2015 (11) TMI 1728

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....in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the cash credit of Rs. 1,14,500/- in the name of Shree Pal. 3. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the addition of Rs. 1,25,000/- u/s 69 in respect of Sh. Rajinder Kumar Mittal. 4. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in upholding the addition of Rs. 40,030/- on account of low household expenses. 5. That on the facts and in the circumstances of the case and in law, the ld. CIT(A) should have set off the addition of balance house hold expenses with cash credit as was done by him in the case of trading addition." 2. Concerning Ground no.1, the AO made an addition of Rs. 50,000/- in the trading account of the assessee. It was observed that the assessee deals in tea leaves; that on the gross turnover of Rs. 66,83,514/-, the GP had been shown by the assessee at Rs. 4,68,938/- which worked out to 7.01% as compared to GP of 8.64% shown for the immediately preceding assessment year, i.e. 2009-10; that on query the assessee had contended that during the year his sales rose to Rs. 66.83 l....

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....deemed to have been accepted by the AO. Accordingly, the addition of Rs. 50,000/- restricted to Rs. 30,000/- by the ld. CIT(A), is deleted. Ground Nos. 1, 1A & 1B are accepted. 8. Coming to Ground no.2, the AO found the assessee to have raised fresh loans from Shree Pal S/o Sh. Bhim Sain and Sh. Rajinder Mittal at Rs. 50,000/- and Rs. 1,25,000/- respectively. However, from the books of account of the assessee, the AO observed that Shree Pal was an employee of the assessee, to whom, salary of Rs. 64,500/- was claimed to have been paid, as follows: i) 29.04.2009 : Rs. 2,000/- ii) 29.05.2009 : Rs. 2,000/- iii) 25.09.2009 : Rs. 2,500/- iv) 26.09.2009 : Rs. 2,500/- v) 26.10.2009 : Rs. 2,500/- vi) 04.12.2009 : Rs. 3,000/- vii) 05.03.2009 : Rs. 50,000/- 9. The AO observed from the above that actually salary of Rs. 14,500/- was withdrawn by Shree Pal during the whole of the year; as an amount of Rs. 50,000/- had been paid only through cheque in March, 2010. The AO found it strange that a person deriving salary of Rs. 5,000/- had received salary during the whole of the year of Rs. 14,500/-. The AO observed that it was highly improbable to manage one's affair with ....

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.... paid interest on this loan, he had claimed less expense. The ld. counsel for the assessee contends that the ld. CIT(A) erred in not considering these submissions specifically made before him, as also recorded at page 5 of the impugned order. It has been contended that the assessee had requested that since the AO had not given reasonable opportunity to produce Shree Pal on another date, Shree Pall be allowed to be produced before the ld. CIT(A), which request was also wrongly taken into consideration. 12. The ld. DR, on the other hand, has placed strong reliance on the impugned order, in this regard. 13. It is seen that the ld. CIT(A) confirmed the addition by observing as follows: "3.3. The AO has rightly made addition of Rs. 1,14,500/- on account of unexplained credit and salary in the account of Shree Pal who is an employee of the appellant. The finding of the AO that a person getting salary of Rs. 64500/- cannot advance a loan of Rs. 50,000/- to the appellant and maintaining his family with the amount of Rs. 14,500/- received from the appellant which comes about to Rs. 1200/- per month, is correct. Moreover, he could not be produced before the AO to prove that somebody....

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.... garb of fresh unsecured loan and bank account of the assessee had been utilized as conduit pipe to give it a colour of loan. The AO added the amount of Rs. 1,25,000/- to the income of the assessee u/s 69 of the Act. The ld. CIT(A) confirmed the addition. 16. The assessee contends that the ld. CIT(A) has erred in confirming the addition of Rs. 1,25,000/-, made u/s 69 of the Act; that Sh.Rajender Kumar Mittal, the creditor was having income of Rs. 1.5/2.00 lacs per annum from doing part time work; that the money was received through banking channel; that if the assessee had not paid interest on loan, then the assessee had, in fact, claimed less expense, which goes in favour of the department; that if the depositor did not tell the exact date of having received back the amount; and that too after expiry of considerable time no adverse inference can be drawn against the assessee, it is not the case either of the Authorities below that the lender is not doing any work; that it is not the assessee's onus to prove the source of source of deposits; that the assessee cannot be presumed to have the knowledge of source from which the depositor obtained the money; that once the assessee ha....

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....of the either Authorities below that the depositor/lender was not doing any work. As per the return of income of Sh. Rajender Kumar Mittal, for the AY 2008-09, filed on 3.3.2009, income of Rs. 1,05,120/- has been shown. As per the computation of income for the year ending 31.03.2008, net income is Rs. 1,05,116/- or say Rs. 1,05,120/-. Out of this an amount of Rs. 95,500/- is by way of salary and other income, Rs. 60,000/- having come from M/s. Balanwali Rice Mills and Rs. 35,500/-, income from part time accounts, for the AY 2009-10, Sh. Rajender Kumar Mittal has earned Rs. 84,000/- from M/s. Prime Traders, Rs. 48,200/- from part time accounts and Rs. 1,500/- as on-line tax commission, total amounting to Rs. 1,33,700/-. For the AY 2010-11, the gross total income of Sh. Rajender Kumar Mittal is Rs. 2,19,609/-. After claiming deduction under Chapter VI-A amounting to Rs. 50,000/-, the total income depicted at Rs. 1,69,609/-. 19. Furthermore, the factum of no interest having been paid by the assessee to his creditor, by itself, cannot go against the assessee. The factum of creditor having not received any interest on the loan has been categorically admitted by Sh. Rajender Kumar Mit....

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..... 22. In "Sarogi Credit Corporation vs. CIT", 103 ITR 344 (Patna), it has been held that it is not for the assessee to explain further as to how the or in what circumstances the depositor obtained the money, or how he came to make an advance of the money as a loan to the assessee; that once such identity is established and the creditors, 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 can not be accepted and as to why it must be held that the entry though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source; that in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials. In the present case, whereas on the one hand, the assessee has successfully discharged, his onus, the department has not been able to gather any material much less sufficient or adequate material, to conclude that the entry in question represented the income of the assessee from suppressed source. 23. In "CIT vs. Metachem Industries", 245 ITR 160 (MP), it h....