M/s. Blessing Construction, Surat v. The Income tax Officer,Ward-3(2),, Surat

ITA 1487/AHD/2009 | 2005-2006
Pronouncement Date: 29-12-2011 | Result: Dismissed

Appeal Details

RSA Number 148720514 RSA 2009
Assessee PAN AAGBF1228B
Bench Ahmedabad
Appeal Number ITA 1487/AHD/2009
Duration Of Justice 2 year(s) 7 month(s) 18 day(s)
Appellant M/s. Blessing Construction, Surat
Respondent The Income tax Officer,Ward-3(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 29-12-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 29-12-2011
Date Of Final Hearing 27-12-2011
Next Hearing Date 27-12-2011
Assessment Year 2005-2006
Appeal Filed On 11-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI JM AND SHRI A. MOHAN A LANKAMONY AM) ITA NO.1487/AHD/2009 A.Y .: 2005-06 M/S. BLESSING CONSTRUCTION 10 ISHITA ROW HOUSE ADAJAN ROAD SURAT 395 009 PA NO. AAGBF 1228 B VS THE INCOME TAX OFFICER WARD 3 (2) AAYAKAR BHAVAN MAJURA GATE SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ANIL K. SHAH RESPONDENT BY SHRI ANURAG SHARMA SR. DR DATE OF HEARING: 27-12-2011 DATE OF PRONOUNCEMENT: 29-12-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II SURAT DATED 17 TH FEBRUARY 2009 FOR ASSESSMENT YEAR 2005-06 CHALLEN GING THE ADDITION OF RS.10 00 000/- ON ACCOUNT OF UNEXPLAINE D CASH CREDITS/LOANS RECEIVED FROM 7 DEPOSITORS U/S 68 OF THE IT ACT. 2. FACTS OF THE CASE ARE THAT IN THE COURSE OF ASSE SSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAD S HOWN UNSECURED LOANS TOTALING RS.13 00 000/- FROM EIGHT PERSONS. THE AO EXAMINED THE BANK PASSBOOKS OF THE ALLEGED DEPOSITO RS AND ALSO RECORDED THE STATEMENT OF SOME OF THEM. ACCORDING T O HIM CASH WAS ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 2 DEPOSITED IN THE ACCOUNTS OF ALL THE DEPOSITORS/LEN DERS PRIOR TO GIVING THE SAID LOANS TO THE ASSESSEE. NO EVIDENCE HOWEVER WAS FURNISHED REGARDING THE SOURCE OF SUCH CASH. THERE WAS NO SUC H TRANSACTION EITHER BEFORE OR AFTER THE LOAN TRANSACTIONS WITH T HE ASSESSEE. THE AO THEREFORE ISSUED SHOW CAUSE NOTICE TO THE ASSE SSEE IN RESPONSE TO WHICH IT WAS SUBMITTED THAT CONFIRMATIO N LETTERS FROM THE DEPOSITORS THEIR PERMANENT ACCOUNT NUMBERS COPIES OF RETURNS OF INCOME BALANCE SHEETS AND BANK STATEMENTS HAD BEEN FURNISHED. STATEMENTS OF SOME OF THE DEPOSITORS HAD BEEN RECOR DED. IT WAS THUS ARGUED THAT THE GENUINENESS OF THE LOANS WAS FULLY ESTABLISHED. THE AO REJECTED THE ASSESSEES SUBMISSION AND RELYING O N THE CASES OF BOMIN PVT. LTD. VS CIT 160 ITR 477 (GUJ.) AND M/S. PRECISION FINANCE PVT. LTD. 208 ITR 465 (CAL.) GAVE THE FIND ING THAT THE SAID LOANS WERE NOT SATISFACTORILY EXPLAINED IN TERMS OF SEC. 68 OF THE IT ACT AND ADDED THE SUM OF RS.13 00 000/- TO THE ASSE SSEES TOTAL INCOME UNDER THE SAID SECTION. 