spb/ 15itxa1750-17.doc IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 1750 OF 2017 Mr. Gaurav Triyugi Singh Appellant. R/at. 3005-A, Oberoi Woods, Mohan Gokhale Marg, Goregaon (E), Mumbai- 400 063. V/s. Income Tax Officer-24(3)(1), having his office at C-11, 7th floor, Pratyakshakar Bhavan, Bandra-Kurla Complex, Bandra (E), Mumbai -51. Respondent. Mr. Dharam V. Gandhi, Advocate for Appellant. Mr. Sham Walve, Advocate a/w. Mr. Pritesh Chatterjee, Advocate for Respondent. CORAM : UJJAL BHUYAN AND MILIND N. JADHAV,JJ. DATE : JANUARY 22, 2020. ORAL ORDER : 1 Heard Mr. D. V. Gandhi, learned counsel for Appellant; and Mr. Sham Walve, learned standing counsel Revenue for Respondent. 2 Considering subject matter of appeal, Digitally signed we are of view that same can be disposed of by Shalikram P. Borey Shalikram Date: P. Borey 2020.01.28 17:45:20 0530 Borey 1/9 spb/ 15itxa1750-17.doc at this stage itself. Consequently, notice is made returnable forthwith and by consent of parties, appeal is taken up for final disposal. 3 This Appeal has been preferred by assessee under section 260-A of Income Tax Act, 1961, assailing legality and correctness of order dated 11.05.2017 passed by Income Tax Appellate Tribunal, Mumbai Bench G , Mumbai (Tribunal) in Income Tax Appeal No. 6160/Mum/2016 for assessment year 2010-11. 4 Short point for consideration in this Appeal is addition of sum of Rs. 14 lakhs to income of assessee by Assessing Officer under section 68 of Income Tax Act, 1961 (briefly, Act hereinafter), as modified by Tribunal. 5 Assessee is individual and for assessment year under consideration, he filed return of income disclosing total income of Rs. 17,04,320.00. During assessment proceedings, Assessing Officer found that assessee had taken unsecured loan from amongst others Smt. Savitri Thakur for amount of Rs. 17,04,320/-. Assessee was asked to submit loan confirmation as well as copy of returns of income Borey 2/9 spb/ 15itxa1750-17.doc and bank statements of Smt. Savitri Thakur. Though those were submitted, Assessing Officer was not satisfied and took view that genuineness of loan was not established by assessee; besides credit worthiness of Smt. Savitri Thakur was found to be suspect. Consequently, aforesaid amount of Rs. 17 lakhs was added back to total income of assessee under section 68 of Act as unexplained cash credit vide assessment order dated 22.03.2013. 6 As against above, assessee preferred appeal before Commissioner of Income Tax (Appeals)-42, Mumbai. By order dated 04.07.2016, Appellate Authority upheld and confirmed order of Assessing Officer. 7 Assessee carried matter further in appeal before Tribunal. Out of Rs. 17 lakhs loan given by Smt. Savitri Thakur to assessee, Tribunal held that loan amount of Rs. 3 lakhs was properly explained as assessee had proved genuineness of transaction, creditworthiness and identity of creditor. However, regarding balance amount of Rs. 14 lakhs, Tribunal held that source of said amount was full of doubts and explanation provided by assessee Borey 3/9 spb/ 15itxa1750-17.doc could not be accepted. Accordingly addition of Rs. 14 lakhs was upheld while deleting addition of Rs. 3 lakhs vide order dated 11.05.2017. 8 Aggrieved, present appeal has been preferred. 9 Though number of questions have been proposed by Appellant as substantial questions of law, we find that following question covers controversy in question, which is as under : Whether on facts and in circumstances of case and in law, Tribunal was justified in upholding addition in respect of unsecured loan of Rs. 14,00,000/- under section 68 of Act, inspite of fact that initial onus laid down on Appellant was duly discharged ?. 10 Submissions made have been considered. 