TaxTMI 
TaxTMI 
2014 (2) TMI 1272
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....ducing books of accounts of M/s. Ajay Electronics, Finance Division and Bank Pass book before the A.O. to substantiate claim that Rs. 1,40,00,000/- was given to Sh. Ajay Kumar." 2. In ITA No.62(Asr)/2012, the revenue has raised following grounds of appeal: 1. Whether on the facts and circumstances of the case, the variation in the copies of Capital Account of Sh. Ajay Kumar partner as produced in the Court and copies of account filed with the Income Tax Department is immaterial. 2. Whether on the facts and circumstances of the case, the assessee was right without producing books of accounts of M/s. Ajay Electronics, Finance Division and Bank Pass book before the A.O. to substantiate claim that Rs. 1,40,00,000/- was given to Sh. Ajay Kumar." 3. First of all, we take up appeal of the Revenue in ITA No. 60(Asr)/2012. The brief facts of the case are that the assessee derives income from house property at Rs. 100643/-, income in the hands of minor son, Master Amit as well as taxable receipts under the head 'Business Income" being remuneration and interest from two firms namely Ajay T.V. Centre, Gurdaspur and Ajay Electronics Pathankot. Subsequently, on rece....
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....0,000/-. After considering the assessee's explanation, the AO rejected the same. In view of the variation in the assessee's copy of capital account appearing in the books of Ajay Electronics as furnished before the Trial Court vis-à-vis as furnished with the return of income, which has been made part of his re-asstt. order, the AO has made an addition of Rs. 1,70,00,000/- u/s 68 treating it assessee's own undisclosed income from unexplained sources. 4. The Ld. CIT(A) deleted the addition for the reasons mentioned in his order. 5. During the course of appellate proceedings before the Ld. CIT(A), the ld. counsel for the assessee filed written submissions which are available in para 5 at pages 5 to 9 of CIT(A)'s order. 6. As regards the legal ground, the Ld. CIT(A) vide para 8 at pages 10 to 15 rejected the legal ground of the assessee and confirmed the action of the A.O. with regard to the reopening of assessment proceedings u/s 147 read with section 151 of the Act. 7. There is no appeal of the assessee before us and therefore, the issue of reopening of assessment has attained finality. 8. The Ld. DR relied upon the order of the A.O. 9. The Ld. counsel for th....
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....ected to be registered and or whether the transaction was matured or not. On the other hand, the assessee has all along been contending that he was conducting the transaction for and on behalf of the firms. Even concluding lines of para 5 of the AO's assessment order stating therein from the above facts, it appears that Sh. Ajay Kumar and the two partnership firms i.e. Ajay TV Centre, Gurdaspur (Rs.5,00,000/-) and M/s. Ajay Electronics, Pathankot (Rs.1,70,00,000/-. The assessee has claimed that he is not maintaining personal books of account. Therefore, in the absence of books, no credit can be given to the application of section 68 of the Act. Further, the assessee has produced Sh.Surinder Mahajan Partner of M/s. Ajay Electronics, Pathankot, who has confirmed payment of Rs. 1,70,00,000/- to the assessee. Moreover, the Finance Division is working since 1997-98 and it is duty appearing in the list of creditors . Interest paid by the Finance Division is duly reflected and debited in the P & L account and duly allowed by the AO. Moreover, asstt. For the A.Y. 1998-99 and 2001-02 have been completed u/s 143(3). It is not the case of the AO that funds of the firm were clandestinely were ....
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....70 lakhs from M/s. Ajay Electronics, Pathankot a regular assessee with your circle. Copy of account viz (1) Capital account (2) Imprest A/c from M/s. Ajay Electronics is enclosed herewith. Sir, money received is debited in imprest a/c and since the saem was not used by Sh. Ajay Mahajan for the purpose it was collected/taken from firm M/s. Ajay Electronics was returned back to them and as such the Imprest a/c. was squared up. Sir, since this entry was squared up in Imprest a/c itself such the same was not made part of capital account filed with you. In capital a/c, the entry of permanent nature were recorded except this Imprest account. Sir, no adverse inference should be drawn since Sh. Ajay Mahajan is an regular assessee and his source, M/s. Ajay Electroncis , Pathankot is also regular assessee with your circle... The A/R of the assessee has placed on record the following judgments in support of his contentions that if the creditor has confirmed on oath that he advanced the amounts to the assessee, the burden immediately shifts on the AO to show as to why it must be held that credit represented the income of the assessee from suppressed sources unless it is proved that the cred....
