M/S Ram Gopal Harbans Lal v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No.132 of 2011 Date of decision: 11.3.2011 M/s Ram Gopal Harbans Lal. Vs. Commissioner of Income Tax. -----Appellant. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOELHON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:-Mr. R.S. Sihota, Sr.Advocate withMr. B.R. Rana, Advocatefor the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assesseeunder Section 260-A of the Income Tax Act, 1961 (for short, “theAct”) against the order of the Income Tax Appellate Tribunal, NewDelhi dated 28.6.2010 in ITA No.726/Del/2009 claiming following substantial questions of law:- (I)Whether on the facts and circumstances the IncomeTax Appellate Tribunal was correct in law to hold thata sum of Rs.2,00,000/- received by Dinesh Goyalfrom his relatives by bank draft and deposited in hisbank account and thereafter deposited in his bankaccount and thereafter deposited with the Appellantfirm was not genuine and belongs to the firm asunexplained cash credit and liable to be assessedTax Appellate Tribunal was correct in law to hold thata sum of Rs.2,00,000/- received by Dinesh Goyalfrom his relatives by bank draft and deposited in hisbank account and thereafter deposited in his bankaccount and thereafter deposited with the Appellantfirm was not genuine and belongs to the firm asunexplained cash credit and liable to be assessed under section 68 of the Income Tax Act, 1961 asincome of the Appellant Firm? (II).Whether in the light of the law established and basedon facts and circumstances the ITAT was legallyjustified in concluding that the burden of proof cast onthe appellant under S.68 of the IT Act, 1961 has notbeen discharged and the ingredient for invokingsection 68 of Income Tax Act are present? (III)Whether on the facts and circumstances, even afteradmission of loan amount given to the appellant firmby Dinesh Goyal, is there any material on record tohold that the gift amount even if not accepted asgenuine in the a/c of Dinesh Goyal, yet can legally beattributed as the income of the appellant firm?admission of loan amount given to the appellant firmby Dinesh Goyal, is there any material on record tohold that the gift amount even if not accepted asgenuine in the a/c of Dinesh Goyal, yet can legally beattributed as the income of the appellant firm? (IV)Whether on the facts and circumstances and settledproposition of law, the appellant has not proved theidentity of the loaner, genuineness of transaction andcapacity of the person advancing the loan to theappellant firm warranting the application of S.68 ofIncome Tax Act against the appellant?proposition of law, the appellant has not proved theidentity of the loaner, genuineness of transaction andcapacity of the person advancing the loan to theappellant firm warranting the application of S.68 ofIncome Tax Act against the appellant? 2. The assessee is a firm running a petrol pump and inits account credited a sum of `2 lacs as loan from one DineshGoyal. The Assessing Officer asked the assessee to explain thegenuineness of the said cash credit. Accordingly, Dinesh Goyalwas examined. It was found that he had no sources of his ownand he claimed that he had obtained a gift of `2 lacs from hisrelative, which explanation was found not to be proper.Accordingly, the amount was treated as undisclosed income of the assessee. The said finding was upheld by the CIT(A) as wellas by the Tribunal. The Tribunal observed:- 2. The assessee is a firm running a petrol pump and inits account credited a sum of `2 lacs as loan from one DineshGoyal. The Assessing Officer asked the assessee to explain thegenuineness of the said cash credit. Accordingly, Dinesh Goyalwas examined. It was found that he had no sources of his ownand he claimed that he had obtained a gift of `2 lacs from hisrelative, which explanation was found not to be proper.Accordingly, the amount was treated as undisclosed income of the assessee. The said finding was upheld by the CIT(A) as wellas by the Tribunal. The Tribunal observed:- “6. We have heard both the parties and perused therecord. It is settled law that for proving the credit u/s68 of the Income-tax Act, identity and creditworthinessof the lender as well as genuineness of thetransaction are needed to be established by theassessee. As per admitted facts of the case,assessee firm has received an unsecured loan ofRs.2,00,000/- from Shri Dinesh Goyal. The said loanhas been received through cheque from bankaccount. An examination of the creditor’s bankaccount revealed that there was very meager balancein the account and creditor had receivedRs.2,00,000/- by demand draft which has been givenby cheque to the assessee firm as loan. The saidcreditor has clearly stated that he has obtained the giftas he was in “need” of the gift. No confirmation etc.on the so-called donor was produced. Hence thecreditworthiness of the donor has not at all beenestablished. The circumstances clearly warrant aconclusion that it is assessee’s own money in thegarb of loan.” 3. The Tribunal also relied upon the judgment of Hon’bleSupreme CourtCITv. P. Mohanakala291 ITR 278 to the effectthat the explanation under Section 68 implied a proper andacceptable explanation and since explanation furnished by theassessee was not acceptable, the burden on the assessee toexplain genuineness of the credit entry was not discharged. 4. We have heard learned counsel for the appellant. 5. Learned counsel for the appellant submits that theaddition by the Assessing Officer as upheld by the CIT(A) and theTribunal is not called for. The creditor of the assessee hadreceived a gift from his maternal uncle and in any case, theaddition should be in the hands of the creditor. 6. We are unable to accept the submission. The findingof fact recorded concurrently by the three authorities is that theassessee had no explanation for the credit entry and the samerepresented its undisclosed income. Explanation by DineshGoyal was false as he did not have any source of money. Hisplea of receipt by way of gift was also false. The said findings arebased on appreciation of material on record and are not shown tobe unreasonable or perverse. Even if a different view could betaken, the questions raised cannot be held to be substantialquestions of law. 7. Accordingly, the appeal is dismissed with costsquantified at `10,000/- to be deposited with the High Court LegalAid Committee. (ADARSH KUMAR GOEL) JUDGE ( AJAY KUMAR MITTAL ) JUDGE