ORDER
Shri Abdul Razack, Judicial Member
1. The only grievance of the assessee in this appeal is that the Appellate Commissioner ought not to have confirmed the addition of Rs. 39,000 under section 68 of the Act and the sum of Rs. 12,545 being interest on the cash credits.
2. The Assessing Officer (AO) found that loans/cash credits in the names of below given three persons were not genuine and the assessee as well as the loan creditors failed to establish the validity of the source of the creditworthiness :-
Gokul Prasad Sahu Rs. 13,000 Govind Prasad Sahu Rs. 11,000 Preveen Kumar Jain Sahu Rs. 15,000 3. The assessee's case was that the loans were obtained from those three persons through account payee cheques and all the three creditors were income-tax assessees. As such, the identity and the creditworthiness of those three lenders remained established. The assessee also submitted before the Appellate Commissioner in first appeal that the two out of three creditors were summoned by the Assessing Officer and their oath statements recorded under section 131 of the Act wherein they had accepted having advanced loan to the assessee. These pleadings and arguments were abortive before both the lower tax authorities. The matter, therefore, rests before us by way of second appeal. 4. The assessee's counsel Shri Saboo made personal appearance as well as submitted certain relevant points in writing which have been duly considered in arriving at a decision. The Departmental Representative Smt. Lekha Kumar was also heard who relied upon the reasons given by both the lower tax-authorities.
5. Upon due consideration of the submissions and the examination of the case record, we are of the view that the addition of Rs. 39,000 plus interest thereon ought to have been deleted by the Appellate Commissioner (A.C.) as the assessee has discharged the burden which lay upon it as per section 68 of the Act. The loans by the three persons admittedly are by account payee cheques. The Hon’ble Patna High Court in the case of Addl. CIT v. Bahri Bros. (P.) Ltd. [1985] 154 ITR 244, had held that if loans are given by account payee cheques, it amounts to identification of the parties and discharge of burden by the borrower, namely, the assessee in the present case, and, therefore, the cash credits cannot be treated as income. It is further noticed by us that the Assessing Officer issued summons to two creditors who were also examined on oath under section 131 of the Act. One of the creditors did not appear but the evidence points that the same also was through account payer cheque. All the three creditors are income-tax assessees as is evident from the observations made by the Assessing Officer in the assessment order. The Assessing Officer has merely disbelieved that version of the lenders and he came to the conclusion that they had no creditworthiness or means to advance loan to the assessee. In our view, this cannot be a ground for making addition under section 68 of the Act. Merely falsity of an explanation or not believing an explanation cannot make the loans as income of the assessee in terms of section 68 of the Act. The Assessing Officer cannot convert a good proof into no proof and assess the loans as income of the assessee from some undisclosed sources. The Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723, have held that where the entry stands in the name of third party and the assessee satisfies the ITO as to the identity of the third party and furnishes such other evidence which prima facie establishes that the cash credit entry is not fictitious, the initial burden, which lies on an assessee/borrower, can be said to have been discharged and explained and it will not thereafter be for the assessee to explain Further how or in what circumstances the third party obtained money and how or why he came to make deposit of the same with the assessee. We think the ratio laid down by the Bombay High Court squarely applies to the facts of this case apart from the decision of the Hon’ble Patna High Court in the case of Bahri Bros. (supra). The Hon’ble Supreme Court in the case of CIT v. Daulat Ram Rewatmal [1973] 87 ITR 349 at page 359 has also reiterated that mere falsity of explanation, either of the lender or of the borrower, cannot lead to a conclusion that the borrowed amount is the income of the assessee (borrower) from some undisclosed sources and, therefore, subjected to tax. The judicial pronouncements which we have recorded above, clearly go to the aid of the assessee and which persuade us to reverse the order of the AC in confirming the addition of Rs. 39,000 plus interest there on. We, therefore, reverse the finding and conclusion of the A.C. and direct the Assessing Officer to delete the addition of Rs. 39,000 plus interest of Rs. 12,845 thereon. We order and direct accordingly.
6. Appeal is allowed.
Shri V.K. Sinha, Accountant Member
7. I have gone through carefully the proposed order of my learned brother but, with respect, find that I am unable to agree with the conclusion.
8. The facts require to be stated in some greater detail. The matter concerns cash credits in three names as given in para 2 of the proposed order of my learned brother. It is necessary to notice the peculiar circumstances of each case.
9. Notices under section 131 of the Act were issued to all the three creditors. Shri Gokul Prasad Sahu is the nephew of Shri Niranjan Prasad. Partners of the assessee-firm are wife and son of Shri Niranjan Prasad. Shri Gokul Prasad Sahu is, therefore, a close relative. He appeared before the Assessing Officer and stated that he was doing business in ‘lac’. He further stated that amount of Rs. 13,000 was advanced to the assessee by cheque on 9-4-1985. The relevant bank a/c was also produced. It revealed that the same amount of Rs. 13,000 was deposited in the bank one day earlier in cash, i.e., on 8-4-1985. A search was carried out by the CBI at the residence of Shri Niranjan Prasad, an employee of the office of AC, Bihar. Immediately after the search, his statement was recorded under section 131 by the ADI and he admitted in answer to question No. 17 that he introduced Shri Gokul Prasad Sahu to the Bank and he had deposited the amount in the bank a/c of Shri Gokul Prasad Sahu. The Assessing Officer further observed that in the statement under section 131, Shri Gokul Prasad Sahu stated that income derived by him amounted to Rs. 13,000 but his income-tax record showed that he was assessed at only Rs. 18,900 for assessment year 1986-87. He could not explain the deposit in the Bank A/c of 25-10-1983 amounting to Rs. 13,170. In the circumstances, the credit was treated as not genuine and unexplained and addition was made under section 68.
10. Shri Govind Prasad Sahu is also a relative of the partners of the son. He did not appear for examination before the Assessing Officer. But his bank a/c was produced. It showed that a sum of Rs. 11,000 was deposited on 29-10-1985 and withdrawn on 30-10-1985. The Assessing Officer also mentioned that from the Panchnama prepared by the CBI, it was seen that a pay-in-slip of Rs. 9,000 was found in the name of Shri Govind Prasad Sahu.