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....editors have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry tough purporting to be in the name of a third part, still represented the income of the assessee from a suppressed source- Further, tribunal having accepted the genuineness of cash credits in part, the other part of the Tribunal's findings was without evidence." The same issue has also been confirmed by the Hon'ble Madhya Pradesh high Court in the case of CIT vs. Metachem Industries, cited at 245 ITR 160 (2000): "So far as the responsibility of the assessee is concerned, it is satisfactorily discharged. Whether that person is an income-tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of Income- tax." 13. Further the heavy relianc....
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....venue in ITA No.62(Asr)/2012. The brief facts of the case are that the facts in the present case are identical to the facts in the case of ITA No.60(Asr)/2012. Rather the facts in the present case are inter-connected with the case of Sh. Ajay Kumar and the A.O. made protective addition of Rs. 170 lacs u/s 68 by treating the person owned undisclosed income from undisclosed sources. The assessee in the present case made submissions which were considered by the Ld. CIT(A) and on identical facts, the Ld. CIT(A) dismissed the legal grounds of the assessee and held the reopening of the assessment proceedings u/s 147 read with section 151 of the Act as valid. There is no appeal by the assessee before us and therefore the reopening of the assessment by the AO has attained finality. 16. As regards the issue on merit, after considering the submissions of the assessee, placed before the ld. CIT(A) and the explanations which have been tabulated by the ld. CIT(A) at pages 22 to 25 and findings of the ld. CIT(A) thereafter at pages 25 to 29, we concur with the views of the ld. CIT(A) in para 9.3 & 9.4 (pages 29 to 36 which are reproduced as under: "that the assessee has explained the....
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..../Sh.Najjar Singh and Bahadur Singh, both sons of Sh.Sewa Singh, r/o Sant Ngr., Gurdaspur and the appellant had entered into an agreement to purchase 40 kanals of land at Gurdaspur for Rs. 1,65,00,000 on 30.6.2000 and at the time of agreement a sum of Rs.5,00,000/- was paid and the balance amount to be paid on 31.12.2002 i.e. at the time of registration of sale deed. Later on, a dispute arises between the parties and the matter went upto the Supreme Court and the Apex Court vide their order dt.9.10.2007 restored the matter to Trial Court with the directions to the petitioner i.e. Sh.Ajay Kumar to deposit the entire balance amount i.e. Rs. 1,60,00,000 with the trial court and the trial court will decide the matter within six months. The complainant had attached with the complaint copy each of Supreme Court's order dt.9.10.07, Addl. Civil Judge, Gurdaspur's order dt.29.1.2008 along with copies of accounts of the appellant as appearing in the books of Ajay Electronics, Pathankot for the period 1.4.02 to 31.3.03 and 1.4.2000 to 31.3.2001 and in the books of M/s.Ajay T.V.Centre, Gurdaspur for the period 1.4.02 to 31.3.03. It has been allege....
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.... Electronics and since the entry appearing in the imprest account was squared up as such the same was not made a part of/and find place in capital account filed with the Income Tax Department. In capital account, entry of permanent nature has to be recorded except this imprest account, hence no adverse inference should be drawn since both the appellant as well as the firm, M/s.Ajay Electronics, Pathankot both are regular assesses of the A.O. Moreover, during the asstt. proceedings before the A.O., Sh.Surinder Mahajan, partner of M/s.Ajay Electronics, Pathankot has confirmed that an amount of Rs.170 lacs was advanced by the firm to Sh.Ajay Kumar, partner for purchase of land for and on behalf of the firm. Since, the appellant and another partner of the firm has admitted and satisfactorily explained that the amount has been withdrawn by the appellant from the accounts of the firm, which has been duly accounted for in its books, no addition can be made in the hands of the appellant treating it as unexplained cash credit u/s.68 of the I.T.Act, 1961. The appellant after placing heavy reliance on the juri....
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....been contending that he was conducting the transaction for and on behalf of the firms. Even concluding lines of para.5 of the A.O.'s assessment order stating therein from the above facts, it appears that Sh.Ajay Kumar and the two partnership firms,i.e. Ajay T.V.Centre, Gurdaspur ( Rs.5 lacs ) & M/s.Ajay Electronics, Pathankot (Rs. 1,70,00,000/-) have introduced unaccounted money of Rs. 1,75,00,000/-. The appellant has filed copy of cash book disclosing names of all depositors before the A.O. who have deposited cash on various dates with the appellant. Further, the appellant has produced Sh.Surinder Mahajan, partner of M/s.Ajay Electronics, Pathankot who has confirmed payment of Rs. 1,70,00,000/- to the appellant * Moreover, the Finance Division is working since 1997-98 and it is duly appearing in the list of creditors [Schedule-D to the audited Balance sheet of the firm]. Interest paid by the Finance Division is duly reflected and debited in the P&L account and duly allowed by the A.O. Moreover, asstt. for the Asstt. years 1998-99 & 2001-02 have been completed u/s. 143(3). It is not the case of the A.O. that funds of firm clandestinel....
