TMI Blog1996 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Whether the Tribunal was justified in law in upholding the addition of three cash creditors in all amounting to Rs. 2,15,000 as income of the assessee ? 3. Whether the Tribunal was justified in upholding the disallowance of interest on the cash credit treated as income of the assessee ?" The facts for the purpose of answering the questions may be narrated as follows : The assessee carries on timber business and the matter relates to the assessment year 1981-82. In the accounting year 1980-81, the assessee received a loan of Rs. 1,50,000 from Hans Kumar Jain, a partnership firm, Rs. 35,000 from Malchand Killa and Rs. 30,000 from Malchand Radheshyam. While making the assessment for the said period, the Income-tax Officer disbelieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. The Tribunal disposed of the appeal holding that although the identity of the person was not doubtful the capacity to advance the loan was doubtful and, therefore, set aside the appellate order passed by the Commissioner of Income-tax (Appeals) and restored the order passed by the Assessing Officer. The assessee requested the Tribunal to refer the aforesaid questions to this court, which, however, the Tribunal refused. Situated thus, the assessee filed an application under section 256(2) of the Act which was numbered as Civil Rule No. 5(M) of 1991 and this court by judgment dated March 6, 1991, directed the Tribunal to refer the aforesaid questions to this court. Hence, this reference. We have heard Dr. A. K. Saraf, learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that aspect of the matter brushed aside the case of the assessee holding that mere identity of the transaction was not enough, the capability also ought to have been considered. Dr. Saraf further submits that the assessment made by the Income-tax Officer in respect of the creditors itself is sufficient to indicate the genuineness of the transaction and capability of giving cash credit. Mr. Bhuyan, however, opposed the submissions made by Dr. Saraf. He strenuously argued that the Tribunal was fully justified in holding that mere identity was not enough, there should be at least some evidence to show that the creditors had the capability to advance cash credit and the transaction was genuine. As the assessee miserably failed to discharge tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit is found to have been made by a third party in the accounts of the firm, that entry is prima facie proof that that amount in question was deposited by the person in whose name the deposit stands. To require the firm or the individual partners to go further and adduce proof of the sources from which the deposits in question appearing in the accounts in the name of third parties were derived by them, would be placing a burden on the firm as well as the partners, which is not required or justified by law. " Dr. Saraf has also drawn our attention to a decision of the apex court in CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349. In the said case, the apex court, while considering the genuineness of the entries made regarding the deposit, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer on cogent grounds. when such grounds themselves are based on no evidence, the question of presumption against the assessee does not arise. To counter the submissions of Dr. Saraf, Mr. U. Bhuyan strenuously argued that the Tribunal has come to a clear finding that the assessee could discharge a portion of the burden, namely, the identity and not other matters. Learned counsel has pointed out that the Tribunal has specifically stated that the identity itself was not sufficient to come to a conclusion regarding the genuineness and the capability of the creditors is also required to be looked into. Mr. Bhuyan submits that as the assessee miserably failed to discharge that part of the onus, the finding of the Tribunal was just and proper. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urces he has disclosed or from some undisclosed source. " On the basis of the cases cited above, it is to be seen whether in the present case the assessee could discharge the onus regarding the receipt of the cash credit. The Tribunal in its judgment indicated that the identity of the creditor was not enough. It is true that by proving the identity the assessee cannot be said to have discharged its onus. In the instant case, the amounts were shown in the income-tax return of the assessee. Besides, the creditors had also shown in the returns about the giving of the loan to the assessee. Strangely, the Income-tax Officer while making the assessment in respect of the three creditors above named accepted the returns. This itself will go to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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