“creditworthiness of the creditor”

Cash Credits & Unexplained ItemsSection 68Section 68914 judgments

The decision most relied on for creditworthiness of the creditor is CIT v. Orissa Corporation Pvt. Ltd. (159 ITR 78), cited in 897 judgments on BharatTax.

Leading authorities on creditworthiness of the creditor

CIT v. Orissa Corporation Pvt. Ltd.

159 ITR 78 · 1986 · Supreme Court

897

citing judgments

When an assessee provides the identity and address of a creditor or investor for a cash credit or share capital under Section 68, the burden shifts to the Department to establish lack of genuineness or creditworthiness, requiring it to conduct further inquiries; mere non-compliance by third parties to summons cannot be the sole basis for an adverse inference against the assessee.

CIT v. Lovely Exports (P) Ltd.

216 CTR 195 · 2008 · Supreme Court

854

citing judgments

If an assessee company receives share application money from alleged bogus shareholders and provides their details to the Assessing Officer, no addition can be made under Section 68 in the company's hands; the Department must proceed against the shareholders by reopening their individual assessments.

Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd.

342 ITR 169 · 2012 · High Court

658

citing judgments

To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.

Kale Khan Mohammad Hanif v. CIT

50 ITR 1 · 1963 · Supreme Court

581

citing judgments

The assessee bears the onus of proving the source and nature of any sum of money or receipt found to have been received by them. If the assessee fails to satisfactorily explain the receipt, the Income-tax Officer is entitled to treat it as taxable income.

DCIT v. Rohini Builders

256 ITR 360 · 2002 · High Court

489

citing judgments

An assessee discharges the initial onus under Section 68 for cash credits by providing creditor details like PAN and addresses, proving creditworthiness via banking transactions, and demonstrating genuineness, especially when loans are repaid through cheques.

Roshan Di Hatti v. CIT

107 ITR 938 · 1977 · Supreme Court

477

citing judgments

An assessee bears the onus to prove the identity, creditworthiness, and genuineness of any cash credit or transaction. If the assessee fails to discharge this burden with cogent evidence and explanation, the Assessing Officer is justified in making additions to their income, and no further burden lies on the revenue.

CIT v. Precision Finance Pvt. Ltd.

208 ITR 465 · 1994 · High Court

427

citing judgments

When an assessee seeks to explain a cash credit under Section 68, they must prove the identity of the creditors, their creditworthiness or capacity to advance money, and the genuineness of the transactions. The burden of proof is not discharged merely by filing confirmatory letters or demonstrating banking channel transactions.

CIT v. Divine Leasing & Finance Ltd.

299 ITR 268 · 2008 · High Court

426

citing judgments

The Assessing Officer cannot add share capital or share premium amounts if the assessee provides the identity and creditworthiness of the subscriber and establishes the genuineness of the transaction. The court may admit additional evidence under Rule 46A, such as the PAN identity of the creditor.

Judgments citing creditworthiness of the creditor

Prakash Govindbhai Patel, Ahmedabad vs. The Income Tax Officer, Ward-6(1)(1), Ahmedabad

In the result, the assessee appeal of the assessee is partly allowed for statistical purposes

ITA 162/AHD/2023[2011-12]Status: DisposedITAT Ahmedabad23 Sept 2024AY 2011-12

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar

For Appellant: NoneFor Respondent: Shri R.N. Dsouza, CIT D.R. & Shri Rignesh

Section 143(1)Section 144Section 148Section 69A

Pune) (TM) held that it is part of the duty of the assessee to furnish evidence regarding the creditworthiness of the creditors. 13. Accordingly, looking into the instant facts where the assessee has made huge cash deposits in his bank account which are not commensurate with the income declared

Prakash Govindbhai Patel, Ahmedabad vs. The Income Tax Officer, Ward-6(1)(1), Ahmedabad

In the result, the assessee appeal of the assessee is partly allowed for statistical purposes

