TMI Blog2019 (8) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... have been found to be same, as assessee therein was also from Mathura and the Assessing officer being the same in person, impugned order was also on same lines and so is the Assessment Year i.e. A.Y. 2011-12 - Decided partly in favour of assessee. Addition u/s 68 - AO has made the addition on account of his finding that M/s Easyway Solutions (P) Limited has no capacity and creditworthiness to advance sum to the assessee and the same is unexplained cash credit assessable in the hands of the assessee u/s 68 - HELD THAT:- The assessee has thus discharged his onus in the matter. None of the evidence furnished by the assessee has been found to be nongenuine and the evidence has been discarded on the basis of conjectures and hypothesis only. Nothing prevented the authorities to go beyond the transaction and look into the affairs. The assessee in fact made request both at assessment stage as well as appellate stage for examination of the party, but his request was not acceded to without assigning any reason, much less for valid and convincing reason. The assessee could not be punished merely for the reason that advance was received in cash whereas he could do so under the law, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to its Books of Accounts and without any justifiable reason . The addition had been made and sustained purely on the consideration of suspicion and unfounded presumptions. 6. BECAUSE, alternatively, in any view of the matter no addition under section 68 can be validly made after rejecting the books of account as the credits pertains to same set of books which had been held unreliable by the learned AO while framing assessment. 7. BECAUSE, alternatively, in any view of the matter, entire addition of ₹ 3,00,00,000/- cannot have been validly made as the same is liable to be telescoped to the extent of addition made against extra profit as sustained. 8. BECAUSE, the appellant denies levy of interest under section 234B of the Act as the Income of the assessee is subjected to TDS. 9. BECAUSE, while making the assessment the authorities below made various observations/ conclusions which are contrary to facts available on records. While making the addition submission made and evidences filed have been rejected arbitrarily. 10. BECAUSE, the order appealed against is arbitrary, illegal, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of:- a) ACIT vs. Jagdish Prasad Bansal (2012) 34 CCH 0446 (Agra) (APB 99 -102) b) Sri Devendra Kumar vs. ACIT (Order dated 31.08.2017 in ITA No. 495/Agra/2015)(APB 108 -119) c) Infra Developers Vs ITO, Order dated 30.03.2017 in ITA No. 52/Agra/2013(APB 120 -133) 7. The Ld. A.R thus submitted that in light of settled judicial position, learned CIT (Appeals) has erred in estimation of net profit disregarding past history and further placed reliance to the orders passed by the Agra Bench in the cases ofM/s Sri Siddheshwar Engineers India (P) Ltd 886 Takia Azad Gaan, Etawah Vs. ACIT- 5, Firozabad and Smt. ArchanaDutta, Mathura Vs ACIT, Circle-3, Mathura in ITA No. 330/Agra/2016. Copies of which were filed during the course of hearing. 8. The Ld. CIT, D.R Shri. Sunil Bajpayeestrongly disputed the arguments raised by the Ld. A.R, supported the order of the Ld. CIT(A), placed reliance upon the order passed by the ITAT Agra Bench in the case of Mahesh Chand Contractor (supra) and also submitted that estimate is a question of fact and not question of law. Therefore, reliance placed by the assessee to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1.88%, and in A.Y 2010-11 upon turnover of ₹ 8,36,63,967/- Net Profit of ₹ 17.04,930/- was disclosed, giving N.P rate of 2.04% as against above in the year under consideration i.e. A.Y. 2011-12 upon Turnover of ₹ 14,35,07,199/- Net Profit of ₹ 29,32,732/- was disclosed which gives N.P rate of 2.04%. Thus, Net Profit of the assessee in filed Returns ranges from 1.88% to 2.04% in the consecutive three assessment years. In A.Y 2010-11, assessment was framed under section 143(3) of the Act vide order dated 2010-11 where income was estimated by application of N.P rate of 5.25%. However, the past history of the assessee on the basis of Returns filed ranges from 1.88% to 2.04% except in A.Y 2010-11 where assessee agreed for being assessed at 5.25%. Keeping in mind the entire factual matrix of the case and finding no evidence or reason for application of N.P rate of 8% we consider it fair, reasonable and logical to apply an average rate of two years referred above i.e (A.Y 2009-10 N.P rate of 1.88% and A.Y 2010-11 N.P rate of 5.25%) which gives N.P rate of 3.50% as against 2.04% shown by the assessee on turnover of ₹ 14,35,07,199/-. This view of ours is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g and sustaining the addition of ₹ 3,00,00,000/- received by the assessee. 14. The Ld. A.R submitted that during the year assesse has received a sum of ₹ 3,00,00,000/- towards advance against property from M/s Easyway Solutions Private Limited. Before the learned Assessing officer, assessee submitted copy of agreement along with confirmation and requested the learned Assessing officer that personal financial records pertaining to the creditor such as its ITR and bank statement may be obtained from the party directly. The learned Assessing officer acceding to the request of the assessee issued notice u/s 133(6) of the Act, obtained such details from the party as is evident from the discussion made in the assessment order. However, the AO held that the transaction did not appear to be genuine and made the addition of said amount to the income of the assesse. 