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2016 Supreme(Raj) 1670
IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Ajay Rastogi, J.K. Ranka, JJ.
Commissioner of Income Tax – Appellant
Versus
Deen Dayal Choudhary – Respondent
IT Appeal No. 58 of 2015
Decided On : 15-07-2016
For the Appellant :Sameer Jain, Advocate.
The assessee is required to prove the identity, capacity, and genuineness of the creditors under section 68, but once this is done, the burden of proof shifts to the AO to show that the cash credits are not genuine.
Headnote:
INCOME TAX - SECTION 68 - CASH CREDITS - GENUINENESS AND CREDITWORTHINESS - BURDEN OF PROOF - SHIFTING OF ONUS - EVIDENCE REQUIRED TO DISPROVE GENUINENESS - INTERPRETATION OF SECTION 68.
Fact of the Case:
The assessee, a construction company, received unsecured loans from three individuals. The AO, not satisfied with the confirmations and statements recorded under section 131, added the amounts as income from undisclosed sources under section 68. The CIT(A) and Tribunal deleted the addition, holding that the assessee had proved the identity, capacity, and genuineness of the creditors.
Finding of the Court:
The Court held that the assessee had discharged the burden of proof under section 68 by providing the names, addresses, and PAN details of the creditors, along with evidence of their income tax assessments and bank statements showing the transactions. The Court further held that the AO's mere suspicion that the money actually belonged to the assessee was not sufficient to disprove the genuineness of the cash credits.
Issues: 1. Whether the assessee had discharged the burden of proof under section 68 by providing the names, addresses, and PAN details of the creditors, along with evidence of their income tax assessments and bank statements showing the transactions? 2. Whether the AO's mere suspicion that the money actually belonged to the assessee was sufficient to disprove the genuineness of the cash credits?
Ratio Decidendi: The Court held that once the assessee had provided the required information and evidence, the burden of proof shifted to the AO to show that the cash credits were not genuine. The Court further held that the AO's mere suspicion, without any concrete evidence, was not sufficient to discharge this burden.
Final Decision: The Court dismissed the Revenue's appeal, holding that the Tribunal's order was based on a proper appreciation of the evidence and that no substantial question of law arose.
J.K. Ranka, J.
Instant IT Appeal under section 260A of the IT Act, 1961 has been preferred by the appellant-Revenue assailing order dated 14th Nov.2014, passed by the Tribunal, Jaipur. It relates to asst. yr. 2008-09.
2. Brief facts noticed for disposal of the instant appeal are that the respondent-assessee derives income by way of activities of construction, builders and developers. During the course of assessment proceedings, the AO noticed that the assessee had taken unsecured loans from various persons and desired the assessee to place on record confirmations with addresses, permanent account number, bank account details and copies of returns filed by the person giving loans. The confirmations as desired by the AO was submitted. Thereafter, the AO, being not satisfied, issued summons under section 131 to ten persons and their statements were recorded. The AO was not satisfied with the three cash credits in the name of Shri Banshilal son of Shri Lal Ram, village Asarpura, Tehsil Sanganer who deposited an amount of Rs. 25 lac with the assessee; Shri Kana Ram Agarwal who deposited an amount of Rs. 45 lac and Shri Kailash Chaudhary who deposited an amount of Rs. 20 lac and after recording of the statements, the AO came to the conclusion that genuineness and creditworthiness of the cash credit was not proved though identity was established and accordingly intended to add the said amount by invoking provisions of section 68. The assessee came with the plea that the entire credits are genuine, identity has been established so also when the amount is advanced through account payee cheques and the said creditors are assessed to income-tax since long, the creditworthiness and genuineness is also proved. However, the AO, noticing some discrepancies in the statements recorded, made an addition of Rs. 90 lac relating to three creditors.
3. The said assessment order was assailed before the CIT(A) who, after analysing the material on record including statements recorded under section 131, found that the ingredients namely, identity, capacity and genuineness in all the three cash creditors and thus deleted the entire addition.
4. The Revenue preferred appeal before the Tribunal and the Tribunal vide order impugned upheld order of CIT(A) by holding that the source has been duly explained and all the three ingredients are duly proved.
5. Learned counsel for the appellant-Revenue contended that the AO was not satisfied with the manner in which huge amounts were advanced by the three named creditors. Though they may be existing income-tax assessee but the AO noticed discrepancies in the statements recorded under section 131 as the said three creditors were unable to prove the source from which the money was advanced to the assessee. In one of the cases, he submitted that amount was advanced out of sale of agricultural land by Kailash Chaudhary but he did not place on record even the basic documents namely; registration of agricultural land sold by Kailash Choudhary. Therefore, the AO was well justified in holding that the said cash credits are not genuine. He further contended that merely being income-tax assessee does not satisfy the conditions laid down in section 68 when the assessee has to prove that the amount was advanced genuinely and burden is on assessee. once credit is found recorded in his books. A taxpayer simply proves identity and nothing more which is not at all proper and Revenue can always doubt such credits. He thus contended that substantial questions of law arise out of order of the Tribunal.
6. We have heard counsel for the appellant and have also gone through the order impugned and the other material placed on record.
7. In our view, both the appellate authorities, after taking note of the facts and going through the statements of three cash creditors, have come to a definite finding that not only the identity was established but the genuineness and creditworthiness of the creditors were well proved.
8. Before the CIT(A),
