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2004 (5) TMI 255 - AT - Income TaxUnexplained cash credit - challenged the order passed by CIT - Sustenance of addition on account of excess stock - HELD THAT - The amount of loan was received by the assessee from the creditor by the account payee cheque of Canara Bank the details of which are given in the assessment order and the same was deposited in assessee-firm s account. It is also revealed from record that out of the above loan amount of Rs. 25, 000 was repaid by cheque dt. 18th Jan. 1990 of SBI and the cheque number has also been given and the same is mentioned in the assessment order as well. As per the assessee there was an outstanding balance of Rs. 25, 000. The contradiction or the discrepancy regarding the factum of balance of Rs. 25, 000 remaining outstanding as on 31st March 1990 or not with reference to books of account of creditor wherein the adjustment of the said balance of Rs. 25, 000 has been entered on account of purchase of a pulvariser by the creditor from assessee though disputed by the assessee as being factually incorrect but even assuming the same to be there the same may have been due to some confusion or communication gap or for some other reason but that does not render the loan to be not genuine in view of the overwhelming proof of advancing loan of Rs. 50, 000 by M/s Cresswell an IT assessee to the assessee. Thus I find no justification for this addition which I delete accordingly. Sustenance of addition on account of excess stock - From the perusal of record I find that the AO has made this addition finding the stock in excess due to taking the wastage/shortage resulting from conversion of Guar into Churi Korma etc. at 3 per cent i.e. much higher than that shown by the assessee which was .78 per cent. From the perusal of the record I do not find any material on record supportive of AO s action in taking the shortage/wastage at the rate as he has done in the assessment order. In that view of the matter considering the facts and circumstances of the case I find the AO s action finding the stock in excess and in making the addition accordingly to be not justified and uncalled for I therefore delete the addition. In the result this appeal of the assessee is allowed in part as indicated above.
Issues involved: Appeal against order of CIT(A) for assessment year 1990-91.
Issue 1 - Unexplained cash credit of M/s Cresswell Chemicals (P) Ltd.: The assessee contested the addition of Rs. 50,000 as unexplained cash credit, providing confirmation and details of the transaction. The Departmental Representative argued that the burden of proof lies on the assessee, citing relevant case law. The Tribunal found the loan to be genuine based on evidence of the transaction and the creditor being an IT assessee, thus deleting the addition. Issue 2 - Disallowances/additions on account of expenses: The AO's disallowances/additions were challenged by the assessee as excessive, but the Tribunal deemed them reasonable and declined to intervene. Issue 3 - Addition under section 40A(3) for cash payments: The assessee defended cash payments under exceptional circumstances for various transactions, supported by confirmations and specific reasons for each payment. The Departmental Representative argued against the necessity of cash payments. The Tribunal, after considering the circumstances and evidence provided, deleted the additions. Issue 4 - Addition on account of excess stock: The AO's addition of Rs. 72,240 for excess stock was disputed by the assessee, citing discrepancies in calculation methods. The Departmental Representative supported the addition based on findings at the premises. The Tribunal found the AO's action unjustified and deleted the addition. Issue 5 - Charging of interest under IT Act sections: Both parties agreed that the charging of interest was consequential, and the Tribunal directed the AO to provide any necessary relief to the assessee. In conclusion, the Tribunal partially allowed the appeal, deleting certain additions and providing relief to the assessee where justified.
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