TaxTMI 
TaxTMI 
2007 (10) TMI 433
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....55,000 made by the ld. Assessing Officer towards unsecured loans received from the following depositors as an unexplained cash credit under section 68 of the Income-tax Act. 5. The ld. Commissioner of Income-tax (Appeals) has failed to adjudicate on the issue of levying of interest under section 234A at Rs. 40,394. 6. The ld. Commissioner of Income-tax (Appeals) has failed to adjudicate on the issue of levying of interest under section 234B at Rs. 3,61,928. Without prejudice the calculations are wrong." 2. Ground Nos. 2 and 3 since relates to the addition made by the Assessing Officer in respect of unexplained cash credit under section 68 of the Income-tax Act. The ld. AR contended that the assessee has complied with all the three ingredients as stipulated under section 68 of the Income-tax Act. The identity, creditworthiness, of all the three parties from whom the loan has been received were proved. The genuineness of the transaction was also proved. The assessee has taken loan from the following three parties through account payee Cheque and re-paid the same through account payee Cheque:- S. No. Name Amount 1. M/s. Nimantran Leasing Ltd. 8,25,000 2. ....
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....The Assessing Officer did not issue summon to any of these parties. The case of the assessee is duly covered by the decision of Hon'ble Supreme Court in the case of CIT v. Orissa Corpn (P.) Ltd. [1986] 159 ITR 78^1. The assessee even filed the copy of the bank account showing their re-payment and the encashment of the payment being made to each of the party. Thus it was contended that all the three ingredients of section 68 were complied with. There is no evidence on record that the assessee has given the cash or has received back the cash from any of the party. The cash credits were treated to be bogus merely on the basis of the statement of third party Mr. Sanjay Rastogi. The copy of the statement was never supplied to the assessee for cross-examination. Reliance was placed on the decision of A Bench of New Delhi Income-tax Appellate Tribunal Nos. 4079 and 4080/Delhi/2003 for the assessment year 1995-96 and 1996-97 in the case of Yemna Synthetic Ltd. v. CIT. For the proposition of law that since the assessee has submitted all the necessary evidence, identifying each of the party their creditworthiness and the genuineness of transaction, therefore, no addition can be made in the c....
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.... Cheque. The Assessing Officer could not complete the enquiry and therefore the assessee has not discharged his onus. Reliance was also placed on the decision of CIT v. Smt. P.K. Noorjahan [1999] 237 ITR 570 (SC). Reliance was also placed on the decision of Commissioner of Income-tax (Appeals) for the proposition that if the assessee fails to prove satisfactory the source and the nature of the amount received by the Assessing Officer is entitled to draw the inference that the amount received are the income of the assessee. The Assessing Officer is not required to specify or prove what the source is, from which the assessee has received the money, as the source is only known to the assessee. Merely the assessee has filed the confirmation along with the permanent account number does not prove that the creditors are identified and the transaction entered into by the assessee are genuine. The assessee has to prove each of the ingredients, identity of the creditors, creditworthiness of each of the creditors and the genuineness of the transaction. It is a clear case where the provision of section 68 is clearly applicable. Reliance was also placed on the following decisions:- 1.D.C. Ra....
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....ed by the assessee in the opinion of the Assessing Officer is not satisfactory. It is only then the sums found credited in the books may be treated to be the income of the assessee of the previous year. "Assessee offers no explanation" has been defined by the Hon'ble Supreme Court in the case of P. Mohanakala (supra) to mean the assessee offers no proper reasonable and acceptable explanation as regards the sum found credited in the books maintained by the assessee. The opinion of the Assessing Officer was not accepting the explanation offered by the assessee as not satisfactory must be based on proper appreciation of the facts and the material and other surrounding circumstances available on record. The opinion of the Assessing Officer must be formed objectively by appreciating the material available on record. Application of mind by the Assessing Officer is in-built for forming the opinion. The initial burden is with the assessee to prove the nature and the source of the sum found credited in the books of the assessee. In case the assessee failed to discharge his burden the amount will be treated to be the income of the assessee. In the present case we find, that the assessee has ....
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....ed all the documents and the evidence about the address of each of the cash creditors. 8. In the case of Nizam Wool Agency v. CIT [1992] 193 ITR 318 it was held as under:- "Held, that the question whether a particular entity or concern is genuine or bogus is a question of fact. In the instant case, all three income-tax authorities had found that the entity in question was a bogus one. No question of law arose from the order of the Tribunal." In that case Tribunal as a fact found that the entries found were bogus and therefore, it was held that no question of law arose. This case therefore will not assist the revenue. In the case of Precision Finance Ltd. (supra) the Assessing Officer made all the enquiries and the parties could not be verified, the assessee's plea was since loan were taken through cheques the parties identity, creditworthiness and genuineness of the transaction were proved. Hon'ble Court held mere payment by account payee cheque is not sacrosanct, nor can it make a non-genuine transaction to be genuine one. In the case before us, the assessee has submitted all the evidence to prove identity, creditworthiness and genuineness of the transaction, therefore....