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TMI Blog2012 (8) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 90,165/. The return was processed u/s.143(1) accepting the income returned. Subsequently a survey u/s.133A was conducted in the business premises of the assessee on 13-01-2004 and 14-01-2004. While examining the books consequent to the survey, it was noticed that credit amount of Rs. 1,30,433 shown by the assessee in the name of M/s. Himali Enterprises as on 07-12-2000 was found to be not genuine. Therefore, the assessment proceedings were re-opened u/s.147 of the I.T. Act and notice u/s. 148 was issued on 03-07-2004. The assessee intimated vide letter dated 26-02-2004 that the return filed on 19-07-2001 be treated as return in response to notice u/s.148. 4. As mentioned in the body of the assessment order (Para 2), a copy of the reasons recorded u/s.147 was given to assessee as per his request and he was requested to furnish his objections if any on the same. The assessee vide his letter dated 23-12-2004 stated as under : " I have already submitted my letter dated 06-12-2004 that the amount of Rs. 1,30,433/- is due to the said party which is being paid in due course. It is learnt that the said party, i.e., Himali Enterprises has already confirmed this fact by your honour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the return filed on 12-09-2001 was processed u/s. 143(1) and no order u/s.143(3) was passed as mentioned by the AO as well as the CIT(A). Therefore, there was no application of mind by the AO. We find the notice u/s.148 was issued on 03-02-2004 which is within a period of four years from the end of the relevant assessment year. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. reported in 291 ITR 50 the re-assessment proceedings initiated by the AO is legally valid. The various decisions cited by the ld. Counsel for the assessee are distinguishable and not applicable to the facts of the present case. Therefore, we do not find any infirmity in the order of the CIT(A) and uphold the same. Ground raised by the assessee is accordingly dismissed. 7. In Ground of appeal No. 2 the assessee has challenged the order of the CIT(A) in confirming the addition of Rs. 1,30,433/- made by AO u/s.68 of the I.T. Act being unexplained credit shown in the name of M/s. Himali Enterprises. 8. Facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of hearing that Sri K.A. Shah had discontinued the business of Himali Enterprises and started the business under the name of Kalpana Traders. There is no proof of this. Moreover, even if this is true, the credit outstanding to the appellant from Himali Enterprises should have been transferred to the books of Kalpana Traders or reflected in the personal balance sheet or capital account of Shri K.A. Shah. The capital account and balance sheet do not contain any reference to any amount payable to the appellant. The credit appearing in the name of Sri K.A. Shah is, therefore, not confirmed by any documentary evidence furnished by the creditor." Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the Paper Book filed on behalf of the assessee. We find the AO made addition of Rs. 1,30,433/- being the credit balance appearing in the books of accounts of the assessee in the name of M/s. Himali Enterprises and the assessee could not substantiate with evidence to his satisfaction regarding the genuineness of such credit. Rejecting the various submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities were credited prior to 1997 for which the details could not be furnished. In respect of 5 parties it was stated that the amount had been paid subsequently. The remaining 2 parties were stated to be sister concerns. However, the AO was not convinced with the explanation given by the assessee. He was of the opinion that the liabilities, which are very old, had actually seized to exist. He, therefore, made addition of the entire amount of outstanding to the parties u/s. 41(1) of the I.T. Act. 13. Before the CIT(A) the assessee gave a break-up of the details of the parties with narration the details of which are as under : Sl.No. Name Amount Particulars 1 M M Chouhan Steel 35,300 Amount still payable 2 Ashirwad Enterprises 10,610 Amount still payable, there is balances outstanding in sister concern Rajesh Steel hence not yet paid 3 Nagpur Iron Tr. 22,400 Amount still payable, there is balances outstanding in sister concern universal trs. Hence not yet paid. 4 Rajaram Steel 29,497 This amount is still payable 5 Vivek Electronics 27,500 Confirmation enclosed 6 Anand Industries 82,627 Infact this amount is advance from debtors there are no purchases from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount payable to Nagpur Iron Trading and Rajaram steel it is the submission of the assessee that the amounts are payable to the sister concern. However, no explanation of the nature of the liability and the reason why it was not paid was given. 16.1 We find the Hon'ble Supreme Court in the case of T.V. Sundaram Iyengar and Sons Ltd., reported in 222 ITR 344 at Page No. 353 has held as under : " The principle laid down by Atkinson J.. applies in full force to the facts of this case. If a commonsense view of the matter is taken, the assessee, because of the trading operation, had become richer by the amount which it transferred to its profit and loss account. The moneys had arisen out of ordinary trading transactions. Although the amounts received originally were not of income nature, the amounts remained with the assessee for a long time unclaimed by the trade parties. By lapse of time, the claim of the deposit became time barred and the amount attained a totally different quality. It became a definite trade surplus. Atkinson J. Pointed out that in Tattersall's case [1939] 7 ITR 316 (CA) no trading asset was created. Mere change of method of book-keeping had taken place. But, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Age Agro Engineering. 21. Facts of the case, in brief, are that during the course of assessment proceedings the AO noted that the assessee has shown a credit of Rs. 1 lakh in the name of Green Age Agro Engineering as on 26-03-2002. With a view to cross verify the genuineness of this credit amount, the proprietor of M/s. Green Age Agro Engineering Sri Ramesh Dattatreya Patil was summoned on 03-02-2004. Vide his written statement on 05-02-2001, Sri R.D. Patil admitted that this is not a regular payment against material supply but is over and above the trade transaction. It was also admitted by the said creditor that it is practically difficult and not possible for him to prove the source for this particular transaction. The AO extracted the reply given by the above party which reads as under : "Payment of M/s. R.K. Steel Traders Rs. 1 lakh on 26-03-2002 and to M/s. P.M. Chouhan (on behalf of M/s. Alpha) Rs. 1 lakh on 26-03-2002. As per the cash book extract for the period 20-03-2002 to 26-03-2002 it is clear that cash was available and the cash has been deposited in bank amounting to Rs. 1,90,000 and Rs. 10,000 on 26-03-2002. The cash was available in the books of accounts out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a sum is credited in the books, the appellant is duty bound to establish the identity of the creditor, his credit worthiness and genuineness of the transaction. The last two criteria were not fully satisfied in this case. The so called creditor has sworn that the credit is not related to a trading or business transaction. The cheque was accordingly given because it was requested by the appellant. Examination of the account of Green Age Agro Engineers in the books of the appellant reveals that payment is received after sale bills are raised. There is usually a debit balance is received after sale bills are raised. There is usually a debit balance as the cheques received are short of the sale bills raised. The account shows a debit balance continuously till 17-02-02 in the range of Rs. 35,000/- to over Rs. 1,00,000/-. Suddenly, in March 2002, the party has given payment of Rs. 25,000/- leaving credit balance of Rs. 1,72,263/-. The transaction in March 2002 certainly appear unusual. A debtor, who makes payment against bills suddenly turns a net creditor by a substantial amount. Further, it also admits the money was paid not for considerations of business. The unusual element is comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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