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TMI Blog2016 (4) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... see. In the case of assessee, he had maintained proper books of account and there is no material on record to show that the he had made sale of newsprints in unauthorized market. Hence, the books of account of the appellant cannot be rejected by invoking section 145(2) and the turnover/profit cannot be estimated. In view of above, in the absence of any evidence of selling the newsprints in unauthorized market by the assessee, the CIT(A) had rightly held that the AO was not justified in rejecting the books of account and estimating either the turnover or the profit of the assessee for the year under appeal. Accordingly, we confirm the order of CIT(A) - Decided in favour of assessee Unexplained cash credit - Held that:- CIT(A) after taking loan confirmations and other documents deleted the addition respect to loan creditors to the extent of ₹ 86,000/- in the names of Shri Balsinger Singh, Shri A. K. Mullick, Shri S. K. Mullick and Shri Biman Behari Saha. In respect to loan creditor M/s. Mamoni Films of ₹ 7,00,000/- there is a categorical finding recorded by CIT(A) that the loan pertains to AY 1988-89 and not to the relevant AY 1987-88. Once this is the position, the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fting of newsprints for numerous papers having allotment of newsprints on commission basis from State Trading Corporation (STC). The assessee filed his return of income on 13.06.1987 for the relevant AY 1987-88. Subsequently, a search action u/s. 132 of the act was conducted on the business and residential premises of the assessee on 05.10.1988. During the course of search on the business and residential premises of the assessee books of account, ledger account, cash book etc. were seized and marked as identification no. PTI 1 to 263. The AO during the course of assessment proceedings originally framed assessment u/s. 143(3) of the Act on 27.03.1991 assessing the total income at ₹ 62,92,890/-. Subsequently, this assessment was set aside by CIT(A) to the file of the AO for framing de novo assessment vide his order dated 30.12.1991 and the AO framed assessment u/s. 143(3)/251 of the Act vide order dated 30.03.1994 (the impugned order of the AO). The CIT(A) dismissed the appeal of the assessee for non-compliance on 03.05.1995 but Tribunal set aside the order of CIT(A) vide order dated 26.04.2004. Finally, the CIT(A) passed the impugned order dated 01.12.2011. The AO in his asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before CIT(A). 4. The CIT(A) deleted the addition for the reason that the AO has not gone into the seized documents, which were evidenced by the bills and vouchers, books of accounts and other documents, which proves that the assessee was only lifting the newsprints for allotting the same to newspapers owners and not selling the newsprints in cash in unauthorized market. According to him, there are ample evidence in the seized documents that newsprints were lifted by assessee for the newspaper owners on the basis of authorization issued to parties by STC and accordingly, payment was also received from them. The assessee produced copies of ledger account of these parties and this ledger accounts were seized during the course of search. According to CIT(A), these parties were supplied newsprints and payment was also received by assessee from them. The assessee collected the newsprints from STC only on the strength of authorization by the consumers and not otherwise. The CIT(A) also examined the Panchnama prepared during the course of search on 05.10.1988 and the inventory of books of accounts and documents seized and observed that large number of books and files were seized as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers for India. It is observed that the AO has stated that there was no evidence that newsprint after collecting from the STC by the assessee, was supplied to the respective allottees. That, the assessee had sold the newsprints in unauthorized market earning much higher income than the income declared in the return of income. We do not agree with the view of the AO, specifically, in the absence of any evidence on record that the assessee had sold the newsprints in the unauthorized, market. If the contention of the AO is accepted, it, would mean that on the authorization of allottees of newsprint, the assessee lifted the newsprint from STC and sold it in unauthorized market. If, it is so, from where the allottees newspapers and periodicals would had shown the consumption of newsprints which was allotted to them by the STC for the purpose of printing the newspapers and periodicals? Does it mean that the allottees newspapers and periodicals did not get supply of newsprint from the assesse which was lifted by him on their authorization and that the allottee newspapers and periodicals did not print the newspapers and periodicals? However, it was no so and there is no evidence on record i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therwise than crossed cheque or bank draft in violation to provisions of Sec. 40A(3) of the Act, whereas, the assessee had shown most of the receipts by way of cash or uncrossed demand drafts. In view of the facts, we are of the view that as far as the assessee is concerned, he had shown receipt of cash and not an expenditure in cash. We find that the assessee had shown receipts in cash from the allottee newspapers and periodicals, it does not mean that the assessee himself was selling the newsprints in cash in unauthorized market. The assessee produced copies of ledger accounts of these parties. The said ledger account was seized during the course of search. On perusal of ledger account of these parties it is observed that the newsprint was supplied to them and payment was also received by the assessee. The said ledger account clearly mentioned the authorization number and date, date of receipt, size of paper, number of reels, weight, number and date of memo of delivery and amount etc. Hence, we are of the view that it cannot be said that either these parties did not make the payment to the assessee or did not lift the newsprints. Therefore, on the basis of 3-4 parties out of abou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness and correctness of the loan confirmations and hence, I am of the opinion that there is no reason to make the addition aggregating to ₹ 86,000/- on account of the loan taken by the appellant from the above-mentioned four parties. The AO, is directed to delete the addition of ₹ 86,000/-. Similarly, it is observed that from M/s. Mamoni Films, the appellant had taken loan of ₹ 7 lakh by cheque on 20.5.1987. The said loan was returned by him on 12/11/1987. On perusal of Balance-sheet and Profit Loss a/c of M/s. Mamoni Films for the year ended 14/4/1987, it is observed that the said concern was engaged in the business of production and film distribution etc. M/s. Mamoni Films had also filed loan confirmation giving the address and GIR No. In the course of remand proceedings the AO has not doubted about the correctness of the loan confirmation filed by the said concern. Hence, I am of the opinion that no addition u/s. 68 can be made on account of loan taken from M/s. Mamoni Films. I also find force in the submission of the appellant that the loan of ₹ 7 lakh from M/s. Mamoni Films was taken in the previous year relevant to AY 1988-89 and not in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord to prove the same, except the presumption made in the order u/s. 132(5) of the Act. However, on mere presumption, business of a person could not be treated as benami business of another person. In view of the above, I am of the opinion that it cannot be said that the business in the name of M/s Industrial Paper was the benami business of the appellant and that, he had deposited the sum of ₹ 2, lakh in the bank account of Shri Ram Balak Singh. Therefore, the AO was not justified in making addition of ₹ 39,000/- on account of estimated profit and addition of ₹ 2 lakh on account of unexplained cash credit. He is directed to delete both the additions. Aggrieved, revenue came in second appeal before Tribunal. 12. We have heard rival submissions and gone through facts and circumstances of the case. We find that the entire addition is based on a provisional order passed u/s/. 132(5) of the Act estimated the income of the assessee and by virtue of which holding that M/s. Industrial Papers was benami of the assessee instead of Shri Ram Balak Singh. No doubt certain books and documents of Shri Ram Balak Singh were found from the premises of the assessee but it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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