9911796707
TMI Blog2024 (7) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... d by CIT (A) at Rs. 20 crores u/s 68 of I.T. Act 1961 is unjustified, unwarranted and bad in law. 4. The learned A.O. and CIT (A) ought to have held that assessee has discharged its onus to explain the loan in terms of provisions of section 68 of I.T. Act 1961 and consequently no addition ought to be made at the hands of assessee. 5. The assessee having repaid the loan in subsequent accounting year and same having been accepted by A.O. Addition made in the case of assessee is unjustified, unwarranted and bad in law Addition upheld by CIT (A) without considering the submission made by assessee in appellate proceedings is in violation of principles of natural justice and is unjustified and unsustainable. 7. Addition upheld by CIT (A) without allowing the opportunity, of physical hearing through video conferencing is in violation of principles of natural justice and is unjustified and unsustainable 8. The assessee denies liability to pay interest u/s 234A, 234B and 234C of I.T. Act 1961. Without prejudice, levy of interest under section 234A, 234B and 234C of I.T. Act 1961 is unjustified, unwarranted and excessive. 9. Any other ground that shall be prayed at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not satisfied with the information and explanations though the assessee has submitted the details of confirmation of lender, bank statement, and financial statements to substantiate genuineness, identity and creditworthiness of loan creditors. The assessee has obtained the unsecured loan/ inter corporate deposit and was repaid to the lender company in the financial year 2015-16 and was confirmed by the parties. Whereas the AO was not satisfied with the information and explanations and observed that the assessee has not satisfied the ingredients required u/sec 68 of the Act and made an addition of unsecured loan and assessed the total income of Rs. 20,00,00,000/- and passed the order u/sec 143(3) of the Act dated 30.12.2017. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The CIT (A) has considered grounds of appeal, findings of scrutiny assessment. The assessee has filed the submissions on the disputed issue of unsecured loan/ inter corporate deposits on 24-12-2020 placed at page 293 to 325 of the paper book read as under: "1. In Ground No. 1 to 3 assessee has challenged the addition made by A.O. at Rs. 20 crores u/s 68 of I.T. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessment proceedings. On above undisputed factual position addition made by A.O. by treating loan at Rs. 20 crores as unexplained credit at the hands of assessee is unjustified and unsustainable. C) It is respectfully submitted that the balance sheet of the lender company shows that it had opening loan & advances of Rs. 70.91 crores which has increased to Rs. 72.59 crores thereby there is increase in loan & advances given to the tune of Rs 1.67 crores. The above facts has been noted by A.O. at para 12 of the assessment order. The fact that the lender company has given loan & advances as on 31/03/2014 at Rs. 70.91 crores and there are outstanding loans & advances as on 31/03/2015 at Rs. 72.59 crores which includes Rs. 20 crores advance given to assessee sufficiently establishes the creditworthiness of the lender to give loan of Rs. 20 crores to the assessee company. In view of above, adverse observation in assessment order with regard to lender company does not deserve any credence and are unjustified and unsustainable. D) The assessee invites attention to the Company Master Data downloaded from ROC site to show that lender company is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return along with audited financial statement of lender company was obtained from A.O. of the lender company. A.O. by referring to share capital, reserve & surplus and loans & advance received from the said company has observed that it has not much capital to advance Rs. 20 crores to assessee company. It is respectfully submitted that complete analysis of balance sheet of M/s. Kriviera Impex Pvt. Ltd. indicates that it is a company having substantial operation. The aforesaid company is having turnover to the tune of Rs. 181.18 cores as against turnover of immediately preceding year at Rs. 85.26 crores. Assessee has down loaded the details of ROC from the site of registrar of company to show that the aforesaid company is having status of active company. The aforesaid company is assessed by Dy. Commissioner of Income Tax, Central Circle-8(1), Mumbai. It is matter of common knowledge that majority of assessment at Central Circles are completed u/s 143(3) of I.T. Act 1961. The above facts amply demonstrate the identity, genuineness and creditworthiness of creditor and credit with assessee company does not remain unexplained so as to invoke provision of sec. 68 of 1.