Dear Members,
In one of my client's case Assessment proceedings are going on for A.Y. 2011-12. The client is a salaried employee and he is not supposed to prepare and keep books of accounts. (nevertheless he has maintained the same for his own purpose.) During the assessment proceedings for A.y. 2011-12 the ITO had asked for Bank details and the client had submitted the same. The ITO had asked for loan confirmation from the parties from whom the client had received cheques as loan. The client had also complied with the same. He had furnished loan confirmations, bank statements and ITR of the parties from he had received the loan and ITO seemes to be satisfied with the same. The client has also deposited cash in bank a/c which incidentely he had withdrawn in earlier year. The ITO has also verified this withdrawal from pass book in earlier two years i.e. Asst. Year 2009-10 and Asst. 2010-11. The client had withdrawn these amounts from cheques deposited which were received as loan.
Now the ITO had issued notice U/s 142(1) and wants confirmation, creditworthiness and genuineness proved of the parties who had given loan in earlier years i.e. Asst. Year 2009-10 and 2010-11. (The scrutiny is going on for Asst. Year 2011-12)
Is the action of ITO justified? Can anybody give some "case law" to substaintiate the unjustifiability or otherwise of the ITO? Any help will be highly appriciated.
Regards,
Jaimin.
CAclubindia
