TMI Blog2017 (11) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... peculiar facts and circumstances of the case where there is no satisfactory explanation to substantiate the fall in the gross profit rate, we find the approach of the learned Commissioner of Income- tax (Appeals) was reasonable where he has followed the past history of the assessee. In the result, the grounds taken by both the assessee and the Revenue are dismissed. Additions under section 68 - Held that:- The cash deposits in the bank account has been examined by the jurisdictional Assessing Officer of Shri Mahendra Singh and the same has been accepted as evidenced by order passed under section 143(3) read with section 147 of the Act dated February 23, 2016 which is available on record. Apparently, the said order under section 143(3) read with section 147 has been passed subsequent to the order of the learned Commissioner of Income-tax (Appeals) but facts remain that the cash deposited has been found duly explained in his own assessment proceedings. In light of the same, there cannot be any basis to add the same amount in the hands of the assessee under section 68 of the Act. In the result, the Department's appeal to this extent is dismissed. Not allowing set off of trading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and circumstances of the case in reducing the trading addition of ₹ 23,49,472 to ₹ 2,85,181 made by the Assessing Officer on account of low gross profit rate declared. 2. That the Commissioner of Income-tax (Appeals), Alwar has erred in law as well as on the facts and circumstances of the case in reducing the addition of ₹ 2,03,16,200 to ₹ 85,49,700 made by the Assessing Officer on account of unexplained cash creditors under section 68 of the Income-tax Act, 1961 without appreciating the material facts of the case. 2. Regarding ground No. 1 of the assessee's as well as the Revenue's appeal, the brief facts of the case are that the assessee is engaged in the business of trading in liquor. During the year, he declared a gross profit of ₹ 18,02,976 on turnover of ₹ 2,98,30,810 giving a gross profit rate of 6.04 per cent. as against the gross profit of ₹ 5,56,678 on the turnover of ₹ 76,27,050 giving a gross profit rate of 7.29 per cent. in the immediately preceding year. 2.1 The Assessing Officer observed that there is a decline in the gross profit rate as compared to the preceding year. The books of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in nature. The assessee thus pleaded that application of section 145(3) is unlawful and unjustified. The assessee also questioned the application of gross profit rate of 13.92 per cent. by submitting that the same cannot be altered/changed inasmuch as all the bills/vouchers for purchase account and expenses towards the trading account are vouched and sales value is confirmed. Further, the decline in the gross profit rate by 1.25 per cent. in comparison to the preceding year is very negligible in comparison to increase in sale by 3.91 times. 3.2 The learned Commissioner of Income-tax (Appeals) confirmed the action of the Assessing Officer in invoking the provisions of section 145(3) of the Income-tax Act. However, he restricted the trading addition to ₹ 2,85,181 by applying the gross profit rate of seven per cent. on the declared turnover. The relevant finding of the learned Commissioner of Income-tax (Appeals) is as under : 4.5 I have perused the assessment order, remand report as well as the submissions made by the authorised representative of the appellant along with judicial citation given therein and find that the Assessing Officer has made the trading addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omplete books of account have been maintained and were produced before the Assessing Officer in the course of remand proceedings also. 4.8 I have examined the contentions and judicial decisions cited by the appellant and material available on record and find that the appellant has not been able to controvert the fact that complete sales records in the form of supporting vouchers were not maintained and thus could not be produced before the Assessing Officer in the course of the appellate proceedings. Therefore, I hold that the provisions of section 145 of the Income-tax Act have been rightly invoked by the Assessing Officer in view of the deficiencies noticed. However, as regards the estimation of gross profit rate is concerned, various courts have held that the best guide for making the best judgment assessment would be the history of the appellant and therefore it would be just and fair to adopt a gross profit rate of seven per cent. on the declared turnover. This would take care of leakage of revenue on account of incompleteness of the vouchers, bills, etc., and also it take into consideration the increase in turnover during the period under consideration. 4.9 In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent. is better as compared to the previous year and the subsequent year. Hence, the gross profit rate of 6.04 per cent. declared by the assessee in the year under consideration be accepted. 