TaxTMI 
TaxTMI 
2012 (10) TMI 470
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....rief are that the assessee-firm is engaged in the business of retail trade of petrol, diesel and lubricants. It filed return of income for the assessment year 2006-07 on 31.10.2006, declaring loss of Rs.40,176. During the assessment proceedings, the assessing officer noticed that the assessee had shown total unsecured loans to the tune of Rs.42,27,977. Finding that only some of the creditors were verifiable while the assessee had not even provided proper names and addresses with respect of the other creditors, the assessing officer made further investigations. He found that most of the credits were in the range of Rs.15,000-20,000 and addresses of the alleged creditors were vague and they were unverifiable. Giving the assessee benefit only ....
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....ers of the assessing officer were returned by the postal authorities and a further six persons did not confirm or deny the fact of having given the loans. Considering the arguments of the assessee based on the fact that the assessee firm came into existence only on 7.6.2005 and commenced business in the month of August, 2005, the CIT(A) classified the loans into two categories, viz. loans pertaining to the period prior to commencement of business, and loans pertaining to the period subsequent to the commencement of business by the assessee. Referring to the decisions of the Rajasthan High Court in the case of CITV/s. Kishorilal Santoshilal(216 ITR 9); and of the Allahabad High Court in the case of CIT V/s. Kapur Bros(118 ITR 741), the CIT(A....
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....tions even in relation to cash credits pertaining to the period subsequent to the commencement of business by the assessee. He submitted that the Inspector, who made enquiries in respect of Mahabubnagar parties found the transactions to be genuine and also obtained confirmation letters from the respective creditors. It is submitted that some of the creditors might not have submitted the re-confirmation letters in response to the letters sent by the assessing officer, being under the impression that the confirmation letters originally given by them are sufficient. It is submitted that the enquiry letters and confirmation letters were received by the Revenue through postal authorities. Learned counsel submitted that the assumptions of the ass....
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....ehalf of the assessee, and the case-law cited by the parties. It is an undisputed fact that the assessee-firm came into existence only 7.6.2005 and commenced its business in the month of August, 2005, and that being so assessment year 2006-07 is the first year of business of the assessee. While the total unsecured loans claimed to have been raised by the assessee are of the order of Rs.42,27,977, the CIT(A), as noted above, segregated the same into two categories, viz. pertaining to the periods prior to commencement of business and after commencement of business. Prior to commencement of business, the assessee having not made any sale or business, could not have income to cover the aggregate amount of unsecured loans of the relevant period.....
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....acity. No body knows any reasons for advancing such loans to the appellant and there is no evidence of any past relationship with the appellant. 5.7 Given these facts and circumstances, even though in some cases, the identity of the creditor is established, their creditworthiness and genuineness of the transaction have not been established. Therefore, addition with respect to all cash credits introduced after the commencement of the business are confirmed. ...." We find no infirmity in the above reasoning given by the CIT(A) for confirming the addition made by the assessing officer with regard to loans pertaining to the period subsequent to the commencement of business by the assessee. The case-law relied upon by the learned counsel for t....