TaxTMI 
TaxTMI 
2008 (7) TMI 1027
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....e was selected for scrutiny assessment and notice under section 143(2) and 142(1) along with questionnaire was issued to the assessee in response to which the Chartered Accountant of the assessee namely Shri Deepak Aggarwal attended and produced evidence and documents as called for. On examination of the books of accounts, the Assessing Officer found that the assessee had shown loans amounting to Rs. 25 lacs in its balance-sheet. On closure scrutiny it was observed that the assessee had taken loan from three ladies. The Assessing Officer has noted the details of credits at page 2 of the assessment order which are as under:- S.No. Name Date Dr. Cr. Total loan 1. Smt. Iqbal Devi 13.4.2000 - 2,90,650 " 15.4.2000 - 2,90,650 " 20.4.2000 2,40,000 - " 22.4.2000 2,95,000 5,35,000 2. Smt. Swarn Kapoor 3.3.2000 2.43,680 " 3.3.2000 2,78.640 " 10.4.2000 2.50,000 - " 11.4.2000 2,75,000 - 5.25.000 3. Smt. Inpta Manchda - 3,40,429 " 7.11.2000 1,00,000 " 18.12.2000 2,00,000 3....
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....m. Regarding confirmations filed by the two parties namely Pawan Resources Pvt. Ltd. and Sherry Investment the Assessing Officer suspected the genuineness of the same by observing that they did not contain telephone numbers or the SEBI Registration No. etc. and were merely printed out without giving any details of names of companies to whom the shares were sold. 6. In view of the above observations an inference was drawn. For confirming the genuineness of the transactions, notice under section 131 were issued to M/s. Pawan Resources Pvt. Ltd. and M/s. Sherry Investment. These parties were required to file following documents:- i) List of shares sold on behalf of Smt. Iqbal Devi and Smt. Swarna Kapoor. ii) Copies of contract note in respect of such shares. iii) Copies of your bank a/c in original out of which sale consideration has been paid to the above said sellers. iv) Name and address of persons who purchased these shares. In response to the summons, on behalf of the two parties referred to above, documents were filed including the bills. However, regarding contract notes it was submitted that these parties were acting as sub-broker and no contract notes were issued by the....
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....T, 103 ITR 344 (Patna); (2) Subhash Dal Mill vs. ACIT, 257 ITR 115 (AT)(Agra); (3) Bhagwandas Gharola vs. CIT, 82 TTJ 982 (Hyd.); (4) Neerudevi Kothari vs. ITO, 116 Taxman 224 (Jodhpur); (5) Jalan Timber vs. CIT, 223 ITR 71 (Gauhati); (6) Addl. CIT vs. Hanuman Aggarwal, 151 ITR 151 (Patna); (7) CIT vs. Pitampur Conzima (P) Ltd., 244 ITR 442 (MP); and (8) DCIT vs. Rohini Builders, 256 ITR 360. 10. The learned DR Shri Rahul Garg on the other hand, placed reliance on the orders of the Assessing Officer and that of the CIT(A). 11. We have considered entire material on record and the rival submissions. The assessee has furnished copy of confirmation from Smt. Iqbal Devi at page 25 of the Paper Book which reads as under:- "To Whom It May Concern This is to certify that I have given an amount of Rs. 5,35,000 (Rs. Five Lacs Thirty Five Thousand Only) to M/s. Nitin Sales Corporation, Khasra No.197, Holambi Khurd, Delhi during the year 2000-2001 as interest free loan. Further it is certified that 1 am assessed to Income-tax with ITO Ward No.25(1), New Delhi and my PAN is AFDPD-5925-P. Sd/- Iqbal Devi W/o Sh. Joginder Pal B-232, IInd Floor, Lok Vihar Pitam Pura, Delhi." 12. T....