3. IN THE WRITTEN SUBMISSION IT WAS CONTENDED BEFO RE THE LEARNED CIT(A) THAT THE ASSESSEE WHO IS ENGAGED IN CIVIL CO NSTRUCTION HAD SUBMITTED ALL THE REQUISITE DOCUMENTARY EVIDENCES B EFORE THE AO. FOUR OF THE DEPOSITORS WERE ALSO PRESENTED BEFORE T HE LEARNED AO. THESE WERE SHRI HASMUKH R. MEHTA JIMIT M. MEHT A M/S. NIRAV GEMS AND NIRAV M. MEHTA WHOSE STATEMENT S WERE RECORDED BY THE AO. THEY HAD CONFIRMED THE LOAN TRA NSACTIONS WITH THE ASSESSEE. BECAUSE OF THE PAUCITY OF TIME THE R EMAINING FOUR DEPOSITORS WERE NOT EXAMINED. IT WAS FURTHER SUBMIT TED THAT THE ASSESSEE HAS REPAID ALL THE LOANS IN THE SUBSEQUENT YEAR. THE AO ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 3 MADE THE ADDITION SIMPLY ON THE GROUND THAT CASH HA D BEEN DEPOSITED IN THE BANK ACCOUNT OF THE DEPOSITORS BEF ORE ISSUING THE CHEQUES TO THE ASSESSEE. IT WAS THE CONTENTION OF T HE LEARNED COUNSEL FOR THE ASSESSEE THAT ALL THE DEPOSITORS HA D SUFFICIENT FUNDS IN THEIR ACCOUNTS BEFORE ISSUING THE CHEQUES TO THE ASSESSEE. IN SUPPORT OF THE CONTENTION OF THE LEARNED COUNSEL FO R THE ASSESSEE HE HAD FURNISHED ALL THE DOCUMENTS THAT THAT HAD BEEN PRESENTED TO THE AO. 4. THE LEARNED CIT(A) CONSIDERING THE EXPLANATION O F THE ASSESSEE EVIDENCES ON RECORD AND FINDING OF THE AO CONFIRMED THE ADDITION OF RS.10 00 000/- OUT OF TOTAL ADDITION OF RS.13 00 000/- U/S 68 OF THE IT ACT. HIS FINDINGS IN PARA 5 6 AND 6. 1 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER: 5. I HAVE CAREFULLY CONSIDERED BOTH THE POSITIONS. I HAVE ALSO EXAMINED THE RELEVANT DOCUMENTARY EVIDENCES FURNISH ED BY THE AR INCLUDING ACCOUNT CONFIRMATIONS COPIES OF INCOM E-TAX RETURNS OF THE DEPOSITORS THEIR BALANCE-SHEETS P & L ACCOUNTS AND CAPITAL ACCOUNTS AS ALSO THEIR BANK STATEMENTS. THE FIRST DEPOSITOR WAS SHRI HASMUKH R. MEHTA AGAINST WHOM THE LOAN OF RS. 3 LAKHS WAS SHOWN. HIS BANK STATEMENT WITH H DFC BANK SHOWS AMONGST OTHER TRANSACTIONS A DEPOSIT OF RS. 3 LAKHS ON 29.6.2006 BY CHEQUES. THE LOAN WAS GIVEN TO THE ASS ESSEE BY CHEQUE ON 4.7.2006. IT CANNOT THEREFORE BE SAID THA T UNEXPLAINED CASH WAS DEPOSITED IN THE ACCOUNT OF SH RI HASMUKH R. MEHTA BEFORE GIVING THE SAID LOAN TO THE ASSESSEE. THE NEXT DEPOSITOR WAS SHRI JIMIT M. MEHTA HIS BANK ACCOUNT SHOWED A DEPOSIT OF RS 1 50 000 IN CASH ON 24.3.200 5. ON THE VERY NEXT DAY HE ISSUED A CHEQUES OF RS.1 50 000 T O THE ASSESSEE PRIOR TO THE SAID DEPOSIT HIS BALANCE WA S ONLY RS.2 056.20 WITH NO MAJOR CREDITS. THE EXTRACT OF H IS CASH BOOK SHOWS NO CASH BALANCE PRIOR TO DEPOSITING SUCH CASH INTO HIS ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 4 BANK ACCOUNT. NEXT WAS SMT. KOKILABEN M. MEHTA; A LOAN OF RS.1 50 000 WAS SHOWED IN HER NAME. ON 6.11.2004 TH E SAID SUM WAS DEPOSITED IN CASH IN HER BANK ACCOUNT WITH BANK OF BARODA. ON 8.11.20.04 THE CHEQUE WAS ISSUED TO THE ASSESSEE. THE BALANCE IN HER ACCOUNT PRIOR TO THIS TRANSACTIO N WAS ONLY RS.1 448.95. HER CASH BOOK SHOWS CAPITAL BUILDUP FR OM STITCHING AND EMBROIDERY INCOME EVERY MONTH. THE RE TURN OF INCOME FILED BY HER FOR THE A.Y.2005-06 DECLARED AN INCOME OF ONLY RS.51 904. IT IS A CLEAR CASE OF ACCOMMODATION ENTRY BEING PROVIDED TO THE ASSESSEE. SHE SIMPLY DID N OT HAVE THE REQUISITE CREDITWORTHINESS TO GIVE THE LOAN 6. COMING TO M/S. NIRAV GEMS WHO CLAIMED TO HAVE GIVEN A LOAN OF RS.1 50 000 THE SITUATION WAS EXACTLY TH E SAME CASH OF RS.1 50 000 WAS DEPOSITED ON. 8.11.2004 AND THE LOAN WAS GIVEN ON THE VERY NEXT DAY. BEFORE