TMI Blog1982 (2) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... he disclosed profit and, applying a net profit rate of 171/2 per cent. on the total receipts, estimated it at Rs. 2,30,000. Ultimately, the Appellate Tribunal sustained the net profit at Rs. 34,500. The ITO further found that during the relevant previous years the assessee bad taken some hundi loans. One such creditor was M/s. Jethanand Madan Das, r/o-4/1, Madan Street, Calcutta, and a loan of Rs. 17,000 was shown to have been taken from him on September 5, 1962. On the same date there was a loan of Rs. 25,000 taken from M/s. Amar Mal Mool Chandra, whose residence was the same as that of M/s. Jethan and Madan Das and there was a third loan of Rs. 20,000 taken on the same date from M/s. Govind Das Nichal Das of Calcutta. The assessee filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and that the filing of a mere confirmation letter would not amount to a sufficient discharge of the burden placed upon the assessee under s. 69 of the I.T. Act. The assessee has to prove not only the identity of the creditor but has further to prove that the creditor had the capacity to advance the loan. The Tribunal then found that the identity of the creditors could not be disputed because they were all assessees on record and also had made statements before the Department. As for their capacity to advance the loans, the Tribunal accepted the genuineness of the loan taken from M/s. Govind Ram Nichal Das, but in regard to the other two did not accept the genuineness of the same. As for the alleged loan from M/s. Jethanand Madan D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Tribunal that it was not required to see what more could have been done by the ITO or the assessee. The Tribunal was left to decide the matter on the basis of the material on record. The Tribunal, thereafter, decided the question of the genuineness of this loan on the basis of that material and we agree that a mere confirmation letter from the alleged creditor could not have been treated as sufficient evidence to prove the genuineness of the loan. The Tribunal was not swayed by any irrelevant consideration in arriving at this finding. Now, coming to mis-appreciation of law, it was submitted before us on behalf of the assessee that the Tribunal erred in considering the case under s. 69 of the Act because it was s. 68 which was appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1, where it has been laid down that the onus is on the assessee to explain the nature and source of cash credits, whether they stand in the assessee's account or in the account of a third party. Irrespective of the fact that a credit entry is in the name of the assessee or is in the name of a third party, the burden lies upon the assessee to explain the credit entry. It is correct that in certain circumstances the onus might shift to the ITO. For instance, if the assessee succeeds in showing that entries regarding cash credits in a third party's account are genuine and the sums were in fact received from the third party as loans or deposits, he had discharged the onus and in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness. In the instant case the only material on record in regard to the impugned transaction was the so-called confirmation letter from the creditor. That alone could not have served the purpose. The same was the position in regard to the furnishing of the G.R. number of the creditor. Apart from this, the assessee itself foreclosed any further enquiry in the matter by agreeing to the decision of this question on the basis of the material already on the record. The finding of the Appellate Tribunal in this behalf is a pure finding of fact. Reliance was also placed on behalf of the assessee on a decision of the Assam High Court in Nabadwip Chandra Roy v. CIT [1962] 44 ITR 591. In that case a distinction was drawn on the question of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly so, because the assessee had not been given an opportunity to cross-examine the person. None the less, there was some background for disputing the genuineness of the entry on the part of the ITO and that being so, the assessee was required to satisfy him that the entry was genuine. The last case, on which reliance was placed, is the decision of the Patna High Court in Radhakrishna Behari Lal v. CIT [1954] 26 ITR 344. We do not think that that decision improves the case of the assessee in any appreciable manner. That court also took the view that if a cash credit stands in the assessee's name in his books the burden of proof is upon him to show that the item of receipt is not of an income nature but in regard to a sum shown in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X
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