ITA 161/AHD/2023[2010-11]Status: DisposedITAT Ahmedabad23 Sept 2024AY 2010-11

Bench: Shri Siddhartha Nautiyal & Shri Makarand V. Mahadeokar

For Appellant: NoneFor Respondent: Shri R.N. Dsouza, CIT D.R. & Shri Rignesh

Section 143(1)Section 144Section 148Section 69A

Silverlake Traders Pvt. Ltd., Kolkata vs. ITO, Ward-5(1), Kolkata

In the result, the appeal filed by the assessee is partly allowed

ITA 379/KOL/2024[2009-10]Status: DisposedITAT Kolkata23 Sept 2024AY 2009-10

Bench: Sri Rajpal Yadav, Vice- & Sri Sanjay Awasthi

Section 14ASection 263Section 68

satisfaction of the Assessing Officer, so as to discharge the primary onus. ii. The Assessing Officer is duty bound to investigate the creditworthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name- lenders

ACIT, Cir-10(2), Kolkata vs. M/S Skyscraper Projects Pvt. Ltd., Kolkata

In the result, the appeal of the revenue is partly allowed for statistical purposes

ITA 2542/KOL/2019[2012-13]Status: DisposedITAT Kolkata23 Sept 2024AY 2012-13

Bench: Dr. Manish Borad, Hon’Ble & Shrisonjoy Sarma, Hon’Ble Judicialmember Assessment Year: 2012-13 Acit, Circle-10(2), M/S. Skyscraper Projects Kolkata, Pvt. Ltd. Aayakar Bhawan, 3R 53B, Townshend Road, Floor, Vs Kolkata-700025. P-7, Chowringhee {Pan: Aajcs 1656 G] Square, West Bengal – 700069 (Appellant) (Respondent) Present For: Assessee By : Shri Anuj Musaddi, Ar Revenue By : Shri P.P. Barman, Additional Cit, Sr. Dr Date Of Hearing : 08.07.2024 Date Of Pronouncement: 23.09.2024 O R D E R Per Sonjoy Sarma, Jm: This Appeal Of The Revenue For The Assessment Year 2012-13 Is Directed Against The Order Dated 19.08.2019 Passed By The Ld. Commissioner Of Income-Tax (Appeals)-4Kolkata, [Hereinafter Referred To As ‘The Ld. Cit(A)’].

For Appellant: Shri Anuj Musaddi, ARFor Respondent: Shri P.P. Barman, Additional CIT, Sr. DR

Section 142(1)Section 143(2)Section 43B

deletion of Rs. 3,18,44,538/- on account of unexplained cash credit due to the lack of identity, genuineness of transaction and creditworthiness of the creditors. The ld. CIT(A) while deleting the addition of Rs. 3,18,44,538/- without looking into the fact that the creditors income ... factual findings of the case, which is as under:- As directed, during remand proceeding, to verify the identity, genuineness of transaction and creditworthiness of the creditors, the assessee was asked to submit the details of long term and short term borrowings as appeared in the balance sheet for the year

Ashok Kumar Verma, Chomehla, Jhalawar vs. ACIT, Kota

In the result, the appeal filed by the assessee is allowed

ITA 529/JPR/2024[2017-18]Status: DisposedITAT Jaipur17 Sept 2024AY 2017-18

Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)

For Appellant: Shri Nikhelesh Kataria (C.A.)For Respondent: Shri Anoop Singh (Addl.CIT)

Section 129Section 142(1)Section 143(2)Section 143(3)Section 69A

that the cash deposited was out of services nor able to produce any documentary evidence in support of his submission. Thus, identity and creditworthiness of the creditors and the genuineness of the transaction were not found to be established to the satisfaction of the AO as evident from the assessment

Ebro India Pvt.Ltd., Delhi vs. ACIT Circle-7(1), Delhi

In the result, the ground no 4 raised by the assessee is allowed

ITA 1291/DEL/2022[2018-19]Status: HeardITAT Delhi09 Sept 2024AY 2018-19

Bench: SHRI S.RIFAUR RAHMAN (Accountant Member), SHRI YOGESH KUMAR U.S. (Accountant Member)

