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TMI Blog2014 (3) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has fulfilled the conditions laid down u/s 68 of the Act – thus, the order of the CIT(A) set aside and the additions made u/s 68 of the Act also set aside on account of cash credits received by the assessee – Decided in favour of Assessee. Addition made - expenditure u/s 37(1) – Proper vouchers not furnished – Held that:- The assessee failed to substantiate the claim by producing documentary evidence to establish that the payment is genuine – thus, the order of the CIT(A) on the issue is confirmed – Decided against Assessee. - ITA No. 1849/Hyd/2012, ITA No. 1870/Hyd/2012 - - - Dated:- 28-2-2014 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Petitioner : Sri S. Rama Rao For the Respondent : Sri Soly Jose T. Kottaram ORDER Per Chandra Poojari, AM: These are cross appeals directed against the order of the CIT(A)-III, Hyderabad dated 12th October, 2012 for the assessment year 2008-2009. ITA NO. 1849/Hyd/2012 appeal by the assessee 2. Briefly the facts of the case are that the assessee is a company which derives income from land development and sale of plots. It filed its return of income for the assessment year 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit Rs.5,00,000/- in her account and the genuineness of the transaction to this extent are not explained. However, there is no ambiguity regarding the amounts received from the society. Therefore, addition to the extent of Rs.5,00,000/- is confirmed and the balance addition was deleted by the CIT(A). 3.3 As regards the cash credit of Rs.5,00,000/- received from Mr N Chandrasekhar Reddy, the CIT(A) observed that in this case also the amount has been received from the account of Mr Reddy and prior to that an equal amount has been placed in his account from the bank account of Nalla Malla Reddy Educational Society. Here also the assessee s onus stands fully discharged with respect to section 68 and this addition was deleted by the CIT(A). 3.4 As regards the cash credit of Rs. 5,00,000/- received from Mr Sampath Reddy, the CIT(A) observed that the amount has been received from the account of Mr Sampath Reddy and prior to that an equal amount has been placed in his account from the bank account of Nalla Malla Reddy Educational Society. He, therefore, held that o the appellant's onus stands fully discharged with respect to section 68 and this addition was also deleted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,50,000 in M/s. Harsha Estates Pvt. Ltd., vide cheque No. 005691 at Allahabad Bank, Boduppal Branch, Hyderabad dated 16.10.2007, it is to be noted that Sri N Mohan Reddy is not assessed to Income Tax. He further noted that the assessee company also filed a copy of the instrument bearing No.005691, dated 16.10.2007 issued from the account No.1335 by the said Sri N Mohan Reddy from the Allahabad Bank account, Boduppal in favour of the assessee company. Enquiries made wi th the Allahabad Bank revealed that there is a deposit of Rs.3,50,000/- by way' of transfer in his said Bank Account prior to issue of the cheque. However, the balance before the deposit is mere Rs.1,000/- only. The Assessing Officer noted that the bank enquiries further revealed that the said deposit in the bank account is by way of deposi ting the pay order bearing No.000012 issued by SBI, Gowliguda through clearing. Further enquiries made with SBI, SMECCC Branch, Himayat Nagar and SBI, Gowliguda Branch revealed that the origin of the said pay order is from the account of Nalla Malla Reddy Educational Society bearing No.30051729280. A copy of the said pay order has also been furnished by the bank authorities. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revealed that the origin of the said pay order is from the account of Nalla Malla Reddy Educational Society bearing No.30051729280. In the light of the above information with a view to examine the alleged creditor Sri P Dharma Reddy, the assessee company was asked to produce him before the undersigned. However, the assessee company could not produce Sri P Dhara Reddy for examination as required. The Assessing Officer observed that the assessee could not discharge his onus of providing the genuineness, creditworthiness as well as identity of the loan creditor. The AO noticed from the information from the banks that the source for the said amount of Rs.5,00,000/- is M/s Nalla Malla Reddy Educational Society only. In view of the above observations, the Assessing Officer, therefore, held that it is evident that the alleged creditor of the assessee company has no credit worthiness in advancing the said sum of Rs. 5,00, 000/-. 