TaxTMI 
TaxTMI 
2016 (2) TMI 617
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....dence to substantiate the capacity of the creditors and genuineness of the transaction. 3. The Commissioner of Income-tax (Appeals), Lucknow has erred in law and on facts of the case in deleting the addition of Rs. 17,000/- made on account of disallowable interest for delayed payment of TDS ignoring the fact that interest being penal in nature is not allowable expenditure. 4. The Commissioner of Income-tax (Appeals), Lucknow has erred in law and on facts of the case in deleting the addition of Rs. 25,384/-, disallowed depreciation on Car @ 20% for personal use, ignoring the fact that the assessee did not produce any evidence to establish that the car was used wholly and exclusively for business purposes. 2. Apropos grounds No.1 and 2, it is noticed that during the course of assessment proceedings, the Assessing Officer has noted addition in the capital account of the proprietor amounting to Rs. 59.20 lakhs. The assessee was asked to explain each credit entry seen in the capital account. The assessee has furnished the details of the credit entries found in his capital account, but the Assessing Officer was not convinced with respect to the entries for a sum of R....
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....xplained deposits in capital account and unsecured loans respectively. The A.O. has discussed this issue in para-8& 9 of assessment order mentioned above. The A.O. has treated the deposits in capital account of appellant to the extent of Rs. 42,40,000/- out of total deposits Rs. 59,20,000/- as unexplained deposits in the hands of appellant. During assessment proceedings the appellant has filed the details of bank account and cheques received from different persons during the assessment year under consideration and it was stated by appellant that these deposits in his bank account were represented the borrowed money received from different persons and same were recorded in his capital account directly. However the A.O. has not accepted the money received to the extent of Rs. 42,40,000/- mentioned in para-8 (ii) to (vii) of assessment order as explained and added back to the income of the appellant. Further the A.O. has made the addition u/s 68 of I.T. Act, 1961 of Rs. 2,00,50,000/- vide para-9 (a), 9(b)(i) & (ii) and 9(c) of assessment order, treating the creditors as unexplained credits in the hands of appellant. The appellant has contended that he has furnished entire det....
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....Nos. and complete details of cheques amount and number of loans/deposits. 2. Photo copy of PAN of depositors/creditors 3. Photo copy of ITR of depositors/creditors showing the interest income received from appellant by different creditors on borrowed funds/loans, which were treated unexplained by A.O. u/s 68 of I.T. Act, 1961. 4. Details of TDS amount on interest payment to different creditors/depositors filed by the appellant. 5. Photo copy of bank statement showing the deposits; of loan/borrowed fund in capital account of appellant and reflected in the name of different creditors/depositors. 6. Copy of relevant pages of ledger showing the creditors account. As mentioned supra the A.O. has provided an opportunity to furnish remand report on written submission of appellant and evidences filed in the form of papers/documents mentioned supra. Further these additional evidences were filed by the appellant on the queries raised during appellate proceedings, therefore, the objection raised by A.O. not to admit these evidences at appellate stage cannot be considered proper and justified. Even the CIT(Appeals) may admit the additional ....
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....ant during appellate proceedings and papers/documents, confirmations to prove identity, credit worthiness & genuineness of cash credits reflected in the books of account of appellant. On my examination of these papers/documents, confirmation letters, bank statements and books of accounts of the appellant I find that the appellant has duly explained the identity, credit worthiness & genuineness of different lenders/depositors from whom the appellant has received loans during the assessment year under consideration. The appellant has discharged the obligation to prove the identity, credit worthiness and genuineness of creditors, by furnishing the confirmations, copy of PAN, copy of ITR , copy of bank account and details of cheques received from lenders showing the details of TDS on interest payment on the loans obtained by appellant which were treated by A.O. as unexplained u/s 68 of I.T. Act, 1961. Further the appellant has also filed the copy of audit report alongwith its annexures and explained that the appellant has shown and claimed interest on these creditors in P&L account. The A.O. has allowed the interest payment to these cash creditors whereas the principal amount of loans ....