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to section 68 on facts which do not warrant the application of proviso to section 68 of 1.T. Act 1961. The addition made by A.O. is thus unjustified and unsustainable. L The assessee places reliance on decision of Hon'ble ITAT Delhi Bench in the case of Smt. Prem Anand in ITA No. 3514/Del/2014 vide order dated 13/04/2017. The Hon'ble ITAT in aforesaid case has held that amendment to section 68 by inserting proviso does not give power to A.O. to examine the source of source in non- share capital cases u/s 68 of I.T. Act 1961. The ratio laid down by Hon'ble ITAT squarely applies to the facts in the case of assessee. In view of above addition made by A.O. is unjustified and unsustainable. 3. Considering the submission made hereinabove it is humbly submitted that addition made by A.O. is unjustified and unsustainable In view of above it is humbly prayed that addition made by A.O. be directed to be deleted The assessee respectfully begs to submit as under: 1. The assessee in assessment proceedings has adduced sufficient legal evidence on record to substantiate identity, creditworthiness and genuineness of loan transaction of M/s. Kriviera Impex Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f account. Nor, for that matter, is there any such finding recorded either by the ITO or the AAC. On the contrary, the AAC, whose appellate order in favour of the assessee forms part of the statement of the case, marked "B", clearly points out that the findings recorded by the ITO were no positive findings. The AAC, in my view, had rightly assessed the position in law by holding that, in order to rope in any amount as the income of the assessee from undisclosed sources, or as secreted profits, there must be some tangible materials". The ratio laid down by Hon'ble Patna High Court squarely applies to the facts in case of assessee and considering the same addition made by A.O. is unjustified and unsustainable. 3. The assessee places reliance on the decision of Hon'ble Bombay High Court in case of M/s Orient Trading Co. Ltd. Vs. CIT reported at 49 ITR 0723 (Bom.) wherein Hon'ble Bombay High Court has held as under: "When, however, in a case where the entry stands in the name of the third party, the assessee satisfies the ITO as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of aforesaid case the confirmation of creditors was given along with GIR/PAN and repayment of loan obtained by cheque was submitted. The Hon'ble ITAT has held that the onus to explain the credit stands discharged by assessee and addition made u/s 68 was unsustainable. The order of ITAT was upheld by Hon'ble High Court of Gujarat. The SLP filed by revenue against the said judgment before Apex Court is dismissed and reported at 254 ITR 275 (St.) 6. The assessee places reliance on the decision of Hon'ble Calcutta High Court in case of CIT Vs. M/s Chandela Trading Co. Pvt. Ltd. reported at 372 ITR 0232 (Cal.) wherein Hon'ble High Court has held that omission on part of creditors to subject themselves to enquiry will not lead to conclusion that creditors lacked identity, creditworthiness and genuineness on the face of sufficient legal evidences on record. The ratio laid down by the aforesaid decision supports the submission assessee. In view of above, addition made by A.O. is unjustified. of 7. The assessee place reliance on the decision of Hon'ble Rajasthan High Court in the case of CIT vs. Jai Kumar Bakliwal reported at 366 ITR 217 (Raj.). The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Commissioner of Income-Tax, Orissa Vs. Orissa Corporation P. Ltd.: (1986) 159 ITR 78 held as under:- "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assesses. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 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." 12. Hon'ble Apex Court in the case of Commissioner of Income-Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, we notice that not only the identity of the creditor has been proved but from the facts which have been culled out, the assessee has been able to prove genuineness also. 15. This Court, in the case of KanhailalJangid Vs. Assistant Commissioner of Income Tax: (2008) 217 CTR 354, held that the burden does not go beyond to put the assessee under an obligation to further prove that where from the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee is not relevant for the purposes of rejecting the explanation furnished by the assessee and make additions of such deposits as income of the assessee from undisclosed sources by invoking Sec. 68 unless it can be shown by the department that source of such money comes from the assessee himself or such source could be traced to the assessee itself. 16. This Court, in the case of Aravali Trading Co. Vs. Income Tax Officer. (2008) 220 CTR 622 has gone to the extent of observing the fact that the explanation furnished by the four creditors about t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion." The ratio laid down by the decision of Hon'ble Rajasthan High Court squarely applies to the facts in the case of assessee. In view of above addition made by A.O. is unjustified. 8. The assessee places reliance on decision of Hon'ble High Court of Gauhati in the case of Nemi Chand Kothari reported at 264 ITR 0254 (Gauhati) wherein Hon'ble High Court has held as under "Keeping in view the above position of law, when we turn to the factual matrix of the present case, we find that so far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of his creditor. The ratio laid down by Hon'ble Delhi High Court supports the submission of assessee. In view of above addition made by AO is unjustified & unsustainable. 