TMI Blog2014 (10) TMI 497X X X X Extracts X X X X X X X X Extracts X X X X ..... it rate or the net profit ratio of the Assessee, the addition is restricted to lump sum amount of ₹ 1.50 lac – Decided partly in favour of assessee. Unsecured loans taken from various parties - Addition u/s 68 – Held that:- With respect to the addition with respect to deposit from Shri Pancholi it is stated that he has given loan of ₹ 17 lacs through two cheques to the Assessee - Shri Jadavbhai Kalsaria, Director of the Assessee, in the statement recorded through survey had admitted that assessee had shown bogus loans which were offered for taxation - AO was fully justified in making the addition of ₹ 17 lacs with respect to amount received from Shri Pancholi - In the case of Jayesh Kumar Thakkar, Assessee had filed copy of confirmation and PAN card but did not file the copy of bank statement. There is nothing on record to demonstrate that on receipt of the copy of confirmation and PAN card, A.O had made any further inquiries and then found the amount to be bogus. By merely non filing the bank statement and in the absence of any other material on record it cannot be said that initial burden was not discharged by Assessee - no addition can be made and thus direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts as also in law in confirming addition of ₹ 8,40,783/- made on account of alleged unaccounted sales. The addition may kindly be deleted. 2.1 The learned CIT(A) erred in refusing to estimate profit on such alleged unaccounted sales for the purpose of making addition. 3 The learned CIT(A) erred on facts as also in law in confirming addition of ₹ 18,15,000/- made u/s. 68 of the Act in respect of unsecured loans taken from the following parties. The addition may kindly be deleted: Sr. Particulars AmountRs. 1 A. R. Pancholi 17,00,000/- 2 Doshi Kantilai Jayantilal HUF 50,000/- 3 N. B. Mehta 65,000/- TOTAL 18,15,000/- 4 The learned CIT(A) erred on facts as also in law in confirming addition of ₹ 8,25,000/-made u/s. 68 of the Act in respect of unsecured loans taken from the following parties. The addition may kindly be deleted: Sr. Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee carried the matter before CIT(A). CIT(A) confirmed the addition made by the A.O by holding as under:- 4.3 I have gone through the orders of the AO the submissions of the AR carefully. The AR claimed that the AO has not examined the contention of the appellant that the matter had been brought to the notice of the authorized officer during the course of survey and that the sales were in fact made to M/S Shreeeji Sales of 167.35 MT. It is seen that the contention of the AR of the appellant is not borne out from the records. There is no mention of sales made to M/S Shreeji Sales in the statement recorded during survey. It is also seen that the AO verified the stock statement filed by the appellant with the registers impounded during the survey and arrived at the shortage of finished cotton. The photocopy of the stock register produced also shows that entry of sales made to M/S Shreeji Sales stated to have been made on 6/01/2007 has been entered after all the sales have been recorded upto 31/03/2007 and totals have been drawn. It is also seen that the sale has been at 16735Kgs. in the bill filed along with the submissions made during appellate proceedings where as the entry in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er bills was stated to be 16735 Kg whereas the entry in the register was of 16732 kg. He has therefore held that the sales shown to M/s. Shreeji Sales are not genuine and the entry has been inserted as an afterthought only to explain the shortage of stock. Before us, the ld. A.R. could not controvert the findings of CIT(A) by bringing any tangible material on record. Further there is no material on record to support the contention of the Assessee that the material sent to Shreeji Traders was not taken into account for want of confirmation from the purchaser. In view of the aforesaid facts, we are of the view that the addition made by the A.O was justified. However it is also a settled law that the entire amount of sales cannot be considered as income but only the profit element of the sale can be added as income. Before us, in the absence of details about the gross profit rate or the net profit ratio of the Assessee, we are of the view that considering the totality of facts, ends of justice would be met if addition is restricted to lump sum amount of ₹ 1.50 lac. Thus this ground of Assessee is partly allowed. Ground nos. 3, 4 5 are in connection with confirming the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee could not prove the identity and creditworthiness of the depositors, the deposit taken by