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....ferent lenders were under taken through banking channel. Since the assessee has filed relevant evidences to establish the identity, genuineness of the transaction and credit worthiness of the creditor. A detailed chart of different persons from whom the appellant received the monies which were accounted for in his books of accounts is given as below:- DETAILS OF UNSECURED LOAN RECEIVED, INTEREST AND TDS DURING THE FINANCIAL YEAR 2009-10 The above chart transpires that the appellant has furnished confirmation of all the lenders, copy of sale deed of sales of land, the details of interest payment and TDS made thereon, copy of PAN and ITR etc., in support of to prove the identity, credit worthiness and genuineness of transactions in respect of loans and sale proceeds of land. Thus no addition could be made treating the different creditors as unexplained unless and until it is proved otherwise. Hence such type of addition cannot be sustained in the eye of law. Reliance is also placed on following judicial decisions:- (l)COMMISSIONER OF INCOME TAX vs. JAI KUMAR BAKLIWAL RAJASTHAN 267CTR 396 (Raj) Held : Three things are required to be proved ....
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....e facts in the present case, it is observed the amounts advanced are not substantial and in most of the cases, the amounts are ranging from Rs. 25,000 to Rs. 90,000 and in some cases, it is exceeding Rs. 1,50,000. On perusal of the facts, if is also apparent that in some of the cases even the Karta of the HUF had produced the cash book and their ledger account before the AO and the AO has drawn adverse inference finding some discrepancies in their respective cash books but as observed above, the doubt, if any, may be true but insofar as the assessee is concerned, that issue cannot be converted into an addition of income under s. 68 in the hands of the assessee and appropriate course, as observed hereinabove, was that the AO could have informed the AO assessing the respective cash creditors for appropriate action in their case.- Aravali Trading Co. vs. ITO (2008) 220 CTR (Raj) 622: (2008) 8 DTR (Raj) 199 followed. (Para 10) Though under s.68. AO is free to show with the help of the enquiry conducted by him into the transaction which has taken place between the creditor and the sub-creditor that the transaction between two were not genuine and that the sub-creditor had no cr....
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....d there was no material to prove source explained by 'A ' and creditors were not genuine, the A. O. was not justified in calling upon assessee to prove source of source. Therefore, impugned addition made by A.O. under section 68 was liable to be deleted. Accordingly I find no merit in the addition made by A.O. Hence I delete the same. " (3) Shri Hari Har Singh (HUF) 551/226, Jha. Kanpur Road Alamabgh, Lucknow ITA No.305/LKW/2012-Assessment Year-2008-09 "Having carefully examined the orders of the authorities below, we find that the Assessing Officer has noticed cash credit of Rs. 27,99,139/- in the books of account of the assessee. The assessee was asked to furnish confirmatory letters and other evidence to prove the creditworthiness of the creditors. In response thereto, assessee furnished relevant information. The Assessing Officer was convinced with the explanation furnished by the assessee with regard to major cash credit of Rs. 17,01,759/- received from Shri. Hari Har Singh and he accepted the same to be genuine, but the remaining cash credit, which are ranging between and he accordingly made an addition of Rs. 10,97,3 80/- under section 68 o....
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.... addition for loans raised by assessee from other persons who have not even been examined and in respect of whom nothing adverse has been found by the AO. The Assessee has made payment of interest to the persons and even though addition under section 68 of the Act has been made by the AO there is no corresponding disallowance of interest which has been accepted by the AO. The deposit of cash by Shri O.P. Singh in his bank account prior to issue of cheque to the appellant is immaterial if the person giving the loan accepts the same in his confirmation. In the case of Nemi Chand Kothari Vs CIT & another 264 ITR 254 (Gauhati), the Hon'ble Court laid down as under- "A person may have funds from any source and an assessee, on such information received, may take a loan from such a person. It in not the business of the assessee to find out ether the source or sources from which the creditor had agreed to advance the amounts were genuine or not. It a creditors has, by any undisclosed source, a particular amount of money in the bank, there is no limitation under the law on the part of the assessee to obtain such amount of money or part thereof from the creditor, by way of chequ....