15. He also submitted that Ld. CIT(A) further called upon documents from the assessee is respect of advance , which were furnished and Ld. CIT(A) remitted those evidences to the learned Assessing officer, request was also made to issue summons under section 131(1) of the Act, but on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act. The Addl. CIT, Range-3 who was conducting the assessment proceedings prior to the AO, had issued notice dated 26.02.14 u/s 142(1) fixing compliance on 10.03.14 which was done 14.03.14, requiring the assessee to show cause as to why addition u/s 68 be not made by observing as under: You have shown current liability of ₹ 3,00,00,000/- in the name of M/s Easy Way Solution (P) Ltd. as on 31.03.2011. You were asked to give details alongwith confirmation of the above party, vide order sheet entry dated 24.01.2014 but you have not given the same. In this regard you are required to furnish the confirmed copy of account M/s Easy Way Solution (P) Ltd. for A.Y. 2011-2012 bank statement for A.Y. 2011-2012 and copy of acknowledgement of ITR for A.Y. 2011-2012 failing which the amount of ₹ 3,00,00,000/- will be added in your income u/s 68 of the I.T. Act, 1961 which may be noted 19. On the date appointed of 14.03.2014, assessee sought an adjournment as found noted in the order sheet of the ACIT, Circle-3, Mathura. Thereafter the case was transferred to ACIT, Circle-3, Mathura who issued fresh notice u/s 142(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and there is no dispute that such evidences were not filed at the stage of assessment. Even the Assessing officer issued notice u/s 133(6) of the Act to M/s Easyway Solutions (P) Ltd and obtained such details directly from creditor. The return of Income was also obtained from the System of the Department. Thus, after having primary evidences on records of the Department confirming the advance received by the assessee the burden got shifted to the revenue to prove that the confirmation is not genuine. The Assessing officer in the assessment order has noted that creditor has no means to have advanced credit of ₹ 3,00,00,000/- referring to deposits and withdrawals made in its Bank account ; the Agreement is undated, unnotarized and unregistered in respect of property to be purchased in future and is not held by the assessee. Assessee is a Contractor not a builder. Thus, these all facts according to the learned Assessing officer proved that it not a genuine business advance. 23. However, as culled from the records and from the perusal of order sheet as made available by the Department in its paper book and notices which are reproduced in the Assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing officer of the assessee cannot take the burden of assessing the profit and loss account of the creditor when admittedly the creditor himself is an income tax assessee. After getting the PAN number and getting the information that the creditor is assessed under the Act, the Assessing officer should enquire from the Assessing Officer of the creditor as to the genuineness of the transaction and whether such transaction has been accepted by the Assessing officer of the creditor but instead of adopting such course, the Assessing officer himself could not enter into the return of the creditor and brand the same as unworthy of credence. So long it is not established that the return submitted by the creditor has been rejected by its Assessing Officer, the Assessing officer of the assessee is bound to accept the same as genuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. 25. It is trite law in view of section 68 of the Act which creates a deeming fiction and which requires the assessee to prima-facie prove the three ingredients of the said section. (a) Identity of the Person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits of the addition. Next and last issue required to be established by the assessee was the creditworthiness of the company. The assessee had produced the audited balance sheet of the company (APB 26 -31), whichshowed that the company had shareholder s fund of ₹ 41.29 lacs, secured loans from Oriental Bank of Commerce of ₹ 72.48 lacs, unsecured loans of ₹ 999.03 lacs and thus had total liabilities to the tune of ₹ 11.14 Crores. On assets site, it had fixed assets of ₹ 20.67 lacs, fixed deposits of ₹ 3.20 Crore, loans and advances of ₹ 5.84 Crore besides other assets. Schedule F to the balance sheet showed advance for land ₹ 5.50 Crore (Previous year Rs. Nil) besides other advances. Thus, not only the company was creditworthy, its balance sheet disclosed advances for land amounting to ₹ 5.50 Crore extended during the year under consideration itself. Thus, on the circumspection of the evidence, Ld. CIT (A) has grossly erred in taking adverse view wherein she has altogether ignored to look into the creditworthiness of the company and the fact that its balance sheet disclosed advances of ₹ 5.50 croretowards land. If the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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