TaxTMI 
TaxTMI 
2015 (7) TMI 1381
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....ad submitted the complete details which show the genuineness of Smt. Chandra Kanta Joshi. 3. After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed that assessee has taken unsecured loans from various parties. The assessee was requested to file the confirmation etc. which was duly filed. The Assessing Officer ultimately made addition in respect of three parties which are as under:- S.No. Name of the person from whom unsecured loan raised during the year Amount of Loan raised 1. Sh. Champa Lal Baid Rs. 5,00,000/- 2. Smt. Chandra Kanta Joshi Rs. 2,50,000/- 3. Sh. Prakash Joshi Rs. 2,50,000/- 4. The Assessing Officer did not accept the explanation justifying the above loans and observed as under:- "Although the assessee has furnished the documents relating to the identity of the creditors but failed to prove the genuineness of the transaction and also the means of the persons who can advance loans. Merely proving the genuineness, payment by cheque does not prove that the person who has advanced loan is a man of means as in most of the cases the perusal of the documents submitted re....
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....bank account, statement and affidavits of the concerned persons were filed before the Assessing Officer. These documents clearly prove that assessee has proved the identity of his creditors, genuineness of transactions and creditworthiness of the creditors. Reliance was also placed on the following case laws:- i) Nemi Chand Kothari v CIT (2003) 24 ITR 254 (Gau.) ii) Jalan Timbers v CIT (1997) 223 ITR 1 and iii) CIT v Sahibganj Electric Cables (P) Ltd (1978) 115 ITR 408 (Cal.) 6. The Ld. CIT(A) after examining the submissions did not find force in the same. According to him, merely proving the identity and payment by cheque does not prove that person who advanced the loans is a man of means Thereafter, he has repeated observations of the Assessing Officer and confirmed the addition. 7. Before us, Ld. Counsel for the assessee submitted that all the persons from whom loans were taken are regular Income-tax assessee's and copies of their returns, PAN numbers, copies of bank statements were filed before the Assessing Officer Further, loans have been returned later on through account payee cheque. The assessee has also deducted the tax wherever it was app....
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....entry in respect of cheqeus issued to the assessee. When Ld. Counsel was confronted with this situation, he admitted that this cheque was issued after depositing cash. The ratio of decision of Hon'ble Punjab & Haryana High Court in the case of CIT v Laul Transport Corporation (supra) cannot be applied where cheques has been issued after depositing the cash. This aspect has been discussed by us in detail in the case of ACIT Vs. Ekta Construction Co. in ITA No. 885/Chd/2010 order dated 23.6.2015. Paras 32 to 33 and 38 to 39 of that order which reads as under:- "32. Therefore, it is clear that case was decided on peculiar facts because Revenue did not peruse those creditors despite their statement that they were only lending the names particularly when the name of the assessee was not in the list whom these persons had lent their names. The Revenue did not examine the sources of those creditors. The facts in the case before us are different which we will see little later. In any case we would like to observe that law is not static and lot of developments have taken place in respect of interpretation section 68. The issue regarding section 68 was discussed in detail by the....
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....the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within exemption pro vided by the Act lies upon the assessee. But, in view of section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut, the said evidence being unrebutted, can be used against him by holding that it was a receipt of an income nature." 18. In that case the amount was credited in the capital account in the books and the assessee offered her explanation about the said receipt being her winnings from horse races. The explanation was not accepted. There was no dispute that the amount was received by the assessee from various race clubs on the basis of winning tickets presented by her. This court based on the material available on record....
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.... In short, therefore, the V very genuineness of the transaction was not established. This, therefore, is not a case where the Revenue makes addition on the assessee failing to establish source of the source. All issues are essentially based on facts and appreciation of evidence on record. No question of law arises. Tax appeal is dismissed." 39. Similar issue arose in the case of Smt. Suman Gupta v CIT (ITA No. 680 of 2012). In that case also the decision of CIT Vs. Orissa Corporation P. Ltd CIT v Orrisa (supra) was relied on. The Hon'ble Court made the following observations at page 6 to 8 which are as under:- "6. In the present case, we find that after the initial burden was discharged by the appellant-assessee, the AO did not accept the application to summon the creditors and proceeded to examine the records namely the bank accounts to find out whether the unsecured loan transactions were genuine. He considered each and every loan transaction and found that none of the individual unsecured creditors could be said to be creditworthy to advance loans for such amounts. The observations made by the AO discussed by the ITAT are re-produced as follows:- "....
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....ssment order and the details verified from the paper book would clearly support the findings of the AO that none of the creditors were persons of sufficient means to advance any loan to the assessee. Filing of balance sheets, cash flow statements, cash books etc. have no evidentiary value because according to the remand report filed by the AO, those documents were not filed with the return of income. Moreover, no regular books of account have been maintained by any of the creditors and majority of them have shown estimated income in their returns of income. Therefore, such balance sheet, cash flow statements etc. would not support the contention of the assessee that genine credits have been received. The order sheet noted by the AO would also show that the assessee has made no efforts to produce the remaining creditors before the AO. Even in the statement of one of the creditors recorded by the AO, Shri Ambhay Maheshwari, he was not able to explain his source of deposit or advancing loan to the assessee through genuine source. It is well settled law that burden is upon the assessee to prove ingredients of section 68 of the Act by proving identity and creditworthiness of the cr....