1 A.F.R. Court No. - 4 Case :- INCOME TAX APPEAL No. - 184 of 2013 Appellant :- Ram Baboo Agrawal Respondent :- Commissioner Of Income Tax, Agra And Another Counsel for Appellant :- Suyash Agarwal Counsel for Respondent :- S.S.C. (Income Tax Dep.), Shubham Agarwal Hon'ble Abhinava Upadhya, J. Hon'ble Ashok Kumar,J. (Per-Ashok Kumar, J.) This Income Tax Appeal arise from decision of Income Tax Appellate Tribunal (in short 'ITAT') dated 28.12.2012 passed in I.T.A. No. 245/Agra/2012 (Assessment Year 2007-08). following questions of law have been framed by assessee : (i) Whether on facts and circumstances of case ITAT was right in making addition of Rs.3,71,000/- under Section 68 of Act relating to 22 creditors whose amount was below Rs.20000/- and who advance money to appellant for purchasing silver ornaments ? (ii) Whether appellant having discharge onus by submitting confirmatory letters with complete address of creditors and amount being below Rs.20,000/- per creditor ITAT was right in making addition on ground that no request for summoning any creditor was made by appellant ? (iii) Whether section 40A (3) of Act does not require creditor to make expenditure in respect of payment made in day otherwise then by account payee cheque or bank draft exceeding Rs.20,000/-, ITAT was right to make addition of payment made by 22 small creditors for purchase of silver ornaments in hands of appellant? brief facts of present case are that source of 2 income of appellant was to earn interest from various parties under his business of money lending in name of Rajnikant and brothers. present appellant was also indulge in another business which was proprietorship concerned in name of M/s Yashodhara Jewellers which was engaged in silver and gold ornaments business. For Assessment Year in question assessing authority of appellant has passed assessment order under Section 143(3) of Income Tax Act, 1961 (hereinafter referred to as Act) and vide order dated 14.12.2009 assessing authority has determined total income of appellant to tune of Rs.7,77,614/-. It is relevant to mention here that appellant has declared its income at Rs.4,06,614/-. case of appellant was taken up for scrutiny and notice under Section 143 (2) has been issued and served. In reply to said notice authorised representatives of appellant along with assessee attended proceeding before assessing authority from time to time. During course of scrutiny proceeding assessing authority has noticed that number of cash credit entries were appearing in books from about 20 persons. It is further noticed that to establish genuineness of aforesaid credit entries confirmatory letters were brought on record to substantiate genuineness of said transactions. assessing authority has noticed that alleged confirmatory letters were having no proof with regard to identification of alleged creditors. He has further found that all transactions were in cash. assessing authority has therefore, doubted genuineness of transaction as same were neither verifiable nor substantiated by appellant. assessing authority has further found that credit worthiness of alleged creditors 3 was also remained un-established in absence of genuineness of persons who have credited amount in cash as well as genuineness of transactions. assessing authority has therefore, confronted aforesaid facts to assessee and has issued show cause notice indicating wherein that as to why alleged cash credit should not be treated as unexplained income under Section 68 of Act. In its turn assessee has submitted that he is doing silver ornament business and for said business, some persons have given him advanced to purchase silver ornaments on their behalf as per suitable rates. On query made by assessing authority, it is found that persons whose names were mentioned in cash book and who allegedly advance money for purchase of silver ornaments were not brought forward as such according to appellant himself appellant has returned amount to all parties in cash. It is noticed by assessing authority that all persons who had advanced cash money for purchase of silver ornaments were very ordinary persons and none of them were assessed to income tax by department. Considering aforesaid facts and that there was no other documentary evidence adduced by appellant which supports his claim, it was unbelievable to assessing authority that such large number of cash deposit to purchase of silver ornaments without any identity proof is correctly established. assessing authority therefore, has found that explanation which has been furnished by assessee was wholly imaginary and was without any substance or evidence as he failed to substantiate genuineness of cash credit as such has held to be unexplained and accordingly aggregate amount which has 4 been found/ noticed in cash book under heading of credit entries total sum of Rs.3,71,000/- has been added to income of assessee. Aggrieved by order of assessing authority appellant has preferred appeal before CIT (Appeals) who vide its order dated 28.12.2011 has dismissed appeal filed by appellant and has confirmed order passed by assessing authority. Still aggrieved by order of CIT (Appeal) appellant has preferred appeal before ITAT which has been dismissed vide impugned order and judgment dated 28.12.2012. instant appeal is against judgment and order of ITAT dated 28.12.2012. We have heard Sri Suyash Agrawal, learned counsel for assessee and Sri Shubham Agrawal, learned counsel for department. counsel for assessee has submitted that assessee is in business of Silver Ornaments and those 20 creditors have given advance to him for purchase of Silver Ornaments as per suitable rates. He has further submitted that assessee has filed confirmation letters with regard to transaction which was routed in cash. He has further submitted that books of account have been accepted by assessing authority except addition of sum of Rs.3,71,000/- as unexplained amount. Learned counsel for assessee has therefore, submitted that assessing authority has not discharged his burden as provided under Section 68 of Act. Section 68 of Act provides as under. Where any sum is found credited in books of 5 assessee maintained for any previous year, and assessee offers no explanation about nature and source thereof or explanation offered by him is not, in opinion of Assessing Officer, satisfactory, sum so credited may be charged to income-tax as income of assessee of that previous year. [Provided that where assessee is company (not being company in which public are substantially interested), and sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) person, being resident in whose name such credit is recorded in books of such company also offers explanation about nature and source of such sum so credited; and (b) such explanation in opinion of Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in first proviso shall apply if person, in whose name sum referred to therein is recorded, is venture capital fund or venture capital company as referred to in clause 23(FB) of section10.] Learned counsel for assessee appellant has submitted that amount which has been given by persons is less than Rs.20,000/- each in all cases and this is kind of regular feature in case of assessee likewise. He has further submitted that silver ornaments could not be purchased against cash money provided by individuals on account of continuously increase in price of goods/silver ornaments therefore, ultimately entire amount has been returned to respective parties. Similar submissions has been reiterated before Appellate Tribunal while challenging order passed by CIT (Appeals). ITAT has considered facts of case 6 and has noticed that assessee has not proved ingredients of Section 68 of Act. burden is upon assessee to prove identity of creditors, their creditworthiness and genuineness. We find that in present case, appellant assessee has not proved any of aforesaid conditions of Section 68 of Act. It is noticed by Tribunal that though confirmation letters from creditors are placed but no supportive evidence to prove identity of creditors or their creditworthiness and genuineness of transaction is placed. Tribunal therefore, has held that since assessee has failed to prove primary condition of provisions of Section 68 of Act, merely confirmation letters can not substantiate genuineness and creditworthiness as well as identity of creditors. decisions which are cited by appellant before Tribunal are duly considered and Tribunal has found that cited decisions are not applicable to facts of case of appellant. It is further noticed by us that neither before CIT (Appeals) nor before Tribunal appellant has furnished any evidence to prove identity of creditors, their creditworthiness and genuineness of transaction in matter. In our opinion, Tribunal had taken all relevant facts into consideration and conclusion arrived by Tribunal that loans represented assessee's income from undisclosed sources was not perverse or unreasonable. In view of aforesaid facts, we find no merit in present appeal. Accordingly, appeal is dismissed. Order Date :- 06.11.2017 S.S. . (Ashok Kumar, J.) (Abhinava Upadhya, J.) Ram Baboo Agrawal v. Commissioner of Income-tax, Agra and Another