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Cash credits: Credits from regular assessee-Credit in wife's name
July, 16th 2007

The assessee had disclosed certain cash credits in the name of his wife, who had the capacity to give deposit, as she was being regularly assessed under the Income Tax Act 1961 as well as the Wealth Tax Act 1957. Therefore, since the identity and capacity of the creditor was established, the tribunal's order deleting the addition made to the assessee's income on account of unexplained cash credits was justified.

High Court of Allahabad

CIT vs Prem Kumar

I.T. Reference No. 27 of 1996

A.K. Yog and Prakash Krishna, JJ

19 January 2006

Shambhu Chopra for the Applicant
R.S. Agarwal for the the Respondent


1. The Income-tax Appellate Tribunal, Delhi Bench, has referred the following question of law for opinion of this Court under section 256 (1) of the Income-tax Act :

"Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was correct in law in deleting the addition of Rs. 1,13,500 made under section 68 of the Act, being unexplained deposit, notwithstanding the fact that the capacity or the creditworthiness of the depositor remained unsubstantiated as the assessee failed to discharge his onus lay upon him to prove the capacity or the creditworthiness of the depositor and further
categorically refused for being examined the depositor, his wife Smt. Mamta Devi. Mere filing of confirmatory letters, copies of assessment orders and payment by cheque do not prove genuineness of credits nor they make a non-genuine transaction/loan genuine."

2. The dispute relates to the assessment year 1990-91. The brief facts giving rise to the present writ petition are as follows :

The assessee is an individual and in his return he disclosed cash credit of Rs. 1 lakh in the name of his wife, Smt. Mamta Devi. The assessing authority asked the assessee to produce Smt. Mamta Devi, but he failed. The assessing authority accordingly treated the cash credit of Rs. 1 lakh as unexplained income of the assessee. The addition was agitated in appeal before the CIT (Appeals). The appeal was dismissed. The assessee filed second appeal before the Tribunal and the Tribunal allowed the appeal and noted that Smt. Mamta Devi, the creditor is being regularly assessed by the department in
respect of her income as also wealth and the returns filed by Smt. Mamta Devi stood accepted by the revenue. The Tribunal allowed the appeal.

3. Heard Sri Shambhu Chopra learned standing counsel for the department and Sri R.S. Agarwal, Advocate, for the assessee.

4. The only argument raised by Sri Shambhu Chopra for the department that since the assessee has failed to produce Smt. Mamta Devi, therefore an adverse inference should have been drawn against the assessee.

5. We have carefully considered the submission of learned counsel but do not find any merit therein. It has come on record that Smt. Mamta Devi is regularly assessed by the department in respect of her income. The Tribunal has treated the deposit as genuine. The finding of the Tribunal is based on relevant considerations. The Tribunal has found that the identity of the creditor is established and she had the capacity to give the deposit as she was regular assessed under the Income-tax Act as well as under the Wealth-tax Act. In view of the above we find no illegality in the order of the Tribunal.

6. In the result we answer the afore-mentioned question of law referred to us in affirmative i.e., in favour of the assessee and against the revenue. There will be, however no order as to costs.

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