Commissioner Of Income Tax, Udaipur v. Shribhim Singh Chundawat(D.b.income Tax Appeal

COMMISSIONER OF INCOME TAX, UDAIPUR VS. SHRIBHIM SINGH CHUNDAWAT(D.B.INCOME TAX APPEAL NO.36/14) Dated:- 1.6.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.K.K.Bissa, for the appellant. 1.This appeal is directed against order dated 30.8.13 ofIncome Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur,whereby an appeal preferred by the Revenue against the orderof Commissioner of Income Tax (Appeals) [CIT(A)], Udaipur,dated 30.11.12, deleting the addition of Rs.1,81,46,869/- madeby the Assessing Officer (AO) under Section 68 of the IncomeTax Act, 1961 ( for short “the Act”), vide assessment orderdated 31.12.08 for the assessment year 2006-07, has beendismissed. 2.The relevant facts are that the assessee, the proprietor ofAnchal Associates, engaged in business of collection of Toll Tax,Sales Tax and Royalty on contract basis, filed the return ofincome for the assessment year 2006-07 on 30.10.06 declaringtotal income of Rs.32,93,790/-. During the financial year 2005-06 under the head 'unsecured loans' an amount ofRs.1,28,32,430/- was shown by the assessee in the BalanceSheet, whereas in the previous assessment year i.e. 2005-06, nosuch loan existed. The assessee vide notice under Section 142 (1) was asked to furnish the confirmation alongwith the copy ofthe return and complete enclosures in case of the parties fromwhom new unsecured loans were acquired during the previousyear relevant to the assessment year 2006-07. In response tothe notice, the assessee furnished copy of the account of theparties as appearing in the books of accounts giving the detailsof credit obtained from the creditors. After due consideration ofthe evidences gathered, the AO arrived at the finding that thecash credits appearing in books of assessee during the financialyear 2005-06 are bogus advances received by the assessee andaccordingly, the same were added back to his income underSection 68 of the Act. Aggrieved by the order passed by the AO,the assessee preferred an appeal before the CIT (A), Udaipur.Before the CIT (A), the assessee furnished the writtensubmissions which were remanded by the CIT (A) to AO andcalled for his report. The AO submitted the report. Afterconsidering the remand report, CIT(A) discussed each and everycash credit entry and found the advances by 13 creditors asgenuine and accordingly restricted the addition made on accountof unexplained cash credit to Rs.13,39,750/- under Section 68 ofthe Act. The appeal preferred by the Revenue against the orderpassed by the CIT(A) stands dismissed by the ITAT. Hence, thisappeal. 3.Learned counsel for the appellant contended that ITAT has seriously erred in not discussing the various grounds of theappeal of the Revenue wherein the specific short comingsdisproving the credit worthiness of the creditors are highlighted.Learned counsel submitted that AO had arrived at a categoricalfinding that credits do not fulfil three parameters of Section 68i.e. to prove identity of creditors, their creditworthiness andgenuineness of their transaction. Learned counsel submitted thatthe assessee was able to prove the identity of the creditors butfailed to prove creditworthiness and genuineness of thetransaction and therefore, the ITAT has seriously erred inconfirming the order passed by the CIT(A) restricting theaddition made to Rs.13,39,750/-. 3.Learned counsel for the appellant contended that ITAT has seriously erred in not discussing the various grounds of theappeal of the Revenue wherein the specific short comingsdisproving the credit worthiness of the creditors are highlighted.Learned counsel submitted that AO had arrived at a categoricalfinding that credits do not fulfil three parameters of Section 68i.e. to prove identity of creditors, their creditworthiness andgenuineness of their transaction. Learned counsel submitted thatthe assessee was able to prove the identity of the creditors butfailed to prove creditworthiness and genuineness of thetransaction and therefore, the ITAT has seriously erred inconfirming the order passed by the CIT(A) restricting theaddition made to Rs.13,39,750/-. 4.A bare perusal of the order passed by the CIT(A) revealsthat the CIT(A) discussed the creditworthiness and genuinenessof each and every individual transaction and found 13 creditorsas genuine. The ITAT has arrived at the finding that the assesseehas established the creditworthiness of the creditors to theextent he is obliged under the law to do so. The ITAT found thatthe creditors have accepted that they had advanced theirrespective credits to the assessee and also given the details ofthe sources of the deposit. The ITAT opined that the assesseecannot be burdened with proof of 'source of source' and the cashcredit cannot be held to be ingenuine by stretching theingredients of Section 68 too far. We are of the considered Aditya/ opinion that the findings arrived at by the CIT(A), affirmed bythe ITAT regarding identity of the creditors and creditworthinessand genuineness of the transactions remain findings of facts,which do not give rise to any substantial question of law. 5.In the result, the appeal fails, it is hereby dismissed. (KAILASH CHANDRA SHARMA),J. (SANGEET LODHA),J.