11 Regarding Smt. Savitri Thakur, it is seen that she had issued cheque payment of Rs. 14 lakhs dated 21.07.2009 to Appellant. Prior to issuance of cheques, this amount was credited into bank Borey 4/9 spb/ 15itxa1750-17.doc account of Smt. Savitri Thakur maintained in State Bank of India, Rae Baraeli Branch. There were three transfers of Rs. 5 lakhs, Rs. 5 lakhs and Rs. 4 lakhs into above account of Smt. Savitri Thakur before issue of cheques by her to assessee. Smt. Savitri Thakur claimed that these amounts were received by her as gifts from one Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. Shri Rajendra Bahadur Singh is brother of Smt. Savitri Thakur and Smt. Sarojini Thakur is sister of Smt Savitri Thakur. Shri Rajendra Bahadur Singh had gifted Rs. 5 lakhs to Smt. Savitri Thakur and Smt. Sarojini Thakur had gifted to Rs. 5 lakhs and Rs. 4 lakhs to Smt. Savitri Thakur. Result of verification and remarks by Department in respect of Shri Rajendra Bahadur Singh is as under : donor had retired in 2003 and claims to earn tuition income of Rs. 1.5 Lacs p.a. and this money has been claimed to have been hoarded and kept in cash by him over several years and he claims that out of this accumulation he deposited sum of Rs. 5,00,000/- in cash in his bank account with SBI Rae Baraeli on 20.07.2009 and it was transferred to Savitri Thakur on 20.07.2009. donor has not filed any income tax return. Borey 5/9 spb/ 15itxa1750-17.doc 11.1. Similarly in respect of Smt. Sarojini Thakur, result of verification and remarks by Department is as under : This donor has ostensibly retired from service in 2007 and she has deposited cash of Rs. 9,00,000/- in her bank with SBI, Rae Baraeli on 18.07.2009 before issuing two cheques to Savitri Thakur. She has not filed any return of income admittedly from A.Y. 2008-09. She also claims to receive agricultural income of Rs. 1.5 lacs p.a. which is claimed to be kept in cash with her since several years. 12 At this stage, it would be apposite to advert to section 68 of Act, relevant portion of which reads as under : 68. Where any sum is found credited in books of assessee maintained from 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. Borey 6/9 spb/ 15itxa1750-17.doc 12.1. From reading of section 68, as extracted above, it is seen that if amount is credited in books of assessee maintained from 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 relevant previous year. 13 Section 68 of Act has received considerable attention of courts. It has been held that it is necessary for assessee to prove prima facie transaction which results in cash credit in his books of account. Such proof would include proof of identity of creditor, capacity of such creditor to advance money and lastly, genuineness of transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, assessee has to explain or satisfy three conditions, namely : (i) identity of creditor; (ii) genuineness of transaction; and (iii) credit-worthiness of creditor. 14 In Principal Commissioner of Income Tax vs. Veedhata Tower Pvt. Ltd., (2018) 403 ITR Borey 7/9 spb/ 15itxa1750-17.doc 415 (Bom), this court has held that assessee is only required to explain source of credit. There is no requirement under law to explain source of source. In instant case, there is no dispute as to identity of creditor. There is also no dispute about genuineness of transaction. That apart, creditor has explained as to how credit was given to assessee. Thus assessee had discharged onus which was on him as per requirement of section 68 of Act. What Assessing Officer held was that sources of source were suspect i.e., he suspected two sources Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur of source Smt. Savitri Thakur. 15 In view of discharge of burden by assessee, burden shifted to revenue; but revenue could not prove or bring any material to impeach source of credit. Though Mr. Walve, learned standing counsel, has pointed out that creditor had no regular source of income to justify advancement of credit to assessee, we are of view that assessee had discharged onus which was on him to explain three requirements, as noted above. It was not required for assessee to explain sources of source. In other words, he Borey 8/9 spb/ 15itxa1750-17.doc was not required to explain sources of money provided by creditor Smt. Savitri Thakur i.e. Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur. 16 Considering above, we are of view that Tribunal was not justified in sustaining addition of Rs. 14 lakhs to total income of assessee as undisclosed cash credit under section 68 of Act. 17 Consequently, finding of Tribunal to above extent is set aside. question framed is answered in favour of assessee and against Revenue. 18 Appeal is accordingly allowed but with no order as to cost. (MILIND N. JADHAV, J.) (UJJAL BHUYAN, J.) Borey 9/9 Gaurav Triyugi Singh v. Income-tax Officer-24(3)(1), Mumbai