10. Considering the judicial precedents discussed hereinabove it is humbly submitted that loan credit of assessee is not unexplained credit considering evidence on record. In view of above it is humbly prayed that addition made u/s 68 be directed to be deleted 1. It is respectfully submitted that A.O. in assessment order at para 22 has referred to various decisions for the purpose of making addition in assessment framed. All the decisions relied upon are distinguishable on facts and ratio laid down therein is inapplicable to the facts in case of assessee. Assessee gives hereunder submission on each of the judgement relied upon by A.O. A) A.O. at para 22 has referred to the decision of Hon'ble Delhi High Court in case of CIT Vs. M/s. Nipun Builders & Developers Pvt. Ltd. reported at 350 ITR 407 (Del.). The perusal of judgment would indicate that in the aforesaid case summon issued u/s 131 of I.T. Act 1961 was returned unserved with remark "no such company". The company had not provided proper ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he name of third party is required to be explained u/s 68 of I.T. Act 1961. There is no quarrel to above proposition and nothing adverse can be drawn there from in case of assessee in as much as assessee has satisfactorily explained the identity, creditworthiness and genuineness of loan transaction. E) The A.O. has placed reliance on decision of Hon'ble Punjab Haryana High Court in case of Shantadevi vs. CIT reported at 171 ITR 532 (P & H) and decision of Hon'ble Gauhati High Court in case of Anandram Raitani reported at 223 ITR 544 (Gauhati) wherein it has been held that the entry in books of account of assessee is required to be considered u/s 68 of I.T. Act 1961, The aforesaid decision do not support the case of revenue where cash credit has been satisfactorily explained by placing on record the legal evidence as to identity, creditworthiness and genuineness of transactions of loan. It is worthwhile to submit in conclusion both decisions have decided issue in favour of assessee. The decision of Hon'ble Rajasthan High Court in case of M/s Kamal Motors reported at 131 Taxmman 13 (Raj.) is relied upon at para 22.4 of assessment order. Perusal of aforesaid judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee so as to enable it to be treated as the undisclosed income of the assessee. In the absence of such findings, addition could not be made in the income of the assessee under s. 68 of the Act." In terms of ratio laid down by Hon'ble Delhi High Court discussed hereinabove it is for the department to show that it is money belonging to assessee which has flown for receipt of loan by assessee. A.O. has not brought any evidence on record to show that money has flown from assessee to receive back loan. The decision of Hon'ble Delhi High Court in fact supports the submission of assessee and considering the same the addition made by A.O. is unjustified and unsustainable. In the consolidated judgment in ITA No. 514 of 2007 in the case of Vijay Power Generators Ltd. considering the statement of two shareholders it was concluded that they were man of no means and thus addition in respect to credit of such person was held to be assessable u/s 68 of I.T. Act 1961 In the aforesaid case bank statement of assessee was also not submitted to support that the money has been received through proper banking channel. The facts in the aforesaid judgment is clearly distinguishable and thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be incorrect. Assessee is not required to prove source of source in respect to loan obtained by assessee. Assessee has discharged its onus to explain the credit in terms of provisions of section 68 of 1.T. Act 1961 by placing legal evidence on record. In view of above it is humbly submitted that there is no justification for addition u/s 68 of I.T Act 1961. The submission made by assessee company is in terms of law laid down by Hon'ble Jurisdictional High Court in the following cases. i) (2020) 107 CCH 0294 (Mum.) Pr. CIT vs. AMI Industries (India) Ltd. ii) Hon'ble Bombay High Court decision in case of Mr. Gaurav Triyugi Singh in ITA No. 1750 of 2017 vide order dated 22/01/2020 In view of above it is humbly prayed that addition made by A.O. be directed to be deleted. 3. Assessee company has repaid loan obtained in subsequent financial year and same has been accepted by Income Tax Department in regular assessment framed. The repayment of loan having been accepted addition in respect to loan received cannot be made. Assessee for this proposition places reliance on the decision of Hon'ble Gujarat High Court in case of CIT Vs. Ayachi Chandrashekhar Narsanggi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perusal of the assessment order, the assessee has submitted the documentary evidences but the A.O has over looked the vital documents in respect of the sources filed by the assessee. The assessee has submitted the written submissions before the CIT (A) and the confirmation of loan creditor, PAN, Bank account details and the Income Tax returns. We find that the assessee has to satisfy the 3 ingredients with respect to identity, creditworthiness and genuineness of the transaction. The CIT (A) has discussed on the provisions of the Act but has confirmed the action of the A.O. We are of the opinion that the assessee has discharged the burden of proof in filling the documents. Whereas the A.O and the CIT (A) has taken a different view and over looked the explanations of the assessee and the judicial decisions relied by the Ld.AR are as under: 1. CIT Vs. Orissa Corporation (P) Ltd., 159 ITR 0078 (SC). 