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TMI Blog2012 (9) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... is as raised per its Ground Nos. 2 and 3 by the Revenue, i.e., against deletion of the addition for an aggregate sum of Rs. 58,88,667/-, being Rs. 50,34,314/- and Rs. 8,54,353/- in respect of lorry hire charges payable and sundry creditors respectively, made by the assessing authority on account of the said credits being unexplained; the assessee having failed to furnish confirmations in their respect, by the learned CIT(A). While the non-furnishing of the confirmations before the Assessing Officer (AO) is not denied, the basis of relief allowed by the ld. CIT(A) is that, firstly, the said credits stood discharged by the assessee by payment in the following year and, secondly, that the provision of section 68 could not be applied to trade c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability, has to be satisfactorily explained, to keep section 68 at bay. Even if the said section, or its requirements, i.e., with regard to proving the same on the parameters of identity, capacity and genuineness, may not be said to be strictly applicable to each and every credit appearing in the assessee's books, the corresponding liability has to be shown to be genuine, in the absence of which the same is liable to be treated as income. In fact, this position obtained even prior to the statutory incorporation of section 68 in the Act, with an unexplained credit being considered as income under the earlier (1922) Act. Rather, in such a case the limitation of section 68 would not strictly apply, and a non-genuine trade credit can be added a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. CIT [2004] 265 ITR 202/136 Taxman 482 (MP) and Indian Woollen Carpet Factory v. ITAT [2003] 260 ITR 658/[2002] 125 Taxman 763 (Raj), though case law in the matter is legion. The stated legal basis for the deletion of the impugned addition, i.e., being trade credits are not liable to be shown as representing genuine credits or a genuine liability, thus, cannot be countenanced, and is not tenable in law. The degree of proof required to prove the genuineness, though, may vary from depending on the facts and circumstances of each case, and which is the purport of the decisions relied upon by the assessee. 4.2 Coming to the facts of the case, the assessee was afforded sufficient opportunities to furnish confirmations in respect of the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onus to prove its claims being without doubt on the assessee. 4.3 We have already emphasized that the matter is one of the fact, and has to be looked into in its entirety, and that no hard and fast rule could be laid down for the purpose. If the liability outstands, say, in variance with the norms and practices of the trade, or in inconsistence with the normal human behaviour, the same could constitute a reason for doubting the genuineness of the underlying expenditure, or at least to that extent. In fact, as it appears, the accumulated hire charges payable for Rs. 3.35 crores were treated as income in the assessee's case for that reason, i.e., was not found to represent a genuine trade liability, though stood booked and allowed as expendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terminate, and requires proper verification and examination at the end of the assessing authority. We only consider it fit and proper to restore the same back to the file of the Assessing Officer for the purpose. The onus to establish its case is on the assessee, who shall, even as indicated during the course of hearing, co-operate fully in the matter. The action of the ld. CIT(A) in deleting the impugned addition is reversed. We decide accordingly. 5.1 The second issue in the present appeal is the deletion of addition on account of net profit rate, and disallowances in respect of expenditure on telephone, travelling, general expenses, oil and fuel expenses and car depreciation, effected at minor amounts, for the reason of their being, aga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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