For Appellant: Shri Rohit Jain, AdvocateFor Respondent: Shri Rajesh Kumar, CIT DR

Section 143(3)Section 144BSection 144CSection 68

decidendi emanating from the aforesaid decisions may be summarized as under: (i) The assessee has to provide documents to prove the identity and creditworthiness of the creditor as well as genuineness of the transaction; 25 The identity stands established if any information regarding PAN or other identity/ document is provided ... assessee amounts to discharge of primary burden cast on the assessee in terms of s. 68 of the IT Act for identity and creditworthiness of the creditors and genuineness of transaction. ……….. 11.5 We find merit in the contentions of learned counsel and reliance on the decisions of the Tribunal

Income Tax Officer, Ward-1, Malegaon vs. Saroj Jain, Malegaon

In the result, the appeal filed by the Revenue stands partly allowed for statistical purposes

ITA 455/PUN/2024[2018-19]Status: DisposedITAT Pune04 Sept 2024AY 2018-19

Bench: Shri S.S. Godara & Shri Inturi Rama Rao

For Appellant: Shri Pramod S. ShingteFor Respondent: Shri Ajay Kumar Keshari

Section 143(3)Section 250Section 68

from the AO deleted the addition by holding that the respondent-assessee had discharged the onus lying upon him by providing the identity, creditworthiness of the creditors. 4. Being aggrieved, the Revenue is in appeal before the Tribunal in the present appeal. 5. The ld. CIT-DR for the Revenue ... account of unsecured loans and interest thereon as even during the assessment proceedings, the respondent-assessee had failed to prove the identity, creditworthiness of the creditors and genuineness of the transactions. It is further contended that mere filing of the confirmation letters does not prove the genuineness of the transactions

Dhiren Raghavji Bheda, Mumbai vs. DCIT - 4(1)(1), Mumbai

In the result, the appeal filed by the assessee is treated as allowed

ITA 2585/MUM/2024[2015-16]Status: DisposedITAT Mumbai03 Sept 2024AY 2015-16

Bench: SHRI B.R. BASKARAN (Accountant Member), SHRI PAVAN KUMAR GADALE ( (Judicial Member)

Section 68

from Shri Atul Mawani and Rs.1.00 crore from Shri Vijay Chheda. Since the assessee did not furnish documents to prove the identity and creditworthiness of the creditors and the genuineness of the transactions, the AO assessed the cash credit loan of Rs.1,40,00,000/- as income of the assessee

ITO, Ward- 1)1), Nagpur vs. Axykno Enterprises Pvt. Ltd., Nagpur

In the result, appeal filed by the Revenue is dismissed

ITA 47/NAG/2019[2012-13]Status: DisposedITAT Nagpur02 Sept 2024AY 2012-13

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri Kapil Hirani a/wFor Respondent: Shri Kailash C. Kanojiya

Section 132(4)Section 143(3)Section 263Section 68

assessee has to discharge initial burden by filing necessary documents to prove the identity of the creditors, the creditworthiness of the creditors and genuineness of transaction. Once the assessee has discharged initial burden by filing necessary evidences, then, the burden shifts on the Assessing Officer to prove that the impugned ... assessee has to discharge initial burden by filing necessary documents to prove the identity of the creditors, the creditworthiness of the creditors and genuineness of transaction. Once the assessee has discharged initial burden by filing necessary evidences, then, the burden shifts on the Assessing Officer to prove that the impugned

Prateek Soni, Indore vs. Income Tax Officer, NFAC New Delhi

Appeal is allowed

ITA 476/IND/2023[2014-2015]Status: DisposedITAT Indore30 Aug 2024AY 2014-2015

Bench: Shri Vijay Pal Rao & Shri B.M. Biyaniassessment Year: 2014-15 Shri Prateek Soni, Income-Tax Officer, 49,Krishna Bagh Colony, Nfac, बनाम/ Indore New Delhi Vs. (Assessee/Appellant) (Revenue/Respondent) Pan: Bksps0203G Assessee By Shri Pankaj Shah & Shri Soumya Bumb, Ars Revenue By Shri K.Bala Murali Krishna, Sr. Dr Date Of Hearing 22.08.2024 Date Of Pronouncement 30.08.2024

