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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SH. BHAVNESH SAINI & SH.L.P.SAHU
PER BHAVNESH SAINI, JUDICIAL MEMBER
This appeal by the assessee has been directed against the order of Ld.CIT(A)-XXII, New Delhi dated 31.01.2013 for A.Y.2008-09, challenging the addition of Rs.11,25,000/- on account of unexplained loan received from Sh.Balwant Singh.
We have heard Ld. representatives of both parties and perused the material on record.
Briefly the facts of the case are that during the year under appeal, the assessee has shown deposit of Rs.11,25,000/- in the name of Sh. Balwant Singh detailed below:-
(i) 14.01.2008 Rs.3,00,000/- (ii) 14.01.2008 Rs.3,25,000/-
Page 2 of 7 (iii) 28.01.2008 Rs.5,00,000/-
The assessee was required to furnish confirmation of the cash creditor with documentary evidences and also to prove identity, genuineness and creditworthiness of the depositor. The assessee filed confirmation letter and also bank account. Perusal thereof revealed that the depositor Sh. Balwant Singh neither filed return of income nor was man of means to advance a large sum to the assessee. Perusal of the bank accounts revealed that there are no substantial transaction in the bank account except the amount shown as deposit in the name of the assessee.
These amounts were deposited on the same date as cash including draft charges payable thereon. The details of these deposits in cash including bank charges are reproduced in the impugned order. It is stated that on 14.01.2008, the creditor deposited cash of Rs.6,25,000/- and Rs.1,000/-.
On the same day, the creditor has issued Drafts (WDL) in favour of the assessee of the amount of Rs.3,00,000/- & Rs.3,25,000/- with bank charges. Again on 28.01.2008, the creditor deposited Rs.5,02,000/- in cash in his bank account and on the same day Rs.5,00,000/- with bank charges have been transferred through Draft (WDL) in the account of the assessee for giving loan. The assessee failed to produce the creditor for examination on oath. The loan was found outstanding even after lapse of three years. The assessee is totally unknown about the depositor. The assessee came into contact with the depositor through Sh. Satish Kamboj
Page 3 of 7 with whom the assessee has business dealing. The AO, therefore, noted that the assessee has introduced his amount from undisclosed source in the name of Sh. Balwant Singh, therefore, identify, genuineness and creditworthiness of the creditor and genuine deposit of Rs.11,25,000/- have not been proved. The amount was added to the income of the assessee u/s 68 of the Act.
The assessee reiterated the submissions before the Ld.CIT(A) and it was submitted that the assessee filed confirmations of the lender, copy of the election card of the lender, copy of bank statement and copy of the sale proceeds of agricultural commodities. Therefore, the assessee proved the identity and creditworthiness of the creditor as well as proved the genuineness of the transaction in the matter. Certain case laws were also relied upon.
Ld.CIT(A) found that even if copy of seven Form (J) showing sale proceeds of agriculture produce by the lender are filed as additional evidence but this would added upto total of Rs.5,73,843/-. The depositor claimed deposit in Jan. 2008 but the document shows sale, much beyond this period. Even some of the documents have illegible dates. It is also noted that the lender would have spent some amount for earning agricultural income and spent personal expenses, therefore, nothing is left with the creditor Sh.Balwant Singh. The AO also noted that there were no relationship between the assessee and the creditor and the cash deposits
Page 4 of 7 in the account of the creditor has not been proved. Therefore, Sh.Balwant Singh did not have capacity or creditworthiness to advance the loan.
Further, genuineness of the transactions has not been proved, therefore, addition was confirmed and this ground of appeal of the assessee was dismissed.
7. After considering the rival submissions, we do not find any merit in the appeal of the assessee. Ld. counsel for the assessee reiterated the submissions made before the authorities below and referred to the order of ITAT Delhi Bench in the case of the Ashok Kumar Narula in dated 07.01.2016. He has submitted that it is a case brother of the assessee in which loan was taken from Sh.Balwinder Singh and on the same facts, the addition has been deleted. On the other hand, Ld. DR relied upon the orders of the authorities below.
7.1. Considering the facts of the appeal and in the light of the material on record, it is clear that the assessee failed to prove the creditworthiness of the creditor and genuineness of the transaction in the matter.
7.2. Though, the assessee filed copy of the confirmation and copy of the election card of the creditor which may prove identity of creditor but the assessee failed to prove creditworthiness of the creditor. The bank A/c of creditor revealed that on 14.01.2008 there is a cash deposit of Rs.6,25,000/- in his account alongwith Rs.1,000/- and on the same day, two drafts of Rs.3,00,000/- & Rs.3,25,000/- with bank charges have been Page 5 of 7 issued in the name of the assessee. Similarly on 28.01.2008, there is a cash deposit in the bank account of the creditor of Rs.5,02,000/- and on the same day draft of Rs.5,00,000/- has been issued to the assessee.
Thus, the creditor has no explanation of source of the cash deposited in his bank account Form (J) were filed before the Ld.CIT(A) showing sale proceeds of agricultural produce but these were also not sufficient to prove the creditworthiness of the creditor because after excluding the expenses incurred for earning agricultural income and household expenses , nothing would be left with the creditor because only Form (J) were filed for Rs.5,73,843/- only in which also Ld.CIT(A) found certain defects. No other evidence has been produced to prove creditworthiness of the creditor.
ITAT, Agra Bench in the case of Smt. Suman Gupta vs ITO 138 ITD 153 considered the identical facts in which there were small bank balances available in the account of the creditor before issue of cheque to the assessee and equal amount of the cash were deposited in the bank accounts for giving loan to the assessee. The Tribunal confirmed the addition u/s 68 of the Act. Hon’ble Allahabad High Court in the case of Smt. Suman Gupta vs CIT in vide judgement dated 07.08.2012 confirmed the order of the Tribunal and dismiss the appeal of the assessee. Hon’ble Gujarat High Court in the case of Blessing Construction vs ITO 32 taxmann.com 366 held that “where sizeable amounts were deposited in cash in account of depositor only before their
Page 6 of 7 withdrawal through cheques in favour of the assessee, addition was justified”. Further the assessee failed to produce the creditor before the AO for examination in order to find out the truth in the matter, therefore, the assessee deliberately withhold the creditor to be produced before the AO for examination. Ld. counsel for the assessee submitted that the assessee was not required to produce the depositor for examination.
However, the AO has specifically mentioned in the assessment order that the assessee did not produce the depositor for examination on one or other reason. If the assessee was interested in producing the creditor for examination by the income tax authorities, the assessee should have made a request to the Ld.CIT(A) in this respect, therefore, the facts remained that the assessee could not produce sufficient evidences before the authorities below to prove creditworthiness of the creditor and genuineness of the transaction in the matter. Ld. counsel for the assessee referred to the order of the ITAT in the Ashok Kumar Narula (supra) but this order could not be any preference as against the decisions of the Hon’ble Allahabad High Court and Gujarat High Court referred to above.
Ld. counsel for the assessee also referred to certain decisions during the course of hearing with regard to share application money which were not relevant to the matter in issue and were clearly distinguishable on facts.
Considering the totality of the facts and circumstances of the case, we do not find any merit in this ground of the appeal of the assessee.
Page 7 of 7 8. In the result, the appeal of the assessee is dismissed.
The order is pronounced in the open court.