2. Shri Kanwarjeet Singh Nanda, ITA no. 361/Ind/2022 3. CIT Vs. Ranchhod Jivanbhai Nakhava, 208 taxmann 0035 4. CIT Vs. Dharamdev Fin P Ltd, 43 taxmann.com 395 5. Mr. Gaurav Triyugi Singh Vs. ITO, 423 ITR 0531 (Bom) 6. CIT Vs. Shiv Dhooti Pearls & investment Ltd, 64 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and has upheld the order of the CIT (A) dismissing the revenue appeal observing at Page 13 Para 5.3 to 7 of the order read as under: "5.3 Thus, in all these cases the assessee has produced supporting evidence in the shape of PAN, Bank account statement, confirmation of the loan creditors to prove identity and creditworthiness of the loan creditors. Further all the transactions of loan were through banking channels and the assessee has received loan amount through account payee cheques and the AO has not brought any contrary material on record to show that the assessee's own unaccounted money has routed back in the garb of alleged unsecured loan. Though the AO has issued summons to some of the loan creditors on 26.12.2019 however, the assessment order itself was passed on 31.12.2019 being time barring. The AO has not conducted any inquiry except issuing the alleged summons at the fag end of limitation and not giving sufficient time to the lean creditors to respond with relevant documents. Thus nothing could have been achieved by issuing the summons at the fag end of the limitation period of framing the assessment. Therefore, when the AO himself has failed to conduct an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion given by the assessee and accordingly assessed all the three credit entries to the account of the assessee as the income. 5. On appeal, the Commissioner of Income-tax (Appeals) examined the matter in detail and found that Shri S. K. Gupta was the real owner of the business. The explanation given by the assessee was found to be satisfactory and he deleted the aforesaid three entries. The same finding of fact has been affirmed by the Tribunal. Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is the responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee-firm is discharged. It is open to the Assessing Officer to undertake further investigation with regard to that individual who has deposited this amount. 6. So far as the responsibility of the assessee is conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, in a case where the end as to the identic of "When, however assessee satisfies the IT evidence which it of the third party the also supplies such other evidential which will show, third party, that the entry is not fictitious the initial burden which lies primul can be said to be discharged by him. It will not there after for the assessee to explain further how or in what circumstances the for the arty obtained money and how or why he came to make a deposit of the money with the assessee. The burden will then shift on depth Department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the Department has to be in possession. of sufficient and adequate material. 7. As the applicant satisfied the authority as to the identity of the third party and also supplied the relevant evidence showing prima facie that the entries were not fictitious, the initial burden can be said to be discharged by the applicant- assessee. In view of the farcical matrix and legal pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copies of account of his personal books, bank accounts, etc. We further find that in the course of remand proceedings, the AO was provided copy of the accounts of these parties, their names, and addresses, and their confirmation of the accounts. The assessee also provided PAN numbers of these persons along with the copy of bank statements. The amounts were received by account payee cheques. The AO in his remand proceedings was of the view that amount of Rs. 1,76,83,518/- were not satisfactory explained by the assessee. The amounts included the sum of Rs. 1,70,11,830/-. The learned Crr(A) however was of the view that since in respect of this amount the creditor has given his PA Number, confirmation and his bank statement, the deposit cannot be treated as unexplained. We also feel that since this amount has come to the assessee's account through banking channels which is verifiable from the bank statement of the creditor (which is on record), the source of the credit and genuineness of the transaction is established. The identity of the person is already established as he is having PA Number. In rebuttal of this position, nothing has been brought on record by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hakkar for AY 2005-06 where the AO had made additions of Rs. 50 lakh on the basis of the same loose paper and I have deleted such addition in that case. As discussed in the said order, as the transactions are duly recorded in the books of Satya Developers an Rakesh Thakkar and that the books are audited under the provisions of section 44AB, the AO was not justified in charging the explanation of the appellant. Keeping in view the entire facts of the appellant's case, the addition made is accordingly deleted. 