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2016 (10) TMI 243 - ITAT PUNE

2016 (10) TMI 243 - ITAT PUNE - TM - Unsecured cash credit - Held that:- A bare reading of section 68 would show that there has to be credit of amounts in the books maintained by the assessee during the previous year and the assessee either offers no explanation or the explanation offered by the assessee about the nature and source of such credit, in the opinion of Assessing Officer, is not satisfactory. It is only in such circumstances the sum so credited may be charged to Income Tax as the inc .....

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first appeal the Commissioner of Income Tax (Appeals) clarified that the addition has been made u/s. 68 of the Act. The addition made in respect of outstanding expenses payable to Shri S.S. Dhage and Shri B.M. Gaikwad cannot be made u/s. 68 of the Act. The provisions of section 68 are not attracted where services are received by the assessee and an entry is made in the books crediting liability in account of person from whom services are received. In view of the facts of the case and the provisi .....

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ssee against the order of Commissioner of Income Tax (Appeals)-III, Pune dated 30-09-2013 for the assessment year 2003-04. In appeal, the assessee has primarily assailed the findings of Commissioner of Income Tax (Appeals) in confirming addition of ₹ 2,84,300/- on account of outstanding expenses payable to Shri S.S. Dhage ₹ 1,89,000/- and Shri B.M. Gaikwad ₹ 95,300/- and in upholding the validity of proceeding u/s. 147/148 of the Income Tax Act, 1961 (hereinafter referred to as .....

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icultural income of ₹ 16,995/-. The copy of Trading, Profit and Loss account, Balance Sheet and Audit Report was furnished by the assessee along with the return of income. A survey u/s. 133A of the Act was conducted at the business premises of the assessee on 10-03-2005. The Assessing Officer inter alia made addition of ₹ 2,84,300/- on account of unproved/unexplained creditors. Aggrieved by the assessment order dated 24-03-2006 passed u/s. 143(3) r.w.s. 147 of the Act, the assessee p .....

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ney and the genuineness of the transactions by adducing satisfactory evidence. The Commissioner of Income Tax (Appeals) further rejected the contentions of assessee with regard to validity of proceedings u/s. 147/148 of the Act. Against the order of Commissioner of Income Tax (Appeals) the assessee is in second appeal before the Tribunal. 3. Shri S.N. Puranik appearing on behalf of the assessee submitted that he is withdrawing ground No. 6 and the additional ground raised impugning the findings .....

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1,89,000/- and Shri B.M. Gaikwad ₹ 95,300/-, the ld. AR contended that no addition can be made u/s. 68 of the Act. The ld. AR submitted that the assessee has utilized the services of Shri S.S. Dhage and Shri B.M. Gaikwad and had not paid for the services utilized. It was in this context the assessee has shown the above two persons as creditors. The assessee has not obtained any advances or loans from the aforesaid persons. Shri S.S. Dhage is a driver and is also engaged in arranging JCB ma .....

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g Officer had directed the assessee to appear on 18-08-2011. 4. On the other hand Shri Hitendra Ninawe representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals). The ld. DR submitted that the assessee has measurably failed to show that any amount was payable by the assessee to Shri S.S. Dhage and Shri B.M. Gaikwad. The assessee could neither produce Shri B.M. Gaikwad nor any confirmations letter from him was filed. Whereas, Shri S.S. Dhage in his state .....

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al, the Commissioner of Income Tax (Appeals) has categorically observed that the addition in respect of unproved creditors has been made u/s. 68 of the Act. The contention of the assessee is that the addition made in respect of unproved creditors cannot be made under the provisions of section 68 as the assessee had not accepted any advances/loans or any amount from the aforesaid persons. In fact, the assessee was to pay to Shri S.S. Dhage and Shri B.M. Gaikwad for the services rendered by them. .....

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: [Provided that where the assessee is a company, (not being a company in which the public are substantially interested)and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless - (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and .....

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sessee during the previous year and the assessee either offers no explanation or the explanation offered by the assessee about the nature and source of such credit, in the opinion of Assessing Officer, is not satisfactory. It is only in such circumstances the sum so credited may be charged to Income Tax as the income of assessee. In other words, for making addition u/s. 68 of the Act, the assessee should have received cash. 7. In the present case the stand of the assessee is that Shri S.S. Dhage .....

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e and Shri B.M. Gaikwad cannot be made u/s. 68 of the Act. The provisions of section 68 are not attracted where services are received by the assessee and an entry is made in the books crediting liability in account of person from whom services are received. 8. Our view is further fortified by the decision of Delhi Bench of the Tribunal in the case of Annamaria Travels and Tours (P) Ltd. Vs. Dy. CIT reported as 95 TTJ 71 (Delhi-Trib.). The relevant extract of the findings in the said case are as .....

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