11. Shri Praveen Kumar Jain was examined by the Assessing Officer under section 131. Total credits in his name in the firm amounted to Rs. 54,000 although fresh credits during the previous year were only Rs. 15,000. The source was stated to be salary income and hosiery commission. However, his salary in 1980 was Rs. 800 only with annual increment of Rs. 200. He was married in 1983. He could not give any information regarding the person from whom commission was claimed to have been received. It was further stated that the entire business of commission was kept out of books of account. The CBI seized a pay-in-slip of Rs. 5,000 for his bank a/c. In view of this, the explanation was rejected an addition was made.
12. The CIT(A) observed that a cash credit cannot be accepted as genuine simply because the loan creditor was an income-tax assessee. The credit worthiness of Shri Gokul Prasad Sahu and Shri Pradeep Kumar Jain, who were examined on oath, could not be proved. Shri Govind Prasad Sahu was not produced. Pay-in-slips were found in possession of Shri Niranjan Prasad who admitted having deposited the amount in the bank a/c of the loan creditors. He came to the conclusion that the cash credits were far from genuine. Accordingly, the addition of Rs. 39,000 under section 68 and disallowance of interest of Rs. 12,845 were confirmed.
12A. From the above facts, it is seen that the case of Bahri Bros. (P.) Ltd. (supra), relied upon in the proposed order of my learned brother, is distinguishable on facts. In that case, the loans were advanced by account payee cheques. To that extent, facts are similar, but only to that extent. In the case of Bahri Brothers, the loans were repaid by cheque and interest and brokerage was also paid by account payee cheque. Such material is not available here. In the case of Bahri Brothers, there were no further enquiries. However, there were further enquiries here, as stated above. It cannot be said that a proposition was laid down in the case of Bahri Brothers that simply because a payment was made by cheque, the assessee’s onus was discharged for ever. It was only in those limited circumstances that it was held that the onus was discharged.
13. In this connection, reference may be made to a decision of the Supreme Court in the case of Sumati Dayal v. CIT [1995] 214 ITR 801. The question, therefore, related to burden of proof in the case of cash credit. In that case, it was claimed that substantial amount had been won in horse racing in two consecutive accounting years, before the Settlement Commission. The Chairman of the Settlement Commission had laid emphasis, in his dissenting opinion, on the fact that the assessee had produced evidence in support of the credits in the form of certificate from the receipt clerk giving particulars of the crossed cheques for payment of the amounts for the winning of jackpots, etc.
The Supreme Court dealt with the matter as under :
“The Chairman of the Settlement Commission, in his dissenting opinion, has laid emphasis on the fact that the appellant had produced evidence in support of the credits in the form of certificates from the racing clubs giving particulars of the crossed cheques for payment of the amounts for winning of jackpots, etc. The Chairman has rejected the contention regarding lack of expertise in respect of the appellant and has observed that the expertise is the last thing that is necessary for a game of chance and anybody has to go and call for five numbers in a counter and obtain a jackpot ticket and that books containing information are available which are quite cheap.
This, in our opinion, is a superficial approach to the problem. The matter has to be considered in the light of human probabilities. The Chairman of the Settlement Commission has emphasised that the appellant did possess the winning ticket which was surrendered to the Race Club and in return a crossed cheque was obtained. It is, in our view, a neutral circumstance, because if the appellant had purchased the winning ticket after the event she would be having the winning ticket with her which she could surrender to the Race Club. The observation by the Chairman of the Settlement Commission that ‘fraudulent sale of winning tickets is not an usual practice but is very much of an unusual practice’ ignores the prevalent malpractice that was noticed by the Direct Taxes Enquiry Committee and the recommendation made by the said Committee which led to the amendment of the Act by the Finance Act of 1972, whereby the exemption from tax that was available in respect of winnings from lotteries, crossword puzzles, races, etc., was withdrawn. Similarly, the observation by the Chairman that if it is alleged that these tickets were obtained through fraudulent means, it is upon the alleger to prove that it is so, ignores the reality. The transaction about purchase of winning ticket takes place in secret and direct evidence about such purchase would be rarely available. An inference about such a purchase has to be drawn on the basis of the circumstances available on the record. Having regard to the conduct of the appellant as disclosed in her sowrn statement as well as other material on the record an inference could reasonably be drawn that the winning tickets were purchased by the appellant after the event. We are, therefore, unable to agree with the view of the Chairman in his dissenting opinion. In our opinion, the majority opinion after considering the surrounding circumstances and applying the test of human probabilities has rightly concluded that the appellant’s claim about the amount being her winning from races is not genuine. It cannot be said that the explanation offered by the appellant in respect of the said amounts has been rejected unreasonably and that the finding that the said amounts are income of the appellant from other sources is not on evidence.”
14. Thus, it is clear that the payment of cheque cannot be treated as sacrosanct and an inference has to be drawn on the basis of circumstances available on the record. The surrounding circumstances have to be seen and the test of human probabilities has to be applied.
15. In the course of hearing, the Bench had invited the attention of the learned counsel for the assessee to the decision of the Patna High Court in Saraogi Credit Corpn. v. CIT [1976] 103 ITR 344, which also mentioned in the assessee’s own paper book. It was held that if a credit entry in the books of the assessee stands in the name of the assessee or the assessee’s wife and children or in the name of any other close relation or an employee of the assessee, the burden lies on the assessee to explain satisfactorily the nature and source of the entry. In the present case, Shri Gokul Prasad Sahu and Shri Govind Prasad Sahu were close relations and, therefore, the burden of proof on the assessee is greater in their case.
16. Applying the above tests and guidelines, it is a very strange confidence that cash was deposited in the bank a/c of Shri Gokul Prasad Sahu and Shri Govind Prasad Sahu one day before advancing of the loan and pay-in-slips were found during the search by the CBI at the residence of Shri Niranjan Prasad. Shri Niranjan Prasad even admitted that he had deposited the amount in the bank a/c of Shri Gokul Prasad Sahu. Shri Gokul Prasad Sahu has not been able to explain the source of deposit in his bank a/c of Shri Govind Prasad did not even appear and, therefore, the source of deposit in his bank a/c remained unexplained. I therefore, hold that cash credits in their names have rightly been confirmed by the CIT(A), as well as disallowance of corresponding amount of interest paid on these loans. These additions are hereby confirmed.
