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2015 (8) TMI 165 - ITAT LUCKNOW

2015 (8) TMI 165 - ITAT LUCKNOW - TMI - Addition u/s 40A (3) - CIT(A) deleted addition on the ground that payments of ₹ 132,000/- made on 21.03.2010 and ₹ 167,620/- on 28.03.2010 fall on Sundays and banks were closed which was one of the exceptions provided in Rule 6DD(j) - Held that:- We find that learned CIT (A) has allowed relief only in respect of two payments which were made on Sundays and he has confirmed the balance disallowances u/s 40A (3). We also find that it is noted by t .....

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t the balance sheet was prepared for business affairs and this bank account was a personal account. It is not shown by the revenue that any business transaction was carried out through this bank account and hence, we find no merit in the objection of the A.O that the HDFC Bank Account is not incorporated in Balance Sheet. Even if the assessee fails to establish the purpose for which the loan was stated to have been taken by the assessee, it cannot be said that for this reason alone, the loan is .....

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this difference is with regard to payment of stamp paper purchased in cash and it was explained before CIT (A) that this payment was made out of cash available in personal capacity. Learned CIT (A) held that in the facts of the present case, it is reasonable to accept that the assessee may be having some cash as personal savings and he accepted this claim to the extent of ₹ 80,000/-. In our considered opinion, the amount of personal cash accepted by CIT (A) is not excessive and hence, we h .....

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erred in law and on facts in deleting the addition of ₹ 2,99,620/- made u/s 40A (3) of IT Act on the ground that payments of ₹ 132,000/- made on 21.03.2010 and ₹ 167,620/- on 28.03.2010 fall on Sundays and banks were closed which was one of the exceptions provided in Rule 6DD(j) without considering the fact that assessee failed to submit the requirement and necessity of payment on Sundays before the Assessing Officer. The Ld CIT (A) - II, Lucknow before giving relief has also .....

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thorities. We find that learned CIT (A) has allowed relief only in respect of two payments which were made on Sundays and he has confirmed the balance disallowances u/s 40A (3). We also find that it is noted by the A.O. in the assessment order that these are cash purchases. Therefore, there is no requirement to find out the due date of the bill. This is not the case of the A.O. that these two dates are not on Sunday. Considering all these facts, we decline to interfere in the order of CIT (A) on .....

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account and without considering the facts that interest earned on deposits was also not incorporated in computation of income. The Ld CIT (A) - II, Lucknow has also not examined the unusual pattern of loan taken from 98 different persons who are neither relative nor family members which creates doubt over the genuineness of so called loan taken by the assessee. In doing so, the Ld CIT (A) - II, Lucknow has also erred in law and on facts in deleting the addition of ₹ 18,00,000/- without ap .....

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e AO and the submissions of the appellant. The appellant obtained loans on personal grounds for purchase of land from 98 persons. The loans taken in cash from agriculturists were deposited in bank account number 08661000004351 with HDFC Bank, Bahraich. The said bank account was a personal account and not a business account and therefore entries therein were not reflected in the books of accounts. The AO invoked provisions of section 68 of the Act for making addition of cash deposit in the bank a .....

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revious year for such an income would be the ordinary financial year. Even under the provisions embodied in section 68 of the said Act it is only when any amount is found credited in the books of the assessee for any previous year that the section will apply and the amount so credited may be charged to tax as the income of that previous year, if the assessee offers no explanation or the explanation offered by him is not satisfactory. As the Tribunal has pointed out, it is fairly well settled tha .....

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the instructions of the constituent. In view of this, the Tribunal was, with respect, justified in holding that the pass book supplied by the bank to the assessee in the present case could not be regarded as a book of the assessee; that is, a book maintained by the assessee or under his instructions. In our view, the Tribunal was justified in the conclusions at which it arrived. 5(2)(ii) The AO is therefore not justified in invoking the provisions of section 68 of the Act. The AO has wrongly in .....

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h mentioning is that the appellant in support of loans taken filed affidavits of all the 98 persons. The AO insisted on production of 10 persons as per serial numbers 5, 15, 25, 35, 45, 55, 65, 75, 85, and 95 as mentioned in paragraph 4 on page 2 of the assessment order. The appellant produced 9 persons out of the 10 called by the AO. Shri Dinesh Kumar mentioned at serial number 95 could not be produced. Statement on oath of 9 persons was recorded by the AO on 27.12.2012. All the 9 persons confi .....

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ation of the bank account in the balance sheet. The balance sheet prepared by the appellant was related to business affairs and the HDFC Bank account having been held as a personal account with no business transactions, was not incorporated therein. Even otherwise, the matter which requires consideration is the nature and source of cash deposit in the bank account. The next issue is that the appellant has filed affidavits of ail 98 persons from whom loans were taken and the AO has examined only .....

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o the Revenue to challenge the correctness of the cash book entries or the statements made in the affidavits. The decision of the Supreme Court lays down "that if there is no material whatsoever on record for doubting the veracity of the statements made in the affidavits and if the deponents have also not been subjected to cross-examination for bringing out the validity of their statements, then the Tribunal would not be justified in doubting the correctness of the statement made by the dep .....

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d have confirmed the loans. As regards non-filing of details of land purchased for which loans were taken, 1 find that the AO has misdirected his findings. The issue is the veracity of loans taken from 98 persons amounting to ₹ 18,00,000/-. The utilization of the loan taken is not an issue. 5(5) I find from my examination that when the assessee has filed confirmations of the cash creditors in the form of affidavits which have not been disproved, the initial burden placed upon the assessee .....

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h in the case of Vishnu Jaiswal Vs ITO in ITA No. 336 (LKW.) of 2011 dated MAY 1, 2012 wherein it was laid down as under- The Assessing Officer should not have come to any conclusion without examining the cash creditors. The assessee cannot be aware of the source of creditors, which would be within the personal knowledge of the creators. Mere doubt with regard to the creditworthiness should not automatically reflect in disbelieving the case of the assessee to make addition under section 68 witho .....

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ss book of a third party can be taken as primary evidence in proof of the fact that loan was advanced by third party. Thus, the initial onus shifts onto the revenue to prove that the creditors lack creditworthiness and to come to such conclusion, the assessee cannot be asked to produce any evidence which is within the personal knowledge of the third party. In the instant case, the Assessing Officer did not examine the parties and proceeded on the assumption that creditors would not have saved an .....

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the appellant. 8. From the above paras from the order of CIT (A), we find that the A.O. had inter alia three objections that the HDFC Bank Account is not incorporated in Balance Sheet, (2) No evidence was filed in support of loan except affidavits and (3) details of land for the purchase of which loans were taken were not filed. Regarding the first objection, a clear finding is given by CIT (A) that the balance sheet was prepared for business affairs and this bank account was a personal account. .....

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iscard the evidence filed in the form of affidavits. Regarding credit worthiness of lenders, it is observed by CIT (A) that if the A.O. had doubts, the A.O. should have directed the assessee to produce the creditors or would have examined the creditors directly and without doing so, the A.O. in taking an adverse inference. Learned CIT (A) has followed a Third Member tribunal order rendered in the case of Vishnu Jaiswal in ITA No. 336/LKW/2011 dated 01.05.2012. Considering all these facts, we fin .....

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