4.2 It is a settled law that even if the books of account are rejected it is not necessary that there should be a trading addition. After rejection of the books of account, assessment is to be made in the manner provided under section 144. This would require taking into consideration all the circumstantial facts and the past history. It is to be noted that overall gross profit has been increased from ₹ 5,56,678 to ₹ 18,02,976 as compared to the last year. The slight decline in the gross profit rate of 1.25 per cent. is on account of increase in the turnover, which has increased by 3.91 times as compared to the last year. The assessee is interested in the volume of profit and not in the rate of profit. Thus, when the amount of profit declared by the assessee is better as compared to the results declared in earlier years, application of gross profit rate of seven per cent. by the learned Commissioner of Income-tax (Appeals) as against gross profit rate of 6.04 per cent. declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound No. 2 of the Revenue's appeal are relating to the additions under section 68 of the Act. The Assessing Officer has made an addition of ₹ 2,03,16,200 which has been reduced to ₹ 84,49,700 by the learned Commissioner of Income-tax (Appeals). The assessee is challenging the sustenance of addition of ₹ 84,49,700 and the Revenue is challenging the reduction in addition under section 68 of the Act from ₹ 2,03,16,200 to ₹ 84,49,700. 7.1 Before we examine the facts of the case, it would be relevant to refer to the legal propositions in the context of section 68 which has emerged after examining various legal authorities including those quoted by the learned authorised representative on the subject as under : (a) Where any sum is found credited in the books maintained by the assessee, section 68 requires that the assessee should offer an explanation about the nature and source of such sum found credited in its books of account to the satisfaction of the Assessing Officer. In the absence of explanation, or in the event of explanation being not found satisfactory, the sum so credited would be included in the income of the assessee. (b) The prima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money but could do nothing more and it was for the Assessing Officer to enforce shareholders/lenders attendance in spite of the fact that the shareholders/lenders were missing and not available. Their reluctance and hiding may reflect on the genuineness of the transaction and creditworthiness of the shareholder/lender. It would be also incorrect to universally state that an inspector must be sent to verify the shareholders/lenders at the available addresses, though this might be required in some cases. Similarly, it would be incorrect to state that the Assessing Officer should ascertain and get addresses from the Registrar of Companies' website or search for the addresses of shareholders/lenders themselves. (g) Unlike the case of private limited companies, in the case of public limited company which has gone for a public issue and got share subscriptions from prospective shareholders across the length and breadth of the country, the legal regime may not be the same. In such cases, the company concerned cannot be expected to know every detail pertaining to the identity as well as financial worth of each of its subscribers. The company must, however, maintain and make availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing a copy of statement of bank account of share subscriber, when circumstances requires that there should be some more evidence of positive nature to show that the subscribers had made genuine investment. Similar analogy will apply in respect of any loan transaction. (j) The entire evidence available on record has to be considered and a reasonable approach has to be adopted. The final conclusion must be pragmatic and practical, which takes into account holistic view of the entire evidence including the difficulties, which the assessee may face to unimpeachably establish identity, creditworthiness of the shareholders and the genuineness of the transaction. (k) Where the assessee has discharged the initial burden placed upon him under section 68 to prove and establish the identity and creditworthiness of the share applicant/lender and the genuineness of the transaction, the burden of proof shifts on the Assessing Officer. In such a case, the Assessing Officer cannot sit back with folded hands till the asses see exhausts all the evidence or material in his possession and then come forward to merely reject the same, without carrying out any verification or enquiry into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditor - No identity proof filed - Amount received on March 28, 2009 through demand draft - Assessee failed to produce the creditor - Address not provided at primary stage of scrutiny proceedings and same was provided on December 27, 2011 - Complete address given in assessment proceedings as Ravi Kant S/o Ram Chander, Chandna Bus Stand, Near Natraj Hotel, Rewari, Haryana - No reply received from creditor in response to notice under section 133(6) - No permanent account number Remand proceedings - Notice issued under section 131 came back with the