17. In the case of Shri Praveen Kumar Jain, the source of Rs. 15,000 remaining unexplained. His salary income was too meagre and there was no evidence regarding income from commission. Pay-in-slip was found with Shri Niranjan Prasad. Applying the test of human probabilities and surrounding circumstances, I hold that here also credit has remained unexplained. The addition is, therefore-confirmed and the disallowance of corresponding interest is also confirmed.
18. In the result, the assessee’s appeal is dismissed.
REFERENCE FOR 3RD MEMBER CASE UNDER SECTION 255(4) OF THE IT ACT, 1961, IN THE ABOVE MATTER :
As we differ in our views in the above case, we request the Hon’ble President to Kindly refer the matter to the 3rd member on the following point :
“Whether, in the facts and circumstances of the case and in law, cash credits totalling Rs. 39,000 added under section 68 of the Act and disallowance of interest totalling Rs. 12,545 on the cash credit should be confirmed or deleted ?”
THIRD MEMBER ORDER
Shri T.V. Rajagopala Rao (Third Member)
1. The following point of difference arose between the Members while deciding ITA No. 584/Pat./92 and, therefore, it is referred to me for appointment of a Third Member :
“Whether, in the facts and circumstances of the case and in law, cash credits totalling Rs. 39,000 added under section 68 of the Act and disallowance of interest totalling Rs. 12,545 on the cash credit should be confirmed or deleted ?”
2. I have heard the case on reference. The facts of the case briefly stated are as follows. The assessee is a registered firm. The assessment year involved is 1986-87, for which the previous year ended by 31-3-1986. The original assessment was completed under section 143(3)/182(1) on 28-3-1989. However, this assessment was cancelled by the CIT under section 263 by his order dated 10-8-1990 with a direction to examine whether the assessee’s contention that he was in possession of Rs. 2,08,598 on 10-8-1985 was correct. The partnership was formed under the deed dated 21-3-1983. Smt. Leela Devi and her son Shri Sanjay Kumar Gupta were the two partners of the firm. They are the wife and son respectively of Shri Niranjan Prasad. Before the firm was established, it used to be the proprietory business of Smt. Leela Devi. The business of the firm consisted of dealing in cement, asbestos and other cement products. Shri Niranjan Prasad, husband and father of the partners respectively, is an employee in the office of the Accountant General, Bihar. The partnership firm carries on its business in a portion of the residential premises belonging to Shri Niranjan Prasad. On 10-8-1985, the CBI searched the business premises of the assessee and a sum of Rs. 2,08,598 was seized along with some papers and documents. The assessee firm owned the cash. One of the seized documents at the time of search was a copy of quarterly statement produced by the firm before the Sales-tax authorities for the quarter ending June, 1985, which was received in the Sales-tax Office on 25-7-1985, in which the turnover was shown at Rs. 2,07,008.88. On verification of the books of account of the assessee, some cash credits were found introduced. Out of the several cash credits introduced, I am now concerned in this appeal only with the following three cash credits. The amounts, dates and the names of the cash creditors remained as follows :
9-4-1985 Rs. 13,000 Gokul Prasad Sahu 9-4-1985 Rs. 15,000 Praveen Kumar Jain 30-10-1985 Rs. 11,000 Govind Prasad Sahu
Out of the above three cash creditors, Gokul Prasad Sahu and Praveen Kumar Jain were examined under section 131 and their statements were recorded. Gokul Prasad Sahu stated in his evidence that Smt. Leela Devi is his aunt. He had lent Rs. 6,000 in 1983 and Rs. 13,000 in 1985 to the assessee firm. He had given Rs. 6,000 in cash and Rs. 13,000 in cheque. The amounts which he had lent came from his business. He did business in Laha and Khalli-Bhoosi (Mustard) and he had been doing this business from 1980-81 at Haat Bazar. The turnover of his business is approximately Rs. 3 lakhs for the year. Shanti Surya of Chauka and Kali Babu of Burdhu are also carrying on business along with him. He has been an income-tax assessee since 1981-82. He has a bank account in Allahabad Bank, Hinoo, and also an account in a village Bank, Kanchi. He opened account in Allahabad Bank in 1983 and village Bank 4 or 5 years before his deposition. Nobody introduced him to open the account in his village Bank. However, his maternal uncle Niranjan Prasad introduced him while he opened the account in Allahabad Bank. He does not remember the details of Rs. 13,170 which entry appeared in his pass book as the amount deposited on 25-10-1983. He charges interest at 12%. After seeing his pass book, it is apparent that before giving cheque of Rs. 13,000 in the name of the assessee-firm he had deposited money to the tune of Rs. 13,000 on 8-4-1987. To a pointed question as to where from this money came from and who deposited the same. He replied that the money belongs to his business and he himself had deposited it. To a question as to what is his yearly income from business and agriculture, he answered that agriculture was carried on by his joint family which was looked after by his father and his family depended on the agriculture. The income from business is about Rs. 20,000 to Rs. 30,000 approximately.
3. Similarly, Shri Praveen Kumar Jain deposed that he is doing hosiery business in Gaya since 1988. Before that, he was working as Depot Incharge in Hyderabad Absestos Cement Products at Ranchi. At that time, he was drawing salary of Rs. 600 and Rs. 500 towards allowance. He received the salary for about one year and after which he get an increment of Rs. 200. He deposed that he had given a loan of Rs. 15,000 before March, 1983, and Rs. 34,000 approximately in financial part 1983-84 and this money was paid back in 2 or 3 instalments. In 1985, he had again given Rs. 15,000. Likewise, he had given total of Rs. 64,000. To a pointed question as to what is the source from which he had given the loan, he deposed that the source of these loans was first his salary and second his hosiery commission. He made purchases from M.R. Company and other known persons. He had done work on commission basis and he had not kept the details of his income. He was married in 1983 and he had two children aged 4 and 2 respectively. He did not introduce anything in his own hosiery business. His real brother was doing business and after resigning from service he joined with him. From joint family, his brother used to give him family expenses. He does not know whether he had any share in the profits of the business. He receives interest @ 12% which is credited in his account. He is an income-tax assessee. He is assessed at Gaya. He handed over his income-tax file to his advocate, Shri T.N. Nitish Jain.
4. The third creditor, Shri Govind Prasad Sahu, was not examined under section 131 since the assessee did not produce him for examination.
