TMI Blog2023 (2) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents, to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the assessing officer and he cannot go into the realm of suspicion. AO cannot burden the assessee with tax liability merely on the ground that summons issued to the creditors were returned back with the endorsement not traceable. CIT(A) noted that in the assessee`s case, once the assessee had produced all documents establishing the identity and capacity of creditors of creditors and genuineness of transactions, the initial onus cast upon the assessee was discharged and the onus shifted to the assessing officer to bring material on record to the effect that in spite of identity and creditworthiness of the creditor being proved, the transaction was still not genuine. However, the assessing officer has not made any further inquiries and has not brought only material on record to controvert the documentary evidence submitted by the assessee. CIT(A) noted that AO was not justified in treating as unexpla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners of the assessee firm namely Sh. Jignesh J. Vaghani and Nilesh A. Patel, had introduced Rs.2,74,86,097/- and Rs.1,83,78,648/- respectively as capital in the firm. During the scrutiny proceedings, the assessee explained the assessing officer stating that source of capital introduced by the partners were unsecured loans from friends and relatives, capital withdrawn from partnership firm and sale proceeds of agricultural produce. However, this claim of the assessee was not accepted by the assessing officer by doubting the creditworthiness of persons who gave unsecured loans to the partners. The assessing officer mentioned that both these person brought their unaccounted money through depositing cash in bank account of various parties and then the same in their bank account and in the end introduced money as capital in the firm. Accordingly, the assessing officer treated the capital introduced to the extents of Rs.53,50,000/- and Rs.94,75,000/- by Sh. Nirav V. Patel and Sh. Jigneshbhai J. Vaghani respectively as unexplained cash credit u/s 68 of the Act. Therefore, a total addition of Rs.1,48,25,000/- (Rs.53,50,000 + Rs.94,75,000) was made by the assessing officer. 4. Aggrieve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced of Rs.2,74,86,097/- and Rs.1,83,78,648/- by Sh. Jignesh J. Vaghani and Sh. Nilesh A Patel respectively, the assessing officer doubted the source of Rs.94,75,000/- and Rs.53,50,000/-. It means that the assessing officer was satisfied with the capital introduced to the tune of Rs.1,80,11,097/- and Rs.1,30,28,648/- by Sh. Jignesh J. Vaghani and Sh. Nilesh A Patel respectively. From the chart / tables given in the assessment order at page nos. 10 to 13, it is clear that the assessing officer only doubted the unsecured loans taken from some parties by the two partners. That is, the assessing officer treated the capital introduced to the extents of Rs.53,50,000/- and Rs.94,75,000/- by Sh. Nirav V. Patel and Sh. Jigneshbhai J. Vaghani respectively as unexplained cash credit u/s 68 of the Act. The ld CIT(A) observed that Shri Nirav Patel had taken an unsecured loan of Rs.86,00,000/- from friends and relatives and prove the genuineness of these transactions, he submitted that bank details showing that these transactions took place through proper banking channel,(i) i.e., account payee cheques, RTGS NEFT only and various other details like, Confirmation ledger account of the len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to introduce capital and advance loans to the partners has been established with sufficient documentary evidences. (iii).Genuineness of Transactions:- The assessee has filed copies of bank accounts of these partners as well as their loan creditors wherein the loan amounts advanced during the year are reflected, all loans have been advanced through banking channel. Thus, the genuineness of transaction has been established beyond doubt. 10. Thus, ld CIT(A) observed that it is an established proposition of law that onus is never static but goes on shifting as and when the two contesting parties lay down evidence in support of their stand. The law in section 68 puts burden of proof, which is fixed on the assessee, to prove nature and source of credit appearing in its books. The Courts have explained the nature and source as identity of the creditor, his creditworthiness land genuineness of the transaction. If assessee is able to discharge the initial onus by submitting evidence to prove the identity of the creditor, and his creditworthiness and genuineness of the transaction then onus will shift to the assessing officer to put material on record to the effect that in spite of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the documents such as (i) PAN, (ii) income-tax returns of creditors, (iii) the details of bank accounts through and to which the loan amount has passed, (vi) confirmations of creditors etc., then initial onus lying on the assessee-company would stand discharged. It is so held in several judgments such as CIT v. Dwarkadhish Investment (P.) Ltd. [2010] 194 Taxman 43 (Delhi), CIT v. Sophia Finance Ltd. [1994] 205 ITR 98 /[1993] 70 Taxman 69 (Delhi), CIT v. Kundari Investment Ltd. [2003] 263 ITR 626/130 Taxman 689 (Cal.) and CIT v. Rathi Finiease Ltd. [2008] 215 CTR 429 (M.P.). The Creditworthiness or financial strength of the creditor can be proved by producing the bank statement of the creditor showing that it had sufficient balance in its accounts to enable it to advance money to the assessee. The Genuineness of the transaction is to be demonstrated by showing that the assessee had, in fact, received money from the said creditor and it came from the coffers of that very creditor. The Division Bench of Delhi High Court in the case of CIT vs. Kamdhenu Steels and Alloys Ltd. 361 ITR 220 (Del.) held that when the money is received by cheque and is transmitted through banking or other i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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