1. This Income Tax Appeal arise from the decision of the Income Tax Appellate Tribunal (in short 'ITAT') dated 28.12.2012 passed in I.T.A. No. 245/Agra/2012 (Assessment Year 2007-08).

2. The following questions of law have been framed by the assessee :

“(i) Whether on the facts and circumstances of the case theAT was right in making the addition of Rs.3,71,000/- under Section 68 of therelating to 22 creditors whose amount was below Rs.20000/- and who advance money to the appellant for purchasing silver ornaments

(ii) Whether the appellant having discharge the onus by submitting the confirmatory letters with complete address of the creditors and the amount being below Rs.20,000/- per creditor theAT was right in making addition on ground that no request for summoning any creditor was made by the appellant

(iii) Whether section 40A (3) of thedoes not require the creditor to make expenditure in respect of the payment made in a day otherwise then by account payee cheque or bank draft exceeding Rs.20,000/-, theAT was right to make addition of the payment made by 22 small creditors for purchase of silver ornaments in the hands of the appellant”

3. The brief facts of the present case are that the source of income of the appellant was to earn the interest from various parties under his business of money lending in the name of Rajnikant and brothers. The present appellant was also indulge in another business which was a proprietorship concerned in the name of M/s Yashodhara Jewellers which was engaged in silver and gold ornaments business. For the Assessment Year in question the assessing authority of the appellant has passed the assessment order under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the) and vide order dated 14.12.2009 the assessing authority has determined the total income of the appellant to the tune of Rs.7,77,614/-. It is relevant to mention here that the appellant has declared its income at Rs.4,06,614/-. The case of the appellant was taken up for scrutiny and a notice under Section 143 (2) has been issued and served. In reply to the said notice the authorised representatives of the appellant along with the assessee attended proceeding before the assessing authority from time to time.

4. During the course of the scrutiny proceeding the assessing authority has noticed that a number of cash credit entries were appearing in the books from about 20 persons. It is further noticed that to establish the genuineness of the aforesaid credit entries the confirmatory letters were brought on record to substantiate the genuineness of the said transactions. The assessing authority has noticed that the alleged confirmatory letters were having no proof with regard to the identification of the alleged creditors. He has further found that all the transactions were in cash. The assessing authority has therefore, doubted the genuineness of the transaction as the same were neither verifiable nor substantiated by the appellant. The assessing authority has further found that the credit worthiness of the alleged creditors was also remained un-established in absence of the genuineness of the persons who have credited the amount in cash as well as the genuineness of the transactions.

5. The assessing authority has therefore, confronted the aforesaid facts to the assessee and has issued a show cause notice indicating wherein that as to why the alleged cash credit should not be treated as unexplained income under Section 68 of the.

6. In its turn the assessee has submitted that he is doing silver ornament business and for the said business, some persons have given him an advanced to purchase the silver ornaments on their behalf as per suitable rates. On query made by the assessing authority, it is found that the persons whose names were mentioned in the cash book and who allegedly advance money for the purchase of silver ornaments were not brought forward as such according to the appellant himself the appellant has returned the amount to all the parties in cash. It is noticed by the assessing authority that all the persons who had advanced the cash money for purchase of silver ornaments were very ordinary persons and none of them were assessed to income tax by the department. Considering the aforesaid facts and that there was no other documentary evidence adduced by the appellant which supports his claim, it was unbelievable to the assessing authority that such a large number of cash deposit to purchase of silver ornaments without any identity proof is correctly established. The assessing authority therefore, has found that the explanation which has been furnished by the assessee was wholly imaginary and was without any substance or evidence as he failed to substantiate the genuineness of the cash credit as such has held to be unexplained and accordingly the aggregate amount which has been found/ noticed in the cash book under the heading of credit entries total sum of Rs.3,71,000/- has been added to the income of the assessee.

7. Aggrieved by the order of the assessing authority the appellant has preferred an appeal before the CIT (Appeals) who vide its order dated 28.12.2011 has dismissed the appeal filed by the appellant and has confirmed the order passed by the assessing authority.

8. Still aggrieved by the order of CIT (Appeal) the appellant has preferred an appeal before theAT which has been dismissed vide impugned order and judgment dated 28.12.2012.

9. The instant appeal is against the judgment and order of theAT dated 28.12.2012.

10. We have heard Sri Suyash Agrawal, learned counsel for the assessee and Sri Shubham Agrawal, learned counsel for the department.

11. The counsel for the assessee has submitted that the assessee is in the business of Silver Ornaments and those 20 creditors have given advance to him for purchase of Silver Ornaments as per suitable rates. He has further submitted that the assessee has filed the confirmation letters with regard to the transaction which was routed in cash. He has further submitted that books of account have been accepted by the assessing authority except addition of a sum of Rs.3,71,000/- as unexplained amount. Learned counsel for the assessee has therefore, submitted that the assessing authority has not discharged his burden as provided under Section 68 of the.

12. Section 68 of theprovides as under.

“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.

[Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless-

(a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and

(b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory:

Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause 23(FB) of section10.]”

13. Learned counsel for the assessee appellant has submitted that the amount which has been given by the persons is less than Rs.20,000/- each in all the cases and this is a kind of regular feature in the case of assessee likewise. He has further submitted that the silver ornaments could not be purchased against the cash money provided by the individuals on account of continuously increase in price of the goods/silver ornaments therefore, ultimately the entire amount has been returned to the respective parties.

14. Similar submissions has been reiterated before the Appellate Tribunal while challenging the order passed by the CIT (Appeals). The ITAT has considered the facts of the case and has noticed that the assessee has not proved the ingredients of Section 68 of the. The burden is upon the assessee to prove the identity of the creditors, their creditworthiness and genuineness.

15. We find that in the present case, the appellant assessee has not proved any of the aforesaid conditions of Section 68 of. It is noticed by the Tribunal that though the confirmation letters from the creditors are placed but no supportive evidence to prove the identity of the creditors or their creditworthiness and genuineness of the transaction is placed. The Tribunal therefore, has held that since the assessee has failed to prove the primary condition of provisions of Section 68 of the Act, merely confirmation letters can not substantiate the genuineness and creditworthiness as well as the identity of the creditors. The decisions which are cited by the appellant before the Tribunal are duly considered and the Tribunal has found that the cited decisions are not applicable to the facts of the case of the appellant. It is further noticed by us that neither before the CIT (Appeals) nor before the Tribunal the appellant has furnished any evidence to prove the identity of the creditors, their creditworthiness and the genuineness of the transaction in the matter.

16. In our opinion, the Tribunal had taken all the relevant facts into consideration and the conclusion arrived by the Tribunal that the loans represented the assessee's income from undisclosed sources was not perverse or unreasonable.

17. In view of the aforesaid facts, we find no merit in the present appeal. Accordingly, the appeal is dismissed.