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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI SANJAY ARORA, AM & SHRI PAWAN SINGH, JM
सुनवाई क� तार�ख / : 12.5.2016 Date of Hearing घोषणा क� तार�ख / : 09.8.2016 Date of Pronouncement आदेश / O R D E R Per Sanjay Arora, A. M.: This is an Appeal by the Revenue directed against the Order by the Commissioner of Income Tax (Appeals)-34, Mumbai (‘CIT(A)’ for short) dated 21.9.2010, partly allowing the Assessee’s appeal contesting its assessment u/s.143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) for the assessment year (A.Y.) 2006-07 vide order dated 29.12.2008.
(A.Y. 2006-07) Dy. CIT vs. Saraswati Developers 2. The addition in the present case, made at Rs.1,46,59,851/- u/s. 68 of the Act, is in respect of credits, arising during the current year (PB pgs. 58, 62, 66, 70 & 74), ascribed to its five trade creditors by the assessee, a builder and developer. The credits, outstanding as at the year-end, continued to outstand to a significant extent (Rs.76.98 lacs) even up to 31.3.2008, as under, getting ‘discharged’ in full only by 31.3.2009, and which was indeed quizzical: (refer pg. 2 of the assessment order) (Amt. in Rs.) Name Closing bal. as Closing bal. as Closing balance on 31.3.2006 on 31.3.2007 as on 31.3.2008 Jyoti Enterprises 4734478 2397908 1897628 Sagar Trading Co. 3618669 1294890 1294890 D M Corporation 3419952 3000661 3000661 Neelam Sales Corpn. 1462718 897529 411869 Komal Enterprise 1424034 1093392 1093392 Total 14659851 8684380 7698440 No explanation qua the same was advanced, i.e., apart from stating that the credits were on account of purchases (made during the year) and, further, paid during the subsequent years by account payee cheques, furnishing along with the copies of the purchase bills, the bank statement (duly supported by confirmations by bank/PB pg. 80-83), as well as the confirmations from the said parties. The Assessing Officer (A.O.) was not satisfied with regard to the genuineness of the said credits. The confirmations did not bear PAN, much less the ward/range where they stand assessed to income tax, nor was the PAN furnished despite being specifically called for. That is, there was nothing to show that they were income tax assessees, much less filing regular returns of income, or to exhibit their creditworthiness, viz. (audited) accounts, etc. Further, notices u/s. 133(6) remained un-responded, even as the Ward Inspector, deputed for the purpose, reported their absence at the stated addresses. The assessee was unable to furnish their present addresses, and neither did the confirmations bear any address. Further still, there was nothing to evidence the transportation of goods to (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers the assessee; the bills stating neither the lorry number nor the mode of transport. The telephone numbers mentioned in the bills neither responded nor were correct. In fact surprisingly, even as all the addresses mentioned in the bills were different, the land line telephone number of two parties, i.e., Sagar Trading Company and Neelam Sales Corporation, were surprisingly the same, i.e., 22615666. The assessee, who had sufficient cash and bank balance with it; the balances as at 31.3.2006, 31.3.2007 and 31.3.2008 being at Rs.82.51 lacs, Rs.12.85 lacs and Rs.94.08 lacs respectively, did not advance any explanation for non-payment or payment with such huge delay. Even no interest was paid to the creditors by the assessee. The credits were under the circumstances considered as unexplained, i.e., as to their nature and source, and deemed as income u/s. 68 of the Act, which reads, as under: ‘Cash credits.
Where any sum is 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 appeal, the ld. CIT(A) was moved firstly by the fact that the impugned credits were trade credits and not loan credits. The assessee had been dealing continuously with them and the purchases stood made from the said parties even in the subsequent years also. The A.O. could not doubt the transaction merely on account of some discrepancy, as the telephone number. The A.O. had made no independent enquiry and neither is there any confession by the creditors, who stood paid in the subsequent years through account payee cheque/s. Accordingly, the addition was directed to be deleted, relying on CIT vs. Uttam Chand Jain [2010] 320 ITR 554 (Bom) and CIT vs. Kiran Deepak Kukreja [2010] 190 Taxmann 393 (Bom).
