TaxTMI 
TaxTMI 
2022 (7) TMI 1295
X X X X Extracts X X X X
X X X X Extracts X X X X
....tal income at Rs. "Nil". The case of the assessee was taken up for scrutiny assessment and the AO noted that during the year under consideration, the assessee had received loan of Rs. 1,78,66,925/- from M/s S. M. Traders, proprietary firm of Shri Hareshbhai R. Parmar. During the course of assessment proceedings, the assessee furnished permanent account number (PAN), confirmation of the said party and bank statement of the assessee to prove identity, genuineness and creditworthiness of the transaction. However, the Ld. Assessing Officer recorded the statement of Shri Hareshbhai R. Parmarand on basis of the same held that though the identity of the creditor is established, genuineness of the transaction and creditworthiness of the party is not established and therefore the amount of Rs. 1,78,66,925/- is treated the assessee's own account fund which was credited as and when needed in the name of Shri Hareshbhai R. Parmar. Accordingly, the AO added the same to the total income of the assessee under section 68 of the Act. 4. In appeal, Ld. CIT(A) confirmed the additions with the following observations: "3.2 In the assessment order dated 31-12-2007 under section 143(3), AO ob....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor is far from established. In this regard, the statement recorded from the creditor u/s. 131 during the course of assessment proceedings is of vital importance. The statement is reproduced below: xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 3.5 The contents of the above statement can be summed up as follow: The creditor Shri Hareshbhai R. Parmar was aged 28 years as on 29-12-2007; he was unemployed in the preceding 8 months due to his being bedridden on account of accident; in the preceding 3 years he had taken cash from one or two parties, deposited the cash in bank account and issued cheques to the parties (the names of which he did not remember); he advanced loan to the appellant company during the F.Y.2004-05, but did not remember the amount of loan given; he was in the business of purchasing waste/garbage items from Alang shipyard and selling the same; the said business was started in the year 2003 and was stopped 3 years before; he did not remember the turnover of the said business for the F.Y.2004-05; he had maintained only a 'Kachha book' in respect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ort of the claim, sales of Rs.1.14 crores were supposed to have been made between 10- 05-2009 and 15-05-2009 and the balance amount of Rs.0.64 crores was still outstanding. The sales were supposed to be of non excisable commodity. It is pertinent to note here that neither in the statement given nor the affidavit filed, the creditor claimed the amount given to be towards advance for purchase of goods from the appellant. Further, if this plea is to be accepted, the advance was given during F.Y. 04-05 whereas the purchases were effected during the F.Ys.09-10 i.e. after a gap of 5 years, during which period the creditor met with accident, lost the 'kachha diary5 and did not do any business in 3 intervening years. Therefore, I am of the view that the so called sales made by the appellant do not get established by mere filing of ledger extracts. Even if it is presumed that sales were effected subsequently, it does not establish the creditworthiness of the creditor during the year under consideration and the contention that amount advanced was towards purchase of goods. Therefore, this plea of the learned AR also is to be rejected." 5. Before us, the counsel for the assessee submit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ave made payment to assessee. On basis of above, Tribunal held that identity of source was thus established and requirement of section 68 was proved beyond any doubt by assessee and, therefore, addition made by Assessing Officer was not sustainable. High Court held that since Tribunal ignored vital facts emanating from record that said creditors had not produced evidence to establish their capacity to raise such a huge amount and also that they were not clear about their precise role in transaction involving said amount, its order was to be set aside. High Court further held that creditors admitting that they had made payments to assessee was not sufficient to discharge burden placed on assessee by section 68. The Hon'ble Supreme Court dismissed the SLP filed against the order of High Court. 6.2 Again, the Supreme Court in the case of Sunil Thomas v, ITO [2021] 127 taxmann.com 275 (SC) dismissed SLP against High Court ruling that where donor (creditor) who was assessee's brother, apart from furnishing his employment particulars and confirming gift, couldn't explain genuineness of transactions or his creditworthiness by proving his monetary ability to make such gifts ....