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2015 (7) TMI 321 - ITAT JAIPUR

2015 (7) TMI 321 - ITAT JAIPUR - TMI - Unexplained cash credits - creditworthiness and genuineness of the creditor was not proved by the assessee - loan is not appearing in the balance sheet and the assessee had not declared any loss from sale trading as claimed in the statement recorded on oath U/s 131 - CIT(A) deleted the addition - Held that:- It is undisputed fact that the assessee had disclosed derivative transaction loss at ₹ 10,14,308/- through the broker namely M/s Mangal Keshav Se .....

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not claimed any loss on account of derivative transaction in computation of income. Even it is presumed that the assessee had introduced own cash it has been shown as income and it could be adjusted against the business loss. The ld DR has not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A) - Decided against revenue.

Disallowance U/s 40A(3) - the assessee had adjusted the creditors against the debtors on 31st March, 2008, which is cover .....

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T AHMEDABAD ), on identical issue, which has not been controverted by the ld DR. The Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Kishan Chand Maheshwari Dass [1979 (9) TMI 58 - PUNJAB AND HARYANA High Court] wherein identical issue has been decided in favour of the assessee and held no violation U/s 40A(3) of the Act. - Decided against revenue. - ITA No. 791/JP/2012 - Dated:- 19-6-2015 - Shri R.P.Tolani & Shri T.R.Meena, JJ. For the Petitioner : Shri Rajesh Ojha (JCIT) For the .....

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he fact that the creditworthiness and genuineness of the creditor was not proved by the assessee. (ii) deleting the addition of ₹ 10,85,782/- made by the A.O. on account of disallowance U/s 40A(3) of the I.T. Act, 1961 notwithstanding the fact that assessee violated the provisions of Section 40A(3) of the I.T. Act, 1961. 2. The first ground of revenue s appeal is against deleting the addition of ₹ 9,36,240/- made by the Assessing Officer on account of cash credits. The ld Assessing O .....

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ssing Officer has recorded the statement U/s 131 of the Act of the assessee, which has been reproduced by the Assessing Officer on page 3 and 4 of the Assessing Officer. The ld Assessing Officer observed as under:- a. The creditworthiness and genuineness of the creditor has not been proved by the assessee. b. The identification is also not provided by the assessee. c. The confirmation is also not provided by the assessee. d. Repayment of cash loan as stated above the assessee has also not been m .....

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made addition of ₹ 9,36,240/- in the income of the assessee as unexplained cash credit. 3. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition made by the Assessing Officer by observing as under:- I have duly considered the submissions of the appellant. On perusal of the assessment order, it is seen that the A.O. was of the opinion that the appellant had deposited his own undisclosed cash in the name of .....

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,14,308/- in the derivative transactions through the broker namely M/s Mangal Keshav Securities Ltd. The payments and receipts for these transactions were made through ICICI Bank Account No. 5075 and all the transactions were recorded in the books of account maintained by the appellant. Since it was mutually agreed between the appellant and Sh. Praful Patel that he was to bear all the losses which were incurred in the derivative transactions, the appellant received cash of ₹ 9,36,240/- fro .....

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rejudice to the above, even if the same was treated as undisclosed income of the appellant, it did not have any impact on the taxable income of the appellant. The net loss of ₹ 10,14,308/- in the derivative transactions as per provisions of Section 43(5)(d) was to be set off against undisclosed income of ₹ 9,36,240/-. It is therefore, obvious that the A.O. had not properly appreciated the facts and ignored the entries in the books of account maintained by the appellant without any ba .....

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of derivative transactions. Therefore, there was not any onus on him to prove the creditworthiness of the creditor or genuineness of the transaction as alleged by the A.O. I therefore, direct the A.O. to delete the addition of ₹ 9,36,240/- made by her. This ground of appeal is allowed. 4. Now the Revenue is in appeal before us. The learned D.R. vehemently supported the order of the Assessing Officer and argued that the creditworthiness and genuineness of credit has not been proved by the a .....

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, the ld AR of the assessee has supported the order of the ld CIT(A) and argued that the assessee was in derivative transaction of shares. There was a loss in the derivative transaction, which was settled with Shri Praful Patel, which has been shown as income against the derivative transaction loss. Finally the assessee has shown receivables from Sh Praful Patel at ₹ 78,068/-, which has been also reflected in the balance sheet. Therefore, order of the ld CIT(A) may please be confirmed. 6. .....

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Patel that he was to bear all the losses which were incurred in the derivative transaction, which has been received in cash at ₹ 9,36,240/- and balance amount of ₹ 78,068/- had been shown as receivables. Due to this reason, the assessee had not claimed any loss on account of derivative transaction in computation of income. Even it is presumed that the assessee had introduced own cash it has been shown as income and it could be adjusted against the business loss. The ld DR has not con .....

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the debtors accounts were also reflected squaring up the loans by adjusting their debit balances to other persons having credit balance. The Assessing Officer gave reasonable opportunity of being heard on payment, had not been made by account payee cheque or demand drafts and as per his opinion, it was violation of Section 40A(3) of the Act. The assessee replied vide letter dated 18/11/2010. After considering the various creditors account and assessee s reply, it has been held that this adjustme .....

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f ₹ 10,85,782/- U/s 40A(3) of the Act. 8. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld. CIT(A), who had deleted the addition made by the Assessing Officer by observing as under:- I have duly considered the submissions of the appellant. During the year under reference, the appellant had squared off certain credit balances of the creditors brought forward from the earlier years by transferring the same to the account of other parties ha .....

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for the earlier years up to A.Y. 2007-08, the A.O. was not justified in making the impugned disallowance in the current year i.e. A.Y. 2008- 09. The disallowance if any could be made only in the relevant assessment year in which the liability was incurred by resorting to provisions of section 154 of the I.T. Act. This issue is squarely covered in favour of the assessee by the order of Hon ble Ahmadabad Tribunal in the case of Anand Kumar Rawatram Joshi Vs. ITO (49 SOT 235) and Tushar A Sanghvi ( .....

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