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.... Partner" 14. Similarly regarding the transactions carried by M/s. Sherry Investment, the details of bills etc. were filed, copy of which is available at page 52 of the Paper Book and which reads as under:- "To The Income-tax Officer, Ward 21 (4), New Delhi. Re:- Submission of reply in the case of M/s. sherry Investment for the Assessment Year 2001-02. Sir, The above noted assessee is in receipt of the summons under section 131 of the Income-tax Act, 1961 dt. 25/3/2004. In this regard we are submitting herewith the following documents. i) Copy of Bills of shares sold by Mrs. Iqbal devi, Mrs. Swarna Kapoor and Mrs. Tripta Manchanda. ii) Copy of Ledger Account of the abovesaid client. iii) The assessee has paid the payment to the above named person as follows:- S.No. Name Ch.No. Dated Bank a. Iqbal Devi 290650 18.4.00 PSB, Bikri Kar Bhawan, New Delhi. b. Swarna Kapoor - 29.3.00 -do- We hope that your goodself will find the above information in order and shall be glad to furnish any other information if required by your goodsself. Please do the needful and oblige. Thanking you, Yours faithfully. For P.K. Garg and Associates Chartered accountan....
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....vidence adduced by the assessee by which the assessee has successfully established the identity of the creditors and the genuineness of the transactions and the sources for making the credits. The evidentiary value of these documents has not been properly appreciated. The Assessing Officer as well as the learned CIT(A) have made general observations for doubting the genuineness of the transactions. The department has not brought any material on record to doubt the identity of the creditors who have filed their confirmatory letters which have been reproduced hereinabove. The other documents including the acknowledgement for filing the return, computation of income, statement of affairs, copy of bank account also go to prove the identity of the creditors and the genuineness of the transactions. The transactions worked out through banking channel. The assessee has also filed the confirmation on behalf of M/s. Pawan Resources Pvt. Ltd. and M/s. Sherry Investment through whom the transactions regarding sale of shares were carried out. In view of these details, there remains no stock of doubting the genuineness of transactions of credits. On going through the assessment order it appears ....
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....g so, he has also placed reliance on various authorities including the decisions in the cases of Sumati Dayal vs. CIT, 214 ITR 801 (SC); CIT vs. K. Palaniappan, 156 CTR 524 (Mad); and the decision of Kerala High Court in the case of Oceanic Products Exporting Co. vs. CIT, 241 ITR 497. 22. The learned counsel for the assessee has challenged the findings of the authorities below. Before us the learned counsel submitted that Smt. Chanchal Lamba has confirmed the transaction by giving a confirmatory letter. In this regard, our attention was invited to page 62 of the Paper Book which is as under:- "To Whom It May Concern This is to certify that we have a balance of Rs. 2,40,000.00 (Rupees Two Lacs forty Thousand only) in favour of Smt. Chanchal Lamba as on 31st March 2001. Further it is certified that we have assessed to the Income-tax, Ward No.21(4), New Delhi For Nitin Sales Corporation Sd/- Partner J.K. Puri. Sd/- Chanchal Lamba PAN No.:- AASPL4341B." The learned counsel also made reference to other documents including the sanction of GPF, 23. We have carefully considered the relevant material on record and the rival submissions. On going through the documents filed in th....
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....in this year. It was observed that sale and gross turnover has increased 6.56 folds than that of the last year but increase in the expenditure under a few heads are far beyond the proportion of increase in sale. After mentioning increase over last year under the various heads, he made disallowance of Rs. 1 lac by observing as under:- "S.No. Head Expenses claimed i.e. A.Y. 2001-02 Increase over last year i.e. A.Y. 2001-02 1. Freight and Cartage 5,45,224 9.39 times (inward) 2. Diesel 2,75,066 12.71 times 3. Freight and Cartage 1,93,385 15.72 times (outward) 4. Packing Material 1,69,971 94.42 times 13. From the above table, it is obvious that the expenses claimed are disproportionate and inflated. In order to verify the genuineness of these expenses, the vouchers were called for and examined. It was noticed that some of the vouchers were self made and not supported by any independent third party receipts/vouchers. Therefore, a lump sum disallowance of Rs. 1,00,000 is made out of expenses claimed in the absence of supporting proof of expenses." 25. In appeal, it was submitted before the first appellate authority that disallowance was arbitrary as the A....