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TMI Blog2014 (4) TMI 1011X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case, the ITAT was justified in holding that there was no justification for rejection of accounts in spite of the fact that the A.O had clearly noted that sales were not verifiable from the accounts and the Bombay High Court had held in the cases of Bombay Cycle Stores Co. Ltd. v. CIT [1958] 33 ITR 13 (Bom.) & A. Moosa & Sons v. CIT [1953] 23 ITR 73 (Bom.) that rejection of account books was valid under these circumstances? (ii) Whether on the facts and in the circumstances of the case the ITAT was justified in holding that addition u/s 68 was not correct particularly in respect of the cash creditors viz Shailendra Singh, Radheshyam Kunwar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,935/- as unexplained credit under Section 68 of the I.T. Act. 5. In so far as Rs. 9,83,935/- made as unexplained credit under Section 68 of the I.T. Act, the C.I.T. (Appeals) observed that since most of the creditors responded to the notices issued by the Assessing Officer under Section 131 and the income tax particulars of the persons concerned were also filed before the Assessing Officer, the Assessing Officer was not justified in doubting such loan creditors only on the basis of the inability to earn income and thereafter lending the same to the assessee and the C.I.T. (Appeals) deleted the addition of Rs. 9,83,935/-. 6. Appeal preferred by the Revenue before the I.T.A.T., the Tribunal dismissed the appeal upholding the order of C.I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 145 (2) of the Income Tax Act. 10. In paragraph 15 of the assessment order, the Assessing Officer has summarized the serious defects like, which are as under: (i) cash book not maintained on day-to-day basis; (ii) The cash book not checked thoroughly by the tax auditors because of the very fact that no normal 'Tick Mark' was found on the entires made in the cash book; (iii) No concrete explanation given with respect to the account of South Eastern Coal-Fields Ltd as appearing in page 132 wherein the stock of coal am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,21,717/- under Section 145 (2) of the I.T. Act. 12. The C.I.T. (Appeals), in detail, has considered the various defects pointed out by the Assessing Officer in the books of accounts. The C.I.T.(Appeals) in paragraph (18) while deleting addition of Rs. 7,21,717, has recorded the following findings: "I also find that the appellant is maintaining books of account which have been duly audited by a competent auditor. Such books of account have been impounded by the Assessing Officer himself. No suppression of purchase has been found out. No suppression of sales have been found out. All the quantitative details are available which has not been assailed by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2). 15. The Assessing Officer has made an addition of Rs. 9,83,935/- as an unexplained credit under Section 68 of the Income Tax Act. During the course of assessment proceedings, the Assessing Officer, observed that the assessee has taken loans from certain persons and after summoning such creditors under Section 131, the Assessing Officer has arrived at a conclusion that these loan creditors shown by the assessee were not genuine and has accordingly made the addition. 16. In so far as the addition of Rs. 9,83,935/- made as an unexplained credit under section 68 of the Act, the C.I.T(Appeals) considered the matter in respect of each of those creditors. In its detailed order, the C.I.T.(Appeals) has observed that the Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and has come to the conclusion that they have no creditworthiness or means to advance loans to the appellant. It has been held in the case of Girdhar Agency v. Asstt. CIT 59 TEJ (Pat) 620 by the third member Sri T.V. Rajgopala Rao, President of the Hon'ble Tribunal that "mere falsity of an explanation or not believing an explanation cannot lead to a conclusion that the borrowed amount is the income of the assessee (borrower) from some undisclosed sources." 17. As pointed out by the C.I.T.(Appeals), the cash creditors including the ladies creditors appeared before the Assessing Officer and their income particulars were filed before the Assessing Officer. The Assessing Officer disbelieved all those documents and statement of those cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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