INCOME TAX ACT, 1961

Section 68

Income from undisclosed sources - Addition under section 68 - Assessee discharged onus in resepct of alleged unexplained loans obtained from creditors -

AO noticed that the assessee had taken total unsecured loan of Rs. 14,76,38,600 from 56 persons, out of which 54 are based at Ranchi and remaining two are group concerns of the assessee. The AO had issued commissions to Dy. CIT, Circle-1, Ranchi and Asstt. CIT-TDS, Circle, Ranchi under section 131(1)(d) to conduct enquiries in case of the lenders based at Ranchi. The said officers have sent the enquiry reports, which were framing part of assessment order. On the basis of AO's finding the addition of unexplained cash credit was made under section 68. The CIT(A), however, deleted the addition. Held: The CIT(A) had examined each and every creditors/lenders and given his factual findings of enquiry report as well as facts of each lenders in column 5 of Annexure-A forming part of his appellate order. The CIT(A) had examined and discussed issue of identity, creditworthiness and analysis of bank account and genuineness of transaction. The assessee had discharged the initial onus which lay on him in the terms of section 68 by providing identity of creditors and same had not been doubted by the AO also. Further, the assessee had proved the creditworthiness by way of filing ITR returns, bank account, balance sheet, confirmation of the creditors. The assessee is not expected to prove the genuineness of cash deposits in bank accounts of those e-creditors because under the law the assessee can be asked to prove source of credit but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. v. CIT (1963) 49 ITR 723 (Bom) : 1963 TaxPub(DT) 279 (Bom-HC). therefore, in such a situation and considering above fact and finding Tribunal was in complete agreement with reasoning given by the CIT(A) that when full particualrs, inclusive of the confirmation with name, PAN, copy of IT returns, balance sheet Profit and Loss Acount computation of income were furnished and same were reflected in their books of account. Further, the findings recorded by the CIT(A) were also supported by the decision of Gujarat High Court and Supreme Court. The addition so made was rightly deleted by the CIT(A). In view of these facts and circumstances, there was no infirmity in the order of CIT(A), accordingly, same was upheld.

Relied:Dy.CIT v. Rohim Builders (2002) 256 ITR 360 (Guj) : (2003) 127 Taxman 523 (Guj) : 2002 TaxPub(DT0 305 (Guj-HC), CIT v. Orissa Corporation (P) Ltd. (1986) 159 ITR 78 (SC) : (1986) 25 Taxman 80 (SC) : 1986 TaxPub(DT0 1425 (SC) and Orient Trading Co. v. CIT (1963) 49 ITR 723 (Bom) : 1963 TaxPub(DT) 279 (Bom-HC).

REFERRED : CIT v. Ranchhod Jivabhai Nakhava (2012) 21 Taxmann.com 159 (Guj) : (2012) 81 CCH 193 (Guj-HC) : 2012 TaxPub(DT) 2351 (Guj-HC), Dy. CIT v. Rohini Builders (2002) 256 ITR 360 (Guj.) : (2003) 127 Taxman 523 (Guj) : 2002 TaxPub(DT) 305 (Guj-HC), CIT v. Apex Therm Packaging (P.) Ltd. (2014) 42 Taxmann.com 473 (Guj), CIT v. Ayachi Chandrasekhar Narsangji (2014) 42 Taxman.com 251 (Guj).

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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