the Assessee, from the depositor cannot be treated as genuine and he accordingly treated the amount of ₹ 50,000/- and ₹ 65,000/- received as cash credit u/s. 68 of the Act. 10. In the case of Doshi Balwantrai Jentilal (Rs. 1,00,000/-), Doshi Dhirajlal Virchandra (Rs. 90,000/-) and Shri Ramesh Kumar Girajashanker (Rs.50,000/-). A.O had issued summons u./s. 131 of the Act. In the absence of compliance of summons, or any written reply from the lenders, A.O concluded that the identity and creditworthiness of the depositors remained unproved and therefore the deposits were treated as unexplained cash credit u/s. 68 of the Act. 11. In the case of Jayeshkumar Thakkar (Rs. 1,00,000/-), Assessee filed confirmation and copy of PAN card but did not file copy of bank statement for relevant period. A.O was of the view that in the absence of bank statement, creditworthiness of depositor remained unproved and therefore the deposit was treated as uexplained cash credit u/s.68 of the Act. 12. From Smt. Kajalben Chetanbhai Doshi, Assessee has claimed to have received ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Mansukh bhai immediately. It is seen that Shri Pancholi was unable to explain why he kept the entire money with him in cash for over one year and deposited the same after opening a bank account in installments over a period of three weeks only to give loans to the appellant. He was also unable to explain what happened to the remaining money which he had received from his brother as his share. During the course of appellate proceedings the AR of the appellant was asked to produce the copy of the bank account of Shri Mansukhbhai to prove that Shri Pancholi had indeed received his share of the sale proceeds of the agricultural lands. Vide, order sheet entry dated 29/10/2010 the AR of the appellant stated that the copy of account of Shri Manshukhbhai cannot be filed. In view of the above, it is clear that the loan from Shri A R Pancholi is not genuine. His capacity to have the loan is not proved because the primary fact that he had indeed received his share of the sale proceeds of agricultural lands has not been established. 5.3 Further it is seen that in the statement of Shri Jadavbhai G Kalsaria., director of the appellant company, recorded during the course of survey, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the AR does not have a correct in view of the fact that the AO has mentioned that no details were filed before him. It is also seen that copy of their bank accounts was not filed during the course of assessment proceedings. Even during the course of appellate proceedings the same are not filed despite the fact that vide order sheet entry dated 26/8/2010 the AR of the appellant was specifically asked to do so. Thus it is apparent that the creditworthiness of these creditors is not proved. The AO was hence justified in treating the loans from these persons as bogus. In view of the above the addition made by the AO is confirmed. It is seen that investment of the following persons the AO issued summons in response to which confirmation of the loans were filed. The AO however had that since copies of bank accounts and income tax returns were not filed hence the creditworthiness of the creditor was not proved. He hence proceeded to make the additions under section 68 wording of the loans were not explained. 1 Jayeshkumar l Thakkar 1, 00,000/- 2 Smt. Kajalben Chetanbhai Doshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further placed reliance on the decision of Gujarat High Court in the case of Blessing Construction Company. 17. We have heard the rival submissions and perused the material on record. With respect to the addition with respect to deposit from Shri Pancholi it is stated that he has given loan of ₹ 17 lacs through two cheques to the Assessee. In the statement recorded on oath with respect to source of money, Shri Pancholi has stated to have received his share of ₹ 22,18,966/- on 23.11.2005 in cash which was lent to Assessee. However A.O has noted that before issuing two cheques on 29.12.2006 i.e. almost 1 year after the receipt of sale proceeds, matching cash aggregating to ₹ 17 lacs was deposited on 6 days from 02.12.2006 to 26.12.2006 and therefore it had no nexus between the amount received of his share on sale of land in 2005 and the deposit by cash in bank which was more than 1 year after the sale of land. Before us, the ld. A.R. has stated that Shri Pancholi is assessed to tax and has filed his return of income. From the copy of the return of income placed at page 43 of the paper book, it is seen that the copy of acknowledgement is for filing of return ..... X X X X Extracts X X X X X X X X Extracts X X X X
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