Case Law Details
On going through the above discussion the fact is undisputed that assessee has filed the details of names, addresses, Permanent Account Number (PAN), bank statement, income-tax returns and financial statements of all the alleged loan creditors and no anomaly or mistake has been observed by the Revenue authorities except for the low or nil income shown during the year. Further no enquiry has been conducted in any of the loan creditor so as to disprove the evidences and documents placed by assessee with respect to proving identity, creditworthiness and genuineness of the loan creditor. In the course of proceedings before us, we examined two of the loan creditors namely Ranjana Suraj Bhojavani and Hemaben Virumal Miterani from whom loan of Rs. 28,00,000/- & Rs. 19,70,000/- respectively was taken during the year. These two amounts were the two highest amount among 24 loan creditors, with the help of ld. Authorised Representative we went through the confirmations a/c. bank statement, income-tax return and balance sheet of these two creditors and observed that no cash was deposited before the issue of cheque to the assessee and the transactions were entered through account payee cheques only wherein some funds came through third party into the account of loan creditor and thereafter account payee cheques of loan amount were given to the assessee. From the records of these two parties we were satisfied that assessee has substantial evidences to prove the identity, genuineness and creditworthiness as envisaged in the provisions of section 68 of the Act. We further observe that similar details of bank statement, income-tax return and financial statement along with confirmation were placed on record with respect to all other 22 parties. We find it pertinent to observe the lucid finding of Hon. Jurisdictional High Court in the case of Commissioner of Income Tax vs. Ranchhod Jivabhai Nakhava (supra) adjudicating similar issue and almost similar facts wherein Hon. Court observed as follows :-
“After hearing Mrs. Bhatt, the learned advocate appearing on behalf of the appellant and after going through the materials on record, we are unable to accept her contention that in this case the Revenue has discharged its onus and it was for the assessee to further prove the genuineness and creditworthiness of the creditors.
In our view, once the assessee has established that he has taken money by way of accounts payee cheques from the lenders who are all income tax assessees whose PAN have been disclosed, the initial burden under Section 68 of the Act was discharged. It further appears that the assessee had also produced confirmation letters given by those lenders.
Once the Assessing Officer gets hold of the PAN of the lenders, it was his duty to ascertain: from the Assessing Officer of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amount of money had been lent to the assessee. If before verifying of such fact from the Assessing Officer of the lenders of the assessee, the Assessing Officer decides to examine the lenders and asks the assessee to further prove the genuineness and creditworthiness of the transaction, in our opinion, the Assessing Officer did not follow the principle laid down under Section 68 oflhe Income Tax Act.
If on verification, it was found that those lenders did not disclose in their income tax return the transaction or that they had not disclosed the aforesaid amount, the Assessing Officer could call for further explanation from the assessee to prove the genuineness of the transaction or creditworthiness of the same. However, without verifying such fact from the income tax return of the creditors, the action taken by the Assessing Officer in examining the lenders of the assessee was a wrong approach. Moreover, we find that those lenders have made inconsistent statement as pointed out by the Commissioner of Income Tax (Appeals) and in such circumstances, we find that both the Commissioner of Income Tax (Appeals) and the Tribunal were justified in setting aside the deletion as the Assessing Officer, without taking step for verification of the Income Tax Return of the creditors, took unnecessary step of further examining those creditors. If the Assessing Officers of those creditors are satisfied with the explanation given by the creditors as regards those transactions, the Assessing Officer in question has no justification to disbelieve the transactions reflected in the account of the creditors. In other words, the Assessing Officer had no authority to dispute the correctness of assessments of the creditors of the assessee when a co-ordinate Assessing Officer is satisfied with the transaction.
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