Section 143(1)Section 143(2)Section 147Section 148Section 68

facts of the issue and the documentary evidences filed by the assessee to prove three ingredients of section 68 i.e. the identity and creditworthiness of the creditor “S” and genuineness of transaction, are identical in AY 2015-16 already decided by ITAT in assessee’s favour

Nyalkaran Builders LLP, Vadodara vs. The Income Tax Officer, Ward-3(3)(5), Vadodara

In the result, the appeal filed by the assessee is partly allowed, as indicated above

ITA 126/AHD/2024[2018-19]Status: DisposedITAT Ahmedabad22 Aug 2024AY 2018-19

Bench: Mrs. Annapurna Gupta & Shri T.R. Senthil Kumarआयकर अपील सं / Ita No. 126/Ahd/2024 िनधा"रण वष"/Assessment Year: 2018-19 बनाम Nyalkaran Builders Llp, Income Tax Officer, Vs. A/101, Premdarshan, Ward 3(3)(5), B/H. Abme School Sama Ahmedabad Savli Road, Vadodara-390008 Pan : Aamfn 5952 A अपीलाथ"/ (Appellant) "" यथ"/ (Respondent) िनधा"रती की ओर से / Assessee By : Shri Chetan Agarwal, Ar ""थ" की ओर से / Revenue By : Smt. Mamta Singh, Sr Dr सुनवाई की तारीख/Date Of Hearing : 27.05.2024 घोषणा की तारीख /Date Of Pronouncement: 22.08.2024 आदेश/O R D E R Per T.R. Senthil Kumar: This Is An Appeal Filed By The Assessee Against The Order Dated 09.01.2024 Passed By The Learned Commissioner Of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi (Hereinafter Referred To As The “Cit(A)”), Arising Out Of The Assessment Order Passed Under Section 143(3) Of The Income-Tax Act, 1961 (Hereinafter Referred To As The “The Act” In Short), Relating To The Assessment Year (Ay) 2018-19. 2. The Brief Facts Of The Case Are That The Assessee Is A Limited Liability Partnership Firm (Llp) Engaged In The Business Of Construction & Development Activities. For The Assessment Year 2018-19, The Assessee Filed Its Return Of Income On 20.10.2018 Declaring Total Income Of Rs.96,54,550/-. The Return Was Taken-Up For Scrutiny Assessment Since It Was Found Large Increase In Unsecured

For Appellant: Shri Chetan Agarwal, ARFor Respondent: Smt. Mamta Singh, Sr DR

Section 143(3)Section 68

assessee. However, the ld. CIT(A), without making any comments on the repayment of loan by the assessee, but merely relying upon the creditworthiness of the creditors, confirmed the addition made by the Assessing Officer. 5 Nyalkaran Builders LLP Vs. ITO AY : 2018-19 9. In our considered view

Elegant Dealmark Pvt. Ltd., Kolkata vs. ITO, Ward-5(3), Kolkata

In the result, the appeal filed by the assessee is partly allowed, with Ground No

ITA 51/KOL/2024[2012-13]Status: DisposedITAT Kolkata21 Aug 2024AY 2012-13

Bench: Sri Rajpal Yadav, Vice- & Sri Sanjay Awasthi

Section 131Section 14ASection 68

Grafton Merchant Pvt. Ltd., Kolkata vs. DCIT, Circle-1(1)/Kolkata

ITA 230/KOL/2023[2010-11]Status: DisposedITAT Kolkata21 Aug 2024AY 2010-11

Bench: Sri Rajpal Yadav, Vice- & Sri Sanjay Awasthi

Section 131Section 250Section 263Section 68

I.T.A. No.: 230/KOL/2023 Assessment Year: 2010-11 Grafton Merchant Pvt. Ltd. ii. The Assessing Officer is duty bound to investigate the creditworthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name- lenders

