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2018 Supreme(Raj) 1117
IN THE HIGH COURT OF RAJASTHAN (JAIPUR BENCH)
KALPESH SATYENDRA JHAVERI, VIJAY KUMAR VYAS, JJ.
Dinesh Kumar Laddha - Appellant
Versus
Assistant Commissioner of Income - Tax - Respondent
Income Tax Appeal No. 135 of 2018
Decided On : 02-07-2018
Gunjan Pathak, Adv., Aditya Bohra, Adv.
The assessee discharges its onus under Section 68 of the Income Tax Act, 1961, by establishing the identity of the creditors, obtaining their confirmation letters, affidavits, and providing their full addresses, GIR numbers, and PANs.
Headnote:
INCOME TAX - Section 68 - Unexplained cash credits - Burden of proof - Assessee's onus discharged - Tribunal's addition set aside.
Fact of the Case:
The appellant assessee challenged the Tribunal's order partly allowing the department's appeal and dismissing the assessee's cross objection. The assessee had received cash credits from various creditors, which were added to the income as unexplained cash credits under Section 68 of the Income Tax Act, 1961. The assessee contended that it had discharged its onus under Section 68 by establishing the identity of the creditors, obtaining their confirmation letters, affidavits, and providing their full addresses, GIR numbers, and PANs.
Finding of the Court:
The Court held that the assessee had discharged its onus under Section 68 by establishing the identity of the creditors, obtaining their confirmation letters, affidavits, and providing their full addresses, GIR numbers, and PANs. The Court relied on several precedents, including Kanhailal Jangid v. Assistant Commissioner of Income Tax, Labh Chand Bohra v. Income Tax Officer, Aravali Trading Co. v. Income Tax Officer, Commissioner of Income Tax v. Jai Kumar Bakliwal, Sarogi Credit Corporation v. Commissioner of Income Tax, Jalan Timbers v. Commissioner of Income Tax, and Commissioner of Income Tax v. S. Kamaljeet Singh, to support its conclusion.
Issues: 1. Whether the assessee had discharged its onus under Section 68 of the Income Tax Act, 1961, by establishing the identity of the creditors and providing their confirmation letters, affidavits, and other relevant information? 2. Whether the Tribunal was justified in making the addition under Section 68, treating the loan received as undisclosed income of the assessee, without considering the assessee's evidence?
Ratio Decidendi: The Court held that the assessee had discharged its onus under Section 68 by establishing the identity of the creditors, obtaining their confirmation letters, affidavits, and providing their full addresses, GIR numbers, and PANs. The Court reasoned that once the assessee had established the identity of the creditors and they had admitted to advancing the loan, the onus shifted to the department to prove that the source of the loan was not genuine.
Final Decision: The Court set aside the Tribunal's addition under Section 68, holding that the assessee had discharged its onus under the provision and the department had failed to prove that the source of the loan was not genuine.
1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has partly allowed the appeal of the department and cross objection of the assessee is dismissed.
2. Counsel for the appellant has framed following substantial questions of law:-
(A) Whether in the facts and circumstances of the case, once the assessee has established the identity of the creditors in whose names cash credit is found in the books of account and the said creditors have admitted having advanced the aforesaid sum to the appellant assessee and the said creditors have also been assessed to income tax, the tribunal was justified in holding that the assessee has failed to discharge his onus under Section 68 of the Act of 1961?
(B) Whether under the facts and circumstances and in law, the ld. ITAT has erred in making the addition u/s 68 of the Act, 1961, treating the loan received as undisclosed income of the assessee, without taking into account that the Assessee has discharged its burden by placing (i) confirmation letter of the cash creditors; (ii) its affidavit; (iii) its full addresses and GIR numbers and permanent account numbers; (iv) its Income Tax Return?
(C) Whether in the facts and circumstances of the case the rejection of explanation furnished by the appellant, explaining the cash credits of persons, for the reasons are perverse by ignoring the objective material available to the assessee?
3. The facts of the case are that the appellant is engaged in the business of trading of gold and silver ornaments under the name & style of M/s. Laddha Jewellers and is regularly assessed to tax under PAN No.ABPPL5675G. The appellant has also income from estate business. The appellant had filed his return of income for the Assessment Year 2012-13 on 31.8.2012 declaring income of Rs. 7,84,816/-. The case of the appellant was pricked up for scrutiny and notice u/s 143(2) of the Act was issued on 23.9.2013.
3.1 Thereafter, assessment u/s 143(3) of the Act of 1961 was framed vide order dt. 27.3.2015 on the appellant. During the assessment proceedings, the AO assessed the income of the appellant amounting to Rs. 58,98,350/- by making further additions to the declared income of the appellant as under:-
| Declared Income Additions | Rs. 784816/- |
| 1. Trading addition | Rs. 13,87,305/- |
| 2. Interest Expense | Rs. 3,98,025/- |
| 3. Interest Expense incurred on Immovable Property | Rs. 4,52,332/- |
| 4. Unsecured Loan from Sh. Sunil Agarwal Section 68 | Rs. 5,00,000/- |
| 5. Gift received from Sister Section 68 | Rs. 10,00,000/- |
| 6. Gift received from Sisters Daughter Section 68 | Rs. 10,00,000/- |
| 7. Vehicle Depreciation and Insurance | Rs. 33,854/- |
| 8. Household Expenses and Foreign Tour Expenses | Rs. 3,42,200/- |
| Total Assessed Income | Rs. 58,98,530/- |
| Declared Income Additions | Rs. 784816/- |
4. Counsel for the appellant has relied upon the following decisions:-
4.1 In Kanhailal Jangid vs. Assistant Commissioner of Income Tax,2008 217 CTR 354, it has been held as under:-
6. Another Rs. 16,000 has been added to the income of assessee as unexplained cash credit in the name of Sri Ramulal. The assessee has explained that Ramulal who is a land tax inspector has advanced the loan of Rs. 16,000 to him. However, he has also furnished an affidavit purporting to be by Sri Ramulal owning said advance to the assessee. However, the AO has found that said Ramulal was not produced for examination when so required by the AO. He also found that the assessee has not given correct and complete address of the said Ramulal so that the efforts could be made through Inspector of circle to ascertain the genuineness of the creditor. In other words, notwithstanding the filing of affidavit the real existence of the creditor who could co