remark refused service - No regular source of income to give loan Confirmation filed on December 26, 2013 (PB 8) - Copy of bank statement not filed - No explanation about source of cash creditor Assessing Officer s observation - Copy of Income-tax return not filed - No details filed by creditor in response to notice dated February 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emark 'refused service'. When these facts were confronted to the appellant in the course of remand proceedings, the appellant has stated that the amount was received through banking channel and beyond this he failed to substantiate the transaction of loan having been received. No copy of the bank statement of the creditor was filed. No details regarding the sources of income so as to establish the creditworthiness of the creditor were filed, no copy of the Income-tax return filed by the creditor was produced before the Assessing Officer. In view of the above facts, I find that the appellant has not been able to discharge the onus under section 68 of the Income-tax Act- identity and creditworthiness of creditor, genuineness of the trans action have not been proved. Thus, I confirm the addition of ₹ 1,00,000 made by the Assessing Officer on this account. 8.4 We have heard the rival submissions and perused the material available on record. We do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals). The assessee has failed to satisfy the initial onus cast on him in terms of the identity and creditworthiness of the creditor, gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhiwadi filed (paper book 18-21) - Bank statement of Corporation Bank and ICICI Bank filed Assessing Officer s observation - All the above documents filed with reply dated December 26, 2013 by the assessee through his authorised representative and not by the cash creditor - Only one DD of ₹ 16,74,000 has been issued from ICICI bank on July 23, 2008 and no details of the manner of other DD of ₹ 16,74,000 are available as per the copies of bank account filed - On July 22, 2008 and July 23, 2008, there are cash deposits in the bank account of the cash creditor which ultimately has been utilised in DD issued for ₹ 16,74,000 from this bank account - No Income-tax return of the assessment year 2009-10 seems to have been filed by Sh. Anil Kumar 9.1 In this regard, the learned authorised representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e creditor, genuineness of the transaction have been proved. The creditor has filed these details in response to the notices issued by the Assessing Officer and therefore no adverse inference can be drawn. The Assessing Officer may if he so desires pass the information to the Assessing Officer with whom the creditor is assessed to tax. Accordingly I delete the addition of ₹ 33,48,500 made by the Assessing Officer on this account. 9.3 We have heard the rival contentions and pursued the material available on record. The source of cash deposit in the bank account has been explained to be receipt from RIICO pursuant to cancellation of plot. We accordingly confirm the above findings of the learned Commissioner of Income-tax (Appeals) where he has held that the assessee has discharged the onus placed on him under section 68. The findings of the learned Commissioner of Income-tax (Appeals) remain uncontroverted before us. We hereby confirm the deletion of the addition of ₹ 33,48,500. The ground of the Revenue's appeal to this extent is hereby dismissed. 10. Bhishan Singh-Rs. 28,10,000 (Assessee's appeal) Assessing Officer s findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to furnish any details regarding the sources of income of creditor so as to establish the creditworthiness - Creditworthiness not genuine Assessing Officer s observation - Copy of the Income-tax return filed by the creditor was not produced before the Assessing Officer - Notice dated February 8, 2013 issued under section 133(6) returned undelivered - No compliance made of notice issued under section 131 dated April 17, 2013 and December 5, 2013 - A new story has been evolved that Bhishan Singh is the first holder of account, the assessee credited the money in his name while his son Ashok Kumar has confirmed the loan. How the assessee had known at the time of acceptance of loan that the 1st holder is Bhishan Singh. It is merely an afterthought. Even after substitution of name of creditor, creditworthiness remains unexplained. 10.1 The learned authorised representative submitted that from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts were found by the Assessing Officer in the account before the issue of cheque/DD in favour of the appellant. The appellant has failed to furnish any details regarding the sources of income of the creditor so as to establish the creditworthiness. Further, no copy of the Income-tax return filed by the creditor was produced before the Assessing Officer. The appellant has also failed to produce the cash creditor for examination in response to the notices issued to verify the veracity of the contentions made in the affidavit. Therefore, I hold that the appellant has not been able to discharge the onus under section 68 of the Income-tax Act identity and creditworthiness of creditor, genuineness of the transaction have not been proved beyond doubt. Accordingly I confirm the addition of ₹ 28,10,000 made by the Assessing Officer on this account. 