TMI Blog2014 (10) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... eness of the transaction and therefore, he has discharged his onus and therefore, no addition is called for and the addition sustained by learned CIT(A) is directed to be deleted along with the interest of ₹ 11,047/-. The order of learned CIT(A) is reversed and the addition of ₹ 1,11,047/- is directed to be deleted. Thus, the ground no. 2 raised by the assessee is allowed. Addition of cash credit in the name of Smt. Salochna Devi - Held that:- The creditor Smt. Salochna Devi is the mother of the assessee who is the widow lady of around 67 years has furnished the affidavit confirming the loan given to the assessee by making a cash deposit of ₹ 60,000/-. She is not an income tax assessee. She has stated in her statement before the A.O. of doing book binding business from where she earns ₹ 70,000/- to 80,000/- per annum, is not disputed. The said cash was given to the assessee, who deposited the same in the creditor’s account from where cheque has been taken. She has also stated that she is living with her son. In this circumstances and facts of the case, I am of the view that the assessee has proved the identity, creditworthiness and genuineness of the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, as per the A.O. s order, are reproduced herein below: The assessee deals in tea leaves. On the gross turnover of ₹ 74,34,011/-, GP has been shown by the assessee at ₹ 4,62,251/-, which works out to 6.22%, as compared to 9.41% shown during the immediately preceding year. On being confronted for steep fall in the GP as compared to the assessee s own case during the previous year, the assessee argued that during the year, his sales rose to ₹ 74.34 lac as compared to ₹ 43.62 lac, hence margin was reduced to achieve higher sales. The contention raised has been considered carefully. It is acceptable to some extent but not in toto as one has to compromise with its margin to achieve higher sales, but in the instant case, fall in GP is 51%, which is abnormally high. The issue has been discussed with the assessee. After discussion, a lump sum addition of ₹ 50,000/- is hereby made on account of low GP. 4) Learned CIT(A) confirmed the addition made by the A.O. to the tune of ₹ 30,000/- and allowed relief of ₹ 20,000/- on account of increase in sales in the impugned year as compared to the preceding year. 5) Learned counsel Mr. J.K. Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the loans and also filed copies of their respective bank accounts. From perusal of the said bank accounts, it transpires that cash deposits equivalent to the amounts of loans were made into these accounts, which cast aspersions over genuineness of the loans. Accordingly, the assessee was required to produce the creditors for examination. Statement of Smt. Santosh Rani was recorded on oath on 13.03.2013 from which the following facts emerges: i) The creditor deposed that she earns around ₹ 500/- to ₹ 700/- per month from the business of book binding. ii) In the affidavit filed, it has been deposed that she has been doing the work of book binding for the last ten years and the loan was given to the assessee out of saving from Book binding business up to the end of the year, she had been working for the last seven years. iii) In this way, her total income/saving, if not even a single penny spent works out around ₹ 40 to 60 thousands only. iv) Cash deposits of ₹ 50,000/- each have been made on 27.04.2009 and 30.04.2009 and the loan of ₹ 1,00,000/- has been given to the assessee on 30.04.2009 i.e. immediately after deposit. v) Prior to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus. Since loan of ₹ 1,00,000/- has been found to be bogus, hence interest expenses claimed thereon at ₹ 11,047/- are also treated to be bogus and added to the income of the assessee. In this way, total addition on this count works out to ₹ 1,11,047/-, which is hereby made u/s 68 of the Act. Being satisfied that the assessee has furnished inaccurate particulars of income in respect of this loan, penalty proceedings u/s 271(1)(c) of the Act are being initiated separately. 9) The learned CIT(A) confirmed the order of the A.O. on this very grounds. 10) Learned counsel for the assessee Mr. J.K. Gupta, argued that the assessee has furnished the affidavits of the creditors confirming the loans and has filed the copies of their respective bank accounts. The statement of the creditor has been taken, which is on record, wherein she confirmed of having given the loan to the assessee. Smt. Santosh Rani being the sister of the assessee had advanced loan of ₹ 1,00,000/- who is doing the business of book binding for the last 7 years, and out of the earning from the book binding and her past savings, which was deposited in her bank account, the loan was given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 5,000/- to 7,000/- per month by the assessee before the learned CIT(A), and the learned CIT(A) has not made any further inquiry and therefore, the explanation of the assessee that the creditor earns ₹ 5,000/- to 7,000/- per month is accepted. In the circumstances and facts of the case, though the creditor does not appear to be taxable during the years of the savings, and therefore by perusing the earnings and expenses of the family, and assessee not being the income tax assessee, I am of the view that the creditor being the real sister of the assessee must have given ₹ 1,00,000/- loan by depositing cash in her bank account. The assessee had proved the identity, creditworthiness and genuineness of the transaction and therefore, he has discharged his onus and therefore, no addition is called for and the addition sustained by learned CIT(A) is directed to be deleted along with the interest of ₹ 11,047/-. The order of learned CIT(A) is reversed and the addition of ₹ 1,11,047/- is directed to be deleted. Thus, the ground no. 2 raised by the assessee is allowed. 14) As regards ground no. 3, the brief facts of the case, as per the A.O. s order, is reprodu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was given to the assessee, who deposited the same in the creditor s account from where cheque has been taken. She has also stated that she is living with her son. In this circumstances and facts of the case, I am of the view that the assessee has proved the identity, creditworthiness and genuineness of the transaction and accordingly no addition of ₹ 60,000/- is called for alongwith the interest of ₹ 7,200/-. Accordingly, the order of learned CIT(A) is reversed and the A.O. is directed to delete the addition of ₹ 67,200/-. Thus, ground no. 3 raised by the assessee is allowed. 17) As regards ground nos. 4 and 5, brief facts of the case, as per A.O. s order, are reproduced as under: 4. From the perusal of capital account of the assessee, it has been noticed that a petty withdrawal of ₹ 40,000/- has been made for household expenses. On being confronted, it has been stated that her wife also contributed ₹ 30,000/- for household expenses, but nothing could be brought on records to establish genuineness of the assessee s contention. The assessee s family consists of five members i.e. self, wife, widow mother and two school going children. Even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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