MS CHHAYA SINGHAL,,GHAZIABAD vs. ITO, GHAZIABAD

O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is appeal filed by the assessee against the order of the LD CIT (A), Ghaziabad dated 31.08.2015 for the Assessment Year 2011-12. 2. The assessee has raised the following grounds of appeal:- “1. The order of the Hon’ble CIT(A) is bad in law and on facts of the case,

2. The Honourable CIT(A) is wrong and unjustified in upholding addition of Rs. 400000/- as unaccounted money when the identity, creditworthiness of the lenders and the genuineness of the transaction had been proved.”

3. The brief facts of the case are that the assessee ,an individual ,filed her return of income on 30.9.2011 showing income of Rs. 625476/- as proprietor M/s Iscon Steels. During the year, assessee has taken loan from Ms. Ambika Singhal and Ms. Ishika Singhal of Rs. 2 lacs each. Before the Assessing Officer assessee submitted confirmation , Income tax returns along with bank statements of both the parties, however, as cash was deposited in the bank Page 2 of 3 account of the lender either on the same day or just before issue of cheques, ld Assessing Officer disbelieved genuineness of transaction and made an addition of Rs. 4 lacs u/s 68 of the Income Tax Act. The assessee carried the matter before the ld CIT(A). Ld CIT(A) confirmed the addition holding that nothing has been brought on record to prove satisfactorily creditworthiness of the lenders. Therefore, assessee is in appeal before us.

4. Ld AR of the appellant submitted that assessee has submitted the confirmation of the lender, bank account statement and the income tax returns of the lenders. Therefore, his submission was that assessee has proved the identity, creditworthiness and genuineness of the transaction. Regarding deposit of cash in the account of those lenders, it was submitted that source of the income of those creditors are in cash and they deposit only cash into the bank account when some cheques are required to be issued by them. He further submitted that AO did not examine those creditors and proceeded on the assumptions that creditors lack the creditworthiness. He further submitted that cash deposited by lenders itself proves their creditworthiness when they are assessed to income tax, therefore CIT (A) erred in holding that the assessee did not prove creditworthiness of parties satisfactorily.

5. Ld DR relied on the order of the lower authorities and submitted that as the cash has been deposited in the bank account of those parties then creditworthiness of the transaction as well as the genuineness of the transactions is in doubt and therefore he submitted that the orders of the lower authorities may be confirmed.

6. We have carefully considered the rival contentions. Before the LD Assessing Officer assessee has discharge his initial onus by producing the confirmation, bank statement and income tax return of those parties. Merely that the cash has been deposited in the bank account of the lenders immediately before the issue of cheques to the assessee cannot be the reason that the transactions entered into by the assessee of obtaining loan with those lenders are not creditworthy. The Assessing Officer is required to bring some material before treating them so. As the assessee has submitted before us that the lenders are deriving income