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2015 (8) TMI 112 - ITAT BANGALORE

2015 (8) TMI 112 - ITAT BANGALORE - TMI - Unexplained gift/loans received - Gift received - explaining source or source - capacity to give gift/loans - Held that:- It is clear from the material on record that donor as well as creditors could not show prima facie the source of funds out of which gift/loans were given. Added to this is the circumstance that on the date when the gift/loans were given, there were cash deposits made in the bank accounts. It is in these circumstances that the donor/cr .....

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revenue authorities. This cannot be equated as calling upon the assessee to furnish source of source. The capacity of the creditors has not been prima facie established by the assessee. It is only when credible evidence is let in regarding capacity of the creditor that this argument of calling upon the assessee to explain source of source can be advanced. In this regard, the law laid down by the Hon’ble Calcutta High Court in Shankar Industries (1978 (3) TMI 91 - CALCUTTA High Court ) clearly e .....

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ent years 2004-05 & 2005-06. 2. In these appeals the issues that arise for consideration are regarding the action of the AO in treating gift/loans received by the assessee as unexplained. The gifts/loans received by the Assessee were as follows:- AY 2004-05 (1) Gift received from Mr. Tahir Ali - Rs. One lakh. (2) Loan received from Shivanna Siddapur - Rs. One lakh. (3) Loan received from Irshad Ali Khan- ₹ 1.45 lakhs. All the above sums were added as unexplained cash credits u/s. 68 of .....

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ourt by its judgment dated 28.1.2014 in ITA No.366 & 367 of 2012, remanded the matter in respect of merits of addition of above cash credits to the file of Tribunal. It is in these circumstances that these appeals were listed for hearing and were heard. 5. The assessee was an agriculturist and was running a rice mill. The assessee constructed a commercial complex at Koramangala, Near KSRTC Bus Stand. A sum of ₹ 33,50,000 was spent as investment in the construction. In the course of exp .....

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of ₹ 1 lakh as gift in favour of the assessee by a Demand Draft drawn on Canara Bank, dated 7.7.2003. The AO found that on 7.7.2003, Tahir Ali had deposited a sum of ₹ 1 lakh by cash in the bank account. Tahir Ali was examined by the AO and he could not produce any evidence to substantiate the source of cash of ₹ 1 lakh deposited in the bank account. The AO also found from the bank account of Tahir Ali with Canara Bank that for the period from 30.10.02 to 6.7.03, there was depo .....

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iven by cash on 3.11.03. The sworn statement was recorded under section 131 of the I T Act from Shri Shivanna on 26.7.2006. In answer to question No.10, Shri Shivanna had stated that he had given a loan of ₹ 1 lakh to Irshad Ali Khan, S/o. K.B. Khaleel by cash on 3.11.2003. In answer to Q.No.11, Shri Shivanna had stated that the said sum of ₹ 1 lakh was withdrawal out of his PF account and the withdrawal was for the purpose of performing his daughter s marriage. It was further stated .....

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d incurred approximately an expenditure of ₹ 3.5 lakhs. The conclusion of the revenue authorities was that when Shri Shivanna s daughter s marriage was conducted in the month of November, 2003, it is highly improbable that the cash withdrawn on 3.11.2003 (noted as self in the cheque) is for giving loan to the assessee. 9. Loan received from Irshad Ali Khan- ₹ 1.45 lakhs: The loan in question had been given by Irshad Ali Khan by cheque dated 29.6.03. On examination of his bank account .....

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the sum of ₹ 1 lakh was paid out of loan received from his brother-in-law, Mr. Zakir Hussain (son of the Assessee). The assessee had a bank account with Canara Bank, Mandi Mhalla, Mysore. On perusal of this account, the AO found that on 31.12.04, a sum of ₹ 2 lakhs was deposited in his bank account and the next day i.e., on 1.1.05, the same was withdrawn by issuing a cheque of ₹ 1 lakh to Zakir Hussain and a DD for ₹ 1 lakh in favour of Smt. Fahimida Khatoon. Zakir Hussai .....

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assessee was false. This finding of the AO was also confirmed by the Tribunal. 12. Before us, the ld. counsel for the assessee submitted that in all the cases, the donor/creditors had confirmed the fact that they had given the gift/loans to the assessee. According to him, the assessee cannot be called upon to explain the source out of which gift/loans were given by donor/creditors. According to him, asking the assessee to explain the source of the donor/creditors would be asking the assessee to .....

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re the AO, and where the creditor confirms giving of loan to the assessee; no addition u/s. 68 could be made in the hands of assessee on the ground that creditor could not satisfactorily explain the source of loan. The Hon ble Rajasthan High Court held that burden on the assessee does not extend to prove the source of creditor form where he made the advance to the assessee. 13. The ld. DR, on the other hand, submitted that the creditworthiness of the donor/creditors had not been proved by the as .....

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and did not call for any review. He placed reliance on the decision in the case of K.C.N. Chandrashekar v. ACIT, 66 TTJ 355 (Bang), wherein the Bangalore Tribunal after making a reference to the decision of the Hon ble Calcutta High Court in Shankar Industries v. CIT, 114 ITR 689 (Cal) and the decision of Hon ble High Court of Karnataka in Bedi & Co. P. Ltd. v. CIT, 144 ITR 352 (Kar), held that capacity of the creditor has to be established by the assessee. 14. Our attention was also drawn .....

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