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TMI Blog2024 (7) TMI 1019X X X X Extracts X X X X X X X X Extracts X X X X ..... ash. They have clearly mentioned that they have sufficient agricultural income from where the advance was given for purchase of sand. Such advances were subsequently repaid by banking transactions or adjusted with sale of sand. The unimpeachable testimony of these persons cannot be lightly brushed aside. The ratio decidendi is squarely applicable to the case in hand that when advances are later booked as income, no addition u/s 68 is possible. Decided in favour of assessee. - Shri V. Durga Rao, Judicial Member And Shri K.M. Roy, Accountant, Member For the Assessee : Shri Manoj Moriyani, Advocate For the Revenue : Shri Abhay Y.Marathe, Sr.Dr. ORDER PER K.M.ROY, A.M. The present appeal has been preferred by the department challenging the impugned order dated 31/01/2018, passed u/s 250 of the Income Tax Act, 1961 ( the IT Act ) by the learned Commissioner of Income Tax (Appeals), Nagpur, [ learned CIT ], for the assessment year 2011-12, emanating against the order u/s 143(3) r.w.s. 147 of the I.T. Act, 1961, by ITO, Ward-1, Amravati, on 23/03/2015. 2. The department has raised following grounds of appeal: 1. On the facts and circumstances of the case and in law the learned CIT (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he all the 17 persons from whom the appellant has taken money and their deposition were recorded on 29/12/2014. All have admitted and confirmed that they have given money to the appellant as sand advance and source thereof was stated to be out of agriculture and sand business and they have also submitted all the documents as and when called by the assessing officer during the course of assessment proceedings. The learned assessing officer without going into merits of the case made addition of Rs. 2,05,00,000/- as unexplained cash credits u/s. 68. The learned assessing officer also stated that the appellant repaid the loan amount by mode other than account payee cheque in violation of section 269T 4. Being aggrieved against the addition, the appeal was preferred before CIT(A). The CIT(A) has dealt elaborately as follows:- 5.5.1 The appellant is trading in sand the appellant has introduced a sum of Rs. 2.05 crores being advances received from 17 parties, for sand in his books of account on 03/01/2011 during the previous year relevant to assessment year under consideration. The details in respect to amounts of Rs. 2.05 crores received in cash by appellant from these 17 parties have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of sand and the same is reflected in the copy of VAT audit report filed in the paper book. The appellant also filed the copy of account of Shri Rajesh Hiwase showing the purchases made from Rajesh Hiwase. 5.5.4 During the course of assessment proceedings, the A.O. issued summons under sections 131 of I.T. Act 1961 to all the 17 parties from whom the appellant received the cash advances for sand and the depositions u/s 131 of I.T. Act 1961 in respect to 13 parties were recorded. All such depositions made u/s 131 of I.T. Act 1961 are filed in the paper book at pages 118 to 166. Perusal of the said depositions indicates that all the persons have accepted the fact of giving money in cash to the appellant for sand. They also explained that the sources of money given by them to the appellant are out of their agricultural income and sand business. The appellant filed the copies of reply filed by the parties in response to summons issued under section 131 of I.T. Act and they are placed at pages 175 to 188 of the paper book. The appellant also filed the copies of ledger accounts of all 17 persons at pages 189 to 208. The appellant has also filed the copy of statement of VAT Audit repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ramda Shelke 13] Copy of statement u/s 131 of More Dilip Shahadeo 14] Copy of statement u/s 131 of Shri Prasad V. Mahajan 15] Copy of statement u/s 131 of Sanjay Gangaram Chavan 16] Copy of statement u/s 131 of Nilesh Popatlal Shaha 17] Copy of statement u/s 131 of Gawande Hareram Gulabrao 18] Copy of statement u/s 131 of Shivpal Puranji Maliye 19] Copy of statement u/s 131 of Mohd Hanif Sk Burhan s/o k.Burhan 20] Copy of reply to notice u/s 148 dated 20/11/2013 21] Copies of reply filed before the assessing officer 22] Copi8es of reply filed by persons before assessing officer to whom summons u/s 131 were issued along with copy of Summons u/s 131 23] Copy of ledger account of Ujjwal Ganeshrao Khedkar 24] Copy of ledger account of Bhagwant Sitaram Neware 25] Copy of ledger account of Anish Ghyanchand Mahjan 26] Copy of ledger account of M.Brahim Musabhai 27] Copy of ledger account of Sagar Girdharji Bundele 28] Copy of ledger account of Vijay Mesare 29] Copy of ledger account of Ramesh Shriram Mesare 30] Copy of ledger account of Sharad Janakramji Wasu 31] Copy of ledger account of Gajanan Ramda Shelke 32] Copy of ledger account of Dilip Shahadeo More 33] Copy of ledger account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be deduced from such account, therefore, the books of accounts are rejected u/s 145(3) of the Income Tax Act, 1961, as not satisfactory and not reveal true picture of business affairs and as such assessment was to be made on best judgment. 8. The learned AR argued before us that once the books of accounts has been rejected, there can be no separate addition u/s 68 of the Act. We find that the matter is covered by a similar judgment of ITAT, Chennai Bench, in ITA No. 3091/Chhy/2019 in case of Assistant Commissioner of Income Tax -vs.- Shri S. Moorthy. The Hon ble Judicial Member being a party to the order has held as follows: We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. It is an admitted fact that the AO has rejected books of account u/s.145(3) of the Act and estimated profit from the business by adopting 12.5% net profit on gross receipts. It is also an admitted fact that once books of account are rejected u/s.145(3) of the Act, no further additions can be made by relying upon same books of account either in respect of cash credits u/s.68 of the Act or unexplained commission expenses u/s.69C of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards cash credit u/s.68 of the Act and unexplained commission u/s.69C of the Act, when the books of account were rejected u/s.145(3) of the Act. 9. We further find that the similar view has also been taken in the case of Commissioner of Income Tax -vs.- G.K.Contractor, (2009) 19 DTR 0305 (Raj.HC) , wherein the High Court of Rajasthan has held as follows; Estimation of profit after rejection of books of account AO having estimated the profit by applying a higher net profit rate to total contract receipts after rejecting assessee s books of account by invoking the provisions of s. 145(3), no separate addition can be made on account of cash credit under s. 68 even though the assessee has failed to discharge its onus of proof in explaining the amount shown in the books of account as market outstanding No substantial question of law arises for consideration. We find the substantial merit in the forceful submission of AR. 10. On the other hand, the learned DR has referred to the following judgments: [1] Hon ble High Court of Allahabad s judgment in the case of Commissioner of Income Tax-I vs. G.S.Tiwari Co. vide IT Appeal No. 5 of 2008 reported in [2014] 41 taxmann.com 17 (Allahabad) dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in paper book filed before Court- It could not, therefore, be said that view taken by Tribunal was perverse-Question essentially was question of fact and Tribunal on basis of evidence was satisfied that money had in fact been received by way of advance and therefore, no question of any bogus liability being created was there as held by AO-In that view of matter, finding arrived at by Tribunal was not perverse-Section 68 in facts of the case had no applicability-Question was, thus, answered in favour of assessee. 12. The Ld.DR could not satisfactorily rebut the proposition so placed. He then submitted that the lenders are all agriculturists and then there is no locus standi to advance for purchase of sand. It is a common fact that agriculture is a seasonal activity and farmers with marginal land holding find it difficult to sustain. So to augment their income level, there is no bar to try alternative avenues for generation of income. Even big corporates diversify and venture into new business ventures. So the hollow argument is rejected being devoid of any merit. In fact, these persons had unequivocally confirmed in the course of statement recorded u/s 131 that they have advance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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