TMI Blog2015 (11) TMI 1728X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the AO. The AO recorded the statement of the depositor u/s 131 of the Act. The factum of the depositor having earned income of ₹ 1.5/2.00 lacs per annum from doing part time work, has no where been questioned by the department. It is also equally true that the amount in question was received through banking channel. It is also true that the depositor specifically stated having received back the loan amount. The assessee is also right in contending that it was not his responsibility to prove the source of the amount in the account of the depositor. In this regard as per the decision of the Hon’ble Madras High Court in the case of “S. Hastimal vs. CIT” (1962 (12) TMI 60 - MADRAS HIGH COURT), there is no presumption that the assessee had special knowledge of the source of his source or the origin of origin. - Decided in favour of assessee. Addition on account of low household expenses - Held that:- It has been shown that the household withdrawals @ ₹ 7,000/- per month for a family of three including wife and single child is sufficient and adequate. Therefore, this Ground rejected. - ITA No.468(Asr)/2014 - - - Dated:- 27-11-2015 - Sh. A.D. Jain, J. Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promise with one s margin to achieve higher sales, but in assessee s case the fall in GP was 51%, which was abnormally high. Thus, the AO made the addition of ₹ 50,000/- on account of low GP. 3. The AO reduced the addition to ₹ 30,000/-. 4. The ld. counsel for the assessee has contended that the ld. CIT(A) has failed to taken into consideration the fact that the assessee s audited books of account were not rejected and that so, no addition could have been made on account of GP. In this regard, reliance has been placed on the decision dated 31.10.2014 of the Singh Bench of the Amritsar Bench of the Tribunal, in the case of Vinod Kumar vs. ITO , passed in ITA No. 467/Asr/2014 for the assessment year 2010-11. 5. The Ld. DR, on the other hand, placed strong reliance on the impugned order in this regard. 6. The contention on behalf of the assessee is found to be correct. Once the books of account have not been rejected and that assessment order has been passed u/s 143(3), no addition on account of GP could be made. In this regard, in Vinod Kumar vs. ITO (supra), it has been observed as follows: 7. I have heard the rival contentions and perused the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.2009 to the assessee without charging any interest, which remained with the assessee for the whole of the year. The AO observed that it was not believable that a person of such meager income , after meeting the household expenses, would have been in a position to spare sizeable amount of ₹ 50,000/- with the assessee without charging any interest. The assessee was queried in this regard. Shree Pal was asked to be produced for examination. The assessee failed to do so. The AO, thus, concluded that the salary paid to Shree Pal was nothing but artificial funds had been generated in the hands of Shree Pal for utilizing the assessee s unaccounted money, which had been brought back in the garb of loan. The AO, accordingly, disallowed the salary and loan as bogus. An addition of Rs,1,14,500/- was, accordingly, made u/s 68 of the Act. 10. The ld. CIT(A) confirmed the addition. 11. Challenging the action of the Tax Authorities, the ld. Counsel for the assessee had drawn my attention to APB 7-8, which is a copy of salary account of Shree Pal for the financial years 2008-09 2009-10. It has been contended that the ld. CIT(A) has failed to appreciate the specific submission made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding which is correct on facts and salary paid to this employee is nothing but artificial funds has been generated in the hands of this firm which have been brought back in the books of account of the appellant in the garb of loan. In such circumstances, the addition of ₹ 1,14,500/- being the amount of salary and advance both is confirmed and the grounds of appeal are dismissed. Thus, the assessee is correct in contending that the specific submissions made before the ld. CIT(A) were erroneously not taken into consideration and that the ld. CIT(A) confirmed the addition merely on the basis that the assessee had failed to produce Shree Pal before the A.O. 14. Having considered this matter, I find it expedient and in the interest of substantial justice, to allow the assessee an opportunity to produce Shree Pal before the AO, who, after examining Shree Pal and giving due and adequate opportunity of hearing to the assessee, shall redecide the matter. Accordingly, Ground no.2 is accepted for statistical purposes. 15. Regarding Ground no.3, the AO made an addition of ₹ 1,25,000/- , as loan by the assessee from Sh. Rajender Kumar Mittal. As per the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing advanced the amount in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee s case is not acceptable and as to why it must be held that the entry though purporting to be in the name of third party, still represents the income of the assessee from the suppressed source; that in the present case, there is no material whatsoever to arrive at such a conclusion; that the AO s rejection of the assessee s explanation regarding the source of deposits by itself, again lead to an adverse inference regarding non-genuineness or fictitious character of the entry in the assessee s books of account that the moments the assessee gives a satisfactory explanation and produces the creditor, his burden is discharged and the credit entry cannot be treated to be income of the assessee for the purposes of income tax and it is open to the AO to take appropriate action u/s 69 of the Act, against the person who has not been able to explain the investment; that it has been so held in CIT vs. Metachem Industries , 245 ITR 160 (MP); and that in this view of the matter, the addition, which is not entitled to be sustained, may kindly be deleted. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse to question no.7 put to him by the AO in his statement dated 13.03.2013. In fact, no further question was put by the AO to Sh. Rajender Kumar Mittal on this issue of interest. 20. Further, the ld. CIT(A) has gone wrong in observing that creditor in her statement could not state that whether the money was received back and if so when . This observation is clearly a result of complete misreading and non-reading of the statement of Sh. Rajender Kumar Mittal recorded by the AO u/s 131 of the Act, in as much as vide third last question, the AO specifically asked the depositor as to whether this money had come back to the depositor. The answer was that the money has been taken back, but the depositor did not remember as to when come back. The relevant question and answer are reproduced hereunder, for ready reference: Question: Kya Jeh paisa aap ke pass bapis aa giya he ? Ans. Paisa bapas le lia he, muje yaad nahin he kab bapas aaya he. 21. On the other hand, the assessee, it is seen has amply discharged his onus by identifying the depositor and duly producing along with him relevant documents before the AO. The AO recorded the statement of the depositor u/s 131 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that as soon as the assessee gives a satisfactory explanation and produces the person who has deposited the amount, the burden of the assessee is discharged and in that case, the credit entry cannot be treated as to be the income of the assessee for the purposes of income tax and it is open to the AO to take appropriate action u/s 69 of the Act, against the person who has not been able to explain the investment. 24. In view of the above, finding force in the grievance raised by the assessee, by way of revised Ground no.3, the same is accepted, while deleting the addition of ₹ 1,25,000/-. 25. Apropos Ground nos. 4 5, the AO made an addition of ₹ 52,030/- on account of low household expenses. It was observed by the AO that the capital account of the assessee showed a petty withdrawal of ₹ 43,970/- having been made for household expenses. This appeared to the AO on the lower side. On being confronted, the assessee submitted that household expenses were sufficient for his family of self, wife and one child. The AO observed that the withdrawals came to ₹ 3,665/- p.m., which was quite insufficient. He estimated the household expenses @ ₹ 8,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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