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2016 (4) TMI 210 - ITAT AHMEDABAD

2016 (4) TMI 210 - ITAT AHMEDABAD - TMI - Addition u/s 68 - Association of persons (AOP) or not - CIT(A) treating the cash as loan/deposits and adding to total income as non genuine loan/deposit u/s 68 - Held that:- As in the eyes of law there is no evidence which the assessee has shown about the legal existence of an AOP. Income-tax Dpartment can assess an entity as an AOP only if it has a separate PAN and there is no mechanism in the statute for including the income of an AOP along with return .....

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assessee for accepting the existence of an AOP.

We find that assessee has not been able to prove the identity, creditworthiness and genuineness of the transactions of cash loan received from the above three parties and merely seems to be an adjustment to prove the source of cash in the books of account. For the lack of requisite evidences and information, we are unable to accept the contentions of ld. AR and we are of the opinion that ld. Assessing Officer has rightly made the additi .....

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n short the Act) for Asst. Year 2008-09 by ITO, Wd-6(5), Ahmedabad, on 22.12.2010. Assessee has raised following grounds of appeal :- 1. The ld. CIT(A)-XI, Ahmedabad is not justified in treating the cash of ₹ 6,09,500/- as loan/deposits and adding to total income as non genuine loan/deposit u/s 68 of the IT Act. 2. The ld. CIT(A)-XI, Ahmedabad is not justified in disbelieving the claim of the assessee that ₹ 6,09,500/- was collected from members constituted AOP/BOI for the share trad .....

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ssessment proceedings it was observed by the Assessing Officer that assessee has deposited cash of ₹ 11,85,000/- in his bank account held with Bhagyodaya Co-op. Bank Ltd.. On being asked about the source of cash deposit by Assessing Officer, assessee replied that the source of cash deposit is from the opening cash balance held by the assessee as well as cash received from relatives for doing share trading business. In this reply assessee further submitted that this share trading business w .....

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5,500/- addition u/s 68 of the Act for unaccounted cash deposit of ₹ 6,09,500/- was made along with disallowance of expenses at ₹ 54,695/- and the income of the assessee was assessed at ₹ 8,86,300/-. 4. Aggrieved, assessee went in appeal before ld. CIT(A) who partly allowed the appeal of the assessee by restricting the disallowance of expenses to ₹ 20,370/- and confirmed the addition u/s 68 of the Act at ₹ 6,09,500/-. While confirming the addition of ₹ 6,09,50 .....

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have a bank account Thirdly, this A.O.P. has not been issued PAN and it is not assessed to tax. Fourthly, this A.O.P. does not exist no more. This was apparently floated to explain the source of cash deposits in the S. B. account of the appellant It is a matter of record that so called cash contributions were deposited in the S.B. account of the appellant Since money was deposited in the S.B. account of the appellant, accordingly it has to be presumed that the same belongs to the appellant The a .....

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close relatives. To substantiate this contention, appellant has furnished copy of confirmations from seven persons. It is seen that all these loans had been received in cash. Out of these loans, five loans are less than ₹ 20,000/-. The denomination of these loans are intentionally kept less than ₹ 20.000/-, just to evade provisions of section 269 SS of the IT. Act However, in case of two loans from Dhanesh M.Patel and Vishakaben M. Patel, there are violation of provisions of section .....

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the same are hereby rejected. 4.5 The appellant has also taken an alternate plea that peak in his bank account should be taken as undisclosed income. As discussed above, the A.O. had made an addition of ₹ 6,09,500/-after giving benefit of cash withdrawal from the S.B. account of the appellant of ₹ 6,75,500/-. It is a matter of record that cash of ₹ 11,85,000/- was deposited in his account. The A.O. has given benefit of cash withdrawal from this account This way, availability o .....

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t.1 Accordingly, addition of ₹ 6,09,500/- is confirmed. This ground cf appeal is dismissed. 5. Aggrieved assessee is now in appeal before the Tribunal against the impugned addition of ₹ 6,09,500/- us/68 of the Act. 6. Ld. AR submitted that the assessee s main business is of trading in dyes and is conversant with the share trading business. Looking to his ability in share trading business his relatives including his brother in law and their wives gave cash to the assessee for doing th .....

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t because of negligible income the same were not shown in the income-tax return filed by the assessee but the cash received from relatives was not in a shape of unsecured loan but was part of business venture carried on as an AOP and, therefore, no addition to be made under section 269SS for cash loan taken and alternatively submitted that even if the contention of share trading in the name of AOP is not accepted then the peak credit method to be applied which in the case of assessee is ₹ .....

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ground that whether there actually existed an AOP. From going through the records carefully we find that there was no agreement between the members to form an Association of Persons, there was no separate PAN taken in the name of AOP and all the cash received from the relatives were forming part of the financial statements disclosed by the assessee in his return of income filed in the capacity as an individual. Therefore, in the eyes of law there is no evidence which the assessee has shown abou .....

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P. The assessee has relied on various judicial pronouncements. However, the facts discussed in these judgments are different from the facts of the case of assessee and therefore, we dismiss the contentions of assessee for accepting the existence of an AOP. 10.1 Now we take the issue about addition u/s 68 of the Act of ₹ 6,09,500/-. From going through the Paper Book we find that sumarrized cash flow for Financial Year 2007-08 has been produced which is reproduced below :- From going through .....

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is more than ₹ 20,000/- and the total of these three entries is ₹ 3,20,000/- received from following parties - 1. Vishakhaben M. Patel 1,82,000/- 2. Dhanesh M. Patel 55,000/- 3. Krushnakant N. Patel 83,000/- Total 3,20,000/- 11. Further in the above cash flow statement assessee has shown an opening cash balance as on 1.4.2007 at ₹ 1,67,500/-. It is claimed by the assessee as a cash in hand in his regular books of account and Revenue has not raised any objection in not accepting .....

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n as an addition to the capital by the assessee. As the source of this cash addition of ₹ 25,500/- is explained, we accept the same to this extent as the Revenue has not objected to the source shown by the assessee. 13. Now we take up unsecured cash loan of ₹ 98,100/- received from six parties and each loan amount being less than ₹ 20,000/-. We find that assessee has submitted necessary documents and evidences to prove the identity and genuineness of the cash received from foll .....

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