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TMI Blog2019 (7) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made by the A.O. on the ground that the assessee has failed to explain the source of cash deposited by the loan creditor - HELD THAT:- Though, the assessee has proved the identity of the loan creditor, however, a cash of ₹ 2.95 lacs was deposited in the bank account of the loan creditor prior to the said amount of ₹ 3.00 lacs given to the assessee. Further the source of deposit was explained by the assessee as salary income of the loan creditor who was employed with the assessee itself. Thus, the loan taken by the assessee from its own employee and prior deposit of cash clearly established that the creditworthiness of the loan creditor is not proved beyond doubt. Since the loan creditor was employee of the assessee, therefore, the preponderance of probability is against the assessee that the said cash deposited in the bank account of the employee is assessee s own unexplained cash. Assessee has claimed loan of ₹ 3.00 lacs from his own employee and a cash of almost equal amount was deposited in the bank account of the said loan creditor prior to the alleged loan given to the assessee clearly an evidence against the assessee against which the assessee has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee does not press ground No. 1, the same may be dismissed being not pressed. The ld DR has not raised any objection if ground No. 1 of the assessee s appeal is dismissed as not pressed, accordingly, ground No. 1 of the assessee s appeal is dismissed being not pressed. 3. Ground. No. 2 of the appeal is regarding disallowances of expenses. The assessee is engaged in the business of wholesale trading and commission agent of food grains, oilseeds etc. in the name and style of M/s Ramavtar Radhey Shyam. During the course of scrutiny assessment, the A.O. noted that the assessee has declared G.P. at 2.80% and net profit at 0.40% on the turnover of ₹ 22,79,12,614/-. The A.O. further noted that on examination of books of account, various expenses were not found properly vouched and not supported by proper evidences. Accordingly, the A.O. disallowed 20% of the expenses on account of wages, vehicle, shop and shop repaid expenses total amounting to ₹ 7,71,920/- and 20% of the same was worked out at ₹ 1,54,384/-. The assessee challenged the action of the A.O. before the ld. CIT(A). The ld CIT(A) has restricted the disallowance from 20% to 10% being & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is as per law that all the above expenses are not fully vouched. Therefore the cited decision of the A/R of the appellant not applicable in this case. The Assessing officer made the disallowance @ 20% which is unreasonable, excessive and without any basis. Therefore considering the facts of the case and nature of the expenses I restricted the disallowance @ 10% of the above expenses. Thus the disallowance comes to ₹ 77192/-. Accordingly I confirm the addition of ₹ 77192/- and balance amount of ₹ 77192/- is deleted. This ground is partly allowed. The ld. CIT(A) has given the finding that the A.O. has disallowed 20% of the expenditure which is unreasonable, excessive and without any basis. Once this finding is given by the ld. CIT(A) then there is no justification for sustaining the disallowance at 10% of the expenses. Therefore, after holding the addition as unreasonable, excessive and without any basis, the restriction of the addition/disallowance at 10% is also without any basis. Hence, the addition/disallowance sustained by the ld. CIT(A) is not sustainable in law and the same is deleted. 7. Ground No. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the bank account of the loan creditor prior to the said amount of ₹ 3.00 lacs given to the assessee. Further the source of deposit was explained by the assessee as salary income of the loan creditor who was employed with the assessee itself. Thus, the loan taken by the assessee from its own employee and prior deposit of cash clearly established that the creditworthiness of the loan creditor is not proved beyond doubt. Since the loan creditor was employee of the assessee, therefore, the preponderance of probability is against the assessee that the said cash deposited in the bank account of the employee is assessee s own unexplained cash. The ld. CIT(A) has considered this issue in para 6.3 as under: 6.3 I have carefully considered the material before me. I find that the Assessing officer made the addition of ₹ 3,00,000/- u/s 68 of the I.T. Act making the observation that genuineness of the transaction and credit worthiness of the appellant is not proved. The A/R of the appellant submitted that the so called cash creditor explained the sources. This argument is not correct because the so called cash creditor fail to explain the source the cash depos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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