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Ram Baboo Agarwal Versus A.C.I.T. -3, Mathura.

2012 (12) TMI 1135 - ITAT AGRA

ITA No. 245/Agra/2012 - Dated:- 28-12-2012 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER Appellant by : Shri Navin Gargh, Advocate Respondent by : Shri K.K. Mishra, Jr. D.R. ORDER Per Bhavnesh Saini, J.M.: This appeal by the assessee is directed against the order of the ld. CIT(A)-I, Agra dated 28.12.2011 for the assessment year 2007-08, challenging the addition of ₹ 3,71,000/- u/s. 68 of the IT Act. 2. Briefly, the facts of the case are that the assessee s .....

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ced by them. In respect of these cash credits, confirmatory letters were filed. The confirmatory letters were in the names of individuals, but those confirmatory letters were not having any proof with regard to identification of these creditors. All the transactions are in cash. The genuineness of the transaction could not be subjected to verification. The assessee did not produce any evidence to prove the creditworthiness of the alleged creditors and no evidence was furnished to prove the genui .....

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e mentioned in the cash book, but due to continuous increase in price, the assessee has not purchased the goods as per their requirements and ultimately, the assessee has returned the amount to all the parties. Copy of the account was filed. All are ordinary persons and not assessed to tax. It was a genuine business transaction. The AO did not accept the explanation of the assessee because the assessee failed to prove identity of any of the persons. No evidence was filed to prove their creditwor .....

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ities below and submitted that the assessee is in business of silver ornaments and those 20 creditors have given advance for purchasing the silver ornaments as per suitable rates. The assessee filed confirmation letters and all the transactions were routed in cash. The books of account have been accepted by the AO. Therefore, on filing the confirmation and capital account of the creditors, onus upon the assessee u/s. 68 is discharged. He has admitted that the provisions of section 68 are applica .....

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54 ITR 591 (Pat.) (iv). Addl.CIT vs. Hanuman Agarwal, 151 ITR 150 (Pat.) (v). Munnalal Murlidhar vs. CIT, 791 ITR 540 (Alld.) (vi). Natu Ram Premchand vs. CIT, 49 ITR 561 (Alld.) (vii). CIT vs. Orissa Corporation Pvt. Ltd., 159 ITR 78 (SC) (viii). Colonisers vs. A.C.I.T., 41 ITD 57 (Hyderabad Bench) (ix). ITO vs. Metro Cycle of India, 88 Taxman 193 (Chandigarh Bench) (x). CIT vs. K.M.N. Naidu, 211 ITR 451 (Mad.) He has submitted that one more opportunity be given to the assessee to establish his .....

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dmitted that the provisions of section 68 of the IT Act are applicable in the case of the assessee. For proving the ingredients of section 68 of the IT Act, the burden is upon the assessee to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. However, the assessee has not proved any of the above conditions u/s. 68 of the IT Act. The assessee filed mere confirmation letters from the creditors without filing supporting evidence to prove the identity of .....

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Act. Hon ble Calcutta High Court in the case of Bharti Pvt. Ltd. vs. CIT, 111 ITR 951 held as under : In the course of assessment proceedings, the Income-tax Officer found that the assessee had shown ₹ 20,000 as loan in its books taken from two parties. The assessee produced the alleged confirmatory letters from those parties before the Income-tax Officer in support of the two loans. The Income-tax Officer served notices under section 131 of the Income -tax Act, 1961, on the alleged credit .....

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he identity of the creditors: Held, that the Tribunal had taken all the relevant facts into consideration and the conclusion arrived at by the Tribunal that the loans represented the assessee s income from undisclosed sources was not perverse or unreasonable. 4.1 The Hon ble Calcutta High Court in the case of CIT Vs United Commercial and Industrial Co. (P) Ltd., 187 ITR 596 held as under: The primary onus lies on the assessee to prove the nature and source of credits in its account. It is necess .....

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not by itself prove that the loans have been obtained from those loan creditors or that they have credit-worthiness. Held, that, in the instant case, the Tribunal misdirected itself in holding that the transactions were genuine simply because some of the transactions were made by cheques. The assessee had failed to prove the credit-worthiness of the alleged lenders. A number of other assessees had also admitted that loans obtained from these bankers against hundis were not genuine and such hundi .....

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s in cash have been given to the assessee for purchasing silver, but because of the rates of silver have increased, the amounts have been taken back. Almost same narration is given in the alleged confirmation letters. All these confirmation letters are contrary to the explanation of the assessee. The assessee explained before the AO that he is doing the business of silver ornaments. Even in the copies of silver jewellery account, the assessee has not mentioned anything if the assessee has purcha .....

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essee to establish the identity of these creditors and their creditworthiness through documentary evidence in order to prove genuine transaction in the matter. But the assessee failed to do so. Therefore, the onus upon the assessee has not been discharged at all. The assessee has been given opportunity by the AO vide separate order sheet dated 13.09.2009 to explain this issue and to prove its case u/s. 68 of the IT Act, but the assessee did not furnish any evidence before the AO in respect of hi .....

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case of the assessee. The ld. Counsel for the assessee also argued that the books of account have been accepted by the AO, therefore, the entries of cash credits should also be accepted by the AO. We are afraid to accept such contention of the ld. Counsel for the assessee because the provisions of section 68 are deeming provisions to consider the cash credits entered into the books of account and it has no relation with the acceptance or rejection of books of account. This issue has been consid .....

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d. Counsel for the assessee is rejected. Considering the above discussion, it is clear that it is a case of no evidence filed by the assessee to prove the identity of the creditors, their creditworthiness and genuineness of the transaction. Therefore, none of the decisions cited by the ld. Counsel for the assessee are applicable to the facts of the present case. The ld. Counsel for the assessee was also requested to cite any case law where on mere filing of the confirmation, additions have been .....

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