TaxTMI 
TaxTMI 
TaxTMI 
2014 (9) TMI 602
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....) erred in confirming the addition made u/s 68 in the case of Mr. Ashok Mehta amounting to Rs. 24,00,000/- without appreciating the facts of the case. The appellant prays that the additions may kindly be ordered to be deleted. Ground No.4: On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in confirming the addition made u/s 68 in the case of Mr. Ajay Shah amounting to Rs. 18,00,000/- without appreciating the facts of the case. The appellant prays that the additions may kindly be ordered to be deleted. The appellant craves to add, alter, amend or delete all or any of the grounds of appeal before or during the course of hearing. The appeal, before us, is arising from the order of the Tribunal (ITA No./4212/Mum/2004-dated 18.11.2008). In pursuance of the said order the Assessing Officer (AO) had passed an order on 24.12.2009, u/s.143(3) Act r.w.s.254 of the Act. We will like to reproduce the order of the Tribunal: Having regard to the details and evidences filed in respect of Shri Chandulal Patel, the findings of the Ld. CIT(A), cannot be sustained and hence, the same are reversed. However, in respect of other cash creditors indicated in t....
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.... Corporation from whom a loan of Rs. 9 lacs has been received. 2) M/s Pooja Enterprises from whom loan of Rs. 7 lacs has been received, 3) Shri Ashok Mehta from whom a deposit of Rs. 24 lacs has been received. 4) Shri Ajay Shah from whom a deposit of Rs. 18 lees has been received. 5) Shri Chandula1 C. Patel from whom a loan of Rs. 3 lacs has been received. Looking to the facts and past history of your case, it is observed that you have avoided the production of above parties in person before the Assessing Officer & Commissioner of Income Tax (A). However, before Hon'ble ITAT you have taken the argument that the above parties can be produced in person. In view of above, final opportunity is hereby accorded to you to produce the above parties in person on any working day between 01.12.2009 to 16.12.2009 along with proof of their identity (original documents), copy of their bank statements for the respective period and their I.T. Return,Computation, Capital A/c and Balance Sheet for the relevant period. Please note that this being the final opportunity provided to you, if you fail to utilize the same, addition of Rs. 61 lacs shall be made in your hands as unexplained cash c....
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....in it was held that the bank account was opened in the bank where NRI status had not been shown, that signature in the passport were different from that of confirmation, that the funds in the bank accounts did not belong to the lenders. He further mentioned that he had not produced the parties during remand proceedings or set aside proceedings, that he did not submit confirmation and addresses of both the persons, that he had failed to establish identity and credit worthiness of the parties and the genuineness of the transaction. He made an addition of Rs. 42 lakhs (Rs.24 lakhs + Rs. 18 lakhs) to the total income of the assessee. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA. Before him, it was submitted that the assessee had received an advance of Rs. 9,00,000/- from PC towards the sale of premises in one of the projects,that the deal could not materialise and he refunded the money through cheque, that the amount was reflected in the bank statement of the assessee, that he had repaid the sums within the same FY. and no addition could be made u/s.68 of the Act, that it was not a loan but an was an advance received in relation to the sale of t....
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....y of saving Bank Account Opening Form of Ashok Shah was supplied, that the copy of the assessee's bank statement reflecting the receipt of money was available on record, that the assessee had received the monies through the banking channel which was substantiated by the bank statement, that the assessee had produced sufficient evidence to prove the genuineness and the creditworthiness of Ashok Mehta. It was further stated that the the assessee had received an advance of Rs. 18,00,000/- from Ajay Shah, a resident of United Kingdom towards investment in the local stock market. In this case also almost identical arguments were advanced by the assessee that were advanced in the case of Ashok Mehta. It was also contended that the AO had made the addition on the ground that the assessee had failed to produce the parties in the time provided in the set-aside proceedings, that Ashok Mehta and Ajay Shah were non-residents, that they could not travel to India. 3.2. After considering his submissions and the order of the AO,the FAA held that the assessee had claimed that he had received loan from PC of Rs. 9,00,000/- and from PE of Rs. 7,00,000/-, that before the AO confirmations of PC an....
