Blessing Construction v. ITO - Taxpublishers.in

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The Tax Publishers2013 TaxPub(DT) 1442 (Guj-HC) : (2013) 052 (I) ITCL 0517 : (2013) 214 TAXMAN 0645 Income Tax Act, 1961 --Income from undisclosed sources--Addition under section 68 Capacity and creditworthiness of depositorsAssessing officer made addition of unsecured loans as unexplained cash credits by holding that capacity and creditworthiness of depositors were not proved. On appeal, Commissioner (Appeals) observed that the cash was deposited in bank accounts of the depositors immediately prior to giving loan to assessee. He also noticed that after giving the loan, very small amount remained in the account of depositors, further, depositor had not maintained any books of account. Accordingly, Commissioner (Appeals) confirmed the addition on account of non-establishment of creditworthiness of depositors. Tribunal also confirmed the addition. Aggrieved, assessee filed before this court submitting that while examining the question of addition under section 68, assessee could not be expected to establish source of the income of depositors, i.e., source of the source. *Held:* There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meagre balance shortly before sizable amount of Rs. 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such depositors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. Therefore, the very genuineness of the transaction was not established and therefore, addition was justified. Income Tax Act, 1961, Section 68 In the Gujarat High Court Akil Kureshi & Sonia Gokani, J.J. Blessing Construction v. ITO Tax Appeal No. 16 of 2013 13 March, 2013 *Decision:* In favour of revenue. Appellant by : Udayan P. Vyas ORDER *Akil Kureshi, J.* Assessee is in appeal against the judgment of the Income Tax Appellate Tribunal ('the Tribunal' for short) dated 29-12-2011 raising following questions for our consideration : (1) Whether on the facts and circumstances of the case, the Tribunal has erred in law in confirming the additions of unsecured loans as unexplained cash credit under section 68 of the Income Tax Act, 1961 on the ground that assessee has failed to discharge the onus of proving the source of source or origin of the cash credits? (2) Whether, on the facts and circumstances of the case, the Tribunal is justified in law in applying against the assessee the fact of not satisfying the authorities as to the source from which the depositors derived the money while confirming the addition as unexplained cash credit under section 68 of the Income Tax Act, 1961? 2. The issue pertains to a sum of Rs. 13 lakhs treated as cash credit under section 68 of the Income Tax Act, 1961 by the assessing officer. Such assessment was confirmed by the Commissioner (Appeals) as well as by the Tribunal. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1442 (Guj-HC) : (2013) 052 (I) ITCL 0517 : (2013) 214 TAXMAN 0645

Income Tax Act, 1961

--Income from undisclosed sources--Addition under section 68 Capacity and creditworthiness of depositorsAssessing officer made addition of unsecured loans as unexplained cash credits by holding that capacity and creditworthiness of depositors were not proved. On appeal, Commissioner (Appeals) observed that the cash was deposited in bank accounts of the depositors immediately prior to giving loan to assessee. He also noticed that after giving the loan, very small amount remained in the account of depositors, further, depositor had not maintained any books of account. Accordingly, Commissioner (Appeals) confirmed the addition on account of non-establishment of creditworthiness of depositors. Tribunal also confirmed the addition. Aggrieved, assessee filed before this court submitting that while examining the question of addition under section 68, assessee could not be expected to establish source of the income of depositors, i.e., source of the source. Held: There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meagre balance shortly before sizable amount of Rs. 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such depositors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. Therefore, the very genuineness of the transaction was not established and therefore, addition was justified.

Income Tax Act, 1961, Section 68

In the Gujarat High Court

Akil Kureshi & Sonia Gokani, J.J.

Blessing Construction v. ITO

Tax Appeal No. 16 of 2013

13 March, 2013

Decision: In favour of revenue.

Appellant by : Udayan P. Vyas

ORDER

Akil Kureshi, J.

Assessee is in appeal against the judgment of the Income Tax Appellate Tribunal ('the Tribunal' for short) dated 29-12-2011 raising following questions for our consideration :

(1) Whether on the facts and circumstances of the case, the Tribunal has erred in law in confirming the additions of unsecured loans as unexplained cash credit under section 68 of the Income Tax Act, 1961 on the ground that assessee has failed to discharge the onus of proving the source of source or origin of the cash credits?

(2) Whether, on the facts and circumstances of the case, the Tribunal is justified in law in applying against the assessee the fact of not satisfying the authorities as to the source from which the depositors derived the money while confirming the addition as unexplained cash credit under section 68 of the Income Tax Act, 1961?

2. The issue pertains to a sum of Rs. 13 lakhs treated as cash credit under section 68 of the Income Tax Act, 1961 by the assessing officer. Such assessment was confirmed by the Commissioner (Appeals) as well as by the Tribunal.