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TMI Blog2014 (12) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... e present gifts has not been established by the assessee – thus, the invocation of section 68 of the Act is upheld– Decided against assessee. Addition of lesss GP declared by assessee – Held that:- The AO as well as the CIT(A) have succinctly brought out infirmities/discrepancies in the account books maintained by the assessee - Ostensibly, the enquiries during the course of search/survey action clearly pointed out that the trading results declared by the assessee are impaired inasmuch as the sales as well as the stock figures are recorded on estimation and not on actual basis - The excess physical stock found on the date of search also justifies the inference of the Assessing Officer that the book results are not reliable - the lower authorities made no mistake in disregarding the book results declared by the assessee and estimating the Gross Profit @ 6% - thus, the order of the CIT(A) sustaining the addition on account of low Gross Profit for the three AYs of 2000-01, 2002-03 and 2003-04 respectively – Decided against assessee. Addition of unexplained cash credits u/s 68 – Held that:- The onus is on the assessee to establish the nature and source of the cash credits appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first issue raised is with regard to an addition of ₹ 1,10,000/- sustained by the CIT(A) on account of unexplained gifts. In this regard, brief facts are that the Assessing Officer treated three gifts totaling to ₹ 1,00,000/- received by the assessee from (i) Mrs. Geeta Ratnani ₹ 25,000/-; (ii) Mr. Deepak Ratnani ₹ 25,000/-; and, (iii) Mr. Sanjay Ratnani ₹ 50,000/- as unexplained and added the same to the returned income by invoking section 68 of the Act. Further, the Assessing Officer also added a sum of ₹ 10,000/- i.e. 10% of the gift amount being incurred on purchase of the non-genuine gifts, thereby resulting in a total addition of ₹ 1,10,000/-. The CIT(A) has sustained the action of the Assessing Officer on the ground that the necessary ingredients of section 68 of the Act were not fulfilled by the assessee qua the aforesaid sum. Against the aforesaid action of the CIT(A), assessee is in further appeal before us. 4. At the time of hearing, the Ld. Representative for the assessee reiterated the submissions put-forth before the lower authorities, which are to the effect, that the assessee has discharged the onus cast on him u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrender by the assessee. So however, under these circumstances, a heavy onus was cast on the assessee to establish the genuineness of the impugned gifts also. It is for this purpose that the Assessing Officer carried out a verification exercise. It is noted by the Assessing Officer that the letters sent to the donors at the addresses provided by the assessee were returned back with remarks not known and no information received . The assessee was also allowed opportunities by the Assessing Officer to present the donors4. However, the assessee could neither produce the donors and nor provide their correct addresses. Under these circumstances, in our view, the lower authorities have correctly come to a finding that the genuineness of the present gifts has not been established by the assessee. Therefore, the action of the lower authorities in invoking section 68 of the Act and making the impugned addition is hereby affirmed. As a result, on this issue assessee fails. 7. The second addition in dispute in assessment year 2000-01 is of a sum of ₹ 1,20,736/- on account of Gross Profit declared by the assessee. This aspect of the dispute is common to all the assessment years be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the figures of sales and stock declared in the records kept for Excise authorities is a reliable indicator of the actual trading activity carried out by the assessee. Therefore, it is not proper for the Assessing Officer to have rejected the book results and estimated the profit on an ad-hoc basis. 9. On the other hand, the Ld. CIT-DR appearing for the Revenue has supported the order of the authorities below for the reasons, which we have already noted in the earlier paras, and are not being repeated here for the sake of brevity. 10. We have carefully considered the rival submissions. In our considered opinion, the Assessing Officer as well as the CIT(A) have succinctly brought out infirmities/discrepancies in the account books maintained by the assessee. Ostensibly, the enquiries during the course of search/survey action clearly pointed out that the trading results declared by the assessee are impaired inasmuch as the sales as well as the stock figures are recorded on estimation and not on actual basis. The exces6s physical stock found on the date of search also justifies the inference of the Assessing Officer that the book results are not reliable. Under these circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative for the assessee reiterated that the creditors have confirmed advancing of loans to the assessee and therefore the assessee can be said to have discharged the burden cast on him in terms of section 68 of the Act. On the other hand, the Ld. CIT-DR has defended the order of the authorities below by relying on the discussion contained therein. 15. We have carefully considered the rival submissions. Ostensibly, the onus is on the assessee to establish the nature and source of the cash credits appearing in the books of account, having regard to the provisions of section 68 of the Act. In this context, the CIT(A) has reproduced the bank account statements of the creditors to show that cash deposits have been made immediately before issuing Demand Drafts to the assessee for the impugned loans. It is a concurrent finding of fact rendered by the Assessing Officer as well as the CIT(A) that the creditors have not explained the source of such cash deposits. No doubt, the assessee furnished the income-tax particulars, etc. of the said creditors, but their failure to even primafacie explain the source of cash deposits in their bank account coupled with the fact that assessee has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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