TMI Blog2018 (7) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... hypothetical income like misc. receipts. We find from record that the loan creditors were appeared before the AO under 131 proceedings and they have stated that they have vegetable and foria business since last 7-8 years. In respect of gift of ₹ 50,000/- we find that the AO did not make any adverse remark in respect of her capital account. In our opinion, the assessee has proved the identity, creditworthiness and genuineness of transaction of loan creditors and donor. The assessee also filed relevant documents in support of the transaction regarding identity, creditworthiness and genuineness of transaction before the AO/CIT-A. Therefore, addition made by the AO and confirmed by the CIT-A on this issue stands deleted. Addition made on account of sundry creditor - Held that:- Taking into consideration the submissions of the ld.AR and in the interest of justice, we deem it fit and proper to remand the issue to the file of AO for the same. The AO shall consider the issue afresh. The assessee is at liberty to file necessary details in respect of his claim and contention. The assessee is also directed to co-operate with the AO in the assessment proceedings for speedy disposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of timber and contract works separately, thus, made such disallowance. Regarding the Misc. expenses, the AR mentioned that the assessee incurred total expenses of ₹ 37,371/under this head for the business of timer and contract works, which was 0.217% of the total turnover. The expenses were prudent and expected, considering the nature of business. But without pointing out any reason, the Ld AO estimated the same @1,500 p.m. and disallowed the balance amount of ₹ 19,371/. So far as Site expenses is concerned, the Ld AR stated that the assessee has incurred expenses of ₹ 1,65,117/under this head which was 14.7% of the total contractual receipts. Such expenses was including the expenses incurred on fooding, transportation, medical, carrying and other misc. expenses which was reasonable and expedient considering the nature of business, But without pointing out any reason, the AO has considered the site expenses gross turnover of contract work and disallowed ₹ 1,15,582/which was not justified. 5. Considering the above submissions, the CIT-A confirmed the impugned addition made by the AO on the ground that there was no substantial ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the account of Vinayak Industries. The contention of assessee is that amount of ₹ 10,000/- received through cheque. Before us the ld. AR pointed out to the computation of income to show that the amount to an extent of ₹ 10,000/- received through cheque from M/s. Vinayak Industries. The AR is also unable to explain on other entries, therefore, we restrict the addition to ₹ 17,000/-. This ground of assessee s appeal is partly allowed. 12. Ground nos. 3 4 relating to confirmation of disallowances of ₹ 8,00,000/- and ₹ 50,000/- on account of loan creditors and donors. 13. During the course of assessment proceedings, the AO found that the assessee has availed loans/gift of ₹ 8,50,000/- from the following creditors/donors:- Sl. No. Name of the loan creditors/donors Amount of loan transaction Amount of Gift transaction Total Loan/Gift 1. Sri Arun Mantri ₹ 2,00,000/- - Rs.2,00,000/- 2. Sri Sukumar Mukherjee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me date when the amounts were transferred to the Bank A/c of the assessee. Thus, If cannot be said that the creditors had creditworthiness. From all respect, it is held that the assessee had failed to discharge the legal obligation. The Courts held that if the assessee offers an explanation about the cash credit, the AO can ask the assessee to prove his explanation and if the assessee fails to tender evidence or burkes an enquiry, then the Assessing Officer is justified in rejecting the explanation and holding that the income is from undisclosed source. The AO is not required to specify or prove what that source is, which from the nature of the case must be known only to the assessee, as held in Seth Kalekhan Md Hanif vs CIT (1963) 50 ITR 1 (SC). It is necessary for the assessee to prove primafacie the transactions genuine with identity of the creditor, his capacity and the transaction. Only after these three things proved primafacie, only then the burden shifts on the department. Merely establishing the identity of the creditor is not enough [ref. Shankar Industries vs CIT (1978) 114 ITR 689 (Cal); Prakash Textile Agency vs CIT (1980) 121 ITR 890 (Cal) Mere filing of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nwarranted. The ld. AR referred to pages 3-40 of the paper book and argued that all the details as produced by way of paper book also filed the same before the AO CIT-A and prayed to allow ground nos. 3 4 of appeal. 18. On the other hand, the ld. DR relied on the orders of the AO CIT-A. 19. Heard rival submissions and perused the record including the paper book details available on record. It is clear from the record that all the details as sought by the AO by way of questionnaire/letter were produced in respect of identity of loan creditors and donor regarding genuineness and creditworthiness of the transaction. The AO examined all the details, but nowhere made any adverse remark in respect of such details in his order. It is noticed that the AO only doubted the creditworthiness of the said loan creditors by observing that all the creditors and donors have only normal balances in their bank accounts and said amount were deposited prior to giving the amount to the assessee. It is also noticed from the assessment order that the AO held that the loan creditors and donors have shown hypothetical income like misc. receipts. We find from record that the loan creditors were a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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