3.11 The CIT(A) observed that the creditor Shri P Dharma Reddy is not even an income tax assessee. His whereabouts are unknown. The genuineness of the transaction is in severe doubt. His bank account has clearly been used as a conduct by the appellant. He, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditor Shri P. Venkat Reddy is not even an income tax assessee. His whereabouts are unknown. The genuineness of the transaction is in severe doubt. His bank account has clearly been used as a conduct by the appellant. He, therefore, held that section 68 clearly applies and the addition made by the Assessing Officer was confirmed. 3.14 As regards the addition of Rs.5,00,000/- on account of cash credits from Sri V Mohan Reddy, the AO observed that the assessee company filed a letter of confirmation purportedly signed by Sri V Mohan Reddy, stating that he had invested an amount of Rs.5,00,000/- in M/s. Harsha Estates Pvt. Ltd, vide cheque No.002573 at Allahabad Bank, Boduppal Branch, Hyderabad dated 18.10.2007 (However, a copy of the instrument filed shows the date as 16.10.2007). Further, the Assessing Officer observed that a peculiar feature in this case is that the signature on the instrument and the signature on the confirmation letter are not tallying. It is to be noted that Sri V Mohan Reddy is not assessed to income tax. The assessee company also filed a copy of the instrument bearing No. 002573, dated 16.10.2007 issued from the account No.463 by the said Sri V Mohan Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peculiar feature in this case is that the confirmation letter bears a thumb impression from a self-inking stamp pad where as the copy of the instrument produced by the assessee bearing No.005681 from account No. 1336, dated 16.10.2007 of Allahabad Bank, Boduppal Branch contains signature which can be seen as R.S.Reddy . It is to be noted that Sri R Srinivasa Reddy is not assessed to income tax. The assessee company also filed a copy of the instrument bearing No. 005681, dated 16.10.2007 issued from the account No.1336 by the said Sri R Srinivasa Reddy from the Allahabad Bank account, Boduppal in favour of the assessee company. Enquiries made with the Allahabad Bank revealed that there is a deposit of Rs.5,00,000/- by way of transfer in his said bank account prior to issue of the cheque. However, the balance before the deposit is mere Rs.1,000 only. The bank enquiries further revealed that the said deposit in the bank account is by way of depositing the pay order bearing NO.000010 issued by SBI Gowliguda through clearing. Further enquiries made with SBI, SMECC Branch, Himayat Nagar and SBI, Gowliguda Branch revealed that the origin of the said pay order is from the account of Nalla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,00,000/- which is voluntarily offered by the assessee company is also hereby brought to tax. 3.19 The CIT(A) observed that during appeal proceedings, the appellant did not produce any evidence to prove that the expenditure had been properly vouched and was genuine and a good portion of the expenditure did not have supporting evidence and the MD had admitted to an additional income of Rs. 20,00,000/- over and above any other issues involved. He, therefore, confirmed the addition made by the Assessing Officer. 4. Aggrieved by the order of the CIT(A), the assessee is in appeal before us and has raised the following grounds of appeal: 1. The order of the learned CIT(A) is erroneous to the extent it is prejudicial to the appellant. 2. The learned CIT(A) erred in confirming addition of Rs. 5 lakhs out of Rs. 10 lakhs made by the Assessing Officer u/s 68 of the IT Act disbelieving the credit from Smt. Nalla Sneha. 3. The learned CIT(A) erred in confirming addition of Rs. 1,50,000/- disbelieving the amount received from Nalla Malla Reddy Engineering College. 4. The learned CIT(A) erred in confirming addition of Rs. 70 lakhs made by the Assessing Officer u/s 68 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned AR furnished the details of bills pending and that of the unsecured loans to be repaid. The State Bank of India directly issued cheques in favour of the creditors. Copies of the cheques issued by SBI are submitted and the amount paid by the bank directly to the creditors was treated as loan given to the assessee and is debited to the assessee s account by the bank. All the said details have been filed by the assessee vide paper book pages 1 to 33. 7. On the other hand, the learned DR besides relying on the orders of the revenue authorities, submitted that Section 68 seeks to bring to tax any cash credits appearing in the books of accounts which are not satisfactorily explained as the income of the previous year. He contended that if the assessee did not render the satisfactory explanation with regard to the nature and source of the cash received by him, then the assessing officer was entitled to draw the inference that the receipts are of an income nature and subject to charge u/s 68 of the Act. 8. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. In this case, originally these creditors, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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