ORDER
Dinesh K. Agarwal, J.M.
1. This is an appeal preferred by the assessee against the order passed by Dy. CIT(A) dt. 11th January, 1993.
2. The only grievance of the assessee is against the addition of Rs. 50,000 and disallowance of interest treating the loan as non-genuine and as income from undisclosed sources without allowing any opportunity to the assessee to cross-examine the creditor.
3. The brief facts of the case are that the assessee is a registered firm. The original assessment was completed under s. 144/146 on 29th November, 1985, on a total income of Rs. 51,123 including income from undisclosed sources being unexplained cash credit of Rs. 50,000. This assessment was set aside by the Tribunal vide order dt. 13th December, 1989, in ITA No. 318/Jp/87 with the direction to allow the assessee a reasonable opportunity of being heard before completion of the assessment.
4. In compliance of this, the AO has given a specific opportunity to the assessee vide letter dt. 7th August, 1990, to produce the creditor M/s. Megh Raj Duli Chand, Calcutta, as Shri S. L. Jain, proprietor of M/s. Megh Raj Duli Chand, Calcutta, in his letter dt. 24th June, 1981, addressed to the ITO, J-Ward, District IV(3), Calcutta, has denied in response to summons under s. 131, to advance any loan of Rs. 50,000 or any amount on 25th August, 1970, or any other date either subsequently or formerly.
5. In spite of sufficient opportunity provided by the AO, the assessee could not produce the creditor but insisted that the said creditor may be summoned again at the cost of the assessee for cross-examination. The AO after considering the explanation furnished by the assessee has treated the cash credit of Rs. 50,000 as unexplained and the same was added to the total income as income from undisclosed sources under s. 68 of the IT Act, 1961.
6. On first appeal, the Dy. CIT(A) has upheld the order of the AO and dismissed the assessee’s appeal.
7. Now the assessee is in appeal before us. It was pleaded by the learned authorised representative that in support of his claim the assessee has filed a confirmatory letter dt. Nil of the party along with the copy of statement of a broker who had arranged the said loan; the lower authorities have not allowed the proper opportunity to cross-examine the creditor at the cost of the assessee in spite of his request; the interest was paid subsequently by demand draft of bank and, therefore, he argued that the addition made by the AO and confirmed by the Dy. CIT(A) is uncalled for and should be deleted. He also relied upon the decision of Tribunal, Jaipur Bench, in the case of Sohan Lal Jain vs. ITO.
8. The learned Departmental Representative on the other hand, relied upon the orders of the AO and Dy. CIT(A) and also referred case law cited at 232 ITR 82 (Cal) (sic).
9. We have heard rival submissions of both the parties and we find that in this case both parties were unknown to each other. As per statement of Shri Chandra Singh, a broker of Jaharat, it is noticed that Shri Ram Lal, representative of M/s. Megh Raj Duli Chand has brought some amount in cash and wanted to deposit with some party at Jaipur. He (broker) took him to Shri Devendra Kumar, partner of the assessee-firm to whom the amount was given on interest.
10. It is surprising to note that a loan of Rs. 50,000 which was not a small amount in those days was given to the unknown party even without any documentary evidence/written agreement.
11. We have also noted that in this case a letter dated Nil was filed by the assessee in the year 1973, at the time of original assessment proceedings which was not accepted by the AO as the creditor in response to summon issued under s. 131 has denied to advance any loan of Rs. 50,000 or any amount on 25th August, 1970, on any other date either subsequently or formerly vide his letter dt. 24th June, 1981, addressed to the ITO J-Ward, Distt. IV(3), Calcutta. Therefore, the said amount was added in the income of the assessee as income from undisclosed sources. The matter went upto Tribunal who set aside the assessment order vide order dt. 13th December, 1989, in ITA No. 318/Jp/87 with the direction to allow the assessee a reasonable opportunity of being heard before the completion of assessment.
12. Since it was the duty of the assessee to prove prima facie the transaction which results in a cash credit in his books of account, such proof includes proof of the identity of his creditor, the capacity of such creditor to advance the money and, lastly, the genuineness of the transaction. These things must be proved prima facie by the assessee and only after the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts on the Department. Merely establishing the identity of the creditor is not enough [Shankar Industries vs. CIT (1978) 114 ITR 689 (Cal), C. Kant & Co. vs. CIT (1980) 126 ITR 63 (Cal), Prakash Textile Agency vs. CIT (1980) 121 ITR 890 (Cal) and Oriental Wire Industries (P) Ltd. vs. CIT (1981) 131 ITR 688 (Cal). Mere filing of confirmatory letters does not discharge the onus that lies on the assessee [Bharati (P) Ltd. vs. CIT (1978) 111 ITR 951 (Cal) and CIT vs. W.J. Walker & Co. (1979) 117 ITR 690 (Cal)].
13. We also feel that the assessee was given sufficient opportunity to produce better evidence in support of his claim but he failed to do so. The law of evidence mandates that if the best evidence is not placed before the Court, adverse inference can be drawn against the person who ought to produce it.
14. It is also noticed that the case law relied upon by the AO in the case of CIT vs. C.P. Adam (1976) 105 ITR 465 (Ker) is most identical case and squarely applicable in the facts of the present case. In the cited case it was held that :
“the assessee explained cash credit, appearing in his 1962 books to the aggregate of Rs. 1,35,000, as being loans advanced by three creditors – V, M and K. At the request of the assessee, summons were issued for attendance of V, M and K. That upon V was served and V appeared. He denied having advanced loans and was cross-examined by the assessee. The summons issued to M and K were returned unserved. These two creditors were, however, examined at Madras but in the absence of the assessee. They also denied having advanced loans. The assessee requested the ITO to call M and K for cross-examination, but no summons were issued. It was held that there was no failure of natural justice and the ITO was entitled to draw an inference that the cash credits in the names of M and K were assessable as assessee’s income.”
15. The learned authorised representative vehemently argued that the interest amounting to Rs. 298 was paid through bank draft dt. 4th October, 1971. We find that no documentary evidence in the form of bank account, etc. was placed before us and secondly the said letter is not relevant for the year under consideration as the same is dt. 10th October, 1971, i.e., after the close of the accounting year Dewali 1970.
16. Our attention was also drawn towards the decision of Tribunal, Jaipur Bench, supra. In the cited case it was held that :
“The fact that the onus of proving genuineness of cash credit is upon the assessee does not mean that he is bound to win over false witnesses, if he can show that they have resiled but he can certainly produce other collateral evidence to show the circumstances under which they have resiled. In such circumstances it is the imperative duty of the taxing authority to find out the truth for himself and not to reject the assessee’s version because unfortunately the creditors do not support him. Accordingly we accept these appeals and restore the matter back to the file of the AAC for fresh decision on merits in the light of our aforesaid observations.”
17. Whereas in the case before us the assessee in spite of sufficient opportunity provided by the AO, did not produce any other evidence in support of his claim, therefore, the cited decision of this bench is distinguishable and against the facts and circumstances of the case.
18. Having considered all the facts, ratio of various decisions and material on record, we are of the considered view that the AO rightly added a sum of Rs. 50,000 as income from undisclosed sources being unexplained cash credit which was upheld by the Dy. CIT(A). It is also mentioned that we do not find any case law relied upon by the learned Departmental Representative cited at (1998) 232 ITR 80 (Cal) (supra). We, therefore, see no infirmity in the order of the AO/Dy CIT(A) and the same is upheld.
19. In the result, the appeal filed by the assessee is dismissed.