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2016 (10) TMI 49 - PUNJAB AND HARYANA HIGH COURT

2016 (10) TMI 49 - PUNJAB AND HARYANA HIGH COURT - [2016] 388 ITR 272 - Unexplained loan - Variation in the copies of Capital Account partner as produced in the court and copies of account filed with the Income-tax Department - failure to to produce books of accounts - Held that:- We have gone through the order of the Commissioner and find therein no proper analyses of the statements of the persons who were said to have loaned money to the assessee through its finance division. - One of the .....

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Sher Singh. - Kuldip Singh son of Onkar Singh is said to have confirmed answers to questions No.4 and 5 and Dinesh Kumar son of Onkar Singh is said to have confirmed questions No.6 and 7. In their cases also it has nowhere been discussed by the Commissioner as to what were the questions in their cases. - As per the statements of said Kapil Kumar and Ramesh Kumar, they did not loan any money to the assessee or its finance division. This contradicts the assessee's stand that this fact has .....

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so against the record. - The order of the Tribunal does not clarify the matter either. No discussion is found therein with regard to the above-referred statements of the alleged creditors of the assessee-firm. It was observed that the imprest account “does not necessarily” form part of capital account. Reliance was placed on the statement of Surinder Mahajan, a partner of the assessee without comparing the same with the statements of the alleged creditors. After simply finding fault with the .....

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ommissioner with regard to the deletion of ₹ 1,70,00,000/- from the income of the assessee. - In view of the above, the order of the Tribunal is found to be perverse. While setting aside the order of the Tribunal, we remit the matter to the Tribunal for a fresh decision on merits. - Decided in favour of revenue - ITA-286-2014 - Dated:- 15-9-2016 - MR. S.J. VAZIFDAR AND MR. DEEPAK SIBAL, JJ. For The Appellant : Mr.Denesh Goyal, Advocate For The Respondent : Mr.Pankaj Jain, Senior Advoca .....

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tions of law: - 1. Whether the Hon'ble ITAT Bench, Amritsar was right in facts and circumstances and in law that the variation in the copies of Capital Account of Sh. Ajay Kumar partner as produced in the court and copies of account filed with the Income-tax Department is immaterial? 2. Whether the Hon'ble ITAT Bench, Amritsar was right in facts and circumstances and in law in confirming the action of the Ld. CIT (A) in deleting the addition made by the A.O. on the ground that the assess .....

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must prove identity of credits, capacity of creditor to advance money and genuineness of transaction-then only burden shifts to the Department? The relevant facts which need to be noticed for adjudicating upon the present appeal are that on 01.12.2003, the assessee filed its return declaring therein an income of ₹ 11,77,772/-. The same was processed under Section 143(1) of the Act. Thereafter the assessee was issued a notice under Section 148 of the Act as to why it may not be re-assessed. .....

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70,00,000/- in cash from the assessee-firm and for this purpose Ajay Kumar had also filed a copy of the capital account in the court showing therein a withdrawal of ₹ 1,70,00,000/- in cash on 30.12.2012. The assessing officer perused the capital account attached with the return of the assessee but did not find any such entry therein. When Ajay Kumar was confronted with this fact, he replied that he had received cash of ₹ 1,70,00,000/- from the assessee under the imprest account and, .....

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s from a large number of people. The assessee had also shown receipt of cash amounting to ₹ 1,40,00,000/- from Ajay Electronics Finance Division which according to the assessee was its branch. The assessee explained that in the year 1997-98 it had opened a branch office under the name and style of Ajay Electronics Finance Division. Through this division money was borrowed from the public during the year ending 31.03.1998 which was used by the assessee. Separate books of accounts were maint .....

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nsaction was through the imprest account of Ajay Kumar and the money was returned within five days of its receipt, the same was not reflected in the capital account. On return of the money by Ajay Kumar the same was then returned to the public by Ajay Electronics Finance Division. After going through the audit report of the assessee attached with the return of income pertaining to the assessment year in question, the assessing officer found no reference to any branch office by the name of Ajay E .....

