TaxTMI 
TaxTMI 
2015 (2) TMI 935
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.... Shri Vinod Kumar Rs. 2,14,600.00 Vinod Kumar (HUF) Rs. 2,22,150.00 2 (a) That the ld. CIT(A) has also grossly erred in sustaining the addition of Rs. 24 lakhs on account of amount received from Shri Vijay Kumar s/o of the Proprietor, despite confirmation and source of source of Shri Vijay Kumar explained during the course of assessment proceedings before him." 3. Brief facts in respect of first issue are that during assessment proceedings it was noticed by the AO that the assessee had shown various loans from friends and relatives at Rs. 1,40,50,668/- out of which loans amounting to Rs. 17,21,100/- were received during the year from family members. It was noticed that certain additions have been made in the loans in the name of these family members as under: Sewa Ram (HUF) Rs. 2,09,700.00 Smt. Shakuntla Rs. 2,12,300.00 Smt. Raj Kumari Rs. 2,16,000.00 Smt. Jyoti Kinger Rs. 2,17,100.00 Shri Vijay Kumar Rs. 2,15,000.00 Vijay Kumar (HUF) Rs. 2,14,050.00 Shri Vinod Kumar Rs. 2,14,600.00 Vinod Kumar (HUF) Rs. 2,22,150.00 Rs. 17,21,100/- &nb....
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....rta 329 1,02,400 25.1.2007 Vijay Kumar HUF Son Karta 330 1,01,300 25.1.2007 Vinod Kumar Son 331 1,03,450 25.1.2007 Vinod Kumar HUF Son Karta 332 1,07,150 8,28,500 17,21,100 According to the AO the assessee had routed the transactions through these people because most of these persons had very low income without the commodity profit. Information was called from M/s Satya Narayan Online Trading Pvt Ltd., Ludhiana. Copies of the client registration form were furnished by this company which depicted that all the forms bear same date i.e. 2.9.2006. The statement of Shri Kawitansh Khana, Director of the company was also recorded. In reply to the question who signed these forms, Shri Khanna stated that he knew only one person i.e. Shri Vijay Kumar who came for registration of these persons and also for other discussions and he could not state who had signed these forms. The AO noted that Shri Vijay Kumar is the son of the assessee. It was also noted that Voter Card in most of the cases as part of the identity proof were given later on because voter cards have bee....
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....nd Rs. 30,000/- on 19.3.2007. In fact these accounts are being treated by the assessee as well as family members like current account and whenever any payment is required to be made to anybody such cheques are issued by the assessee on the instructions of the family members directly to such parties. Page 24 & 25 is copy of bank account which shows receipt of the profit from commodity broker and payment to the assessee. Therefore, merely because the account with assessee have been used as current account and cheques for margin have been issued by the assessee will not make any difference particularly because family members had sufficient credit balance with the assessee. He also referred to page No. 27 to 29 which are copy of contract note issued by M/s Satya Narayan Online Trading Pvt Ltd., Ludhiana to Sewa Ram HUF showing various profits earned. Page 30 & 31 is copy of return filed by Sewa Ram HUF. Further it is usual in every family that financial matters are looked after by one person of the family and therefore, Shri Vinod Kumar went to the commodity broker to open accounts on behalf of the family members and that should not make any difference. He then referred to page 101 whi....
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....l because cash credits came from bank account held by the wife, Son and d-in-law. It was observed that since cash credit came through bank account the same could not be added to the income unless it was proved that such persons were benamidar of the assessee. He also relied on the decision of Hon'ble Punjab & Haryana High Court in case of CIT V. Ram Narain Goel, 224 ITR 180. In that case the assessee had received four credit entries which according to the AO were fictitious and unaccounted income of the assessee. However, the Tribunal gave a finding that moneys had been advanced by account payee cheque and had been returned by the assessee with interest through account payee cheque and since copy of the bank account have been filed along with the confirmation, no addition could be made. These findings were confirmed by the Hon'ble Court. In case before us the assessee had filed the copies of the confirmation, bank account and proof of filing of income-tax return, therefore, credit in the names of these family members could not have been added as income of the assessee. 6. He pointed out that the ld. CIT(A) has given a lot of emphasis on the decision of Hon'ble Calcut....
