TaxTMI 
TaxTMI 
TaxTMI 
2017 (2) TMI 680
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.... opportunity to the AO. In CO No. 29/JP/15 (assessee's cross-objection): (i) On the facts and in the circumstances of the case, the ld. CIT(A) has grossly erred in upholding the action of ld. AO in rejecting the books of accounts of assessee u/s 145(3) of the IT Act, 1961 merely by alleging that the stock register is not maintained and the sale/purchase bill were not produced by assessee. Thus the addition of the ld. AO deserves to be held bad in law. (ii) On the facts and in the circumstances of the case the ld. CIT(A) has grossly erred in sustaining the addition of Rs. 2,57,000/- being 10% of total labour charges claimed in M/s Ved Prakash & Co. and Rs. 55,032/- being 10% of total labour charges claimed in M/s Madan Mohan &Co. without appreciating the evidences submitted by assessee in support of the expenses claimed. Thus the addition of Rs. 3,12,632/- deserves to be deleted. (iii) On the facts and in the circumstances of the case the ld. CIT(A) has grossly erred in sustaining the addition of Rs. 9,00,000/- being unsecured loan received by assessee and held by ld. AO as unexplained credits u/s 68 without appreciating the facts and circumstances of the case and the ev....
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....ns of the persons from whom loans had been taken and also filed the copy of return of income alongwith computation of income , however ld. AO has deliberately not stated this fact on the assessment order and straightaway observed that since the assessee failed to produce the parties for verification therefore, the loans are not confirmed and made the addition. While making the addition the AO neither stated whether the assessee failed to prove the identity or the genuineness of the transaction or creditworthiness. With regard to the identity, confirmations containing complete name, addresses and PAN of the lender were filed. Since all the transactions were made through banking channels thus genuineness was further proved and their credit worthiness have been proved by their income tax returns, which further established that all the parties are assessed to income tax. Thus, the asseseee had duly discharged his burden of proving existence of the creditors and genuineness of the transaction, which has been tabulated as under: Name of creditor Amount PAN Whether Return of income & computation filed Whether confirmat ion filed Whether Summon issued Anuradha Pareek 9,00,00....
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....s creditor. Therefore, addition on account of unexplained loan or Rs. 9 lacs received from Anuradha Pareek is upheld..." On bare perusal of above remarks of Ld. CIT(A), it is crystal clear that assessee was not provided with the opportunity to explain his stand in respect of loan taken from Anuradha Pareek. No further enquiry whatsoever was made in respect of loan taken from Anuradha Pareek, rather merely on the basis of return of income furnished, it was concluded that lender was not in a position to lend a sum of Rs. 9 lacs. In this regard, it is submitted that it is well settled law that so far as funds have been borrowed through banking channels and identity as well as genuineness of the transaction is proved, and assessee has proved the source of a particular income onus of proving "source of source" does not lie upon assessee. In the circumstances it is submitted that assessee had duly discharged its burden of proving the identity, genuineness of the transaction and creditworthiness of the lender and thus entire addition of Rs. 18,70,000/- on account of unsecured loans is not sustain able in law. Reliance placed on the following decisions: * Orrisa Corporation (P) Ltd. rep....
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....kh is upheld and unsecured loan obtained from six other persons amounting to Rs. 9,70,000/- is held to be explained in view of the evidences filed by the assessee during the course of assessment proceedings. The AO is therefore, directed to delete the addition amounting to Rs. 9,00,000/- on account of unsecured loans received from six persons. This ground is partly allowed. 4.4 We have heard the rival contentions and pursued the material available on record. The ld CIT(A) has rightly applied the test of identity, creditworthiness and genuineness to examine the unsecured loan transactions of the appellant and after examining the material on record, has given a clear finding that except for Anuradha Pareek, the said test is duly satisfied. Regarding the findings about Anuradha Pareek from whom the assessee has shown unsecured loan transaction of Rs. 9,00,000, the ld CIT(A) has given a finding after examining her return of income that her creditworthiness is not proved. Where any one of three limbs of the basis test as referred above are not satisfied, it cannot be said that the assessee has discharged the primary onus placed upon him. The assessee has placed the necessary documenta....
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....ring chares separately shown in the Profit and Loss Account which fact is also grossly ignored by the Ld. AO. For better clarity on facts of the case, during the course of assessment proceedings, a chart was furnished providing bifurcation of the receipts of the assessee from which it would clearly be seen that the deductions have been made from the supplies also, few copies of the bills and payment instructions issued by the awarder at the time of making payment, as submitted to the ld. AO in support of the claim are enclosed wherein it is clearly stated that the TDS was also deducted in the case of supplies made to the awarder thus the gross receipts should have been compared instead of comparing the contract receipts only. Therefore, the observation of ld. AO was factually wrong and when these facts were brought to the knowledge of the ld. CIT(A), after thorough examination of the copies of bills/payment instructions issued by principal, which reflected that tax had been deducted at source on sales/ supply of material as well and the reconciliation statement of receipts as per books of accounts and as per 26AS, ld. CIT(A) deleted the addition. 5.2 Ld DR vehemently argued the ma....