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M/s. Shreeji Exports Versus ACIT, Gandhidham, Kutch

Addition u/s 68 - unsecured cash credit - Held that:- It is incumbent on the part of the assessee to prove the identity, genuineness and creditworthiness of the loan taken u/s 68 and non-fulfilling of any of the three conditions, makes a question mark on the impugned transaction. Therefore, we are of the view that assessee has been unable to prove the creditworthiness of both the loan creditors and therefore, addition u/s 68 of the Act for unexplained cash credit of is confirmed and order of ld. .....

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andhidham-Kutch on 26/12/2011. Following grounds of appeal have been raised by the assessee:- 1. That, the learned CIT(A) has not given proper opportunity of being heard and confirmed the addition. 2. The addition is based on statement recorded behind the back of the assessee, The Ld. CIT(A) has called for statement vide letter dated 16/01/2013, no statement is provided by Id. AO and still the appeal is finalized against the assessee. 3. That, the learned CIT(A) has wrongly confirmed the additio .....

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led on 29.9.2009. Case was selected for scrutiny assessment and notice u/s 143(2) of the Act dated 21.9.2010 was issued and duly served. Due to change of incumbent a notice u/s 142(1) & questionnaire dated 9.6.2011, 30.06.2011, 24.10.11 & 143(2) r.w.s. 129 dated 9.6.2011 were issued and served. Assessment was completed at an assessed income of ₹ 20,11,244/- after making addition of ₹ 7,91,344/- which included addition on account of unexplained cash credit of ₹ 4,99,600/ .....

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d the income profile of the two persons, it is very difficult to imagine them to be capable of giving such a big loan to the appellant. The A.O. has very correctly analysed the bank account and discovered that there are cash deposits of equivalent amount in the bank just prior to the giving of the loan by cheque. The two persons have miserably failed in explaining the source of these cash deposits. One of the persons, Shri Yogesh Parikh, is also working in the appellant firm. Thus one of the ess .....

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) in his appellate order or by the assessee before us. It is absolutely clear from the assessment order that the creditors had their bank accounts but no significant deposits in their bank accounts were made either before or after the impugned transactions. If the creditors^ were persons of significant means, it would then be quite untimely that they would keep such huge amounts in their respective .houses instead of keeping them in bank accounts. Secondly,cash deposits were first made in their .....

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o the impugned transactions. If the creditors had requisite cash available with them, there was no reason as to why they would hold them back in cash and deposit the same just before issuing cheques in favour of the assessee. The whole story manufactured by the assessee, rings false from beginning till end. The Assessing Officer has brought sufficient materials on record to show that the impugned cash credits were not at all genuine. His order deserves to be confirmed and is accordingly confirme .....

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asis of evidence. The mere fact that the creditors are income-tax payee does ^ot by itself establish the availability of cash in their hand; or their creditworthiness to advance any sum of money. The Id. CIT(A) further observes that the source of source need not be proved by the assessee. We are unable to accept the aforesaid reasoning also The question here is not to prove the. source of source but of satisfactorily establishing the nature and source of cash credits found recorded in the books .....

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the relevant part of the statements has already been reproduced in the assessment order. In view of this, I do not foresee any need for the statements to be given to the appellant. It has also been offered sufficient opportunity during the course of appellate proceedings to rebut the findings of the A.O. 4.6. Respectfully following the decision of the Hon'ble ITAT (supra) and the other discussion, it is held that the appellant has not discharged its onus properly in respect of the loans. The .....

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oan creditors and confirmation letters. Ld. AR submitted that whatever possible documents a person can arrange with regard to loan received were duly collected and submitted before the lower authorities and there was no mechanism on the part of the assessee to prove the source of source in a situation when both the loan creditors were assessed to tax. Ld. AR placed reliance on following judgments & decisions :- 1. CIT vs. Ranchod Jivabhai Nakhava Tax Appeal No.50 of 2011 Gujarat High Court. .....

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he source of income of the loan creditors was too meager to suffice the deposit of cash in the bank account and, therefore, the impugned credit of ₹ 4,99,600/- is the income of the assessee itself which has been brought in by way of unsecured loans and, therefore, ld. CIT(A) has rightly confirmed the addition. 7. We have heard the rival contentions and perused the material on record. Assessee has raised four grounds out of which ground nos. 1 & 4 are general in nature, which need no ad .....

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T(A) in confirming the addition of ₹ 4,99,600/- as unexplained cash credit u/s 68. We find that assessee took unsecured loans of ₹ 3,49,600/- from Yogesh Parikh and ₹ 1,50,000/- from Dharmendra D. Morabia. However, during the course of assessment proceedings assessee submitted necessary documents in the form of income-tax return, PAN, addresses details, confirmation letters and source of income of both the loan creditors. But simultaneously we observe that in the case of loan c .....

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d by the assessee. We further observe that both the loan creditors were summoned u/s 131 of the Act and statements have been recorded on oath and the yearly income of Yogesh Parikh was declared at ₹ 96,000/- whereas loan of ₹ 3,49,600/- was received from him and similarly, another loan creditor Dharmendra D. Morabia hardly recalled about the person to whom loan of ₹ 1,50,000/- was given and was not able to satisfy the authorities about his creditworthiness of giving the loan am .....

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Tax Appeal No.800 of 2012 has dealt with similar issue in which cash was deposited just a day before the date of issuing account payee cheque as loan. Hon. High Court dismissed the appeal by observing as under :- 18. Three basic ingredients viz., [a] identity: [b] creditworthiness and [c] genuineness of the transaction, when are considered, it cannot be disputed that all the three of them require independent consideration and yet they are not mutually exclusive or can be considered in isolation. .....

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ght of the findings that the assessee had no justification for borrowing such amounts at such high rate of interest. These aspects would have a bearing on the genuineness of the transaction and the credit worthiness of the donors and cannot be seen as an attempt to throw the burden to prove source of the .source on the assessee. As is very eloquent from the record itself, substantial amount of cash was deposited in the bank accounts of all the creditors shortly prior to issuance of cheques and i .....

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re essentially in the realm of appreciation of facts No error is committed by any of these authorities to term the findings as perverse leading to raise question of law. Tax Appeal is resultantly dismissed. 10. We further observe that Co-ordinate bench in the case of ITO vs. Vajubhai N. Kanani in ITA No.368/Rjt/2012 vide its order dated 05/10/2012 dealing with similar issue, allowed the appeal of Revenue by observing as follows :- 7. We have heard both the parties and carefully considered their .....

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that they would keep such huge amounts in their respective houses instead of keeping them in bank accounts. Secondly, cash deposits were first made in their bank accounts and immediately thereafter cheques of matching amounts were issued by them in favour of the assessee. This is not a matter of co-incidence in one or two cases but a part of well-calculated design to first deposit matching amounts in the bank accounts of creditors and thereafter have the cheques issued in favour of the assessee .....

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t sufficient materials on record to show that the impugned cash credits were not at all genuine. His order deserves to be confirmed and is accordingly confirmed. 8. The Ld. CIT (A) has proceeded on the basis that "the capacity of a creditor may be presumed to be there to advance loan to appellant if such creditor is an income tax assessee and nothing advance has been proved from her income tax return of income against her capacity." We are unable to agree with the aforesaid observation .....

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