(A.Y. 2006-07) Dy. CIT vs. Saraswati Developers 3. Before us, while the Revenue pleaded that the assessee had not been able to prove the impugned credits in terms of section 68 of the Act, relying on the decisions in the case of CIT vs. Precision Finance (P) Ltd. [1994] 208 ITR 465 (Cal); CIT vs. M. Ganapati Mudaliar [1964] 53 ITR 623 (SC); and A. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC) (refer Ground 3 of the Appeal), the assessee’s case, relying on CIT vs. Nangalia Fabrics (P.) Ltd. [2013] 40 taxmann.com 206 (Guj); Amitabh Construction (P.) Ltd. vs. Addl. CIT [2012] 20 taxmann.com 385 (Jhark); Manoj Aggarwal vs. Dy. CIT [2008] 113 ITD 377 (Del) (SB); ACIT vs. Lakhi Games Impex Pvt. Ltd. 2010 TIOL 272 (Trib)(Mum) was based principally on the proposition that the credits on account of trade transactions, as purchases, could not be brought to tax as unexplained credit u/s. 68 of the Act. This is particularly so as the purchases had not been doubted by the A.O., which are at a total of Rs.164.41 lacs for the current year. In fact, the assessee had already disclosed a gross profit and net profit at 35% and 20.70% respectively, which is reasonable as compared with the market rate, so that including the same by the impugned addition would increase it to unprecedented level of 58.69% and 44.39% respectively, which is highly improbable. The payments had been made by the assessee in the normal course of its’ business.
We have heard the parties, and perused the material on record. The present case is one of the addition u/s. 68. The law on the same is well settled, and which we may though briefly touch upon. In A. Govindarajulu Mudaliar vs. CIT [1958] 34 ITR 807 (SC), it was explained by the apex court that whether the receipt is to be treated as income or not must depend very largely on the facts and circumstances of the case. Further, where an assessee fails to prove satisfactorily the source and nature of an amount credited in its accounts, the A.O. was entitled to draw an inference that the receipt is of an assessable nature. In Sumati Dayal vs. CIT [1995] 214 ITR 801 (SC), the hon’ble apex court, after referring to its earlier decisions in Sreelekha Banerjee vs. CIT [1963] 49 ITR 112 (SC); Parimisetti Seetharamamma vs. (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers CIT [1965] 57 ITR 532 (SC); CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC); and CIT vs. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC), held as under: ‘In all cases in which a receipt is sought to be taxed as income, the burden lies on the Department to prove that it is within the taxing provision and if a receipt is in the nature of income, the burden of proving that it is not taxable because it falls within the exemption provided by the Act lies upon the assessee. But in view of section 68 of the Income-tax Act, 1961, where any sum is found credited in the books of the assessee for any previous year it may be charged to income-tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such a case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut the said evidence, it can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee, the Department cannot, however, act unreasonably (see pp. 804H. 805A – C).)’ [emphasis, ours] The decision in the case of Orissa Corporation P. Ltd. (supra) was also referred to by the hon'ble jurisdictional high court in Major Metals Ltd. vs. Union of India [2013] 359 ITR 450 (Bom) (at pgs. 447 - 478) to emphasize that the doubtful nature of the transaction and the manner in which the sums were found credited in the books of account maintained by the assessee are to be duly taken into consideration by the Revenue authorities. Reference was also made by it to the decision in the case of Vijay Kumar Talwar vs. CIT [2011] 330 ITR 1 (SC) (at pg. 478 of the reports) to reiterate the same principle, i.e., that in the absence of a satisfactory explanation, as where the assessee does not produce any evidence about the nature and source of the credit rebutting the presumption of section 68, the same would hold, attracting charge to income tax. In CIT vs. P. Mohanakala [2007] 291 ITR 278 (SC), to which again reference stands made by the hon’ble court (at pg. 447 of the reports), the apex court clarified that the expression ‘the assessee offers no explanation’ occurring in section 68 means where the assessee offers no proper, reasonable and acceptable explanation (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers as regards the sums found credited in the books maintained by it. Further, the satisfaction, or as the case may be, non-satisfaction of the A.O. is required to be formed objectively with reference to the material available on record, signifying an application of mind, which is the sine qua non forming the opinion. In our clear view, this is the case of no explanation being offered by the assessee. The first issue that arises before us is whether section 68 of the Act could be applied to the impugned credits, or the same includes only cash credits within its purview, for which, i.e., the latter proposition, reliance stands also placed by the assessee on CIT v. P. Mohanakala [2007] 291 ITR 278 (SC), even as the decision in the case of V.I.S.P. (P) Ltd. vs. CIT [2004] 265 ITR 202 (MP) was cited and put across by the Bench to the ld. Authorized Representative (AR) during hearing. In the facts of that case, it was found by the Tribunal that the purchase of goods could not be satisfactorily proved. The alleged supplier firm, belonging to the same group, was not assessed to tax and its’ credentials were doubtful. It’s books of account were also not produced. Under the circumstances, the tribunal upholding the addition u/s. 68, the question arose if section 68 could extend to the credit on account of purchases as well. The Hon’ble Court found no reason as to why it could not be so. Drawing on the clear, unambiguous, open and wide language of the provision, reproduced supra, it held as: ‘Section 68 of the Income-tax Act, 1961, is not confined to cash entries in accounts. If a liability shown in the accounts is found to be bogus, in the absence of any plausible and reasonable explanation offered by the assessee, the amount can be added towards the income of the assessee and brought to tax in the hands of the assessee.’ The decision, in ratio, and which alone is binding, is that where a liability is not proved and is thus not satisfactorily explained as to its nature and source, section 68 shall become applicable irrespective of whether the ostensible source of the credit is a trade creditor or the loan creditor. The provision nowhere employs the word/s ‘cash’, or ‘of money’ following the words ‘Where any sum’, therein, so that the same cannot (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers be read there-into. In fact, any sum is convertible into money, as indeed the credit in the instant case, stated to be paid subsequently (through bank). We are conscious that it could be argued that the liability in that case was found as bogus. That, however, would be missing the point. The fact of the matter remains that it was not the purchase per se that was disallowed in that case – which would be u/s. 37(1), but the liability, stated as arising on its account, u/s. 68 of the Act. The ‘purchase on credit’, it may be noted, is the explanation toward the nature of the credit, which is to be satisfactorily explained, so that stating the same as on it’s account does not by itself exclude the transaction from the ambit of section 68, but is only towards explaining its nature and source, being on account of purchase from the stated creditor. Reference to ‘purchases’ by the Special Bench (of the tribunal) in Manoj Aggarwal (supra) while discussing the matter, is only toward citing a case where a credit is considered as explained on account of a purchase, which is admitted and accepted. The said decision in fact thus supports what stands stated by us – that purchase, admitted and accepted from a regular supplier in the ordinary course of business, forms a reasonable explanation of the nature and source of the credit, which is to be satisfactorily proved. That is, the validity and the genuineness of the purchase was cited as a ground as to why section 68 could not be invoked under the circumstances. In fact, the larger bench clearly states (per para 178 of its order, to which our attention was drawn during hearing) of sales being liable to be assessed u/s. 68, emphasizing thus that ‘purchase’ and ‘sale’ are only toward explaining the nature and source of the credit, i.e., to which its origin is ascribed, so that once proven as genuine purchase and sale, section 68 cannot normally be applied. The said decision nowhere detracts from and, in fact, supports what is being stated by us in-as-much as sales, a trade receipt, could under particular circumstances be considered as unexplained credit u/s.
