identity and creditworthiness of the loan creditors. In fact in that case, the assessee s explanation was that the amount received was in respect of old debtors of a partnersh .....

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rious judgments cited by Learned A.R. of the assessee. 7.1 In the case of CIT vs. S. Kamaljeet Singh (supra), it was held by Hon'ble Allahabad High Court that where the assessee has brought on record the confirmation of creditor, their affidavits, their full address, GIR/PAN, the assessee s burden stood discharged and addition is not called for. 7.2 Similarly in the case of Nemi Chand Kothari vs. CIT and Another (supra), it was held by Hon'ble Gauhati High Court that when the assessee es .....

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mount is received by account payee cheque, source of the credits need not be proved. We find that the facts in the present case are similar to the facts of the cases on which reliance was placed by Learned A.R. of the assessee. In the present case, confirmation of all creditors with full address and PAN, bank statement and assessment particulars are brought on record. Only adverse feature is that in some cases, there is cash deposit in the bank account of the creditor. Merely on this basis alone .....

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ts. 8. In the result, the appeal of the Revenue is dismissed and both the appeals of the assessee are allowed. 9. There is no other issue in the revenue s appeal or in the assessee s appeal in the case of HUF. In the assessee s appeal in the case of individual i.e. in ITA 184/LKW/2010, Ground No. 8 & 9 are to decided. The same are asunder:- Gr. 8:- Because the disallowance of ₹ 31,830/- out of car expenses as made/ sustained by the authorities below is wholly erroneous. Gr. 9:- Because .....

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