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\nIN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nORDINARY ORIGINAL CIVIL JURISDICTION
\nINCOME TAX APPEAL NO. 1750 OF 2017
\nMr. Gaurav Triyugi Singh … Appellant.
\nR\/at. 3005-A, Oberoi Woods, Mohan
\nGokhale Marg, Goregaon (E),
\nMumbai- 400 063.
\nV\/s.
\nThe Income Tax Officer-24(3)(1),
\nhaving his office at C-11, 7th floor,
\nPratyakshakar Bhavan, Bandra-Kurla
\nComplex, Bandra (E), Mumbai -51. \u2026 Respondent.
\n—
\nMr. Dharam V. Gandhi, Advocate for the Appellant.
\nMr. Sham Walve, Advocate a\/w. Mr. Pritesh Chatterjee,
\nAdvocate for the Respondent.
\n—
\nCORAM : UJJAL BHUYAN AND
\nMILIND N. JADHAV,JJ.
\nDATE : JANUARY 22, 2020.
\nORAL ORDER :
\n1 Heard Mr. D. V. Gandhi, learned counsel for
\nthe Appellant; and Mr. Sham Walve, learned standing
\ncounsel Revenue for the Respondent.
\n2 Considering the subject matter of the appeal,
\nwe are of the view that the same can be disposed of
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\nat this stage itself. Consequently, notice is made
\nreturnable forthwith and by consent of the parties,
\nappeal is taken up for final disposal.
\n3 This Appeal has been preferred by the
\nassessee under section 260-A of the Income Tax Act,
\n1961, assailing the legality and correctness of the order
\ndated 11.05.2017 passed by the Income Tax Appellate
\nTribunal, Mumbai Bench \u201cG\u201d, Mumbai (Tribunal) in
\nIncome Tax Appeal No. 6160\/Mum\/2016 for the
\nassessment year 2010-11.
\n4 Short point for consideration in this Appeal is
\nthe addition of a sum of Rs. 14 lakhs to the income of
\nthe assessee by the Assessing Officer under section 68
\nof the Income Tax Act, 1961 (briefly, \u201cthe Act\u201d
\nhereinafter), as modified by the Tribunal.
\n5 Assessee is an individual and for the
\nassessment year under consideration, he filed return of
\nincome disclosing total income of Rs. 17,04,320.00.
\nDuring the assessment proceedings, Assessing Officer
\nfound that assessee had taken unsecured loan from
\namongst others Smt. Savitri Thakur for an amount of
\nRs. 17,04,320\/-. Assessee was asked to submit loan
\nconfirmation as well as copy of the returns of income
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\nand bank statements of Smt. Savitri Thakur. Though
\nthose were submitted, Assessing Officer was not
\nsatisfied and took the view that genuineness of the
\nloan was not established by the assessee; besides credit
\nworthiness of Smt. Savitri Thakur was found to be
\nsuspect. Consequently, the aforesaid amount of Rs.
\n17 lakhs was added back to the total income of the
\nassessee under section 68 of the Act as unexplained
\ncash credit vide the assessment order dated
\n22.03.2013.
\n6 As against the above, assessee preferred
\nappeal before the Commissioner of Income Tax
\n(Appeals)-42, Mumbai. By order dated 04.07.2016, the
\nAppellate Authority upheld and confirmed the order of
\nthe Assessing Officer.
\n7 Assessee carried the matter further in appeal
\nbefore the Tribunal. Out of Rs. 17 lakhs loan given by
\nSmt. Savitri Thakur to the assessee, Tribunal held that
\nloan amount of Rs. 3 lakhs was properly explained as
\nassessee had proved genuineness of the transaction,
\ncreditworthiness and identity of the creditor. However,
\nregarding the balance amount of Rs. 14 lakhs,
\nTribunal held that source of the said amount was full
\nof doubts and explanation provided by the assessee
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\ncould not be accepted. Accordingly addition of Rs. 14
\nlakhs was upheld while deleting the addition of Rs. 3
\nlakhs vide the order dated 11.05.2017.
\n8 Aggrieved, present appeal has been
\npreferred.
\n9 Though a number of questions have been
\nproposed by the Appellant as substantial questions of
\nlaw, we find that the following question covers the
\ncontroversy in question, which is as under :
\nWhether on the facts and in the circumstances of
\nthe case and in law, the Tribunal was justified in
\nupholding the addition in respect of unsecured
\nloan of Rs. 14,00,000\/- under section 68 of the
\nAct, inspite of the fact that the initial onus laid
\ndown on the Appellant was duly discharged ?.
\n10 Submissions made have been considered.
\n11 Regarding Smt. Savitri Thakur, it is seen that
\nshe had issued cheque payment of Rs. 14 lakhs dated
\n21.07.2009 to the Appellant. Prior to the issuance of
\nthe cheques, this amount was credited into the bank
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\naccount of Smt. Savitri Thakur maintained in the State
\nBank of India, Rae Baraeli Branch. There were three
\ntransfers of Rs. 5 lakhs, Rs. 5 lakhs and Rs. 4 lakhs into
\nthe above account of Smt. Savitri Thakur before issue
\nof cheques by her to the assessee. Smt. Savitri Thakur
\nclaimed that these amounts were received by her as
\ngifts from one Shri Rajendra Bahadur Singh and Smt.
