SMT. JAYSHREE S. JAIN,,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-1(2)(2),, AHMEDABAD

SMC-ITA No. 2910/Ahd/2016 Jayshshree S Jain Vs. ITO AY : 2012-13 Page 1 of 6

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD [ Before Shri Pramod Kumar, Accountant Member ] ITA No. 2910/Ahd/2016 Assessment Year : 2012-13 Jayshree S Jain ......…………......Appellant 6, Sugarwala Market, Sakar Bazar, Ahmedabad-380 002 [PAN : ABBPJ 6246 P]

Vs.

Income Tax Officer .......................Respondent Ward 1(2)(2), Ahmedabad

Appearances by: Vinit Moondra, for the appellant Antony Parikh, for the respondent

Date of concluding the hearing : 29.06.2018 Date of pronouncing the order : 20.09.2018

O R D E R 1. By way of this appeal, the assessee-appellant has challenged correctness of the order dated 19th August 2016 passed by the by the CIT(A)-10, Ahmedabad, in the matter of assessment under section 143(3) of the Income-tax Act, 1961 for the assessment year 2012-13.

“That the authorities below have erred in law and facts by treating the following two credits. (i) Smt. Nidhi K. Basu - Rs.1,50,000/- (ii) Smt. Jagruti R. Modi – Rs.2,30,000/- When in the circumstances facts that confirmation of the creditors have filed along with sources of deposits from their bank account.

That both the credits have come through banking channel. ”

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was received through banking channels. So far as Smt. Jagruti Modi is concerned, there were three entries; one of Rs.80,000/- from her bank account and the remaining two entries of Rs.1,30,000/- & Rs.20,000/- from M/s. P.D. Traders who had paid on her behalf. As regards Smt. Nidhi K. Busa is concerned, the amount was received from her account by cheque. The Assessing Officer was of the view that, as regards the receipt of cheque from M/s. P.D. Traders, it is not clear as to why these amounts were paid by M/s. P.D. Traders on behalf of Smt. Modi. It was also noted that the depositors have not responded to the notices issued under Section 133(6) and that the transactions in the bank account of Smt. Busa did not inspire faith about her creditworthiness. He thus treated both these accounts as unexplained cash accounts, and, resultantly made addition of Rs.3,80,000/- to the income returned by the assessee.

““5. The submission made by the appellant, the material available on record as well as the discussion undersigned had with the appellant during the course of proceedings were perused and considered. The same have also been kept on record. The AO has made addition u/s. 68 of the I.T. Act in case of two unsecured loans received by the appellant during the previous year relevant to A Y. 2012-13. A loan of Rs 2 30,000/- was taken from Smt Jagruti R. Modi and a loan of Rs 1,50,000/- from Smt Needhi K. Busa. The AO has discussed in details the facts of the case which are being reproduced as under:-

“The case of the assesses was selected for scrutiny for verifying her claims of unsecured loans. The assessee is claimed to have taken unsecured loans of Rs.2,30,000/- from one Smt Jagruti R. Modi and another loan of Rs.1,50,000 from one Smt. Needhi K. Busa, among others. Vide the notice u/s. 142(1) dated 22-11-2014, the assessee was asked to prove the genuineness of all the unsecured loans claimed to have been taken by him during the year under assessment, whether squared up or not. in terms of the provisions of Section 68 of Income-tax Act, 1961. The assessee was given ample opportunities to prove that any such loan was really taken by her from Smf Jagruti R. Modi and from Smt. Needhi K. Busa Despite all possible opportunities, the assessee could not provide the Revenue with the basic confirmation letter from Smt. Needhi K. Busa. Similarly, as regards, source of loan of Rs.2,30,000/- from Smt. Jagruti R. Modi, the assessee supplied the copies of Bank Statement of wherein transfer entry dated 08-06-2011 of Rs.80,000/- was there but whose Bank Statement it pertained to was not ascertainable and for the remaining Rs.1,50,000/-, Bank Statement of one M/s.P.D. Traders was furnished wherein two transfer entries of Rs.20,000/- and Rs.1,30,000/- are found. What is the relation between M/s. P D Traders and Smt. Jagruti R. Modi is not ascertainable. As a matter of fact, notices u/s. 133(6) of the Act were sent to the alleged

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depositors twice one on 02-02-2015 and 19-02-2015 at the addresses provided by the assessee but both the notices u/s. 133(6) of the Act in both the cases returned unserved and when this fact was brought to the notice of the assessee, it was submitted by her that both the alleged depositors were out of station. Here, it is pertinent to mention that vide her written submission dated 10-03- 2015, the assessee informed that Smt. Jagruti R. Modi is not assessed to tax. In view of the above facts, it is held that the alleged loan transaction of the assessee with Smt. Needhi K. Busa and Smt. Needhi K. Busa remained unproved in terms of the provisions of Section 68 of Income-tax Act, 1961.

A harmonious construction of section 106 of the Evidence Act and section 68 of the Income-tax Act,1961 will be that apart from establishing the identity of the creditors, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor/loaner/depositor. Now the provisions of section 68 of the Income-tax Act, 1961 are visited and it is found that section 68 emphasizes -

"where any sum if found credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year."

