Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2007 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2007 (10) TMI 338 - AT - Income TaxIncome From Undisclosed Sources - alleged excess stock found - HELD THAT:- It is an undisputed fact that the difference in stock was worked out during the course of survey on the basis of GP rate of 3.37 per cent shown in the immediately preceding year whereas the assessee in his statement recorded under s. 131 had stated that the difference in the stock was as a result of application of profit rate of the past year and if the profit rate of the current year was applied, there was no such difference. The assessee had agreed to pay tax as per the s. 44AF and he has also honoured the same. The assessee has shown net income by applying a net profit rate of 5 per cent as against net profit worked out in P&L a/c which in our opinion clearly explains the amount taken as difference in stock. Consequently, we confirm the finding of the learned CIT(A) and dismiss ground No. (1) of Revenue's appeal. Unexplained cash credits u/s 68 - It is a settled position of law that the assessee is duty bound to, prima facie, establish the identity and capacity of the cash creditors along with genuineness of the transactions. We have examined each and every cash creditor, out of 32 squared up cash creditors, 27 parties were examined by the Inspector of the Department. Even before the Inspector 24 parties confirmed the factum of loan having been given to the assessee and also having been received it back by them. These parties also confirmed receipts of interest on their respective deposits. The identity of these persons was established beyond doubt. We (sic-They) have also explained their respective source(s) of income along with their monthly expenses. Therefore, their creditworthiness also stands explained being sufficiently proved on record. The transactions are found genuine; therefore, there is no justification for addition on account of 27 squared up cash creditors. We confirm the finding of the learned CIT(A) to that extent and hold that the learned CIT(A) has correctly deleted the same. As regards 5 cash creditors, who were not examined but they had their duly sworn in and attested affidavits filed which remained uncontroverted. When the affidavits remained uncontroverted by the Department, the averment of the affidavit has to be taken as truthful. All of them have confirmed the factum of their cash credits. There were only 3 cash creditors who did not confirm having given loan and having received the same back. The explanation of the assessee in respect of them is that the transactions in question took place in financial year 2000-01 whereas the statements were recorded. Therefore, we accept these cash creditors also as genuine. Regarding transaction being not by cheque, it was explained that the place where the assessee has. carried on business and further that in this line of the business, the banking habits are not normal. This is also a valid explanation. Therefore, the addition cannot be made merely because transaction was not through cheque. Hence, we accept all the cash creditors as genuine and delete the entire addition so made u/s 68 of the Act. Otherwise also, the assessee is entitled to set off of the amounts of some cash creditors who denied the factum of loan against the extra income declared by the assessee by declaring income under the provisions of s. 44AF. Therefore, ground No. (2) of Revenue's appeal is dismissed and ground No. (1) of assessee's cross-objection is allowed. Unexplained Investment in the purchase of a plot - HELD THAT:- We are aware that only on the basis of stamp duty charged by the sub-Registrar no addition can be made on account of estimated investment made in the purchase of the property. In this case, the AO made addition simply on the basis of the valuation taken for stamp duty by the sub-Registrar, even after making further inquiries, which were not relied by him. Therefore, by respectfully following the decision of the Jodhpur Bench in the case of Jai Marwar Co. (P) Ltd. vs. Asstt. CIT [2005 (3) TMI 414 - ITAT JODHPUR], we confirm the impugned finding and dismiss ground No. (3) of Revenue's appeal. Addition on account of inadequate withdrawals for household expenses - HELD THAT:- The family of the assessee consisted of 2 members only and total withdrawals shown by him and his wife were at Rs. 48,000, which was considered to be quite reasonable by the learned CIT(A). On the very face of it, in the absence of any other material available on record, we also confirm the impugned deletion. The AO simply made this addition based on guesswork. We cannot approve the same. We hold that the learned CIT(A) has correctly deleted this addition. In the result, the appeal of the Revenue is dismissed and cross-objection is partly allowed.
|