THE DEPOSIT THE BALANCE IN ITS ACCOUNT WITH DENA BANK RAMPURA BRANCH WAS ONLY RS.4 008.87. HE ALSO BUILD UP HIS CAPITAL BY SHOWIN G DIAMOND BROKERAGE INCOME OF APPROXIMATELY RS.3 000 PER MONT H. ONCE AGAIN THIS IS ANOTHER CASE OF ACCOMMODATION ENTRY BEING PROVIDED TO THE ASSESSEE. SHRI NIRAV M. MEHTA WHO CLAIMED TO HAVE GIVEN A LOAN OF RS.1 LAKH TO THE ASSESSEE CASH WAS DEPOSITED ON 6.11.2004 IN HIS BANK ACCOUNT WITH DEN A BANK AND THE LOAN WAS GIVEN TO THE ASSESSEE ON 9.11.2004 .HIS ACCOUNT SHOWS SIMILAR TRANSACTIONS OF ROTATING MONE Y AT REGULAR INTERVALS. THE AVERAGE BALANCE PRIOR TO THE SAID DE POSIT WAS APPROXIMATELY RS.2 000 - RS.3 000 SHRI SEVANTILAL A. MEHTA HAD A BALANCE OF RS.5 557 BEFORE DEPOSITING CASH OF RS.1 LAKH ON 15.1.2005 AND GIVING THE SAID SUM AS A LOAN TO T HE ASSESSEE ON 18.1.2005. SMT. SUSHILABEN R. SANGHVI HAD A BALANCE OF RS.550.05 BEFORE CASH OF RS1 50 000 WAS DEPOSITED IN HER ACCOUNT AND A CHEQUE OF THE SAID SUM ISSUED TO THE ASSESSEE ON 18 1 2005. SMT TARABEN A. MEHTA HAD A BALANCE OF RS.2 557 35 AS ON 9.11.2004. ON 24 1.2005 I.E. MORE THAN TWO MONTHS LATER WITH NO TRANSACTION IN BETWEEN S UMS OF RS.3 000 AND FOUR INSTALLMENTS OF RS.49 000 EACH WE RE DEPOSITED IN CASH IN HER BANK ACCOUNT ON 24.1.2005 CREATING THE NECESSARY FUND FOR GIVING THE LOAN OF RS.2 LAKH S THE VERY NEXT DAY I.E. 25.1.2005 ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 5 6.1 THE AFORESAID FACTS CLEARLY SHOW THAT THE AVAI LABILITY OF FUNDS IN THE HANDS OF THE DEPOSITORS WAS MANIPULATE D BY DEPOSITING CASH IN THEIR BANK ACCOUNTS EXCEPT FOR S HRI HASMUKH R. MEHTA. EVEN THOUGH FOUR OF THE DEPOSITOR S MAY HAVE APPEARED BEFORE THE AO AND CONFIRMED THE LOANS EVEN THEN THE LOANS DID NOT STAND SATISFACTORILY EXPLAIN ED ESPECIALLY IN RELATION TO THE CREDITWORTHINESS OF THE ALLEGED DEPOSITORS. THE IDENTITIES OF FOUR DEPOSITORS WERE ESTABLISHED ONLY BY THEIR PERSONAL APPEARANCE. HOWEVER THE RETURNS OF INCOME CANNOT BE TREATED AS A CONCLUSIVE EVIDENCE OF GENUINE IDENTIT Y OR EVEN THE BANK ACCOUNTS ESPECIALLY WHEN IT IS CONSIDERED THA T A LARGE NUMBER OF BOGUS RETURNS AND BANK ACCOUNTS ARE OPENE D FOR PROVIDING SUCH ENTRIES THE PRACTICE OF WHICH IN SU RAT IS ALMOST AN INDUSTRY APART FROM THE TEXTILE AND DIAMOND IN DUSTRIES. ON THE FACE OF IT THE TRANSACTIONS WERE MADE LOOK ABSOLUTELY GENUINE AS THE LOANS WERE TAKEN BY ACCOUNT-PAYEE CH EQUES THE DEPOSITORS HAD FILED THEIR RETURNS OF INCOME H AD PREPARED THEIR ACCOUNTS HAD THEIR OWN BANK ACCOUNTS AND FOU R OF THEM HAD EVEN APPEARED BEFORE THE AO. UNFORTUNATELY A D EEP SCRUTINY INTO THE PILE OF DOCUMENTS FURNISHED BY TH E AR AND THE ASSESSEE BOTH IN ASST. PROCEEDINGS AND IN APPELLAT E PROCEEDINGS CLEARLY REVEAL THAT THE MANIPULATIONS THE MANNER IN WHICH CASH WAS DEPOSITED IN THE BANK ACCOUNTS OF SEVEN OF THE ALLEGED DEPOSITORS IMMEDIATELY PRIOR TO ISSUING THE CHEQUES TO THE ASSESSEE. IT MAY BE ALRIGHT TO CONTEND BY RE LYING ON COURT DECISIONS THAT THE AO WAS NOT COMPETENT TO EN QUIRE INTO THE SOURCE OF SOURCE OF THE LOANS YET THE COURTS H AVE ALSO HELD THAT THE CREDITWORTHINESS OF THE DEPOSITORS/LENDERS