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2016 (6) TMI 287 - ITAT MUMBAI

2016 (6) TMI 287 - ITAT MUMBAI - TMI - Unexplained cash credits u/s. 68 on account on account of deposits in banks - identity of the parties he claimed to have received the amounts from - Held that:- As seen that the fact of the assessee’s cash deposits, etc. in his bank account with Abhudya Co-op Bank and SBI was noticed by the AO. It is seen that on being required by the AO to explain these deposits in the bank account, the assessee was unable to substantiate the explanations he put forth and .....

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nder section 68 of the Act, i.e. the identity of the parties he claimed to have received the amounts from, their creditworthiness and the genuineness of the transactions, resulting in the learned CIT(A) upholding the addition of ₹ 14,31,647/- made by the AO under section 68 of the Act. Before us also, we find that the assessee, except for raising the grounds of appeal has failed to bring on record any material evidence to establish the genuineness of the aforesaid cash credits in the bank .....

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e order of the CIT(A)- 18, Mumbai dated 27.11.2013 for A.Y. 2007-08. 2. The facts of the case, briefly, are as under: - 2.1 The assessee filed his return of income for A.Y. 2007-08 on 31.08.2007 declaring income of ₹ 1,47,858/-. The return was processed under section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 04.11.2009 wherein the income of the assesse .....

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lief; by deleting the addition of unexplained cash credit of ₹ 83,000/- shown as gift, but upheld the addition of ₹ 14,31,647/- on account of unexplained cash credits under section 68 of the act on account of deposits in the assessee s bank accounts. 3. Aggrieved by the order of the CIT(A)-18, Mumbai dated 27.11.2013 for A.Y. 2007-08, the assessee has preferred this appeal raising the following grounds: - 1) On the facts and in the circumstances of the case the learned CIT(A) erred i .....

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s and documentary evidence submitted by your appellant to prove that against the receipt of payment pay orders were issued which is not covered u/s 68 amounting to ₹ 6,10,000/- (Rs. 2,00,000/- Gafar Khan, ₹ 1,40,000/- Sheru Khan, ₹ 2,70,000/Sagar Patel). 4) The Learned CIT(A) was highly unjustified in treating ₹ 3,12,000/- (this includes ₹ 83,000/- as Gift from father) as unexplained Cash Credit. Your appellant received the payment out of sale of room for ₹ 4, .....

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2016, when the case was called for hearing, none was present for the assessee, but the learned D.R. was present and ready to argue the case on behalf of Revenue. In these circumstances, we are of the view that the assessee is not serious about pursuing this appeal and therefore proceed to dispose off the same with the help of the learned D.R. for Revenue and the material on record. 5.1 In the grounds raised (supra), the issues raised by the assessee pertain to the addition of ₹ 14,31,647/- .....

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IT(A) erred in not considering the confirmations and documentary evidence submitted by the assessee to prove that against the receipt of payments, pay orders amounting to ₹ 6,10,000/- were issued (comprising of ₹ 2,00,0000/- of Gafar Khan, ₹ 1,40,000/- Sheru Khan and ₹ 2,70,000/- Sagar Patel). It was also contended that the learned CIT(A) was not justified in treating ₹ 3,12,000/- as unexplained cash credit, which was the payment the assessee received on account of .....

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77; 20,75,342/-) and required the explanation of the assessee as to the source of these deposits. From the explanation put forth by the assessee, the AO noticed that as per the cash book, the assessee claimed cash loans were received from Shri Gaffar Khan (Rs. 2,00,000/-), Shri Sagar Patel (Rs. 2,70,000/-), Shri Sheru Khan (Rs. 1,40,000/-) and cash loan plus gift of ₹ 3,12,000/- from Shri Niharo Pal, but observed that no material evidence was brought on record to establish the identity of .....

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from the AO. As per the learned D.R., on receipt of the AO s remand report dated 05.08.2013, a copy of which was given to the assessee, the learned CIT(A) observed that in response to notices issued under section 133(6) of the Act by the AO, one creditor, Sagar Patel, refused to receive the notices; two others, Shri Gaffar Khan and Shri Niharo Pal even after receiving the notice never responded and in respect of Shri Sheru Khan, the assessee was unable to furnish any details about him or his wh .....

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- made under section 68 of the Act. It is contended that all the arguments in the grounds raised (supra) have been considered by the authorities below and the assessee has merely raised the grounds without bringing on record material evidence to controvert the findings of the authorities below and therefore it was pleaded that the impugned order of the learned CIT(A) be upheld and the assessee s appeal dismissed. 5.3.1 We have heard the learned D.R. for Revenue in the matter and perused and care .....

