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2024 (2) TMI 1340 - BOMBAY HIGH COURTUnexplained cash credits u/s 68 - allegation of involvement in multi crore securities transactions scam of nineties infamously known as Harshad Mehta Scam, Assessee got labelled as party under the Special Court's (TORTS) Act, 1992 - assessee had failed to meet all the three criteria i.e. identity, creditworthiness and genuineness of the transaction - ITAT deleted addition - HELD THAT:- ITAT has very elaborately dealt with each of the additions. For the first addition relating to Rita Chopra, ITAT came to a finding that there is no reason to suspect the credit obtained from this party. ITAT, therefore, directed the AO to delete this addition. Cash credit in the name of Ronak Patel, though assessee did not obtain any confirmation letter, he produced evidence on repayment of Rs. 93,000/- made on 10th May 1991 to Ronak Patel. Assessee also showed evidence of having paid interest of Rs. 11,890/- to Ronak Patel during the year under consideration and, therefore, the Tribunal considered that for a sum of Rs. 12,000/- there was satisfactory explanation given by assessee. ITAT, therefore, modified the additions and reduced it from Rs. 40,000/- to Rs. 28,000/-. Cash credit received from Saurin Patel, the ITAT has accepted the explanation and evidence from assessee that he paid an interest of Rs. 12,600/- in February and August 1986. It has also noted that assessee has obtained fresh credit of Rs. 12,000/- on 3rd December 1986. ITAT, therefore, expressed a view that the interest payment of Rs. 12,600/- was sufficient to explain the sources for the fresh credit of Rs. 12,000/-. As regards cash credit received from Vikram Patel, opening balance of Rs. 1,00,000/- available in this account and interest payment made to the creditor, the ITAT did not find any reason to sustain the addition of Rs. 10,000/-. Interest expenditure debited as interest on securities - ITAT deleted addition by holding that the AO did not show any reason to the conclusion that the expenditure is excessive in nature - The admitted position is that payments have been made by cheques to bank accounts. AO should have considered the vouchers submitted by assessee and examined the genuineness of the expenditure with reference to the underlying invoices, bills of payment details, party details etc., and not straightaway come to the conclusion that the expenditure accounted through journal vouchers are bogus without verifying the factors and evidence that necessitated the passing of journal entries. ITAT, therefore, rightly concluded that passing of entries through journal vouchers are part and parcel of accounting proceedings in any type of business and any expenditure accounted through journal vouchers cannot be doubted on the only reason that they have been accounted through journal vouchers. Nothing prevented the AO to examine the entries with the underlying evidence. AO has also expressed the view that expenditure incurred was excessive in nature but has not given any reason for coming to this conclusion. ITAT noted that the AO cannot arrive at the conclusion on certain presumptions and by making general observations. ITAT has also correctly observed that CIT(A) has simply confirmed the order of the AO without critically examining the same. Therefore, even here no substantial question of law arise. Addition on account of negative balance of securities - ITAT deleted addition - AO has made observation, which has been confirmed by CIT(A) on the basis of stock summary prepared by the AO himself without furnishing the basis for arriving at alleged negative stock. The addition has been made without providing relevant materials and the ITAT has accepted that the relevant materials have not been submitted. The revenue was not been able to furnish materials on the basis of which the stock statement was prepared. ITAT has correctly concluded that the revenue has failed to appreciate that there is no difference in the quantity of units of UTI because the debit and credit of face value of units of UTI are the same. There is no difference in the quantity of units of UTI alleged to have been purchased or sold. AO has arrived at a presumed figure simply by looking at the cost price of the units and the sale price of the same. We would agree with the findings of the ITAT. No substantial question of law arise.
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