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....s received the money at Rs.170 lakhs From M/s.Ajay Electronics, Dhangu Rd, Pathankot, a regular assessee. with your Circle. Copy of account viz. (1)Capital account (2) Imprest A/c. from M/s.Ajay Electronics is enclosed herewith. Sir, money received is debited in imprest a/c. and since the same was not used by Sh.Ajay Mahajan for the purpose it was collected/taken from firm, M/s.Ajay Electronics, was returned back to them and as such the Imprest a/c. was squared up. Sir, since this entry was squared up in Imprest a/c. itself, as such the same was not made part of capital account filed with you. In capital a/c. entry of permanent nature were recorded except this Imprest a/c. Sir, no adverse inference should be drawn since, Sh.Ajay Mahajan is a regular assessee and his source, M/s.Ajay Electronics at Dhangu Rd, Pathankot is also regular assessee with your circle The appellant has placed on record that he has arranged deposits from public. But in the present case, the A.O. has not brought on record any evidence to prove that the amount of Rs.1,70,00,000/- in fact belonged to the appellant, discussed supra. Sh.Surinder Mahajan in his re....
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....ney from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit cannot be treated to be the income of the firm for the purposes of Income tax." Document 7 advanced the amount for purchase of land for and on its behalf. It has been held by Hon'ble Guhati High Court in the case of Nemi Chand Kothari v. CIT 264 ITR 254 (2003): Income Cash credit - Burden of proof - There is nothing in s.68 to show that the scope of enquiry by the Revenue shall remain confirmed to the transaction which have taken place between the assessee and the creditor nor does the wording of s.68 indicate that it does not authorize the Revenue to make enquiry into the source(s) of the creditor and/or sub- creditor. However, once the assessee had disclosed the source(s) from which he has received the loans, his burden stands discharged. It is not the burden of the assessee to show the source(s) of the sub-creditors. In the instant case, assessee has established the identity of the creditor and the amounts ....
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....SSESSEE CANNOT BE ASKED TO EXPLAIN DEPOSIT IN ANOTHER PERSON'S NAME EXPLANATION OF ASSESSEE THAT THE AMOUNT REPRESENTED GIFTS BY ASSESSEE'S SONS TO HIS WIFE DISBELIEVED – PERSON IN WHOSE NAME DEPOSIT STANDS OR IN WHOSE BOOKS DEPOSIT APPEARS NOT EXAMINED – AMOUNT OF DEPOSIT NOT ASSESSABLE AS ASSESSEE'S INCOME FROM UNDISCLOSED SOURCES. "That the person in whose name the deposit stood or in whose books the deposit appeared, should have been called upon to explain the Deposit. Admittedly, neither of them were called upon to do so. There was thus clearly no warrant for adding the sum of rs.5,000/- to the income of the assessee." Besides, this there was another disputed amount of Rs.5,000/- during the assessment year 1971-72. It came to the knowledge of the Income Tax Officer that a sum of Rs.5,000 had been deposited with Hamdard Printing Press in the name of the assessee's wife. The assessee informed the Income Tax Officer that this sum represented gifts made by his son to his wife from time to time. The Income Tax Officer took the view that the sons were not in a position to make any such gifts and he, therefore, ad....
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....on, Pathankot, its cash flow statement, copy of capital account of partner, Mr.Ajay Mahajan, copy of account of Mr. Ajay Mahajan Imprest account, consolidated capital account of Mr. Ajay Mahajan, copy of its ledger and cash book, giving names of the depositors. Further, as per relevant assessment record, the A.O. has on test check basis, carried out verification u/s.131 by recording statements of some of the depositors, who have more or less have given their respective confirmation in writing, but no one has specifically denied the transactions. In some case, appellant's firm's confirmed copy of account as appearing in the books of its one of the sundry trade creditor has also been procured by issuing summons u/s.131. b]Nevertheless, as stated above, the A.O. has carried out verification on test check basis, but perusal of the assessment records reveals that the A.O. had chosen to make addition u/s.68 of Rs.1,70,00,000 /-, without bringing on record in positive terms any adverse material in contradiction with the appellant's book version. It is the Document 10 appellant's case that in view of the documentary evidence furnis....