5. The Assessing Officer found that the advance of Rs. 13,000 was made to the assessee-firm by Gokul Prasad Sahu through a cheque issued on 9-4-1985. However, he found that the same amount was deposited by him on 9-4-1985 in the bank. Niranjan Prasad, the husband of the first partner and father of the second partner of the assessee firm, in his examination, admitted that he introduced this creditor to the Bank and he had deposited the amount in the bank account of Gokul Prasad Sahu. Though Gokul Prasad Sahu claims that the yearly income derived by him would be about Rs. 30,000, in his income-tax return, he showed Rs. 18,900 for the year 1986-87. He was unable to explain the transfer entry on 25-10-1983 amounting to Rs. 13,170. On the above evidence, the Assessing Officer came to the conclusion that the credit was bogus; in fact, the money was that of the firm; it was deposited in the bank account and brought back in the account through the bank account of Gokul Prasad Sahu.
6. Next, the examination of the evidence of Praveen Kumar Jain was taken up by the Assessing Officer. The total credits introduced in his name in the firm amounted to Rs. 64,000 although during the previous year only Rs. 15,000 was introduced. When this creditor was asked about the source, it was stated that the same had come out of salary plus hosiery commission. He further stated that his salary was Rs. 800 in 1980 with an annual increment of Rs. 200. He was married in 1983. He failed to elicit any information regarding the persons from whom he received the commission. Pay-in-slips for a deposit of Rs. 5,000 made in his bank account were also seized from Niranjan Prasad. From the evidence, it was concluded by the Assessing Officer that Praveen Kumar Jain was not capable of extending loan to the assessee, the loan was bogus and as such the same was disallowed.
7. Govind Prasad Sahu was not produced for examination though his bank account was however produced and examined. It revealed that Rs. 11,000 was deposited on 29-10-1985 and withdrawn on 30-10-1985. From the panchnama prepared by the CBI, the Assessing Officer found that they had seized pay-in-slips of Rs. 5,000 in the course of search in the name of the alleged creditor, namely, Govind Prasad Sahu. Govind Prasad Sahu also was stated to be a relative of the partners of the firm and, therefore, in view of the above, the cash credit was treated to be bogus and the amount of cash credit was added to the income of the assessee. Thus, a sum of Rs. 39,000 was added under section 68 and the interest amount of Rs. 12,845 was also disallowed and added to the income of the assessee. The total income of the assessee was determined at Rs. 96,270 under the assessment order dated August, 1991.
8. Questioning the above as well as the interest thereon, the assessee went in appeal before the CIT(A), Ranchi. However, the appeal was unsuccessful and the additions were confirmed by the ld CIT(A) by his appellate order dated 30-4-1992. Hence, the second appeal was filed before the Patna Bench of the Tribunal.
9. In the second appeal, on behalf of the assessee, 20-page paper book was filed. After hearing the arguments advanced before them, the ld. Judicial Member, Shri Abdul Razack, felt that the appeal should be allowed for the reasons listed out below. The three persons admittedly advanced the loans by account payee cheques. In Bahri Bros. (P.) Ltd.’s case (supra) Patna High Court held that if loans are given by account payee cheques, it amounts to identification of the parties and discharge of burden by the borrower. The two creditors were also summoned and examined on oath under section 131 of the IT Act. One of the creditors, though did not appear, evidence on record points out that his loan was also advanced through account payee cheque. All the three creditors are income-tax assessees as is evident from the observation made by the Assessing Officer. The Assessing Officer merely disbelieved the version of the cash creditors and came to the conclusions that they have no creditworthiness or means to advance loans to the assessee. Mere falsity of an explanation or not believing an explanation cannot make the loans as income of the assessee from undisclosed sources. In Orient Trading Co. Ltd.’s case (supra) the Bombay High Court held that where the entry stands in the name of a third party and the assessee satisfies the ITO as to the identity of the third party and furnishes such other evidence which prima facie establishes that the cash credit entry is not fictitious, the initial burden which lies on the assessee can be said to have been discharged and it will not thereafter be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came to deposit the money with the assessee. The ld. Judicial Member felt that this decision along with the Patna High Court decision in Bahri Bros. (P.) Ltd.’s case (supra) applies to the facts of the present case. The ld. Judicial Member also states that in Daulat Ram Rawatmal’s case (supra) the Hon’ble Supreme Court at page 359 also reiterated that mere falsity of explanation, either of the lender or of the borrower, cannot lead to a conclusion that the borrowed amount is the income of the assessee from some undisclosed sources and, therefore, can be made subject to tax.
10. The ld. Accountant Member, Shri V.K. Sinha, on the other hand, after stating the facts of the case and also after noting down the salient findings of the ld. CIT(A), held the following. He opined that Bahri Bros. (P.) Ltd.’s case (supra) is distinguishable from the facts of the present case. In that case, the loans were advanced by account payee cheques. Only to that extent, the facts are similar and similarity does not extend any further. In the case of Bahri Bros., the loans were repaid by cheque and interest and brokerage was also paid by account payee cheque. Such material is not available in the case. In Bahri Bros., the Patna High Court did not lay down the broad proposition that simply because a payment was made by cheque, the assessee’s onus was discharged for ever. The ld. Accountant Member found that the Supreme Court’s decision in Sumati Dayal’s case (supra) is relevant to be considered. After quoting extensively from the Hon’ble Supreme Court’s decision, the ld. Accountant Member deduced that thus it is clear that the payment of cheque cannot be treated as sacrosanct and an inference has to be drawn on the basis of circumstances available on record. The surrounding circumstances have to be seen and the test of human probabilities has to be applied. The ld. Accountant Member found that the Supreme Court’s decision in Sarogi Credit Corpn’s case (supra) where it was held that if a credit entry in the books of the account stands in the name of the assessee or the assessee’s wife and children or in the name of any other close relation or an employee of the assessee, the burden lies on the assessee to explain satisfactorily the nature and source of the entry. In this case, Shri Gokul Prasad Sahu and Govind Prasad Sahu were closed relations and, therefore, the burden of proof on the assessee is greater. Applying the above tests and guidelines given in the above decided cases, the ld. Accountant Member began commenting upon the facts of the case. He held that it is very strange coincidence that cash was deposited in the bank account of Gokul Prasad Sahu and Govind Prasad Sahu one day before advancing of the loan and pay-in-slips were found during the search by the CBI at the residence of Niranjan Prasad. Shri Niranjan Prasad even admitted that he had deposited the amount in the bank account of Gokul Prasad Sahu. Shri Gokul Prasad Sahu has not been able to explain the source of deposit in his bank account. As far as Govind Prasad Sahu is concerned, since he did not appear the source of his deposit in the bank account remains unexplained. In the case of Praveen Kumar Jain, the source of Rs. 15,000 remains unexplained. He held that his salary income was too meagre and there was no evidence regarding income from commission. Pay-in-slip was would with Shri Niranjan Prasad. Applying the test of human probabilities and surrounding circumstances, he held that here also the credit has remained unexplained. Ultimately, he held that the appeal is worthy to be dismissed and the cash credit amounts as well as the interest amounts are worthy to be confirmed in the hands of the assessee.
