TMI Blog2018 (5) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... the above expenditure. The assessee has maintained the regular books of accounts which are subject to audit u/s 44AB of I.T.Act . The assessee also produced the books of accounts before the AO and it is also common as observed by the Ld.CIT(A) that in the transport business various expenses are incurred by truck, lorry drivers during the journeys undertaken by them, do not maintain proper vouchers but mostly self made vouchers. - Decided against assessee. Depreciation on trailor No.2D6699 - AO allowed 50% of the depreciation since the trailor bearing No. NLO 2D 6699 was put to use less than 180 days and registered on 15/12/2008 - CIT(A) confirmed the addition since the assessee failed to produce the bills for purchase of trailor in the Financial year 2007-08 - Held that:- During the appeal hearing, the Ld.AR did not furnish any evidence to controvert the findings of the CIT(A). Therefore, we do not find any reason to interfere with the Ld.CIT(A) and appeal of the assessee on this ground is dismissed. - I.T.A. No. 617/Viz/2013 And I.T.A.No.638/Viz/2013 - - - Dated:- 25-4-2018 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,10,000 No return No return 10. Mandela Narayanarao 3,40,000 1,64,503 1,76,530 11. Patapalla Durga Ramesh 3,20,000 No return No return 12. Smt.Patapalli Sita Mahalakshmi 2,80,000 No return No return 13. Smt.Ravilla Narayanamma 2,80,000 No return No return 14. Smt.Mandela Sri Sai Lakshmi 3,20,000 No return No return Total 68,10,000 The AO examined the capital accounts of all the partners and observed that source of capital stated to be from agricultural income, gifts received and introduction of cash @Rs.20,000/- per day from 01.03.2009 to 31.03.2009 in all partners capital accounts. The source for the amounts rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1. The Assessing Officer (AO) observed that the above sum of ₹ 38,40,000/- was introduced in the capital accounts of the partners by way of ₹ 20,000/- each between 01.03.2009 to 31.03.2009. The total number of such credits were 192 items in 30 days. The AO asked the assessee to explain the sources of the credits and the assessee explained that the receipts represent agricultural receipts, amounts received by way of gifts etc. The assessee further argued that the said amounts were emanated from regular books of accounts. The AO issued summons to the partners to examine the credits in the capital accounts, but the partners did not respond to the summons issued by the AO. The AO observed that there was unusual influx of agricultural income and unusual influx of funds said to have been received by way of gifts. Since the partners failed to respond to the summons issued and explain the source for introduction of capital, the AO treated the difference in increase of capital (87,89,819-23,25,382) as unexplained cash credit in the hands of the firm and accordingly made the addition of ₹ 64,64,437/-. 2.2. The AO also made the addition of ₹ 1,24,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). Alternatively argued that the addition should have been taken in the hands of individual partners, but not in the hands of the firm. 8. On the other hand, the Ld.DR argued that the partners have brought into capital in 192 credits from 1.3.2009 to 31.3.2009 @20,000/- each which is unbelievable. No person would receive ₹ 20,000/- each daily towards the regular income. In the initial, the assessee stated before the AO that they were agricultural receipts and the credits were emanated from regular books of accounts. During the appeal hearing before the first appellate authority, the assessee submitted that the partners can be produced for verification to explain sources. The Ld.CIT(A) called for the remand report and the AO submitted the remand report to the Ld.CIT(A), after carrying out detailed enquiries and analyzing the evidence submitted by the individual partners. The Ld.CIT(A) given the copy of the remand report to the assessee and considered the submissions of the Ld.AR and allowed the relief of ₹ 28,70,000/- and confirmed the remaining amount. The Ld.DR argued that while analyzing the individual credits in the accounts of the partners, the Ld.CIT(A) accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount was unsecured loans accepted by the partner. The assessee did not make the claim of loans either before the AO or before the Ld.CIT(A). Even in response to the remand report the assessee claimed the source as agricultural income but not the unsecured loans. No evidence was furnished by the Ld.AR during the appeal hearing. As per the assessment order, the