TMI Blog2017 (7) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... d in reversing the order of the Id. CIT (Appeals) and confirming order of the Assessing Officer - Decided against assessee. - IT APPEAL NOS. 1009 (JP) of 2013, C.O. NO. 6 (JP) of 2014 - - - Dated:- 2-2-2017 - BHAVNESH SAINI, JUDICIAL MEMBER, T.R. MEENA AND BHAGCHAND, ACCOUNTANT MEMBER, AND LALIET KUMAR AND KUL BHARAT, JUDICIAL MEMBER For The Appellant : Ranjan Kumar, CIT and Mukesh Verma, CIT-DR For The Respondent : Manish Agarwal and O.P. Agarwal, CA ORDER Laliet Kumar, Judicial Member - This is an appeal filed by the Revenue and the Cross Objection is by the assessee against the order of Id. CIT (A)-I, Jaipur dated 09.10. 2013 for the A.Y. 2008-09. The ground raised in the appeal is as under :- Whether on the facts and in the circumstances of the case and in law the Id. CIT (A) has erred in deleting the addition of ₹ 13,10,000/- made by the AO u/s 68. The ground raised by the assessee in the Cross Objection is as under :- That the Id. CIT (A) has erred on facts in sustaining addition of ₹ 2,34,619/- on account of cash credits considering the same as unexplained. 2. The brief facts of the case are that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the proving their identity, creditworthiness and genuineness of the transaction. Vide order sheet dated 15.10.2010 the assessee was asked to furnish confirmation from the creditors from whom the assessee had the loans during the A.Y. 2008-09. Since the assessee has failed to furnish the confirmation, therefore, the notices as mentioned above were issued under section 131. 3. The AO after recording the statement of 7 persons have only upheld the identity, creditworthiness and genuineness in respect of only Shri Sudershan Fomra for an amount of ₹ 1,71,500/- and has not accepted the cash credit of the assessee in respect of other 9 persons on the pretext that the assessee has failed to discharge the primary onus to establish the identity, creditworthiness and genuineness of these 9 persons. As such the AO has made the addition for an amount of ₹ 14,44,619/- shown in the name of various parties as an unexplained credit under section 68 of the IT Act and has added back to the total income of the assessee. 4. Feeling aggrieved by the order of AO, the assessee filed appeal before the Id. CIT (A). The assessee has submitted that the lenders, namely, Shri B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required under the Act. He had produced 7 (seven) creditors out of 9 (nine) creditors and all of them supported the case of the assessee. The Id. A/R further vehemently pointed out that no question has been asked by the AO with respect to source of the source of assessee. Even otherwise, it was contended that in law in respect of cash creditors, source of source is not required to be asked in view of the judgment of Hon'ble Supreme Court in the case of CIT v. Lovely Exports (P.) Ltd. [2008] 216 CTR 195 and also CIT v. Divine Leasing Finance Ltd. [2008] 299 ITR 268 (Delhi). 8. We have heard rival contentions and perused the material on record. From the records available it is emerged that out of 9 creditors summoned by the AO under section 131, 7 creditors (out of them, one creditor on remand proceedings) had appeared and their statements had been recorded by the AO in the assessment order itself. During the examination of the above creditors, they had heavily confirmed having given the loans to the assessee. In support of their version, they had filed copies of IT Returns also. The AO made the additions even after getting confirmation by all of them to had extended loan t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings as may be available against the creditors. But in the present case, no proceedings have been initiated. 9. In the light of above discussion, we find no infirmity in the order of Id. CIT (A) who have rightly deleted the addition of ₹ 13,10,000/-. 10. Coming to the cross objection of the assessee, the Id. CIT (A) has sustained the addition of ₹ 2,34,619/- on the ground that no credible evidence has been furnished by the assessee in respect of the money advanced by the creditors. 