TMI Blog2013 (3) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... case are that the assessee is engaged in the business of silver ornaments and bullion and job work. During the assessment proceedings, the A.O. noticed that cash in land as on 10.01.2007 as per cash book produced was ₹ 2,62,230/-. He further noticed that cash of ₹ 2,00,000/- was deposited in Bank on 11.01.2007 and closing balance was shown at ₹ 2,62,230/-. The A.O. asked for the explanation from he assessee. The assessee submitted that ₹ 2,00,000/- was received from Shri Ambrish Bhai as advance for purchasing silver ornaments. But due to oversight, this entry was not passed in cash book as on 11.01.2007. The A.O. did not satisfy with the explanation of the assessee and made addition of ₹ 2,00,000/- under Section 68 of the Act. 4. The A.O. further noticed that the assessee taken loans and advances of ₹ 1,00,000/- from Shri Kishan Singh Verma, ₹ 1,00,000/- from Shri Kuldeep Kumar Soni, ₹ 2,00,000/- from Shri Narayan Das and ₹ 2,00,000/- from Shri Nitin Kumar Verma. It was explained by the assessee that Sri Kishna Singh Verma and Sri Kuldeep Kumar have given advance of ₹ 1,00,000/- each to the assessee for purchase of orna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rti 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 creditors and since those notices came back unserved, the Income-tax Officer treated the loan as assessee s income from undisclosed sources. The Appellate Assistant Commissioner dismissed the assessee s appeal on the ground that the assessee could not even establish the identity of the parties. On further appeal by the assessee, the Appellate Tribunal held that mere filing of confirmatory letters did not discharge the onus that lay on the assessee and there was no material on the record to establish the 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments that as per market practice, rates of silver/silver ornaments have to be taken of the date when advance has been given. Therefore, there was no question of withdrawing from the transaction on increase of the value of silver. Therefore, there is serious doubt about the confirmation filed by the alleged creditors. In such a situation, it is the duty of the assessee 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 his claim. Therefore, it is not the case of denial of any opportunity to the assessee. The assessee has not established on record if the assessee has made any request to the AO for summoning of any of the creditors, therefore, the AO is not bound to issue any summon to the creditors. Since the assessee has not discharged in any w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the test of human probabilities after considering the surrounding circumstances. In the present case, the assessee has not adduced any evidence before the authorities below to prove the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter and whatever confirmations were filed were contradictory to the explanation of the assessee. The silver is not a rare commodity for which advance should be given to the assessee for purchase and particularly when the assessee did not deal in silver because the assessee deals only in silver jewellery. Everything is afterthought story made up to cover the unaccounted money. Therefore, it would lead to irresistible conclusion that the assessee has fabricated all the confirmations and it was the unaccounted money of the assessee only which is entered into the books of account under the garb of cash credits given by 20 persons. Thus, the assessee miserably failed to prove his case. We do not find any infirmity in the orders of the authorities below. The orders of the authorities below are, therefore, confirmed and the appeal of the assessee is dismissed. 7. As regards the second aspect of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.2007 (PB-126). Prior to that, the assessee sought time from the AO to produce remaining creditors for examination, but later on did not produce them. The ld. counsel for the assessee explained that due to one or other problem of the remaining creditors on account of medical advice, the depositors have shown their inability to appear before the AO for examination, but it is admitted fact that the assessee did not make any request before the AO for examination of the remaining creditors through the commission and no willingness was shown before the CIT(A) for production of the remaining creditors for examination even at the remand stage in the appellate proceedings. Even during the course of arguments before the Tribunal, the ld. counsel for the assessee did not show his willingness to produce remaining creditors for examination before the AO. It is, therefore, clear that the assessee has failed to produce the remaining creditors for examination by the Revenue Department in order to find out truth in the matter. 9.1 The AO discussed each and every creditor in the assessment order and the crux of the findings of the AO had been that there were very small bank balances in the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersons of sufficient means to advance any loan to the assessee. Filing of balance sheets, cash flow statements, cash books etc. have no evidentiary value because according to the remand report filed by the AO, those documents were not filed with the return of income. Moreover, no regular books of account have been maintained by any of the creditors and majority of them have shown estimated income in their returns of income. Therefore, such balance sheet, cash flow statements etc. would not support the contention of the assessee that genuine credits have been received. The order sheet noted by the AO would also show that the assessee has made no efforts to produce the remaining creditors before the AO. Even in the statement of one of the creditors recorded by the AO, Shri Ambhay Maheshwari, he was not able to explain his source of deposit or advancing loan to the assessee through genuine source. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity and creditworthiness of the creditors and genuineness of the transactions. The assessee has, however, failed to prove the creditworthiness of the creditors who were havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is creditors, the capacity of such creditors to advance the money and lastly the genuineness of the transactions. Only when these things are proved by the assessee prima facie and only after the assessee has adduced evidence to establish the aforesaid facts does the onus shift on to the Department. It is not enough to establish the identity of the creditors. Mere production of the confirmation letters before the Income-tax Officer would 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 loans really represented their own concealed income. The assessee had not discharged its burden of proving that the loans in question were genuine. 10.2 Hon ble Calcutta High Court in the case of M/s. Precision Finance Pvt. Ltd., 208 ITR 465 held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of Rohini Builders and U.M. Shah (supra), the departmental appeal was dismissed finding no substantial question of law because the findings of the Tribunal were based on appreciation of evidence. 12.1 In the case of CIT vs. Orissa Corporation P. Ltd (supra), it was also held that the Revenue did not examine source of income of the said alleged creditors when they were assessed to tax to find out whether they were creditworthy. However, in the present case, the authorities below have specifically found that all the creditors were not men of means and as such, their creditworthiness was not proved at all. Therefore, the decision cited by the ld. counsel for the assessee would not support the case of the assessee. 13. Considering the facts and circumstances of the case in the light of findings of the authorities below, we do not find any irregularity or illegality in the orders of the authorities below. We confirm their findings and dismiss the appeal of the assessee on this ground. Concise grounds Nos. 1 2 are, accordingly, dismissed. 26. The relevant facts, question before High Court and finding thereon in case of suman Gupta ; Income Tax Appeal No.680 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducing the assessment orders and accounts books of the unsecured creditors. The loans were taken by the banking channels. It is submitted that once the burden was discharged by the assessee, it was open to the Assessing Officer to have called the creditors by issuing notices under Section 131 of the Act to examine their creditworthiness and the genuineness of transactions. It was not open to the AO to examine the assessment orders and pass books and draw conclusions on the creditworthiness of the creditors, to add back at the entire loan amount to assessee s income. 5. We have considered the submissions, and have gone through the judgments cited by the appellant. In all these judgements, it has been reiterated that after the assessee has led the evidence of identifying the persons, with names, PAN numbers, bank account numbers and assessment orders, the burden under section 68 of the Act shifts upon the department to disprove the genuineness of the transactions. The AO could not make detailed enquiries into the sources of source, or doubt the genuineness and creditworthiness of the creditors on arbitrary reasoning or mere ipse dixit. His enquiry should be bonafide and concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfactorily explain the availability of funds with him for giving loan to the assessee. In his case, he has filed return of income for the assessment year under appeal at ₹ 1,02,850/- (PB-60). In the case of Shri Amit Maheshwari, he was also having small bank balance of ₹ 2429/- before issue of cheque to the assessee and equal amount of the cash credit was deposited in the bank account. He has filed return of income for the assessment year under appeal at ₹ 44972/- (PB-71). In the case of Smt. Keerti Maheshwari, in her bank account, there was balance of ₹ 4688/- only prior to issue of cheque to the assessee and equivalent amount of cash credit was deposited for the purpose of issue of cheque in favour of the assessee. For the assessment year under appeal, she has filed return of income at ₹ 1,01,000/- only. In the case of Smt. Mithlesh Maheshwari, the bank balance before issue of cheque was ₹ 10,794/- and equivalent amount of cash credit was deposited in her bank account for issue of cheque in favour of assessee. For assessment year under appeal, she filed return of income at ₹ 1,02,476/- only. In the case of Sh. Rampal Sing, it is already n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts of the creditors for the purpose of giving credits to the assessee. These were, therefore, accommodation entries only and as such, could not be considered as genuine transactions. Merely because the loans have been received through banking channel, is not sacrosanct to make a non-genuine transaction as genuine transaction. 7. We do not find that the AO failed to exercise his jurisdiction in refusing to summon the file of unsecured creditors other than Shri Abhay Maheshwari, who had appeared and was examined. We also do not find that the AO has committed any error in examining the account books. None of the creditors under examination could prove their creditworthiness. Each one of them had a very small bank balance of a few thousand rupees only and that in all the cases the entire sum given as unsecured loan was deposited on the same day, when it was advanced to the assessee-appellant. 8. We do not find that any of the substantial questions of law framed by the appellant arises for consideration of the Court. The findings recorded by the AO about the creditworthiness of the unsecured loans of ₹ 13,00,000/- as against the total unsecured loans of ₹ 78,75,249/-, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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