TaxTMI 
TaxTMI 
2005 (7) TMI 284
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.... of these parties have been given on p. 2 of the assessment order. Though several opportunities were allowed, the assessee failed to furnish desired information despite several opportunities allowed. The AO, therefore, by relying on the judgment of Hon'ble Supreme Court in the case of Roshan Di Hatti vs. CIT 1977 CTR (SC) 200 : (1977) 107 ITR 938 (SC), judgment of Hon'ble Madras High Court in the case of V. Datchinamurthy & Anr. vs. Asstt. Director of Inspection (Intelligence) IT Deptt. & Anr. (1982) 27 CTR (Mad) 106 : (1984) 149 ITR 341 (Mad) and Hon'ble Calcutta High Court in the case of CIT vs. United Commercial & Industrial Co. (P) Ltd (1991) 187 ITR 596 (Cal) held that the assessee failed to discharge the onus of proving the source and genuineness of these depositors. He, therefore, made an addition of Rs. 4,22,300 in respect of such deposits. 3.1 Being aggrieved, the assessee carried the matter in appeal before the CIT(A). It was stated before the CIT(A) that the assessee was engaged in the business of hire purchase and financing. The assessee accepted the deposits from public under the rules and regulations framed by the RBI and out of total deposits of Rs. 10,85,700, the....
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....d for hearing by the A 0 on 17th Dec., 1999, as desired by the counsel. On 17th Dec., 1999, Sh. K.K. Sareen, chartered accountant appeared along with Sh. Rakesh Thapar, managing director of the company before the AO. However, neither any depositor was produced for recording of statement nor any written reply was filed. The AO has concluded that the assessee-company had no evidence to prove the source of cash credits. 3.5 A copy of the report of the AO was made available to the appellant and the case was fixed for hearing on 8th Feb., 2000. It was admitted by Sh. K.K. Sareen and Sh. Dheeraj Sehgal, director, that no evidence were produced before the AO in support of the credits. A written submission dt. 8th Feb., 2000 was also filed along with copies of certain documents. As none of these documents were produced before the AO. Neither during the assessment proceedings or during the remand proceedings, no cognizance is being taken in respect of these documents and this was brought to the notice of learned counsel during the appellate proceedings on 8th Feb., 2000. 3.6 In the light of above discussion, it is clear that the assessee-company had shown deposits in 35 names but requ....
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....Del) 567 : (1998) 60 ITD 177 (Del). He further argued that the AO had never asked the assessee to produce these depositors. He, therefore, submitted that the deposits in the names of 15 persons should be accepted. Since the learned counsel for the assessee strongly contested that the assessee was never asked to produce depositors by the AO or during the course of remand proceedings, the learned Departmental Representative was asked to produce the case records of CIT(A) for verifying this fact. These were produced and shown to the learned Authorised Representative and he was heard in the matter. As regards deposit of Rs. 70,000 in the case of Smt. Nirdosh Sareen, the learned counsel submitted that since she was not available, an affidavit of Sh. Parshotam Rai Bharti, her real brother was filed wherein it was stated that the amount of Rs. 70,000 was given out of sale proceedings of the property. A copy of the bank account was also filed and the amount was given by cheque. He submitted that the amount should have been accepted. He further argued that the case may be remanded to the AO for producing these 15 depositors who had confirmed the deposits of Rs. 2,40,000 by way of affidav....
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.... creditors, the assessee failed to do so. Relying on the judgment of Hon'ble Patna High Court in the case of Addl. CIT vs. Bahri Bros. (P) Ltd. (1984) 42 CTR (Pat) 66 : (1985) 154 ITR 244 (Pat), the assessee contended that since the amounts had been advanced by cheques and creditors were being assessed to tax and their permanent account numbers were given, there was no basis for making addition under s. 68. The AO rejected such submissions and made the addition on the ground that the creditors were not produced before him. However, the Tribunal deleted the addition. On further appeal, the Hon'ble Punjab & Haryana High Court held that approach of the appellate authority was not correct because the assessee failed to produce the creditors before the AO for verification. It was further observed that mere fact that the amount was received by cheque does not by itself prove the genuineness of the transaction. Thus, the matter was remanded to the Tribunal for fresh adjudication. 3.7 In the case of Roshan Di Hatti vs. CIT, the Hon'ble Supreme Court has held that the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is o....
