IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.132 of 2011 Date of decision: 11.3.2011 M/s Ram Gopal Harbans Lal. -----Appellant. Vs. Commissioner of Income Tax. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. R.S. Sihota, Sr.Advocate with Mr. B.R. Rana, Advocate for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, New Delhi dated 28.6.2010 in ITA No.726/Del/2009 claiming following substantial questions of law:- (I) Whether on the facts and circumstances the Income Tax Appellate Tribunal was correct in law to hold that a sum of Rs.2,00,000/- received by Dinesh Goyal from his relatives by bank draft and deposited in his bank account and thereafter deposited in his bank account and thereafter deposited with the Appellant firm was not genuine and belongs to the firm as unexplained cash credit and liable to be assessed I.T.A. No.132 of 2011 under section 68 of the Income Tax Act, 1961 as income of the Appellant Firm? (II). Whether in the light of the law established and based on facts and circumstances the ITAT was legally justified in concluding that the burden of proof cast on the appellant under S.68 of the IT Act, 1961 has not been discharged and the ingredient for invoking section 68 of Income Tax Act are present? (III) Whether on the facts and circumstances, even after admission of loan amount given to the appellant firm by Dinesh Goyal, is there any material on record to hold that the gift amount even if not accepted as genuine in the a/c of Dinesh Goyal, yet can legally be attributed as the income of the appellant firm? (IV) Whether on the facts and circumstances and settled proposition of law, the appellant has not proved the identity of the loaner, genuineness of transaction and capacity of the person advancing the loan to the appellant firm warranting the application of S.68 of Income Tax Act against the appellant? 2. The assessee is a firm running a petrol pump and in its account credited a sum of `2 lacs as loan from one Dinesh Goyal. The Assessing Officer asked the assessee to explain the genuineness of the said cash credit. Accordingly, Dinesh Goyal was examined. It was found that he had no sources of his own and he claimed that he had obtained a gift of `2 lacs from his relative, which explanation was found not to be proper. Accordingly, the amount was treated as undisclosed income of 2 I.T.A. No.132 of 2011 the assessee. The said finding was upheld by the CIT(A) as well as by the Tribunal. The Tribunal observed:- “6. We have heard both the parties and perused the record. It is settled law that for proving the credit u/s 68 of the Income-tax Act, identity and creditworthiness of the lender as well as genuineness of the transaction are needed to be established by the assessee. As per admitted facts of the case, assessee firm has received an unsecured loan of Rs.2,00,000/- from Shri Dinesh Goyal. The said loan has been received through cheque from bank account. An examination of the creditor’s bank account revealed that there was very meager balance in the account and creditor had received Rs.2,00,000/- by demand draft which has been given by cheque to the assessee firm as loan. The said creditor has clearly stated that he has obtained the gift as he was in “need” of the gift. No confirmation etc. on the so-called donor was produced. Hence the creditworthiness of the donor has not at all been established. The circumstances clearly warrant a conclusion that it is assessee’s own money in the garb of loan.” 3. The Tribunal also relied upon the judgment of Hon’ble Supreme Court CIT v. P. Mohanakala 291 ITR 278 to the effect that the explanation under Section 68 implied a proper and acceptable explanation and since explanation furnished by the assessee was not acceptable, the burden on the assessee to explain genuineness of the credit entry was not discharged. 3 I.T.A. No.132 of 2011 4. We have heard learned counsel for the appellant. 5. Learned counsel for the appellant submits that the addition by the Assessing Officer as upheld by the CIT(A) and the Tribunal is not called for. The creditor of the assessee had received a gift from his maternal uncle and in any case, the addition should be in the hands of the creditor. 6. We are unable to accept the submission. The finding of fact recorded concurrently by the three authorities is that the assessee had no explanation for the credit entry and the same represented its undisclosed income. Explanation by Dinesh Goyal was false as he did not have any source of money. His plea of receipt by way of gift was also false. The said findings are based on appreciation of material on record and are not shown to be unreasonable or perverse. Even if a different view could be taken, the questions raised cannot be held to be substantial questions of law. 7. Accordingly, the appeal is dismissed with costs quantified at `10,000/- to be deposited with the High Court Legal Aid Committee. (ADARSH KUMAR GOEL) JUDGE March 11, 2011 ( AJAY KUMAR MITTAL ) ashwani JUDGE 4