CIT v. Ranchhod Jivabhai Nakhava

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The Tax Publishers2012 TaxPub(DT) 2351 (Guj-HC) : (2012) 208 TAXMAN 0035 INCOME TAX ACT, 1961 --Income from undisclosed sources--Addition under section 68Burden of proof--In the relevant year, assessee took certain amount of loans from three persons by way of account payee cheque. During the course of assessment proceedings, he produced confirmation letters from lenders and photocopy of their PAN card. AO inspite of verifying that whether or not those lenders had shown those transactions in their income-tax returns, examined the lenders. The lenders made a statement that they had received cash from assessee which they had deposited in account of other entity and from that account cheques were issued in their favour, and in turn, they issued cheques and deposited them with assessee. Considering above facts, assessing officer, made an addition of loan amounts under section 68 as undisclosed income. Assessee contended that once he had established that the amounts were received from account payee cheques from the lenders who were all income-tax assessees whose PAN had been disclosed, the initial burden under section 68 was discharged. Held: Assessee had discharged his initial burden under section 68 by filing confirmation letters, PAN cards and their passbooks. AO made an addition, based on erroneous approach by wrongly shifting the burden again upon assessee without verifying from those lenders, whether in their respective returns they had shown existence of such amount of money and that those amount of money had been lent to assessee. Moreover, it was found that statement of lenders were inconsistent as they initially stated that assessee had given them money and same were deposited in bank account; however, later on, they had stated that money was given by some other person whom they did not know. In view of above facts, addition made under section 68 did not sustain. Income Tax Act, 1961 Section 68 IN THE GUJARAT HIGH COURT BHASKAR BHATTACHARYA, ACTING C.J. &J.B. PARDIWALA, J. CIT v. Ranchhod Jivabhai Nakhava Tax Appeal No. 50 of 2011 20 March, 2012 Appellant(s) by : Mauna M. Bhatt, Opponent(s) by : None, ORDER SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2351 (Guj-HC) : (2012) 208 TAXMAN 0035

INCOME TAX ACT, 1961

--Income from undisclosed sources--Addition under section 68Burden of proof--In the relevant year, assessee took certain amount of loans from three persons by way of account payee cheque. During the course of assessment proceedings, he produced confirmation letters from lenders and photocopy of their PAN card. AO inspite of verifying that whether or not those lenders had shown those transactions in their income-tax returns, examined the lenders. The lenders made a statement that they had received cash from assessee which they had deposited in account of other entity and from that account cheques were issued in their favour, and in turn, they issued cheques and deposited them with assessee. Considering above facts, assessing officer, made an addition of loan amounts under section 68 as undisclosed income. Assessee contended that once he had established that the amounts were received from account payee cheques from the lenders who were all income-tax assessees whose PAN had been disclosed, the initial burden under section 68 was discharged. Held: Assessee had discharged his initial burden under section 68 by filing confirmation letters, PAN cards and their passbooks. AO made an addition, based on erroneous approach by wrongly shifting the burden again upon assessee without verifying from those lenders, whether in their respective returns they had shown existence of such amount of money and that those amount of money had been lent to assessee. Moreover, it was found that statement of lenders were inconsistent as they initially stated that assessee had given them money and same were deposited in bank account; however, later on, they had stated that money was given by some other person whom they did not know. In view of above facts, addition made under section 68 did not sustain.

Income Tax Act, 1961 Section 68

IN THE GUJARAT HIGH COURT

BHASKAR BHATTACHARYA, ACTING C.J. &J.B. PARDIWALA, J.

CIT v. Ranchhod Jivabhai Nakhava

Tax Appeal No. 50 of 2011

20 March, 2012

Appellant(s) by : Mauna M. Bhatt,

Opponent(s) by : None,

ORDER