HAVE TO BE NECESSARILY ESTABLISHED. THOUGH THIS IS CLEARLY A C ONTRADICTORY AND DICHOTOMOUS SITUATION YET THE NECESSITY OF ENQ UIRIES REGARDING THE CREDITWORTHINESS OF THE ALLEGED DEPOS ITORS CANNOT SIMPLY BE WISHED AWAY. IN THE CASE OF THE ASSESSEE SUCH ENQUIRIES HAVE CLEARLY REVEALED THAT APART FROM SH RI HASMUKH R. MEHTA THE REMAINING SEVEN ALLEGED DEPOSITORS SI MPLY DID NOT HAVE THE FUNDS AVAILABLE TO GIVE THE LOANS THE ASSESSEE. THE FUNDS WERE MADE AVAILABLE BY SURREPTITIOUS MEAN S WHICH WAS NOT EXPLAINABLE. GIVEN SUCH FACTS AND CIRCUMSTA NCES OF THE CASE I HOLD THAT OF THE UNEXPLAINED LOANS OF RS.13 LAKHS ONLY THE LOANS OF RS.3 LAKHS IN THE NAME OF SHRI HASMUKH R. MEHTA STOOD SATISFACTORILY EXPLAINED. THE REMAINING LOANS OF RS.10 ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 6 LACS REPRESENTED ABSOLUTELY BOGUS ACCOMMODATION ENT RIES. THE ADDITION TO THE EXTENT OF RS.10 LAKHS UNDER THE PRO VISIONS OF SEC. 68 OF THE IT ACT IS SUSTAINED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE SUBMITTED CONFIRMATION LETTERS FROM TH E DEPOSITORS THEIR PERMANENT ACCOUNT NUMBERS COPIES OF THE RETURNS OF INCOME BALANCE SHEETS AND BANK STATEMENTS BEFORE THE AO. H E HAS SUBMITTED THAT NO BOOKS OF ACCOUNTS ARE MAINTAINED BY THE DEPOSITORS BUT IN THEIR CASES CASH FLOW STATEMENT WAS PROVIDED WHICH EXPLAIN THAT CASH WAS DEPOSITED BY THE DEPOSITORS IN THEIR BANK ACCOUNTS FROM THEIR OWN SOURCE. REFERENCE WAS MADE TO PB-5 W HICH IS CASH FLOW STATEMENT IN THE CASE OF TARABEN AMRUTLAL MEHT A DEPOSITOR. HE HAS SUBMITTED THAT CAPITAL ACCOUNT AND BALANCE SHEE TS OF THE DEPOSITORS WERE ALSO FILED. HE HAS REFERRED TO BANK STATEMENT OF ALL THE DEPOSITORS COPIES OF WHICH ARE FILED IN THE PAP ER BOOK AT PB-17 26 42 62 79 101 AND 121. THE LEARNED COUNSEL F OR THE ASSESSEE THEREFORE SUBMITTED THAT THE ONUS UPON THE ASSESSE E TO PROVE GENUINE CREDITS HAS BEEN DISCHARGED. HE HAS RELIED UPON THE ORDER OF ITAT HYDERABAD SMC BENCH IN THE CASE OF BHAGAWAND AS SHARDA VS ACIT 4 SOT 469 IN WHICH IT WAS HELD LENDER BEING AN INCOME TAX ASSESSEE AND HAVING CONFIRMED THE LOAN BUT COUL D NOT BE PRODUCED AS HE WAS NOT AVAILABLE ONUS ON ASSESSEE STOOD DISCHARGED AND ADDITION ON THE BASIS OF SUSPICION C OULD NOT BE SUSTAINED. HE HAS ALSO RELIED UPON THE DECISION OF THE HONBL E RAJASTHAN HIGH COURT IN THE CASE OF ARAVALI TRADING CO. VS ITO 220 CTR 622 IN WHICH IT WAS HELD MERELY BECAUSE THE DEPOSITORS ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 7 EXPLANATION ABOUT THE SOURCES OF MONEY WAS NOT ACCE PTABLE TO THE AO IT CANNOT BE PRESUMED THAT THE DEPOSIT MADE BY THE CREDITORS IS MONEY BELONGING TO ASSESSEE ITSELF. HE HAS ALSO RELIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN TH E CASE OF ITO VS KALIPAR CREDIT & MERCANTILE PVT. LTD. IN ITA NO. 421/AHD/2008 DATED 14-05-2010 IN WHICH DEPARTMENTAL APPEAL WAS D ISMISSED BY HOLDING THAT SINCE THERE WAS SOME CASH DEPOSITS ALONE IS NO GROUND TO MAKE THE ADDITION. HE HAS SIMILARLY REPLIED UPON THE ORDER OF ITAT AHMEDABAD BENCH IN THE CASE OF SHRI A MIT N. PRAJAPATI VS ITO IN ITA NO.287/AHD/2008 DATED 06-11-2009 5. ON