TaxTMI 
TaxTMI 
2010 (12) TMI 861
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.... admitted that he was not having any bank account and was only an agriculturist and produced ledger account from Mahavir Fruit Centre, Varachha Road. The AO was of the view that there was no nexus between his agricultural receipt and cash deposited by him. The AO further issued notice to Mahavir Fruit Centre, but the party did not reply. The assessee explained that the creditor was a well established agriculturist having 6.55 hectors of land and his average agricultural income was Rs.5 to Rs.6 lacs per year. He received a sum of Rs.5,23,515/- from 1-04-2004 to 17-06-2004 part of which was deposited in the bank for giving loan to the assessee. The AO did not accept the explanation and noted that there was no cash received in the case of Shri Maheshbhai Shah in the month of June, 2004 and therefore treated the entire loan as unexplained cash credit. 4. The addition was challenged before the learned CIT(A) and it was submitted that the creditor categorically confirmed to have given loan to the assessee and that he was engaged in agricultural activity for more than last 10 years and also gave details of the party to whom sale of banana was made during his statement u/s 131 of....
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....ndli Ltd., Bharuch was also filed to show that the creditor has sold sugarcane to them and received a substantial amount, copy of which is filed at page 7 of the paper book. He has further submitted that the assessee also produced ledger account from Mahavir Fruit Centre to which the creditor sold the agricultural products and received the payment, copy of which is filed at page 8 and 9 of the paper book. He has, therefore, submitted that the assessee proved the identity of the creditor and his creditworthiness. Therefore, the addition should have been deleted. He has relied upon the following decisions: (i) Decision of the Hon'ble Bombay High Court in the case of Orient Trading Co. vs CIT 49 ITR 723 in which it was held that "when the entry stands in the name of a third party and the assessee establishes the identity of the creditor and produces evidence showing that the entry is not fictitious, initial burden lying on the assessee stands discharged." (ii) Decision of the Hon'ble Patna High Court in the case of Sarogi Credit Corporation vs CIT 103 ITR 344 in which it was held that "once the identity of the creditor is established before the AO and he has pledge....
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....purchase of the demand drafts. In his statement, he has explained that he was not liable to income tax as his income never exceeded exemption limit. The creditor was, therefore, not assessed to tax. He has further explained that source of the deposit in his bank account is from sale of sugarcane crop to Shree Ganesh Khand Udyog Sahkari Mandli Ltd. The payment was received partly in cash and partly in cheque and for banana sold to Mahavir Fruit Centre payment of which was received in cash. PB-9 is the copy of the statement of account of the creditor in the books of Mahavir Fruit Centre which would show that no sufficient payment was made to the creditor in June, 2004 to make deposits of Rs.4 lacs in cash in his bank account in June, 2004. Earlier also, no sufficient funds were available. When the AO wanted to verify the creditworthiness of the creditor, summons were issued to Mahavir Fruit Centre to ascertain the genuineness of the cash given to the creditor but such party did not attend the proceedings before the AO and has not filed any written explanation. Similarly, PB-7 is certificate of Shree Ganesh Khand Udyog Sahkari Mandli Ltd. in which it was explained that in the year 200....
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....ncome was blow taxable limit, therefore, it would support the findings of the authorities below that the creditor was not having source to make cash deposit in his bank account in June, 2004 and was not a man of means and that the transaction in question is not genuine. The Hon'ble Madras High Court in the case of Mangilal Jain relied upon by the learned DR considered the facts in which the bank transaction clearly indicated that the transaction was done after deposits were made only on the previous dates and on the next date it was given a bearer cheque and it was also not explained why a new bank account was opened when already there existed another account. Hon'ble High Court in this case held as under: "Held, dismissing the appeal, that the bank transactions indicated that deposits were made only on the previous dates and on the next day the money was given as bearer's cheque. It was also not explained why a new account was opened when already there existed another account. There was contradiction of statement by S in respect of the place where the money was kept, whether it was in the house or in the bank. Both the assessing authority and the Tribunal held that the e....