TMI Blog2010 (8) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... s Shradha Fuels, Village Tiwarta, Korba and is engaged in the business of trading in petrol, diesel and lubricant oil etc. He submitted this return of income for asst. yr. 2006-07 on 30th Oct., 2006 declaring total income of ₹ 1,26,359, The assessment proceedings were taken up by issuance of notice under s. 143(2) of the Act, dt. 20th March, 2007. The assessee claimed expenses in transportation accounts amounting to ₹ 4,21,150. Cash credits amounting to ₹ 9,00,000 and ₹ 10,99,000 are appearing in the names of Shri S.R. Manhar (Individual) and S.R. Manhar (HUF) in the books of assessee as under : The above amounts were deposited by the creditors in the month of March, 2006 on different dates in cash, in their respective bank accounts and account payee cheques were immediately issued thereafter to assessee. On being asked, the assessee produced the above creditors for his examination. Shri S.R. Manhar (Individual) is also Karta of the HUF viz., S.R. Mahar. Statement of Shri S.R. Manhar in his individual as well as his capacity as Karta of HUF were recorded in presence of the Authorized Representative of the assessee, separately. Out of ₹ 4,21,150, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aravali Trading Co. vs. ITO (2008) 220 CTR (Raj) 622 and Murlidhar Lahorimal vs. CIT (2006) 200 CTR (Guj) 109 : (2006) 280 ITR 51 (Guj). He would further contend, addition of ₹ 50,000 in the income, disallowing transportation expenses to the above extent incurred for running and maintenance of tanker truck is also without any basis. On the other hand, Shri Rajeev Shrivastava, learned standing counsel appearing for the respondent, supported the order passed by the Tribunal and contended that the findings recorded by the AO as well as the Tribunal are pure findings of fact and do not give rise to any substantial question of law requiring interference by this Court, in as much as accepting or rejecting the explanation offered by the assessee is a finding of fact and the same does not give rise to any substantial question of law, as held by this Court in IT Appeal No. 125 of 1999 (CIT vs. Satyanaryan Agrawal) vide its order dt. 25th Nov., 2009 and the appeal being sans merit deserves to be dismissed. We have heard the submissions made by learned counsel for the parties and also perused the record. In the instant case, the explanation offered by the assessee was not found sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In respect of disallowance of the transportation expenses, the net profit shown in respect of truck is more than the amount under s. 44AB, hence the disallowance made by the AO is deleted. 11. The Tribunal reversed the order passed by the CIT(A) and restored the order passed by the AO. While allowing the appeal, the Tribunal has held in paras 15, 16 and 17 as under : 15. We have heard the rival submissions and perused the material available on record. We find that the learned CIT(A) has simply deleted the addition on the ground that the creditors are income-tax assessees and has not gone into the creditworthiness of the creditors. We also find that the assessee though proved the identity of the creditors but unable to prove their creditworthiness in advancing such huge sums to the assessee. We also find from the facts of this case that the creditors are using the bank account not for keeping his earnings in that account but only for the purpose of giving loans to the assessee which is clear from the fact that as and when the creditors issue cheques he deposits the money in cash and then gives cheques to the assessee. In view of the above, we are of the opinion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor; (ii) Capacity of such creditor to advance money; and (iii) Genuineness of transaction. Burden of assessee to prove genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. It is not the business of the assessee to find out the source of money of his creditor [(2005) 199 CTR (All) 69 : (2006) 282 ITR 236 (All), para 9; (2003) 185 CTR (Gau) 635 : (2003) 264 ITR 254 (Gau) paras 13 and 14]. 15. A three Judge Bench of the Supreme Court in case of Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : 1995 Supp.(2) SCC 453 while dealing with the facts- During the asst. yr. 1971-72, the appellant received a total amount of ₹ 3,11,831 by way of race winnings in Jackpots and Treble events in races at Turf Clubs in Bangalore, Madras and Hyderabad. The said amount was shown by the appellant in the capital amount in the books. The appellant filed a return on 27th March, 1972 declaring an income of ₹ 27,829. The appellant also made a sworn statement on 6th Jan., 1973 before the ITO and on the basis of the said statement the ITO made an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) In view of the exceptional luck, claimed to have been enjoyed by the appellant, her loss of interest in races from 1972 assumes significance. Winnings in racing became liable to income-tax, from 1st April, 1972 but one would not give up an activity yielding or likely to yield a large income merely because the income would suffer tax. The position would be different, however, if the claim of winnings in races was false and what were passed off as such winnings really represented the appellant's taxable income from some undisclosed sources. The majority opinion includes that it would not be unreasonable to infer that the appellant had not really participated in any of the races except to the extent of purchasing the winning tickets after the events presumably with unaccounted funds. The Chairman of the Settlement Commission, in his dissenting opinion has laid emphasis on the fact that the appellant had produced evidence in support of the credits in the form of certificates from the racing clubs giving particulars of the crossed cheques for payment of the amounts for winning of Jackpots etc. The Chairman has rejected the contention regarding lack of expertise in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It cannot be said that the explanation offered by' the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not based on evidence. 16. The Supreme Court in case of CIT vs. P. Mohanakala (2007) 210 CTR (SC) 20 : (2007) 6 SCC 21 after considering the cases of Sumati Dayal (supra), CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509 : (1997) 11 SCC 198, CIT vs. Bharat Engineering Construction Co. 1972 CTR (SC) 247 : (1972) 4 SCC 401, CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) Supp. SCC 110, has observed in paras 24 and 26 of its judgment as under: 24. It is true that even after rejecting the explanation given by the assessees if found unacceptable, the crucial aspect whether on the facts and circumstances of the case it should be inferred that the sums credited in the books of the assessees constituted income of the previous year must receive the consideration of the authorities provided the assessees rebut the evidence and the inference drawn to reject the explanation offered as unsatisfactory. We are required to notice that s. 68 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not real ones. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. By applying the law laid down by the Supreme Court in the dicta of the above-referred two cases, it is clear that where any sum is found credited in the books of assessee for any previous year, the same may be charged to income-tax as income of the assessee of the previous year if the explanation offered by the assessee about nature and source of such sums found credited in the books of assessee is in the opinion of the AO not satisfactory. Such opinion (sic formed) itself constitutes a prima facie evidence against the assessee viz. the receipt of money, and if the assessee fails to rebut the said evidence the same can be used against the assessees by holding that it was a receipt of an income nature. In the case in hand the AO has formed the opinion that the explanation offered by the assessee is not satisfactory, is based on cogent material which shows that the transaction is not genuine. All the decisions cited by Shri Purohit are required to be appreciated and understood in the light of law declared by the Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X
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