10.3 We have heard the rival submissions and pursued the material available on record. The Assessing Officer has given a finding that cash was deposited in the creditor's bank account and on the same date, demand draft was issued. Nothing has been submitted to explain the source of such cash deposits. It is not a question of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - The assessee cannot be required to explain the source of source of cash credit in the books of account of the creditor though Sh. Mangal Singh has himself admitted during the proceedings that he has received the amount on maturity of FDR after the death of his uncle - Creditworthiness not genuine 11.1 The learned authorised representative relied on the finding of the Commissioner of Income-tax (Appeals). It was further submitted that the Assessing Officer in the case of Shri Mangal Singh has initiated proceedings under section 148 and vide order dated February 22, 2016 made addition of ₹ 8,82,240 being the amount of cash deposit in his bank account (copy of the assessment order of Shri Mangal Singh is at paper book 34- 35). Thus, when the Assessing Officer has already added the cash deposited in the bank account of the creditor in his hand, no addition can be made in the hands of the assessee. Further, when the creditor has appeared before the Assessing Officer and accepted the transaction in his statement, the onus of the assessee under section 68 stood discharged. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne in the name of Raju and another in the name of Satpal Tanwar - No identity proof filed - Copy of confirmation is at paper book 36-37 - There is a cash deposit of ₹ 16.50 lakhs in the account of Raju Tanwar on July 22, 2008, a day before the cheque is issued to the appellant - No source of cash creditor filed - Raju is the nick name of Sh. Satpal Tanwar - The appellant has failed to produce the creditor before the Assessing Officer - Assessee did not considered fit to provide address at primary stage of proceedings Remand proceedings - In remand proceedings, the appellant stated that Sh. Raju Tanwar and Satpal Tanwar are brothers and therefore the confirmation was signed earlier by Satpal Tanwar. None the less, the explanation given by the appellant remains unsubstantiated as it was stated earlier that Raju is the nick name of Satpal Tanwar. Therefore, what are the real facts still remains unclear. - No permanent account number - Permanent account number is ADRPT3356L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12.1 The learned authorised representative submitted that from the above, it can be noted that the identity of the creditor is established. He has given the amount by directly depositing to the Excise Department for obtaining advance licence of liquor. The amount was given by him by DD. This proves the genuineness of the transaction. He is assessed to tax. He has replied under section 131 to the Assessing Officer. All these facts prove his creditworthiness. The learned Commissioner of Income-tax (Appeals) has confirmed the addition for the reason that the assessee has failed to prove the source of income of the creditor and failed to produce him. Only because the creditor could not be produced, when he has responded to the notice issued under section 131, cannot be a reason for making an addition under section 68. Further, the assessee is not required to prove the source of the source. In these facts, the addition confirmed by the learned Commissioner of Income-tax (Appeals) is unjustified and the same be deleted. 12.2 The findings of the learned Commissioner of Income-tax (Appeals) are as under : In view of the above facts, I find that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly I confirm the addition of ₹ 16,74,700 made by the Assessing Officer on this account. 12.3 We have heard the rival submissions and pursued the material available on record. The learned Commissioner of Income-tax (Appeals) has given a finding that cash was deposited in the creditor's bank account and on the next date, cheque was issued. Nothing has been submitted to explain the source of such cash deposits. It is not a question of determining source of source rather it is a question of satisfying the test of creditworthiness. In other words, whether the cash creditor has the necessary financial standing of his own to lend to the assessee and what are the sources thereof. The Income-tax return filed of the cash creditor doesn't inspire any confidence in our mind. There is nothing further on record to satisfy the test of creditworthiness of the creditor. The finding of the learned Commissioner of Income-tax (Appeals), remain unrebutted before us. The assessee has thus failed to satisfy the initial onus placed on him especially in terms of the creditworthiness of the creditor. In the result, we confirm the findings of the learned Commissioner of Income-tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the creditor was given as Rakesh Chiwa, then changed to Rakesh Thankar and finally to Rakesh Bhukar - Notice issued under section 133(6) returned undelivered with the postal remarks incomplete address - Notice issued under section 131 at the address as per the driving licence served but no compliance made by Sh. Rakesh Chiwa or Thankar or later renamed as Bhukar - How the cash creditor is changing names and cities i.e. earlier reported as Bhiwadi to later reported as Chidawa with the passage of time is not clear which implies that assessee has made entry in his books as per his own sweet. 