11. Thus, in view of the diametrically opposite appreciation of facts, the learned Members referred the matter to the Third Member and thus the matter stands before me. After having heard both sides at length and after going through the records of the case as well as the paper book filed on behalf of the assessee, I am of the opinion that the cash credit additions as well as the interest additions are worthy to be deleted. I agree with the conclusions reached by the learned Judicial Member, though the reasons for my conclusion cannot exactly be the same as he had adopted in his order. The reasons for my conclusion are the following.
12. Firstly, the statement purported to have been given by Shri Niranjan Prasad to the CBI on the date of search, namely, 10-8-1985, or his statement said to have been recorded under section 131 soon after the search by the CBI on 10-8-1985 appears to be clearly a statement recorded at the back of the cash creditors, namely, Shri Gokul Prasad Sahu, Shri Praveen Kumar Jain, and Shri Govind Prasad Sahu. It is not even the claim of the Assessing Officer that copies of the statement of Shri Niranjan Prasad were supplied to the assessee. The cash creditors were never given an opportunity to cross examine Shri Niranjan Prasad with reference to his claim of depositing certain amounts on behalf of the cash creditors or with reference to having possession of the pay-in-slips. What are the dates of the pay-in-slips also are not mentioned in the assessment order or further clarified in the orders of the lower authorities. Under the circumstances, I feel that it is necessary for me to examine how far the statement of Niranjan Prasad can be made use of against the assessee or against the version of the cash creditors. The ld. Accountant Member appears to have learned heavily in favour of the assessee based on the statement given by Niranjan Prasad. Therefore, it is my primary duty to consider how far it is admissible. It is very clear from the facts of the case that the Assessing Officer did not draw the attention of the assessee to the statement given by Niranjan Prasad. So also he did not draw the attention of the cash creditors when they were examined on oath under section 131. Either the whole of the evidence or any portion of the evidence of Niranjan Prasad was put to the two cash creditors when they were examined under section 131. So also the pay-in-slips said to have been secured or preserved by Niranjan Prasad showing that he had deposited the moneys on behalf of the cash creditors into the bank account were also not confronted to the cash creditors. If they were confronted with or showed such pay-in-slips, there would have been an opportunity for them to explain all the circumstances about the pay-in-slips or about the truth or otherwise of the version of Niranjan Prasad. Now, the question is without putting any such material to the cash creditors, whether the so-called evidence of Niranjan Prasad can be used against them in order to discredit their testimony that they are capable of lending the amounts. In this connection, the Allahabad High Court decision (Gargi Din Jwala Prasad v. CIT [1974] 96 ITR 97) is worthy to be noticed. Just like in this case, the revenue wants to very much rely upon the testimony of Niranjan Prasad as well as the pay-in-slips kept in custody by him. In that case also, the case of the revenue wholly relied on the statements of Chimman Lal Phool Chandra and Nagar Das Dayal Bhai and the account books of their firms. In fact, that formed the basis on which the authorities came to the conclusion that the suppressed profits of the assessee were Rs. 85,000 and odd. In that case, the statements were not supplied and the books of account were also not supplied. The question before the Allahabad High Court was whether the principles of natural justice were sufficiently met. The Hon’ble Allahabad High Court, having duly kept in view the principles of natural justice adumbrated by the Hon’ble Supreme Court in Suraj Mall Mohta & Co. v. A.V. Visvanatha Sastri [1954] 26 ITR 1 and Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775, 783, held the following :-
“From these cases it is apparent that the principles of natural justice are applicable to assessment proceedings. The elementary principle of natural justice is that the assessee should have knowledge of the material that is going to be used against him so that he may be able to meet it. Here, the Income-tax Officer was placing reliance on the statements of certain witnesses. He had permitted the assessee to cross-examine the witnesses but he did not supply copies of the statements of those witnesses although the assessee had requested for it. He did not even supply the substance of the contents of the statements as recorded. The learned standing counsel took us through the correspondence between the Income-tax Officer and the assessee but in none of the letters of the Income-tax Officer there was any indication as to what was the name of the witnesses, much less any semblance of indication as to what he had stated. Under these circumstances the mere grant of the permission to cross examine those witnesses was an eye-wash. The direction that he will issue a commission was illusory. The assessee was not told the names of witnesses or apprised of the contents of their statements. It is clear that an adequate opportunity to cross examine was denied. Even if we accept, for the sake of argument, that in law the requirements of natural justice are satisfied by supplying the substance of the statement sought to be relied upon, even that was not done in this case. The Income-tax Officer had refused to give copies of the statements of the witnesses on the view that they formed part of the record. Even so, he refused permission to the assessee to inspect the record. It is evident that the proceedings were vitiated by violation of the principles of natural justice.”
Therefore, not supplying the statements of Niranjan Prasad and copies of the pay-in-slips said to have been retained by him, which show that he had deposited the amounts on behalf of the cash creditors, and not tendering Niranjan Prasad for cross-examination of the cash creditors or the assessee amount to serious violation of principles of natural justice and, to my mind, it would appear that such of the material which is sought to be used as evidence without observing the principles of natural justice should be excluded from evidence. Therefore, the alleged statement of Niranjan Prasad either before the CBI or the ITO under section 131 or the pay-in-slips, the custody of which is said to have been kept by Niranjan Prasad, should excluded from evidence.