THE OTHER HAND THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE WERE DEP OSITS OF CASH IN ALL THE CASES OF THE DEPOSITORS PRIOR TO ISSUE OF THE C HEQUES WHICH HAVE NOT BEEN EXPLAINED BY THE DEPOSITORS. THERE WERE NO SUBSEQUENT TRANSACTIONS OR EARLIER TRANSACTIONS IN THE BANK AC COUNTS OF THE DEPOSITORS. NO INTEREST IS PAID TO ANY OF THE CREDI TORS. NO SOURCE OF CASH FLOW STATEMENT HAS BEEN FILED. HE HAS REFERRED TO PB-5 CASH FLOW STATEMENT IN THE CASE OF SMT. TARABEN AMRUTLAL MEHTA REFERRED BY THE LEARNED COUNSEL FOR THE ASSESSEE AND SUBMITT ED THAT SOME OPENING BALANCES ARE SHOWN AND AMOUNTS RECEIVED FRO M LOANS AND ADVANCES HAS BEEN SHOWN AND BY ADDING INCOME OF THE CURRENT YEAR THE TOTAL IS SHOWN AT RS.2 38 805/- OUT OF WHICH LO AN OF RS.2 00 000/- IS STATED TO HAVE BEEN GIVEN TO THE ASSESSEE. THE L EARNED DR THEREFORE SUBMITTED THAT THE EXPLANATION OF THE AS SESSEE IS NOT PROBABLE BECAUSE THE ENTIRE INCOME EARNED BY THE CR EDITOR IS SHOWN TO HAVE BEEN GIVEN ON LOAN WITHOUT INTEREST. THEREF ORE IT THE TEST OF ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 8 HUMAN PROBABILITIES IS APPLIED TO THE FACTS AND CIR CUMSTANCES OF THE CASE IT WOULD PROVE THAT IT WAS ONLY ACCOMMODATING ENTRY GIVEN TO THE ASSESSEE. THE CREDITORS HAVE ONLY MEAGER INCOME FOR WHICH ALSO NO SOURCE IS EXPLAINED. THE LEARNED DR THEREFORE SUBMITTED THAT THE ASSESSEE FAILED TO PROVE THE CREDITWORTHINESS AND G ENUINENESS OF THE TRANSACTIONS IN THE MATTER. THE LEARNED DR SUBMITTE D THAT THE DOCUMENTS PRODUCED BY THE ASSESSEE MERELY SUPPORT T HE CLAIM OF THE ASSESSEE SUPERFICIALLY BUT THE SAME COULD NOT BE AC CEPTED IN VIEW OF THE SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITI ES. THE LEARNED DR RELIED UPON THE ORDER OF ITAT DELHI BENCH IN THE CASE OF DCIT VS SMT. PHOOLWATI DEVI 122 TTJ 502 IN WHICH IT WAS HE LD AS UNDER: HELD THAT ON FACTS DESPITE THE DOCUMENTATION SUPPORTING THE CLAIM OF THE ASSESSEE SUPERFICIALLY THE EVIDENCE COULD NOT BE ACCEPTED IN VIEW OF THE SURROUNDING CIRCUMSTANCES AND HUMAN PROBABILITIES. SOME OF THEM EVEN APPEARED BEFORE THE ASSESSING OFFICER UNDER SECTION 131 TO CONFIRM THE LOANS. HOW EVER THERE WERE CERTAIN FEATURES OF THE CASE WHICH BELIE D THE DOCUMENTARY EVIDENCE. FIRSTLY THE LOANS DID NOT CA RRY ANY INTEREST. IN ALL THE CASES THE ISSUE OF DRAFT IN FAVOUR OF THE ASSESSEE FROM THE BANK ACCOUNTS OF THE CREDI TORS WAS PRECEDED BY AN EQUIVALENT OR ALMOST EQUIVALENT AMOUNT OF CASH DEPOSIT IN THE BANK ACCOUNTS OF THE CREDITORS. THE ASSESSEE HAD ATTEMPTED TO EXPLAIN TH E CASH DEPOSITS IN SOME CASES BY PRODUCING BILLS FOR THE SALE OF AGRICULTURAL PRODUCE BY THE CREDITORS BUT T HE ASSESSING OFFICER HAD RIGHTLY REFUTED THE ATTEMPT B Y SAYING THAT IN VIEW OF THE HUGE TIME GAP BETWEEN TH E DATES OF THE BILLS AND THE ACTUAL DEPOSIT OF THE CA SH THE CLAIM THAT THE CASH REPRESENTED SALE PROCEEDS OF AGRICULTURE COULD NOT BE ACCEPTED. THE ASSESSEES EXPLANATION COULD NOT BE ACCEPTED AS IT RAN COUNTER TO THE HUMAN PROBABILITIES SUPPORT OF THE CREDITS THE Y ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 9 COULD NOT BE CONSIDERED TO