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TMI Blog2019 (9) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 7-8-2019 - Vikram Singh Yadav (Accountant Member) AND Vijay Pal Rao (Judicial Member) For the Appellant: Shri P.C. Parwal (C.A.) For the Respondent: Shri B.K. Gupta (CIT) ORDER VIJAY PAL RAO, This appeal by the assessee is directed against the order dated 17.12.2018 of the ld. CIT(A), Alwar for the assessment year 2010-11. The assessee has raised the following grounds of appeal:- 1. The ld. CIT(A) has erred on facts and in law in confirming the addition of ₹ 8,62,66,333/- made by the AO by treating the cash deposit in the bank account as unexplained income. 1.1. The ld. CIT(A) has erred on facts and in law in confirming the above addition by making various incorrect observations and by:- (i) holding that assessee failed to prove the genuineness of cash credit in the bank account (ii) ignoring that the amount deposited in the bank account is out of sale proceeds of ₹ 13,14,78,613/- which is duly reflected in trading and P L A/c (iii) ignoring that sale proceeds deposited in the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook was submitted before the AO. The copy of sale and purchase bills, ledger account of all debtors and creditors were also submitted before the AO. The books of account of the assessee were duly audited and cash deposited in the bank account is verifiable from the cash book accounts. The AO has not rejected the books of account of the assessee therefore, the addition made by the AO is not justified and liable to be deleted. The ld. AR has further submitted that the only reason given by the AO for making the addition is that the assessee could not produce the persons to whom notices U/s 133(6) of the Act and the report of the enquiry reveals that the parties were not found at the given address. All these parties are creditors of the assessee from whom he has purchased goods and the payments were made through cheques and they have filed the confirmation in response to the notice issued U/s 133(6) of the Act. Therefore, the assessee discharged its onus to prove the identity and genuineness of the transaction of purchase of goods from these persons the sales were made in cash therefore, the deposit made in the bank account was out of the sale proceeds. The ld. AR has submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below. In rejoinder the ld. AR has submitted that the confirmation were signed by different persons because the proprietorship concerns might have been converted into private limited Companies. 5. We have considered the rival submissions as well as relevant material on record. In the return of income the assessee has shown profit of ₹ 79,170/- in the proprietorship concern M/s Sunmangal and loss of ₹ 90,251/- of M/s Mukta Arts therefore, net result from the business is declared at ₹ 11,081/-. It is also not in dispute that the cash deposit in the different bank account as many as 7 accounts were not declared by the assessee in the return of income. The details of the cash deposit has been given by the AO at page 2 as under:_ 1. ICICI Bank account 032101582093 ₹ 11,000/- 2. AXIS Bank account 00505010200070373 ₹ 64,45,280/- 3. AXIS Bank account 005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstantiate the claim that the deposit made in the bank account is out of sale proceeds. Further, The AO deducted the enquiry by issuing the commission to Addl./Joint DIT(Investigation) Wing, Kolkata vide letter dated 06.12.2017. In the report received vide letter dated 22.12.2017 it was stated that the enquiry conducted in respect of 10 parties from whom the assessee claimed to have purchased the materials were not found at the given address. The peculiarity of the facts and circumstances of the case as well as result of the enquiry conducted by the AO through Investigation Wing, Kolkata clearly established that the claim of the assessee is not genuine. The ld. CIT(A) has adjudicated this issue in para 5.3 and 5.4 as under:- 5.3 I have perused the assessment order as well as submissions made by the appellant. Following facts have emerged; 1. That the appellant has claimed to have been engaged in the business of Fabric trading under the name of M/s Sumangal M/s Mukta Arts during the year under consideration and declared income of ₹ 1,39,500/-. 2. That the A.O had found cash deposits to the tune of ₹ 8,62,66,333/- in various b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan High Court in the case of The Commissioner of Income Tax, Ajmer Vs Shri Jai Kumar Bakliwal, Date of Order: 06/02/2014 has held that In our view as well, three things are required to be proved by recipient of money i.e. (1) identity of the creditor (2) capacity of the creditor to advance money and (3) genuineness of the transaction. From the facts emerging on the face of record, we notice that it is an admitted fact that all the above cash creditors (12 in number) are assessed to income tax and they provided a confirmation as well as their permanent account number. They have their own respective bank accounts which they have been operating and it is not the claim of the AO that the respondent-assessee was operating their bank accounts rather they have categorically stated that they issued cheque to the respondent-assessee., in our view, stood discharged as he was able to prove identity of the creditors. Once the amount was advanced by account payee cheque from their respective own bank accounts and were being assessed to income tax, then in our view, capacity of the creditor and genuineness of the transaction stood proved. In so far as the respondent-assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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