capital introduced was ₹ 20,000/- per day, whereas as per the paper book, the assessee has accepted the sum in ₹ 19,000/- loan from each lender, thus there was mismatch in entries of daily credit. No confirmations were furnished by the assessee either before the AO or before the Ld.CIT(A) and the assessee s explanation is inconsistent with regard to the source of capital, In the absence of any evidence to substantiate the unsecured loans from various creditors, we are unable to accept the genuineness of the loans. Neither the loan was accepted by cheque nor the same was repaid by cheque. As per the submissions made by the Ld.AR, even the interest to creditors was paid in cash. Therefore, we hold that the assessee failed to establish the genuineness and credit worthiness and capacity of the unsecured loans accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the argument of the assessee that Mr.Prasad has contributed the additional capital by taking loans from various parties is baseless and unacceptable. There is no consistency in the stand of the assessee to explain the source. Accordingly, we hold that the source of the remaining amount of ₹ 3,50,000/- confirmed by the Ld.CIT(A) is reasonable and the same is upheld. The appeal of the assessee on this ground is dismissed. 3. Sri Nelakurthi Chenchaiah (Partner). The partner has introduced additional capital of ₹ 5,50,000/- and filed return of income for the assessment year 2009-10 admitting total income of ₹ 1,22,298/- and agricultural income of ₹ 1,80,000/-. After considering the remand report and the evidences furnished by the assessee, the Ld.CIT(A) allowed the credit of ₹ 2,00,000/-relating to agricultural income income and confirmed the balance amount of ₹ 3,50,000/-. During the appeal hearing, Ld.AR submitted the paper book and submitted the list of 6 names of unsecured creditors and argued that Mr.Chenchaih has accepted loans of ₹ 2,06,000/- during the year under consideration and explained the source as unsecured loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,349/- as Kisan Gold Loan. This calim is made by the assessee first time before the tribunal. As per the verification of the capital account, the partner has introduced the capital at ₹ 20,000/- from 1st March to 31st March, whereas he submitted in the paper book that he had taken loans of ₹ 18,000/- to ₹ 19,000/- from each creditor. There is mismatch of the loan stated to have taken with amount introduced on daily basis in the capital account and the assessee s stand is inconsistent with regard to the sources for capital introduction. Further, the assessee has neither furnished confirmation letters nor produced any evidence to establish the genuineness of loans either before the AO/CIT(A). Though the Ld.AR argued that interest paid was allowed as deduction from the interest received in the hands of the partners, merely because the AO has allowed the interest, the loan cannot be accepted as genuine, unless the assessee establishes the identity, capacity and credit worthiness of the creditor. In this case, during the appeal hearing, the Ld.AR submitted that the loan was taken in cash and the interest was paid in cash. During the appeal hearing also, the Ld.AR did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO or before the Ld.CIT(A). The Ld.AR did not submit any confirmations and also has not established that the loan taken from the Union bank of India was paid in to the firms account with Bank account copy. Therefore, we are unable to accept the genuineness of the loans, since the assessee failed to establish the identity, credit worthiness and capacity of the creditors. Therefore, we hold that the order of the Ld.CIT(A) is reasonable and the sum of ₹ 3,70,000/- is sustained as unexplained cash credit in the hands of the firm. 7. Shri VNDS Srinivasa Rao (Partner). The partner has introduced additional capital of ₹ 8,20,000/- during the year under consideration. He has filed return of income for the assessment year 2009-10 admitting income of ₹ 93,500/- and agricultural income of ₹ 4,08,169/-. Before the Ld.CIT(A) he has claimed the agricultural land holding of 15.96 acres and 23 acres belonging to his wife. The Ld.CIT(A) considered the explanation of the assessee, the remand report, the return of income and the gifts received by the partner during the year and allowed the credit of ₹ 7,50,000/- and confirmed the balance amount of ₹ 70,000/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the identity, genuineness and capacity of the creditor, we hold that the claim of loan by the assessee is bogus and introduction of capital was from unexplained sources, accordingly, we sustain the addition of ₹ 1,40,000/- and confirm the order of the Ld.CIT(A). 