TaxTMI 
TaxTMI 
2016 (1) TMI 1496
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....d been advanced to the appellant and as such, addition so sustained is invalid and untenable. 1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate that, inability of the assessee to explain source of source cannot be a basis to confirm addition u/s 68 of the Act. 1.3 That the learned Commissioner of Income Tax (Appeals) has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition sustained is wholly unwarranted and not in accordance with law. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts that in upholding lump sum addition of Rs. 25,000/- out of the expenses incurred and claimed by the appellant. 1.4 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are contrary to record and law and thus unsustainable. 2. That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts and in upholding lump sum addition of Rs. 25,000/- out of the expenses incurred and claimed by t....
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....n support of the same. Whereas Sh. Faquir Chand Godara stated that he sold the agriculture produce to M/s Girdhari Lal Ramesh Chand, the AR furnished copy of account of one M/s Shree Shyam Traders, commission agent, which/has no relevance to Sh. Faquir Chand Godara. The partner of M/ s Girdhari Lal Ramesh Chand stated that they did not have any transactions with Sh. Faquir Chand Godara at any time. The salient aspects of the statements of Sh. Faquir Chand Godara produced in the assessment order and. reproduced in para 3.1 above clearly indicate that the loan transaction is not genuine and Sh. Faquir Chand Godara does not have creditworthiness. It is further reinforced by the fact that till now the loan of Rs. 5.00 lacs has not yet been repaid by the assessee to Sh. Faquir Chand Godara, who is not an IT assessee, and further no interest has been paid to him even though he is not a relative. The argument of the AR that Sh. Faquir Chand Godara cannot given right statement before the AO due to pressure is without any basis and devoid of any merit. The case laws relied upon by the AR are distinguishable on facts. In view of the above, I hold that the assessee failed to discharge the onu....
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.... take loan of Rs. 6.50 lacs from PNB. The case laws relied upon by the AR are distinguishable on facts. In view of the above facts I hold that the assessee failed to discharge the onus cast on him of proving the genuineness and creditworthiness of the creditor and therefore addition of Rs. 6.00 lacs made by the AO is upheld." 5.3 Loan in respect to Smt. Satyawanti, Mother An amount of Rs. 4.50 lakhs was shown as outstanding unsecured loan as on 31.3.2008 out of which Rs. 1.50 lakhs was fresh unsecured loan accepted on 12.03.2008. The AO recorded the statement of Smt. Satyawanti produced by the assessee on 15.12.2010. From the facts and the statement of Smt. Satyawanti, the AO held that a person earning income of Rs. 25,000/- per annum by stitching of clothes did not have any capacity to advance the loan of Rs. 1.50 lakhs to the assessee. The AO also observed that her bank account also revealed that identical cash was deposited on the same date before issuance of cheque to the assessee. The AO also observed that she could not furnish the account copy of M/s Shree Gian Chand, commission agent from whom money was received which in turn was given as loan to the assessee. Accordin....
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....e aforesaid creditor since he never sold produce to firm, M/s. Girdhari Lal Ramesh Chand though he stated that such produce was sold to the said firm. Ld. AR submitted that in fact, such produce was sold to M/s. Shyam Trades which is evident from Form - J issued by M/s. Shyam Trades, copy whereof is placed at pages 49 - 65 of the Paper Book (PB). In this regard, he submitted that M/s. Shyam Traders filed the confirmation also which is placed at pages 40 to 42 of the PB. Ld. AR submitted that the aforesaid evidences were furnished before the AO and subsequently, the books of accounts of M/s. Shyam Traders had also been produced. The ld. AR, therefore, submitted that as there was no sale to M/s. Girdhari Lal Ramesh Chander, no adverse inference can be drawn on the basis of statement of Shri Fakir Chand, who duly confirmed the factum of credit but his inability to explain the source of advance at the time of statement on account of his age of 79 years, could not be a justified basis to draw adverse inference by disregarding other evidences and facts on record. He further submitted that non-payment of loan or the interest free loan could not be a ground to state the creditors were not ....
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.... viii) Copy of statement of Shri Satish Kumar dated 8.11.11 partner of M/s Girdhari Lal Ramesh Chander (pages 106-108 of Paper Book) ix) Copy of statement of appellant dated 11.11.2011 is Partner of Shree Shyam Traders (pages 101-102 of Paper Book) and, books produced records (ii) Joginder Mongia Ld. AR submitted that the identity is not disputed. As regards that loan is not genuine, the ld. AR submitted that the creditor duly confirmed the loan along with source; loan was duly repaid within one year; transactions are through account payee cheque; creditor was having land measuring 35 acres and his yearly income was Rs. 20 lakhs. He further submitted that this was supported by statement of account of the firm to whom crops had been sold (page 75 to 77 of PB) and also bank statement of the creditor was filed (page 67 to 70 of PB). He submitted that subsequently, even the firm had duly confirmed the sale of crop in a statement (page 116 of PB). He submitted that the loan was paid and for this contention, he relied on pages 115 & 78 of the PB). He further relied on the documents submitted in the PB and s....
