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2014 (7) TMI 549 - AT - Income TaxAddition u/s 41(1) - outstanding liability since long – hawala transactions - Necessity of verification of the genuineness of creditors – Held that:- confirmation of the account statement as appearing in the assessee’s books of account is bearing the pan numbers - Even though the said confirmation is accompanied by a certificate by the ld. AR to the effect that the same stood furnished before the A.O., it is clearly false in-asmuch as the assessment order is dated 19.12.2011. How could a transaction dated 28.03.2012, which would only be confirmed by the creditor on or after the said date, be reported to the A.O. on 19.12.2011, even as the hearing before him would have presumably closed prior thereto? This falsity on behalf of the assessee is highly condemnable to say the least and needs to be depreciated in the strongest terms. - What anguishes us equally is that the same was not pointed out by the ld. DR during hearing, and which is particularly astonishing considering that the Revenue’s main charge is that the concerned creditors are not genuine traders but only hawala operators, providing accommodation entries, and that evidence had been admitted and acted upon by the ld. CIT(A) in contravention of rule 46A. - matter remanded back for fresh adjudication. Additions towards unconfirmed creditors - Held that:- No confirmation or any other material evidencing the existence of the liability to the other party, Swastik Enterprises, stands furnished at any stage, with the notice to him by the AO returning unserved, for which again no explanation stands furnished by the assessee - The amount is outstanding since 09.07.2003, i.e., for a period of almost six years as at the end of the relevant previous year, and for over 9 years by the time the matter stood decided by the first appellate authority - Nor reason for the same stands advanced at any stage, and even no claims with regard thereto were made, i.e., after a further lapse of another 1 ˝ years – it is clearly unproved and the application of section 41(1) in relation to the credit is confirmed. - Additions confirmed - Decided against the assessee. Addition u/s 68 of the Act – Genuineness of credit cannot accepted – Held that:- There is no finding to that effect that the payment to the stated extent may find reflection in the assessee’s books of account for the following year - it needs to be appreciated that if the entries in books were final or conclusive, no addition u/s 68 could at all be made - It is on the failure of the assessee to prove the veracity or the truth of the entries appearing in his accounts, which would lead to invocation of section 68 or any other relevant provision for that matter – Relying upon CIT vs. Kamaraia Pandian [1983 (9) TMI 65 - MADRAS High Court] – decided against Assessee.
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