SUNIL AMBWANI,ADITYA NATH MITTAL, JJ. - (1.) WE have heard Shri Dhananjay Awasthi, learned counsel for the income tax department. Shri Krishna Ji Agrawal appears for the respondent.
(2.) THIS income tax appeal under Section 260 -A of the Income Tax Act, 1961 has been filed on the following questions of law: - "(1) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition of Rs.11,39,000/ - made by the AO. on account of loan creditors despite the fact that in the audit report filed along with the returned no such creditors were shown ? (2) Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in confirming the order of the CIT (A) deleting the addition of Rs.68,484/ - made by the A.O. by applying a higher rate of gross profit on estimated sale of Rs.20,00, 000/ -?" The Income Tax Officer, in respect of the assessment year 2005 -06 did not accept the books of account. He added Rs.11,39,000/ - as unexplained increase of cash credit in the balance sheet, and also added the extra profit of Rs.68,484/.
(3.) THE assessee challenged the order of the Income Tax Officer dated 10.12.2007 making additions on the returned income. He objected that the Assessing Officer has not considered the explanation of the assessee while adding the cash credits, under Section 68 of the Income Tax Act, 1961 (the Act) and the excess profit. The appellate authority found that the explanation submitted by the assessee was satisfactory. The creditworthiness of the creditors was explained, in as much as the credit entry in respect of Ram Kali Devi, the wife of the petitioner of Rs.6,10,000/ - and Rs.5 lacs of Mohit Agencies as well as Rs.29,300/ - on the liability side of the balance sheet was sufficiently explained.;