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2016 (5) TMI 237 - ITAT DELHI

2016 (5) TMI 237 - ITAT DELHI - TMI - Addition u/s 68 - Held that:- In this case in some of the bank accounts there are entries of transfer deposits in the bank account of these persons before the issue of cheque to the assessee. However we could not find any entry of unsecured loan in the statement of affairs of these parties except gift received from the mother of ₹ 50,000/- in some accounts. Therefore there is no source available with the assessee of the sums shown to have been received .....

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uineness of the transactions. We are also of the view that no decision cited by the assessee or ld AR are applicable on the facts of the case of the manner in which the return of income is filed, statement of affairs are prepared and amounts are introduced in the books of assessee which does not commensurate with the income shown by the lenders. In view of our above finding we also hold on the same reasoning as there is no change in facts and evidences produced before us that the loans of ₹ .....

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and no disallowance is called for to the extent sums are paid, in view of the decision of the Hon’ble Allahabad High Court in the case of CIT Vs. Vector Shipping Pvt. Ltd [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. In view of this above two directions, we set aside the issue to the file of the AO for verification if the payments are made to the agents of foreign shipping agents then no disallowance is called for. Further, the disallowance is also required to be reduced to the extent of amount pai .....

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g grounds of appeal have been raised by the assessee:- 1. That the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as 'Id. CIT (A)') has erred in law as well as on the facts of the case by upholding the assessment of appellant's income at ₹ 84,66,7607- as against the returned income at 64.460/- and the various observations and findings made are incorrect and untenable in law and the facts of the case have not been considered in the right perspective thereo .....

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the Id. CIT(A) including that all the 7 unsecuredv lenders were apparently unconnected persons are either factually incorrect or untenable law. 3. That the Id. CIT(A) has grossly erred in law as well as on the fact of the case by confirming the addition of ₹ 31,90,7997- u/s 40{a)(ia) of the Income Tax Act, 1961, for alleged non -deduction of TDS for various reasons including the following:- a) The Id- CIT-(A) has grossly erred on the facts of the case by holding that none of the persons to .....

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Circular no. 715 dated 8/8/1995 on the issue and also ignoring the judicial pronouncements thereon. c) The Id. CIT-(A) has grossly erred in law and on the facts of the case by not accepting the law laid down by the Hon'ble Supreme Court in the case of Allied Motors Pvt. Ltd. [224 ITR 677], and not allowing the benefit of the 2nd proviso to section 40(a)(ia) of the I.T. Act, 1961, to the appellant. d) Without prejudice to the above, the Ld. CIT-(A) ought to have given the benefit of 1s1 prov .....

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accounts on a single day on 27th June 2009 and subsequently on next day the cheques were issued and deposit wasaccepted in the name of these parties in the books of assessee. This amount was added by assessing officer u/s 68 of the Income tax Act holding that the creditworthiness and genuineness of the transaction is not proved because of the reasons that the lenders are having meager income and does not have capacity to deposit such amount in the bank account of the assessee. The following tabl .....

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5181500 27.06.2009 3. Aggrieved by this the assessee preferred an appeal before the ld.CIT (A) who in turn confirmed the addition u/s 68 of the Act. Therefore, the assessee is in appeal before us. 4. The ld. AR of the assessee submitted a Paper Book wherein the details of income tax return, computation of income, statement of affairs of bank statement of the seven creditors are submitted. The ld. AR of the assessee submitted that despite filing the confirmation no summons have been issued to th .....

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py of bank account computation of total income and return of income along with statement of affairs are submitted. In ITA No 438/Del/2015 we have dealt with the issue of cash credit of these lenders where they have also lent money to another assessee M/s Fazal FrozenFoods for AY 2010-11 where on identical facts, evidences and circumstances we have decided the issue of addition u/s 68 in the case of the same creditors vide our order of even date as under :- 7. We have carefully considered the riv .....

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the AO during the assessment proceedings. The assessee also placed before us the written submission made before the learned Commissioner of Income tax (Appeals). We have carefully gone through the submission and evidences placed before us. On perusal of all the evidence, we are of the view that for the purpose of section 68 of the Act following three conditions are required to be proved. 1. Identity of the lenders 2. Creditworthiness of the lenders 3. Genuineness of the transaction. 8. Regarding .....

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me shown by the lenders is a single line entry wherein income from embroidery and knitting has been shown. There is no profit and loss account or income and expenditure statement. For all the returns, the income computed is approximately 2.15 to ₹ 3 lacs only and meagre tax of ₹ 15 thousands to ₹ 2500 is paid in all these accounts. In an identical manner statement of affairs of all these eight women and two men is prepared wherein advances to the assessee and Al Hind Export (pa .....

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a Begum, Rs, 12.94 lacs in the name of Mrs. Naseem Bano and ₹ 10.66 lacs in the name of Sabana Praveen are shown. In past no loan is given to the assessee and other sister concern of the assessee. In same the statement of the affairs of some of the lenders sundry creditors are shown which are also cannot be identified. From the statement of affairs surprisingly there is no profit and loss account was available no income and expenditure statement has been prepared. While filing the computat .....

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address of all the parties is 13 Ismail Nagar, Meerut City. All these lenders have come together and deposited cash in their bank accounts with the same bank and then deposit these amounts with the assessee as well as its sister concern on the very next day proves more than what is said by lower authorities. Therefore in the case of these 8 ladies wherein the identical modus operandi has been adopted for giving alleged loan to the assessee who are having their meager income and has meager cash i .....

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he assessee have filed their return of income showing meager income and paying small amount of tax and further preparing and submitting their computation of total income, a statement of affairs, capital account in similar manner and showing opening capital of those assess to show the advance, it is a façade created to prove the genuineness of the transaction. All the decisions relied upon by the ld. AR cannot be come to the rescue of the assessee in view of façade created by the as .....

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, in the case of other two other assesses who have deposed before the AO regarding deposit ₹ 5 lacs each are also dealt in a similar manner. In case of Mr. Ashique Elahi the income of ₹ 210,000/- has been shown however, there is no narration in the computation of total income about the activities of these persons. In the statement of affairs cash at hand of ₹ 170,000/- has been shown, further in his bank account only cash of ₹ 25,000/- is available. In the case of Rehmat .....

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deposits in the bank account of these persons before the issue of cheque to the assessee. However we could not find any entry of unsecured loan in the statement of affairs of these parties except gift received from the mother of ₹ 50,000/- in some accounts. Therefore there is no source available with the assessee of the sums shown to have been received by the lenders through banking transfer entries in their account. Further the finding of the CIT (A) in a tabular form at page no 9 of his .....

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le on the facts of the case of the manner in which the return of income is filed, statement of affairs are prepared and amounts are introduced in the books of assessee which does not commensurate with the income shown by the lenders. In view of our above finding we also hold on the same reasoning as there is no change in facts and evidences produced before us that the loans of ₹ 51,81,500/- has rightly been added by the AO u/s 68 of the Act and confirmed by the ld. CIT(A). Therefore, the g .....

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