TaxTMI 
TaxTMI 
2012 (3) TMI 56
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....llowed the same by giving the following findings- "While dealing with the said issue the AO has erred in not considering the first proviso to section 79(a) of IT Act, 1961 & if the same is taken into account, the assessee company is entitled to set off of the brought forward business loss since the shares have changed hands on account of gift in case of Sh. Dharmender Agarwal to Manish Agarwal of 10,000 shares. Thus, total shares 40100 remained with original shareholders, M/s Ranjana 30,000, gifted share of Sh. Manish Agarwal 10,000 & original shareholder Sh. Ashok Kumar Agarwal 100 shares & this situation is taken care of by the first proviso of section 79(a) of the IT Act 1961 which specifically excludes the operation of the proviso of section 79(a). Under such circumstances, AO is not justified in denying the set off of the said allowances against the current year income." 5. The ld. D/R has relied on the order of A.O. 6. The ld A/R submitted as under: Provisions of section 79 of the I.T. Act, 1961 reads as under:- "Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not be....
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....s well as on the facts and circumstances of the case in dealing the addition of Rs.59,526/- as made by the AO on a/c of under valuation of closing stock. 9. AO observed that out of 42.980 MT of closing stock of Methanol, assessee has valued 21.210 MT @ 8080.50 MT & remaining 21.770 MT @ 10,887.50 MT (PB 123). He, therefore, valued the entire stock @ 10887.50 MT on the ground that no evidence is adduced by the assessee for adopting the different rates resulting into addition of Rs.59,526/-. 10. CIT (A) deleted the addition by giving the following findings:- After careful consideration of the submissions of the learned A/R and perusing the documents filed at the time of appellate proceedings, the addition on account of under valuation of closing stock does not seem to hold good in as much as the valuation made by the assessee company is in conformity with the method of accounting followed by it consistently and stands duly supported by the documentary evidence as submitted any lying on the record which has been verified. Therefore, the addition of Rs.59,526/- is hereby deleted. 11. The ld. D/R submitted that the assessee valued methanot measuring 21.210 M.T at Rs.8080.50 ....
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....fore the AO is submitted at Page 8-9 of the assessment order. The AO, however, did not accepted the explanation of the assessee & the evidences submitted by it for the reason that assessee failed to substantiate that M/s D.D. Enterprises & M/s U-Like Sales had made sales to M/s Balaji Sales & M/s. Shivam Sales Corporation. He further observed that many times cash was deposited in their bank account just prior to issue of cheques. The observation of the AO is at Page 10 of the assessment order. Accordingly, AO made addition of Rs.1,36,10,000/- as unexplained deposit in the bank account u/s 68. 16. The ld. CIT (A) deleted the addition after observing as under: "Having considered the written submissions and the assessment order, it is seen that the moot question in the controversy revolves around the sale of finished goods by the assessee company and the receipt of amount against sales. The issue has first to be examined from the point of view whether, there is any sales by the assessee company to M/s. DD Enterprises and M/s. U.Like Sales Corp. The assessee company has submitted the daily stock register for the period from Sept,2001 to Feb.2002 of thinner to establish that th....
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....o the assessee company and address of the consignee to establish the identity of the consignee. All these documentary evidences have also remained un-controverted by the Assessing Officer. AO has not provided copy of bank account of both the parties in which the alleged cash was deposited, copy of any statement recorded by the Investigation Wing of Delhi Office, no independent enquiry was conducted by the AO too ascertain the (veracity of) the information send by DIT (investigation Delhi). The AO has not followed the principal of natural justice. Therefore considering the above facts & position of law & following the order of Jurisdictional High Court, the AO is not justified in treating a sum of Rs.1,36,10,000/- as income of the assessee within the meaning of section 68." 17. Before us the ld. D/R drew our attention to the fact that a sum of Rs.1,36,10,000/- stood credited in the bank account of assessee maintained at Bank of Rajasthan Janpath. Such credits were on account of cheques and drafts from M/s Shree Balaji Sales and M/s. Shivam Sales Corporation. The assessee stated that M/s. D.D. Enterprise and U-dike sales were their consignment agents and they directed the other tw....
