TMI Blog2020 (2) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... out any such exercise as has been laid down by the Hon'ble Gujarat High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava(supra). Additions made by the ld.AO in the case of assessee are against the principles laid down u/s.68 - no addition could have been made by the ld.AO as in the present case the assessee has already discharged his initial onus. Therefore, the unsecured loan received by the assessee cannot be termed as unexplained. Thus, no addition on that account is sustainable. Disallowance being 20% general labour wages, workers salaries and freight expenses of lumsum basis - only reason for making disallowances was that assessee was not maintaining any register and had only submitted self-made vouchers - HELD THAT:- We notice that in this particular year, there are less expenditure, then that occurred in the earlier years. Therefore, keeping in view of the above submissions, we are of the view that there is no justification of making any disallowance on account of expenses incurred by the assessee. When the assessee has substantiated the same by producing documents, therefore, we delete the addition/disallowance, accordingly Ground No.3 is allowed. - I.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the ld.CIT(A), the assessee filed appeal before us on the grounds mentioned hereinabove. 6. Ground No.1 2: Both the grounds raised by the assessee are inter-related and inter-connected thereby challenging the order of the ld.CIT(A) confirming the actions of the ld.AO in making additions on account of unexplained Unsecured Loans and on account of interest paid on such loans. Therefore, both grounds are being adjudicated by the present consolidated order. 7. The ld.Authorised Representative(AR) appearing on behalf of the assessee reiterated the same arguments as was raised before the ld.CIT(A) and the same were contained in para no.5 of the order of the ld.CIT(A) which is reproduced below: 1) Identity Proved :- The appellant has submitted PAN card as well as Election Card of all the depositors. Even notarized copies of proof of identity have been submitted. Thus, the identities of all the depositors have been proved beyond doubt. So the first requirement of genuine cash credit gets fulfilled. 2) Creditworthiness Proved :- The appellant has submitted PAN card as well as acknowledgment of return of income of all the depositors also. Also these cumulativel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so disallowed ₹ 12,97,716/- out of aforesaid exps. @ 20% thereof 1) First of all the disallowance has been made without issuing any show cause notice which is patently illegal liable to be quashed ipso facto as bad in law. 2) The disallowance is in breach of principle of Audit Alteram Parttem as no opportunity is afforded to the appellant to explain the so called discrepancies and is liable to be quashed as such. 3) The reason given for disallowance of salary wages, that no register is maintained thereof that self made vouchers are made, is not tenable. This is because the law nowhere prescribes that for salary wages expenses, a register has to be maintained mandatorily that self made vouchers are not valid. There is no law as such. Besides, the appellant runs factory of manufacturing of art silk grey cloth on power looms. These power looms are run by labours who are illiterate hail from very low families. 'Almost all of them have migrated from different states all over India, in search for job to became bread winner for their families. To expect their own vouchers, invoices etc. for all these expense from such person is like flying in sweet drea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial placed on records, judgments cited by the parties as well as orders passed by the Revenue Authorities. From the records, we noticed that the ld.AO had made additions by holding the unsecured loans availed by the assessee as unexplained on the grounds mentioned below: All the depositors have filed return of income, nevertheless the fact that they did not have taxable income or negligible taxable income. In most of the cases refund of TDS on interest has been claimed means they do not have much income but they have advanced loans. In some cases cash was deposited prior to loan given in some cases transfer / clearing is credited and loans has been advanced on same day. None of these depositors have made available their balance sheet to prove creditworthiness nor did they prove that any investment/provision for unforeseen circumstances, which may befall upon their own family members despite the alleged availability of cash for advancing as a loan, were made. 11. The ld.Authorised Representative(AR) submitted that all the loans were availed by the assessee through banking channel and confirmation in that respect has already been filed. The assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineness and creditworthiness of transactions, it would be against principles laid down under section 68 - Held, yes [In favour of assessee]. 12. After appreciating the facts and hearing the parties at length, we find that in all the cases, assessee had already submitted before the ld.AO, PAN cards of all the depositors and even notarized copy of proof of identities have been submitted. Assessee had also submitted acknowledgement of Return of Income of all the depositors and bank passbook which reflects the credit worthiness of the depositors. Since all the confirmations from the depositors have been submitted, so there was no conclusion of any afterthought or make believe transactions. All the transactions are duly recorded in the regular books of accounts. Therefore, genuineness of those cannot be doubted. Even otherwise, Hon'ble jurisdictional Gujarat High Court in the case of DCIT Vs. Rohini Builders along with PAN and confirmation, then in that eventuality no additions are sustainable. Even in the case of CIT Vs. Ranchhold Jivabhai Nakhava (supra)it has categorically been held Hon'ble jurisdictional Gujarat High Court that when once the initial onus has already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these expenses, self-made vouchers are the order of the day. Even otherwise, from comparative chart which has been placed on record by the assessee and the same is reproduced below: Assessment Year 2009-10 2010-11 2011-12 2012-13 Amount % Amount % Amount % Amount % Turnover 13532981 20786965 32528807 41708950 Leave Salary Wages 33640 0.25% 72777 0.35% 25832 0.08% 38950 0.09% Worker Salaries 2540050 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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