\nSarojini Thakur. Shri Rajendra Bahadur Singh is the
\nbrother of Smt. Savitri Thakur and Smt. Sarojini Thakur
\nis the sister of Smt Savitri Thakur. Shri Rajendra
\nBahadur Singh had gifted Rs. 5 lakhs to Smt. Savitri
\nThakur and Smt. Sarojini Thakur had gifted to Rs. 5
\nlakhs and Rs. 4 lakhs to Smt. Savitri Thakur. Result of
\nverification and remarks by the Department in respect
\nof Shri Rajendra Bahadur Singh is as under :
\n\u201cThe donor had retired in 2003 and claims to
\nearn tuition income of Rs. 1.5 Lacs p.a. and this
\nmoney has been claimed to have been hoarded
\nand kept in cash by him over several years and he
\nclaims that out of this accumulation he
\ndeposited a sum of Rs. 5,00,000\/- in cash in his
\nbank account with SBI Rae Baraeli on 20.07.2009
\nand it was transferred to Savitri Thakur on
\n20.07.2009. The donor has not filed any income
\ntax return.\u201d
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\n11.1. Similarly in respect of Smt. Sarojini Thakur,
\nresult of verification and remarks by the Department
\nis as under :
\n\u201cThis donor has ostensibly retired from service in
\n2007 and she has deposited cash of Rs.
\n9,00,000\/- in her bank with SBI, Rae Baraeli on
\n18.07.2009 before issuing two cheques to Savitri
\nThakur. She has not filed any return of income
\nadmittedly from A.Y. 2008-09. She also claims to
\nreceive agricultural income of Rs. 1.5 lacs p.a.
\nwhich is claimed to be kept in cash with her since
\nseveral years.\u201d
\n12 At this stage, it would be apposite to advert
\nto section 68 of the Act, relevant portion of which reads
\nas under :
\n\u201c68. Where any sum is found credited in the
\nbooks of an assessee maintained from any
\nprevious year, and the assessee offers no
\nexplanation about the nature and source thereof
\nor the explanation offered by him is not, in the
\nopinion of the Assessing Officer, satisfactory, the
\nsum so credited may be charged to income -tax
\nas the income of the assessee of that previous
\nyear. \u2026…\u2026….\u201d
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\n12.1. From a reading of section 68, as extracted
\nabove, it is seen that if an amount is credited in the
\nbooks of an assessee maintained from any previous
\nyear and the assessee offers no explanation about the
\nnature and source thereof or the explanation offered
\nby him is not, in the opinion of the Assessing Officer,
\nsatisfactory, the sum so credited may be charged to
\nincome tax, as the income of the assessee of the
\nrelevant previous year.
\n13 Section 68 of the Act has received
\nconsiderable attention of the courts. It has been held
\nthat it is necessary for an assessee to prove prima
\nfacie the transaction which results in a cash credit in
\nhis books of account. Such proof would include proof
\nof identity of the creditor, capacity of such creditor to
\nadvance the money and lastly, genuineness of the
\ntransaction. Thus, in order to establish receipt of credit
\nin cash, as per requirement of section 68, the assessee
\nhas to explain or satisfy three conditions, namely : (i)
\nidentity of the creditor; (ii) genuineness of the
\ntransaction; and (iii) credit-worthiness of the creditor.
\n14 In Principal Commissioner of Income
\nTax vs. Veedhata Tower Pvt. Ltd., (2018) 403 ITR
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\n415 (Bom), this court has held that assessee is only
\nrequired to explain the source of the credit. There is
\nno requirement under the law to explain the source of
\nthe source. In the instant case, there is no dispute as
\nto the identity of the creditor. There is also no dispute
\nabout the genuineness of the transaction. That apart,
\nthe creditor has explained as to how the credit was
\ngiven to the assessee. Thus assessee had discharged
\nthe onus which was on him as per the requirement of
\nsection 68 of the Act. What the Assessing Officer held
\nwas that sources of the source were suspect i.e., he
\nsuspected the two sources Shri Rajendra Bahadur Singh
\nand Smt. Sarojini Thakur of the source Smt. Savitri
\nThakur.
\n15 In view of discharge of burden by the
\nassessee, burden shifted to the revenue; but revenue
\ncould not prove or bring any material to impeach the
\nsource of the credit. Though Mr. Walve, learned
\nstanding counsel, has pointed out that the creditor had
\nno regular source of income to justify the
\nadvancement of the credit to the assessee, we are of
\nthe view that the assessee had discharged the onus
\nwhich was on him to explain the three requirements,
\nas noted above. It was not required for the assessee
\nto explain the sources of the source. In other words, he
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\nwas not required to explain the sources of the money
\nprovided by the creditor Smt. Savitri Thakur i.e. Shri
\nRajendra Bahadur Singh and Smt. Sarojini Thakur.
\n16 Considering the above, we are of the view
\nthat the Tribunal was not justified in sustaining the
\naddition of Rs. 14 lakhs to the total income of the
\nassessee as undisclosed cash credit under section 68
\nof the Act.
\n17 Consequently, finding of the Tribunal to the
\nabove extent is set aside. The question framed is
\nanswered in favour of the assessee and against the
\nRevenue.
\n18 Appeal is accordingly allowed but with no
\norder as to cost.
\n(MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.)
\n\u2026..
\nBorey 9\/9<\/p>\n","protected":false},"excerpt":{"rendered":"
Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely : (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor<\/p>\n