HITENDRA M GHOSH,MUMBAI vs. ITO WD 19(1)(3), MUMBAI

आदेश / O R D E R

2.1. I have considered the rival submissions and perused the material available on record. The facts, in brief, are that it was noticed by the Assessing Officer, from the balance sheet of the assessee, that the assessee has taken unsecured loans of Rs.4,15,000/-. The assessee did not filed any details or confirmation with regard to source of the loans. The assessee was issued notice u/s 142(1) of the Act to furnish the details but the same were not filed. In the absence of proving the genuineness of the credits, and their source, these were treated as unexplained cash credits and added u/s 68 of the Act and assessment was framed u/s.144 of the Act.

2.2. On appeal before the ld. Commissioner of Income Tax (Appeals), the assessee argued that proper opportunity was not provided to the assessee. The ld. Commissioner of Income Tax (Appeals) sought remand report from the Assessing Officer, wherein, remand report was duly filed, which was confronted to the assessee also. Notice u/s 133 (6) of the Act to three parties and broker of the fourth party calling information with respect to unsecured loans given to the assessee. In response, Shri Sawalram Bagaria (HUF) vide letter dated 07/04/2012 furnished the copy of the ledger account, copy of statement, copy of return of income along with balance sheet reflecting loans and advances to the assessee to the tune of Rs.1,15,000/-. The ld. Commissioner of Income Tax (Appeals) accepted the explanation and thus, granted relief to the assessee. The remaining loan from Shri Manish Jain, S.K. Enterprises and broker of M/s S.L. Enterprises, no reply was filed to the notices issued u/s 133(6) of the Act. The assessee also did not explain the source, creditworthiness and genuineness of the transaction. Before the Tribunal also, the assessee did not explain anything. The conditions enshrined in section 68 of the Act were not proved by the assessee. As per section 68 of the Act, onus is upon the assessee. First burden is upon the assessee to satisfactorily explain the credit entry contained in his books of accounts. The burden has to be discharged with positive material (Oceanic Products Exporting Company vs CIT 241 ITR 497 (Kerala.). The legislature had laid down that in the absence of satisfactory explanation, the unexplained cash credit may be charged u/s 68 of the Act. My view is fortified by the ratio laid down in Hon’ble Apex Court in P.Mohankala (2007)(291 ITR 278)(SC). A close reading of section 68 and 69 of the Act makes it clear that in the case of section 68, there should be credit entry in the books of account whereas in the case of 69 there may not be an entry in such books of account. The law is well settled, the onus of proving the source of a sum, found to be received by an assessee, is on him and where it is not satisfactorily explained, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. Where the assessee failed to prove satisfactorily the source and nature of such credit, the Revenue is free to make the addition. The principle laid down in Ganpati Mudaliar (1964) 53 ITR 623/A. Govinda Rajulu Mudaliar (34 ITR 807)(SC) and also CIT vs Durga Prasad More (72 ITR 807)(SC) are the landmark decisions. The ratio laid down therein are that if the explanation of the assessee is unsatisfactory, the amount can be treated as income of the assessee. The ratio laid down in Daulat Ram Rawatmal 87 ITR 349 (SC) further supports the case of the Revenue. In the case of a cash entry, it is necessary for the assessee to prove not only the identity of the creditor but also the capacity of the creditor and genuineness of the transaction. The onus lies on the assessee, under the facts available on record. A harmonious construction of section 106 of the evidence Act and section 68 of the Income Tax Act will be that apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors. In CIT vs Korlay Trading Company Ltd. 232 ITR 820 (Cal.), it was held that mere mention of file number of creditor will not suffice and each entry has to be explained separately by the assessee (CIT vs R.S. Rathaore) 212 ITR 390 (Raj.). The Hon’ble Guwahati High Court in Nemi Chandra Kothari vs CIT (264 ITR 254)(Gau) held that transaction by cheques may not be always sacrosanct. In the present appeal, the assessee neither fulfilled the conditions enshrined u/s 68 of the Act nor produced the creditors from whom claimed loan was taken. Even no confirmation was filed before the Assessing Officer regarding the genuineness of claimed loan.

2.3. The ratio laid down in ACIT vs Rajeev Tandon 294 ITR (AT) 219 (Del.), which was confirmed by Hon’ble High Court , in 294 ITR 488, supports the case of the Revenue. Identical ratio was laid down in CIT vs Anil Kumar 392 ITR 552 (Del.), wherein it was held that mere identification of the donor an movement of gift through banking channel is not sufficient to prove the genuineness of gift. Keeping in view, the totality of facts, attendant circumstances, human probabilities, and in the absence of plausible explanation by the assessee, relevant material, and non-fulfillment of ingredients enshrined in section 68 of the Act, I find no infirmity in conclusion drawn by the ld. Commissioner of Income tax (Appeals), thus, the appeal of the assessee is having no merit, therefore, dismissed.

Finally, the appeal of the assessee is dismissed.

This order was pronounced in the open Court in the presence of ld. representative of both sides at the conclusion of the hearing on 06/01/2016.