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TMI Blog2018 (4) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... o goes against the claim of the assessee. - Decided against assessee. - ITA No. 378/JP/2014 - - - Dated:- 8-3-2018 - Shri Vijay Pal Rao, JM And Shri Bhagchand, AM Assessee by : Shri Rohan Sogani (CA) Revenue by: Smt. Poonam Rai, (DCIT) ORDER Per Vijay Pal Rao, JM This appeal by the assessee is directed against the order dated 28th March, 2014 of ld. CIT (A)-II, Jaipur for the assessment year 2010-11. The assessee has raised the following grounds :- 1. In the facts and circumstances of the case and in law the ld. CIT (A) has erred in confirming the action of ld. AO in rejecting the books of accounts by invoking the provisions of section 145(3) and confirming the estimation of the gross profit at 17.5% against the declared gross profit rate at 8.16% resulting into trading addition of ₹ 4,78,997/-. The action of the ld. CIT (A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the rejection of books of accounts and accepting the book results by deleting the said addition of ₹ 4,78,997/-. 2. (a) In the facts and circumstances of the case and in law the ld. CIT (A) has erred in not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He has further contended that the AO has selected one company for the purpose of applying the GP rate without explaining the basis of the comparability of the said company, namely, M/s. Rainbow Jewellers. The ld. A/R has pointed out that the AO has also not given the details of the nature of business of said company whether it is a wholesaler or retailer and comparable to the business of the assessee. In support of his contention, he has relied upon the decision of the Coordinate Bench of the Tribunal dated 15.12.2017 in case of ACIT vs. M/s. Allied Gems Corporation in ITA No. 794 795/JP/2011 and C.O. No. 76 77/JP/2011 wherein the Tribunal has held that the past history of the assessee s declared GP is relevant guidance for estimation of income of the assessee after rejection of books of accounts. 2.1 On the other hand, the ld. D/R has submitted that the AO during the assessment proceedings has noted that out of total purchases of ₹ 50,25,180/- made during the year under consideration, 90% of the purchases are outstanding as on 31st March, 2010 and therefore, the purchases of the assessee were found to be unverifiable. She has further contended that the AO has applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of amount of ₹ 5.75/- lacs. It means that to this extent, accretion in purchase is without supporting the correct bills. Of course, total openting balance of all parties is ₹ 1,15,43,782/- and the closing balance is ₹ 1,33,36,193/-. However, looking to the accretion in the closing balance of the concerns for which Revenue has material, the addition confirmed by the ld. CIT(A) is reasonable . 2.30 The Hon ble P H High Court in the case of Uplakesh Metal Industrial V CIT 177 taxman 298 held that issue decided by this is in the realm of appreciation evidence. The find of Tribunal as mentioned in this judgment is as under:- However, in our opinion the observation of the Assessing Officer that the assessee was prima facie required to prove the genuineness of the transaction and identity of the creditors is not misplaced because there is no distinction laid between the trade creditor and the non-trade creditor and we are further of the opinion that in case the assessee claims liability of payment to the trade creditors shown in the balance-sheet, the assessee is definitely required to prima facie prove the identity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly the addition of 25% being inflated purchases was made and upheld by the Tribunal which was again upheld by the Hon ble High Court. On the contrary in the case of the assessee the AO not given any finding of inflated purchases by the assessee but doubted the very transaction of purchases due to non production of these parties before the AO. The AO has not given the finding that the prices of the goods was inflated by the assessee but the AO doubted the genuineness of the purchases on the ground that the suppliers were found to be accommodation entries providers. When the AO rejected the book results u/s 145(3) of the Act, then the AO after rejection of the books of account can proceed to make the assessment on the basis of best judgment instead of resorting make the addition to the book results. Accordingly, in the facts and circumstances of the case and in view of the decision of this Tribunal in assessee s own case for A.Y. 2006-07 we do not find any error or illegality in the orders of the ld. CIT(A) in restricting the addition to the average GP rate based on the past history. Hence, the grounds raised in the Revenue appeals are rejected being without any substanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to prove source from which the creditor could have acquired money to be deposited with it. Thus the ld. A/R has forcefully contended that once the assessee has produced the records to establish the identity of the creditor and bank statement, then no further evidence is required to be produced in support of the claim. 