BE GENUINE LOANS TAKEN B Y THE ASSESSEE. IN THE INSTANT CASE THE DOCUMENTARY EVIDENCE PRIMA - FACIE SUPPORTED THE ASSESSEES CASE REGARDING CASH CREDITS BUT A CLOSER LOOK AT THE SAME IN THE LIGHT OF THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES REVEALED THAT THE DOCUMENTARY EVIDENCE COULD NOT BE ACCEPTED. THERE WAS NO MERIT IN THE ASSESSEES CONTENTION THAT SECTION 68 WAS NOT APPLICABLE SINCE THE ASSESSEE WAS NOT MAINTAINING BOOKS OF ACCOUNT AND NO ADDITION COULD BE MADE ON T HE BASIS OF THE BANK PASSBOOK OF THE CREDITORS SINCE T HE BANK STATEMENTS COULD NOT BE CONSIDERED TO BE BOOKS OF ACCOUNT OF THE ASSESSEE. NO DOUBT SECTION 68 REFER S TO AMOUNTS CREDITED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BUT SECTION 68 IS NOT EXHAUSTIVE OF THE ADDITIONS THAT CAN BE MADE BY THE ASSESSING OFFICER . WHERE IT IS SEEN THAT THE ASSESSEE IS IN RECEIPT OF MONIES THEN NOTWITHSTANDING THAT HE DOES NOT MAINT AIN BOOKS OF ACCOUNT IN WHICH SUCH MONIES ARE RECORDED IT IS HIS BURDEN WHEN CALLED UPON HIM TO POINT OUT T HE NATURE AND SOURCE OF THE MONEY AND IF HIS EXPLANATI ON IN THIS BEHALF IS NOT FOUND SATISFACTORY IT IS OPEN TO THE ASSESSING OFFICER TO ADD THE SAME AS HIS INCOME. FO R THIS PURPOSE IT IS NOT NECESSARY FOR THE ASSESSING OFFICER TO RELY ON SECTION 26. EVEN WITHOUT REFERENCE TO SECTION 68 THE AMOUNT CA N BE ADDED IF THE EXPLANATION OF THE ASSESSEE WITH REGAR D TO THE NATURE AND SOURCE OF THE RECEIPT IS NOT SATISFA CTORY. THEREFORE THE ADDITION IN THE INSTANT CASE WAS TO BE UPHELD. 6. THE LEARNED COUNSEL FOR THE ASSESSEE ADMITTED TH AT NO INTEREST IS PAID TO ANY OF THE CREDITORS AND FURTHER THE CAS H FLOW STATEMENT IS MADE IN ALL THE CASES OF THE DEPOSITORS. ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 10 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIAL ON RECORD. THE FINDINGS OF THE LEARNED CIT(A) REPRODUC ED ABOVE DEALT WITH EACH CREDIT HAVE NOT BEEN ASSAILED TO BY THE L EARNED THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF ARGUM ENTS. IT IS THEREFORE PROVED ON RECORD THAT CASH WAS DEPOSITED IN THE ACCOUNTS OF ALL THE DEPOSITORS PRIOR TO GIVING THE SAID LOAN S TO THE ASSESSEE. NO EVIDENCE WAS FURNISHED REGARDING SOURCE OF DEPOSITI NG SUCH CASH. THERE WAS NO TRANSACTION EITHER BEFORE OR AFTER THE LOAN TRANSACTIONS WITH THE ASSESSEE. ON GOING THROUGH THE BANK ACCOUN TS COPIES OF WHICH ARE FILED IN THE PAPER BOOK IT IS CLEAR THAT THERE WERE VERY SMALL AMOUNTS REMAINED IN THE ACCOUNTS OF THE DEPOSITORS WHICH PROVE THAT THEY HAVE NO SOURCE OF INCOME OTHERWISE PERSONS WHO HAD EARNED THE INCOME WOULD HAVE DEFINITELY MADE DEPOSIT IN THEIR BANK ACCOUNTS. THE ASSESSEE HAS NOT EXPLAINED AS TO WHY THE DEPOSI TORS THOUGH CLAIMED TO HAVE EARNED INCOME; NO DEPOSITS HAVE BEE N MADE IN THE BANK ACCOUNTS OF THE DEPOSITORS. THE DEPOSITORS HAV E NOT MAINTAINED ANY BOOKS OF ACCOUNTS AND ONLY CASH FLOW STATEMENT IS FILED WHICH SHOWS THAT THERE WERE SOME OPENING BALANCES IN CASH . SOME RETURNS OF LOANS AND ADVANCES HAVE BEEN ADDED IN CASH AND I N THE SAME CASH AMOUNT INCOME OF THE DEPOSITORS IS ADDED OUT O F THE SAME LOAN