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2016 (4) TMI 660 - ITAT KOLKATA

2016 (4) TMI 660 - ITAT KOLKATA - TMI - Addition of unexplained cash credit - Held that:- From the facts on record and also from the Balance Sheet of the firm from assessment year 1994-95 onwards and at least till assessment year 2003-04, it is found that the liability of the sundry creditors remains almost the same or a little more right from assessment year 1993-94 onwards. Therefore, it can be concluded that the assessee never supplied any good to the alleged creditors. It is a fact that no c .....

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a,[2006 (12) TMI 492 - HIGH COURT OF PUNJAB & HARYANA], wherein it is held that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was received by the firm from its partners, then in the absence of any material to indicate that they were profits of the firm, it could not be assessed in the hands of the firm. In the present case before us also there is no finding that the cash introduction is on acco .....

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erest can be levied only from the date of default of the demand notice issued in pursuance of the fresh assessment order. The order of CIT(A) holding that interest under section 220(2) has to be levied from the date of default as per the original assessment order therefore cannot be sustained. The same is set aside - Decided in favour of assessee

Addition of bogus purchases - Held that:- We find that the assessee has produced purchase bills, bank account, statement pertaining to purch .....

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and bank statement pertaining to purchases, the purchases cannot be held to be bogus and the same are accepted as genuine - Decided in favour of assessee - I.T.A Nos.157 & 167/Kol/2008 - Dated:- 24-2-2016 - Shri Mahavir Singh, JM & Shri Waseem Ahmed, AM For The Revenue: Shri S. M. Surana, Advocate For The Assessee: Shri Sanjay Mukherjee, JCIT ORDER Per Shri Mahavir Singh, JM: Both these appeals filed by assessee are arising out of separate orders of CIT(A)-XXX, Kolkata vide Appeal Nos. 29 & .....

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h credits. For this, assessee has raised following ground no.1: For that in the fact and in the circumstances of the case, the advance/loan appeared in the name of Kona Udyog, Steel Corporation and Metal Trading Corporation are genuine, but for the lapse of more than 15 years and due to the internal quarrel in the family, the proper accounts/documents could not be produced. Hence, the Ld. CIT(A) erred in confirming the addition made by the AO and the same may kindly be deleted. At the time of he .....

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riginal assessment was completed by the AO u/s. 143(3)/147 of the Act on 04.01.1999 which was set aside by CIT(A) vide his order dated 16.02.2001. Subsequently, the AO made assessment in response to the order of CIT(A) u/s. 144/251 on 22.03.2002, which was confirmed by CIT(A) vide his order dated 07.01.2005. Subsequently, ITAT vide its order dated 30.08.2005 set aside the order of CIT(A) dated 07.01.2005 and again the AO gave appeal effect to the order of ITAT and framed fresh assessment u/s. 14 .....

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see took us to para 3 and 4 of the set aside assessment order passed by AO u/s. 143(3)/147/254 of the Act dated 15.11.2006, which reads as under: 3. It has also been submitted by you that the creditors were not co- operating. Therefore, they cannot be produced for examination. Vide letter dt.19-7-04, Jaiprakash Jaiswal, one of the partners stated that the transactions occurred more than 10 years back and accidentally the loan creditors are not at present in touch with the assessee. This statemen .....

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ship deed dated February '88 entered into by Shri Jaiprakash Jaiswal, Shri Prakash Jaiswal, Smt. Kiran Jaiswal, Shri Sanjiv Jaiswal of 65 G.T. Road, Salkia, Howrah and Smt. Vibha Jaiswal of 4A Palm Avenue, Kolkata. Omprakash Jaiswal is the husband of Smt. Kiran jaiswal and first cousin of Shri Jaiprakash J aiswal and Sanjiv Jaiswal. Similarly, Shri Prakash Jaiswal and R.P. Jaiswal are brothers of J.P. Jaiswal and Sanjiv Jaiswal. Thus, the persons behind the huge deposits in the name of Kona .....

