AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 9
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..../-. 2. (a) In the facts and circumstances of the case and in law the ld. CIT (A) has erred in not admitting the additional evidences produced during the course of appellate proceedings. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by considering the additional evidences while disposing off the appeal. (b) In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of ld. AO to the extent of making addition of Rs. 9,40,000/- u/s 68 of the Income Tax Act, 1961 out of the total addition of Rs. 25,75,500/- made by the ld. AO. The action of the ld. CIT (A) is illegal, unjustified arbitrary and against the facts of the case. Relief may please be granted by deleting the said addition of Rs. 9,40,000/-. 3. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of ld. AO in making disallowance out of the following expenses :- Particulars Expenses Disallowed Telephone expenses 72,758/- 21,400/- Transportation Expenses 80,724/- Vehicle repair Expenses ....
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..... Thus, the ld. D/R has submitted that the AO is justified in taking the GP of the comparable case instead of taking past history of the assessee which is not reliable. She has relied upon the orders of the authorities below. 3. We have considered the rival submissions as well as material on record. As far as the computation of income of the assessee on the basis of the best judgment, there is no dispute that the assessee's own past history of declared GP which is accepted or the GP which has attained the finality can be considered as a proper guidance for the estimation of income after rejection of books of account under section 145(3). The Coordinate Bench of the Tribunal in case of CIT vs. Allied Gems Corporation, while considering an identical issue has held in para 5 as under :- "5. We have considered the rival submissions as well as relevant material on record. The Assessing Officer rejected the books of account by invoking the provisions of section 145(3). The issue of rejection of books of accounts is involved in the cross objection filed by the assessee, therefore, we deal with this issue while deciding the cross objection. Once, the books of accounts are rejec....
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....ssessee has neither been able to disclose the complete addresses of the trade creditors nor is able to give the complete addresses of the consignors nor the name has been mentioned on the challan forms, so the verification of the same by the Assessing Officer became totally impracticable on account of lack of this complete information supplied by the assessee. It means that the assessee failed in establishing the genuineness of the so called trade creditors appearing in its books of account. We are further of the opinion that since in the instant case of the assessee, the point under consideration before us is regarding the genuineness of the liability amounting to Rs. 1,75,26,586 shown by the assessee in its balance-sheet as trade creditors, so it was not relevant for us to consider as to whether the purchases made by the assessee were genuine or not or to whether the assessee has inflated those purchases or not. It is also not material to consider whether the GRs from sale-tax department were verified or not, so, the CIT(A) on considering these points was not justified in deleting the impugned addition without discussing as to whether the liability of trade creditors shown by the....
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....y the assesee even in the past years, however, when the issue of applying the GP rate has already been settled in the process of appeals and has attained the finality then the GP which has attained the finality or was accepted by the AO can be considered for the purpose of estimation of income of the assessee for the year under consideration. Accordingly, we direct the AO to compute the income of the assessee by taking the average GP of the past years of the assessee which is accepted and/or attained finality. Hence this issue is set aside for limited purpose of applying the average GP for computation of income of the assessee. Ground No. 2 is regarding the addition of Rs. 9,40,000/- made under section 68 of the IT Act confirmed by ld. CIT (A). 4. During the course of assessment proceedings, the AO noted that the assessee has introduced the deposit of Rs. 25,75,500/- on account of partner's capital and further Rs. 9,40,000/- as unsecured loan. When the assessee has failed to furnish any explanation and supporting evidence, the AO made the addition of these amounts as unexplained credit under section 68 of the IT Act. On appeal, the ld. CIT (A) has deleted the addition to the ....
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....ujarat) Dayal Singh and Sons vs. Commissioner of Income Tax 20 taxmann.com 687 (P&H) Umesh Krishnani vs. Income Tax Officer 35 taxmann.com 598 (Gujarat) 5. We have considered the rival submissions as well as relevant material on record. The assessee has shown the cash credit of Rs. 9,40,000/- being loan taken from M/s. Royal Jaipur Durbar Hotels Pvt. Ltd. There is no dispute that the primary onus is on the assessee to establish the genuineness, creditworthiness and identity of the creditor. The assessee has produced bank statement from which the said company has issued the cheques for payment of the amount. However, apart from the bank statement, the assessee has not produced any other documents. The ld. CIT (A) has specifically pointed out that even the confirmation with PAN was not filed by the assessee and, therefore, the assessee has failed to discharge its primary onus. We further note that when the partner of the assessee is one of the Directors of the loan creditor company, then the burden lies on the assessee to prove the genuineness of the transaction beyond any iota of doubt. The assessee has not explained any reason for not furnishing the confirmatio....
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.... the ld. CIT (A), the assessee has not produced any of the supporting evidence even before us to explain the source of credit. The Hon'ble Gujarat High Court in case of Blessing Construction vs. ITO (supra) while dealing with an identical issue of cash credit has observed in para 4 to 7 as under :- "4. The assessee carried the issue in appeal. The Commissioner(Appeals) re- examined the entire issue at length. He observed as under : "5. I have carefully considered both the positions. I have also examined the relevant documentary evidences furnished by the AR including account confirmations, copies of Income-tax returns of the depositors, their balance-sheets, P & L accounts, and capital accounts as also their bank statements. The first depositor was Shri Hasmukh R. Mehta, against whom the loan of Rs. 3 lakhs was shown. His bank statement with HDFC Bank shows, amongst other transactions, a deposit of Rs. 3 lakhs on 29.6.2006 by cheque. The loan was given to the Assessee by cheque on 4.7.2006. It cannot therefore be said that unexplained cash was deposited in the account of Shri Hasmukh R. Mehta before giving the said loan to the Assessee. The next depositor was Shri....
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....allments of Rs. 49,000 each were deposited in cash in her bank account on 24.1.2005 creating the necessary fund for giving the loan of Rs. 2 lakhs the very next day i.e. 25.1.2005. 6.1 The aforesaid facts clearly show that the availability of funds in the hands of the depositors were manipulated by depositing cash in their bank accounts except for Shri Hasmukh R. Mehta. Even though four of the depositors may have appeared before the Assessing Officer and confirmed the loans, even then the loans did not stand satisfactory explained, especially in relation to the creditworthiness of the alleged depositors. The identities of four depositors were established only by their personal appearance. However, the returns of income cannot be treated as a conclusive evidence of genuine identity or even the bank accounts, especially when it is considered that a large number of bogus returns and bank accounts are opened for providing such entries, the practice of which in Surat is almost an industry, apart from the textile and diamond industries. On the face of it the transactions were made look absolutely genuine as the loans were taken by account-payee cheques, the depositors had filed ....
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....not be accepted in view of surrounding circumstances and natural probabilities. The Tribunal therefore, came to the conclusion that assessee could not establish the creditworthiness of the depositors and genuineness of the transactions. 6. Learned counsel for the appellant vehemently contended that the Revenue authorities as well Tribunal committed serious error in inquiring with the assessee the source of the income of the creditors. He contended that while examining the question of addition under section 68 of the Act, assessee cannot be expected to establish source of the source. In this context, he placed heavy reliance on the following decisions : (1) CIT v. Jay Dee Securities & Finance Ltd.[2013] 32 taxmann.com 91 (All.) (2) Nemi Chand Kothari v. CIT[2003] 264 ITR 254/[2004] 136 Taxman 213 (Gau.). (3) S. Hastimal v. CIT[1963] 49 ITR 273 (Mad.) 6.1 Counsel further submitted that assessee had not only established the identity of the depositors, had received the amount through cheque. Genuineness of the transaction therefore, could not have been doubted. The creditworthiness of the depositors also was sufficiently established. Assesse....