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....y the Hon'ble Supreme Court were in the context of those findings and in the line relied on by the ld. DR for the revenue, the Court has made clear that the addition would be confirmed if the assessee failed to rebut the evidence whereas in case before us, the AO has never doubted the profit made from commodity transactions. He has simply observed that profit has not been made or earned by such individual but by the assessee without pointing out any evidence in this regard. 9. We have heard the rival submissions carefully and it has to be noted that addition has not been made u/s 68 of the Act but the addition has been made by observing that commodity profit earned by eight family members is income from undisclosed sources of the assessee. It is very strange that the AO has nowhere stated that income from commodity transactions is bogus or not genuine. In fact the assessee has shown an amount from eight members as per detailed below as loans:- Sewa Ram (HUF) Rs. 2,09,700.00 Smt. Shakuntla Rs. 2,12,300.00 Smt. Raj Kumari Rs. 2,16,000.00 Smt. Jyoti Kinger Rs. 2,17,100.00 Shri Vijay Kumar Rs. 2,15,000.00 Vijay Kumar (HUF) Rs. 2,14,050.00 S....
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....by copy of account, confirmation, income-tax return, bank statement and sources of funds from commodity transactions. Therefore, as far as burden u/s 68 is concerned, the same stands discharged. It is settled position of law that in case of cash credits three ingredients are required to be proved i.e. identity of the creditor, genuineness of the transactions and capacity of the creditor. Identity has been proved bycopy of account and genuineness of the transactions has been proved because loans were received through genuine transactions and even confirmations were filed. Capacity stands proved by disclosure of the source of fund by way of profit from commodity transactions. Therefore, the matter should have ended there only. If the AO was of the view that these profits are not genuinely earned by these family members then initially assessments of such family members should have been taken up for scrutiny and enquiry should have been made by recording the statements of such family members which has not been done. The fact remains that earning the profit through commodity transactions has not been doubted. Only aspect which has been doubted is that cheques have been issued by the ass....
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....tions. A copy of the Registration Form placed at page 129 in case of Sewa Ram HUF, does not show any discrepancy or incomplete details. The form was furnished on 2.9.2006 and M/s Satya Narayan Online Trading Pvt Ltd. wanted further identity proof which has been furnished by way of Voter Cards which has been obtained by the assessee on a later date. If there is no column for giving the details of Voter card in the client registration form then there was no need to give voter card along with Registration Form and therefore, this objection is also of no substance. 10 We do not find any force in the submissions of the ld. DR for the revenue that the observations of the Hon'ble Supreme Court in case of CIT V. P. Mohankala (supra) is applicable to the case of the assessee. According to him once the AO has given a finding that the explanation of the assessee is not satisfactory then same is binding on the assessee. In case of CIT V. P. Mohankala (supra) Hon'ble Apex Court was concerned with a case where the assessee and his family members have received gifts of Rs. 1,79,27,703/- in various years from Non Resident Indian (NRI) who was not related to the assessee. Various contrad....
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....authorities provided the assessee rebut the evidence and the inference drawn to reject the explanation offered as unsatisfactory. We are required to notice that section 68 of the Act itself provides, whether any sum is found credited in the books of the assessee for any previous years the same may be charged to income-tax as the income of the assessee of the previous year if the explanation offered by the assessee about the nature and source of such sums found credited in the books of the assessees is in the opinion of the AO not satisfactory. Such opinion formed itself constitutes a prima facie evidence against the assessees, viz., the receipt of money, and if the assessees fail to rebut the said evidence the same can be used against the assessees by holding that it was a receipt of an income nature. In the case in hand the authorities concurrently found the explanation offered by the assessees unacceptable. The authorities upheld the opinion formed by the AO that the explanation offered was not satisfactory. The assessees did not take the plea that even if the explanation is not acceptable the material and attending circumstances available on record do not justify the sum found c....
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....t reads as under:- "7.11.1994: Their Lordships B.P. Jeevan Reddy and S.B. Majmudar JJ. dismissed a special leave petition by the Department to appeal against the judgment dated 24.4.1994 of the Punjab & Haryana High Court in ITR No. 138 of 1992, whereby the High Court upheld the order of the Tribunal and answered the questions referred to it in favour of the assessee. In this case, certain cash credits in the names of the assessee's wife, son and daughter-in-law were added back by the Officer as unexplained cash credits and certain payments in cash in excess of Rs. 2,500 were disallowed. The Appellate Tribunal allowed the assessee's appeal holding that since the cash credits came from bank accounts held by the wife, the son and the daughter-in-law, the Officer could not add back these amounts unless he could prove that these persons were the benamidats of the assessee. With respect to the cash payments in excess of Rs. 2,500, the Tribunal held that the matter was covered by a Board Circular and the payments had to be allowed. Commissioner of Income-tax V Chunnilal: SLP (Civil) No. 21334 of 1994.....
