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2019 (7) TMI 378 - AT - Income TaxDisallowance of expenses - CIT-A restricted the disallowance from 20% to 10% - HELD THAT:- A.O. has not rejected the books of account of the assessee but the trading results of the assessee were verified by the A.O. only for the purpose of examining the claim of expenditure. The A.O. has made the disallowance on the ground that the assessee has not produced the supporting vouchers but the vouchers filed by the assessee are self-made vouchers. CIT(A) has given the finding that the A.O. has disallowed 20% of the expenditure which is unreasonable, excessive and without any basis. Once this finding is given by the ld. CIT(A) then there is no justification for sustaining the disallowance at 10% of the expenses. Therefore, after holding the addition as unreasonable, excessive and without any basis, the restriction of the addition/disallowance at 10% is also without any basis. Hence, the addition/disallowance sustained by the ld. CIT(A) is not sustainable in law and the same is deleted. Addition u/s 68 - creditworthiness of the loan creditor is not proved - CIT(A) has confirmed the addition made by the A.O. on the ground that the assessee has failed to explain the source of cash deposited by the loan creditor - HELD THAT:- Though, the assessee has proved the identity of the loan creditor, however, a cash of ₹ 2.95 lacs was deposited in the bank account of the loan creditor prior to the said amount of ₹ 3.00 lacs given to the assessee. Further the source of deposit was explained by the assessee as salary income of the loan creditor who was employed with the assessee itself. Thus, the loan taken by the assessee from its own employee and prior deposit of cash clearly established that the creditworthiness of the loan creditor is not proved beyond doubt. Since the loan creditor was employee of the assessee, therefore, the preponderance of probability is against the assessee that the said cash deposited in the bank account of the employee is assessee’s own unexplained cash. Assessee has claimed loan of ₹ 3.00 lacs from his own employee and a cash of almost equal amount was deposited in the bank account of the said loan creditor prior to the alleged loan given to the assessee clearly an evidence against the assessee against which the assessee has not produced any evidence and hence the assessee has not discharged his burden to prove the transaction as genuine as well as the creditworthiness of the loan creditor. Therefore, we uphold the order of the ld. CIT(A) on this ground.
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