TMI Blog2023 (4) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... hala and Ms. Sibani Satpathy, interns of 'The Law College, CDA, Cuttack' for the assessee. Shri S.C. Mohanty, Ld. Sr. DR. assisted by Shri Chandra Sekhar Panda, intern 'The Law College, CDA, Cuttack' for the revenue. 3. It was submitted by Ld. AR that the assessee is a Private Limited Company, which is in the business of manufacture and sale of plastic items, such as, Mugs, Buckets, etc. It was the submission that during the relevant assessment year, the assessee had taken loans of Rs. 28,50,000/- from six persons being three individuals and three HUFs, who are relatives of the Directors of the assessee company. It was the submission that the three individuals were also the shareholders of the assessee company. It was the submission that in the course of assessment, the Assessing Officer had invoked the provisions of section 68 of the Act and had treated the loans taken by the assessee as unexplained cash credit. It was the submission that in the course of assessment, the assessee had produced the copies of returns of income of the lenders alongwith their computation of total income, balance sheet, bank statements and confirmation of the lenders. It was the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, that of the Commissioned Appeals) and also of the Tribunal, inescapable conclusion one arrives at is that the Revenue authorities as well as the Tribunal found the entire transaction not genuine. There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meager balance shortly before sizable amount of Rs. 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such creditors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. In short therefore, the very genuineness of the transaction was not established. This therefore, is not a case where the Revenue makes addition on the assessee failing to establish source of the source. All issues are essentially based on facts and appreciation of evidence on record. No question of law arises. Tax Appeal is dismissed. 5. Ld. Sr. DR also relied upon the decision of Hon'ble High Court of Gujarat in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter deduction of tax at source and information to this effect was given in the loan confirmation statements by those creditors filed by the assessee before the Assessing Officer. Thus it is clear that the assessee had discharged the initial onus which lays on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has 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 is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word may and not shall . Thus the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570. 10. Thus taking into consideration the totality of the facts and circumstances of the case, and, in particular, the fact, that the Assessing Officer has not disallowed the interest claimed/paid in relation to these credits in the assessment year under consideration or even in the subsequent years, and tax deducted at source has been deducted out of the interest paid/credited to the creditors, we are of the opinion that the Departmental authorities were not justified in making the addition of Rs. 12,85,000 which is directed to be deleted. 7. He further relied upon the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Baishnab Charan Mohanty, reported in 212 ITR 199 (Ori), wherein, the Hon'ble Jurisdictional High Court has held as follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises. 9. It was the submission that on perusal of the various decisions referred (supra) clearly shows that once the assessee has proved the identity, creditworthiness and genuineness of the transaction, no addition u/s. 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come is Rs. 6,55,000/- and the investment disclosed is Rs. 1,69,220/-. In respect of Deepak Agarwal (HUF), the peak deposit is Rs. 3,18,000/-, loan given is Rs. 2 lakhs, income disclosed is Rs. 6,15,000/- and the investment is Rs. 3,89,000/-. The investments are excluding the loans given to the assessee. Thus, clearly, the lenders had adequate funds, their identity is proved from filing of return of income showing substantial income. Their bank balances are not meager. A perusal of the returns of income filed by the lenders for the assessment year 2021-22 also show that they have disclosed interest received from the assessee and they have claimed the benefit of TDS and the returns have been accepted by the issuance of orders u/s. 143(1)(a) of the Act. With these facts in perspective, if one is to see the principles laid down in various decisions, it becomes clear that the decision relied upon by the Revenue in the case of Blessing Construction (supra) would not apply insofar as in that case, the fact that has led to the said decision was that in respect of the creditors, their bank accounts contain meager balance before sizeable amounts were deposited and the loans given to the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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