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2022 (2) TMI 591 - AT - Income TaxAddition u/s 69A - Unexplained cash credit - HELD THAT:- We find the assessee before the AO had categorically stated that Mamaji & Mataji were staying with the assessee and he used to handover business cash to them for safe custody whenever he used to go out of station for either business purposes or personal work. The assessee has also given the availability of cash on 07.07.2010 (the date of entry in the seized document) in the books of accounts of various proprietorship concerns and companies in which the assessee is a director which is more than the amount of ₹ 10.00 lakhs. Therefore, merely stating that the explanation is not acceptable is not justified. Since, the availabilities of cash on 07.07.2010 in the books of accounts of various concerns of the assessee is not doubted, therefore, we are of the considered opinion that the Ld. CIT(A) is not justified in sustaining the addition of ₹ 10,00,000/-. The order of the Ld. CIT(A) on this issue is, therefore, set-aside and the AO is directed to delete the addition Unexplained property purchased - search proceedings - HELD THAT:- We find the assessee had stated categorically before the AO that these are rough calculation for purchase of property which did not materialize. It is an admitted fact that no such document or papers pertaining to purchase of any property was found either during the course of search or post search enquiries. Apart from the noting in the seized papers, the revenue has no other evidence of purchase of any property by the assessee. No post search enquiry or investigation was conducted by the AO to find out if at all any property has been purchased - no document/paper relating to the so called property was either found during the course of search or post search enquiry and no independent evidence was either found during the course of search or collected subsequent to the search, therefore, in the light of the above decisions, the assessee in our opinion cannot be fastened with the liability. We, therefore, set-aside the order of the ld. CIT(A) on this issue and direct the AO to delete the addition. Ground of appeal No.4 is accordingly allowed. Addition u/s 69A - HELD THAT:- So far as argument of Learned Counsel for the Assessee that telescoping benefit should be given is concerned, the same is acceptable in view of the decision of the Hon’ble Delhi High Court in the case of CIT vs. Sonal Construction reported [2012 (11) TMI 11 - DELHI HIGH COURT] where has accepted the theory of benefit of telescoping. We, therefore, direct the A.O. to allow the benefit of telescoping and deduct the addition of ₹ 10,55,000/- from profits from bogus purchases etc. added in the hands of the assessee and his proprietorship concerns and in the case of the 02 companies namely LV Rustore Applications (P) Ltd., and RR Carwell Private Ltd., where he is a Director and is the controlling person. The A.O. shall do the necessary calculation and the ground raised by the assessee on this issue is accordingly partly allowed in terms indicated above. Unexplained money - HELD THAT:- As letters were found and seized during the course of search and the letters clearly and categorically mention that an amount of ₹ 40 lakhs was given by R.A. Financial Services to Shri Rattan Prakash Mishra, President Omshanti Educational Society and the assessee was only an intermediary, therefore, adding the same to the income of the assessee, in our opinion, is not justified. Accordingly, the order of the Ld. CIT(A) on this issue is set aside and the ground of appeal number 8 raised by the assessee is allowed. Addition based on seized document as an MOU entered into between the assessee and Gyaneshwar Education Trust - HELD THAT:- In the instant case, we find it is peculiar case where the assessee is denying to have made any payment as per the MOU and the second party in the MOU is absconding and is a proclaimed person. However, it is also a fact that the MOUs were found from the premises of the assessee and therefore the onus is on the assessee to prove that the assessee has not paid the amount as mentioned in the first and second MOU and that these MOUs are only for securing the payments made earlier with interest and interest on interest. In our opinion, the matter requires a revisit to the file of the AO to examine certain things to find out the truth before making any addition. i. The AO shall summon and record the statement of Mr. Sanjay Gupta who is a witness to the MOU and the notary in whose register the same has been entered to find out the facts and veracity of the MOU. ii. The AO shall also summon and record the statement of Mr. O.P. Gulati in whose name receipts were found and which are related the MOU. iii. In case the above persons do not respond to the summons issued by the AO, the onus shall be on the assessee to produce them before the AO. If the assessee fails to produce them and they do not respond to the summons then the AO may take adverse view. AO shall decide the issue in the light of our above observation and in accordance with law after giving due opportunity of being heard to the assessee. Non-granting of credit received from Mr. Abhay Salwan and R.A. Financial Services while computing the peak cash balance - HELD THAT:- We find it is the contention of the ld. Counsel for the assessee that benefit of ₹ 50 lakhs as per receipt dated 01.01.2012 seized during the search and received back from Mr. Abhay Salwan and R.A. Financial Services should be given for computing the peak cash balance, Similarly, it is also his submission that the Assessing Officer has not given the benefit of ₹ 50 lakhs as per seized documents dated 15.12.2011 seized during the course of search relating to L.V. Rustor Application Pvt. Ltd. where the assessee is shareholder and director and amount being received back from Mr. Abhay Salwan and R.A. Financial Services along with interest should be considered for computing the peak cash balance. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to decide the issue afresh. Addition being interest @ 2.6% of cash loan - HELD THAT:- Since, the issue relating to the addition on the basis of the MOU as per ground of appeal No.3 has been restored to the file of the AO for fresh adjudication, therefore, this ground is also restored to the file of the for fresh adjudication by the AO. Addition to the total income of the assessee being unsecured loans - HELD THAT:- As amount of ₹ 30,00,000/- received by the assessee are in fact the recovery of principal amount earlier given to Mr. Abhay Salwan and the addition made by the AO and sustained by Ld. CIT(A) are on presumption basis. It is the settled position of law that for allowing any cash credit as genuine, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and creditworthiness of the loan creditor and genuineness of the transactions. However, the assessee in the instant case has not discharged the onus. The submission of the ld. counsel for the assessee that these are in fact recovery of principal amount also needs to be established by the assessee.
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