PRASHANT GUPTA (HUF),DELHI vs. ACIT, NEW DELHI

The assessee is an HUF and carrying the business of purchasing and selling of chemicals. The return of income was filed declaring an income of Rs.19,77,490/-. The AO vide order dated 27.02.2015 under section 143(3)/254 of the Act assessed the income at Rs. 25,48,540/- by making an addition of Rs.5 lacs received by the assessee from one Smt. Geeta Jayantilal Suru under section 68 of the Act. The CIT(A) vide impugned order dismissed the appeal of the assessee.

The assessee is in appeal before me and has raised the following grounds of appeal:- “1. That the order of the Commissioner of Income Tax(Appeals)-19, New Delhi 28.04.2016, the impugned order, is wrong on facts and bad in law.

2. That the Commissioner of Income Tax(Appeals), erred in confirming the addition of Rs.500000/- under section 68 of the Act. 3 That the conclusions and inferences of the Assessing Officer and/or Commissioner(Appeals) are based on suspicions, conjectures, surmises and extraneous and irrelevant considerations.

The Ld. AR assailing the order passed by the CIT(A) submits that the assessee has furnished the full particulars of Smt. Geeta Jayantilal Suru with address, PAN, Bank confirmation, Return of Income, copy of Saving Bank Account etc. He further submits that the loan was repaid on 17.01.2010. He argued that if the AO was not satisfied with the information available, he ought to have issued summons under section 131 to the creditor. According to the Ld. AR, the assessee was not required under the law to produce the creditor for proving the genuineness of the transaction. The Ld. DR, on the other hand, relied upon the order passed by the AO and the CIT(A).

We have heard the rival submissions and perused the judgments relied upon. It is settled law that w.r.t credits received by the assessee during the course of year, the assessee is required to prove the identity of the creditor, genuineness and creditworthiness. In the present case, though the assessee has proved the identity of the creditor, it has failed to show the genuineness and creditworthiness of the creditor. Smt. Geeta, from whom the assessee received the aforesaid amount had declared a total income of Rs. 1,95,071/- during the relevant A.Y. The bank statements also show an average balance between Rs.8,000 to Rs. 10,000/- only during the entire year. The deposit of cash of Rs. 5 lacs when the balance in the bank account of Smt. Geeta was only Rs.847/- and also the fact that on next day, a cheque of Rs.5 lacs was issued in favour of the assessee goes to show that the transaction was not genuine. The creditor was not financially capable to have suddenly earn such an amount. It was the duty of the assessee to produce Smt. Geeta for examination before the AO to prove his case. The onus upon the assessee was not discharged. The judgments relied upon by the assessee have distinguishable facts as the factual scenario depicted above leaves no manner of doubt that the transaction of Rs. 5 lacs was hit by section 68 of the Act. Hence, the grounds raised by the assessee are dismissed.

In the result, the appeal of the assessee is dismissed.