13.1 The learned authorised representative submitted that from the above, it can be noted that the identity of the creditor is established. The learned Commissioner of Income-tax (Appeals) has confirmed the addition for the reason that the assessee has failed to produce the creditor. This cannot be a reason for making an addition under section 68. In these facts, the addition confirmed by the learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent is dismissed. 14. Bhagirath Singh Shekhawat-Rs. 7.20 lakhs (Department's appeal) Assessing Officer s findings Appellate proceedings CIT(A) s findings - No confirmation - Permanent account number is ASVPS3578E - The appellant has filed confirmation, copy of Income-tax return, permanent account number, copy of bank account etc. before the Assessing Officer in course of remand proceedings. Further, the cash creditor has also furnished these documents before the Assessing Officer in response to notice issued under section 133(6) of the Income-tax Act in course of remand proceedings. - No identity proof - Address is Vijay Deep House, Transport Nagar, Jaipur Road, Sikar 332001 - Books of account of the creditor are audited under section 44AB of the Income-tax Act and the creditor is regularly assessed to tax - Incomplete address provided as R/o Basant Vihar, Sikar, Rajasthan to avoid further verification - The assessee received the amount through account payee cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gularly assessed to tax. The creditor has further replied to the Assessing Officer under section 133(6). The amount has been subsequently repaid on March 29, 2012. Thus, when the assessee has discharged the onus under section 68, no addition can be made. Therefore, the order of the learned Commissioner of Income-tax (Appeals) be upheld by dismissing the ground of the Department. 14.2 The findings of the learned Commissioner of Income-tax (Appeals) are as under : From examination of the above facts, I find that the appellant has filed confirmation, copy of the Income-tax return, permanent account number, copy of the bank account etc. before the Assessing Officer in the course of remand proceedings. Further, the cash creditor has also furnished these documents before the Assessing Officer in response to the notice issued under section 133(6) of the Income-tax Act in the course of remand proceedings. Further, it is submitted by the appellant that the books of account of the creditor are audited under section 44AB of the Income-tax Act and is regularly assessed to tax. It is also stated that the loan has also been returned back by account payee cheque in March 2012. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W-18, Sikar 3320011 - The appellant has filed confirmation, copy of the Income-tax return, permanent account number, copy of bank account etc. before the Assessing Officer in course of remand proceedings. - No identity proof - The assessee cannot be required to explain the source of source of cash credit - The creditor is regularly assessed to tax - The assessee did not considered fit to provide proper and complete address at stage of scrutiny proceedings Remand proceedings - It is submitted by the appellant that in regular books of account of the creditor, there is sufficient cash balance which was deposited in the bank account before the issue of cheque to the appellant. - Perusal of the bank statement of Sh. Vikram Singh (paper book 51-52) filed by the assessee revealed that he deposited cash of ₹ 1.50 lakhs on March 13, 2009 and credited ₹ 80,000 out of DD cancellation on March 13, 2009 and on the same day withdrawn it by pay order issued on behalf of assessee for the purpose of obtaining liquor licence in the name of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Income-tax (Appeals) are as under : A careful examination of the above facts reveal that the appellant has filed confirmation, copy of the Income-tax return, permanent account number, copy of the bank account etc. before the Assessing Officer in the course of remand proceedings. Further, the cash creditor has also furnished these documents before the Assessing Officer in the course of remand proceedings. Further, it is submitted by the appellant that in the regular books of account of the creditor there is sufficient cash balance, which was deposited in the bank account before the issue of cheque to the appellant. It is stated that the creditor is regularly assessed to tax. The Assessing Officer may if he so desires pass the information to the Assessing Officer with whom the creditor is assessed to tax. Thus, I find that the appellant has been able to discharge the onus under section 68 of the Income-tax Act identity and creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of ₹ 2,30,000 made by the Assessing Officer on this account. 