TMI Blog2011 (10) TMI 689X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has raised following grounds :- (1) That the CIT(A) erred in confirming the addition of ₹ 56,500/- ₹ 56,000/-, ₹ 55,000/-, ₹ 56,500 ₹ 55,000/- ₹ 57,000/- resp. from Priya Steel, Saniya Steel, Suleman Ent., Vijay Traders, Mansoor Metal Jaybharat Steel Co. (2) That the CIT(A) erred in confirming the addition of ₹ 1,50,000/-, Rs,6,00,000/-, ₹ 14,25,000/- ₹ 9,00,000/- resp. from Fashat Ali, G.V. Katwala, J.K. Co. Mayur M. Patel. (3) That the CIT(A) That the CIT(A) erred in not taking cognizance of the PAN confirmation produced of Fashat Ali, G.V. Katwala, J.K. Co., Mayur M. Patel. (4) That the CIT(A) erred in not applying the ratio of Rohini Builders 256 ITR 360. (5) That the addition of ₹ 56,500/-, 56,000/-, ₹ 55,000/-, ₹ 56,500/- ₹ 55,000/- ₹ 57,000/- should be deleted. (6) That the addition of ₹ 1,15,000/-, ₹ 6,00,000/-, ₹ 14,25,000/- ₹ 9,00,000/- should be deleted. (7) That the CIT(A) erred in confirming disallowance of Kharajat expenses of ₹ 99,833/-. ITA No.2086/Ahd/2009 Asst. Year 2005-06 (Revenue s appeal) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry. This is a case of change of opinion. Hence proceedings u/s 147 should be quashed. Assessee relied on the following decisions :- ACIT vs. Muthoot Leasing Finance Ltd. (2008) 21 SOT 281 (Cochin) Star Ferro Alloys (P) Ltd. (2004) 90 ITD 63 (Delhi (Third Member) Shri Shah Unmesh Indravadan vs. ITO in ITA No.3489/A/07 ITAT, Bench D Ahmedabad.. On merits the assessee submitted that he had filed copy of ledger accounts. The parties are small traders, hence PAN proof was not there but the loan is genuine and accepted. 7. After considering the submissions of the assessee the ld. CIT(A) held as under :- 4.1 I have considered the facts and submissions. I do not agree with the appellant s view. In the original assessment proceedings no inquiry was made regarding genuineness of the loans. As per the audit report loan was taken in cash. Penalty proceedings u/s 271(D) was initiated. During the penalty proceedings, it was found that identity, capacity and genuineness of the loans are not proved. Hence, section 68 of IT Act is attracted. Accordingly, the AO issued notice u/s 148 of IT Act on 29.08.2007. Regarding genuineness of the loan, no opinion was formed in origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is not correct as original order was passed u/s 143(3) after calling for details as above hence presumption is that there was application of mind. No new material was there hence s.147 is not permissible. The AO further dealt with the objection on change of opinion at page 17 of paper book where he stated that erstwhile AO had not taken ample note of the creditors in her assessment order and therefore it can be said that there was certain non-application of mind of the part of the then AO. In this regard he relied on the decision of the Delhi High Court (FB) in the case of CIT vs. Kelvinator of India 256 ITR 1(Delhi)(FB) affirmed by Hon ble Supreme Court in 320 ITR 561, wherein the Hon ble Delhi High Court has held as under :- 23. We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials on the record by itself may justify the AO to initiate a proceeding under section 147. The said submission is fallacious. An order of assessment can be passed either in terms of subsection (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in 320 ITR 561 The ld. counsel of the assessee submitted that re-assessment is not permitted for making roving inquiries and make investigation as per decision of the Tribunal reported in (2004) 90 ITD 63 (Delhi)TM. The duty of the assessee is to furnish primary details only. As held in 199 Taxman 342 106 ITR 1(SC) Parshuram Pottery. On merits, he submitted that as the one person was examined in 271-D proceeding, who confirmed deposit, merely because his sources were not proved, additions could not be made u/s 68 and all other credits be added in suspicion. 9. On the other hand, the ld. DR relied on the orders of authorities below and submitted that during the penalty proceedings initiated u/s 271D it was found by the AO that identity, capacity and genuineness of the loans were not proved and therefore the provisions of section 68 were attracted. No opinion was formed at the time of initial assessment. Accordingly, the AO issued notice u/s 148 of the IT and the case was reopened. The identity of the creditors, credit-worthiness of the creditors and genuineness of the transactions of the loans were not proved therefore, the ld. CIT(A) has rightly upheld the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this case. We further find that this view of our gets support from the following case laws :- Phool Chand Bajrang Lal vs. ITO (1993) 203 ITR 456 (SC) wherein the Hon ble Apex Court has held as under :- Held, affirming the decision of the High Court, that subsequent to the completion of the original assessment proceedings, on making enquiry, the Income-tax Officer came to know that the Calcutta company from whom the appellant claimed to have borrowed the loan of ₹ 50,000/- in cash had not really lent any money but only its name to cover up a bogus transaction. This was not a case where the Income-tax Officer sought to draw any fresh inference, which could have been raised at the time of the original assessment on the basis of the materials placed before him by the appellant relating to the loan from the Calcutta company and which he failed to draw at that time. Acquiring fresh information, specific in nature and reliable in character, relating to a concluded assessment which went to expose the falsity of the statement made by the assessee at the time of the original assessment was different from drawing a fresh inference from the same facts and material available wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o need to interfere with the order of ld. CIT(A). This ground of the assessee is dismissed. 