TaxTMI 
TaxTMI 
2022 (5) TMI 511
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....deposits into bank account of the assessee. 2. Briefly the facts are that the Assessing Officer while completing the assessment u/s 143(3) on 18.03.2015 noticed that the assessee made cash deposits of Rs.36,25,000/- in bank account maintained with HDFC Bank, Punjabi Bagh Branch, Delhi. Assessee was asked to file details of these entries along with documentary evidences. Assessee in the course of assessment proceedings submitted that the company was closed since 1997-98 due to incurring of heavy losses as there was slump in vanaspati oil market. It was submitted that assessee became defaulter for term loans and working capital loans taken from Haryana Finance Corporation (HFC). It was further submitted that Oriental Bank of Commerce had fil....
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....,34,687/- have been produced. 5. Before us the Ld. Counsel for the assessee reiterated the submissions made before the lower authorities stating that the company has closed since 1997-98 as heavy losses were incurred due to slump in the oil market. The company had gone into liquidation and had become defaulter in respect of term loan taken from Haryana Financial Corporation (HFC) and HSIDC and working capital loans taken from its banker M/s OBC. It is stated that the bank had filed a suit in DRP, Jaipur and in the year 2004-05, the company received closure notice from HUDA and the building was auctioned. The company approached BIFR for rehabilitation but could not succeed. In FY 2008-09 due to the pressure of the financial institution HFC ....
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....s were made to carry out any verification by the Assessing Officer. Therefore, it is submitted that having discharged the primary onus of furnishing original invoices in respect of scrap sales and more importantly that these were all petty scrap dealers for small amount which has been deposited into bank account and since there is no other income from the operation of the business of the assessee the explanation offered by the assessee should be accepted. Reliance was placed on the following decisions in support of the contentions raised: 1. CIT vs. P. Mohanakala 291 ITR 279 (SC); 2. MOD Creations Pvt. Ltd. vs. ITO 354 ITR 282 (Del.); 3. AGM Protection Devices Ltd. vs. DCIT 324 ITR 334 (Del.). 7. On the other hand, the Ld. DR strongl....
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.... was asked to produce the original vouchers for the sale of scrap. Originals were produced by the AR of the assessee which were verified and no discrepancy was noted." 9. However, the Ld. CIT(A) sustained the addition observing that the assessee could not produce the vendors before the Assessing Officer. There is no complete address provided and all the transactions are less than 20,000/- and, therefore, they are suspicious. However, the remand report submitted by the Assessing Officer indicates that all the original vouchers were verified and there is no discrepancy found in the vouchers furnished by the assessee. It is noticed from the remand report that the assessee in fact requested the Assessing Officer to issue notice u/s 133 to the ....
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....ancial Corporation gave an advertisement in the newspaper for sale of sick/closed units and assessee company also appears at Sl. No. 14 of the said advertisement. All these goes to show the assessee became financially weak due to heavy losses in past years, business operations were shut and was trying to wriggle out of the financial crunch by settling the dues to bankers and other creditors. The assessee sold some scrap generated in its factory and the sale proceeds were utilized for clearing the loans. The assessee has given explanation regarding the cash deposits made into bank account are out of sale proceeds from scrap generated. 10. The Hon'ble Supreme Court in the case of CIT vs. P. Mohanakala (supra) held as under: - "The question....
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....e books or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory. It is only then the sum so credited in the books may be charged to Income tax as income of the assessee. As held by the Hon'ble Supreme Court the expression "the assessees offered no explanation" means where the assessee offers no proper reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. Here in the case of the assessee, the assessee has given an explanation that the credit entries in the bank account are relating to sale of scrap and the original vouchers were also furnished before the Assessing Officer in the remand proceedings. On examination of all the original vou....