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TMI Blog2020 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... s only forming source of the impugned cash deposits. We thus direct assessment of the impugned bank deposits @8% only. This former issue is partly accepted in assessee s favour. Disallowance of interest paid to the bank - HELD THAT;- We find no merit to sustain the impugned disallowance. The fact remains that the assessee has advanced interest-bearing funds to its sister concerns only. This is not the Revenue s case that the same lacks the element of commercial expediency between two sister concerns as per hon ble apex court s landmark decision in S.A. Builders Ltd. v. CIT [ 2006 (12) TMI 82 - SUPREME COURT] Hero Cycles Ltd. vs. CIT [ 2015 (11) TMI 1314 - SUPREME COURT] . We draw support therefrom to conclude that the assessee s act of advancing interest bearing funds to its sister concern involved commercial expediency and therefore, the impugned pro rata interest disallowance cannot be sustained. The same stands deleted. - I.T.A No.1248/Kol/2018 (Assessment Year: 2012-13) - - - Dated:- 11-12-2019 - SHRI J. SUDHAKAR REDDY, AM AND SHRI S. S. GODARA, JM Appellant by: Shri Pramod Kr. Himmatsingh, Advocate Respondent by: Shri Sanka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garwal, the main partner of the firm stated actually all stock of fabrics/sarees has been sold out . In reply to question number 8, on being asked to produce the sales bills and relevant entries with respect to the fabrics in the books, he further stated we are unable to produce any sales bill in this regard. In fact, the sale proceeds of fabrics/sarees have not been accounted for in the books of accounts. During the course of assessment proceedings also the appellant was unable to produce any evidence in the nature of sales bills or challans to prove the claim of sales. Therefore, the Assessing Officer concluded that the appellant was only an entry operator in saree market and has given entry of purchase of saree only and hence, there was no corresponding sales bills of sarees and no physical stock of sarees as such. During the course of assessment proceedings, the AO further noted, that an, amount of ₹ 75,65,000 was deposited in cash in the Account Number 151502000000431 maintained with Indian Overseas Bank during the period from 21st of November 2011 to 31st of March 2012. All this amount has been subsequently transferred to another CC Account Number 151502000000303 mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in appellant's bank accounts during the period of 21st of November 2011 to 31st of March 2012. The onus squarely rests on the appellant to prove the source of these credits, creditworthiness of the creditors and the genuineness of the transaction. As the AO noted these cash credits in the bank accounts and he gave notice to the appellant with intent to consider the same for addition as unexplained cash credit, it is the bounden onus on the appellant to prove all the 3 facets of the transaction to the hilt to the satisfaction of AO. I observe, even though the assessee contends that it had sold the fabrics or sarees in cash and that is the source of these credits, yet neither during the survey proceedings nor during the assessment and nor even in the appeal proceedings, the appellant has come out clean with respect to the parties to whom the sales have been made. No evidence with respect to sales bill, sales challan have been produced as evidence of sale. It is contended that at the time of survey there was no inventory of stock because every item has been sent to the purchase parties for approval. And, as the approval has not yet been obtained till then, the recognition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Profit Loss A/c from 01.04.11 to 18.01.12, (upto survey date), inventory of saree purchases (RA-2), copy of VAT return, reply letter dated 16.02.2015, letter dated 12.01.2018 with sale bills, tax audit report and audited accounts up to 31.03.2012, Assessing Officer s ordersheet and another letter dated 22.09.2012 addressed him that the assessee had stopped business activities; respectively. He quotes accounting standard AS-9 regarding revenue recognition in support of the assessee s contention that it could not have recognized the challan amounts as income pending approval of the concerned customer parties. Learned counsel submits in light of the following detailed documents and assessee s explanation that both the learned lower authorities have erred in law and as well as on facts in treating assessee s bank deposits involving saree/fabrics sales amount as unexplained cash credits u/s 68 of the Act. 4. The Revenue s case on the other hand is that the assessee has failed to explain source of the impugned bank deposits attributable to saree/fabric sale amounts realised from the customer parties right from date of survey on 18.01.2012 to the lower appellate proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 25,20,688/- and its deployment in sister concern M/s. Sarvesh Rice Mill Pvt. Ltd. involving interest expenditure of ₹ 20,07,637/-; including proportionate amount in issue of ₹ 8,92,283/- on pro rata basis. The same stood disallowed in assessment as well as in the CIT(A) s order. The Revenue s case before us is that both the lower authorities have rightly made the impugned disallowance going by the survey statement. 8. We find no merit to sustain the impugned disallowance. The fact remains that the assessee has advanced interest-bearing funds to its sister concerns only. This is not the Revenue s case that the same lacks the element of commercial expediency between two sister concerns as per hon ble apex court s landmark decision in S.A. Builders Ltd. v. CIT [2007] 288 ITR 1 Hero Cycles Ltd. vs. CIT 379 ITR 347(SC). We draw support therefrom to conclude that the assessee s act of advancing interest bearing funds to its sister concern involved commercial expediency and therefore, the impugned pro rata interest disallowance cannot be sustained. The same stands deleted. 9. This assessee s appeal is partly allowed in above terms. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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