In the instant case, during the year under assessment total amounts of Rs.3,80,000/- are found credited in the books of the assessee but she did not offer proper, reasonable and acceptable explanation as regards the same. External enquiries conducted by the Revenue also resulted in no-service of the notices u/s 133(6) sent to the alleged depositors In view of the above facts and findings, the Revenue has no option except to treat the so-called unsecured loans of Rs.3,80,000/- as non-genuine cash credits and treat the same as the income of the assessee by invoking the provisions of section 68 of the Income-tax Act. 1961 Therefore, an addition of Rs.3,80,000/- is made u/s.68 of the Income-tax Act, 1961 to the income of the assessee for the year under consideration. Penalty proceedings u/s.271(1)(c).

5.1 It has clearly been observed by the AO that no confirmations whatsoever from these two ladies were filed during the course of assessment proceedings. Even notices issued u/s. 133(6) of the Income Tax Act returned un-served in both the cases. The notices were sent by the AO on the addresses given by the appellant. This fact was duly brought to the notice of the appellant by the AO, in reply to which, it was stated by the appellant that both the depositors were out of station. No attempt was made by the appellant to either file confirmation from these two parties or provide

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correct present address, so that enquiries could be conducted by the Assessing Officer. It is the duty of the appellant to prove the complete identity of the persons who had advanced loans to the appellant. Needless to say that the appellant has failed to prove the identity of the persons who has advanced loans despite being given ample opportunities by the AO. The appellant has not made any effort to discharge it's onus to prove the identity of these persons.

It is also an undisputed fact that both these ladies who have advanced loans to the appellant are not assessed to tax. Even if they are not assessed to tax, the confirmation can still be given by these persons to prove the identity and genuineness of the transaction. During the appellate proceedings, the appellant has given a copy of the bank account of Smt Needhi K. Busa maintained with Bank of Maharashtra. A perusal of this bank account reveals that other than this loan transaction, the total transactions in this bank account during that year for the period 22.10.2011 to 23.12.2011 was not even totaling to Rs 40,000/-. In that also, there is an entry of Rs.35,000/-. If that entry is not counted, the only transaction in this account is receipt of dividend. This goes on to prove that Smt. Needhi K. Busa does not have the creditworthiness to advance such huge amount of loan especially when she is not assessed to tax also. Moreover, there is one transfer of Rs. 1,50,000/- in her bank account from "Master Nishit K." on 14-11-2011 and the same has been given to the appellant on 26-11- 2011. No attempt was made by the appellant to submit the details of the transaction of deposit of Rs.1,50,000/- which has actually been transferred to the bank account of the appellant. Therefore, the genuineness of the source of this money has also not been proved by the appellant. Since the appellant has not given the correct identity of this person, the revenue is not in a position to verify the identity, creditworthiness as well as the genuineness of the transaction in the absence of clear identity of the person. The onus to prove the identity creditworthiness and genuineness of the transactions shifts to the appellant which has not been discharged by her even after being given ample opportunities. Therefore, it is held that the loan taken from Smt. Needhi K. Busa is not genuine.

5.2 in case of Smt. Jagruti R Modi also the appellant could not file the confirmation. It is also a fact that Smt. Jagruti R. Modi is also not assessed to tax. The appellant has filed a letter from Kaushik D. Busa (HUF) stating that he has given an amount of Rs 1,50,000/- on behalf of Smt. Jagruti R Modi who is his younger sister. However, no details about the source of the funds or why the money has been given by the brother has not been filed either before the AO or before the undersigned. A bank account of M/s. P.D. Traders maintained with Kalupur Commercial Co-operative Bank has been filed, but it has not been elaborated by the appellant as to why the money has been transferred by this Firm. The loan has been taken from Smt Jagruti R. Modi, however, no confirmation whatsoever could be filed by the appellant. It is a fact that Smt. Jagruti R. Modi is not assessed to tax and the notices issued by the AO u/s 133(6) for verification of the transaction has returned un-served though the notice was issued on the

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address given by the appellant. When this fact was confronted, the appellant could not file the correct address or could not produce the parties for verification. The appellant has also failed to file even confirmation of these parties. Therefore, the appellant has failed to prove the identity, genuineness as well as the creditworthiness of Smt Jagruti R Modi also.

5.3 In view of the detailed discussion supra, it is held that the purported loan taken from Smt. Jagruti R. Modi and Smt. Needhi K Busa are not genuine and the AO has rightly added the same under provisions of section 68 of the Income Tax Act.

In view of the above discussion, it is held that the parties from whom the loan has been taken are not genuine and the AO has rightly added the same u/s 68 of the Act and the same is sustained. In view of the above, the ground taken by the appellant is dismissed and the addition made by the AO is sustained.”

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credits on the facts of the case. I, therefore, deem it fit and proper to delete both these additions. Assessee gets the relief accordingly.

Sd/-

Pramod Kumar (Accountant Member) Ahmedabad, the 20th day of September, 2018 **bt Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order