2022 (8) TMI 601

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.... his onus of proving the identity, genuineness and credit worthiness of the debtors, creditors, etc. 3. The ld. CIT(A) failed to note that the amount shownas Rs.35,50,000/- shown as drawings of the appellant not accounted for by the firm in the reconciliation statement given before the CIT(A) did not appearing in the reconciliation statement given during the remand proceedings and that the reconciliation statement given by the assessee is only play of numbers and not genuine. 4. For these and such other grounds that may be adduced at the time of hearing it is prayed that the order of the CIT(A) may be reversed and that of the Assessing officer restored. As evident, the revenue is aggrieved by relief provided by Ld. CIT(A) in the impugned order qua unexplained investment and unexplained credit. 2. The Registry has noted delay of 95 days in the appeal, the condonation of which has been sought by Ld. Sr. DR. Considering the fact that the impugned order was passed during lockdown situation arising out of Covid-19 Pandemic, we condone the delay and admit the appeal for adjudication on merits. 3. The Ld. Sr. DR, drawing attention to the grounds of appeal, assai....

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....cs was held to be unexplained investment and added to assessee's income. Appellate Proceedings 5.1 The assessee assailed the additions during appellate proceedings which were subjected to remand proceedings. The remand report was furnished by Ld. AO on 07.05.2019 whereas 2nd remand report was furnished on 07.07.2020. 5.2 After perusal of financial statements, it transpired that the assessee was a partner on CEM with 10% profit-share and had a debit balance in the current account. The entry was explained by the assessee as under: Addition as non genuine sundry creditors: Rs. 2,24,12,180/- The learned Assessing officer has made an addition of Rs.2,24,12,180/- holding that the sundry creditor is not genuine and also on the ground that the name of the appellant is not reflected as debtor in the books of the relevant party M/s. Chendur Earth Movers during the relevant period under consideration. The appellant submits that the appellant is one of the partners of the firm M/s. Chendur Earth Movers. The balance of M/s. Chendur earth Movers as per the books of the appellant were refiected at Rs.2,24,12,180/- (credit balance) but in the books of M/s Chendur Earth M....

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....t pleads to submits here under the cash flow statement reflecting the actual position and the source for the investments made. Opening cash and bank balance   Rs. 49,84, 569/- Add: profit as per profit and loss account   Rs. 9,47, 90,275 Depreciation debited to profit and loss account   Rs. 10,36,393 Gifts received during the year   Rs. 1,65,00,000 Less: income tax and wealth tax Rs. 3,20,43,070   LIP and Mutual Funds Rs. 9,93,836   Drawings Rs. 2,40,000 Rs. 3,32,76,906     Rs. 8,40,34,331 Add: increase in Unsecured loans   Rs. 2,37,67,200 Increase in Secured Loans   Rs. 2,87,17,460 Amount withdrawn from Chendur Earth Movers   Rs. 3,20,00,000 Amount withdrawn from Gokulam Chits   Rs. 5,25,000 Reduction in sundry debtors   Rs. 1,51,75,790   A1 Rs. 18,42,19,781 Less:addition to fixed Assets before depreciation A2 Rs. 16,32,48,583 Closing cash and bank balances   Rs. 2,09,71,198 A2 = Addition to fixed assets which is explained by increase in capital As....

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....al 780.13     165.00 ------------ Gifts received during the year   615.13 ------A1 Income declared for AY 2016-17     Total income 937.27   Tax 326.05 ------------     611.22 A2 net of tax increase in capital Unreconciled difference A1 - A2=615.13 - 611.22 = 3.91 On the basis of the same, it was concluded by Ld. CIT(A) that adequate funds were available with the assessee for investments. Further, the figures picked up by AO were from declared accounts and there was no case that any undisclosed asset has been found. Finally, the addition on account of unexplained investment was deleted. 5.6 Regarding unexplained credit of CEM, it was held that the same was merely due to mismatch in account but the same would not lead to conclusion of escapement of income. Finally, except retaining the addition to the extent of unreconciled amount of Rs.3.91 Lacs, the balance addition was deleted. 5.7 Aggrieved, as aforesaid the revenue is in further appeal before us. Our findings and Adjudication 6. So far as the addition of unexplained cash credit is concerned, we find that the same ar....