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....5 of 2001, whereby the high Court dismissed the appeal of the revenue on the ground that no substantial question of law arose. The assessee was a firm engaged in the business of dealings in land. The assessee had taken loans from various parties and at the time of assessment proceedings, the assessee had furnished confirmations giving the addresses of all the depositors. The Assessing Officer passed a detailed order treating the cash credit of Rs. 12.8 lakhs as unexplained. The Tribunal relying on 237 ITR 570 held that an unsatisfactory explanation did not and need not automatically result in deeming the amount credited in the books as the income of the assessee. The Assessing Officer had not disallowed the interest paid in relation to these credits and the tax had been deducted out of such interest: CIT v. Rohini Builders: S LP. (c) No. 515 of 2002. 4(5) The AO has made addition under section 68 of the Act by making reference to examination in the case of 4 persons. This examination in the case of 4 persons is also not heating to the conclusion that the creditors are not genuine. The credit of Rs. 17,01,759/- has been accepted in the case of Shri Had Har Singh. There is n....
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....arged and there in no justification in making an addition in the case of the appellant. The addition of Rs. 10,97,380/- made by the Assessing Officer is directed to be deleted giving consequential relief to the appellant. Ground of appeal is allowed." Aggrieved, the Revenue has preferred an appeal before the Tribunal, but could not point out any specific defect in the order of the Id. CIT(A). We, however, have carefully examined the order of the Id. CIT(A) and we find that except one, all the cash credits are within the range between Rs. 3,881/- and Rs. 50,000/- and the assessee has placed relevant evidence to prove the genuineness of the cash credit and identity of the creditors. Since the Id. CIT(A) has properly examined the cash credits in the light of various judicial pronouncements and also in the light of evidence placed by the assessee, we find no infirmity in the order of the Id. CIT(A). Accordingly, we confirm the same." Keeping in view of facts & circumstances and various judicial decisions mentioned above, 1 hold that the A.O. was not justified in treating the creditors as unexplained. Further the A.O. was also not justified in treating the deposits in ....
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....ed, he has not submitted the remand report. He simply objected the admission of evidence before the ld. CIT(A). The ld. CIT(A) himself has observed that the Assessing Officer has not produced the assessment record despite directions. All these facts clearly demonstrate that despite sufficient time afforded to the Assessing Officer, he did not make any effort to demolish the evidence furnished by the assessee in support of its claim. The ld. CIT(A), however, has examined the details furnished before him and he has observed that before him assessee has filed confirmations of the depositors/creditors with full address, PAN, complete details of cheque amount & number loans/deposits; etc. The assessee has also furnished the details of TDS amount on interest payment to different creditors/depositors; photocopy of bank statement showing the deposits of loan/borrowed fund; etc. Since the assessee has furnished all the relevant evidence to prove the genuineness of the transaction and identity & creditworthiness of the creditors, we find no infirmity in the order of the ld. CIT(A) who has rightly accepted the claim of the assessee. Since no specific infirmity is pointed out in the order of t....
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.... Contation PAN Tonk Aft 7 WAVING AGA ÐСТРÐТИ BAU KISHORAGRAWAL ÐВСРИСТРBAYARAN SARVAL 9 200,000 500,000 2,500,000 10000 2 043 Confomation PAN Bank Aft Ledger A/C Ledger Ac 500,000 61,000 3,000 Contin WN Bank A Ledger N 2,000,000 11,266 1527 Confiction W Bank A FERTILISER TRADERS 10 Prop RAJESH AGARWAL S 1,000,000 1,000,000 1973 Comun PAN Bank A E # CTR Lodger We R Ledger Ac 11 MATA FRASA SHOORAMAL & SONS P 600.000 50,000 L Confusion PAN Bak Ledger A/C 12 MAGARVAL 13 MLESH AGNAL ÐЮ РУСТИК 15.000 151,000 296 01030 393 14 MUPUR AGRAN AGAPA17CE 400,000 400,000 1677 15 PREMA AGRAWAL ÐœÐÐ ÐТИМ 500.000 500,000 503,00 $1,100 16 ÐÐСИКРМЕТРACPMID 201000 201000 2500 2,793 Com Contin PAN Contin Ð ÐÐ Condition PAN Contin PAN MAN ་ 100001/C Bank A/C Lodpor A/C Bank A/ Under A/C Bank A/C Бо....