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TMI Blog2017 (2) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... CCOUNTANT MEMBER: 1. With this appeal, the Assessee has challenged the correctness of the order of the Ld. CIT(A)-II, Ahmedabad dated 11.02.2014 pertaining to A.Y. 2011- 12. 2. The grievance of the assessee is twofold. Firstly, the assessee is aggrieved by the addition made by the A.O. and confirmed by the ld. CIT(A) amounting to ₹ 42.20 lacs on alleged unexplained cash credits of ₹ 48.18 lacs made u/s. 68 of the Act. Secondly, the assessee is further aggrieved by the disallowance of interest paid to the cash creditors to the extent of ₹ 1,83,878/- on the ground that the cash credits were held as non genuine. 3. The assessee derives income from business of courier in respect of post parcel, packet and cash etc. A search action u/s. 132A of the Act was carried out in the case of Shri Jagdish R. Patel on 16.04.2010. Some unaccounted cash was found and seized which was offered for taxation by the assessee for the A.Y. 2011-12. 4. Subsequently, the assessee was served with a notice in reply to which the assessee stated that the return filed on 27.08.2011 may be treated in response to the said notice. 5. Statutory notice u/s. 143(2) of the Act was issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time saving and/or even by providing finance by BEG-BORROW OR STEAL If you analyses all these nineteen 'alleged cash creditors', twelve 'alleged cash creditors' amounting to ₹ 35.20 lacs are taken up as partners in the subsequent year. They were also most efficient employees of the firm and since, during most critical period, and (when the capital was blocked in seizure by police) when the firm was in need of instant finance support, they had whole heartedly supported the firm by arranging finance towards working capital requirement and in token of appreciation, the senior partners invited them to become partner in the firm. It would not be out of place to invite your kind attention to the fact that out of these twelve depositors, six depositors have just contributed one or two lacs in accordance with their capacity and ability. Even the Income-tax department does not tax anything on basic income of ₹ 2 lacs and therefore, in our humble submissions, contributions of Rs.l lacs or ₹ 2 lacs is not a big alarming sum such that your office does not believe such peety sum as savings of past years of the family or of the depositors. In today's era a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the light of the statements of all the 19 cash creditors and came to the conclusion that the assessee could not satisfy all the two conditions to prove the genuineness of cash creditors, their creditworthiness, though only one condition that is identities have been established. The A.O. accordingly added ₹ 48.18 lacs as unexplained cash credits appearing in the name of the following persons:- Sr.No Name of the cash creditors Amount of cash credit 1 Shri Ashish S Patel Rs.1.00 Lacs 2 Shri Ashish P Patel Rs.2.00 Lacs 3 Shri Bhavesh R Patel Rs.1.00 Lacs 4 Shri Chetankumar R Patel Rs.5.20 Lacs 5 Shri Chandresh M Patel Rs.1.00 Lacs 6 Shri Dhavalkumar M Patel Rs.2.00 Lacs 7 Shri Dinesh K Patel Rs.4.00 Lacs 8 Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the copies of the Income Tax returns of all the cash creditors which were duly supported by the copies of the respective bank statements. The ld. counsel also pointed out that all the cash creditors have confirmed the loan transactions in their respective statements recorded by the A.O. 14. The ld. counsel heavily relied upon the judgment of the Hon ble Jurisdictional High Court of Gujarat in the case of Ranchhod Jivabhai Nakhava 208 Taxmann.com 35 and on another decision of the Hon ble Jurisdictional High Court of Gujarat in the case of Rohini Builders 256 ITR 360. The ld. counsel concluded by saying that since the assessee has successfully discharged the initial onus; no addition can be made u/s. 68 of the Act. 15. Per contra, the ld. D.R. strongly relied upon the findings of the lower authorities. It is the say of the ld. D.R. that the assessee failed to prove the creditworthiness of all the cash creditors. 16. We have given a thoughtful consideration to the orders of the authorities below qua the rival contentions. We have also carefully perused the relevant documentary evidences brought on record in the form of paper book in the light of Rule 18(6) of the ITAT Rules. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the creditors. In other words, the Assessing Officer had no authority to dispute the correctness of assessments of the creditors of the assessee when a co-ordinate Assessing Officer is satisfied with the transaction . 19. The Hon ble Supreme Court in the case of Orissa Corporation Ltd. 159 ITR 78, on similar facts, has held as under:- Held, that in this case the respondent had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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