13. Secondly, in my opinion, the bulk of documentary evidence on record supporting the case of the assessee was not duly appreciated. Now, let me go into the documents filed on behalf of the assessee. I have already stated that the assessee filed a 20-page paper book. At pages 3 & 4, the account of Gokul Prasad Sahu, one of the cash creditors out of the three, whom I have been considering, is given. This account is found in the accounts of the assessee firm. The account of Gokul Prasad Sahu in the books of account of the assessee firm began on 31-3-1984. On 9-4-1985, the amount of Rs. 13,000 advanced by Gokul Prasad Sahu was narrated to be by issuance of a cheque. Upto 31-3-1985, an amount of Rs. 6,720 was due by the assessee firm to Gokul Prasad Sahu and by 31-3-1986 an amount of Rs. 21,245.81 was outstanding due to him. From then onwards, his account was not squared up and ultimately the account was squared up in assessment year 1994-95 by issue of a cheque No. 018312 for Rs. 42,612.05 on 25-2-1994. Similarly, the account of Govind Prasad Sahu in the accounts of the firm was shown at page 5 of the paper book furnished. As can be seen from the account, even on 31-3-1985, Shri Govind Prasad Sahu was a creditor to the assessee firm since his brought forward balance stood at Rs. 10,000 by 31-3-1985. On 29-10-1985, an amount of Rs. 11,000 was said to have been received by the firm by cheque from Govind Prasad Sahu. By 31-3-1986, the amount in his account remained at Rs. 22,750. This account was squared up in assessment year 1987-88 by issue of two cheques by the firm, i.e., on 17-2-1987 the firm issue cheque No. 4849157 for Rs. 22,000 and on 20-3-1987 it again issued cheque for Rs. 2,911 by issuing cheque No. 4849158. Thus, it can be seen that the account was squared up in assessment year 1987-88. The account of Praveen Kumar Jain in the accounts of the assessee-firm was furnished at pages 6 & 7 of the paper book compilation. Praveen Kumar Jain was figuring as creditor of the assessee firm even from 31-3-1983. By 31-3-1985, i.e., at the close of assessment year 1985-86, a sum of Rs. 59,069 was the brought forward balance to the credit of Praveen Kumar Jain. A sum of Rs. 15,000, which represents the amount of cash credit, was noted in the accounts of the assessee-firm as covered by cheque No. 463761 dated 9-4-1985. By 31-3-1986, i.e., at the close of assessment year 1986-87, the principal and interest due in the account of this creditor stood at Rs. 82,917.83. In assessment year 1987-88, i.e., on 31-3-1987, an amount of Rs. 10,000 was paid by the firm under cheque No. 4849161. Similarly, an amount of Rs. 8,836.14 was paid by the firm under cheque No. 00504. By 31-3-1991, the principal and interest due to the creditor stood at Rs. 1,16.846.87. In assessment year 1992-93, a sum of Rs. 1 lakh was repaid to Shri Praveen Kumar Jain by the firm by virtue of issuing cheque No. 141875 dated 14-6-1991. Similarly, on 30-3-1992, another sum of Rs. 20,004.60 was also paid by cheque No. 003018. The balance-sheet and profit and loss account of Gokul Prasad Sahu together with computation of his total income was furnished at page-8 of the paper compilation. The profit & loss account shows that he had derived for the accounting year 1985-86 relevant to assessment year 1986-87 a sum of Rs. 22,109.58 as net profit. The balance-sheet prepared by him as on 31-3-1986 discloses clearly the amount due from Girdhar Agency (assessee-firm) at Rs. 21,020.81, for which the account copy was filed. Shri Gokul Prasad Sahu had shown the profit of Rs. 22,110 in his computation of total income and his taxable total income was shown at Rs. 18,900 for assessment year 1986-87. Similarly, the profit & loss account with balance-sheet as well as computation of income relating to Govind Prasad Sahu for assessment year 1986-87, for which the accounting year is upto 31-3-1986, is duly shown at page-9. The profit & loss account shows net profit at Rs. 18,875. His balance-sheet as on 31-3-1986 clearly discloses a sum of Rs. 22,575 as due from the assessee-firm, for which he had filed the account. For assessment Year 1986-87, he returned total income of Rs. 18.700. The profit & loss account as well as balance-sheet of Praveen Kumar Jain was furnished at page-10 of the paper compilation for assessment year 1986-87, for which the previous year ended by 31-3-1986. In the profit & loss account, a sum of Rs. 8,848.83 was shown as interest received from the assessee-firm. In the balance-sheet, a sum of Rs. 82,032.83 was shown as due from the assessee-firm for which the supporting account was filed. Thus, it can be seen that the three cash creditors were doing business and they have been deriving profit in their respective businesses. There are income-tax assessees. They must have maintained regular books of account for their respective businesses. The balance-sheet prepared as on 31-3-1986 clearly discloses the outstanding amount due from the assessee firm to each of them and the amounts thus shown as outstanding in their balance-sheets clearly tallied with the accounts of the assessee-firm. Further, Praveen Kumar Jain was stated to have received a sum of Rs. 8848.83 towards interest from the assessee-firm in the accounting year 1985-86 relevant to assessment year 1986-87. This sum exactly tallied with the interest credited to the account of Praveen Kumar Jain in the books of the assessee-firm as shown at page-6 of the paper compilation. Extract from the bank account which Shri Gokul Prasad Sahu maintained with Allahabad Bank was filed at page 11. It shows that a sum of Rs. 13,000 was deposited on 8-4-1985 and on the next day i.e., 9-4-1985 it was advanced to the assessee-firm by means of issuing a cheque. It created a suspicion in the mind of the ld. Accountant Member mainly because of the fact that Gokul Prasad Sahu was a near relative or brother’s son of Niranjan Prasad. According to me, this should not create any suspicion. It is natural among near relatives to borrow from each other as soon as they come to know that one of the relatives got a considerable sum of money. Therefore, it is not strange when, after knowing that Gokul Prasad Sahu had got a sum of Rs. 13,000 and deposited in the Bank, the next day that amount was requested for and granted as loan to the assessee-firm. Similarly, in the case of Govind Prasad Sahu, a sum of Rs. 11,000 was deposited on 29-10-1985 and on 30-10-1985 the same amount was withdrawn and given to the assessee-firm. However, it is not as if that Govind Prasad Sahu has no other credit entries in his account with Allahabad Bank. On the deposit side as well as withdrawal side, there are heavy amounts. Similarly, the account of Praveen Kumar Jain with Allahabad Bank was also furnished at page-13. It also shows that a sum of Rs. 15,000 was deposited on 8-4-1985 and the said amount was withdrawn on 9-4-1985. However, these are not the sole entries in his account with Allahabad Bank. Apart from these entries, there are other entries disclosing deposits as well as withdrawals in heavy amounts. Everybody knows that Bank interest is only 4% in Savings Bank Account, whereas if an amount is given in a commercial market, it would fetch at least 12% p.a. further, a depositor would prefer to give the amount to his own near relative who is more trust-worthy and in whose hands he feels his deposit safe as well as interest fetching. So, simply because the cash creditors being