AS STATED TO HAVE BEEN GIVEN TO THE ASSESSEE. DESPI TE ALL THE CREDITORS MAINTAINED THEIR BANK ACCOUNTS NOTHING I S EXPLAINED AS TO WHY THE ENTIRE TRANSACTIONS WERE CONDUCTED IN CASH FOR WHICH NO SOURCE OR GENUINENESS OF THE TRANSACTIONS HAS BEEN PROVED. FURTHER THE ENTIRE INCOME OF THE YEAR UNDER CONSIDERATION WAS A DDED TO THE CARRY FORWARD BALANCES FOR THE PURPOSE OF GIVING LOAN. TH E LEARNED DR IS THEREFORE JUSTIFIED IN CONTENDING THAT DESPITE THE CREDITORS STATED TO ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 11 HAVE EARNED MEAGER INCOME BUT ENTIRE INCOME PLUS OP ENING BALANCES HAVE BEEN GIVEN TO THE ASSESSEE ON LOAN WI THOUT INTEREST. THEREFORE THE DOCUMENTS FILED ON RECORD MERELY SUP PORT THE CLAIM OF THE ASSESSEE SUPERFICIALLY. SUCH EVIDENCES COULD NO T BE ACCEPTED IN VIEW OF THE SURROUNDING CIRCUMSTANCES AND HUMAN PRO BABILITIES. FURTHER EXPLANATION OF THE ASSESSEE REGARDING CASH FLOW STATEMENT OF THE CREDITORS AND THEIR BALANCE SHEETS AND THE T RANSACTIONS COULD NOT BE ACCEPTED BECAUSE NO EVIDENCES IN SUPPORT OF THE SAME HAVE BEEN FILED. THE DECISION CITED BY THE LEARNED DR IN THE CASE OF SMT. PHOOLWATI DEVI (SUPRA) CLEARLY SUPPORTS THE FINDING S OF THE AUTHORITIES BELOW. THE CASH FLOW STATEMENTS SUBMITTED BY THE AS SESSEE IN RESPECT OF THE CREDITORS THUS WOULD NOT INSPIRE CON FIDENCE OF THE TRIBUNAL TO ACCEPT THE EXPLANATION OF THE ASSESSEE REGARDING GENUINE LOANS. THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE TO SATISFACTORILY EXPLAIN THE CREDITWORTHINESS OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. THE HONBLE CALCUTTA HI GH COURT IN THE CASE OF BHARATI PVT. LTD. VS CIT 111 ITR 951 HELD AS UNDER: IN THE COURSE OF ASSESSMENT PROCEEDINGS THE INCOME-TAX OFFICER FOUND THAT THE ASSESSEE HAD SHOWN RS.20 000 AS LOAN IN ITS BOOKS TAKEN FROM TWO PARTIES. THE ASSESSEE PRODUCED THE ALLEGED CONFIRMATORY LETTERS FROM THOSE PARTIES BEFORE THE INCOME-TAX OFFICER IN SUPPORT OF THE TWO LOANS. THE INCOME-TAX OFFICER SERVED NOTICES UNDER SECTION 131 OF THE INCOME TAX ACT 1961 ON THE ALLEGED CREDIT ORS AND SINCE THOSE NOTICES CAME BACK UNSERVED THE INCOME-TAX OFFICER TREATED THE LOAN AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. THE APPELLATE ASSISTANT COMMISSIONER DISMISSED THE ASSESSEES APPEAL ON THE GROUND THAT THE ASSESSEE COULD NOT ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 12 EVEN ESTABLISH THE IDENTITY OF THE PARTIES. ON FURT HER APPEAL BY THE ASSESSEE THE APPELLATE TRIBUNAL HELD THAT MERE FILING OF CONFIRMATORY LETTERS DID NOT DISCHARGE THE ONUS THAT LAY ON THE ASSESSEE AND THERE WAS NO MATERIAL ON THE RECORD TO ESTABLISH TH E IDENTITY OF THE CREDITORS: HELD THAT THE TRIBUNAL HAD TAKEN ALL THE RELEVANT FACTS INTO CONSIDERATION AND THE CONCLUSION ARRIVED AT BY THE TRIBUNAL THAT THE LOANS REPRESENTED THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES WAS NOT PERVERSE OR UNREASONABLE. 