TMI Blog2012 (3) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account cannot be held as "Unexplained Deposits". - ITA No.659/JP/2011 - - - Dated:- 6-1-2012 - SHRI R.K.GUPTA, SHRI N.L. KALRA, JJ. Appellant by : Shri Vinod Johary Respondent by : Shri P.C. Parwal ORDER PER SHRI N.L. KALRA, A.M. 1. The revenue has filed an appeal against order of ld. CIT (A) Alwar dated 8.4.2011. 2. The first ground of appeal is as under: That the ld. CIT(A) has erred in law as well as on the facts and circumstances of the case in dealing the addition of Rs.2,52,269/- as made by the A.O. on a/c of set off bf business losses. 3. Assessee company declared business income of Rs.2,52,269/- claimed set off of the same from the brought forward business losses of A.Y. 1997-98. AO held that there is change in the shareholding pattern from A.Y. 97-98 to the year under consideration thus the loss incurred in any year prior to the previous year is not entitled to be carried forward set off against the income of the previous year as per section 79 of the I.T. Act, 1961. 4. CIT (A) allowed the same by giving the following findings- While dealing with the said issue the AO has erred in not considering the first proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 30,000 shares Mr. Ashok Kumar Agarwal holding 100 shares as on 31.3.1997 remained the same during the year under consideration. Therefore, the total shareholding of these persons is 40,100 shares i.e. 53.04% of the shareholding as on 31.3.1997. Section 79 is thus not applicable. 7. We have heard both the parties. The word relative is defined in section 2(41) of I.T. Act and the same is as under: Relative in relation to an individual means the husband, wife, brother or sister or any lincal accendent or decendant of that individual. The shares have been transferred from Uncle to nephew and hence such transfer is not covered under proviso to section 79 as relationship of Uncle nephew is not covered in definition of relative. Once such transfer is excluded then shareholding remaining as per details filed before us is 30,100 and the same is less than 50%. Hence the A.O. was justified in not allowing the set of of less of Rs.2,52,269/-. 8. The second ground of appeal is as under: That the ld. CIT (A) has erred in law as well as on the facts and circumstances of the case in dealing the addition of Rs.59,526/- as made by the AO on a/c of under valuation of closing stock. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales in transit to M/s. D.D. Enterprises M/s. U-Like Sales. The total qty. sold to M/s. D.D. Enterprises during the month of Sep 2011 to Dec 2011 is 10416.840 KL having a realizable value of Rs.12,60,90,645/- to M/s U Like Sales during the month of Jan Feb 2002 is 3041.875 KL having a realizable value of Rs.3,64,65,603/- AO observed that in the bank account of the assessee there are receipts of Rs.1.36 crores from M/s. Balaji Sales M/s Shivam Sales Corporation. As per the information received by him from ITO Delhi, these parties provide accommodation entries. In response to the show cause notice, assessee explained that the receipts of Rs.1.36 crores in their bank account is against the consignment sales made by it to its consignment agents who in turn sold goods to M/s. Balaji Sales M/s Shivam Sales Corporation on their instruction the cheques were drawn by them in favour of the assessee. All necessary evidence in this respect was filed before the AO. The detailed explanation submitted by the assessee before the AO is submitted at Page 8-9 of the assessment order. The AO, however, did not accepted the explanation of the assessee the evidences submitted by it fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lization. In order to establish the receipt of amount, the assessee company has submitted the confirmed copy of account of both the parties viz DD Enterprises and U.Like Sales Corp. to establish the confirmation of sales to them and receipt of payment through cheque, confirmed copy of account of Shree Balaji Sales and Shivam Sales Corp. as appearing in the books of account of U.Like Sales Corp. to confirm the payment by the respective parties in the account of DD Enterprises and U.Like Sales Corp. to the assessee company, confirmation of Shivam Sales Corp. and Shree Balaji Sales to U.Like Sales and of Shivam Sales Corp. to DD Enterprises of issue of cheque in the name of assessee company, Bank statement of Shree Balaji and Shivam Sales Corp. with the Bank of Rajasthan, Janpath Branch, New Delhi, to establish that the cheque to the assessee company have been cleared against the cheque rather than of cash and also the letter dated 18.12.2009 of U.Like Sales confirming lthe payment by Shivam Sales Corp. on their behalf to the assessee company and address of the consignee to establish the identity of the consignee. All these documentary evidences have also remained un-controverted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch sales in the bank account of the assessee Company. The confirmations of M/s. Shree Balaji Sales and M/s. Shivam Sales Corporation have been signed by alleged authorized signatories Shri Yogesh Shri S.Bhagwan whereas as per the information collected from the Bank of Rajasthan Ltd. 82, Jan Path, New Delhi both these concerns were sole Proprietorship concerns of Shri Praveen Kumar Gupta Shri Dinesh Kumar respectively. As per extensive enquiries conducted by the Addl. D.I. (Inv.) Unit-V, New Delhi Shri Dinesh Kumar opened the bank A/c No. 46908 at Bank of Rajasthan, 82, Jan Path, New Delhi on 16.4.2001 under fictitious