near relatives, unless accompanied by other surrounding circumstances, cannot be taken to be a suspicious circumstance by itself. In this case, out of the three cash creditors, two cash creditors appeared before the Assessing Officer and also gave statements under section 131 wherein they have categorically stated to have lent the amounts to the assessee-firm. Their evidence was already provided in the earlier paragraphs of this order. Thus, the bulk of documentary evidence on record would strongly support the case of the assessee or the genuineness of the cash credits. In my opinion, the burden to prove the identity of the credit-worthiness as well as the truth of the transaction lies upon the assessee in the first instance but the burden does not always rest with the assessee only even after he lets in sufficient evidence to discharge his burden. After he produces satisfactory evidence in support of these three ingredients, namely, identity, creditworthiness as well as the truth of the transaction, the burden shifts to the department. In my opinion, having regard to the bulky documentary evidence on record. I have to conclude that the assessee is able to establish the identity, credit worthiness as well as the truth of the transaction of each of the cash creditors. Therefore, the burden shifted to the department to prove that in spite of the evidence appearing in favour of the assessee the impugned cash credits are not true but bogus. I may say that there is no iota of evidence let in by the department to discharge its burden. At this juncture, let me now examine some of the case law on the subject as regards the burden of proof. The Assessing Officer clearly admitted that Gokul Prasad Sahu was an income-tax assessee, whereas CIT(A) admitted that all the three cash creditors were income-tax assessees. However, his contention was that simply because they are income-tax assessees, the credits cannot be accepted as genuine.
14. The first of the decisions worthy to be considered is CIT v. Orissa Corpn. P. Ltd. [1986] 159 ITR 78 (SC). In that case, for assessment year 1962-63, three cash credits aggregating to Rs. 1,50,000 were the subject matter of the decision. The amounts were shown to have been received by loans from three individual creditors of Calcutta under hundis. The borrower produced before the ITO the letters of confirmation, the discharged hundis and gave particulars of those creditors who were assessees and whose general index numbers were with the department. However, the borrower company was not able to produce the creditors before the ITO and, therefore, on its request the ITO issued summons under section 131 to the creditors. All the summons were returned unserved with the remark “left”. The Tribunal found that the creditors, while being assessed, had admitted that they had allowed their names to be lent without giving loans and also gave a list of assessees where the debtor company’s name did not appear. The ITO treated the sum of Rs. 1,50,000 as unexplained and the IAC also imposed penalty of Rs. 50,000 under section 271(1)(c). The Tribunal held that simply because the debtor company could not produce the parties, it did not follow automatically that an adverse inference should be drawn that the amount represented undisclosed income of the debtor company. Thus, the Tribunal had deleted the addition of cash credits and also deleted the imposition of penalty. The High Court, on reference, upheld the order of the Tribunal. In the appeal to the Supreme Court, the following is what is held :
“Held, that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case”.
In this case also, the two cash creditors who were examined under section 131 clearly stated that they were income-tax assessees, that they were carrying on business, that they were credit worthy and that they had lent amounts to the assessee-firm. There is no other thing which the assessee-firm can produce before the Assessing Officer except the documents and evidence which had already been produced before the Assessing Officer. Therefore, I hold that the assessee-firm sufficiently discharged the burden which lay upon it.
15. The second decision which can be worthy of consideration is Bahri Bros. (P.) Ltd.’s case (supra). In that case, there were two deposits of Rs. 10,000 each in the names of two cash creditors. The assessee submitted that the amounts in question were paid to the assessee by account payee cheques and the assessee also repaid the amounts by means of account payee cheques. The amount of interest was also paid by account payee cheques and so also the brokerage in each case. The bank certificate also was produced in that case. The Tribunal accepted the genuineness of the credits. A reference was taken by the revenue to the High Court. The Hon’ble Patna High Court held in the facts of that case as follows :
“Held, that the assessee filed details of loans stating the nature and the mode of transactions. The creditors gave the amount in question to the assessee by account payee cheques which were encashed by the assessee through its own bank. The assessee had also submitted a copy of the certificate of the bank to the effect that the cheques in question, given by the creditors, were honoured in favour of the assessee. Even the brokerage amount was also paid through cheques. When the assessee disclosed the names of the creditors and the names of the banks on which the cheques were drawn, the assessee discharged the primary onus and the assessee not only disclosed the identity of the creditors but also the sources of income. Then the onus shifted on the Department to verify. The creditors were having bank accounts. Hence, they were known not only to the bank but they were introduced by a third person to the bank. It could not be said that the creditors were fictitious persons. The Tribunal was, therefore, right in deleting the addition of Rs. 20,000 and also allowing the interest of Rs. 1,318.”
In this case also, the amounts were lent on cheque. Ultimately, the repayment of all the credits was made in cheque. The drawal of the amounts under the cheques by the assessee-firm was proved by virtue of the entries found in the Bank pass book of Allahabad Bank. In the case of Praveen Kumar Jain, a sum of Rs. 10,000 on 31-3-1987 and a sum of Rs. 8,736.14 were paid cowards interest by cheques. Therefore, these papers go to prove that the cash credits were adequately explained. It is significant that this decision was relied upon by the ld. Judicial Member in his order.
16. In Sarogi Credit Corpn.’s case (supra) the Hon’ble Patna High Court, in my opinion, drew a distinction between two types of cash creditors – one being near relatives like wife, children, close relations or employees etc. and a cash creditor being an independent third party. The following is what is stated in the head-note of the said decision at page 345 :
“Held, that if the credit entry in the books of the assessee stands in the name of the assessee or the assessee’s wife and children, or in the name of any other close relation or an employee of the assessee, the burden lies on the assessee to explain satisfactorily the nature and source of the entry. But if the entry does not stand in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie on him to establish the identity of that party and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make an advance of the money as a loan to the assessee”.