15.3 We have heard the rival submissions and pursued the mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - No permanent account number Remand proceedings - No regular source of income to give such loan - In response to the notice issued under section 133(6) of the Income-tax Act (paper book 56), copy of confirmation (paper book 57), copy of the Income-tax return and computation of total income for the assessment year 2009-10 (paper book 58-59) and bank statement filed (PB 60). - No explanation about the source of cash creditor - The accounts of the creditor are audited under section 44AB of the Income-tax Act, 1961 - The bank balance as on March 4, 2009 i.e. before the issue of cheque of ₹ 2 lakhs to the assessee is ₹ 2,29,683 while the learned Assessing Officer is asking for explanation of credit entry dated February 14, 2009 and February 16, 2009 16.1 The learned authorised representative relied on the finding of the learned Commissioner of Income-tax (Appeals). It was further submitted that the assessee has filed the confirmation, return of income, permanent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same is hereby confirmed. In the result, the appeal of the Department to this extent is dismissed. 17. Sh. Thawaria-Rs. 1,00,000 (Department's appeal) Assessing Officer s findings Appellate proceedings CIT(A) s findings - No confirmation - Sh. Thawaria Singh S/o Sh. Ram is an Income-tax assessee having permanent account number ADMPT7955J. - The appellant has filed confirmation, copy of the Income-tax return, permanent account number, copy of bank account etc. before the Assessing Officer in course of remand proceedings. - No identity proof - He resides at Opp. 132 KV Power Station, Neelam Chowk, Bhiwadi. - The cash creditor was also produced before the Assessing Officer in the course of remand proceedings and his statement was recorded on oath - The assessee did not considered fit to provide proper address at stage of scrutiny proceedings - Copy of confirmation evidencing repayment of loan is at paper book 64 - The creditor is regularly assessed to tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, bank account statement. The creditor is regularly assessed to tax. The creditor was produced before the Assessing Officer and his statement was recorded under oath. The Assessing Officer has made the addition as no explanation has been filed by the creditor regarding the source of cash deposit in the account of the creditor. In order to examine the source of credit in the bank account of the creditor, the Assessing Officer issued notice under section 148 to the creditor and after considering his explanation accepted the source of deposit in his bank account vide order dated February 23, 2016 (Copy of assessment order of Shri Thawaria is at paper book 69). Thus, the assessee has discharged his onus under section 68. Therefore, the order of the learned Commissioner of Income-tax (Appeals) be upheld by dismissing the ground of the Department. 17.2 The findings of the learned Commissioner of Income-tax (Appeals) are as under : An examination of the above facts reveal that the appellant has filed confirmation, copy of the Income-tax return, permanent account number, copy of the bank account etc. before the Assessing Officer in the course of remand proceedings. Further, the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also produced before the Assessing Officer in the course of remand proceedings and her statement was recorded on oath - No identity proof - The assessee has received ₹ 6 lakhs from her through account payee cheque - The creditor is regularly assessed to tax and is filing return of income - Copy of bank account filed (PB 71) revealed that Smt. Nisha has no regular source of income to give loan - Confirmation is at paper book 70 - The loan is stated to have been returned back by account payee cheque in the financial year 2010-11 - No permanent account number - The assessee cannot be required to explain the source of source of cash credit - It is submitted by the appellant that the creditor has explained the sources of credits in the bank account - No explanation about the source of cash creditor Remand proceedings - The appellant has thus discharged the onus under section 68 of the Income-tax Act and addition made by the Assessing Officer on this account is deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transaction have been proved. Accordingly, I delete the addition of ₹ 6,00,000 made by the Assessing Officer on this account. 18.3 We have heard the rival submissions and pursued the material available on record. The findings of the learned Commissioner of Income- tax (Appeals) remain unrebutted before us and the same are hereby confirmed. In the result, the appeal of the Department to this extent is dismissed. 