TaxTMI 
TaxTMI 
2024 (7) TMI 1019
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....ance in their bank account on the date of deposit of money to the account of the assessee. 2. The findings recorded by the CIT (Appeals) in para 5.5.3 that the creditors are agriculturists having substantial agricultural income is perverse on the facts. 3. The findings recorded by the CIT (Appeals) in para 5.5.5(b) that these agriculturists believed in cash transactions is perverse in as much as the same defies logic as to how could they advance substantial sums to the assessee without any documented record of the same. 4. Any other ground which may be raised with the permission of the Hon'ble ITAT. 3. The fact of the case of the appellant as culled out from the records as per Form 35 is as follows:- " The appellant earns business income from lodging & restaurant, Video Game Parlour and Trading of Sand. The appellant is maintaining regular books of account and books of account were audited as per Section 44AB of the Income Tax Act. The appellant filed e-return of income declaring net taxable income at Rs. 4,60,290/- on 25/01/2012. The return was processed and assessment u/s. 143(1) was completed on 17/02/2012. The assessing officer has issued notice u/s. 148 the appellant ....
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....k. The appellant has deposited the aforesaid amount in his bank account No. 2159902651 with Central Bank of India, Daryapur. 5.5.2 In this case, an enquiry under section 131 of I.T. Act 1961was conducted at the premises of the appellant on 19/04/2013 by the Deputy Director of Income Tax (Inv.) Unit-III. Nagpur. During the course of enquiry, the DDIT(Inv.) Unit-III Nagpur noticed that the appellant has introduced cash of Rs. 2.05 crores in his books of account on 03/01/2011 and on the same date the appellant made the cash deposit of Rs. 1.06 crores in the bank account with Central Bank of India, Daryapur., the sources of which was stated by the appellant to be out of cash advances of Rs. 2.05 received by him from the aforesaid 17 parties. On the basis of the enquiry, the A.O. - inferred that the nature and source of cash of Rs. 2.05 crores introduced in the books of appellant on 03/01/2011 has remained explained. Thus the A.O. added the amount of Rs. 2.05 crores to the returned income under section 68 of I.T. Act 1961. 5.5.3 Perusal of the evidences filed in the paper book indicates that the persons who have given money to the appellant are agriculturists having substantial agri....
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.... statements were recorded behind the back of the appellant and no opportunity to cross examine was granted to the appellant. 5. Upon careful consideration of the evidences and documents, learned CIT (Appeal) deleted the addition by holding as follows: "Considering the totality of the facts and circumstances of the case and the appreciation of the evidences filed on record, as well as the decisions relied upon by the appellant, I am of the considered view that the appellant has offered reasonable and satisfactory explanation, and discharged his obligations of proving the transactions. It is therefore held that the A.O. is not justified in making the addition of Rs. 2,05,00,000/- under Section 68 of the I.T. Act 1961 on account of unexplained cash credits. The addition of Rs. 2,05,00,000/- is accordingly deleted and the appeal on these grounds is allowed". Accordingly, CIT (Appeals) has granted full relief to the appellant by directing deletion of the same u/s 68 of Rs. 2,05,00,000/-. Being aggrieved, the department is in appeal before us. 6. The learned DR, at the very onset vehemently argued that the creditworthiness of the lenders was very much in doubt because they are agric....
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....unt of Hariram Gulabrao Gawande 37] Copy of ledger account of Shivpal Puranji Maliye 38] Copy of ledger account of Mohd Hamid SH Burhani 39] Copy of ledger account of Mohd Ibrahim 40] Copy of account of Sharad Wasu 41] Copy of acknowledgement of Audit Report in Form 704 42] Copy of Statement of Audit Report in Form - 7-4 43] Copy of Written submission filed before CIT(A)-1, Nagpur 44] Copy of Remand Report filed by Assessing Officer 45] Copy of submission of rejoinder to remand report 46] Copy of order of Collector, Amravati, regarding Excavation of sand 47] Copy of further rejoinder to remand report alongwith Relevant details. He had also submitted a paper book containing the following orders/ judgments:- 1] (1980) 125 ITR 0713 (SC) Kishinchand Chellaram vs. Commissioner of Income Tax 2] Judgment of Hon'ble Income Tax Appellate Tribunal, Mumbai Bench, dt. 12/04/2017, vide ITA No. 1069 to 1071/Mum/2017 3] Judgment of Hon'ble Income Tax Appellate Tribunal, Delhi Bench "C" dated 24/02/2016 vide ITA No.5500/Del/2013 4] (2010) 322 ITR 0394 (Bom.HC) Commissioner of Income Tax vs. Tania Investments (P) Ltd. 5] (1973) 90 ITR 0396 (Bom HC) Commissioner of I....
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....that credit should be from the books of account of the assessee maintained for that year. Once, the books of account maintained by the assessee is treated as no longer in existence by rejecting those books u/s.145(3) of the Act, then for all purposes including for the purpose of section 68 of the Act, said books of account ceased to exist and hence, those books cannot be relied upon to make addition towards unexplained credit u/s.68 of the Act. This legal position is supported by the decision of Hon'ble High Court of Rajasthan in the case of CIT vs. G.K. Contractor, supra, where it was clearly held that "AO having estimated the profit by applying a higher net profit rate to total contract receipts after rejecting assessee's books of account by invoking the provisions of section 14(3), no separate addition can be made on account of cash credit u/s.68, even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of account". The Hon'ble High Court of Punjab and Haryana, in the case of CIT vs. Aggarwal Engg. Co., (2008) 302 ITR 0246 had considered an identical issue and held that "no separate addition on account of cash cre....
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....f Basir Ahmed Sisodia vrs. Income Tax Officer vide Civil Appeal No. 6110 of 2009 dated April 24, 2020 reported in [2020] 116 taxmann.com 375(SC). 11. Upon perusal of the same, we find that the Hon'ble High Court at Allahabad in paragraph 10 of the order has clearly held that, where the unexplained sundry creditors are referable to the business income and the AO is precluded from adding the said unexplained sundry creditors as undisclosed income from the business." The judgment of the Supreme Court was in regard to the fact that even during the penalty proceedings, documents can be filed to establish the genuineness of sundry creditors. These cases, in our humble opinion, are not at all relevant to decide the issue in hand. Accordingly, the ld. AR is correct in his view that when books of account were rejected, no addition can be made u/s 68 of the IT Act, 1961. The ld.AR also relied upon the judgment of Calcutta High Court in case of Principal Commissioner of Income Tax vs. Dutta Automobiles (P) Ltd., [GA 1116 of 2016 & ITAT 142 of 2016] dated May 17, 2016 reported in 138 DTR 0361 (Cal.). "Income-Cash credits-Bogus liability-It appeared that nearly sum of Rs. 4 crores was found ....