68. This would also explain as to why the Hon’ble Courts have, in the facts and circumstances of the respective cases, as in Nangalia Fabrics (P.) Ltd. (supra); Amitabh Construction (P.) Ltd. (supra); and CIT vs. Ritu Anurag Agarwal (in of 2008/copy on (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers record), also relied upon by the assessee, held in favour of deleting the addition u/s. 68 where referable to purchases on credit. Surely, where there is nothing to doubt the purchases, so that the credit is on account of purchases made from trade suppliers, in the regular course of its business, it may be difficult to impugn the credit solely on the basis that the payment is delayed, the extent of which, as well as the reasons for the same, we may though add, would be very relevant. There is no explanation for the non or, as the case may be, delayed payment, which assumes all the more significance as the assessee had sufficient liquid resources with it. The matter is purely factual, that is to say, whether there are facts and circumstances to infer that the liability, ascribed to purchases, exists. In the present case there is nothing to show that it does. In fact, the ld. AR arguing during the course of hearing that the payments to the creditors as made in the instant case, i.e., over 2-3 years, were made in the normal course of its business by the assessee, was specifically required by the Bench to exhibit it as so, i.e., that the payments to the trade creditors in the industry, or even by the assessee, is made over a period of 2 to 3 years, allowing him an opportunity to do so vide order sheet entry dated 10.5.2016, which is reproduced as under: ‘Mr. Viraj Shah, CA, appears. Case was partly heard. During the hearing, a submission was made that the impugned payments were made in the normal course of business. In the present case, the liabilities stand discharged only by May/June, 2008. To establish the same as representing the normal credit allowed by the assessee, hearing is adjourned to 12.5.16.’ No material, however, was produced on 12.5.2016, the next date of hearing, even as all that the assessee was required to produce, to establish it’s claim, was copies of the account of the trade creditors for the preceding or the succeeding years. In the alternative, it could show that this is the extent of trade credit normally allowed in the industry, or that the purchases under reference were made on such credit terms. In fact, the order sheet entry was pronounced in the open court, on the basis of the information furnished by the ld. counsel and, as the record shows, the ‘liability’ has (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers been fully discharged only by September, 2008 (PB pg.77). This aspect, i.e., the normal trade credit allowed to the assessee, assumes relevance/significance as it directly exhibits the capacity of the creditor to extend credit. It was in fact only on account of the abnormal credit, un-explicable under normal trade conditions, where a trader would endeavour to extend minimum credit, seeking to collect funds – the life line of his business, and deploy them in his trade, that doubt with regard to the genuineness of the transaction came to be entertained by the AO. Blockage of funds, as in the instant case, implies a suspension of business, fatal thereto, as business requires working capital, and cannot sustain itself in its absence or deficiency. The capacity to extend credit, which in the present case is for no insubstantial sums, is completely unproved. Why, the creditors, as the non-furnishing of their PAN despite being called for suggests, are not assessees on the record of the Revenue. There is further nothing to exhibit their financial worth/capacity, so as to be in a position to extend credit. It would be though incorrect to say, we may add, that purchases in the instant case stand accepted by the Revenue or, alternatively, are not doubted by it, and the only infirmity in the assessee’s case is qua the non-proving of the creditworthiness of the creditors by it. There is, firstly, as stated, nothing to evidence the receipt of goods by the assessee. The purchase bills do not bear the correct addresses, making them doubtful. The non-furnishing of the addresses of the supplier firms by the assessee is incomprehensible indeed. This is as the assessee is in the know thereof, obtaining confirmation from the creditors, as well as making payments to them. Besides, it cannot but be aware that the same, being indicative of the business establishment as well as the conduct of the business by them, would set at rest the Revenue’s doubts in the matter. There is no claim of change of address, which would, interestingly, have to be made for all of them, requiring, rather, to exhibit both the former and the current, changed address, and toward which there would be abundant material generated in the normal course of business. The VAT returns of the creditors have not been submitted, (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers which would lend some credence to the transaction. Registration under VAT would not automatically establish the conduct of business, even as it is surprising that business, involving sums in lakhs, for which in fact credit is allowed – even if it is not, though stated to be, in the ‘ordinary’ course - executed by persons who are not even assessees. The suppliers are further not shown to be the regular sources of supply for the assessee inasmuch as it has not dealt with them either in the past or future, i.e., on the basis of the material on record; the only purchases during financial years 2005-06 to 2008-09, for which copies of account are on record, being for the current year. Rather, how could anyone function on a credit period of 2-3 years? There is further nothing to show that they are regular traders. That is, the claim of the impugned purchases being regular purchases, made in the normal course of its business by the assessee, is completely un-established. On the contrary, the facts and circumstances of the case seriously impair the claims of genuineness of the transactions. Who are the partners/proprietors of the concerned creditor-firms. What are their antecedents, which remain completely un-evidenced? The issue, as the foregoing would demonstrate, is principally a matter of fact. Whether on account of purchase or the transaction being bogus or otherwise, the question is if the liability, as stated, exists as on 31.3.2006, the relevant