KUSHAL PRASAD MANHAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE appeal under Section 260A of the Income Tax Act, 1961 (for short, hereinafter referred to as the Act) was admitted by this Court for consideration on the following substantial questions of law:

(2.) THE Assessee is sole proprietor of M/s Shradha Fuels, Village Tiwarta, Korba and is engaged in the business of trading in petrol, diesel and lubricant oil etc. He submitted this return of income for assessment year 2006-07 on 30-10-2006 declaring total income of Rs. 1,26,359, THE assessment proceedings were taken up by issuance of notice under Section 143(2) of the Act, dated 20-2-2007. THE Assessee claimed expenses in transportation accounts amounting to Rs. 4,21,150. Cash credits amounting to Rs. 9,00,000 and Rs. 10,99,000 are appearing in the names of Shri S.R. Manhar (Individual) and S.R. Manhar (HUF) in the books of Assessee as under:

(3.) SHRI G.N. Purohit, learned senior advocate would submit that if the sum is found credited in the account books of Assessee, it has to prove three things viz., identity of the creditor, capacity of such creditor and genuineness of the transaction. Once all the aforesaid three things are proved, burden shifts on the revenue to prove that the amount belongs to Assessee. The Assessee has done everything in as much, he has produced confirmation letters of creditors who are income-tax Assessees, also produced them for recording their statements before the assessing officer, in which they have explained everything, thus the Assessee has successfully discharged its initial burden as envisaged under Section 68 of the Act. The Assessee is not obliged to prove the source of the source. For this, the revenue has not discharged its burden, therefore, the order passed by the assessing officer, disallowing cash credit of Rs. 4,00,000 and Rs. 10,99,000 and adding it to the income of the Assessee is perverse being based on no material on record. For this, he placed reliance upon the judgment in the matters of CIT v. Orissa Corporation (P) Ltd. : (1986) 159 ITR 78 (SC), CIT v. Mehrotra Brothers : (2004) 270 ITR 157 (MP), CIT v. S. Kamaljeet Singh : (2005) 147 Taxman 18 (All), Nemi Chand Kothari v. CIT and Anr. : (2003) 264 ITR 254 (Gau), CIT v. Baishnab Charan Mohanty (1995) 212 ITR 199 (Orissa), Jalan Timbers v. CIT : (1997) 223 ITR 11 (Gau), Anil Rice Mills v. CIT : (2006) 282 ITR 236 (All), Kamal Motors v. CIT (2003) 180 CTR (Raj) 166, Aravali Trading Co. v. ITO (2008) 220 CTR (Raj) 622 and Murlidhar Lahorimal v. CIT : (2006) 280 ITR 51 (Guj). He would further contend, addition of Rs. 50,000 in the income, disallowing transportation expenses to the above extent incurred for running and maintenance of tanker truck is also without any basis.