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GULSHAN VERMA Versus THE D.C.I.T., YAMUNA NAGAR

Addition u/s 68 - Held that:- Keeping in view that the transactions are through banking channels and there is no material on record to prove the contrary, have no hesitation in holding that the assessee had discharged the burden of proving the genuineness of the cash credit.

Under the law, the amount cannot be treated as the income from undisclosed sources of the assessee, when there is neither direct nor circumstantial evidence on record to hold that the said amount actually belonge .....

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e here that both the authorities below have not questioned this document i.e. I.T.R. submitted by Shri Susheel Shukla. The officer who has framed the assessment of the assessee is Assessing Officer as well as Investigating Officer. He has not given any comments as regards the genuineness of the I.T.R. filed by Shri Susheel Shukla. The learned CIT (Appeals) has also not offered his views on this document. Thus, it can be concluded that the Revenue has accepted this document as genuine. In this re .....

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S.A. since long. Considering the above, financial capacity of the lender to pay 10,000 U.S. Dollars cannot be doubted.

In view of the decision of Hon'ble Gauhati High Court in the case of Nemi Chand Kothari v. CIT [2003 (9) TMI 62 - GAUHATI High Court] a creditor's creditworthiness has to be judged vis-à-vis transaction, which has taken place between the assessee and the creditor and, it is not the business of the assessee to find out the source of money of his creditor or genuinenes .....

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only effective ground raised by the assessee in this appeal reads as under: "1. Because the action is under challenge on facts & law, while upholding the addition of ₹ 4,25,000/- u/s 68 of the Income-tax Act, 1961 while the identity veracity and genuineness of the transaction is completely satisfactory in accordance with ratio decendi of the judgment of the Hon'ble High Court & Hon'ble Supreme Court." 3. Briefly stated, the facts of the case are that during the c .....

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from NRE account of the lender maintained with Centurion Bank of Punjab. A photocopy of the bank account was produced before the Assessing Officer. On perusal of the bank account, the Assessing Officer noticed that the said lender had a nil balance as on 1.4.2004. An amount of ₹ 4,48,829/- was credited on 18.5.2004 under the narration "By Bill", out of which an amount of ₹ 4,25,000/- was given to the assessee on the same day and a sum of ₹ 20,000/- was drawn through .....

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5,000/- under section 68 of the Act. The addition was upheld by the learned CIT (Appeals). When the matter came up in appeal before the Tribunal in ITA No. 404/Chd/2009, the Tribunal vide its order dated 11.9.2009 set aside the order of the learned CIT (Appeals) and remanded the matter to the Assessing Officer for considering the issue afresh after obtaining necessary evidence from the assessee with regard to financial capacity of the lender to advance the impugned sum and the genuineness of the .....

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on the assessee to satisfactorily explain the nature and source of the credits appearing in the books of account. It is equally well-settled that the burden cast u/s 68 can be said to be discharged if the assessee proves the identity, creditworthiness of the lender and the genuineness of the transaction. In this case, after considering the material on record, we find that there is no dispute with regard to the identity of the lender. Admittedly, the loan in question has been received from one Sh .....

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creditor still remains on the assessee. In this context, even in the affidavit, furnished by the creditor, there is no mention of the sources of his income. Definitely, there is an averment that the money has been advanced out of his bank account maintained with Centurian Bank, so however, there is no evidence at all which shows the sources of his income or his ability or capacity to advance the impugned amount. When this aspect was confronted to the learned counsel for the assessee during the c .....

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apacity of the lender and the genuineness of the transaction. The Assessing Officer asked the assessee to furnish the following documents : (i) Copy of the Income Tax Return of the lender for the relevant Assessment Year i.e. 2005-06. (ii) Details of the sources of income of the lender. (iii) Copy of the bank accounts of the lender in the country of his residence. (iv) Evidence regarding remittances into the NRE account. (v) Complete books of account for the relevant year. 5. In response to ques .....