S P Industries, Mumbai vs. Asstt. Commissioner of Income Tax -33(3), Mumbai

In the result, the appeal filed by the assessee is allowed

ITA 3221/MUM/2024[2014-15]Status: DisposedITAT Mumbai21 Aug 2024AY 2014-15

Bench: Ms. Kavitha Rajagopal, Jm & Shri Girish Agrawal, Am S P Industries Asst. Cit-33(3) B/601, Harmony Building, 4211, Kautilya Bhawan, Bandra (E), Vs. Opp. Damodar Wadi Ca Road, Mumbai-400 051 Kandiali (E), Mumbai-400 101 Pan/Gir No. Abbfs 50504 K (Assessee) : (Respondent) Assessee By : Shri Shyam Saboo Respondent By : Shri Shambhu Yadav Date Of Hearing : 19.08.2024 Date Of Pronouncement : 21.08.2024

For Appellant: Shri Shyam SabooFor Respondent: Shri Shambhu Yadav

Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 250Section 68

same to be unexplained credits u/s. 68 of the Act for the reason that the assessee has failed to prove the identity and creditworthiness of the creditors and the genuineness of the transactions. The ld. A.O. passed the assessment order on 27.12.2016 u/s. 143(3) of the Act, determining ... said creditors did not have sufficient reserves and surplus. The ld. DR also stated that the assessee has failed to prove the identity, creditworthiness of the creditors and the genuineness of the transaction as warranted u/s. 68 of the Act. The ld. DR relied on the orders of the lower

Champion Builder Pvt. Ltd., Kolkata vs. ITO, Ward-1(3), Gurgaon

In the result, both the appeals of the assessee are partly

ITA 462/DEL/2024[2015-16]Status: DisposedITAT Delhi21 Aug 2024AY 2015-16

Bench: Shri Challa Nagendra Prasadआ.अ.सं/.I.T.A Nos.462 & 463/Del/2024 िनधा"रणवष"/Assessment Years: 2015-16 & 2016-17

Section 144BSection 147Section 148Section 68

Paper Book. Therefore, the Ld. Counsel for the assessee submits that the assessee has filed all the information proving the identity, genuineness and creditworthiness of the creditor and therefore there is no justification in treating the unsecured loan as an unexplained credit u/s 68 of the Act based

Goldendunes Homes LLP, Jaipur vs. ACIT, Central Circle-2, Jaipur

ITA 603/JPR/2024[2017-18]Status: DisposedITAT Jaipur20 Aug 2024AY 2017-18

Bench: SHRI SANDEEP GOSAIN (Judicial Member)

For Appellant: Shri Rohan Sogani, CAFor Respondent: Mrs. Monisha Choudhary, Addl. CIT-DR

Section 115BSection 143(3)Section 68Section 69C

were through cheques which is verifiable from the bank statements produced in remand proceedings. Once the assessee has been able to prove the creditworthiness of the creditors who were having sufficient source to advance money in form of loan to the assessee then the AO 5 M/S. GOLDENDUNES HOME

Modest and Parsons International Private Limited, Mumbai Maharashtra vs. Deputy Commissioner of Income Tax 2(2)(2) Mumbai, Mumbai Maharashtra

In the result, the appeal by the assessee for the assessment year 2018-19

ITA 1510/MUM/2024[2015-16]Status: DisposedITAT Mumbai19 Aug 2024AY 2015-16

Bench: Shri Om Prakash Kant & Shri Sandeep Singh Karhail

For Appellant: Shri Anant PaiFor Respondent: Shri Ankush Kapoor, CITDR

Section 142(1)Section 143(2)Section 250Section 68

response was filed on the portal. Accordingly in the absence of the details, the AO concluded that the identity, genuineness and creditworthiness of the creditors cannot be established, and therefore, made an addition amounting to Rs. 28,77,31,063 on account of sundry creditors for goods and services

