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Balex Private Limited Versus The DCIT Central Circle-1, Baroda

Unexplained cash credit u/s 68 - Held that:- It is assessee’s submission that the assessee had furnished the details to prove the genuineness of transaction and if given one more opportunity, the assessee would present Shanti Metals Pvt.Ltd. before the AO and also furnish all the other necessary details required and also prove that the transactions with Shanti Metals Pvt.Ltd. was genuine and therefore no addition u/s.68 was required. Considering the aforesaid request of the assessee’s ld.AR, in .....

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ore AO and other required vouchers.On the other hand, it is AO’s contention that the required details were not furnished by the assessee. Ld.CIT(A) while upholding the action of AO has inter alia noted that details called for by AO were neither furnished before AO nor during appellate proceedings and further assessee had also not explained the basis for revising the returned income to NIL as against returned loss of ₹ 38,90,070/- after selection of the case for scrutiny and issuance of not .....

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i R. P. Tolani, Judicial Member And Shri Anil Chaturvedi, Accountant Member For the Appellant : Shri Tushar P. Hemani, AR For the Respondent : Shri K. Madhusudan, Sr.DR ORDER Per Shri Anil Chaturvedi, Accountant Member Both these appeals by the Assessee are directed against the separate orders of the Commissioner of Income Tax(Appeals)-I, Baroda identically dated 13/01/2012 passed for Assessment Years (AYs) 2005- 06 and 2006-07. 2. First we take up Assessee s appeal in ITA No.764/Ahd/2012 for AY .....

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t was framed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") vide order dated 19/11/2007 and total income was determined at ₹ 1,00,73,877/- before set off of brought forward loss. Aggrieved by the order of the Assessing Officer(AO), assessee carried the matter before the ld.CIT(A), who vide order dated 13/01/2012 (in Appeal No.CAB-I/150/07-08 ) granted partial relief to the assessee. Aggrieved by the order of ld.CIT(A), assessee is now in appeal befo .....

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t ₹ 6,05,998/-, being 1% of Sales. 3. First (second ground of appeal) ground is with respect to addition of ₹ 33,35,000/- made u/s. 68 of the Act. 3.1. During the course of assessment proceedings, AO noticed that assessee has accepted loans aggregating to ₹ 93,95,000/- from five parties (the list is reproduced at page Nos.3&4 of the assessment order). In respect of those parties, the assessee was asked to furnish confirmation letters, names and addresses of depositors, name .....

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. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who after considering the submissions of the assessee, the remand report and assessee s reply to remand report, granted partial relief by deleting the addition to the extent of ₹ 60,60,000/- but however confirmed the addition of ₹ 33,35,000/- received by assessee from Shanti Metals Pvt.Ltd. by holding as under:- 3.2. I have considered facts of the case and appellant s submissions. Assessing Officer, on .....

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by two stated cheques (i.e. the same cheque numbers) in appellant s bank account with Citibank on 13.10.2004. Addition u/s.68 of ₹ 20,00,000/- in respect of loan from Eastern Jewel Pvt.Ltd. is therefore to be deleted. Regarding loan from Shanti Metals Pvt.Ltd., it is seen from the balance sheet of the party that appellant s name does not figure in Schedule I ( Loans & advances ) totalling to ₹ 13,51,958/- in the balance sheet as on 31.3.2005. Authorised Representative drew attent .....

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s therefore not established and addition u/s.68 in respect of loan from this party is justified. To sum up, addition of ₹ 60,60,000/- is deleted and addition of ₹ 33,35,000/- is confirmed. 3.2. Aggrieved by the order of the ld.CIT(A), assessee is now in appeal before us. 3.3. Before us, ld.AR reiterated the submissions made before the AO and ld.CIT(A) and further submitted that and addition to the extent of ₹ 33,35,000/- in respect of funds received from Shanti Metals Pvt.Ltd. .....

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ogative of Shanti Metals Pvt.Ltd. to reflect the transaction in the way they wish in its books of account and on which assessee does not have any control. He further submitted that the other reason for confirmation of addition by CIT(A) was non-furnishing of the bank statement of Shanti Metals Pvt.Ltd. He submitted that when assessee has furnished the confirmation, the return of income, Balancesheet and Profit & Loss account, it has discharged the onus cast upon by the assessee as required u .....

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ish the genuineness of transactions. As far as the ground of appeal in assessee s appeal for AY 2006-07 is concerned, he submitted that since the loan from Shanti Metals Pvt.Ltd. was considered as unexplained cash credit, the interest paid by the assessee on the loan was also disallowed. The Sr.DR, on the other hand, supported the order of AO and ld.CIT(A) and further submitted that despite various opportunities granted by the AO , the assessee did not discharge the onus cast upon the assessee t .....

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from Shanti Metals Pvt.Ltd. We find that ld.CIT(A) while confirming the addition has inter alia noted that though assessee has stated the amount received from Shanti Metal Pvt.Ltd. as loan but on the other hand, Shanti Metals Pvt.Ltd. has reflected the amount due from assessee as Sundry Debtors , assessee had not filed the copy of bank statement of Shanti Metals Pvt.Ltd. showing source of ₹ 33,35,000/-. On the other hand, before us, it is assessee s submission that the assessee had furnish .....

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the transactions. We therefore restore the issue back to the file of AO to decide afresh the issue of addition u/s.68 of the Act with respect to the amount received from Shanti Metals Pvt.Ltd. Needless to state that the AO shall grant adequate opportunity of hearing to the assessee. The assessee is also directed to cooperate by promptly furnishing all the required details and information called for by the AO and ensure the presence of the lender through its authorized representative before AO. .....

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s, this ground in AYs 2005-06 & 2006-07 are allowed for statistical purposes. 5. Next ground in Assessee s appeal in ITA No.764/Ahd/2012 for AY 2005-06 is with respect to estimating Net Profit. 5.1. During the course of assessment proceedings, AO noticed that the assessee had filed return of income on 29/10/2005 claiming business loss of ₹ 38,90,070/-. The case of assessee was selected for scrutiny assessment and notice u/s.143(2) of the Act was issued on 10/10/2006. Thereafter, the as .....

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d u/s.40A(2)(b) were not furnished by the assessee. He therefore concluded that the books of accounts were not correct and complete and after rejecting the books of accounts u/s.145(3) of the Act, estimated Net Profit on 1% of the total sales and thereby made addition of ₹ 6,05,998/-. Aggrieved by the order of the addition made by the AO, assessee carried the matter before the ld.CIT(A), who upheld the order of the AO by holding as under:- 4.2. I have considered facts of the case and appel .....

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ellant has also not explained the basis for revising the returned income to NIL from returned loss of ₹ 38,90,070/- after selection of case for by the Assessing Officer, it was not possible for the A.O. to verify whether books of accounts were correct or complete and whether the income returned was correctly computed. Assessing was therefore justified in invoking provisions of section 145(3). As far as appellant s contention regarding there being no basis of addition is concerned, quantum .....

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ks of account and other details called for by the AO and in support of which he pointed out to Page Nos.54 being the letter addressed to AO dated 16/11/2007. He submitted that the AO had overlooked the details furnished and proceeded to estimate the Net Profit by rejecting the books of account. He submitted that the books of account of assessee are audited and in such a situation, the rejection of books of account arbitrarily is not tenable in the eyes of law. He therefore submitted that the add .....

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