TMI Blog2013 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord shows that right from start of firm business the assessee though mentioning (in balance sheet) about availability of details of creditors as per preschedule but no such schedule has ever been enclosed with the audit report/return. Bogus liability has been created in the garb of sundry creditors whose name & balances are not known to assessee. This also indicates that no regular books of account have been maintained by the assessee, as not a single detail from the books of account has been furnished in the past fifteen months. The creditors are, therefore, not verifiable. The assessee must be held to have failed to establish that the unexplained sundry creditors were referable to the business income. The addition of the unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is applied any other addition can be made for cash credits from the undisclosed sources of the assessee and not for non-verification of the same, while failing to appreciate the fact that the Assessing Officer in his assessment order had exactly held the same and fulfilled the requirement under the law. 2. Whether or not both the CIT (Appeals) and the Income Tax Appellate Tribunal erred in disregarding the fact of assessments having been made u/s 144 of the I.T. Act, 1961 due to non-cooperation of the assessee and the assessee having failed in discharging the onus of proving that even if the said cash credit represented income, it is income from a source which has already been taxed." The brief facts of the case are that during the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot accepted the sundry creditors on account of non-verification. The sundry creditors actually represented the business income on the assessee which was not disclosed. This aspect was ignored by the appellate authority. Learned counsel for the appellant, at the strength of written note, submits that the ratio laid down in the case of Kale Khan Hanif Mohd vs. CIT, 50 ITR 1 SC is fully applicable in the facts of the instant case but the Tribunal has overlooked the said case law. He further submits that the Tribunal has failed to appreciate that where there is no cooperation by the assessee and even regular statutory information regarding cash credit, sundry creditors has not been furnished by the assessee, then AO has no other alternative b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 which has to be necessarily on the basis of entries in the books which not are rejected. It was further observed that when the books are not maintained, then 8% net profit can be computed on the gross receipts in the case of civil contractor. (b) CIT vs. Aggarwal Engineering Co.; 302 ITR 246 (P H), where it was observed that once the net profit rate was applied, no further addition was called for in respect of purchase and introduction of cash. (c) CIT vs. Purshottam Lal Tamrakar; 270 ITR 314; (d) CIT vs. Banwari Lal Banshidhar; 229 ITR 229 (All); and (e) Amitabh Construction Pvt. Ltd. vs. Additional Commissioner of Income Tax; 335 ITR 523 (Jharkhand). Lastly, he made a request that the impugned orders may be confirmed and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40 lacs then the provisions of Section 44AD is not applicable. However, in the instant case, AO, has inspired from Section 44AD and applied the 8% net profit rate and made the addition on estimate basis on gross contract receipt. The assessee has shown the sundry creditors to the tune of Rs.23,14,417/-. No information, as required by law, was furnished by the assessee pertaining to the sundry creditors. When it is so then further examination of the material is required. This aspect was ignored by the appellate authority. It may be mentioned that in the case of CIT vs. Maduri Rajaiahgari Kistaiah; 120 ITR 294 (AP), it was observed that where a particular business income of the assessee has been estimated and determined and in such a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served that where there is an unexplained credit, it is open to the AO to hold that it is income of the assessee, and no further burden lies on the AO to show that the income is from any particular source. It is for the assessee to prove that, even if the sundry creditors represents income, it is income from a source which has already been taxed. There is nothing in law which prevents the AO in an appropriate case in taxing both the sundry credit, the source and nature of which is not satisfactorily explained, and the business income estimate by him after rejecting the books of account of the assessee as unreliable. In the view of above discussion and by considering the totality of the facts and circumstances of the case, we set side the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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