Mayur Nirmalkumar Jain, Ahmedabad vs. ITO, Ward-6(1)(3), Ahmedabad

In the result, appeal of the assessee is allowed for statistical purposes

ITA 676/AHD/2019[2014-15]Status: DisposedITAT Ahmedabad14 Aug 2024AY 2014-15

Bench: Shri Ramit Kochar & Shri Siddhartha Nautiyal

For Appellant: Shri Dhrunal Bhatt, A.RFor Respondent: Shri Ashok Kumar Suthar, Sr. DR

Section 133(6)Section 143(1)Section 143(2)Section 143(3)Section 68

Sunilbhai K. Jain Rs. 6,43,213/- As detailed above, no confirmations and other supporting documents to prove the identity and creditworthiness of the creditors and genuineness of the transactions were filed before the AO. Even during appeal proceedings no confirmations were filed. The appellant filed some additional evidences ... appellant does not apply as the facts are different. In view of discussion above, the appellant has failed to establish the identity and creditworthiness of the creditors and genuineness of the transactions in respect of above creditors. Accordingly, addition of Rs. 21,38,214/- is upheld. This ground of appeal

Deputy Commissioner of Income Tax, Aurangabad vs. Marsh Fincom Pvt. Ltd., Mumbai

In the result, the appeal filed by the Revenue stands dismissed

ITA 1342/PUN/2023[2010-11]Status: DisposedITAT Pune13 Aug 2024AY 2010-11

Bench: Shri R. K. Panda & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.1342/Pun/2023 िनधा"रण वष" / Assessment Year: 2010-11 Dcit, Aurangabad. Vs. Marsh Fincom Pvt. Ltd., 9Th Floor, Gold Crest, Ns Road No.10, Jvpd Scheme, Vile Parle (W), Mumbai- 400049. Pan : Aabck0760B Appellant Respondent Assessee By : Shri Deepak Shah Revenue By : Shri Sourabh Nayak Date Of Hearing : 26.06.2024 Date Of Pronouncement : 13.08.2024 आदेश / Order Per Vinay Bhamore, Jm: This Appeal Filed By The Revenue Is Directed Against The Order Dated 07.09.2023 Passed By Ld Cit(A)-12, Pune For The Assessment Year 2010-11. 2. The Revenue Has Raised The Following Grounds Of Appeal :- “1. Whether On The Facts & In The Circumstances Of The Case & In Law, The Ld. Cit(A) Has Erred In Law & In Facts By Quashing Proceedings U/S. 153A In Respect Of Assessee Where The Assessee’S Case Was Covered Under Section 132 Of The Act Dated 20.08.2014. 2. Whether On The Facts & In The Circumstances Of The Case & In Law, The Ld. Cit(A) Has Erred In Holding That The Ao Has Made

For Appellant: Shri Deepak ShahFor Respondent: Shri Sourabh Nayak

Section 132Section 132(4)Section 143(3)Section 153ASection 68

satisfaction of the Assessing Officer, so as to discharge the primary onus. 14 ii. The Assessing Officer is duty bound to investigate the creditworthiness of the creditor/ subscriber, verify the identity of the subscribers, and ascertain whether the transaction is genuine, or these are bogus entries of name-lenders

Winsher Vinimay Pvt. Ltd., Kolkata vs. ITO, Ward - 9(2), Kolkata

ITA 1393/KOL/2018[2012-13]Status: DisposedITAT Kolkata06 Aug 2024AY 2012-13

Bench: Shri Rajpal Yadav & Shri Rakesh Mishraassessment Year: 2012-13

For Appellant: N o n eFor Respondent: Shri Bibekananda Madhu, JCIT, Sr. DR

Section 131Section 143(2)Section 143(3)Section 250Section 68

transaction. If the identity of the creditors had not been established, the question of establishment of genuineness of the transaction or the creditworthiness of the creditors did not arise. It is not for the ITO to find out by making investigation from the bank accounts unless the assessee proved ... credited, in the books of the assessee and the assessee could not prove the genuineness of these credits as well as the creditworthiness of the creditor. Hence, in our informed view the addition has rightly been made by the AO. Accordingly, the appeal of the appellant is hereby dismissed