TaxTMI 
TaxTMI 
2016 (9) TMI 402
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....explained cash credit u/s 68 of the Income Tax Act, 1961. 4. That, the finding of the learned CIT (A) are not justified in law as well as facts of the case and required to be deleted The appellant craves to add, alter, amend or delete any of the above grounds of appeal. 2. Brief facts of the case are that the assessee is a firm and engaged in the business of warehousing, transportation, manufacturing & export of plastic bags, strings, etc. Return of income was filed on 29.9.2009. Case was selected for scrutiny assessment and notice u/s 143(2) of the Act dated 21.9.2010 was issued and duly served. Due to change of incumbent a notice u/s 142(1) & questionnaire dated 9.6.2011, 30.06.2011, 24.10.11 & 143(2) r.w.s. 129 dated 9.6.2011 were issued and served. Assessment was completed at an assessed income of Rs. 20,11,244/- after making addition of Rs. 7,91,344/- which included addition on account of unexplained cash credit of Rs. 4,99,600/- u/s 68 of the Act. 3. Assessee went in appeal before ld. CIT(A) wherein only ground relating to addition u/s 68 of the Act at Rs. 4,99,600/- was raised in relation to unsecured loan from Yogesh Parikh Rs. 3,49,600/- and Dharmen....
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.... them back in cash and deposit the same just before issuing cheques in favour of the assessee. The whole story manufactured by the assessee, rings false from beginning till end. The Assessing Officer has brought sufficient materials on record to show that the impugned cash credits were not at all genuine. His order deserves to be confirmed and is accordingly confirmed. " 8. The Ld. CIT (A) has proceeded on the basis that "the capacity of a creditor may be presumed to be there to advance loan to appellant if such creditor is an income tax assessee and nothing advance has been proved from her income tax return of income against her capacity. " We are unable to agree with the aforesaid observations made by the CITfAj. The creditworthiness of a creditor is not a matter of presumption but a matter of fact to be established by the assessee on the basis of evidence. The mere fact that the creditors are income-tax payee does ^ot by itself establish the availability of cash in their hand; or their creditworthiness to advance any sum of money. The Id. CIT(A) further observes that the source of source need not be proved by the assessee. We are unable to accept the aforesaid reasoning....
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..... CIT vs. Value Capital Service P. Ltd. (2008) 307 ITR 334 (Delhi) 6. CIT vs. Real time Marketing (P) Ltd.221 DTR 716(Delhi HC) 6. On the other hand, ld. DR supported the orders of lower authorities and submitted that in both the unsecured loans, the loan creditors had deposited cash just before issuing the cheque to the assessee and the source of income of the loan creditors was too meager to suffice the deposit of cash in the bank account and, therefore, the impugned credit of Rs. 4,99,600/- is the income of the assessee itself which has been brought in by way of unsecured loans and, therefore, ld. CIT(A) has rightly confirmed the addition. 7. We have heard the rival contentions and perused the material on record. Assessee has raised four grounds out of which ground nos. 1 & 4 are general in nature, which need no adjudication. Ground No.2 relating to allegation of assessee for not providing the statement by Assessing Officer we find that the statements of both the loan creditors Mr. Yogesh Parikh and Dharmendra D. Morabia form part of the assessment order itself and assessee could not rebut any of the facts provided in the statements by the loan creditors before ld....
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....ness and [c] genuineness of the transaction, when are considered, it cannot be disputed that all the three of them require independent consideration and yet they are not mutually exclusive or can be considered in isolation. It hardly needs to be specified that the well recognized principle of not insisting upon source of the source needs no elaboration. Upon appreciation of materials on record and totality of facts and circumstances of the case, the revenue authorities and the Tribunal came to the conclusion that the entire transaction was a circuitous route to bring on books the assessee s own accounted money. The factor that the donors did not possess independent source to make such deposits must be viewed in light of the findings that the assessee had no justification for borrowing such amounts at such high rate of interest. These aspects would have a bearing on the genuineness of the transaction and the credit worthiness of the donors and cannot be seen as an attempt to throw the burden to prove source of the .source on the assessee. As is very eloquent from the record itself, substantial amount of cash was deposited in the bank accounts of all the creditors shortly pr....
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....ing cheques in favour of the assessee. The whole story manufactured by the assessee rings false from beginning till end. The Assessing Officer has brought sufficient materials on record to show that the impugned cash credits were not at all genuine. His order deserves to be confirmed and is accordingly confirmed. 8. The Ld. CIT (A) has proceeded on the basis that "the capacity of a creditor may be presumed to be there to advance loan to appellant if such creditor is an income tax assessee and nothing advance has been proved from her income tax return of income against her capacity." We are unable to agree with the aforesaid observations made by the CIT (A). The creditworthiness of a creditor is not a matter of presumption but a matter of fact to be established by the assessee on the basis of evidence. The mere fact that the creditors are income-tax payee does not by itself establish the availability of cash in their hands or their creditworthiness to advance any sum of money. The Id. CIT (A) further observes that the source of source need not be proved by the assessee. We are unable to accept the aforesaid reasoning also. The question here is not to prove the source of sou....