9. The Tribunal also sustained the order of the CIT(Appeals) by holding that Rakesh Thakkar in his individual capacity had accepted that the said amounts and the same had been offered by way of tax since he was the proprietor of Satya Developers. Only on the ground that some loose papers were found from the office premises of this respondent i.e. Dharamdev Finance, the Assessing Officer in the instant case appear to have concluded that financial transaction concerned the assessee. In absence of any contrary material having been brought either before both the authorities or before this Court, neither CIT nor the Tribunal committed any error in appreciating the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making appropriate inquiry." 5.7 Thus following the ratio of Hon'ble Supreme Court in case of CIT vs. Orissa Corporation P. ltd. (supra) it was held that once the loan was taken through banking channel and assessee placed evidence to prove identity and creditworthiness of the loan creditor who is assessed to income tax then if the AO is not satisfied about capacity or creditworthiness of the creditor or as to the source from which the creditor has deposited the amount, it is open to the AO to make the addition in the hands of the respective creditor after making proper inquiry. Thus, in a way the Hon'ble High court has reiterated the view that the assessee is not required to establish the source of source. In case Gaurav Triyugi Singh us. ITO (supra) the Hon'ble Bombay High Court has considered this issue in para 12 to 16 as under: "12 At this stage, it would be apposite to advert to section 68 of the Act, relevant portion of which reads as under : "68. Where any sum is found credited in the books of an assessee maintained from any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see, we are of the view that the assessee had discharged the onus which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he Borey 8/9 spb/ 15itxa1750-17.doc was not required to explain the sources of the money provided by the creditor Smt. Savitri Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. 16 Considering the above, we are of the view that the Tribunal was not justified in sustaining the addition of Rs. 14 lakhs to the total income of the assessee as undisclosed cash credit under section 68 of the Act." 5.8 Therefore, the onus is on the assessee to prove prima facie the transactions which result in the cash credit in the books of account by producing the proof of identity and capacity of the creditor as well as genuineness of the transactions. The Hon'ble High Court has held that it is not required from the assessee to explain source of source, once the assessee has discharged its primary onus by producing the proof of identity and creditworthiness of the creditor as well as genuineness of the transactions and the burden is shifted on the AO t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added the same to the income of the assessee. On appeal the Tribunal took the view that the assessee could not produce those persons alleged to be creditors, but it did not follow automatically and an adverse inference should be drawn that the amount represented undisclosed income of the assessee. The creditors were themselves income-tax assessees and while being assessed, they had made statements before the respective ITO admitting that they were allowing their names to be lent without giving loans as creditors of different assessees. In these circumstances, the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him. This Court held that the Tribunal's conclusion was not unreasonable or perverse or based on no evidence and accordingly further held that no question of law as such had arisen for consideration 5.10 Thus, it is clear that the issue in case of CIT vs. P. Mohanakala (supra) was entirely different and based on different set of facts. Accordingly the said judgment of Hon'ble Supreme Court is not applicable in the case rather the ratio laid down in case of CIT vs. P. K. Noorjahan (supra) and CIT vs. Orissa Corporation P. