2015 (7) TMI 171

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....prises 3,57,000 4 Sri Manish Agarwal 4,00,000   2) The CIT Appeals - IV, Hyderabad erred while confirming the order passed by Assessing officer by making the addition of Rs. 44 lakhs to the returned income relating to the advances received by the assessee towards sale of scrap without considering the explanation offered by the assessee which is not correct, not justified and bad in law. 3) The assessee has received the above Amount from persons engaged in the same line of business. And it is a common practice in business to give advances for purchase and sale of scrap. In the same manner assessee also received advances from said persons in the form of cheques as a part of prudent business practice. Hence the assessee is praying to consider that the cheques were received as advance for scrap and to delete the addition made to assessed income. 4) The CIT(A)-IV has erred while confirming the Order of the Assessing Officer wherein the A.O. has failed to appreciate that the amount received as commission on sale transaction but considered the same as sale transaction of assessee which is not correct and not justified. We, hereby, submit you to kindly consider the commis....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....minating material in search assessment. 8. The assessee may add, alter or modify any of the points to the grounds of appeal at any time before or at the time of hearing of the appeal". 2. Briefly, the facts of the case are that, the assessee is an individual engaged in the business of trading in scrap. Search and seizure operations u/s. 132 of the Act were conducted on 07-11-2007. Subsequently, notice u/s. 153A was issued calling upon the appellant to file the return of income. In response to which, the appellant filed return of income on 25-09-2009 disclosing income of Rs. 4,11,320/-. Against the said return of income, assessment came to be completed u/s. 143(3) r.w.s 153A of the Act vide order dt. 30-11-2009 at a total income of Rs. 1,17,18,320/-. While doing so, the AO made addition of Rs. 1,12,57,000/- by holding that the appellant had advanced sum of Rs. 1,12,57,000/-as loan to the following persons: S.No. Name of person issued the cheque Amount (Rs.) 1.  M/s. Sree Ganesh Steel Trading Co 5,00,000 2. Sri Ram Pratap Agarwal 7,00,000 3. M/s. Sangeetha Engg. Works 6,00,000 4. M/s. Sri Raja Rajeswari Steel Traders 54,00,000 5.  M/s. Sri Krishna Metal....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ined as security for supply of steel scrap but the supply never took place. Even the AO examined the proprietor of M/s. Sree Ganesh Trading Co. i.e., Shri Ashok Kumar Jainwal, who confirmed having issued those two cheques in favour of the appellant as a security for supply of iron ore. However, he denied having issued any promissory note to the assessee. Therefore, the AO drawn an adverse inference that Mr. Ashok Kumar Jainwal's statement cannot be relied upon and concluded that appellant is engaged in the business of money lending and treated Rs. 11 Lakhs as unexplained investment and brought to the tax. On appeal before the CIT(A), the plea of the assessee was not accepted and addition was confirmed by the CIT(A) on the ground that the appellant is engaged in money lending business and the cheques and promissory notes were obtained only as a security for advancing the money. On perusal of the seized material, it is clear that promissory note though singed by Mr. Ashok Kumar Jainwal, which do not contain the amount, date, rate of interest or other particulars. The statement given by Mr. Ashok Kumar Jainwal that the cheques were issued only as a security for supply of the iron ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... Dinesh Gupta under influence of the appellant and therefore not believed the statement of Mr. Dinesh Gupta and brought to adiditon an amount of Rs. 6 Lakhs the CIT(A) confirmed it. After perusal of material on record, we are of the opinion that the material relied upon by the AO does not conclusively prove that the appellant advanced the sum of Rs. 6 Lakhs to Mr. Dinesh Gupta. Though a presumption can be probably raised that the appellant would have advanced money to the appellant but in the absence of any clinching evidence, the addition can't be upheld. More particularly, when Mr. Dinesh Gupta's statement that no loan was granted to him remains un-controverted. Thus, the addition of Rs. 6 Lakhs is also deleted. iv. M/s. Raja Rajeswari Steel Traders: Vide page Nos. 30 & 31 of Annexure A/LNA/Res/01 copies of Cheque No. 057007 dt. NIL for Rs. 12 Lakhs; Cheque No. 436332 dt. 18-05-2007 for Rs. 5 Lakhs; Cheque No. 151067 dt. 02-09-2007 for Rs. 10 Lakhs and Cheque No. 436345 dt. NIL for Rs. 27 Lakhs, it was submitted by the appellant during the course of assessment proceedings that those cheques were obtained by him as security for the amount to be advanced. However, the amou....