2018 (2) TMI 2124

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....facts and circumstances of the case and in law the Ld CIT(Appeals) has erred in confirming the addition of Rs.5,16,000/- made by the AO U/s 69 of the Act in respect of alleged deposit from Mr Mahesh Malhotra. 3. That Ld CIT(A) has erred in confirming the additions aforesaid made by the Ld AO on the basis of estimated balance sheet filed by the assessee while no books of accounts are found to have been kept by the assessee nor are so alleged by the Ld AO. 4. That having regard to the facts and circumstances of the case and in any view of the matter Ld CIT (A) was unjustified and legally wrong to confirm the impugned additions of alleged credits U/s 69 of the Act." 2. The facts are that for the assessment year 2006-07, th....

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....n from other persons were mistakenly included in the accounts of his father and mother. The AO also observed that in the case of unsecured loan from the assessee's mother Smt. Usha Malhotra, there were cash deposits in her bank account just prior to the loan given and that for a loan of 50,000/- on 12/04/2005, no bank statement for the relevant date was filed. Similarly, in respect of the assessee's father, Shri Mahesh Malhotra, the AO observed that since the assessee had not given the basis for change/ modification in the revised balance sheet, change in the loan amount of his father could not be accepted. Finally, the AO made addition of Rs.4,29,356/- towards the opening capital, Rs. 1,75,000/- towards the unsecured loan from the mother, ....

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....ee also relied on certain decisions to support his argument that maintenance of accounts is a sine qua non for any addition u/s 68/69 of the Act. 6. The ld. CIT(A) called for a remand report, which was submitted by the AO. 7. In the final analysis, the ld. CIT(A) deleted the additions on account of opening capital (4,29,356/-) and expenses payable (5,62,000/-), but confirmed the impugned additions (Rs.1,75,000/- & Rs.5,16,000/-), observing that in all probability, as the assessee was having available services of an Accountant and a Chartered Accountant, he was maintaining books of account which he was not willing to show to the AO and that the facts, circumstantial evidences and human probabilities tilt in favour of the first balance ....

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....Pvt. Ltd', ITA No.1613 of 2014 (Bombay High Court). v. 'CIT vs. M/s Navodaya Castles Pvt.', ITA No. 320/2012 (Delhi High Court). vi. 'Deniel Merchants P. Ltd. vs. ITO', (SC). Vii. 'ITO vs. Babu Lal Jain', 116 TTJ Jab 741 (ITATJabalpur). viii. 'Dy. CIT vs. Vishwanath Prasad Gupta', 129 ITD 95, (ITA No. 220/Jab/2008 -ITAT-Jabalpur. ix. 'State of Gujarat vs. Gordhandas Keshavji Gandhi', AIR 1962 Guj. 128-(Guj. High Court)." 10. I have heard the parties and have perused the material on record. It is seen that as correctly contended, the impugned additions were made by the AO for the credits shown in the balance sheet, holding them to be "unexplained cash credits". Sec. 69 is applicable to unexplai....

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....ssee had made investments which are not recorded in the books of account, if any, maintained by him for any source of income and the assessee offers no explanation about the nature and source of the investments, or the explanation offered by him is not, in the opinion of the AO, satisfactory. In the present case, the assessee is not shown to have made any "investment" and, therefore, the provisions of section 69 of the Act are not attracted. 12. Now, once the addition is not sustainable under section 69, all questions raised by the AO or the ld. CIT(A) become otiose. 13. The impugned addition, being alleged as "unexplained cash credits", could only be made u/s 68 of the Act. However, Sec 68 stipulates that if any sum is found credited....

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....sine-qua-non for the addition of "unexplained cash credit". 16. No addition could be made on the basis of either of the estimated balance sheets, particularly when no books were maintained, without making further enquiries, and bringing on record any corroborative material. It is pertinent that the assessee's bank statement was before the AO, but no entries of the alleged amounts were pointed out by the AO. 17. The AO's allegation that the bank statement of mother Smt. Usha Malhotra for entry of 50,000/- on 12/04/2005 was not filed is also not correct. In the very bank statement, which was before the AO, there was this entry on 15/04/2005, posted by the bank on clearing of cheque. Further, along with the revised estimated balance ....