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remittance into the NRE account. The Assessing Officer held that in the absence of the above documentary evidence, the creditworthiness of the lender is not established. The Assessing Officer concluded that in view of the above and also in view of the facts and circumstances explained in the original assessment order under section 143(3) of the Act dated 20.12.2007, the assessee failed to discharge the onus regarding the financial capacity of the lender Shri Susheel Shukla and added a sum of &# .....

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der section 68 of the Act. Section 68 of the Act reads as under: 68. 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. 8. It is well-settled that in order to discharge the onus under .....

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lender and genuineness of the transaction. In this case, the assessee had submitted a certificate from the Manager of HDFC Bank, Limited, Near Nirankari Bhawan, Jagadhri Road, Yamunanagar (Centurion Bank of Punjab merged into HDFC Bank Limited). The bank has certified that Shri Susheel Shukla S/o Shri Sudama Shukla, holder of NRE Account No. 77SB1351960 had transferred ₹ 4,25,000/- through cheque No. 295291 to the SB Account No. 02101000161760 of Shri Gulshan Kumar Verma S/o Shri Angrej L .....

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as Breen, Notary Public State of Maryland, wherein Shri Susheel Shukla has stated that he is resident of 7056 Hanover pkwy city, Greenbelt State Maryland, Pin-#20770 U.S.A. He has also confirmed having given interest free loan for ₹ 4,25,000/- to the assessee by cheque No. 295291 on 18.5.2004 from his NRE Account No. 77SB1351960 maintained with Centurion Bank of Punjab, India. There is no dispute that Shri Susheel Shukla is maintaining NRE Saving Account No. 1351960 with Centurion Bank of .....

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his residence from where the funds have been transferred to his NRE Account in Centurion Bank of Punjab in India. In my opinion, the above objection of the Assessing Officer is irrelevant particularly when the Centurion Bank of Punjab has certified that a sum of ₹ 4,48,829/- (10,000 US Dollar) has been credited on 18.5.2004 under the narration "By Bill", wherein the remittance has come from abroad i.e. U.S.A. Further, the Assessing Officer has admitted that the assessee has submi .....

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is also amply clear from the records that the loan amount has been advanced from a NRE Account, wherein the remittance has come from abroad, i.e. Bank of America, Soverna Park U.S.A. Shri Susheel Shukla has submitted an affidavit in order to confirm that he has given deposit of ₹ 4,25,000/- to the assessee by account payee cheque. The said sum is appearing in the Bank Account of the assessee. The lower authorities have not doubted the authenticity of the aforesaid affidavit. The only obje .....

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tion in holding that the assessee had discharged the burden of proving the genuineness of the cash credit. Under the law, the amount of ₹ 4,25,000/- cannot be treated as the income from undisclosed sources of the assessee, when there is neither direct nor circumstantial evidence on record to hold that the said amount actually belonged to or was owned by the assessee. As regards the creditworthiness of the lender, I may point here that the Assessing Officer admitted that the assessee had su .....

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s framed the assessment of the assessee is Assessing Officer as well as Investigating Officer. He has not given any comments as regards the genuineness of the I.T.R. filed by Shri Susheel Shukla. The learned CIT (Appeals) has also not offered his views on this document. Thus, it can be concluded that the Revenue has accepted this document as genuine. In this return Shri Susheel Shukla has declared annual income of 22,201 U.S. Dollars for the year 2004. The source of income is shown from wages, s .....

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decision of Hon'ble Gauhati High Court in the case of Nemi Chand Kothari v. CIT 264 ITR 254, a creditor's creditworthiness has to be judged vis-à-vis transaction, which has taken place between the assessee and the creditor and, it is not the business of the assessee to find out the source of money of his creditor or genuineness of the transaction. The relevant observations made by the Hon'ble Gauhati High Court read as under: A person may have funds from any source and an ass .....

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