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Case Law Details

Case Name : DCIT Vs Sahara India Financial Corpn. Ltd (ITAT Delhi)
Appeal Number : ITA No. 3199/Del/2013
Date of Judgement/Order : 10/01/2014
Related Assessment Year :
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Assessee’s onus in respect of creditworthiness of the depositors is to be tested in the context of the nature of business of the assessee and not divorced therefrom. For any RNBC registered with RBI engaged in the business of mobilizing deposits, it is well nigh impossible to insist on the depositor to submit documents to establish creditworthiness of the prospective depositors before accepting the deposit. Such a stand is against the banking business regulations and would have serious adverse effect on the banking business. Assessee’ s insistence of conditions which is not asked by other similar banking institution will make the depositors run away to some other institution. Assessee cannot run the risk of being branded as a depositor unfriendly nasty and snooping RNBC, which requires for papers and questions which are not asked by others. Such an exercise is likely to finish its business.

As a matter of customary practice and RNBC regulations, bank never enquiries or insistence on proof about the source of such deposit or creditworthiness of such depositor. It is to be properly appreciated that in the context of assessee’s business, which is akin to banking business, the primary onus on the assessee would stand discharged if the assessee is able to show compliance of KYC norms, which are insisted upon by RBI as a condition precedent for opening the account. Thus once the RNBFC had complied with the KYC norms a fact which is admitted by the special auditor, the primary onus on the assessee to prove the creditworthiness of the depositors stood discharged.


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