TaxTMI 
TaxTMI 
2015 (4) TMI 666
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....ances from four parties aggregating to Rs. 17,89,500. Since the said advances were claimed to be received by the assessee for supply of materials, he was called upon by the Assessing Officer to furnish the details of supplies made to the concerned our parties against the advances. In reply, it was submitted by the assessee that no material was actually supplied against the said advances, and the same were returned back in the subsequent year. Since both the receipt and payment of advances were found to be made in cash, the Assessing Officer required the assessee to establish the identity and capacity of the concerned creditors as well as the genuineness of the transactions. Although the assessee produced confirmation letters of the concerned four parties, the Assessing Officer found that the relevant particulars such as mode of payment, permanent account number, etc. were missing. He also found that all the confirmation letters were identically worded and the same were not supported by any other documentary evidence such as Balance Sheet of the concerned parties reflecting the advances made to the assessee, their income-tax returns, etc. The Assessing Officer, therefore, held that ....
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....ot supplied, the appellant has informed the AO that in the next year such advances were returned. Now, the AO has invoked the provisions of section 68 on the ground that only confirmations were furnished, but not that such confirmations were accompanied by statutory documents like PAN, copies of IT returns, account copies of the creditors in the books of the appellant, audited balance sheet of the purchasers reflecting the advances in such balance sheets etc and etc and for such alleged lapses the impugned addition was made by the AO, which is under challenge now. In course of the appellate proceedings, it is explained that the impugned advances were received for certain quality of granite material, which is to be excavated from the natural deposits. But, the appellant could not supply the material due to his own business problems and accordingly these amounts were returned in the subsequent year. The AR relied on the decision of the Apex Court rendered in the case of CIT vs. Smt.P.K.Noorjahan, reported in (1999) 237 ITR 570(SC), wherein under similar circumstances, the addition made by the AO was ordered to be deleted. In any case, when the appellant has said that the advances rec....
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....found to have been received by an assessee is on him. When the nature and source of a receipt, whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee. i. Roshan Di Hatti Vs. CIT (SC) 107 ITR 938 ii. Khale Khan Mohammad Hanif Vs CIT (SC) 50 TR 1 e. Reliance is also placed on the judicial pronouncements in the case of CIT Vs. Baju Patnaik (SC) 160 ITR 674 and Dhanalakshmi Steel Re-rolling Mills Vs CIT (AP) 228 ITR 780 wherein it was held that assessee must prove identity of credits, capacity of the creditor to advance money and the genuineness of transaction. f. The Id. CIT(A) erred in deleting the addition of Rs. 17,89,500/- as the advances stand refunded in the next assessment year without proving the genuineness of the transaction as the assessee failed to furnish statutory documents such as identity of person, PAN, IT returns of the prospective purchasers, copies of the assessee's account in the purchasers' books of account, audited balance sheet of the purchasers reflecting the advances made to the assesee and the creditworthiness of the creditors. g. Relia....
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....n as much as the confirmation letters of the concerned creditors filed by him did not contain the relevant details such as mode of payments, Permanent Account Number of the concerned creditors etc. Copies of the said confirmation letters are placed on record before us in the paper book filed by the assessee and a perusal of the same shows that the said letters worded identically, do not even contain the dates of issuance of the confirmation letters. The assessee also failed to file any other documentary evidence such as income tax particulars of the creditors or their balance sheets to show that the advances claimed to be given by them to the assessee were duly reflected in their income tax return or even in their Balance Sheets. Despite this failure of the assessee to discharge the onus of establishing the creditworthiness of the concerned creditors, the learned CIT(A) strangely deleted the addition made by the Assessing Officer under S.68 vide his impugned order, and that too, in our opinion, on all irrelevant and immaterial grounds. It is undisputed that the advances in question received by the assessee in cash represented cash credits and the assessee having failed to discharge....