Ashok Kumar, J. - (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). The following questions of law have been framed by the assessee : "(i) Whether on the facts and circumstances of the case the ITAT was right in making the addition of Rs.3,71,000/- under Section 68 of the Act relating 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 the ITAT 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 the Act does 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/-, the ITAT was right to make addition of the payment made by 22 small creditors for purchase of silver ornaments in the hands of the appellant."
(2.) 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 Act) 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.
(3.) 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.;