TaxTMI 
TaxTMI 
2016 (1) TMI 130
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "On the facts and in the circumstances of the case the ld CIT(A) has erred in deleting penalty of Rs. 12,27,064/- imposed by the A.O. U/s 271(1)(c) and in holding that unexplained credits does not tantamount to deliberate intention of the assessee to furnish inaccurate particulars of income/concealment of income." 2. The first ground of appeal is against deleting the addition of Rs. 36,31,407/- made by the Assessing Officer U/s 69C of the Income Tax Act, 1961 (in short the Act). The assessee is engaged in the job of providing security personnel to the various concerns. During the year it provided services of security personnel to M/s Vodafone Essar Digilink Ltd. and the work is being done under the name and style of M/s Udaan Security Force. The assessee filed return for the year under consideration on 31/10/2006 at Rs. 3,32,426/-. 2.1 In this case the Coordinate Bench had passed order dated 24/12/2010 and the revenue's appeal was allowed. Thereafter the assessee filed an MA. petition against the order of the Coordinate Bench. After considering the arguments from both sides, this Bench has allowed the assessee's MA No. 25/JP/2011 for A.Y. 2006-07 vide order dated 05th J....
X X X X Extracts X X X X
X X X X Extracts X X X X
....36,31,407/-. The ld Assessing Officer further observed that by filing of these affidavits the assessee was merely trying to cover up the shortage of cash. No reason had been given by the assessee for the shortage of cash. There was no plausible explanation available with the assessee to justify the increased outflow as compared to the receipts of funds. The expenses incurred were far in excess of the receipts of income. The assessee had not been able to substantiate the source from which the expenditure had been incurred. In view of the deeming provisions, the unexplained expenditure was to be treated as the income of the assessee from undisclosed sources for that financial year. Therefore, addition of Rs. 36,31,407/- was made by the Assessing Officer. 3. Being aggrieved by the order of the ld Assessing Officer, the assessee carried the matter before the ld CIT(A), who had deleted the addition by observing as under:- "1.3 I have considered facts of the case and arguments taken by Sh. Dua alongwith report of Assessing Officer quite carefully. Though it is a fact that as per cash book produced before Assessing Officer which was also impounded U/s 131(3) of I.T. Act there ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iving loan to the appellant. On this issue of cash credit Hon'ble Rajasthan High Court in the case of CIT Vs. Heeralal Chaganlal 257 ITR 281 has held that where the identity of the credit is established and the creditor has confirmed the loan no addition can be made. Hon'ble Rajasthan High Court in another case of Kanhiyalal Jangid Vs. ACIT 217 CTR 354 has held that assessee having filed confirmations from the creditor and where the creditors affirmed advancement of the loan, no addition U/s 68 could be made on the ground that creditor could not satisfactory explain the source of loan. Burden in such case does not extend to prove source of the creditor from where he has made the advances to the assessee. Hon'ble Rajasthan High Court in another case of Labhchand Bohra Vs. ITO 219 CTR 571 has held that identity of the creditor have been established who have confirmed the credit by making statement then assessee is not required to establish the capacity of the lender to advance the money. Recently, Hon'ble ITAT Jaipur Bench in the case of Rajkumar Mehta Vs. ITO Ward 3, Sikar in ITA No. 935/JP/2008 dated 29/08/2008 relying upon Rajasthan High Court judgment in the case of Kanhiyalal Ja....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ayed to confirm the order of the ld Assessing Officer. 5. At the outset, the ld AR of the assessee has reiterated the arguments made before the ld CIT(A) and further argued that the ld Assessing Officer during the course of assessment proceedings worked out a negative cash balance on last days of 11 months of the year based on the main cash book and keeping in view Section 69C, explanation was called for. The assessee clarified that there was a subsidiary cash book also, which could not be produced earlier and due to which the AO could work out negative balance on different dates. The assessee also produced 53 affidavits intimating that during the year, the assessee has taken unsecured loans from various parties. However, the ld Assessing Officer had not found these evidences convincing to him. The cash book produced by the assessee impounded by the Assessing Officer U/s 131(1)(3) of the Act on which the ld Assessing Officer had calculated negative cash balance. When it was confronted with the assessee by the Assessing Officer, the assessee produced subsidiary cash book in which there was entries for loan/deposits received from various persons alongwith repayment detail thereof.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....security agency. Therefore, the ld CIT(A) has rightly deleted the addition and the same may be upheld. 6. We have heard the rival contentions of both the parties and perused the material available on record. The ld CIT(A) had examined this issue thoroughly and he directed the Assessing Officer during the assessment proceedings to make inquiry on the evidences submitted by the assessee. The ld Assessing Officer in remand proceeding was able to record the statement of 15 persons who had admitted the amount was deposited with the assessee. They filed affidavit of all the particulars i.e. names, addresses and source of income has been explained through these affidavits. It is a fact that these loans were in cash. There was no negative cash balance on the basis of subsidiary cash book produced by the assessee when the ld Assessing Officer raised the query on negative cash balance. The number of affidavits i.e. total 53 affidavits were submitted by the assessee, which supports the assessee's case that deposits shown in the cash book were genuine. Therefore, the assessee has proved the cash available with her on given dates. The case laws relied on by the CIT(A) as well as the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....been deputed on the job only. He traveled in entire State at various sites and with the help of area supervisor salary had been disbursed. However, no travelling and conveyance expenses had been claimed by the assessee with regard to travel of the lone salary supervisor. The signal lone salary supervisor able to disburse salary to almost for 400 workers approximately within 5 to 6 days and that too in the entire State of Rajasthan comprising areas as far as Udaipur, Kota, Bhilwara, Ganganagar, Jodhpur, Ajmer, Sikar, Dausa, Alwar. The cash payment of salary as per cash book was Rs. 1,03,49,464/- whereas the salary debited in the P&L account was at Rs. 1,53,63,342/-, the salary payable for the year had been shown at Rs. 46,41,886/-. No salary payment was shown to have been made in the month of February and March, 2006. It is not clear as to how the guards numbering 500 to 600 managed their affairs when they are getting a paltry salary of Rs. 4,326/- per month only. Thereafter how salary was disbursed to the various guards was also not clear to the Manager, whose statement was also recorded. The assessee was not maintaining any attendance register. The assessee seldom visit the sites ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ue as under:- "At the outset, it is submitted that the conclusions and inferences drawn by the AO based on the correct chart prepared by him and reproduced at page 4 of the A.O., was completely incorrect and therefore, a chart based on the Balance sheet and the books of account regularly maintained, was duly submitted before the A.O. during the course of assessment proceedings itself however, the A.O. completely ignored the same. A perusal of the same shall reveal that there is no anomaly found now as alleged. Therefore, no weight can be given to the various negative inferences drawn by the A.O." The ld AR further argued that there cannot be any logical proportion of link between the number of towers and number of persons employed. The ld Assessing Officer did not appreciate that the assessee was to employ the guards throughout the period of the contract irrespective of the number of towers or the places. Even where the number of towers is less he could not have terminated the employee. It is a matter of commercial contract. If any breach of contract found between the parties, there is a remedy in the contract itself. The assessee incurred expenditure out of commercial ....