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e total deposit in these two bank accounts were to the tune of ₹ 20,75,342/-. The assessee has shown business receipts of ₹ 6,14,293/- and income from other sources are shown at ₹ 27,000/- and bank interest at ₹ 2,402/-. The A.O. has called for the source of these deposits in the bank accounts. In response to the show- cause notice, the AR has submitted that the deposits were made out of the cash book and bank book maintained for the year. The A.O. has observed that in th .....

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order in great detail. After discussing the factual position of debit & credit entries, the A.O. has held that the amount of credit in the bank accounts of the assessee amounting to ₹ 14,31,647/- is remained unexplained, therefore, it was treated as unexplained cash credit u/s 68 of the I.T. Act. 2.2. Before me, the appellant has submitted as under:- It was also contended before the assessing officer that there are various deposit and withdrawals of cash from the Bank account and state .....

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t actually this amount of ₹ 7,55,269/ - is nothing but deposit and withdrawal from the bank account and therefore, he has not commented anything further after verification. A copy of the submission before AO dated 17.9.2012 is enclosed for your ready reference. Since this amount is out of cash balance it cannot be treated as Cash Credit and accordingly should be deleted. As regards the balance amount of Cash Credit of ₹ 8,82,000/- as detailed below for which the AO has found certain .....

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payment by account payee Pay Order in the name of the customer and use to debit the same in the name of the friend to whom he use to deliver the Pay Order and once the car was sold the payment was received back from the sale of car and they were booking the profits. Generally the purchase and sale took place either on the same day or within few days and thereby the account debited by my client got squared up and the balance use to become NIL and at the end of the year there was no credit balanc .....

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If cash is taken first and then repaid then it is to be treated as Cash Credit. It was not the case of first depositing the cash in the I bank and then issuing the Pay Order. There was sufficient balance in the bank account and then Pay orders were issued in the name of the parties. Moreover, my client is not required to maintain any books of account and his case falls under the provisions of Section 44AD which was not done and instead it was treated as Cash Credit and addition was made accordi .....

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Pay order it can be seen that the Pay Order bearing No. 851710 dated 14.3.2007 for ₹ 1,70,000/- was issued in the name of Madhuri S. Zode whereas your appellant debited the same in the name of Sagar Patel as the Car was sold by Sagar Patel. In this manner all other pay orders were issued against purchase of Second Hand cars but debited to the persons who sold the car and finally on resale the account was squared up 2.3. I have considered the submissions of the appellant, order of the A.O. .....

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A.O. The A.O. vide letter dated 05.08.2013 has submitted the remand report, the gist of which is reproduced as under:- "The assessee submitted that cash deposited in the bank account of the assessee are loans taken from the following persons:- (1) Shri Gaffar Khan - Ps. .2 lakhs (2) Shri Sagar Pate! - Ps. 2.70 lakhs (3) Shri Sheru Khan - Ps. 1 lakh (4) Shri Niharo Pal - Ps. 3.12 lakhs (Father of the assessee) For the balance amount the assessee submitted that these are amount deposited peri .....

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dha Apartment, Sonawani Chawl, bandra (West), Murnbai 400 050. (c) Shri Sagar Patel, J. V. Sahara Building, D-7, Flat NO. 102, Juchandra Nayagaon (East), Thane Dist., Maharashtra. In all the above cases, the matter was fixed for compliance on 04.07.2013. However, there was no compliance from any one till date. The notice sent to Shri Sagar Patel returned back by the postal authorities remark that 'Refused'. The other two persons namely; Shri Niharo Pal and Shri Gaff-ar Khan neither atten .....

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ut about the transaction of ₹ 1 lakh from Sheru Khan. In the light of the above factual position the undersigned could not verify neither the genuineness of the transaction nor the creditworthiness of the lender of the loan shown by the assessee." Copy of this remand report was also given to the assessee. In response to this, the appellant has submitted its reply which is reproduced as above. From the perusal of the submissions and remand report, it is observed that the A.O. has exami .....

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the A.O. Regarding the 4th person Shri Sheru Khan, the assessee has submitted that he has already left India, therefore, no detail can be submitted. The A.O. has confronted this position to the assessee but it has failed to produce the parties before the A.O. for examination to prove the genuineness of the transaction. Since as per the provisions of Sec. 68, the onus is always on the assessee to submit complete evidences to prove the identity, creditworthiness and genuineness of the transaction .....

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ovindarajulu Mudaliar Vs. CIT 34 ITR 807 (SC) (e) CIT Vs. Durga Prasad More 72 ITR 807 (SC) (f) Sumati Dayal Vs. CIT 214 ITR 801 (SC) Keeping in view the above facts, & circumstances, it is held that the assessee has failed to submit documentary evidences and produce the parties before the A.O. for examination because there was noncompliance to the notice u/s 133(6), therefore, it is held that the assessee has failed to prove the identity, creditworthiness and genuineness of the transaction, .....

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