Gujarat High Court
Aiyub Umarji Patel vs Income Tax on 12 February, 2013
Author: Akil Kureshi
Bench: Akil Kureshi
AIYUB UMARJI PATEL....Appellant(s)V/SINCOME TAX OFFICER....Opponent(s) O/TAXAP/502/2012 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 502 of 2012 ================================================================ AIYUB UMARJI PATEL....Appellant(s) Versus INCOME TAX OFFICER....Opponent(s) ================================================================ Appearance: MR RK PATEL, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI Date : 12/02/2013 ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI) Assessee has preferred this appeal challenging the judgement of Income Tax Appellate Tribunal dated 31.01.2012. Following questions have been framed for our consideration:
(1) Whether on facts and in law, the Tribunal has substantially erred in interpreting section 68 to confirm addition of Rs. 25,97,902/- made by the Assessing Officer?
(2) Whether on facts and in law, the Tribunal has substantially erred in disregarding relevant factors based on contentions and documentary evidence on record and considering irrelevant facts/principles of law while confirming addition of Rs. 25,97,902/- made by the Assessing Officer by invoking section 68 of the Income Tax Act, 1961.
(3) Whether on facts and in law, the Tribunal s findings and conclusions for confirming addition of Rs. 25,97,902/- under section 68 is vitiated findings and conclusions unsustainable on facts, documentary evidence on record and in law?
(4) Whether on facts and in law, when the initial onus is discharged by the appellant, there being no contrary evidence in rebuttal, the disputed addition of Rs. 25,97,902/- under section 68 is sustainable on facts and evidence on record?
2. In brief the history leading to the appeal is as follows:
The appellant-assessee had NRE account in which Assessing Officer, during the course of the assessment proceedings, noticed that there were total deposits of Rs. 25,97,902/-. He, therefore, called upon the assessee to explain such deposits.
2.2 The assessee, in his letter dated 13.12.2007, submitted before the Assessing Officer that he had taken such loans from Shri Yakub Patel, which were transferred from U.K. under the instructions of Habib Bank. Assessing Officer, however, did not accept such explanation. He observed that :
The submission of the assessee is considered carefully. However, the submission of the assessee is not acceptable because the assessee has not produced any evidence from which it can be established that the amount is transferred from the account of his brother. Onus lies on the assessee to justify the creditworthiness of the person from whom loans were taken and genuineness and fairness of the transaction. The assessee failed to furnish the copy of account of the bank from which the funds were transferred to his account. Further, the assessee has not filed any retun of income in response to notice issued u/s. 148 of the I.T.Act. Therefore, the submission of the assessee that he has shown bank interest in his return of income is not correct. Thus, the assessee failed to discharge its duty.
4.3 The onus to prove the genuineness of cash credit lies on the assessee.
Such proof includes proof of source of amount credited and capacity of such credits and the genuineness of the transaction.
4.6 From the facts discussed above, it is clear that the assessee could not prove any of the ingredients to prove the genuineness of the cash deposit. In the circumstances, amount deposited in the Bank account of the assesse to the tune of Rs. 25,97,902/- is treated as income of the assessee from his undisclosed source and brought to tax u/s. 68 of the Income Tax Act, 1961 as unexplained cash credit. Penalty proceedings u/s. n271(1)(c) of the Income Tax Act have been initiated on this issue for concealing the income by way of furnishing of inaccurate particulars of income.
2.3 Such issue was carried in appeal before the CIT(A), who dismissed the appeal observing inter alia that although assessee had contended that the amounts were received from NRE account of Shri Yakub Patel, the details of the bank account of Shri Yakub Patel, from which the amounts were transferred, were not furnished. It was found that in the NRE Bank Account No. 508 of Shri Yakub Patel, Bank of Baroda, Bharuch, the balance available was a meager sum. In the year 2003-04, Shri Yakub Patel had declared income of Rs. 53,405/- from property business. Thus, the creditworthiness of Shri Yakub Patel had also not been established.
2.3 Assessee carried the matter in further appeal before the Tribunal. The Tribunal, by the impugned order, confirmed the view of the revenue authorities. It was observed as under:
On consideration of the facts on record and the arguments made by the rival parties, we are of the view that the details of bank account of Shri Yakub Patel from whom the amounts were claimed to have been transferred to assessee s account were not furnished. As per findings of the Ld. CIT(A), in para 4.4 that in the NRE account No. 508 of Shri Yakub Patel, Bank of Baroda, Bharuch, the balance available was meager and in the return of income for the A.Y. 2003-04, Shri Yakub Patel had declared income of Rs. 53,405/- from the proprietor business in the name of World Talk Telecom Centre, Bharuch. The creditworthiness of Shri Yakub Patel had not been thus established. Moreover, nothing has been brought on record to prove the genuineness and creditworthiness of the transaction. In the circumstances and facts of the case and in view of the judgement of Hon ble Apex Court in the case of CIT v. P Mohankala & Others 210 CTR 20 (SC), where the explanation offered by the assessee about the nature and source of such sums found credited in the books of account of the assessee is not found satisfactory, the same has to be charged to the income tax. Therefore in the present circumstances and facts of the case, we find no error in the order of Ld. CIT(A). Thus, the solitary ground of assessee is dismissed.
3. Having heard learned counsel for the appellant, we are of the opinion that the entire issue has been considered at length by the revenue authorities and the Tribunal. It was found that though sizable amount of money was credited in the account of the assessee, he could give no explanation about the source or the creditworthiness of the payee. This was certainly not a case where the revenue was insisting on gathering source of the source from the assessee. In that view of the matter, decision of this Court relied upon by the counsel for the assessee in case of Deputy Commissioner of Income Tax Vs. Rohini Builders reported in 256 ITR 360 and in case of Murlidhar Lahorimal Vs. Commissioner of Income Tax reported in [2006] 280 ITR 512 would have no applicability.
4. We may notice that the Tribunal and the revenue authorities relied on the decision of Apex Court in case of Commissioner of Income Tax Vs. P. Mohanakala reported in [2007] 291 ITR 278 wherein, it was observed that in cases where explanation offered by the assessee about the nature and source of the sums found credited in the books is not satisfactory, there is, prima facie, evidence against the assessee viz. the receipt of money. The burden would be on the assessee to rebut the same, and, if he fails to do so, it can be held against the assessee that it was a receipt in the nature of an income.
5. In the present case, the assessee, when confronted with the sizable credits in his account, merely stated that the sums were received from his brother without giving any further details of either the source or the creditworthiness thereof. Though before us counsel for the revenue contended that the amounts were received for the construction of a hospital before the Revenue Authorities all throughout apparently, the stand of the assessee was that such amount was received as loan from his brother.
6. In the result, tax appeal is dismissed.
(AKIL KURESHI, J.) (MS SONIA GOKANI, J.) Jyoti Page 6 of 6