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the credits. Thus, the facts and circumstances prove that these deposits were, in fact, unexplained money of the partners of the firm. In view of the above facts of the case, please explain as to why the credits introduced by the partners of the firm should not be treated as unexplained cash credit and added to the income of the firm u/s.68 of the I.T Act. 4. It is a well known fact that all the partners of the firm were misguiding the Department and giving false statement about the three credit .....

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ing the letter. Thereafter, on 4-10-06, a letter was written to the assessee to make compliance by 11-10- 06. Again, there was no compliance. On 27-10-06, a letter was again written to the assessee giving one more opportunity to submit reply by 13-11-06. On 13-11-2006 the assessee submitted a letter for extending the date of hearing by a month. In my opinion, enough opportunity has been allowed to the assessee for submitting reply to the show-cause notice dt.13-9-06. It is about two months since .....

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m that they were the partners in the three alleged creditors firm and the signature on the cheques was also the signature of one or the other partner of the assessee firm. From the facts mentioned in this order, it is also apparent that the assessee has been trying to avoid the compliance at every level and, therefore, I do not consider it necessary to allow any more time to the assessee. The assessment is being completed based on the enquiry made from the Bank and also the other materials avail .....

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their signature on the different cheques which were credited in the A/c. of the assessee firm. (ii) The assessee always claimed that the alleged creditors had given advances against supply of goods. The assessee could not give any proof of supply of any goods. From the facts on record and also from the Balance Sheet of the firm from assessment year 1994-95 onwards and at least till assessment year 2003-04, it is found that the liability of the sundry creditors remains almost the same or a littl .....

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d its partners was credited in the name of three alleged creditors, the claim for recovering the advance given was never made. On this fact also, it is established that the money deposited in the firm belonged to the firm and the partners acting on behalf of the firm. The source of these deposits remain unexplained, therefore, it is presumed to be unexplained income of the assessee firm for the year under consideration in terms of Sec.68 of the LT. Act. (iii) The assessee had given confirmatory .....

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creditors was also not discharged properly by the assessee. 5. In view of the above facts, Ld. Counsel for the assessee stated that these three firms are partners in the assessee firm M/s. Prakash Engineering Works from whom the amount of cheque was received and this fact has been noted by the AO in his assessment order at para 3, reproduced above, stating that, this statement is also not correct because based on some enquiries from the Central Bank of India, it is revealed that following chequ .....

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the partners and not in the firm s hand. For this, Ld. Counsel for the assessee relied on the decision of Hon ble P&H High Court in the case of CIT Vs. Rameswar Das Suresh Pal Cheeka (2007) 163 taxman 0270 (P&H) wherein it is held as under: 5. We are also in agreement with the view taken by the Tribunal that no case was made out for addition to the income of the firm even if deposits made with the firm by the partners were unexplained income of the partners. This view has been taken by .....

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to be rejected, the said Suresh Bhandari may be liable to be taxed by treating the said amount as undisclosed income, but the firm cannot be subjected to tax on that ground. 6. We may also refer to the judgments relied upon by the Tribunal. In CIT v. Jaiswal Motoi Finance (supra), it was observed as under: ...It appears to be well settled that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was r .....

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fy the Department that the moneys which it received from the partner or the stranger were moneys which the partner or the stranger obtained by honest means. In my opinion that would be throwing too heavy a burden upon the assessee. We do not wish to lay down any general law which should apply to all cases. In most cases it would depend upon the facts actually found. On the facts actually found and strictly confining our decision to the facts of this case we are of opinion that there were no mate .....

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er Section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay .....

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r to the judgment of the Supreme Court on this issue in Girdhari Lal Nannelal v. CST , wherein the Supreme Court observed as under: Further, where, as in a case like the present, a credit entry in respect of ₹ 10,000 stands in the name of the wife of the partner, no presumption arises that the said amount represents the income of the firm and not of the partner or his wife. The fact that neither the assessee firm nor its partner or his wife adduced satisfactory material to show the source .....

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e firm and in that eventuality addition cannot be made in the hands of the firm. 7. We have heard rival contentions and gone through facts and circumstances of the case. We find from the facts of the case that AO while making enquiry from the Bank, he made it clear in the remand report and as mentioned in para - 3 of the show-cause notice dt.13-09-2006, that the money in fact belonged to the partners of the assessee firm. The partners of the assessee firm deposited their unaccounted money in the .....

