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2023 (5) TMI 1213 - AT - Income TaxAddition toward estimated gross profit by rejecting books of accounts - Unexplained cash credits - HELD THAT:- Where AO rejected books of account u/s 145(3) and made estimated addition on turnover, then such books of accounts should not be relied to make addition on account of sundry creditors/ trade creditors. Thus, respectfully following the judgment of BAHUBALI NEMINATH MUTTIN [2017 (1) TMI 1375 - KARNATAKA HIGH COURT] the addition made by the Assessing Officer, in case of assessee under consideration, on account of creditor/ temporary loan taken for trading purpose should be deleted. Addition u/s 68 - creditors/person who gave the temporary loan, did not turn up before him, as discussed in the assessment order - We note that assessee has produced sufficient documents and evidences before the assessing officer and the solitary reason of not serving of summons on few creditors cannot be relied only by ignoring the other relevant material produced by the assessee. The judicial pronouncement in the case of D.&H Enterprises [2016 (8) TMI 510 - GUJARAT HIGH COURT] in which it was held that the solitary reason of not serving of summons cannot be relied only by ignoring the other relevant material produced by the assessee. As noticed that in the case of the assessee, the confirmation with the name, address, copy of ledger account, copy of bank statement and PAN number in respect of the parties were filed before the Assessing Officer, therefore addition should not be made in the hands of assessee. Assessee has proved the source of money and the assessee need not to prove ‘source of the source’, as held in the case of Prayag Tendu Leaves Processing Co, [2017 (12) TMI 932 - JHARKHAND HIGH COURT] - assessee`s case is covered by the judgment of Gopal Heritage (P.) Ltd, [2021 (10) TMI 422 - GUJARAT HIGH COURT] wherein the Court held that where assessee had taken unsecured loans from some persons and Assessing Officer made addition under section 68 on ground that assessee had not been able to prove immediate source of cash-in-hands of party, since all ingredients contemplated under section 68 had been duly satisfied in aspect of identity of creditors, genuineness of transactions and their creditworthiness, said addition was to be deleted As evident that the assessee had produced all relevant details and documents in its possession, namely, names and addresses, PAN numbers, confirmations, bank statements and copy of ledger accounts. The amounts in question had been received by way of account payee cheques. As permanent account numbers and the income tax returns of all the creditors had been furnished by the assessee,AO could have easily verified the same, hence there is no failure on the part of the assessee to furnish relevant documents and evidences before the AO. Onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, AO is dissatisfied about the source of the amount deposited in the bank accounts of the creditors, the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). Therefore, AO was not justified in treating it as unexplained cash credit. The assessee has satisfactory explained the source. Ground of assessee’s appeal is allowed.
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