TMI Blog2020 (2) TMI 1181X X X X Extracts X X X X X X X X Extracts X X X X ..... er on the documentary evidences furnished by the assessee and merely rejected the claim of assessee on irrelevant reasons that the creditors have disproportionate income to that of the loan advanced to the assessee. A.O. failed to examine the creditworthiness of the creditors from the source explained in their Bank accounts. Since no further investigation have been carried out by the A.O. on the documentary evidences filed by assessee, therefore, A.O. cannot fasten the assessee with such liability under section 68 of the I.T. Act, 1961. The A.O. failed to carry his suspicion to logical conclusion by further investigation. In the present case has even proved source of the source of the creditors. Therefore, there is no question of considering it to be unexplained credits in the hands of the assessee. The A.O. suspected the loan amount because the assessee filed return of income at ₹ 30 lakhs only and made investment of ₹ 11.65 crores. Since the assessee explained that sufficient loan amount have been taken from the family for purchase of property for family, then in that event, A.O. shall have to consider the explanation of assessee in the light of fact that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1. The case was examined for huge unsecured loans received by assessee for purchase of a residential property. The A.O. noted from the details on record that the amounts credited by these parties were highly disproportionate to their returned income. The A.O. has taken the figure of 03 parties for providing loans for last 05 years. The A.O. also noted that while assessee s income is only ₹ 30 Lakhs, but, she had made investment of ₹ 11.65 Crores, taken from loan and it is not replied as to how she is going to repay such loans or whether she has capacity to repay the loan also. The A.O, therefore, noted that assessee has no capacity to take such huge loans and no capacity to purchase residential property of more than ₹ 11 crores from unaccounted source of income. 2.2. The A.O. from the balance sheet and P L account of BRK Infotech found that it has no revenue from operations and only ₹ 7 Lakh as other income. In contrast, it has over ₹ 1.1 Crore of expenses even before taxes. It has absolutely no creditworthiness to advance a loan of ₹ 50 Lakhs and that too at no interest rate. From the balance sheet and P L account of Ranjitgarh Finance C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and dismissed the appeal of the assessee. 4. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee has produced documentary evidences on record to prove identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. The assessee produced confirmation of account from all the creditors, their bank statements, their computation of income, details of source of funds received by them and statement of financial assets. Copies of the same are filed in the paper book details of which are filed at page-12 of the PB. Learned Counsel for the Assessee submitted that assessee has taken loan for the purpose of purchase of property for family. The creditor Shri Rakesh Kapoor is husband of the assessee, Rakesh Kapoor HUF is their family HUF in which her husband is Karta, M/s. BRK Infotech Developers Pvt. Ltd., is a family company in which husband of the assessee is Director, creditor Ms. Isha Kapoor is daughter-in-law of the assessee. M/s. Ranjit Garh Finance Co. Pvt. Ltd., is NBFC to whom interest is paid on loan. Learned Counsel for the Assessee, therefore, submitted that si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is Karta, Creditor M/s. BRK Infotech Developers Pvt. Ltd., is a family company in which husband of the assessee is Director and Creditor Ms. Isha Kapoor is daughter-in-law of the assessee. The assessee filed confirmation of accounts from all these creditors supported by ITR, PAN, bank statements and computation of income, statement of financial assets and details and source of funds received by them. Mostly, the bank statements reveal their source of deposits are particularly their matured FDRs and sale of properties etc. All these creditors are having sufficient funds in their Bank account to give loan to the assessee. No cash was found deposited in the accounts of the creditors before giving loan to the assessee. It is illogical to say that assessee is required to explain why interest is not paid on loan to the family concern. It is settlement between family members whether to charge interest or not. A.O. cannot dictate any terms to the assessee and his family members in this regard. In case of M/s. Ranjit Garh Finance Co. Pvt. Ltd., all the above documentary evidences have been filed and the bank statement revealed that it has sufficient funds to give loan to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of CIT vs. WinstralPetrochemicals P. Ltd., 330 ITR 603, in which it was held as under : Dismissing the appeal, that it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be non-existent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee. 6.2. Decision of Hon ble jurisdictional High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961, was clear, that the Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year, that the legislative mandate is not in terms of the words shall be charged to income-tax as the income of the assessee of that previous year , that the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as income of the assessee. The Tribunal found that the assessee had discharged the initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/ permanent account numbers and the copies of assessment orders wherever readily available, that it had also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee was not expected to prove the genuineness of the cash deposited in the bank account of those creditors because under law the assessee can be asked to prove the source of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditors, but in the case of the assessee he held them not genuine. There were as many as twelve creditors and the allegations as regards opening of the bank accounts within a particular period was in the case of five creditors only. No inference could have been drawn that these were fake transactions. Admittedly there was no other evidence or material in support of the finding of the Tribunal that the cash credits were not genuine. The order of the Tribunal was not justified. 6.7. Considering the above discussion in the light of totality of the facts and evidences on record, it is clear that assessee produced sufficient documentary evidences on record to prove identity of the creditors, their creditworthiness and genuineness of the transaction. The A.O. did not make any enquiry with regard to asset and amount held by the creditors in their bank accounts with their source. Therefore, A.O. could not draw any adverse inference against the assessee. We may also note here that in the Law assessee need not to prove source of the source as is held by Hon ble Delhi High Court in the case of CIT vs., Dwarakadhish Investment P. Ltd., [211] 330 ITR 298 (Del.) and Judgment of Ho ..... 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