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted relief observing at Page 11 Para 5.3 &5.4 of the order read as under: ""5.3 Accordingly, in our considered view, no addition is called for in the instant facts for the reasons that firstly, the assessee had furnished details of the lenders (name, address, PAN number, confirmation, proof that all transactions were carried through banking channels etc.) and the correctness of details so furnished have not been disputed by the Department. Secondly, the assessee has placed on record supporting documents to prove that the amount has been repaid back to the lender in the subsequent year through banking channels, which as observed earlier gives a strong support as to the genuineness of the transaction/ parties. Thirdly, the Department is solely relying upon the statement of Shri Praveen Kumar Jain without brining anything further on record to show that the details / information furnished by the assessee is incorrect/ inaccurate. Fourthly, we also observe that in similar set of facts, the Tribunal on various occasions has granted relief to the assessee in respect of loans taken from M/s Hema Trading Company (now M/s Nakshatra Business Private Limited) and deleted the additions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., (2018) 403 ITR 415 (Bom), this court has held that assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. In the instant case, there is no dispute as to the identity of the creditor. There is also no dispute about the genuineness of the transaction. That apart, the creditor has explained as to how the credit was given to the assessee. Thus assessee had discharged the onus which was on him as per the requirement of section 68 of the Act. What the Assessing Officer held was that sources of the source were suspect i.e., he suspected the two sources Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur of the source Smt. Savitri Thakur. 15. In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Walve, learned standing counsel, has pointed out that the creditor had no regular source of income to justify the advancement of the credit to the assessee, we are of the view that the assessee had discharged the onus which was on him to explain the three requirements, as noted above. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d discharged the onus on it under section 68 to prove the identity, genuineness and creditworthiness of the creditor. The Commissioner (Appeals) also noted that from the chart in regard to encashment of cheques issued in favour of the assessee it was clear that the corresponding amounts had been received from TCL by TIL Therefore, the finding of the Assessing Officer that the entire chain of lending and borrowing was bogus, was unsubstantiated. The Commissioner (Appeals), therefore, deleted the additions made by the Assessing Officer. The Tribunal upheld the order passed by the Commissioner (Appeals). The revenue's appeal" 13. The Hon'ble Hight of Madhya Pradesh in the case of CIT Vs. Metachem Industries. (2000) 245 ITR 0160 (MP). held : "According to s. 68, the first burden is on the assessee to satisfactorily explain the credit entry in the books of account of the previous year. If the explanation given by the assessee is satisfactory, then that entry will not be charged with the income of the previous year of the assessee. In case the explanation offered by the assessee is not satisfactory or the source offered by the assessee-firm is not satisfactory, then in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not referable questions of law. 6. In (1963) 49 ITR 723 (supra), it is held as under: "When, however, in a case where the entry stands in the name of a third party the assessee satisfies the ITO as to the identity of the third party and also supplies such other evidence which will show, prima facie, that the entry is not fictitious the initial burden which lies on him can be said to be discharged by him. It will not thereafter be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came to make a deposit of the money with the assessee. The burden will then shift on to the Department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the Department has to be in possession of sufficient and adequate material." 7. As the applicant satisfied the authority as to the identity of the third party and also supplied the relevant evidence showing prima facie that the entries were not fictitious, the initial bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating the unexplained source of investment as income of assessee-ITO is not obliged to treat such source of investment as income in every case-Whether it has to be treated as income or not has to be considered in the light of facts of each case Assessee, a young lady, could not explain satisfactorily her source of investment in lands-Tribunal held that it was not possible for her to earn the amount even during a decade and that the source of investments could not be treated as income of assessee-No error in the finding of the Tribunal 18.. Further the assessee has cooperated in submitting the information in the assessment proceedings, whereas the A.O has ignored the information, evidences and audited financial statements and unilaterally made addition u/sec 68 of the Act. The Ld. AR emphasized that the assessee has discharged its burden by submitting the financial statements of the lenders where the payment is made through banking channel and identity, creditworthiness and genuineness of the lender company was proved in the assessment proceedings. Further the assessee has submitted the audited financial statements, confirmations, Bank statements of lender company, copy of the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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