9. Smt. M.Padma (Partner). The partner has introduced ₹ 5,10,000/- as additional capital during the year. She has not filed the return of income and shown interest receipts of ₹ 1,55,873/- and the interest payment of ₹ 63,000/-. She has claimed to have received the gifts of ₹ 95,000/- and agricultural land holdings of 1.73 acres. The Ld.CIT(A) considered the various sources of income of the partner and worked out the surplus of ₹ 1,00,000/- and allowed the relief of ₹ 1,00,000/- and sustained the addition of ₹ 4,10,000/- as unexplained cash credit. During the appeal hearing, the assessee filed paper book with return of income in page No.193 to 197. The only source claimed by the assessee was ₹ 1,75,890/- for sale of agricultural land but no evidence is furnished. During the appeal hearing also, the Ld.AR failed to explain the source of introduction of capital o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroduced in multiples of ₹ 20,000/- per day from 1st March to 31st March. She has not filed any return of income, however, she claimed a gift of ₹ 1,61,700/- from her husband and ₹ 50,000/- from her mother. She has not furnished any evidence to establish the gifts received by her. Therefore, the Ld.CIT(A) held that ₹ 3,20,000/- is unexplained cash credit in the hands of the firm. During the appeal hearing, the assessee submitted the list of 21 creditors having received the unsecured loans of ₹ 19,000/- from each creditor aggregating to ₹ 3,96,000/-. However, no evidence was furnished by the assessee either before the AO or before the CIT(A). During the appeal hearing also, the assessee failed to furnish any evidence. The assessee stated to have received the loans in cash and the payment of interest was also in cash. Since the assessee failed to furnish any evidence to establish the sources and the confirmation letters, we hold that the source for introduction of capital claimed by the assessee is bogus and accordingly we uphold the order of the Ld.CIT(A) and treat the sum of ₹ 3,20,000/- as unexplained cash credit. 12. Sri.N.Janardha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of ₹ 2,00,000/-. During the appeal hearing, the Ld.AR submitted the paper book with list of new loans of ₹ 3,24,000/- from 18 persons @19,000/- . No evidence was filed by the Ld.AR to establish the genuineness of the loan. The Ld.AR stated that the loans were taken in cash and neither the interest nor principal was paid by cheque. Therefore, we hold that the claim of loans is not established and the same cannot be accepted. Therefore, we hold that the CIT(A) order is reasonable and accordingly uphold the same. 10. The revenue has filed the cross appeal in ITA/638/vizag/2013 raising 9 grounds. Ground No.1 and 9 are general in nature which does not require specific adjudication. 11. Ground Nos. 2 to 5 is related to the introduction of capital by the partners. In Ground No.2, the revenue has raised the ground for admission of additional evidence under Rule 46A of I.T.Act. During the appeal hearing, the Ld.DR did not submit the details of additional evidences filed by the assessee before the Ld.CIT*(A). Therefore, Ground No.2 is dismissed as infructuous. 12. Ground No.3, 4 and 5 are related to the introduction of capital by the Partners in their capital ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lf-made vouchers. In the absence of supporting evidences, the AO disallowed the entire expenditure of ₹ 14,37,600/- and added back to the income. Aggrieved by the order of the AO , the assessee went on appeal before CIT(A) and the Ld.CIT(A) restricted the disallowance to the extent of 20% total expenditure. The Ld.CIT(A) observed that these expenses are incurred by truck, lorry drivers during the course of journeys undertaken by them which include repairs and maintenance expenses. The nature of expenditure incurred especially petty repairs maintenance on highways and it is reasonable to accept that this nature of expenses will be mostly made by self made vouchers. 15. We have heard both the parties and perused the material placed on record. During the year under consideration, the assesse has admitted gross receipts of ₹ 5,53,68,146/ and claimed the maintenance of trailors and lorry expenses of ₹ 4,79,600/- and rents paid on lorries and trailors of ₹ 9,58,000/- aggregating to 14,37,600/-. The assessee could not produce vouchers to the extent of the above expenditure. The assessee has maintained the regular books of accounts which are subject to audit u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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