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.... iii) Copy of statement of Smt. Satayawanti dated 15.12.2010 (pages 83-84 of Paper Book) iv) Copy of ledger account in the book of Banwari Lal Kataria for the period 1.04.2006 to 31.03.2007 (page 85 of Paper Book) v) Copy of acknowledgement of return of income for Assessment Year 2006-07 (Rs. 75270/- (pages 86-88 of paper Book), 2005-06 (Rs. 49,480/- (pages 89-92 of paper Book), 2007-08 (Rs. 4,640/- (pages 93-95 of Paper Book), 2008-09 (Rs. 1,40,593/- (pages 95-97 of Paper Book) vi) Copy of statement of Shri Amount Kumar dated 8.11.2011 (pages 106-108 of Paper Book) The learned AR submitted that the authorities below have accepted that the identity of the creditors is that established that have held that creditworthiness and genuineness of the creditors was not proved on the ground that there was inconsistency or contradiction in the statement of the creditors. It was submitted that such inconsistency and contradiction is vis-à-vis the sources of the creditors and therefore, it was submitted that mere fact that the source of source of the creditors was not explained could be a ground to bring....
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....dition made of Rs. 12,50,000/- and sustained by the CIT(A) be upheld. 9. We have considered the rival submissions, perused the material on record. So far as the instant year is concerned, the appellant has raised loan from Shri Faquir Chand Godara of Rs. 5,00,000/-, Shri Joginder Mongia of Rs. 6,00,000/- and Smt. Satyawanti of Rs. 1,50,000/-. All these loans have been raised by account payee cheques. The bank statemenst of each of the creditors have been placed on record by the appellant in support of the credits raised by the appellant. Further, each of the creditors have appeared and accepted the factum of advancing loans to the appellant. In such circumstances, the issue therefore, emerges is whether authorities below were justified in holding that the burden of the appellant remained un-dischanged under section 68 of the Act on the ground that there is inconsistency and contradiction in the statement of the creditors as to the sources of the funds raised by them for giving advance to the appellant. 10. The Hon'ble Gauhati High Court in the case of Nemi Chand Kothari vs. CIT (supra) has held as under:- "The Revenue/Assessing Officer, however, remains free to show ....
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....assessee from undisclosed source ; but if there is no direct evidence in this regard, then, the indirect or circumstantial evidence has to be conclusive in nature and must in such circumstances, unerringly point to the assessee as the person from whom the money had actually flown to the hands of the sub-creditor and, then, routed through the hands of the subcreditor to the hands of the creditor. For this purpose, the circumstantial evidence has to be not only consistent with the hypothesis that the money belonged to the assessee, but that this hypothesis must also be inconsistent with the hypothesis that none other than the assessee owned the said money. If the conclusion be that the money received, as loan, by the assessee may or may not belong to him or if the possibility exists that the money received, as loan, by the assessee may not belong to him, then, in none of such two cases, the loan amount can be conclusively treated as income from undisclosed source of the assessee inasmuch as for assessing the money as income of the assessee from undisclosed source, there must be clinching evidence to show that the money actually belonged to none but the assessee himself. If no such cl....
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.... under :- "9. If there is direct evidence to show that the loan received by the assessee actually belong to the assessee, there will be no difficulty in assessing such amount as the income of the assessee from undisclosed source but if there is no direct evidence in this regard, then the indirect or circumstantial evidence has to be conclusive in nature and should point to the assessee as the person from whom the money has actually flown to the hands of the creditor and then from the hands of the creditor to the hands of the creditor. 20. When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to....
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....in order to substantiate the said argument. Our attention was also taken to the confirmation from M/s. Shyam Traders which is placed at pages 40 to 42 of the PB. Further, the books of accounts maintained by M/s. Shyam Traders were also produced before the AO. The AO in order to discredit Faquir Chand, the old person on a mistaken statement that he has sold agricultural produce to M/s. Girdhari Lal Ramesh Chander was on an incorrect basis to come to a conclusion that the transactions are bogus. It was brought to our knowledge that the said Faquir Chand owns land measuring 39 acres and in this regard, our attention was taken to pages 110 of PB. Our attention was drawn to page 42 of the PB to show his annual agricultural income of Rs. 10.19 lakhs. Copy of the bank statement of Faquir Chand has also been filed and has been placed at page 41 of the PB. Copy of his statement is found recorded at pages 43 & 44 of the PB. Thus, we find that the assessee has discharged the primary onus on him to prove the identity, creditworthiness and genuineness of the transaction. Thereafter, it was the duty of the AO to investigate and found fault with the aforesaid documents that was produced before hi....