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....ounts and issuing cheques to the assessee. This fact has been confirmed by their copy of bank statements for the relevant period obtained from the bank. Many times cash was deposited just prior to that in their bank accounts. The bank account of M/s. Shivam Sales Corporation was closed on 31.10.2002 whereas M/s Shree Balaji Sales is having dormant status presently. Their addresses were not available even in the bank records. Neither of the four parties attended before me. Only part compliance was made by M/s. U-Like Sales. However no books of account & bank statements for the period were produced before me to substantiate the claim. These facts clearly suggests that M/s. Shree Balaji Sales and M/s. Shivam Sales Corporation were entry operators who provided accommodation entries to the assessee company against cash payment and the assessee has cooked up a story in this regard without any basis. Law of estopple is invoked in this case. By not providing the correct present addresses, books of account & bank statements of all the four parties including the alleged depositors and by not producing them in person for verification, the assessee has virtually closed the doors of meaningful ....
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....na High Court in the case of Gumani Ram Siri Ram 98 ITR 337 held that-" It is the assessee's responsibility to establish that the third party had advanced money and is in a position to lend such money." Hon'ble Punjab & Haryana High Court in the case of Todar Mal Vs. CIT, Patiala 106 ITR 619 held that-"In view of section 68, when any amount is found credited in the books and the assessee's explanation in this regard is not satisfactory, the sum so credited may be taxed to Income-tax as income without further proof." It is proved beyond doubt that the confirmations signed by Shri S. Bhagwan & Yogesh, letter of Shri Arvind Chopra alleged proprietor of M/s. U-Like Sales and details of Payments furnished by M/s. U-Like Sales were nothing but self-serving recitals of the assessee. Hon'ble Supreme Court in the case of CIT Vs. Durga Prasad More reported at 82 ITR 540 held that- "Though an apparent statement must be considered real until it was shown that there was reasons to believe that the apparent was not real, in a case where a party relied on self serving recitals in documents, it was for that party to establish the truth of those recitals; the taxing authorities were entitled to loo....
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....cheques in favour of the assessee which is credited in assessee's bank account & adjusted against the consignment sales made by the consignment agent. This is evident from the following documents on record:- RG-1 Register evidencing the manufacture of Thinner & GR evidencing the dispatch of goods to M/s. D.D. Enterprises for the month of September 2001 (PB- 17). RG-1 Register evidencing the manufacture of Thinner & GR evidencing the dispatch of goods to M/s U-Like Sales for the month of January 2002 (PB 18-46). Summary of Consignment sales (Thinner) realized through M/s. D.D. Enterprises & M/s U-Like Sales (PB 47). Consignment agreement with M/s. U-Like Sales (PB 48-49). Ledger account of M/s. D.D. Enterprises in the books of assessee (PB 51-55). Confirmation of sales made by M/s. D.D. Enterprises from Sep 2011 to Dec 2011 & payment thereof to the assessee after deducting his commission charges (PB 56-63). Letter dt. 19.12.2009 of M/s. D.D. Enterprises to AO in respect of above (PB 64). Ledger account of Sh. Balaji Sales in the books of M/s. D.D. Enterprises alongwith the details of cheques issued by Sh. Balaji Sales in the name of assessee & accounted for by M/s. D.....
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.... amount received against such sale cannot be assessed as unexplained deposit u/s 68. Otherwise also, the amount deposited in the bank account is not a credit in the books of accounts & therefore addition made by AO u/s 68 is illegal & bad in law. CIT (A) after considering the3ses facts & after verification of the assessment records has given a categorical finding that the cheques received from M/s. Shivam Sales Corporation & Sh. Balaji Sales is against the sales proceeds recoverable by the assessee from the consignment agents. There is no cash deposit in the bank account of M/s. Shivam Sales Corporation & Sh. Balaji Sales before issue of cheque by them. In these circumstances, CIT (A) has rightly delete the addition. 19. We have heard both the parties. The assessee is maintaining RG-I register in which quantity manufactured and sold is mentioned. Sales are through unvoices and challans are also available. Goods are being sent through tanker and Vehicle number is available in the challans. The assessee provided copies agreements vide which D.D. enterprise and U.like sales were made as consignee. As per agreement, the consignee was to sell the goods at price not less than the p....