The Patna High Court simply drew a distinction between a cash creditor who is a relative of the assessee and a cash creditor who is an independent third party. However, in both these cases, the initial burden rests upon the assessee only. The Patna High Court never held that in the case of a cash creditor, who is a relative, one should start with disbelief however acceptable the evidence let in may be. It was never said that in the case of a near relative the burden always lies on the assessee and never shifts to the department. Further, the burden of proof has no meaning when both the sides lead evidence in the case which should be decided only on the evidence on record and there is no need to fall back upon the question of burden of proof any longer. Nobody can have any quarrel with the proposition laid down so authoritatively by the Patna High Court, but all that the Patna High Court says is that in a case of cash creditor who is a near relative, something more convincing evidence to show the creditworthiness and the source of the entry should be let in than in the case of a third party cash creditor. It did not lay down the principle that however much the evidence which is let in, it should still be viewed with suspicion. How to appreciate evidence on record depends upon the facts and circumstances of each case and I hardly come across decisions describing the way in which evidence is to be appreciated.
17. The next decision is CIT v. Satya Ranjan Sen [1990] 181 ITR 374 (Cal.). In that case, cash creditor was the sister-in-law of the debtor. She had filed a declaration before the ITO for consideration of the advances to be assessed. However, the ITO did not accept the explanation of the lady and the loan amounts were added back to the income of the assessee. The lady was examined and she specifically stated that the amounts were advanced out of the sale proceeds of her gold ornaments and personal funds. In reference before the Hon’ble High Court, it held that there was no evidence to rebut the statements of the cash creditor and the Tribunal was justified in deleting the addition of the sum credited in the books of the assessee in the name of the cash creditor.
18. The next decision sought to be relied on by the assessee was Jalan Timbers v. CIT [1996] 135 Taxation 258 (Gauhati). In that case, the assessee carried on timber business and the matter related to assessment year 1981-82. The assessee raised certain loans. While making the assessment, the ITO disbelieved the cash credits and directed the assessee to produce evidence to prove their genuineness. The assessee filed confirmatory letters and also produced the creditors. The income-tax files were also examined by the ITO. However, the ITO disbelieved the cash credits holding the genuineness of the transaction to be doubtful. The Tribunal decided against the assessee holding that although the identity of the person was not in doubt, but the capacity to advance the loan was doubtful. The Hon’ble High Court decided as follows :
“The Hon’ble Court held that it is to be seen whether in the present case the assessee could discharge the onus regarding the receipt of the cash credit. The Tribunal in its judgment indicated that the identity of the creditor was not enough. It is true that by providing the identity the assessee cannot be said to have discharged its onus. In the instant case, the amounts were shown in the income-tax return of the assessee. Besides, the creditors had shown in the returns about giving of the loan to the assessee. Strangely, the ITO while making the assessment in respect of the three creditors accepted their returns. This itself will go to show that the amount received by the assessee, was at least prima facie genuine. The Tribunal did not make any endeavour to give any cogent reason why the income-tax returns filed by the creditors an& accepted by the ITO should be ignored. In our view the assessee had at least proved its case.”
19. The next decision relied upon by the assessee was CIT v. Barjatya Children Trust [1996] 135 Taxation 383 (MP). In that case, assessment year involved was 1985-86. The books of the assessee showed cash credits in four names totalling Rs. 85,000. The CIT(A) set aside the order of assessment and directed verification of cash credits amounting to Rs. 65,000 relating to three creditors and deleted the addition of Rs. 20,000 as one of the cash creditors was assessed to tax and the amount was shown by her as having been given on loan to the assessee. The Tribunal confirmed the order. Reference was taken by the revenue to the High Court and the Hon’ble High Court held that since the creditor was assessed to tax and the cash credit was shown in the balance-sheet of the creditor, it was not necessary to produce the creditor and it was for the department to take help from the documents and the file of the creditor.
20. The last of the decisions relied on by the assessee was again a Gauhati High Court decision in the case of Raichand Kothari (HUF) v. CIT [1996] 135 Taxation 442. In that case, the assessee, in order to meet its business requirement, took loans from various persons during the assessment year 1982-83 and in preceding assessment year the same were reflected in the balance-sheet. Confirmation of loans and statement of account by the creditors had been furnished to the Assessing Officer. The assessee had also furnished the income-tax file numbers of the creditors and some of the creditors were produced before the Assessing Officer for examination. However, the Assessing Officer was not satisfied with the explanation given by the assessee and the creditors and accordingly the Assessing Officer added the said loans given by the creditors as income from other sources. The Assessing Officer also disallowed the interest paid to all the creditors. The CIT(A) allowed the appeal. The Tribunal reversed the order of the CIT(A). The Hon’ble High Court held, reversing the decision of the Tribunal, as follows as per the head-note :
“No doubt, the Evidence Act as such is not applicable in the income-tax matter but the spirit of the said Act has to be followed. If such books of accounts are not challenged, those books of accounts should be considered as genuine. It will not be necessary on the part of the assessee to further prove the capability of the depositor. In the present case the Assessing Officer did not disbelieve the entries made and also the statement recorded. Tolaram Daga’s case has very clearly laid down the principles to determine the genuineness of the cash credit. In our opinion, therefore, the Tribunal was wrong in ignoring the decision of Tolaram Daga stating inter alia that this judgment was rendered under the IT Act, 1922. The Tribunal did not consider the materials available in record. No reason was given as to how the conclusions arrived at by the CIT(A) were erroneous. The Tribunal did not discuss any evidence whatsoever and after quoting the submissions made by both sides the Tribunal disagreed with the conclusions arrived at by the CIT(A). In our opinion this is not correct. The Tribunal failed to discharge its obligations as per the Act.”
21. Having regard to all the above, I hold that the assessee is able to discharge its burden in proving the genuineness of the cash credits from the three cash creditors and, therefore, the sum of Rs. 39,000 added under section 68 of the Act as undisclosed income of the assessee and the disallowance of interest of Rs. 12,545 or cash credits should be cancelled and I agree entirely with the conclusions reached by the learned Judicial Member.
22. The matter has now to go to the Division Bench to decide the same according to the majority decision.