19. Vinita Devi-Rs. 34,65,000 (Assessee's appeal) Assessing Officer s findings Appellate proceedings CIT(A) s findings - No confirmation - Mrs. Vinita Devi W/o Satveer Singh resides at Neelam Chowk, Bhiwadi - It is apparent from the bank account statement of the creditor that the account has been primarily used for deposition of cash and subsequent issue of cheques and this pattern has been repeated a number of times in the year. - No identity proof - The amount has been received through account payee cheque - The fact that loan has been repaid by the appellant does not carry much convict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor has received ₹ 30 lakhs on March 27, 2012 and ₹ 4.65 lakhs on March 28, 2012 in its bank account. However, these amounts were immediately withdrawn from bank for purchase of property but since the deal did not materialised, the cash remained with the creditor only. - The claim of the authorised representative that cash creditor has permanent account number AQOPV3722A does not hold good in view of the fact that permanent account number generation is September 10, 2012 and no ROI for the assessment year 2009-10 has been filed by the creditor 19.1 The assessee has filed the evidence regarding the identity of the creditor and her bank account statement. The creditor was produced before the Assessing Officer and her statement was recorded under oath. The Assessing Officer has made the addition on the basis that cash has been deposited just before the withdrawal. To examine the source of such cash, the Assessing Officer issued notice under section 148 to the creditor and passed the order dated February 26, 2016 where the cash deposit in her bank account has been accepted (copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed to substantiate the transaction of having advance the money to the appellant through cheque and found that there are frequent cash deposits in the same. The Assessing Officer has accordingly worked out a peak credit in the case of the cash creditor (Smt. Vinita) which is reproduced above. The peak of unexplained cash deposits in (her) bank account of cash creditor has been worked out at ₹ 65,60,000. It is apparent from the bank account statement of the creditor that the account has been primarily used for deposition of cash and subsequent issue of cheques and this pattern has been repeated a number of times in the year. Even the fact that the loan has been repaid by the appellant does not carry much conviction as the same amount stands withdrawn next day, which again substantiates the version of the Assessing Officer that the transaction of loan is a sham. Therefore, I find that the appellant though has proved the identity of the creditor but has failed to adduce enough evidence of satisfy about the creditworthiness of the creditor and genuineness of the transactions. The Assessing Officer may, if he so desires pass on the information about the peak working o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om RIICO for acquisition of agricultural land. A copy of certificate from the bank in support of the said receipt was also filed before the Assessing Officer (paper book 82) - Perusal of the bank statement of Mahendra Singh (paper book 81) filed by the assessee revealed that he deposited cash of ₹ 16 lakhs on February 10, 2009, ₹ 9.78 lakhs on February 11, 2009, ₹ 20.20 lakhs on February 12, 2009 and ₹ 12.50 lakhs on February 16, 2009 and thereafter withdrawn on the respective same days for making DD s/pay orders in favour of the assessee for the purpose of obtaining liquor licence in the name of the assessee - The agricultural land of Sh. Mahendra Singh is acquired by RIICO, Bhiwadi against which he received compensation out of which he advanced ₹ 58.48 lakhs to the assessee. - The creditor has stated that loan was received back by cheque in the financial year 2011-12 - No permanent account number Remand proceedings - The appellant has thus discharged the onus under section 68 of the Income-tax Act and addition made by Assessing Officer on this ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in financial year 2011-12. Thus, I find that he appellant has been able to discharge the onus under section 68 of the Income-tax Act, the identity and creditworthiness of creditor, genuineness of the transaction have been proved. Accordingly, I delete the addition of ₹ 58,48,000 made by the Assessing Officer on this account. 20.3 We have heard the rival submissions and pursued the material available on record. The cash deposits in the bank account has been examined by the jurisdictional Assessing Officer of Shri Mahendra Singh and the same has been accepted as evidenced by order passed under section 143(3) read with section 147 of the Act dated February 23, 2016 which is available on record. Apparently, the said order under section 143(3) read with section 147 has been passed subsequent to the order of the learned Commissioner of Income-tax (Appeals) but facts remain that the cash deposited has been found duly explained in his own assessment proceedings. In light of the same, there cannot be any basis to add the same amount in the hands of the assessee under section 68 of the Act. In the result, the Department's appeal to this extent is dismissed. 21. In resp ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