11. The second ground of this appeal relates to confirmation of addition of ₹ 9,85,500/- made u/s 68. During the course of assessment proceedings the assessee was requested to furnish the details of loans and advances taken during the year including trade advances for supply of goods and scrap material along with the name and address, PAN details, copy of balance sheet, capital account and copy of ROI filed by the parties. The assessee vide his letter dated .filed the following submission :- The assessee has taken advances for supply of goods from following parties :- 1. S. N. Traders Rs.2,07,500/- 2. Suleman Enterprises Rs.1,51,500/- 3. Vijaya Traders Rs.2,23,500/- 4. Saniya Steel Rs.1,70,000/- 5. Sharma Trading Co. Rs.2,33,000/- The confirmations of the parties are now enclosed herewith. The assessee when approached the above parties to confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sustained by ld. CIT(A) deserves to be deleted. 13. On the other hand, the ld. DR relied on the orders of lower authorities. 14. After hearing both the parties and perusing the record, we find that the statement of one person Shri Mayur Rana was recorded during penalty proceedings u/s 271D. However, he could not substantiate that he had given loan to the assessee, therefore, the AO held this loan to be bogus and had initiated reassessment proceedings in this case which we have already upheld, therefore, assessee does not get any support from the statement of Mr. Mayur Rana in respect of this ground regarding cash credit of ₹ 9,85,500/- also. Since at no stage the assessee has been able to prove the identity of the creditors, genuineness of transaction and creditworthiness of the persons, we confirm the order of ld. CIT(A) on this issue. The appeal filed by the assessee is dismissed. ITA No.1364/Ahd/2009 Asst. Year 2005-06 (Assessee s appeal) ITA No.2086/Ahd/2009 Asst. Year 2004-05 (Revenue s appeal) 15. Ground Nos.1 to 6 of assessee s appeal in ITA No.1364/Ahd/2009 and the only effective ground in Revenue s appeal in ITA No.2086/Ahd/2009 relate to additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank accounts were given. Party No.1 to 6 were either small traders or were road side hawkers. As regards parties listed at Sl.No.7 to 12, money was received by account payee cheques. All the parties were trade creditors. When assessee could not produce them, as they were not ready to appear, the AO had not issued summons u/s 131 of the Act. The assessee relied on the decision of Patna High Court in the case of Zaverbhai Biharilal Co. 154 ITR 591. The assessee also relied on the decision of Hon. Gujarat High Court in the case of Rohini Builders 256 ITR 360. Accordingly, the assessee submitted that the addition may be deleted. 16. The ld. CIT(A) considered the facts and submissions and observed as under :- 2.5 I have considered the facts and submissions. (a) Regarding cash credits from Sl.Nos.1 to 6 it is observed that all the amounts have been received in cash. The amount has been returned later on which shows that it was not for supply of goods. Parties were not produced. They are not income-tax payees. The appellant has not given complete address and their credit worthiness is not proved. Hence, AO s action for treating these as not genuine is confirmed. (b) R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven to the assessee. 17. The ld. counsel of the assessee submitted a chart before us regarding the loans taken from different parties as under - Sl.No. Name of party Amount taken Amount repaid 1 Priya Steel Rs.56,500/- Rs.56,500/- 2 Saniya Steel Rs.56,000/- Rs.56,000/- 3 Suleman Enterprises Rs.55,000/- Rs.55,000/- 4 Viya Traders Rs.56,500/- Rs.56,500/- 5 Mansoor Metal Rs.55,000/- Rs.55,000/- 6 Jaybharat Steel Co. Rs.57,000/- Rs.57,000/- 7 A.V. Corporation Rs.2,00,000/- Rs.2,00,000/- 8 Fashat Ali Rs.1,15,000 Rs.1,15,000/- 9 Megh Mayu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax payers. The assessee has not given complete addresses and their credit worthiness is not proved. Therefore, we are of the view that the ld. CIT(A) has rightly confirmed the addition in respect of these parties. We uphold his order on this issue. 19.1 In respect of cash credit of ₹ 2,00,000/- by M/s A.V. Corporation we find that confirmation along with bank statement and copy of acknowledgement of income-tax return for the relevant Asst. Year was filed by the assessee before the lower authorities. In view of these details filed by the assessee, ld. CIT(A) was satisfied that the creditworthiness of the creditor is proved and, therefore, he was right in deleting the addition made by the AO. The order passed by the ld. CIT(A) is hereby upheld on this issue. 19.2 Now coming to cash credit of ₹ 14,75,000/- by Megh Mayur Mallhar Co-op. Soc., we find that assessee has filed a copy of account and the confirmation which shows that the assessee sold goods to the party in the next year. Therefore, amount was for supply of goods only which was done in the next year. Complete address of the party, PAN and other related details were also filed by the assessee. Taking in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rove the actual incurrence of expenditure is strict. In support of the claim of expenditure, mere selfgenerated ledger account was filed. There was lack of proper evidentiary value being self-created in nature Hence the AO had made 10% disallowance out of kharajat expenses on the ground that no vouchers were produced and the expenses were incurred in cash. In appeal before the first appellate authority, the assessee submitted that all the expenses were genuine and should be allowed. The ld. CIT(A) rejected the submissions of assessee with the following observations :- 3.3 I have considered the facts and submissions. I do not agree with the appellant s view. In the absence of complete vouchers, the AO was justified in disallowing part of the kharajat expenses. Hence this ground is rejected. Aggrieved with this order of ld. CIT(A), the assessee is in appeal before us. 22. The ld. counsel of the assessee reiterated the submissions made before the lower authorities and submitted that the ld. CIT(A) was not justified in confirming the action of the AO. The impugned addition be deleted. 23. On the other hand, the ld. DR relied on the orders of lower authorities and subm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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