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from the assessee for personal use, the same should have been shown in the capital account. Finding the explanation of the assessee to be not genuine, the income of the assessee was re-assessed. As a result thereof, addition of ₹ 1,70,00,000/- was made in the hand of Ajay Kumar and on a protective basis in the hand of the assessee. The assessee challenged the re-assessment order by way of an appeal before the Commissioner of Income Tax (Appeals) (for short the 'Commissioner'). The .....

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onfirmed . The order of the Commissioner to this effect, reads as under: - Perusal of assessment record reveals that on test check basis, the A.O. has issued summons u/s.131 and also recorded statements u/s.131 through his inspector in respect of the following person/creditors: - (S/Sh/Smt.) 1) Harish Kumar, s/o Sh. Dharam Pal, V. Kahnuwan, Tehsil Gurdaspur who has not categorically denied the transaction. 2) Sher Singh, s/o Sh. Bishan Dass, r/o Pathankot (confirmation made vide answers to qa. N .....

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firmation) vide replies to queries No.5 & 6 STATING THAT TOTAL PURCHASE WERE MADE ABOUT ₹ 4,00,000/- from M/s. Ajay Electronics, Dhangu Road, Pathankot and payments were made in cash sometimes on weekly or fortnightly basis. 7) Naresh Kumar, S/o Sh. Sat Pal, Pathankot (In reply to question No.5. Please state the sale made during the period i.e. F.Y. 02.03 and also purchase from M/s. Ajay Electronics, Pathankot. At present, I do not remember that sale for the FY 02.03 but during the yea .....

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Please confirm the above payments? A : Sir, I have made the payments on above dates to M/s. Ajay Electronics & Co. in cash. 9) Rakesh Kumar, S/o Sh. Ram Nath, V. Budha Ngr., Pathankot (Confirmation made about cash payments made to the appellant firm on 2nd, 3rd, 27th and 29th Dec., 2002 vide reply to Q.No.6 and further vide reply to Q.No.7, the deponent averred that my total sales during the above period i.e.2002-03 about ₹ 3-4 lacs. 10) Gurmeet Singh, S/o Channa Singh, R/o. Master Co .....

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above, it can be inferred that the A.O. has carried out verification u/s.131 on test check basis about the veracity of the cash book adduced before him. From the above gist of statements of various trade creditors recorded before the A.O., it emerges that in all the cases, the transactions have more or less been unequivocally confirmed. The assessee explained that the source of ₹ 1,70,00,000/- in cash were amounts of less than ₹ 20,000/- from a large section of the people borrowed by .....

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ough the order of the Commissioner and find therein no proper analyses of the statements of the persons who were said to have loaned money to the assessee through its finance division. One of the persons whose statement was considered by the Commissioner was Harish Kumar son of Dharam Pal, who is stated to have not categorically denied the transaction . How such a vague statement could support the defence set up by the assessee, is cause of wonder for us. Sher Singh son of Bishan Dass, is stated .....

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h Kumar is said to have confirmed question No.5. Again, what the question was, is nowhere to be found from the order of the Commissioner. Ramesh Kumar further goes on to depose that he had made purchases from the firm to the tune of ₹ 3 lacs but as to when these purchases had been made and when payment for these purchases was made, which were crucial facts, find no consideration in the Commissioner's order. Kapil Kumar son of Prem Kumar while replying to queries No.5 and 6 is stated to .....

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the assessee or its finance division. This contradicts the assessee's stand that this fact has also been ignored by the Commissioner. The statements of the other persons who allegedly had given loans to the assessee through its finance division have also not been considered the way they deserved to be. It is thus clear that the order of the Commissioner lacks consideration of material and crucial facts. The Commissioner further goes on to hold that the transactions have more or less been une .....

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