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TMI Blog2022 (5) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... he explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory. It is only then the sum so credited in the books may be charged to Income tax as income of the assessee - the expression the assessees offered no explanation means where the assessee offers no proper reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. Here in the case of the assessee, the assessee has given an explanation that the credit entries in the bank account are relating to sale of scrap and the original vouchers were also furnished before the Assessing Officer in the remand proceedings. On examination of all the original vouchers the Assessing Officer could not point out any discrepancy in the vouchers. Therefore, the assessee has discharged its initial onus and there was no further enquiry by the Assessing Officer in the remand proceedings though requested by the assessee to summon the vendors. Therefore, taking the totality of facts and circumstances into consideration, we hold that the cash deposits made into bank account by the assessee are nothing but the sale proceeds of scrap sales and the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Apart from that the Assessing Officer also considered Rs.19,20,000/- as cash credit which was received from sister concern Balaji Carriers. 4. On appeal the Ld. CIT(A) deleted the addition of Rs.19,20,000/- made u/s 68 holding that the assessee has proved the identity, creditworthiness of the transaction which was made with its sister concern Balaji Carriers. However, coming to the cash deposits of Rs.36,25,000/- from out of sale proceeds of scrap sales, the Ld. CIT(A) sustained the addition observing that the assessee failed to produce the parties before the Assessing Officer in the remand proceedings. Ld. CIT(A) also observed that assessee not able to produce complete vouchers in respect of all cash credits but only to the extent of Rs.14,34,687/- have been produced. 5. Before us the Ld. Counsel for the assessee reiterated the submissions made before the lower authorities stating that the company has closed since 1997-98 as heavy losses were incurred due to slump in the oil market. The company had gone into liquidation and had become defaulter in respect of term loan taken from Haryana Financial Corporation (HFC) and HSIDC and working capital loans taken from its banke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ); 2. MOD Creations Pvt. Ltd. vs. ITO 354 ITR 282 (Del.); 3. AGM Protection Devices Ltd. vs. DCIT 324 ITR 334 (Del.). 7. On the other hand, the Ld. DR strongly supported the orders of the authorities below. 8. Heard rival submissions perused the orders of the authorities below and the case laws placed before us. Before the Assessing Officer the assessee contended that the company became sick and could not pay the loans to the creditors, bankers and there was one-time settlement offered to the assessee and the business was completely closed down and in fact there was an auction notice issued by Haryana Financial Corporation and the assessee in order to pay one-time settlement and the other dues sold scrap and the sale proceeds were deposited into bank account and the loans were discharged by utilizing the sale proceeds. However, the Assessing Officer in the absence of any further details treated the cash deposits of Rs.36,25,000/- as unexplained cash credits u/s 68 of the Act. Before the Ld. CIT(A) it appears that the assessee has furnished the evidences and the Ld. CIT(A) called for the remand report and in the remand report the Assessing Officer stated as under: - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ryana Financial Corporation in the month of June, 2009 there was a demolition order from Estate Office, Sonepat in the month of July, 2009. Assessee also approached bankers/financial institutions for one-time settlement of loans in the month of December, 2007 and May, 2008. Page 3 of the Paper Book also suggests that Haryana Financial Corporation gave an advertisement in the newspaper for sale of sick/closed units and assessee company also appears at Sl. No. 14 of the said advertisement. All these goes to show the assessee became financially weak due to heavy losses in past years, business operations were shut and was trying to wriggle out of the financial crunch by settling the dues to bankers and other creditors. The assessee sold some scrap generated in its factory and the sale proceeds were utilized for clearing the loans. The assessee has given explanation regarding the cash deposits made into bank account are out of sale proceeds from scrap generated. 10. The Hon ble Supreme Court in the case of CIT vs. P. Mohanakala (supra) held as under: - The question is what is the true nature and scope of section 68 of the Act? When and in what circumstances would section 68 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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