TMI Blog2018 (3) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit transaction - Held that:- The creditor at the time of the impugned credit, in fact already extended ₹ 3.95 lacs to the assessee during the relevant year itself. Though it is only the credit of ₹ 9 lacs that is under examination, the creditors’ – who is also maintaining books of account, capacity has to be shown with reference to the entire sum. A credit may not necessarily arise from the creditors’ current year income, and may well be from his capital, hereinbefore employed in some other asset/s, since realized. At the same time, it may be that a creditor may be merely a conduit for funds, the source of which is thus located in another person/s, so that the creditor is only an ostensibly source, and does not have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acs by bank transfer on 14.05.2012 from one, Zaitoon Begum, was asked to explain the same. The assessee furnished a ledger account which did not exhibit the said receipt, further explaining Zaitoon Begum to be his wife, who had worked as mate for a short spell in Doda Area - the ledger account reflecting a credit of ₹ 2.15 lacs to her account by way of labour charges, and which was paid by the assessee during the year. The assessee, admittedly in receipt of ₹ 9 lacs from the said person, had not credited the said sum in his books of account, so that the receipt was unexplained as to its nature and source. The AO, accordingly, brought the same to tax u/s. 68. The same stood confirmed in first appeal for principally the same re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edited in his books of account - which in fact he has shown to, the assessee is yet obliged u/s. 69/69A to furnish a satisfactory explanation as to the nature and the source of deposit in his bank account. Reference in this context may be made to the decision in CIT v. Jauharimal Goel [2005] 147 Taxman 448 (All). On balance, section 68 is clearly applicable in the facts and circumstances of the case. The next question is if the assessee has discharged the burden of proof cast on him u/s. 68. The nature and source of a credit, as is well-settled, is to be discharged on the anvil of the parameters of the identity and capacity of the creditor, and the genuineness of the credit transaction/s. The bank account of the creditor (PB pg. 9), co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee in mid May, 2012, i.e., barely 1 months into the year, whereat presumably only a fraction of the total income for the year (f.y. 2012-13) would have materialized. The creditor had, at the time of the impugned credit, in fact already extended ₹ 3.95 lacs to the assessee during the relevant year itself. Though it is only the credit of ₹ 9 lacs that is under examination, the creditors who is also maintaining books of account, capacity has to be shown with reference to the entire sum. A credit may not necessarily arise from the creditors current year income, and may well be from his capital, hereinbefore employed in some other asset/s, since realized. At the same time, it may be that a creditor may be merely a condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of account, so that he is the beneficiary of the sum credited, that the law deems it to be the assessee s income unless he satisfactorily explains the same (credit) as to its nature and source. Reference in this context may also be made to the decision in CIT v. S. Kamaraja Pandian [1984] 150 ITR 703 (Mad), wherein it stands explained that in spite of the entries to that effect in his accounts, an assessee, in view of section 68, will have to establish the identity of the creditor; the capacity of the creditor to advance; and the genuineness of the transaction/s, and where the assessee does not offer any explanation about the nature and source of the cash credits or the explanation offered is not satisfactory, the same may be charged to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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