TMI Blog2019 (6) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... itter being a partner in Chandragiri Construction, the proper course was to credit the amount in the capital account of the wife or to show the same as a loan from the creditor. A careful reading of the decision in Mohanakala [ 2007 (5) TMI 192 - SUPREME COURT] shows that even after rejecting the explanation given by the assessee, the assessing authority should consider the crucial aspect as to whether on the facts and circumstances of the case it could be inferred that the sums credited in the books of the assessee. As far as the instant case is concerned, both CIT(Appeals) as well as the ITAT had found the assessee to have discharged his burden of explaining the genuineness of the cash credits in his account by providing confirmation from the creditor regarding remittance and the source of funds and certificate from the assessee's bank. The explanation offered by the assessee, coupled with the fact that a similar explanation regarding remittances during the previous year was accepted by the Assessing Officer and similar remittances during the period prior had been accepted by the Settlement Commission, had weighed with the CIT(Appeals) and the ITAT. - Decided against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has not proved the credit by producing satisfactory evidence for the capacity of the remitter to advance the money. Following the settled law as stated above the amount of ₹ 2,67,99,547/-, credited in the capital account is treated as income of the assessee and is added as income from other sources. 2. The assessee challenged the assessment order in appeal successfully. The appeal was allowed by the CIT(Appeals) finding that no undisclosed source of income for the assessee had been identified at any time in the income tax assessments. It was observed that the assessment of genuine remittances in the account of the assessee, by his son-in-law from Dubai, should not be suspected as credits to account and cover up any undisclosed income. The First Appellate Authority took note of the fact that the remittance received by the assessee from Dr.K.P.Ali through the Federal Bank had been confirmed by the bank. The details of the clinics and business concerns, from which source amounts were remitted to India, was furnished to the Assessing Officer by Dr.K.P.Ali, along with his confirmation of the remittances. The fact that in the previous assessment year ₹ 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t? ii. Tribunal is right in law and fact in relying on the order of Settlement Commission in support of the genuineness of the credit (from the same person during the year prior to 2002-2003) since being prima facie satisfied that the assessee had obtained the Settlement dated 4.3.2008 under Sec. 245D(4) by fraud and misrepresentation, the Settlement Commission had issued notice dated 8.2.2010 under Sec. 245D(6) of the Act to the assessee to show cause as to why the said Settlement should not be declared as void. 2. Whether, on the facts and in the circumstances of the case does the withdrawals in total noted at page 12 of the order of ITAT runs to more than ₹ 4 crores? and is not the calculation factually wrong and does the same (even if correct) have any relevance, in the absence of proof satisfying all the three ingredients as laid down by the Supreme Court in the case of P. Mohanakala and nexus with the assessee? 3. Whether, on the facts and in the circumstances of the case as a result of search on 21.6.2001, the assessee of this group were found to be operating a large number of undisclosed bank accounts through which amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in the appeal. It is contended that the CIT Appeals and ITAT having found that the explanation offered by the assessee for the remittances in his account to be satisfactory, no interference is warranted on those findings of fact. 7. A reading of Section 68 of the Income Tax Act makes it clear that the section would come into operation when there is credit of amounts in the books maintained by an assessee during the previous year and the assessee offers no explanation about the nature and source of such credit; or, the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. In Mohanakala 's case, the Hon'ble Supreme Court elaborately dealt with the onus of the assessee to dispel any doubt regarding the genuineness of the transaction, to the satisfaction of the Assessing Officer. The relevant portion of the judgment is as under : The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of the Act come into play? A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if the explanation is not acceptable, the materials and attending circumstances available on record do not justify the sum found credited in the books to be treated as receipt of an income nature. It was in those circumstances that the appeal filed by the revenue was allowed finding that the High Court had misdirected itself and committed an error in disturbing the concurrent findings of fact. 9. As far as the case at hand is concerned the assessee as well as the creditor had offered their explanations. The creditor had explained his source of income, the transactions were effected through bank, which fact was substantiated by producing a certificate from the bank. It was in such circumstances that the CIT (Appeals) and the ITAT found that the assessee had established the identity of the creditor, source for the credit and genuineness of the transaction. The fact that the Department had accepted a similar explanation offered in the previous assessment year assume relevance in the above context. Further, the Settlement Commission had also held similar cash transactions during the previous years to be genuine. On the contrary, the finding of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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