4.1. On the other hand, the ld. D/R has submitted that the assessee has failed to produce even the confirmation of the loan creditor as well as PAN. The loan creditor company is a related party of the assessee as one of the partners of the assessee firm is a Director of the said company. Therefore, the non production of confirmation and PAN clearly shows that the assessee has failed to discharge its onus. The ld. D/R has referred to the bank statement of the loan creditor and submitted that the cheques were issued immediately after the deposit of an identical amount in cash in the bank account of the company and, therefore, this is not a case of payment of loan by the company from the known source but cheques were issued just after deposit of cash of like amount. Hence the assessee has failed to establish source of cash credit. In support of her contention, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CASH 24-Oct-2009 TRF to CD244 504602 465000.00 200000.00 468224.92Cr 3224.92Cr Page Total 940000.00 940000.00 3224.92Cr Grand Total: 940000.00 940000.00 3224.92Cr Funds in clearing 0.00 Total Available Account 3224.92Cr Unless the constituent notifies the bank Immediately of any discrepancy found By him in this statement of account, It will be taken that he has found the account correct. Date Stamp Manager Thus it is clear that before issuing the cheque there is a deposit of equal amount in cash on 19th October, 2009 and further when a cheque of ₹ 4,65,000/- was issued, an identical amount was deposited in cash on 21st and 22nd October, 2009. From the entries in the bank account of the loan creditor it clearly reveals the fact that the cheques were issued only for the amount whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her for the A.Y. 2005-06 declared an income of only ₹ 51,904/-. It is a clear case of accommodation entry being provided to the assessee. She simply did not have the requisite creditworthiness to give the loan. 6. Coming to M/s. Nirav Gems, who claimed to have given a loan of ₹ 1,50,000/- the situation was exactly the same. Cash of ₹ 1,50,000/- was deposited on 8.11.2004 and the loan was given on the very next day. Before the deposit, the balance in its account with Dena Bank, Rampura Branch was only ₹ 4,008.87. He also build up his capital by showing diamond brokerage income of approximately ₹ 3,000 per month. Once again, this is another case of accommodation entry being provided to the assessee. Shri Nirav M Mehta who claimed to have given a loan of ₹ 1 lakh to the assessee, cash was deposited on 6.11.2004 in his bank account with Dena Bank and the loan was given to the assessee on 9.11.2004. His account shows similar transactions of rotating money at regular intervals. The average balance prior to the said deposit was approximately ₹ 2,000-Rs. 3000. Shri Sevantilal A. Mehta had a balance of ₹ 5557 before depositing cash of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessarily established. Though this is clearly a contradictory and dichotomous situation yet, the necessity of enquiries regarding the creditworthiness of the alleged depositors cannot simply be wished away. In the case of the assessee, such enquiries have clearly revealed that, apart from Shri Hasmukh R. Mehta, the remaining seven alleged depositors simply did not have the funds available to give the loans to the assessee. The funds were available by surreptitious means which was not explainable. Given such facts and circumstances of the case, I hold that of the unexplained loans of ₹ 13 lakhs, only the loans of ₹ 3 lakhs in the name of Shri Hasmukh R. Mehta, stood satisfactorily explained. The remaining loans of ₹ 10 lacs represented absolutely bogus accommodation entries. The addition to the extent of ₹ 10 lakhs under the provisions of sec. 68 of the IT Act is sustained. 5. Not satisfied with such conclusions, assessee approached the Tribunal. The Tribunal concurred with the view of the Revenue authorities and dismissed the assessee's appeal. It was noticed that cash was deposited in the accounts of such depositors shortly prior to giving s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Tribunal found the entire transaction not genuine. There was sufficient evidence on record to suggest that in case of all the depositors, their bank accounts contained meager balance shortly before sizable amount of ₹ 1 lakh and upward were given to the assessee through such account. In such bank accounts, cash amounts were credited and immediately entire amounts were withdrawn through issuance of such cheques in favour of the assessee. It was noticed that such creditors did not maintain any books of account. Nowhere their capacity to raise such amount for drawing cheque of sizable amounts was established. In short therefore, the V very genuineness of the transaction was not established. This therefore, is not a case where the Revenue makes addition on the assessee failing to establish source of the source. All issues are essentially based on facts and appreciation of evidence on record. No question of law arises. Tax Appeal is dismissed. Thus the Hon ble High Court after considering the peculiar facts of the case has refused to accept the contention of the assessee that the revenue cannot insist on assessee supplying source of source. Similar view has been taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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