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2017 (1) TMI 1332 - ITAT AHMEDABAD

2017 (1) TMI 1332 - ITAT AHMEDABAD - TMI - Unexplained cash credits u/s.68 - amount collected on behalf of its sister concern - Held that:- The assessee has failed to file even details of the cheques bounced in order to discharge its primary onus much less than the substantive burden. Shri Talati at this stage refers to assessee’s huge losses to the tune of ₹ 7,81,61,822/- to plead that there was no need on its part to adopt such a tax evasion method. We find no merit in this plea as this .....

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Court] holding that such an explanation must satisfy the test of human probabilities. We thus find no reason to interfere in the CIT(A)’s order affirming Assessing Officer’s action making the impugned unexplained cash credits addition - Decided against assessee. - ITA No.815/Ahd/2014 - Dated:- 25-1-2017 - SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri Sunil Talati, A.R. For The Revenue : Shri James Kurian, Sr. D.R. ORDER PER S. S. GODARA, JUDI .....

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es in adding cash deposits of ₹ 1,34,70,822/- in its bank account as unexplained cash credits u/s.68 of the Act. This assessee is a company trading in ferrous and non ferrous metal. Its cash book revealed to have received cash amounts of ₹ 1,34,70,822/- in question from M/s. Accost Impex. The Assessing Officer sought its explanation qua the source thereof. The assessee s reply came on 04.10.2011 along with ledger account of the above stated payee entity. It pleaded to have received t .....

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the Assessing Officer inter alia to observe that the assessee s above reasoning offered in support of its cash credits lacked genuineness since there was no reason as to why the payee entity would not make payment to its seller than crediting the very sums in cash to sister concern. He further noted the assessee not to have filed even a confirmation of the payee entity. The Assessing Officer also issued Section 133(6) notice to the alleged payee entity which was returned back. He then sought fu .....

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sessee as unexplained cash credit u/s. 68 of the Income Tax Act. For which appellant respectfully submits that Assessing Officer is not correct at all in treating the amount credited in Bank Account as Unexplained Cash Credits as the same are genuine transactions, which are hereby explained as under: The Sister concern of Appellant i.e. Metal Enterprise Pvt Ltd. sold the goods to Accost Implex Pvt. Ltd. during the financial year 2008-09 worth ₹ 8,28,90,027 out of which Appellant company co .....

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As per Exhibit-I). The said evidences clearly supports about the business transactions carried on between Accost Implex Pvt Ltd and Metal Enterprise Pvt. Ltd. Also confirmation from Metal Enterprises Pvt Ltd (hereby attached as per Page no. 3 and 4) confirming details of collection made by Appellant from Accost Implex Pvt Ltd. on behalf of Metal Enterprises Pvt Ltd Moreover the Ledger Account of Accost Impex Pvt. Ltd. in books of Appellant is also attached herewith as per Page no. 5 to 11 alongw .....

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; 1,33,05,000/- be deleted. In continuation of the hearing and written submission filed on 9th December, 2013 and in response to your Honour's query about the genuineness of the transactions of Sale and recovery of such sale in cash the appellant has to respectfully submit as under. 1. The assessee company i.e. Associated Tradecom Pvt. Ltd., is the sister concern of one Metal Enterprise Pvt. Ltd. The Directors of the appellant company and Metal Enterprise Pvt. Ltd., are same and identical. P .....

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ed under the Companies Act and if having its registration is proved therefore from the Extract of Master Data through office of Registrar of Companies as per (Page 54 and 55) 4. The said Accost Impex Pvt. Ltd., had purchased the goods and accounted the same in its books of account is also conclusively proved from the copy of Monthly return filed under Gujarat Valued Added Tax Act. Copy of the return showing the purchases by the said from the Metal Enterprise is enclosed on page 56 to 70. Thus th .....

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hem. The said party Accost Impex Pvt Ltd., was not paying the amount due to Metal Enterprise Pvt. Ltd., and the some of the cheques issued had bounced back. The said party and Metal Enterprise Pvt. Ltd., therefore, had severe disputed and had fight also. 6. Because of such disputes and fight, Accost Implex Pvt. Ltd., refused to pay anything to Metal Enterprise Pvt. Ltd. Therefore, Associated Tradecom Pvt. Ltd, used its good officers, negotiated and, convinced the said debtor Accost Implex Pvt. L .....

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not at all unaccounted cash credit or unexplained cash deposit. The A.O. has made the addition of such cash receipts as income of the assessee u/s. 68 of the Act which is totally incorrect in facts and on law. The assessee has proved the identity of the party giving cash. The assessee has proved capacity of the said company being Registered Company having filed its return and having its own establishment is also proved. Last and the third ingredient of genuineness is also proved beyond doubt as .....

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vs. Ranchhod Jivabhai Nakhava reported in 21 Taxmann 159 (4) Delhi Tribunal in the case ofMoongipa Investment Ltd vs. ITO reported in 30 Taxmann 113 (5) ITAT Agra Bench in the case of Umesh Electricals vs ACIT. reported in 12 Taxmann 5 (Agra)(TM) In view of the above the additions made u/s. 68 of ₹ 1,34,70,822/-be deleted. I have carefully perused the assessment order as well as submissions made by the AR. It is seen that appellant has not been able to explain the cash received in its acco .....

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haser directly and why the appellant co. was used as mediator. The entire sale proceeds? Have been shown as received in cash which also raises doubt. Normally the transaction between the two corporate entities takes place through cheques and cash payments or cash purchases are avoided. The section 40A(3) also restricts for making cash payments in excess of ₹ 20,000/- each. In my considered view the entire cash received by the appellant Co. amounting to ₹ 1,34,70,822/- has not been sa .....

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d order. The Assessing Officer cannot be burdened with onus of providing negative nor can there be an endless process of substantiation of materials by production of other materials. Where assessee only produced confirmation letters from creditors without any further material regarding identity, status or capacity of creditors or even dates on which impugned loans were given, addition made by Assessing Officer could not be faulted with." Thus, it is seen that the source of cash receipt of & .....

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ition of said sum u/s.68 of the I. T. Act. The addition is sustained. The ground of appeal fails. 4. Learned counsel representing assessee strongly argues that both the lower authorities have erred in making the impugned addition in its hands despite its explanation supported by sufficient cogent evidence. He takes us to assessee s paper book comprising of copy of its articles/memorandum of association along with that of its sister concern followed by necessary documentation under Company Law, m .....

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hat the credits in question are in fact in the nature of business transactions not covered u/s.68 of the Act. Shri Kurian strongly supports the CIT(A) s reasoning extracted in the preceding paragraphs. 5. We have heard both the parties. Case files perused. There is hardly any dispute that both the lower authorities have rejected assessee s explanation to have collected the impugned credits of ₹ 1,34,70,822/- on behalf of its sister concern M/s. Metal Enterprises Pvt. Ltd. from M/s. Accost .....

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e indicates any such dispute between assessee s sister concern and alleged payee entity. The assessee has failed to file even details of the cheques bounced in order to discharge its primary onus much less than the substantive burden. Shri Talati at this stage refers to assessee s huge losses to the tune of ₹ 7,81,61,822/- to plead that there was no need on its part to adopt such a tax evasion method. We find no merit in this plea as this alone cannot form a valid reason to delete the impu .....

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