year-end, or not? This would again be a question of fact, to be decided by taking into account the entirety of the facts and circumstances of the case, drawing reasonable inferences there-from – which are again findings of fact, and considering the very nature of things, the test of human probabilities being applicable to the income-tax proceedings. Further, the Revenue authorities, as indeed the appellate authorities, are not supposed to put blinkers (on their eyes) while looking at documents furnished, or else it would leave the door wide open for tax evasion by leading self-serving documents (Durga Prasad More [1971] 82 ITR 540 (SC)), as the purchase bills and confirmatory letters from the creditors in the instant case (as per Revenue). There is nothing to show that the creditors are regular suppliers in the trade, i.e., with establishment, purchasing and (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers selling goods, paying and filing returns under the indirect tax regime, maintaining proper records and accounts, are men of means, etc., by any independent material. Why, there is nothing to evidence even the receipt or the delivery of the goods. We are aware that the Revenue has impugned the liability and not the purchases per se. We have already shown that it is not proved that the purchases have been made from the concerned creditors. At the same time, however, the assessee’s sales (or work undertaken) is not doubted or in dispute. It is, as such, open for it to contend that in view of its’ sales (work undertaken), its’ purchases, even if from the grey market or from a different source, stand indirectly established in-as-much as there could be no sales or work undertaken without the input goods and services, so that the purchases cannot be disallowed on that ground. A view that has found acceptance by the tribunal as well as by the Hon'ble jurisdictional High Court (refer: CIT vs. Nikunj Eximp Enterprises Pvt. Ltd. [2015] 372 ITR 619 (Bom) and Goolamally Hasanjee vs. ITO (in & 3741/Mum/2012 dated 10.6.2014)). The purchase and the liability, i.e., on account of the purchases booked in accounts, is thus not necessarily linked, and the same may not represent that in respect of the actual purchases. If purchases are not shown as from the stated creditors, it cannot explain credit arising there-from. The question of the liability, would therefore survive even where expenditure on purchase is allowed as deduction in computing business profit/income. Why, in a given case, the purchases may be from the concerned supplier, and yet the liability may not exist, as where it stands discharged, either by the assessee or someone acting on its behalf. Surely, this would require material to establish this as a fact, or else it would be the conjecture, yet represents a distinct possibility. It may be noted that this is only a variant of the earlier example where the purchases are from one source (grey market, etc.), while the billing and the booking of the purchase is from another. The actual purchase, even if costing the same, can only be presumed to have been paid, while it may well be that the ‘liability’ to the latter, i.e., in respect of the book purchases, being only an accommodation (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers entry, continues to outstand. This aspect of the matter has been brought forth in Lachhmandas U. Talreja (HUF) (ITA Nos. 7644, 7645, 6581 & 6582/Mum/2013 dated 11.7.2016), in which the issues arising on the booking of the purchases from an ostensible source, while presumably making the purchases from another, i.e., from the stand point of the income-tax law, stand discussed by the tribunal. The issue, therefore, boils down to, if the impugned liability, outstanding as on 31.3.2006, has been reasonably shown to exist, i.e., as representing an existing liability as on that date. We consider it as not. Surely, if the credit stated to represent the trade liability, cannot be said to exist, the same can by no means or stretch of imagination be said to represent a genuine credit, so that section 68 becomes applicable. In a given case, it could be that the liability is proved to exist on one date, as on 31.3.2006 (say), while not on another as 31.3.2007 (say), in which case section 68 would become applicable qua the latter period, i.e., for A.Y. 2007-08. As regards our observation as to the liability qua the impugned (trade) credits being not shown to exist, the same is based, as afore-stated, on a complete absence of any independent material exhibiting the same. The assessee has, at the same time, shown the payments to have been made subsequently, discharging the liability in full per account payee cheques. A subsequent payment, even if by way of a cheque, cannot by itself prove a credit. Why, the receipt itself may be by cheque, in which case it would prove it as a genuine credit, excluding section 68 in the first place! As is well settled, routing the transaction through the banking channel, which is the import of a receipt or payment by cheque, as indeed the furnishing of confirmatory letters, is not sacrosanct and by itself does not establish the credit in terms of section 68 of the Act. The subsequent ‘payments’ by cheque, therefore, cannot be said to prove the assessee’s case. So, however, where the whole premise of the Revenue’s case is that the same does not represent a genuine liability in-as-much as no such liability exists, at the very least, by the year-end, at which (date) it is reported to exist as per the assessee’s accounts, subsequent payment/s cannot be dismissed without being impugned or found infirm (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers by it (Revenue). It could be that payments are deposited in their regular bank accounts by the creditors, adjusting the assessee’s debt outstanding in their accounts, with the funds deployed in business. On the other hand, it may not be so, with the cheque deposits being withdrawn in cash. The matter, in our considered view, would therefore require to travel back to the file of the AO for fresh adjudication. It shall be open to the assessee to place on record all the materials it wishes to rely upon. The AO may cause any verification including by cross-examination, of the assessee’s claims as he may deem fit and proper, as well as to bring on record material in rebuttal, including by way of inspection; calling materials; information, etc. and decide the same in accordance with law, issuing definite findings of fact.
