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TMI Blog2018 (5) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... rom a proprietorship concern. 4. The case of the appellant was selected for scrutiny assessment. The Assessing Officer completed the assessment under Section 143(3) of the Act of 1961 and made the additional of Rs. 40 lakhs being the amount received as share application money for allotment of shares of the company and also added the amount unsecured loan of Rs. 16,39,960/- as unexplained income under Section 68 of the Act of 1961. 5. The appellant being aggrieved by the additions made by the Assessing Officer filed an appeal before the Commissioner, Income Tax (Appeals). The appellate authority partly allowed the appeal and as against addition of Rs. 40 lakhs considering three applicants as genuine deleted the addition of Rs. 12 lakhs, however, in respect of balance application money of Rs. 28 lakhs from rest of 7 applicants maintained the additions. Similarly the appellate authority also maintained the addition of unsecured loan of Rs. 16,39,960/- as per the order of Assessing Officer. 6. The assessee as well as the revenue partly aggrieved by the order of the appellate authority, which had partly allowed the appeal has filed Second Appeal in Income Tax Appellate Tribunal, Indo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een deposited in the bank. The entire deposit to the bank account has been recorded in the books of the assessee and the books were produced before the Assessing Officer. The total sales of the assessee were of Rs. 8511415/-. Out of the total sales, the assessee has cash sales of Rs. 449338/-. The entire cash deposit is either from sale proceeds or from the collection against the book debt. We find that as per section 68 of the Act sum should be credited in the books but the assessee has credited the sale proceeds in its books of accounts which has been accepted by the Assessing Officer. The Assessing Officer has nowhere found the defect in the books of accounts, therefore, when the assessee has credit sale proceeds in cash in the books of accounts and the same is deposited in bank, no addition can be made u/s 68 of the Act. We also get support from the judgment in the case of CIT vs. Bhaichand H. Gandhji; 141 ITR 67 and Sundarlal Jain vs. CIT; 117 ITR 316. Therefore, the learned CIT(A) is justified in his action. This ground of the revenue is dismissed." 8. In respect of deletion of Rs. 12 lakhs, the Second Appellate Authority came to the conclusion that the assessee has receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een in bank account of M/s Shree Shyam Polyers in Citi Bank account no.0- 000449-547 before making cheque payments to appellant which raises serious doubts on the genuineness of these transactions. As a result, addition u/s 68 of the Income Tax Act of Rs. 16,39,960/- is hereby confirmed. Ground no. 4 of appeal is dismissed." 16. We have heard both the sides. We find that it is a fact that this depositor who is a director in appellant company has shown income of only Rs. 1,49,301/- in its return and capital is only Rs. 9,27,309/- and in these circumstances creditworthiness of depositor is not proved for giving a credit of Rs. 16,39,960/-. We further find that huge cash deposit was seen in the bank account before making the payment. Therefore, this transaction was doubtful. Hon'ble Gujarat High Court in the case of Umesh Krishnani vs. ITO; (2013) 35 taxmann.com 598 has categorically held as under :- "19. As is very eloquent from the record itself, substantial amount of cash was deposited in the bank accounts of all the creditors shortly prior to issuance of cheques and insufficiency of the fund with the creditors when could be easily established from the overall facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re were 10 applicants. Besides this, the cheque was deposited on the same day. Therefore, the Assessing Officer has to verify the genuineness of the transaction and the assessee was asked to submit the accounts of the share applicants to prove that there was no cash payment. In respect of three parties, M/s R.K. Skyline Construction Limited, M/s Renovision Commerce P. Ltd. and Amarjyoti Vyapar Limited, no cash deposit was found. In respect of seven parties, the Assessing Officer did not believe the explanation of the assessee. The matter travelled to the learned CIT(A) and the learned CIT(A) has deleted the addition of Rs. 12 lacs by observing as under :- "11. As a result while share application money of Rs. 12 lakhs of three parties named above whose bank account were furnished by appellant are treated as genuine and such addition of Rs. 12 lakhs is deleted, the balance of share application money of Rs. 28 lakhs from rest of 7 parties is treated as unexplained and addition of such amount is confirmed u/s 68 of Income Tax Act. As a result this ground no. 3 of appeal is partly allowed." 8. We have considered the submissions of both the sides. Looking to the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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