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....bsp; ii) No interest has either been credited or paid to Shri Subhash KInger till date. iii) Shri Subhash Kinger was earning interest on Bank FDR @ 9% per annum compounded quarterly. The FDR was encashed pre-mature and the proceeds allegedly given to Shri Vijay Kumar @ 6% simple interest and that too has not been credited or paid till date. iv) The interest income from FDR has not even been disclosed by him in the return of income. v) The assessee has normally claimed to be paying interest @ 10% on the unsecured loans raised even from close relatives." As far as statement of Shri Subhash Kinger is concerned, the AO noticed that statement has many inconsistencies. For example the lender did not know whether he had taken any loan against his FDR. He did not know about the cash transactions in his account. Therefore, the statement was not trustworthy. In fact Shri Subhash Kinger was a person of small means. Therefore, the assessee was issued a show cause notice dated 18.12.2009 confronting these observations an....
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....ccount seems to have been operated by some other person and not Shri Subhash Kinger. The assessee has adopted this means to route his money earned from undisclosed sources to his books of account." In the light of above background, the AO added a slum of Rs. 24.00 lakhs to the income of the assessee. 12 On appeal before the ld. CIT(A), it was mainly submitted that loan was basically taken by the assessee from Shri Vijay Kumar who has already filed his confirmation copy of account of Shri Vijay Kumar was also filed. Since Shri Vijay Kumar has arranged loan from Shri Subhash Kinger, NRI @ 6% per annum interest affidavit of Shri Subhash Kinger was also produced, therefore, no addition was possible in case of the assessee when Shri Vijay Kumar being a regular income-tax assessee has already confirmed the loan. It was further contended before the ld. CIT(A) that in fact the AO has already reopened assessment of Shri Vijay Kumar u/s 148 of the Act. In any case Shri Subhash Kinger had withdrawn money from his bank account and had also taken certain loans against FDR, therefore, sources of money also stood proved. The ld. CIT(A) did not find force in the submissions. He also called f....
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....ertain amounts of money which were regularly deposited in his NR NR account out of which some money was put in FDR. One of the FDRs was encashed on 3.2.2007 and proceeds of this FDR amounting to Rs. 14,05,275/- was credited to his account on 3.2.2007 which is reflected in the bank statement at page 108 for which a separate certificate has also been placed at page 112 of paper book. The first cheque of loan was given by Shri Subhash Kinger amounting to Rs. 14.00 lakhs on 5.2.2007 which is clearly reflected in the bank statement. The second cheque was given by Shri Subhash Kinger on 15.2.2007 which is also clearly reflected in the bank statement at page 109. For this Shri Subhash Kinger had deposited certain cash in US Dollars when he has returned from abroad. Since the transactions have been routed through bank and all the documents have been furnished in respect of sources of sources, the addition was not called for and in this regard he relied on the decision of the Chandigarh Bench of the Tribunal in case of Ashok Kumar Prop. Shree Shankarjee Rice & General Mills bearing ITA No. 825/Chd/2007 (copy of judgment has been enclosed at page 8 to 21 of paper book regarding judgments). H....
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....corded by the AO: "Question: Have you taken any loan from him? Ans: No major loan other than small petty amounts of Rs. 100 to Rs. 1000 approximately was given by him at times before the year 1992 for daily expenses on need basis." 17. The above clearly shows that Shri Vijay Kumar was helping Shri Subhash Kinger before he went to Japan. Further in addition to the confirmation filed by the assessee even affidavit of Shri Subhash Kinger was filed confirming that he had given loan to Shri Vijay Kumar. Shri Subhash Kinger was produced before the AO where he has explained that he had gone to Japan in 1993 and returned later. The AO has made observation that Shri Subhash Kinger had meager income but the statement filed before us show that loan of Rs. 24.00 lakhs was given by Shri Subhash Kinger not out of his current income but out of the money earned abroad which was deposited in NR NR account with State Bank of India. Both the loans of Rs. 14.00 lakhs and Rs. 10.00 lakhs have been given by Shri Subhash Kinger by account payee cheques....
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....ulture produce which in turn is evidenced by the copies ol form No. *J* placed at pages 51, 72 & 73 of the paper book. Further, the assc-ssee had advanced loans to various parties by way of mortgage deed which in turn were returned in cash and were deposited with the proprietary concern M/s Ashok Kumar Raj Kumar. The father of the assessee claimed to have received back loans of Rs. 6 lakhs H- Rs. 3 lakhs i Rs. 3 lakhs -t- Rs. 4,50,0007- which arc further supported by the mortgage deed placed at pages 52, 64, 65 and 72 of the paper book. The sale proceeds on account of agriculture income received during the year are shown al Rs. 2.16.177/- 36,429/- and Rs. 33,410/-. In respect of the opening balance, the assessee has furnished the 'J' forms of the earlier orders justifying the accumulation of the opening balance in the hands of the father of the assessee. 19. The onus on the assessee in respect of any cash loan received during the year is to establish the identity, creditworthiness and genuineness of the transactions u/s 08 of the Act. The assessee before us has discharged his onus of complying with ....