11. As regards the creditors, namely Shri Sita Ram Yadav (Rs. 72,000/-) and Shri Sua Lal Yadav (Rs. 1,62,619/-) are concerned, they had expired before any investigation is carried out. Shri Sita Ram Yadav had no legal heir who could appear before the AO. In support of having given the loan to the assessee, the Id. A/R of the assessee filed photocopy of girdavari of agricultural land of 6.265 hectare in the name of Shri Sita Ram Yadav. Considering the small amount of ₹ 72,000/-, it is reasonable to accept the creditworthiness of the creditor and genuineness of the transaction, particularly when the creditor was having such a large chunk of land. Looking the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness and creditworthiness of the cash creditors has not been proved, which is discussed as under:- (i) Shri Bharu Lal Yadav had advanced ₹ 2.00 lacs to the appellant in cash during the year under consideration. Statement u/s. 131 of the Act was recorded by the Assessing Officer and he admitted that he had advanced unsecured loan to the assessee in cash and amount was received back in the year 2009. He also admitted that he had been filing his income tax return for the last four years. He admitted in his statement that total income, he was earning at ₹ 10 to 15 thousands per month. Out of this he incurred expenditure for household purposes between ₹ 3,000/- to 4,000/-. The loan given and returned back in cash. On verification of the return of income for A.Y. 2007-08, he had shown income from Dhaba at ₹ 98,510/-. Regarding remaining year, no photocopy of return has been submitted before the Assessing Officer or before the ld CIT (A), therefore, the cash creditors does not have capacity to deposit ₹ 2 lacs with the assessee and the genuineness is also doubtful being loan given and returned back in cash. The case laws relied upon by the ld DR i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest has been given to the cash creditor. Accordingly, I confirm the addition made by the ld Assessing Officer. (iii) Shri Manoj Yadav had advanced ₹ 1.50 lacs in cash during the year under consideration. Statement u/s. 131 of the Act was recorded by the Assessing Officer, who had admitted that he had given unsecured loan of ₹ 1.50 lacs to the assessee in cash, which was outstanding with the applicant. It means that loan was not returned back to the cash creditor. The identity of cash creditor is proved but genuineness and creditworthiness of cash creditor has not been proved. The assessee filed return for A.Y. 2008-09 on 11/5/2009 by showing the returned income of ₹ 1,08,650/-. No computation of income has been filed but in the statement, he has admitted that he has worked as an agent of M/s. Sahara India Pvt. Ltd. and has also a dairy business and roughly he earned ₹ 8,000/- per month. The loan was advanced in A.Y. 2008-09 by the cash creditor. There is no evidence with the assessee that he has filed any return for earlier years and on what basis and how he saved ₹ 1.50 lacs and kept in cash with him. Therefore, the assessee has not discharged h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of advancing loan of ₹ 65,000/- in F.Y. 2007-08 out of sale of agricultural produce. The Assessing Officer asked to produce the evidences regarding sale proceeds of agricultural produce but he failed to substantiate his claim with evidence. The identity of cash creditor has been proved but genuineness and creditworthiness of cash creditor has not been proved. The case laws referred in the case of Shri Bharu Lal Yadav are squarely applicable in this case also. No interest has been given to the cash creditor. Accordingly, I confirm the addition made by the ld Assessing Officer. (vi) Shri Ram Babu Yadav had advanced ₹ 2 lacs to the applicant in cash. Statement u/s. 131 of the Act was recorded by the Assessing Officer, who had admitted that he had given unsecured loan of ₹ 2 lacs in cash. Out of this loan ₹ 1.25 lacs has been returned back by the assessee in cash and ₹ 75,000/- was remained to be paid to the cash creditor. He had been filing income tax return for last three years. He was having income from mobile repairing and labour charges and earned ₹ 13,000/- to 14,000/- per month and admitted household expenses at ₹ 7,000/- to 8,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash creditor. The ld CIT (A) had confirmed the addition. The ld AR has argued that Shri Sua Lal Yadav is real brother of appellant, who has expired but his son Shri Laxmi Narayan appeared before the Assessing Officer in response to summons issued during the remand proceedings wherein he admitted that his deceased father had told his mother that he has outstanding loan from the appellant which comes approximately at ₹ 1.62 lacs, which relates to some settlement of ancestral property. On verification of statement, it is found that he had admitted that his father had told his mother that some outstanding loan approximately at ₹ 1.62 lacs from the appellant was there. When the ld Assessing Officer asked to furnish any evidence and to clarify whether repayment of loan was made or not, he did not have any cogent evidence to prove the transaction as genuine and there is no evidence of repayment of loan and also not paid any interest on it. Therefore, identity, genuineness and creditworthiness had not been proved by the cash creditor. The case laws referred in the case of Shri Bharu Lal Yadav are squarely applicable in this case also. Accordingly, I concur with the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion between the learned Members of ITAT Jaipur therefore, Hon'ble President has referred to me the following question to be answered by me as Third Member : Whether the assessee proved the identity, genuineness and creditworthiness of the creditor as per Section 68 of the Income Tax Act ? 