TMI Blog2022 (8) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... elated concerns which was subsequently adjusted against the sales made to these four parties and also, on account of the deposit of cash by each one of them on various dates towards the Housing Loan of the assessee to the tune of Rs. 48.50 lacs. Such evidences, as furnished, have not been doubted by the AO and even the sales as made by the assessee to the four relates parties against the advance of Rs. 28 lacs received earlier, have not been doubted, nor purchases in the hands of such related parties have been doubted in their hands. Thus, the opening stock, purchases, sales and closing stock in the hands of the assessee have been accepted by the Assessing Officer and the books of accounts of the assessee have also not been rejected u/s 145(3) of the Act and as such the entries relating to the related parties in effect stand accepted and, as such, the confirmation of the two additions i.e. both in regard to the amount of Rs. 28 lacs and Rs. 48.50 lacs are not justified. Also three HUFs who have independent identity and are being assessed and carrying the business, they have out of their independent sources made the cash deposits in the housing loan and in this regard they hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Act, 1961. 2.(a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 1,20,000/- on account of the amount received from Sh. Deepak Sharma and Sh. Suresh Kumar u/s 68 of the Income Tax Act, 1961 to the taxable income of the assessee. 2. (b) That the Ld. CIT(A) has erred in not considering that the amount as received from the above two parties had been returned within a short period of time and, as such, the addition as confirmed by the worthy CIT(A) deserves to be deleted. 3. (a) That the Ld. CIT(A) has erred in confirming the addition of Rs. 28,00,000/- in respect of identifiable parties, who had made advance payments to the assessee, against the sales of bolts, made by the assessee to the same parties during the year under consideration. 3. (b) That the Ld. CIT (A) has erred in not considering the fact that such salesas made to the parties are subjected to VAT and such sales to the parties have been credited in the sale account and such sales, have been accepted by the Assessing Officer and, thus, the addition of Rs. 28,00,000/- as confirmed by the CIT(A) deserved to be deleted. 4. (a) That the Ld. CIT(A) has erred in confirming th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suresh Kumar added u/s 68 of the Act, the Assessing Officer has discussed this issue in Para 7 of the order and referred to cash receipts of Rs. 20,000/- per day from Sh. Deepak Sharma and from Sh. Suresh Kumar. It was submitted that this amount had been returned during the same year by way of cash in installments but before the Assessing Officer, no confirmations, no copy of accounts, no PAN Nos./ITRs detail were furnished leading to addition of Rs. 1,20,000/-. It was further submitted by the Ld. AR that the Ld. CIT (A) had upheld the addition because no confirmations had been filed from either of the parties. The Ld. AR further submitted that that since the assessee does not have any link/connection with these parties, who had advanced the amount for sales to be made to them, therefore, the particulars of such parties were not available and it was stressed that the entries were genuine amount and the same deserved to be accepted. 3.2.0 With respect to Ground Nos. 3(a) and 3 (b), it was submitted that these grounds relate to confirmation of addition of Rs. 28 lacs in respect of advances received from related/identifiable and assessed parties, who had made certain advance paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubted anything in this regard and, accordingly, it was vehemently argued that the identity, credit worthiness and genuineness of the transactions, stand proved and even in the books of accounts of the assessee, no defects have been pointed out and even the affidavits of the parties concerned, duly attested, had been furnished and the said amounts, as received, had been adjusted against the sales made to the related parties and such sales having been accepted in the hands of the assessee and purchases also having been accepted in the hands of the related parties, there was no reason to make such addition. 3.2.2 It was brought to the attention of the Bench that the assessee is a registered VAT dealer and such sales, as made to the related parties, and purchases in the hands of related parties have been accepted. The opening stock, closing stock, purchases and sales in the year under consideration, as reflected in the audited trading account have also been accepted. It was further stressed that all the related parties are being assessed to tax and their sources have been explained and confirmed copies of account have also been furnished and, as such, confirmation of the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee had submitted a detailed reply which has been reproduced at page no. 7 to 9 of the assessment order and the sources of the payment have been doubted only because of the fact that the said HUFs were not the co-borrowers. It has been submitted that the three HUFs who have provided the funds are as under: Arun Garg Sons HUF Rs. 14,00,000/- Varun Garg Sons HUF (brother HUF) Rs. 14,50,000/- Pawan Kumar Sons HUF (brother HUF) Rs.20,00,000/- Total Rs. 48,50,000/- 3.3.2 It was submitted by the Ld. AR that both during the course of assessment proceedings as well as in the proceedings before the NFAC, confirmed copies of all the three HUFs, affidavits of the Karta, their ITRs, copy of the cash summary had been filed and it was argued that the three ingredients i.e. the identity, creditworthiness and genuineness of the transactions having been established and only because of the fact that the said HUFs were not co-borrowers to the loan account, such evidences cannot be brushed-aside. 3.3.3 It was vehemently a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the respective related parties and that all such parties were regularly assessed to tax and, as such, the rejection of the bona fide explanation being only on surmises conjectures cannot be sustained in view of the judgment of the Hon ble Apex Court in the case of Omar Salay Mohammad Sait vs. CIT reported in 37 ITR 151. 6.0 We have heard the rival contentions and have also perused records as well as paper books filed by the assessee in support of his argument that requisite documentary evidences have been furnished. 6.1 As regards the first ground of appeal with regard to the addition of Rs. 1,20,000/-, on account of Rs. 60,000/- each received from Sh. Deepak Sharma and Sh. Suresh Kumar, we find that neither any confirmation nor any evidence of they being assessed to tax has been furnished and, as such, the identity, genuineness of the transactions and creditworthiness have not been proved and, therefore, we have no hesitation in confirming the said addition of Rs. 1,20,000. Thus, this ground of appeal is dismissed. 6.2.0 In respect of the additions of Rs. 28,00,000/- and Rs. 48,50,000/-, we find that all such parties who have advanced different amounts, as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as undisclosed income of the assessee. XXXX 10.13 In the present case also the cash deposited postdemonetization by the assessee was out of the cash sales which had been accepted by the Sales Tax/VAT Department and not doubted by the Assessing Officer, there was sufficient stock available with the assessee to make cash sales and there was festive season in the month of October 2016 prior to the making of the cash deposit in the bank account out of the sales. So, respectfully following the aforesaid referred to orders by the various Hon'ble High Courts and the co-ordinate Benches of the Income-tax Appellate Tribunal, we are of the view that the impugned addition made by the Assessing Officer and sustained by the learned Commissioner of Income-tax (Appeals) was not justified, accordingly the same is deleted. 6.2.2 Further, we also rely upon the order of the Vishakhapatnam Bench of the ITAT in the case of CIT vs. Hira Panna Jewellers reported in 96 ITR (Trib.) 128 wherein the findings were given as under: 7.2 In the instant case the assessee has established the sales with the bills and representing outgo of stocks. The sales were duly accounted for in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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