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....ount holder of SB Nc. No.9261 was Ahsok J. Shah whereas the passport and affidavit furnished was of Ashok Mansukhlal Mehta, that the signature of the two lenders in the bank were totally different from those in their passports and confirmation letters, that both the account opening forms had been signed in the same hand writing,that the bank accounts from which amount of Rs. 18 lakhs and Rs. 24 lakhs were transferred to the assessee's account did not belong to the persons who had confirmed the loans, that the identity and creditworthiness of the parties and the genuineness of the cash credits of Rs. 18,00,000/- in the name of Ajay Shah and Rs. 24,00,000/-in the name of Ashok Mehta were not established, that the assessee could not produce these two persons either before the AO or before him i.e. FAA, though it is averred that they would be visiting India Accordingly, the action of the AO in adding back those amounts was confirmed by the FAA, holding that the assessee had failed to establish identity,creditworthiness of the parties and genuinity of the transaction, that the entire loans/ advances taken from those parties had to be treated as unexplained cash credits.He also held ....
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....see furnished various documents before the AO, that AO and the FAA had relied upon the earlier orders. Departmental Representative (DR) supported the order of the FAA and argued that the assessee had not proved the creditworthiness of the creditors as well as the genuineness of the transaction. 5. We have heard the rival submissions and perused the material before us.From the order of the Tribunal, dated 18.11.2008, it is clear that in the first round of appeal the FAA had confirmed certain additions made by the AO and the Tribunal deleted addition in respect of one of the creditors. For the remaining cash creditors issue was restored back to the file of the AO to 'record' their statement. We find that 'in the interest of justice' the assessee was offered an opportunity to produce parties and to produce relevant documentary evidences' before the AO. Over the years law regarding cash credits have evolved and has taken a definite shape.So,before proceeding further,we would like to mention a few important aspects of the law; culled out from the decisions of the Hon'ble Court; with regard to Sec.68 and same can be enumerated as under: i). Provisions of the S....
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....e firm view that the evidence produced by the assessee cannot be brushed aside in a causal manner. vii). Once the explanation of the assessee is found unbelievable or false, the AO is not required to bring positive evidence on record to treat amount in question as income of the assessee. While considering the explanation of the assessee,the AO has to act reasonably-application of mind is the sine qua non for forming the opinion. viii). Matters related to section 68 should be decided on the particular facts of the case as well as on the basis of preponderance of probabilities. Credibility of the explanation, not the materiality of evidences, is the basis for deciding the cases falling under the section. ix). Confirmatory letters or A/c. payee cheques do not prove that the amount in question is properly explained for the purpose of section 68 of the Act. In other words money coming by way of bank cheques and being paid through the process of banking transaction are not by itself of any consequence for deciding the cash credit issue. x). Contents of section 68,may be divided into two parts-(a) It requires the assessee to explain the sum found credited in the books of the assessee ....
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....identity of a person.The identification of a person includes the place of work, the staff and the fact that that person was actually carrying on business and further recognition of the company or individual in the eyes of public.PANs are allotted on the basis of applications without actual de facto verification of the identity or ascertainment of the active nature of business activity. PANs are allotted as a facility to the Revenue to keep track of transactions. They cannot, blindly and without consideration of surrounding circumstances, be treated as sufficiently disclosing the identity of the person.In a case of accommodation entries, in view of the link between the entry providers and incriminating evidence, the mere filing of permanent account numbers,acknowledgment of income-tax returns of the entry providers and bank account statements,is not sufficient to discharge the onus on the assessee. (361 ITR 258). xiv). A conclusion regarding creditworthiness or otherwise of a person is essentially one of fact. 5.1. Here, we would like to refer to the case of Pushp Trading Co., delivered by the Hon'ble Delhi High Court (190 ITR 618). In that matter certain cash credits were ass....
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.... AO in the original assessment till hearing before us; clearly prove that he had not cooperated with the AO and had not produced evidences to prove the claim made by him about the creditors. As far as PC and PE are concerned it is found that both are Mumbai based entities. It is strange that instead of producing the details of both the concerns the assessee opted to furnish an affidavit of an stranger who is claimed to have worked as a conduit between the him and PC and PE. From the day,he received the order of the Tribunal he knew that he has to produce both the parties for recording statements,but he did not produce them.The AO had directed him to produce the proof of their identity, copy of their bank statements for the respective period, their I.T.Returns, Computations of income,Capital A/cs and Balance Sheets.As stated earlier he furnished a certificate of a real estate broker, what was the locus standi of the broker vis-a-vis the creditors is not known. At the time of the original assessment question about the creditworthiness of PC and PE had arisen and the FAA had pointed about the glaring discrepancies of the letter heads of both the parties.In these circumstances he had a....