AI Drafter 
TaxTMI 
TaxTMI 
2022 (11) TMI 721
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.... directing the AO to verify the documentary evidences, and decide the same. 2. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.50,040/- made in respect of Employee's contribution to PF made u/s.2(24)(x) rws 36(1)(va) of the Act. 3. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.14,342/- made in respect of payment of commission. 4. That on facts, and in law, the learned CIT(A) has grievously erred in confirming the addition of Rs.76,819/- made in respect of payment of interest on TDS. 5. The appellant craves leave to add, alter, amend any ground of appeal. 3. The first issue raised by the assessee is that the learned CIT (A) erred in sustaining the addition of Rs. 3,44,07,768/- made by the AO under section 68 of the Act. 4. Brief facts of the case are that the assessee is a private company and engaged in the business of trading in pure ghee and food products. During the year under consideration, the assessee company received unsecured loan aggregating to Rs. 3,44,07,768/- from 18 persons detailed as under: Sr.No. Name of Investor/De....
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..... A perusal of the assessment order shows that in view of limited compliance by the assessee during the assessment proceedings, the AO was not able to verify the genuineness of the transactions and identity and the creditworthiness of the depositors, in respect of the unsecured loans taken during the year. It is also seen that the appellant did not produce the required documentary evidences before the AO all through the assessment proceedings, but as late as March 2015, requested the AO to call for the required information himself u/s. 133(6) of the Act. In view of the fact that the case was getting time-barred in March and the fact that the assessee had not furnished the required evidences and explanations in respect of the deposits, the AO was left with no option but to add*the said amount to the total income of the assessee. It is however seen that during the appellate proceedings, my learned predecessor i.e. ClT(A)-8, Ahmedabad (who had the jurisdiction over this case before it was assigned to the undersigned) issued letters to the depositors calling for information u/s. 133(6) of the Act in respect of their transactions with the appellant. In response to this, some parties Tav....
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....we are not repeating the same for the sake of brevity. 10. We have heard the rival contentions of both the parties and perused the materials available on record. The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon'ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd reported in 208 ITR 465 wherein it was held as under: "It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity of the creditors had not been established, conseq....
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....lish that creditor party has capacity to advance such loan and having requisite fund in its books of account. The capacity to advance loan can be established by the showing sufficient income, capital and reserve or other fund in the hand of creditor. It is required by the AO to find out the financial strength of the creditor to advance loan with judicious approach and in accordance with materials available on record but not in arbitrary and mechanical manner. 10.6 In the light of the above discussion, we proceed to adjudicate the issue in hand. With respect to the identity of the party, we find that the AO in his order has given categorical finding that the assessee has furnished the details such as copy of ledger confirmation along with the copy of PAN except one party namely Smt. Kalpanaben Desai from whom the assessee has taken the loan of Rs. 2,50,000.00 only. The ledger copies contain the name and address of the loan parties. From the above, there remains no doubt that the identity of the loan parties has been established by the assessee beyond doubt. 10.7 With respect to the genuineness of transaction, we note that the assessee has submitted that all the transactions we....
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....ques and the interest is also paid by the assessee to the creditors by account payee cheques." 10.9 In view of the above and after considering the facts in totality, we are of the view that the assessee has discharged its onus cast under section 68 of the Act, therefore, we direct the AO to delete the addition made by him except one party namely Smt. Kalpanaben Desai from whom the assessee has taken the loan of Rs. 2,50,000.00 only. Hence, the ground of appeal of the assessee is hereby allowed whereas the ground of appeal of the Revenue is hereby partly allowed. 11. The next issued raised by the assessee is that the learned CIT(A) erred in confirming the addition of Rs. 50,040/- made under section 2(24)(x) of the Act on account of late payment of PF. 12. At the outset, we note that the issue on hand is squarely covered against the assessee by the order of the Hon'ble Jurisdictional High Court of Gujarat in the case of CIT vs. Gujarat State Road Transport Corporation India Limited reported in 366 ITR 170. However, we also note that the above referred order of the Hon'ble Gujarat High Court has been challenged before the Hon'ble Supreme Court and outcome of the same is pendi....
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....thorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income-tax Act, raise disputes as to the year in which the deduction should be allowed. The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953- 54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other." 19.1 In view of the above and after considering the facts in totality, we are of the view that....
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....y us vide paragraph no. 11 of this order in favour of the assessee and partly in favour of the Revenue. Thus, the ground of appeal raised by the Revenue is hereby partly allowed. 28. The next issue raised by the Revenue is that the learned CIT (A) erred in deleting the addition of Rs. 3,00,821/- and Rs. 8,46,289/- made by the AO on account of unexplained advances from customers and unexplained liabilities. 29. The AO during the assessment proceedings found that the assessee in the financial statement has shown advances from customers as detailed below: Sr.No. Name of the party Credit Balance/Advance 1. Consumer Super Market Rs.19,150/- 2. Ganesh Sales Agency Rs.17,063/- 3. Shree Shrinath Trading company Rs.44,560/- 4. Thakkar lalji pdamsinh Rs.22,239/- 5. Deep General Stores Rs.1,61,585/- 6. Shiv Enterprises Rs.36,224/- TOTAL Rs.3,00,821/- 30. Similarly, the assessee has shown creditors for expenses amounting to Rs. 8,46,289/- only. The AO vide SCN required the assessee to explain the amount of advance from the customers and creditors for the expenses. The assessee in response thereto submitted ....
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....her transactions as genuine. Accordingly, we are of the view that the stand taken by the AO is unsustainable by treating the closing credit balance as unexplained and treating the transaction carried out by the assessee during the year as genuine. It is not expected from the AO to give different treatment to the various transaction carried out by the assessee. If any credit from any party is to be treated as an unexplained cash credit, then it has to be treated in the entirety and not in the piecemeal. 35.1 With respect to the party namely M/s Shiv Enterprise, we note that the credit balance shown by the assessee was relating to the earlier year. As such, the assessee has shown opening credit balance of Rs. 36,224.00 which was also shown closing balance as on 31st of March 2012. In our considered view, the opening balance carried forward from the earlier year cannot be disturbed in the year under consideration. If any doubt is there with respect to such transaction, the same can be disturbed in the year in which it was credited in the books of accounts of the assessee. In other words, the amount of Rs. 36,224.00 was not credited in the year under consideration. 35.2 With resp....
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....t, the features of section 41(1) are given below: (i) It is applicable in respect of an allowance or deduction which has been allowed in any earlier assessment year. (ii) In any subsequent year, if the assessee obtains some benefit, whether in cash or in any other manner in respect of such loss, expenditure referred to above, it is chargeable to tax. (iii) The benefit is in respect of a trading liability by way of remission or cessation or unilateral transfer to profit and loss account by the assessee. (iv) The amount received or benefit derived shall be deemed to be the profits and gains of business or profession and is chargeable to tax as income of the previous year in which it is received. (v) This is regardless of whether the business or profession in respect of which the allowance or deduction was made originally is continued in the year of receipt of such benefit subsequently. In other words, even if the business or profession is discontinued, the benefit so received is chargeable to tax. (vi) Even successor to the business deriving such benefit has to pay tax. For example, a bad debt written off by father when it is reco....