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TMI Blog2014 (2) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... be underestimated or taken advantage of by them, we are of the view that the ld. CIT(A) was justified in deleting the additions. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... believe that by failure on the part of the assessee to disclose fully and truly all material facts, income to the extent of ₹ 1,70,00,000/- has escaped assessment and thus initiated reopening proceedings by recording reasons u/s 148(2) and by issuing notice u/s 148 with the prior approval dated 11.3.2010 of Ld. CIT-II, Asr. From these facts, the AO observed that Sh. Ajay Kumar and two partnership firm M/s. Ajay TV Centre, Gurdaspur (Rs.5,00,000/-) and M/s. Ajay Electronics Pathankot (Rs.1,70,00,000/-) has introduced unaccounted money of ₹ 1,75,00,000/- . In response to notice u/s 148, the assessee filed a letter dated 7.12.2010 stating therein that return already filed u/s 139(1) on 31.12.2003 be treated as having been filed in response to notice u/s 148. The assessee was asked not only to reconcile and explain the variation in the copies of his respective capital accounts, one filed in the court and the 2nd filed with the department and also required to explain the source of introducing this huge cash withdrawal of ₹ 1,70,00,000/-. After considering the assessee's explanation, the AO rejected the same. In view of the variation in the assessee's copy of capital ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making such abrupt addition u/s 68 without bringing on record the conclusive evidence such as copy of the final sale deed in whose name the registration was directed by the Court to be got done and as to whether the deal was at all matured or how finally the issue was settled by the Trial court so as to enable the Deptt. To make the addition in the appropriate hands. Moreover, from the accounting practice & procedure, nature of imprest account and capital account is totally different. Imprest account does not necessarily forms part of capital account. Moreover, the AO has not taken any adverse view of similar cash credit of ₹ 5,00,000/- taken on 30.12.2002 from another fim, M/s. Ajay TV Centre, Gurdaspur and repaid on 2.1.2003 i.e. within 3 days because the facts, purpose, circumstances in assessee's two transactions each with both the firms are almost identical and similar. Further the AO has failed to bring full facts regarding the finality achieved at the end of the Trial court had as to in whose name the sale deed was directed to be registered and or whether the transaction was matured or not. On the other hand, the assessee has all along been contending that he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his business for last more than six years. The money was paid to our partner Sh. Ajay Mahajan and later on the deal remained immatured and money was return to us, We in turn returned the money to the public from whom we borrowed for short term. Sir, this money was borrowed by our Finance Division from public and lent the same to our partner, Sh. Ajay Mahajan Imprest A/c" and later on recovered the same from Sh. Ajay Mahajan Imprest A/c and returned back to depositors of our Finance Division immediately. We at M/s. Ajay Electronics did not lend the said money. It was neither deposited in our books of account nor any payments were made to suppliers or creditors etc. except for repaying the borrowings of Finance Division from where the money was received during the year itself.. During the course of re-asstt. Proceedings, the assessee's reply dt.29.12.2010 was taken into consideration by the AO and its relevant extracts are reproduced below for the sake of ready reference: In this case, Sh. Ajay Mahajan has received the money at ₹ 170 lakhs from M/s. Ajay Electronics, Pathankot a regular assessee with your circle. Copy of account viz (1) Capital account (2) Imprest A/c from M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by him by way of cheques. Loan amounts could not be treated as income from undisclosed sources on mere failure on the part of the creditors. To show that their sub-creditors had creditworthiness to advance the said loan amounts are findings of facts, the findings being based on an wholly erroneous view of law, the question raised in the appeal is a substantial question of law." 12. But in this case, the assessee has proved the fact that the firm, M/s. Ajay Electronics has sufficient funds in its hands. It has also been held by the Hon'ble Patna High Court in the case of Sarogi Credit Corporation vs. CIT reported in 103 ITR 344 (1976): "Cash credit-Burden of proof-Creditors appearing before the ITO and stating that the amount of ₹ 20,000/- was in act advanced by them. ITO disbelieving them and making addition - Tribunal accepting the deposit to be genuine to the extent of ₹ 5,000/- making addition of ₹ 15,000/-. Non-justified - Once the identity of the third party creditors is established before the ITO and the creditors have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this view by the decision of the Hon'ble Madhya Pradesh High Court in the case of CIT vs. Metachem Indistries reported in2 45 ITR 160, wherein it has been held that: "Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the partner or an individual, then the responsibility of the assessee is over, whether that person is an income tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person wo has deposited the amount, then the burden of the firm is discharged and in that case that credit cannot be treated to be the income of the firm for the purpose of income tax." 14. Accordingly, in the facts and circumstances of the case, we do not find any infirmity in the order of the Ld. CIT(A), who has rightly deleted the addition made by the A.O. Thus, all the grounds of the Revenue are dismissed. 15. Now, we take up appeal of the Revenue in ITA No.62(Asr)/2012. The brief facts of the case are that the facts in the present case are identical to the facts in the case of ITA No.60(Asr)/2012. Rather the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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