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rm from assessment year 1994-95 onwards and at least till assessment year 2003-04, it is found that the liability of the sundry creditors remains almost the same or a little more right from assessment year 1993-94 onwards. Therefore, it can be concluded that the assessee never supplied any good to the alleged creditors. It is a fact that no creditor will like not to recover the credit for such a long time. If these creditors were other than the partners of the assessee themselves they would have .....

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le Allahabad High Court in the case of Jaiswal Motor Finance, supra and by the decision of Hon ble P&H High Court in the case of Rameswar Das Suresh Pal Cheeka, supra, wherein it is held that if there are cash credit entries in the books of the firm in which the accounts of the individual partners exist and it is found as a fact that cash was received by the firm from its partners, then in the absence of any material to indicate that they were profits of the firm, it could not be assessed in .....

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ee has raised additional ground as under: 1. For that the ld. AO erred in charging interest under sec. 220(2) from the date of the Regular Assessment being assessment made in the first round on 27.3.1997 when the said assessment set aside and the assessee cannot be treated to be a defaulter from the said date. 9. We have heard rival contentions and gone through facts and circumstances of the case. We have perused the case records and find that brief facts relating to this issue are that the orig .....

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)/147/251 of the Act vide dated 15.11.2006 (the impugned order now). The CIT(A) passed appellate order vide dated 20.09.2007 which is the impugned order before us now. In such circumstances, when the interest u/s. 220(2) of the Act has been charged by AO from the date of original assessment framed u/s. 143(3)/147 of the Act on 04.01.1999 is as per the provisions of the Act or not. Ld. Counsel for the assessee before us relied on a CBDT Circular No. 334 dated 03.04.1982, wherein the legal positio .....

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by Tribunal and fresh assessment has been made by the A.O., the period for levy of interest u/s.220(2) should be reckoned from the date of default as per the original assessment order or as per the fresh assessment order. We find that this issue has already been examined by the CBDT who had clarified the issue vide Circle No.334 Dt.3.4.1982, the relevant portion of which is reproduced below for ready reference: (2) These issues were comprehensively examined in consultation with the Ministry of .....

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expiry of 35 days from the date of service of demand notice pursuant to such fresh assessment order. (ii) (ii) Where the assessment made originally by the Income Tax Officer is either varied or even set aside by one appellate authority but, on further Download Source- www.taxguru.in 9 ITA No.3360/Mum/2010 appeal, the original order of the Income Tax Officer is restored either in part or wholly, the interest payable under section 220(2) will be computed with reference to the due date reckoned fro .....

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0(2) of the Act has to be charged only after expiry of 35 days from the date of service of demand notice pursuant to the fresh assessment order. But in case the order of CIT(A) is subject matter of further appeal and the Tribunal has restored the order of Assessing Officer either in part or wholly, the interest payable under section 220(2) of the Act will be computed with reference to the due date reckoned from original demand notice and with reference to the tax finally determined in the assess .....

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to the Assessing Officer for fresh assessment and therefore in view of the circular of CBDT (supra), the interest can be levied only from the date of default of the demand notice issued in pursuance of the fresh assessment order. The order of CIT(A) holding that interest under section 220(2) has to be levied from the date of default as per the original assessment order therefore cannot be sustained. The same is set aside and the claim of the assessee is allowed. 10. Now, we are coming to ITA No .....

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ee could not produce bills of the relevant parties and bank accounts including original purchase register and stock register by the reason that the same are lying with Hon ble Calcutta High court. But the assessee produced photo copy of purchase and stock register along with the copy of letter and affidavit evidencing that the originals are lying with Hon ble Calcutta High court. The AO has not gone into the details of purchase bills, bank account, purchase register and stock register and effort .....

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ies. Before the A.O the original purchase and stock registers were not produced, only copies were produced. The appellant produced copies of the bills claimed to be raised by these persons. However, the appellant has hot furnished satisfactory evidence to prove the identity of these parties from whom it is claimed that materials are purchased. The appellant failed to produce Banker's certificate confirming the payment to these parties out of the Bank A/c of the appellant. In the absence of t .....

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