TaxTMI 
TaxTMI 
2007 (10) TMI 338
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....nt of inadequate withdrawals for household expenses. 3. In cross-objection the assessee has raised the following grounds of appeal: "1. Deleting addition of Rs. 50,918 made by the Assessing Officer on account of excess stock found during survey. 2. Deleting addition of Rs. 5,14,900 made by the Assessing Officer on account of unexplained cash credits under section 68. 3. Deleting addition of Rs. 4,27,300 made by the Assessing Officer under section 69B on account of unexplained investment in purchases of plot. 4. Deleting addition of Rs. 12,000 made by the Assessing Officer on account of inadequate withdrawals for household expenses." 4. First ground of Revenue's appeal relates to deletion of an addition of Rs. 50,918 made by the Assessing Officer on account of alleged excess stock found. The facts of this case are that the assessee, who deals in lime products declared income of Rs. 1,92,070 by filing return of income on 31-1-2002 along with copies of trading account, P&L a/c, balance sheet and capital account. The business is done in the name and style of M/s. Hindustan Lime Products, Borunda. A survey under section 133A of the Act was c....
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....ifference in stock. Consequently; we confirm the finding of the learned CIT(A) and dismiss ground No. (1) of Revenue's appeal. 7. Ground No. (2) of Revenue's appeal relates to deletion of addition of Rs. 5,14,900 made by the Assessing Officer on account of unexplained cash credits under section 68 of the Act. 8. The facts of this ground are that it was noticed by the Assessing Officer that cash credits were brought in the books of accounts in the names of 33 persons. Out of them cash credits of 32 persons had been squared up during the accounting year itself. A total amount involved in the name of 33 cash creditors is Rs. 6,12,900. S. No. Name of the creditors Amount (Rs.) Date of credit Date of repayment 1. Svs. Laxamn Luhar Meghwalo ka Bas Borunda 18000 17-9-2000 30-12-2000 2. Lunaram Meghwal Meghwalo Ka Bas 18000 18-9-2000 24-3-2001 3. Baldev Ram Nayak 17000 12-9-2000 9-2-2001 4. Chhotu Ram Sharma, Borunda 18000 24-6-2000 24-3-2001 5. Mahaveer Sharma, Borunda 17000 25-6-2000 20-3-2001 6. Rajesh Agarwal Chhipo ki Pole, Mertacity 15000 24-6-2000 6-7-2000 ....
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.... Total 6,12,900 When the assessee was asked to explain the nature of cash credits appearing in the names of aforementioned persons, the assessee explained the same by filing a written submission. The Assessing Officer examined the explanation of the assessee but did not found it favourable, so he made the addition of the entire amount. On the contrary, learned CIT(A) examined all the cash creditors with respect to their identity, capacity and genuineness of the transactions and he ultimately gave the following finding by accepting most of the cash creditors as genuine and some were held as ingenuine. Thus, both the parties are aggrieved and have taken their respective grounds. Ground No. (2) of Revenue's appeal and ground No. (1) of cross-objection are being decided together. 9. We have heard rival submissions and have perused the available materials on record carefully. 10. It is a settled position of law that the assessee is duty bound to, prima facie, establish the identity and capacity of the cash creditors along with genuineness of the transactions. Shri Laxman Lohar S/o Shanker Ram Lohar filed his affidavit in which he a....
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....Inspector, who has no legal authority to record the statements- This is also a consistent view of this Bench. Therefore, we accept these cash creditors also as genuine. As regards the contention of the Assessing Officer regarding non-appearance of interest entry in the copies of accounts of the cash creditors the assessee explained that the interest was paid in cash and debited to interest account. This fact in our view is sufficient enough to explain the above doubt of the Assessing Officer. Regarding transaction being not by cheque, it was explained that the place where the assessee has carried on business and further that in this line of the business, the banking habits are not normal. This is also a valid explanation. Therefore, the addition cannot be made merely because transaction was not through cheque. Hence, we accept all the cash creditors as genuine and delete the entire" addition so made under section 68 of the Act. Otherwise also, the assessee is entitled to set off of the amounts of some cash creditors who denied the factum of loan against the extra income declared by the assessee by declaring income under the provisions of section 44AF. Therefore, ground No. (2) of R....