2. I have heard Id. Representatives of both the parties and perused the material on record. 3. The revenue in their appeal has challenged the order of Id. CIT (Appeals) in deleting the addition of ₹ 13,10,000/- made by Assessing Officer under section 68 of Income Tax Act. The assessee in the cross objection has challenged the order of Id. CIT (Appeals) in sustaining the addition of ₹ 2,34,619/- on account of unexplained cash credits. The facts are discussed in detail in impugned orders as well as in the proposed orders of the learned Members of ITAT Jaipur Bench. Therefore, these are not repeated for the sake of brevity. The dispute is with regard to additions made under section 68 of the Income Tax Act in respect of 9 creditors by the Assessing Officer. The Id. CIT (Appeals) deleted the additions in respect of 7 creditors, however, confirmed the addition in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors, even no confirmation has been filed by the assessee and they did not appear before A.O. Therefore, there was no justification for the learned Judicial Member to delete additions in their cases. 4. The Id. DR relied upon decision of the Hon'ble Rajasthan High Court in the case of Kamal Motors v. CIT [2003] 131 Taxman 155 in which it was held that, Except filing of the confirmation certificate, the assessee has not shown that creditor was man of means, therefore, there was no justification to interfere with the addition made in that case . The Id. counsel for the assessee, however, relied upon decision of Hon'ble Rajasthan High Court in the case of CIT v. Jai Kumar Bakliwal [2014] 366 ITR 217 in which Hon'ble High Court dismissed the departmental appeal considering that all the cash creditors were assessed to income tax and they provided confirmation as well as PAN numbers. They held their own bank accounts which they had been operating. Hon'ble Rajasthan High Court held that ITAT after appreciation of evidence has rightly come to the conclusion in allowing the appeal which is purely a finding of fact and accordingly, dismissed the appeal of the revenue. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, Accountant Member Since there was a difference of opinion between the learned Members, constituting a Division Bench of I.T.A.T., Jaipur, the Hon'ble President, I.T.A.T. nominated Shri Bhavnesh Saini, Judicial Member as Third Member. The Hon'ble Third Member vide order dated 02.02.2017 concurred with the findings of the Hon'ble Accountant Member and held as under :- 2. I have heard Id. Representative of both the parties and perused the material on record. 3. The revenue in their appeal has challenged the order of Id. CIT ( Appeals) in deleting the addition of ₹ 13,10,000/- made by Assessing Officer under section 68 of Income Tax Act. The assessee in the cross objection has challenged the order of Id. CIT (Appeals) in sustaining the addition of ₹ 2,34,619/- on account of unexplained cash credits. The facts are discussed in detail in impugned orders as well as in the proposed orders of the learned Members of ITAT Jaipur Bench. Therefore, these are not repeated for the sake of brevity. The dispute is with regard to additions made under section 68 of the Income Tax Act in respect of 9 creditors by the Assessing Officer. The Id. CIT (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have stated to have proved the identity of the creditors only. However, in the cases of two creditors, even no confirmation has been filed by the assessee and they did not appear before A.O. Therefore, there was no justification for the learned Judicial Member to delete additions in their cases. 4. The ld. DR relied upon decision of the Hon'ble Rajasthan High Court in the case of Kamal Motors v. CIT 131 Taxman 155 in which it was held that, Except filing of the confirmation certificate, the assessee has not shown that creditor was man of means, therefore, there was no justification to interfere with the addition made in that case . The ld. counsel for the assessee, however, relied upon decision of Hon'ble Rajasthan High Court in the case of CIT v. Jai Kumar Bakliwal 366 ITR 217 in which Hon'ble High Court dismissed the departmental appeal considering that all the cash creditors were assessed to income tax and they provided confirmation as well as PAN numbers. They held their bank accounts which they had been operating. Hon'ble Rajasthan High Court held that ITAT after appreciation of evidence has rightly come to the conclusion in allowing the appeal which is p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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