TaxTMI 
TaxTMI 
2008 (9) TMI 620
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.... to two concerns at a price of Rs. 8.95 crore, viz., Rs. 4.39 crore to M/s. Nikhil Trading Company (NTC) and Rs. 4.56 crore to Geeta Trading Company (GTC), thus, totalling to Rs. 8.95 crores. On verification, the Assessing Officer noticed that M/s Cable Corporation of India Ltd., engaged in the business of manufacturing cables. The Assessing Officer issued notice under section 133(6) to NTC, GTC, and CCI requesting them to furnish certain details/information/evidence such as details about all the transactions, ledger account copies of the parties concerned, PAN and designation of the Assessing Officer, bank statements, sale/purchase register, bills/vouchers in respect of transactions, stock registers, etc. In compliance thereof, director of the assessee-company had filed written submission dated 9-2-2005 wherein it was stated that relevant books of account and other evidence called for were misplaced and, therefore, could not be produced. However, copies of bills/invoices in respect of the transactions, which were issued by the assessee. No further documentary evidence was furnished. The Assessing Officer also issued summons under section 131 to NTC and GTC, but they did not comply....
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....e the addition treating the transaction as sham transactions under section 68 on the basis of cheques received from Nikhil Trading Co. and Geeta Trading Co. The learned AR further submitted that the assessee has satisfied the requirements under section 68, viz., identity, creditworthiness, and genuineness of the transactions. The learned AR submitted that when the transactions are done through banking channel, the identity of the creditors cannot be doubted. When the assessee received cheques from the bank account of those parties, therefore, creditworthiness of those parties also cannot be doubted. The learned AR submitted that when the transaction is done between two parties through banking channels, such transaction cannot be held as non-genuine transaction. The learned AR submitted that the Assessing Officer asked the assessee to explain the source of the source which is not the requirement of section under section 68, he learned in support of his contention, relied upon the judgment of Gujarat High Court in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360^1, which has been confirmed by the Apex Court in 254 ITR (St.) 275. The learned AR further submitted that the Asse....
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....of income-tax liability can be discerned from these words- "In all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if the receipt is in the nature of income, the burden of proving that it is not taxable because it falls within the exemption provided by the Act lies upon the assessee." The above decision is adequate authority for the proposition that by virtue of section 68 of the Income-tax Act the assessee is obliged to establish that amounts credited in the accounts do not represent its income. The assessee while discharging burden, it was submitted that credits were against sale consideration of goods sold to two parties. It is to note that the revenue did not dispute the corresponding purchases and sales accounted for by the assessee in books of account. Thus, the assessee has discharged his burden that the receipt did not fall in ambit of section 68 of the Income-tax Act. In such circumstances the addition is not warranted, therefore, same is liable to delete. 6.1 Now we examine the case from point of view of section 68 of the Income-tax Act, the main grievances of the Asse....
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....eration of the facts of the case we noticed that the identity of creditors Geeta Trading & Nikhil Trading have been proved by the assessee which is evident from the following facts noted by the Assessing Officer himself : Assessing Officer's order page 2 reads as under :- "1.Geeta Trading Co. having business activities at B/5, Mayuri Complex, Amli Main Road, Silvassa (Dadra Nagar Haveli), Union Territory, 396230. 2.Nikhil Trading Co. having business activities at B/5, Mayuri Complex, Amli Main Road, Silvassa (Dadra Nagar Haveli), Union Territory, 396230. ". . .In compliance thereto, Mr. Bharat Shah, Director of the assessee-company attended this office and filed written submission dated 9-2-2005. These parties have stated that relevant books of account including evidences were misplaced as such, same could not be produced. These parties further enclosed copies of bills/invoices as issued by the assessee. No further documentary evidences were furnished." 6.2 As regards second condition, i.e., establishing of creditworthiness the Assessing Officer has not given much emphasis as the transactions were through banking channels. The main thrust given by the Assessing Offic....