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TMI Blog2011 (1) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of the loan creditors because loans are given by these persons to the assessee out of refund received by those loan creditors from one Shri Satish Jindal - Decided in favour of assesse. Unexplained sundry creditors - the assessee failed to furnish the confirmation from the creditor, i.e., M/s.Carborundrum Universal Ltd. before the AO however, relevant record in this regard was produced by the assessee before the CIT(A) - Held that:- From the orders of the CIT(A) and that of ITAT, it transpires, as a matter of fact, that the assessee had given a credit of this amount in the books on account of purchase of goods from M/s.Carborundrum Universal Ltd., but the goods were in transit and hence the same was not debited in the P&L A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.03.2005, the assessee was asked to explain as to why the books of accounts should not be rejected under Section 145(3) of the Act. In the assessment proceedings, the Assessing Officer (AO) made the additions on following accounts: (i) Addition of Rs.34,95,177/- on account of fall in GP; (ii) Addition of Rs.3,65,000/- on account of unexplained unsecured loans; and (iii) Rs.1,55,203/- on account of unexplained sundry creditors. The assessee filed an appeal before CIT(A), which was allowed. The Department preferred an appeal against this order before the ITAT. 3. The CIT(A) summarised the objections of the AO and parawise reply thereof given by the assessee in paragraph 6 of the order, which reads as under: Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was explained. Moreover, surrender during the survey cannot be the basis of attracting the provisions of Section 145 of the Act. The purchases of properties were assessed and source submitted in each year and statement of personal assets/liabilities in the form of Balance Sheet was filed. The properties owned are over period of saving of more than 29 years. The Assessing Officer has merely repeated the queries raised vide his letter dated 21.3.2005. No further inquiries or efforts were made to counter the assessee s reply made vide letter dated 28.3.2005. The sales accepted by the Delhi Sales Tax Department under the Delhi Sales Tax Act is binding on the Income-tax authorities and the Assessing Officer has no powers to draw his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the conclusion that these persons have not been able to show the source of these amounts. Consequently, he made additions of Rs.3,65,000/- under Section 68 of the Act. 7. The CIT(A) did not agree with the findings of AO in this regard. The reasoning given by the CIT(A) in paragraph 8.1 of its order is reproduced as under:- 8.1. It is well established proposition of law that the assessee has to prove the identity and capacity of the creditors and genuineness of the transactions but he cannot be asked to prove the source of source of the original of origin. In the instant case, the appellant has not only furnished all the relevant details to establish the identity and creditworthiness of the persons and the genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to file confirmation. It is a fact that the assessee failed to furnish the confirmation from the creditor, i.e., M/s.Carborundrum Universal Ltd. of a sum of Rs.1,55,203/- before the Assessing Officer However, relevant record in this regard was produced by the assessee before the CIT(A). From the orders of the CIT(A) and that of ITAT, it transpires, as a matter of fact, that the assessee had given a credit of this amount in the books on account of purchase of goods from M/s.Carborundrum Universal Ltd., but the goods were in transit and hence the same was not debited in the P L Account by the assessee. The CIT(A) was satisfied with the record produced by the assessee in this regard including that of accounts of M/s.Carborundrum Universal Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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