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.... before the CIT(A) on 8th Feb., 2000 and accepted that no evidence was produced before the AO as reported by the AO. The order-sheet entry dt. 8th Feb., 2000 is duly signed by these persons. However, the reply submitted in the letter dt. 8th Feb., 2000 is on record of CIT(A)'s folder at pp. 87 and 88. In the said letter, it has been mentioned that on 17th Dec., 1999, few depositors were asked to come to the office for recording their evidence, but they could not turn within official hours and as such three more persons appeared at about 9.30 p.m. and their affidavits were got signed from them and attested. The details for the same were given in the letter. These facts clearly show that the assessee could not produce the depositors despite opportunity allowed by the AO during the course of remand proceedings. The contentions of the learned Authorised Representative that the assessee was not asked to produce these depositors is untenable and incorrect in view of the facts placed on record. In fact, the assessee has miserably failed, both during the course of appellate proceedings and assessment proceedings, to produce these depositors or furnish any worthwhile evidence inspite of the....
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....sp; servant filing IT returns) -------------------------------------------------- 5. Swam Lal S/o Sh. Nihal 50 10,000 Agricul No &n....
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....p; & Agrl. Income were filed) -------------------------------------------------- 6. Kundan Lal S/o Kishan 49 15,....
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.....Sachin Astha, cash accounts Pooja Astha & Aman Astha -------------------------------------------------- 13.Payal Sehgal 44 10,000 Encashment No W/o Satinder Sehgal (Cheque) of NSCs of Husband -------------------------------------------------- 14.Satinder Sehgal 43 10,000 -do- Yes S/o late Sh. (Cheque) (emplo J.K. Sehgal yee of ....
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....------ Sl. Name Amount No (Rs.) ------------------------------------ 1. Sh. C.L. Duggal 15,000 ------------------------------------ 2. Mrs. Nirdosh Sareen 70,000 ------------------------------------ 3. Pinki Dada 10,300 ------------------------------------ 4. Sh. Satinder Sehgal 10,000 ------------------------------------ In these cases, the depositors have claimed that they were filing the returns and in the case of Smt. Nirdosh Sareen, the amount is stated to have been advanced by cheque by withdrawing from the Grindlays Bank, which was a savings bank account. The amount was stated to be out of sale proceeds of pro....
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....widow sister-in-law as the director of the company. However, due to family dispute, the amount was withdrawn by the widow and she left Jalandhar to stay with her parents at Delhi. The repayment was made through bank draft. However, since the personal relations were strained, she did not co-operate with the assessee and the AO was asked to issue summons under s. 131 of the IT Act. It was also stated that she was being assessed to tax by the ITO, Ward-1(2), Jalandhar, having permanent account No. 29-600PB-5599, the source of the same should be accepted. However, the AO made the addition and the learned CIT(A) upheld the addition. 4.1 The learned counsel for the assessee submitted that since the creditor was being assessed to tux and was not co-operating with the assessee, the AO should have exercised powers under s. 131 for enforcing the attendance. He relied on the judgment of Hon'ble Supreme Court in the case of CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138 : (1986) 159 ITR 78 (SC), where the addition made on account of unexplained credit was deleted by observing that the assessee had given the permanent account number and the Department did not make any attempt to ....
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....herwise not. Therefore, the order of the CIT(A) is set aside arid the matter is restored to the file of the AO for deciding the same afresh keeping in view the directions given hereinabove. This ground of appeal is treated as partly allowed for statistical purposes. 6. The last issue relates to sustaining the disallowance of Rs. 10,579 towards business promotion expenses by treating the same as entertainment expenses. Briefly stated, the facts of the case are that the assessee had incurred expenses of Rs. 31.079 under the head 'entertainment expenses out of which Rs. 24,673 were paid to Hotel Kings through account payee cheques. It was submitted that this amount was wrongly shown as entertainment expenses as expenses were incurred on account of depositors and hirers meet to boost business of the assessee. It was submitted that Rs. 24,763 should have been allowed as business expense. The AO did not accept such submissions on the ground that there was no evidence on record to show that the same were not entertainment expenses. He, therefore, upheld the disallowance. The assessee is aggrieved by the order of the CIT(A). Hence, this appeal before us. 6.1 The learned Authorised Re....