TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 1096
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....hri Jagdish R. Patel on 16.04.2010. Some unaccounted cash was found and seized which was offered for taxation by the assessee for the A.Y. 2011-12. 4. Subsequently, the assessee was served with a notice in reply to which the assessee stated that the return filed on 27.08.2011 may be treated in response to the said notice. 5. Statutory notice u/s. 143(2) of the Act was issued and served upon the assessee. During the course of the scrutiny assessment proceedings, the A.O. noticed that the assessee has introduced fresh loans of Rs. 48.18 lacs from 19 cash creditors. The assessee was asked to justify the genuineness of the loan transactions and the creditworthiness of the cash creditors. Assessee filed confirmations along with the copies of the Income Tax returns in respect of all 19 cash creditors. In order to check the genuineness of the transactions and creditworthiness of the cash creditors, summons u/s. 131 of the Act were issued to the cash creditors and their statements were recorded on oath. 6. Pursuant to the statements of all the 19 cash creditors, the A.O. was of the opinion that all the cash creditors are not genuine. The A.O. accordingly issued a show cause to the asses....
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....acity and ability. Even the Income-tax department does not tax anything on basic income of Rs. 2 lacs and therefore, in our humble submissions, contributions of Rs.l lacs or Rs. 2 lacs is not a big alarming sum such that your office does not believe such peety sum as savings of past years of the family or of the depositors. In today's era and fastly growing economy, sum of Rs.l lacs or Rs. 2 lacs would be available with small businessman or agriculturist and for such income or savings, the agriculturist would not care or feel it necessary to keep and maintain records of purchase or sale or of expenses incurred for earning that income and for this reason only, your honour has proposed to reject or disbelieve his Identity, capacity, creditworthiness and even the genuineness. Genuineness of transactions is out of question considering the presence and final reply given by them. Your honour has also noted that yourself are from the same agro based field but, with due respect, we state that agricultural income depends not only on the area of the land but also on the location of land, environment and atmosphere of the area, rainfall, availability of water, type of irrigation, type of ....
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.... 11 Shri Kalesh B Patel Rs.5.00 Lacs 12 Shri Niraj D Patel Rs.2.00 Lacs 13 Shri Paresh Prajapati Rs.1.00 Lacs 14 Shri Ramesh A Patel Rs.2.00 Lacs 15 Shri Anil H Patel Rs.1.00 Lacs 16 Shri Ramesh A Patel Rs.4.00 Lacs 17 Shri Rakesh B Patel Rs.4.00 Lacs 18 Shri Sanjay B Patel Rs.4.00 Lacs 19 Shri Satish K Patel Rs.4.00 Lacs Total Cash creditors 48,18,000 /- 9. The A.O. further disallowed the claim of interest paid to the aforementioned unexplained cash creditors and made an addition of Rs. 2,00,775/-. 10. Assessee carried the matter before the ld. CIT(A) and assailed the assessment order. 11. The assessee strongly contended that it has discharged the initial onus by establishing the identity, creditworthiness and genuineness of the transaction. Therefore, the addition made by the A.O. is unwarranted and uncalled for and the same should be deleted. 12. After considering the facts and the submissions and the material evidence brought on record, the ld. CIT(A) was convinced with the genuineness of the cash credits amounting to Rs. 3.98 lacs and allowed the relief to that extent and confirmed the balance. 13. Aggrieved by this, the assessee is b....
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....ad further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, in our opinion, the Assessing Officer did not follow the principle fold down under Section 68 of the Income Tax Act. If on verification, if was found that those lenders did not disclose in their Income tax return the transaction or that they had not disclosed the aforesaid amount, the Assessing Officer could call for further explanation from the assessee to prove the genuineness of the transaction or creditworthiness of the same. However, without verifying such fact from the Income Tax return of the creditors, the action taken by the Assessing Officer in examining the lenders of the assessee was a wrong approach. Moreover, we find that those lenders have made inconsistent statement as pointed out by the Commissioner of Income Tax (Appeals) and in such circumstances, we find that both the Commissioner of Income Tax (Appeals) and the Tribunal were justified in setting asi....