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TMI Blog2015 (1) TMI 959X X X X Extracts X X X X X X X X Extracts X X X X ..... and sowing, the said explanation of the assessee was not rebutted at any stage. It, therefore, appears that the impugned addition has been made merely on the basis of surmises and conjecture. Therefore, the deposits in question were genuine and the addition made by the AO and confirmed by the ld. CIT(A) was not justified, we, therefore, delete the same. - Decided in favour of assessee. Additional income from Tanker not shown - Held that:- In the present case it is an admitted fact that the assessee maintained separate books of accounts for the tanker which were not rejected by invoking the provisions of section 145(3) of the Act. The AO disallowed 50% of the total expenses without any basis and the ld. CIT(A) also worked out the expenses on the basis of consumption of diesel but ignored other expenses like salary to the driver 18,82,516/- claimed the expenses at 16,86,875/- which were much less than the reimbursement made by the Petroleum Company, the assessee after claiming depreciation of 1,52,275/- had shown the income from tanker at 43,867/- which was more than 42,000/- i.e. the income to be shown u/s 44AE of the Act, on that score also the disallowance sustained by the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of addition of ₹ 10,74,600/- made by the AO on account of cash credit. 4. Facts related to this issue in brief are that the assessee filed the return of income on 01.12.2003 declaring an income of ₹ 79,365/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) on 30.08.2004. Later on, the case was selected for scrutiny. 5. During the course of assessment proceedings the assessee furnished the affidavits of the cash creditors and produced 9 cash creditors whose statements were recorded. The AO noticed that the assessee received unsecured loans amounting to ₹ 17,18,198/- from 62 new and 20 old creditors. The AO asked the assessee to establish the identity, creditworthiness and the genuineness of the transactions. He also noticed that the assessee had accepted an amount less than ₹ 20,000/- from each of the 62 creditors pertaining to the year under consideration and total such amount came to ₹ 10,74,600/-. According to him the creditors were men of no means and had no capacity to pay the amounts to the assessee and all the creditors were not assessed to tax. He, therefore, added a sum of ₹ 10,74,600/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such persons are not being assessed to tax with the Income Tax Department and lastly, he has also doubted the genuineness of transactions that the said amount, have been advanced without interest. The Assessing Officer has not doubted about the identity of the persons, but doubted to the other aspect i.e the capacity. d) It is being submitted herewith that all such persons when produced, have confirmed the advancement of loans with sources thereof and replied to all the queries as raised by the Assessing Officer and your goodself can peruse any statement, which will confirm that all such persons have emphatically stated that they have advanced the loan to the appellant. It is not a case of the Assessing Officer that the persons did not appear or did not reply to the various queries and even some of the persons when asked about their bank accounts, they clearly stated that they did not have any bank account and Le they had advanced the amount to the appellant in cash. The Assessing Officer has not been able to find out any defects in the statement so recorded and the circumstances in which such amount has been advanced, but he has only said in a general way that the persons concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also a settled law by the Hon'ble Supreme Court in the case as reported in the case of Shri Lekha Banerji Vs. CIT in 49 ITR 112 that if the explanation given by the assessee is bonafide then the department cannot convert the good proof into no proof or otherwise act non-reasonably rejected Also, where the explanation have been given by the assessee, then it cannot be rejected arbitrarily without any sufficient ground, unimaginary or irrelevant ground This view finds support from the decision of the Delhi High Court in the case of Sona Electric Co. as reported in 152 ITR 507. In our case, we have given the detailed explanation of each and everything about the credits and it is upto the department to peruse the matter further to trace and examine the credit worthiness. This has been held by the Hon'ble Supreme Court in the case of CIT Vs Orissa Corpn. Pvt. Ltd. (1986) as reported in 159 ITR 78. i) Even by way of letter, dated 17.03.2006 in para-3, the jamabanhi of various persons who had advanced the loans have been given- and it was submitted that the such persons own fertile land and were having substantial income and such evidence have not been disproved by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was stated that no discrepancy had been noticed by the AO or by the ld. CIT(A) and the only doubt had been raised with regard to the capacity of the persons since no interest had been paid to them. It was stated that the evidence of land holding had been given which was not doubted either by the AO or by the ld. CIT(A). It was further stated that there is no bar in giving a deposit by way of cash and the creditors have clearly stated that they did not have any bank account, the amount had been deposited by them in cash which is one of the accepted mode of the financial transaction. It was contended that merely on this basis that cash had been received the doubt could not be raised. It was also contended that the interest had not been charged because of the reasons that the assessee was dealing in resale of Petroleum Products which were required by the villagers, especially from time to time and, in fact, these were the deposits made by them for ensuring regular supplies of Petroleum Products like diesel etc., which was used for the purpose of harvesting and sowing, it was a prime reason for making the deposits with the assessee by the agriculturists and these deposits could ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conjecture. It is well settled that the doubt or suspicion howsoever strong it cannot replace the reality based on the evidence. In the present case also the assessee produced the depositors before the AO, their statements were recorded, the evidences of their land holding were also produced which were not doubted, the assessee was dealing in resale of the Petroleum Products and the depositors to ensure the uninterrupted supply of the diesel etc. during the harvesting or sowing season made the deposits. Therefore, the deposits in question were genuine and the addition made by the AO and confirmed by the ld. CIT(A) was not justified, we, therefore, delete the same. 11. The next issue vide Ground Nos. 3 & 4 relates to the sustenance of addition of ₹ 3,60,199/-. The facts related to this issue in brief are that the assessee was running a Petrol Pump for which it required to lift the Petroleum Products from Panipat Refinery and transported the same to its Petrol Pump at Village Jhumpa Kalan, Bhiwani, Haryana. The assessee owned a Tanker which was used by it for transportation of such Petroleum Products. The transportation charges were reimbursed to the assessee by BPCL i.e. Petr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e driver and cleaner, maintenance/repair expenses of the tankers and also incurred expenditure for the diesel consumed by tanker. It was stated that the assessee maintained a separate account in respect of such tanker, the gross income of which was disclosed at ₹ 1,96,242/- and after claiming the depreciation at ₹ 1,52,275/-, the net income was shown at ₹ 43,867/- which was more than the income deemed to be shown u/s 44AE of the Act. It was further stated that the addition sustained by the ld. CIT(A) on the basis of average consumption per liter of diesel was not justified because there were other expenses of repair/maintenance, driver/cleaner salary and that there could not be any fixed consumption of diesel which depended upon many factors such as traffic hazard on the way etc. It was stated that the amount was reimbursed to the assessee on the basis of certain parameters which has not been challenged either by the AO or by the ld. CIT(A). It was also stated that no defect in the books of accounts maintained on day to day basis had been noticed and neither the books were rejected u/s 145(3) of the Act. Therefore, this adhoc disallowance could not be sustained. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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