In summation 5. The assessee was found to have made purchases on credit during the relevant previous year (f.y. 2005-06), which were unpaid by the year-end. Significant proportion of the same remaining unpaid even by 31.3.2008, i.e., two years hence, seriously impaired the genuineness of the credit/s. Neither the material adduced in support, nor the enquiries conducted or the incidents found, which are neither denied nor rebutted, further confirm and validate the inference of the same being bogus or mere accommodation entries. The law does not draw any distinction between one credit and another – on which basis principally relief stood allowed by the first appellate authority, so that any credit which is not satisfactorily explained could be deemed as income u/s. 68, which is essentially a rule of evidence, the basis of which is that an amount could be subject to tax on the ground that the assessee is a beneficiary of the said sum, so that it is for it to explain its’ nature and source. The question is of real versus apparent, which in view of sec. 68 casts the burden of proof on the assessee to prove that the apparent is real (refer, inter alia, Sumati Dayal (supra); Sreelekha Banerjee (supra)). This burden on the assessee has been further enumerated by the Hon’ble Courts to include satisfaction with regard to the identity (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers and capacity (of the creditor) and the genuineness (of the credit). The transaction being stated to be a purchase transaction is only an explanation toward its’ nature and source, and would not by itself prove the transaction, as indeed was the case in Sumati Dayal (supra); V.I.S.P. (P) Ltd. (supra) and Manoj Aggarwal (supra), to name some. The question of the genuineness of the ‘purchase’ in fact survives even the deduction of the expenditure in its respect, as where the purchases booked are from an ostensible source – an aspect since settled by the Hon'ble jurisdictional High Court in Nikunj Eximp Enterprises Pvt. Ltd. (supra), effectively de-linking the two. The question, therefore, boils down to if the credit represents an existing liability. The same also meets the assessee’s pleading with reference to the inflated profit ratio – which though is, both, unverified and within the range of possibility, in-as-much as the same is thus rendered of no moment. In the instant case, there is nothing to show the conduct of business by the ‘trade creditors’, with even their addresses remaining elusive, so that their being considered as regular traders, much less being in a position to extend credit, remains completely unproved. The credit was for an indefinite period, extraordinary by any count, well beyond the capacity of even a regular trader. The capacity as well as the genuineness aspect is completely unproved in the present case. The identity, which thus becomes of little consequence, could though be said to be satisfactorily explained in-as-much as the repayment is through account payee cheque and the firms being registered under VAT. Surprisingly, however, it is not known who the proprietors/partners of these firms are. Even so, the subsequent payments by cheque, however, could not be dismissed lightly, as it is prima facie indicative of an existing liability. Whether the bank account in which the cheques are banked are the regular accounts of the parties, etc., duly disclosed and forming part of the regular accounts, etc. are aspect that would require to be looked into. An accommodation entry, on the other hand, would normally be accompanied by withdrawal of cash, which is then recycled by the name lender to the payer. The reliance by the assessee on Uttam Chand Jain (supra) and Kiran Deepak Kukreja (supra), rendered following (A.Y. 2006-07) Dy. CIT vs. Saraswati Developers the former, is misplaced. In both the cases, the question was whether in view of the jewellery sold having been accepted by the Revenue under VDIS, could the genuineness of the sale be doubted without bringing any contrary material on record, and which was answered by the Hon’ble Court in the negative. The matter, as sought to be emphasized, is primary factual, to be decided on the basis of factual findings. The matter requires factual determination, and for which the same is therefore, without any fetters, restored back to the file of the assessing authority. We decide accordingly.