TaxTMI 
TaxTMI 
2018 (11) TMI 1110
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....on of Rs. 1,85,64,955, as unexplained credit, being amounts transferred to the Capital Account of M/s. Jay Jewellers by the appellant - despite specific findings, in favour of the assessee, in the remand report given by the Assessing Officer. 3. The issue in appeal lies in a rather narrow compass of material facts. During the course of scrutiny assessment, the Assessing Officer noted that the assessee is sole proprietor of Jay Jewellers and his capital account showed credit of Rs. 1,85,64,955 but capital account of the assessee, in his personal accounts, reflected closing balance of only Rs. 43,16,557. The credit entry of Rs. 1,85,64,955 was thus treated as unexplained, and added to the income of the assessee under section 68. Aggrieved, a....
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....evant for the present purposes, as follows:- "The assessees balance sheet as on 31.03.2009 shown a total of Rs. 8,95,74,579/-.The balance in capital account shows is Rs. 43,16.656/- whereas unsecured loans constitute Rs. 8,52,58,022/- which obviously the balance sheet and liabilities side with the properties, Fixed Assets, Investments, Advance, deposits of the assessee has mentioned in the balance sheet. Thus, Rs. 2,33,87,955/- was treated as an advance which was invested out of the unsecured loans and incidentally the balance of capital account shown at Rs. 43,16,557/- which includes the receipts occurred during the F.Y. like direct remuneration of Rs. 1,95,000/- and profit from proprietary concern of Rs. 36,74,590/-. It is dear that the....
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....he AO however the same would not be a grave misconduct so as to warrant deletion of the entire addition. In this case there are two sets of accounts which have been examined. Thus, one set pertains to one Jay Jewellers which is proprietary business of appellant i.e. Ajay S Mehta and other set pertain to appellant i.e. Ajay S Mehta in his individual capacity. On examination and consideration of evidence on records, it is noted that the books of appellant i.e. .Ajay S Mehta in his individual capacity are being used to act as a conduit to justify transactions in Jay Jewellers which is proprietary business of appellant i.e. Ajay S Mehta. Thus, capital account of Jay Jewellers shows introduction of capital of Rs. 1,85.64,955/-. The source of the....
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.... in the books of accounts of an assessee for which no explanation about the nature, source thereof is offered would be treated as income of the assessee for that previous year. Now in the instant case, the assessee is not Jay Jewellers but the assessee is appellant i.e. Ajay J Mehta. Since the business of Jay Jewellers is done by the appellant in the proprietary capacity therefore the appellant is required to furnish to the A O all the necessary evidences u/s.68. Merely by saying that the capital introduction in Jay Jewellers has come from appellants individual books would not suffice more so because the appellant was not having requisite own funds in the previous year under consideration in his personal capital account. The very fact tha....
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....nd ground of appeal is therefore dismissed." 6. The assessee is not satisfied and is in further appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. Let us first understand the case of the Assessing Officer. His short point was that since capital shown to have been introduced in the capital account of Jay Jewellers does not find corresponding entries in the capital account of the assessee and are in fact much more than capital account credit in the hands of the assessee, and, therefore, the introduction of capital in the accounts of Jay Jewellers stands unexplained. This point, as noted in the remand report, is fall....
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....icer in the remand proceedings, the capital introduction of Rs. 1,85,65,955/- stands explained in the books of Jay Jewellers. 9. Learned CIT(A) has, however, given it a different twist. He has noted that the assessee has, in his personal books of accounts, accepted unsecured loans of Rs. 8,52,58,022/-, including an amount of Rs. 7,91,19,400/- from Harshad Jewellers, and "the assessee was required to have established their identity, creditworthiness and genuineness of transactions in respect of loans taken in the personal account." That, however, was not the case of the Assessing Officer nor any requisition in respect of the same was made at the assessment or appellate stage. The addition under section 68, in such a case, should have been m....