proprietorship concern M/s Shivam Sales Corporation and similarly Shri Praveen Kumar Gupta opened the bank A/c No. 47076 at Bank of Rajasthan, 82, Jan Path, New Delhi on 8.5.2001 under fictitious proprietorship concern M/s. Shree Balaji Sales. They worked as entry operators on commission basis. Their sole motive was to earn commission by accepting cash, depositing the same in the several bank accounts and issuing cheques to the assessee. This fact has been confirmed by their copy of bank statements for the relevant period obtained from the bank. Many times cash w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that lies on the assessee. In the case of CIT Vs. Precision Finance Co. Ltd. (1994) 208 ITR 465,470 held that mere furnishing of the particulars is not enough. Mere payment by account payee cheque is not sacrosanct not can it make a nongenuine transaction genuine. In the cases of Shanker Industries Vs. CIT (1978) 114 ITR 689 9Cal), C.Kant Co. Vs. CIT (1980) 126 ITR 63 (Cal.), Prakash Textile Agency Vs. CIT (1980) 121 ITR 890 (Cal.) Hon ble Calcutta High Court held that It is necessary for the assessee to prove prima-facie the transaction which results in a cash credit in his books of account. Such proof includes proof of the identity of his creditor, the capacity of such creditor to advance money and lastly, the genuineness of the transaction. These things must be proved prima-facie by the assessee and only after the assessee has adduced evidence to establishing prima-facie the aforesaid, the onus shifts on the department. Merely establishing the identity of the creditor is not enough. Hon ble Punjab Haryana High Court in the case of Gumani Ram Siri Ram 98 ITR 337 held that- It is the assessee s responsibility to establish that the third party had advanced money and is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords the assessee Company has introduced its unexplained black money into its books of account in the guise of payment received from transit sales. Thus a sum of Rs.13610000/- is added u/s 68 of I.T. Act, 1961 to total income of the assessee as income from undisclosed sources. Penalty proceedings u/s 271(1)(c) are being initiated separately for concealing income of true Income or furnishing inaccurate particulars of such income. 18. Before us the ld. A/R submitted as under: It is fact on record that the amount of Rs.1,36,10,000/- received from Sh. Balaji Sales M/s. Shivam Sales Corporation has been adjusted by the assessee against the sales proceeds of goods send on consignments to the consignment agents M/s. D.D. Enterprises M/s U-Like Sales. The assessee has not made any direct sale to Sh. Balaji Sales M/s. Shivam Sales Corporation. It is the consignment agent who has sold goods to them against these sales made by the consignment agent, Sh. Balaji Sales M/s. Shivam Sales Corporation have issued cheques in favour of the assessee which is credited in assessee s bank account adjusted against the consignment sales made by the consignment agent. This is evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y them in favour of assessee against sales made the them by the consignments agents M/s. D.D. Enterprises M/s. U-Like Sales (PB 96C-107). Letter dt. 18.12.2009 of M/s. U-Like Sales to the AO in respect of above (PB 108). Details of TDS deducted deposited on commission paid by assessee to the consignment agents alongwith the challans certificate of deduction of tax at source (PB 109-112). Details of sales as per books submitted to the Sales Tax Department (PB 113). Sales Tax Assessment Order of assessee (PB 114-119). From these documents, it is evident that M/s. D.D. Enterprises M/s U-Like Sales sold part of the goods consigned by the assessee to M/s. Shivam Sales Corporation Sh. Balaji Sales against those supplies they issued cheques directly in favour of the assessee which is deposited by the assessee in its bank account adjusted against the amount of sales proceeds recoverable from the consignment agent. The sales so made are duly accounted for accepted by the AO. Hence, the amount received against such sale cannot be assessed as unexplained deposit u/s 68. Otherwise also, the amount deposited in the bank account is not a credit in the books of accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e showed its unability to produce the consignment agents as the matter is old and the assessee is not having any connection with those parties. The assessee asked the A.O. to issue commission. The revenue has accepted the sales. Sales Tax authorities and excise authorities have also accepted the sales. The Credit entries are against sale proceeds. If sales are accepted then such credit entries cannot be added as income the only conclusion can be that sales are not verifiable. The assessee has maintained the quantative details. It is not the case of revenue that sales are deflated or the sales are not at the market price or the goods were being sold on premium. We are holding in the cases of jewelers of Jaipur, that books of account are to be rejected in case the purchases are not verifiable. In this case the assessee has sold goods through its consignment agent and in case such consignment agent received sale consideration from parties which according to revenue were allegedly providing accommodation entries then action should have been take against such consignment agent. It is also an accepted position that bank account of the assessee is not part of the books of assessee as su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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