TMI Blog2000 (8) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 12,964 thereon ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee has not discharged the onus of proving the genuineness of the loans on the ground that the creditworthiness of the creditors was not established ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal should have held that when the creditors had confirmed the loans and explained their sources and it was not for the Assessing Officer to make further investigations regarding the correctness and adequacy of the sources of the parties and since it was not done, the impugned addition was not justified ? (4) Whether, on the facts and in the circumstances of the case, the Tribunal should have held that the assessment was violative of the principles of natural justice and should have remanded the case to the Assessing Officer for further enquiry inasmuch as the assessee has been given a day's/a few days time to rebut the inferences drawn by the Assessing Officer after taking the depositions of the parties, and the assessment was rushed through in the course of few days ?" The Income-tax Appellate Tribunal by its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors had in their confirmation letters clearly admitted to have given the loans to the assessee and the creditors were also produced by the assessee before the Assessing Officer who recorded their depositions in detail. The assessee had paid interest on the loans and the loans had been taken by account payee cheques or crossed demand drafts. By way of production of confirmation letters and the creditors, the assessee had fully discharged his onus and also proved the identity of the creditors. Beyond proving the identity of' the creditors and the genuineness of the transactions, the assessee was not required to do anything further. The Assessing Officer also failed to note that all the creditors were assessed to income-tax and their returns were accepted by the Revenue under the amnesty scheme. Having assessed the creditors on the income, it was not open to the Department to doubt the genuineness of the transactions and again subject the assessee to tax on the genuine advances made by the creditors out of their own resources. In the facts and circumstances of the case, the cash credits found in the books of account of the assessee should be held to be genuine and should, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions. In that view of the matter, the Income-tax Appellate Tribunal dismissed the appeal filed by the assessee and affirmed the order of the Commissioner of Income-tax (Appeals). The main contention advanced by Sri Y. Ratnakar, learned counsel appearing for the petitioner, is that the Assessing Officer despite recording the finding that the assessee discharged the onus of identifying the creditors and confirmation of the credits, seriously erred in law in placing the onus on the assessee to prove further the creditworthiness of the creditors and the genuineness of the transactions. Learned counsel would maintain that under section 68 of the Income-tax Act what the assessee is required to do is to identify the creditors and confirm the credits, and he is not expected to prove the source or genuineness of the credit. In support of this contention, learned counsel would place reliance on the decision of the Patna High Court in Sarogi Credit Corporation v. CIT [1976] 103 ITR 344. Counsel would also meekly submit that the assessment proceeding was concluded with haste by the Assessing Officer without giving reason able opportunity to the assessee. Sri S. R. Ashok, learned senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision which applies when the assessee's explanation regarding a cash credit is rejected as being unsatisfactory or when the assessee does not render any explanation. Section 68 provides that the Assessing Officer may bring to charge a sum as income of the previous year if (i) the sum is found credited in the books of the assessee for any previous year, and (ii) the assessee offers no explanation about the nature of source of that sum ; or (iii) the explanation is not in the opinion of the Assessing Officer satisfactory, whether the sum so credited may be in the assessee's name or in the name of a third party. The Supreme Court in the case of Udhavdas Kewalram v. CIT [1967] 66 ITR 462, held that before an amount of cash can be deemed to be income of the assessee the Assessing Officer and the Tribunal is duty bound to consider all facts and to record its findings on all contentions. In the case of Sreelekha Banerjee v. CIT [1963] 49 ITR 112 (SC), the Supreme Court held that the enquiry must be conducted in accordance with the rules of natural justice and all materials for and against the assessee must be shown to him and an opportunity must be given to the assessee to rebut an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT [1992] 193 ITR 318, have opined that simply because some of the transactions are by cheques, it cannot be said that the transactions are genuine. As held in the cases arising under the 1922 Act and similarly under section 68 of the Act, the initial burden is on the assessee to establish the identity of creditors, the capacity of the creditors to advance monies and the genuineness of the transactions, and the burden may then shift to the Department in some circumstances. It is not correct to state that the Assessing Officer is not entitled to reject the explanation of the assessee if he has some other positive evidence to falsify the assessee's case. The reasonable view, according to us, is that though the Assessing Officer is not bound to accept each and any possible explanation that the assessee may put forth and it is his power to independently satisfy himself about the proof of identity of the creditors, the creditors' capacity to advance money and the genuineness of the transactions, he cannot arbitrarily reject the assessee's explanation without assigning reasons. From the above discussion of the case law on the point what transpires is that the assessee, in order to disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditworthiness of the creditors and the genuineness of the transactions nor is it an authority to state that the assessee need not prove the creditworthiness of his creditors and genuineness of the transactions in order to discharge the onus cast on him under section 68 of the Act. From the above observations of the Patna High Court what could be ascertained is that once the assessee establishes the identity of the creditors and confirmation of the credits, the burden shifts on to the Department to show as to why the assessee's case should not be accepted, and as to why it must be held the entries still represent the income of the assessee from undisclosed sources. In the instant case, even assuming that the petitioner/assessee has discharged the initial burden by proving the identity of the creditors as well as the confirmation of the credits and, therefore, the burden shifted to the Department to show as to why the assessee's case should not be accepted, we should state, the Assessing Officer has satisfactorily discharged the burden as to why the assessee's case should not be accepted by examining the creditors and collecting relevant materials in support of the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Daulat Ram Rawatmull [1973] 87 ITR 349, held that findings on questions of pure fact arrived at by the Tribunal are not to be disturbed by the High Court on a reference unless it appears that there was no evidence before the Tribunal upon which they, as reasonable men, could come to the conclusion to which they have come ; and this is so even though the High Court would on the same evidence have come to a conclusion entirely different from that of the Tribunal. Such a situation is not obtaining in the present case. We have perused the order of the Income-tax Appellate Tribunal. The Tribunal has threadbare and in considerable elaboration considered the entire evidence on record for recording the finding that the loans claimed to have been advanced by Smt. Bhanumathi Chowdary and Sri Dasaradha Chowdary, Rajiv Kumar Patwari, Miss. Leena Patwari and Janak Kumari Patwari who are the minor children of Sri Suresh Kumar Patwari and Smt. P. Sarada Gupta are not genuine transactions. The Tribunal has held that Smt. Bhanumathi Chowdary and her husband, Sri Dasaradha Chowdary, had no means or source of income to advance huge sums of monies to the assessee and, in fact, they were staying in a h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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