7.1 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS UNITED COMMERCIAL AND INDUSTRIAL CO. (P) LTD. 187 ITR 596 HELD AS UNDER: THE PRIMARY ONUS LIES ON THE ASSESSEE TO PROVE THE NATURE AND SOURCE OF CREDITS IN ITS ACCOUNT. IT IS NECESSARY FOR THE ASSESSEE TO PROVE PRIMA FACIE THE IDENTITY OF HIS CREDITORS THE CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND LASTLY THE GENUINENESS OF THE TRANSACTIONS. ONLY WHEN THESE THINGS ARE PROVED BY THE ASSESSEE PRIMA FACIE AND ONLY AFTER THE ASSESSEE HAS ADDUCED EVIDENCE TO ESTABLISH THE AFORESAID FACTS DOES THE ONUS SHIFT O N TO THE DEPARTMENT. IT IS NOT ENOUGH TO ESTABLISH THE IDENTITY OF THE CREDITORS. MERE PRODUCTION OF THE CONFIRMATION LETTERS BEFORE THE INCOME-TAX OFFICER WOULD NOT BY ITSELF PROVE THAT THE LOANS HAVE BEEN OBTAINED FROM THOSE LOAN CREDITORS OR THAT THEY HAV E CREDIT-WORTHINESS. HELD THAT IN THE INSTANT CASE THE TRIBUNAL MISDIRECTED ITSELF IN HOLDING THAT THE TRANSACTIONS WERE GENUINE SIMPLY BECAUSE SOME OF THE TRANSACTIONS WERE MADE BY CHEQUES. THE ASSESSEE HAD FAILED TO PROVE THE CREDIT-WORTHINESS OF THE ALLEGED LENDERS. A NUMBER OF OTHER ASSESSEES HAD ALSO ADMITTED THAT LOANS OBTAINED FROM THESE BANKER S ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 13 AGAINST HUNDIS WERE NOT GENUINE AND SUCH HUNDI LOANS REALLY REPRESENTED THEIR OWN CONCEALED INCOME . THE ASSESSEE HAD NOT DISCHARGED ITS BURDEN OF PROVING THAT THE LOANS IN QUESTION WERE GENUINE. 7.2 THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF M/S. PRECISION FINANCE PVT. LTD. 208 ITR 465 HELD THAT EVEN THE LOAN THROUGH BANK CANNOT BE ACCEPTED AS GENUINE UNLESS THE IDENT ITY AND CREDITWORTHINESS OF THE CREDITORS ARE PROVED. MERE PAYMENT OF ACCOUNT PAYEE CHEQUE IS NOT SACROSANCT NOR CAN IT M AKE A NON- GENUINE TRANSACTION GENUINE. 7.3 THE HONBLE SUPREME COURT IN THE CASE OF DURGA PRASAD MORE 82 ITR 540 AND SUMATI DAYAL 214 ITR 801 HELD THAT THE COURTS AND TRIBUNAL HAVE TO JUDGE THE EVIDENCES BEFORE THE M BY APPLYING THE TEST OF HUMAN PROBABILITIES AFTER CONS IDERING THE SURROUNDING CIRCUMSTANCES. WHEN THIS TEST IS APPLIED TO THE FACTS OF THE CASE IT IS CLEAR THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE OF GENUINE CRED ITS IN THE MATTER. THE ASSESSEE HAS NOT ADDUCED SUFFICIENT EVIDENCES B EFORE THE AUTHORITIES BELOW TO PROVE THE CREDITWORTHINESS OF THE DEPOSITORS GENUINENESS OF THE DEPOSITS AND GENUINENESS OF THE TRANSACTIONS IN THE MATTER. SINCE ALL THE TRANSACTIONS ARE IN CASH AS PER THE CASH FLOW STATEMENTS THEREFORE BURDEN IS VERY HEAVY UPON TH E ASSESSEE TO PROVE GENUINENESS OF THE TRANSACTIONS IN THE MATTER . THE ASSESSEE FAILED TO PROVE THE SAME. MERELY BECAUSE TRANSACTIO NS WERE MADE THROUGH BANKING CHANNEL AND CONFIRMATIONS ARE FILED IS NOT ENOUGH TO DISCHARGE THE BURDEN UPON THE ASSESSEE. ITA NO.1487/AHD/2009 M/S. BLESSING CONSTRUCTION VS ITO WARD -3(2) SURA T 14 8. CONSIDERING THE ABOVE DISCUSSIONS WE ARE OF THE VIEW THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDI TION. THE DECISIONS CITED BY THE LEARNED COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE IN VIEW OF THE FACTS AND CIRCU MSTANCES OF THE ASSESSEES CASE. ACCORDINGLY WE DO NOT FIND ANY ME RIT IN THE APPEAL OF THE ASSESSEE. SAME IS ACCORDINGLY DISMISSED. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD