TMI Blog2022 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of loan received through banking channel and repayment of the same along with interest also made through banking channel then the genuineness cannot be doubted. We hereby held that the assessee discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal of the Revenue on merit is hereby dismissed. Unexplained purchases - AO in absence of necessary details and supporting evidences disallowed 50% of purchases - CIT-A sustained part addition of Rs. 1 lakh only - HELD THAT:- Undeniably, the sales cannot be effected without the purchases. In other words the transactions of purchase and sale are contemporary to each other. In the event, if the purchases are doubted then the corresponding sale cannot be assumed to correct which is arising against the purchases. Gross profit ratio and the net profit ratio of the assessee was improved in comparison to the earlier years. In other words, the revenue in the earlier years was pleased to accept the profitability of the assessee declared by it in the income tax return. Likewise the facts of the year in dispute as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance made for want of verification of purchase details at Rs.1,00,000/- as against Rs.9,56,33,843/- made by the AO. 3. On the basis of the facts and circumstances of the case, the learned CIT(A) ought to have upheld the order of the Assessing officer. 4. That the revenue craves leave to add, amend, alter or withdraw any ground of appeal. 5. It is therefore prayed that the order of the CIT(A), Jamnagar may kindly be set aside and that of the Assessing Officer be restored. 3. The first issue raised by the Revenue is that the learned CIT (A) erred in restricting the addition made by the AO on account of unexplained loan to the extent of Rs. 5 lakh only instead of confirming the full addition of Rs. 11,74,50,000/- only. The facts in brief are that the assessee is an individual and engaged in the business of trading in grains and food items in the name and style of M/s Rohit Trading Co. The assessee for the year under consideration declared an income of Rs. 7,05,650 only in the return of income. Thereafter, the return of income of the assessee was selected for regular scrutiny. Several notices were issued to the assessee but no reply or submission was recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit entry appearing in the balance sheet as also in the ' audit report before me as well as before the AO as confirmed by him vide para 3 of the remand report as also finally in his report dated 14.03.2017. It is seen from the remand report as well evidences placed on record that except the unsecured loans of Rs.50,000/- and Rs.4,50,000/- received and repaid in the cases of Shri Kiritkumar Somchand and Shri Mohanlal Morarji respectively, the appellant failed to discharge the onus lies on him by proving the identity, genuineness of transactions and the creditworthiness of the depositors and as such the same stand unexplained. In respect of balance the appellant has furnished satisfactory evidences the same has been verified by the AO as such stand deleted. The appellant gets relief accordingly. 8. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 9. The learned DR before us submitted that the assessee has failed to furnish the necessary evidences to justify the creditworthiness and the genuineness of transaction. According to the learned DR, the assessee does not get discharged from his obligation imposed under the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Genuineness of transaction refers what has been asserted is true and authentic. A genuine transaction must be proved to be genuine in all respect not merely on a piece of a paper. The documentary evidences should not be a mask to cover the actual transaction or designed in way to present the transaction as true but same is not. Genuineness of transaction can be proved by submitting confirmation of the parties along the details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient to prove the genuineness. As such, the same should also be proved by circumstantial surrounding evidences as held by the Hon ble Supreme court in the case of Shri Durga Prasad More reported in 82 ITR 540 and in case of Smt. Sumati Dayal reported in 214 ITR 801. 12.3 The last stage comes to verify the creditworthiness of the parties. The term creditworthiness as per Black Law Dictionary refers as: creditworthy, adj. (1924) (Of a borrower) financially sound enough that a lender will extend credit in the belief default is unlikely; fiscally healthy-creditworthiness. 12.4 Similarly in The New Lexicon Webster's Dictionary, the word credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note that as such an amount of Rs. 1,00,00,000 vide cheque No. 102110 and an amount of Rs. 60 lakhs vide cheque No. 102111 was given to the assessee and out of the total loan of Rs. 1.60 crores, Rs. 15 lakhs vide cheque no. 196107 was repaid and therefore, an amount of Rs. 1,45,00,000 remained outstanding to be paid to IA. It has also come on record that the said loan amount has been repaid by the assessee to 'IA' in the immediately next year and the Department had accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible, there was no reason to interfere with the impugned order passed by the Tribunal. [Para 6] 12.9 In view of the above elaborated discussion and after considering facts in totality we hereby held that the assessee discharged the onus cast under section 68 of the Act. Hence, we do not find any reason to interfere in the finding of the learned CIT(A). Thus, the ground of appeal of the Revenue on merit is hereby dismissed. 13. The next issue raised by the Revenue is that the learned CIT(A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copy of the audit report u/s 44 AB of the Act was available to the AO. The AO did not find any defects in the audit report nor is the audit report qualified. The best course available to the AO was to refer the past records of the appellant and come to conclusion as to whether it is a fit case for any addition. He had one more option available to refer any comparable case. Considering the volume of purchases in the course of remand proceedings the appellant had made available the details/evidences in the form of 7/12 ectract of purchases from the farmers as directed by the AO on test check basis and the AO in his report dated 14.03,2017 found it to be in order and covered by Rule 6DD of I.T. Rules 1962. As stated, the book result of the appellant show increase in gross profit ration [4.03 % against 3.20 % in immediate preceding year] during the year, there seems no reason to disturb the book result. However, looking to the turnover of the business and the commodity being the jaggary which are produced by the farmers locally from the sugar cane juice, a lump-sum disallowance of Rs.1,00,000/- on estimation would cover the leakages if any. The addition therefore modified accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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