TaxTMI 
TaxTMI 
TaxTMI 
2012 (12) TMI 696
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....- and agricultural income of Rs.1.00 lakh. The assessee showed that the said income was from house property, money lending and other sources. 3. Notice under Section 143 (2) of the Act was issued to the assessee in response to which the Kartha of the HUF, Dr. D.Siva Sankara Rao and his authorized representative appeared before the assessing officer. The assessee contended that an amount of Rs.2.15 lakhs was liable to be paid by the assessee to Dr.Vani Subrahmanyeswari, wife of D.Siva Sankara Rao; that she had received gifts of Rs.1.00 lakh each in cash from her father and mother totaling Rs.2.00 lakhs during the previous year; that she added another amount of Rs.15,000/- out of her own savings and had given the above amount of Rs.2.15 lakhs as loan to the assessee. 4. She was summoned under Section 131 of the Act by the assessing officer and examined on oath. She stated that she was a Civil Assistant Surgeon in the State Government service and had worked at the Government Hospital, Ramachandrapuram, the District Hospital, Rajahmundry and the Government Hospital, Jangareddygudem. She stated that her parents had got the above amounts on leasing their agricultural lands for being us....
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....ing her service which mandate giving of intimation of cash transactions exceeding a certain amount, to the employer and there is no evidence that she had obtained any permission or given any intimation to the State Government. He also held that the alleged loan by the wife of the assessee to the HUF of the husband, not being by way of a crossed cheque or demand draft, and being in cash, the said transaction of loan is questionable. 7. Aggrieved thereby the assessee filed I.T.A.No.8/Vizag/2006 to the Income Tax Appellate Tribunal, "SMC" Visakhapatnam Bench, Visakhapatnam. The said appeal was also dismissed by the Tribunal confirming the orders of the CIT (Appeals). The Tribunal held that the creditworthiness of the creditor i.e. the wife of the assessee was not proved by the assessee; that she had not intimated the Government as per Conduct Rules with regard to the cash receipt; that although she claimed that her parents earned the above sum of Rs.2.00 lakhs by lease of fish ponds, no lease receipt or lease agreement was furnished at any stage; and there is nothing on record to suggest that they have earned substantial income from Ac.3.30 cts. held by her father and Ac.2.20 cts. he....
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....bsp; "16. The question is what is the true nature and scope of Section 68 of the Act? When and in what circumstances Section 68 of the Act would come into play? That a bare reading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum during the previous year; and the assessees offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessees in the opinion of the assessing officer is not satisfactory, it is only then the sum so credited may be charged to income tax as the income of the assessees of that previous year. The expression "the assessee offers no explanation" means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the assessing officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the assessing officer is required to be formed objective....
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....prove the sources from which the deposit was made and that once the accounts of the firm had been accepted and acted upon by the department, they would be prima facie proof of the entries and the correctness thereof under Section 34 of the Evidence Act. Therefore where the deposit was made by a third party in the accounts of the firm, that entry is prima facie proof that the amount in question was deposited by the person in whose name the deposit stands. 16. In Rohini Builders'case (supra), the assessee was a real estate firm and had taken loans from various parties. During the course of assessment proceedings, the assessee furnished loan confirmations giving full addresses, GIR Nos./PAN nos. etc. of all the depositors. The assessing officer however issued summons to some of the creditors and also conducted enquiries into the genuineness or otherwise of the loans taken by the assessee. After considering the evidence, he made an addition of Rs.12,85,000/- to the returned income of the assessee and this was confirmed by the CIT (Appeals) and the ITAT. The High Court held that all the loans were received by the assessee by account payee cheques and the repayment of loans have also be....
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....ssee must e taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter, the burden had shifted to the Assessing Officer to prove the contrary. The failure on the part of the creditors to show that their sub- creditors had creditworthiness to advance the said loan amounts to the assessee, could not, under the law be treated as the income from undisclosed sources of the assessee himself, when thee was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. The Assessing Officer failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the sub-creditors from the assssee. Therefore, the Assessing Officer could not have treated the said amounts as income derived y the assessee from undisclosed sources." 18. In our view, the decisions in Tolaram Daga's case (supra), Rohini Builders'case (supra) and Nemichand Kothari's case (supra) only emphasise the principle that the assessee has to prove the identity of the creditor, the genuineness of the transaction and the creditworthiness of the cr....
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....e Kartha, it cannot be said that the assessee was able to prove the creditworthiness of the creditor or the genuineness of the transaction of loan. Therefore the assessing officer had rightly added the sum of Rs.2.00 lakhs to the assessee's income and held it to be subject to tax. 20. Unlike in Rohini Builders' case and Nemichand Kothari's case, in the present case, the loan was alleged to have been received by the assessee by cash and not by account payee cheques. The accounts of the assessee had not been accepted by the department to the extent of Rs.2.00 lakhs unlike in the case of Tolaram Daga. The fact that the creditor happened to be the wife of the Kartha of the HUF, the loan having been alleged to have been given in cash by her to the HUF, she being a government servant bound to take permission before accepting a gift of Rs.2.00 lakhs from her parents and there being no evidence of either the lease of the small extent of agricultural lands held by her parents or their conversion into fish ponds or proof of rental income therefrom, the assessee cannot be said to have given a satisfactory explanation to the assessing officer for the sum of Rs.2.00 lakhs. In our view, therefo....