PER R.P. TOLANI, JM The appeal is filed by the assessee against the order of the ld. CIT (A), Alwar dated 30.05.2014 for the assessment year 2009-10, challenging the ld. CIT (A)s action on the following grounds :- (i) Confirming the rejection of books of accounts u/s 145(3). (ii) Confirming trading addition of Rs. 6,53,263/- by applying G.P. rate of 5% on the declared turnover as against gross loss of Rs. 2,68,795/- declared by the assessee. ITA No. 530/JP/2014 A.Y. 2009-10. Shri Om Prakash Agarwal vs. ITO (iii) Confirming disallowance of Rs. 11,378/- being 10% out of various expenses of Rs. 1,13,781/- claimed by the assessee. (iv) Confirming addition of Rs. 43,800/- u/s 68 out of total addition of Rs. 3,05,000/- made by the AO. He has further erred in not allowing the set off of addition confirmed by him u/s 68 against the trading addition confirmed by him.

2. Brief facts are- assessee is proprietor of M/s. Shiva Oil Industries, which as per assessees counsel deals in trading of Mustard seeds, Mustard oil etc. It could not be explained whether separate account of each item dealt in were maintained or not and it was agreed by the assessee that consolidated account for ascertaining GP is prepared. Various defects in the books of accounts were found by AO and they were rejected u/s 145(3) and GP was estimate resulting in additions. In 1 st appeal ld. CIT(A) upheld the rejection of books, however part relief in GP was awarded. Aggrieved assessee is in 2 nd appeal.

3. After hearing both the parties, I am of the view that books of account of the assessee have been rightly rejected in as much as the stock register etc. are not maintained and all the activities traded in by assessee have been mixed in one account due to which the separate item wise G.P. could not be ascertained. Consequently, the order of ld. CIT (A) confirming rejection of books is upheld.

4. As regards ground no. 2, the ld. Counsel for the assessee contends that the G.P. addition is excessive and suitable relief may be given.

5. After hearing both the parties, taking a lenient view, the GP addition confirmed by ld. CIT (A) at 5% is reduced to 3%. The addition is reduced accordingly. ITA No. 530/JP/2014 A.Y. 2009-10. Shri Om Prakash Agarwal vs. ITO

6. Apropos ground no. 3, the disallowance of Rs. 11,378/- being 10% disallowance out of miscelleneous expenses is upheld. This ground of the assessee is dismissed.

7. Apropos last ground relating to addition u/s 68, the ld. CIT (A) confirmed this addition by observing as under :-

7.5. I have perused the assessment order as well as submissions made by the appellant and find that an addition of Rs. 3,05,000/- was made by the AO on account of capital introduction made by the proprietor during the period under consideration. The addition was made by the AO as the appellant could not furnish sufficient evidence in the course of assessment proceedings. The appellant had filed additional evidence in the course of appellate proceedings to substantiate the sources of funds raised by the proprietor before introducing such money in the business. The evidence filed by the appellant was forwarded to the AO for examination after giving an opportunity of being heard to the assessee.

7.6. AO has in his remand report stated that the appellant could furnish satisfactory evidence with regard to the amount introduced of Rs. 2,61,200/- which has been received from 16 persons. However, the appellant failed to produce three persons before the AO or furnish other satisfactory evidence in the course of remand proceedings, from whom an amount of Rs. 43,800/- was taken and introduced in the business. The appellant has stated that the evidence furnished may be treated as sufficient and accordingly no addition may be made as confirmation, address and identity proof has been furnished by the appellant.

7.7. Considering the evidence available on record, I find that the appellant has not been able to produce three persons from whom it was stated that an amount of Rs. 43,800/- has been raised by the appellant in cash before introducing the same in the business as capital. The onus lies upon the appellant u/s 68 of the IT Act to produce the said creditors, as ITA No. 530/JP/2014 A.Y. 2009-10. Shri Om Prakash Agarwal vs. ITO and when required by the AO. Thus, the primary requirement has not been satisfied and in the absence of any other evidence, an addition of Rs. 43,800/- is confirmed on account of capital introduction out of the total addition of Rs. 3,05,000/- made by the AO on this account.

8. After hearing both the parties, I find no infirmity with the order of ld. CIT (A) confirming the addition of Rs. 43,800/- in as much as the assessee could not effectively controvert the finding that in respect of this amount satisfactory evidence could not be furnished. The confirmation alone cannot be considered as proof of creditworthiness of the creditor which is an essential ingredient for explaining the cash credit, thus the assessee failed to discharge onus cast on him in this regard u/s 68. The alternate claim of set off of the amount against standing addition also cannot be entertained as the cash credits are received on distinct date whereas the trading additions are as a result of day to day business operations of the assessee. Ld. Counsel for the assessee could not demonstrate any nexus to justify the claim of set off. Consequently this ground of the assessee is dismissed.

9. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 16/10/2015. Sd/- vkj-ih-rksykuh (R.P.Tolani) U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 16/10/ 2015 Das/ ITA No. 530/JP/2014 A.Y. 2009-10. Shri Om Prakash Agarwal vs. ITO vknsk dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:

1. vihykFkhZ@The Appellant- Shri Om Prakash Agarwal, Dholpur.

2. izR;FkhZ@ The Respondent- The ITO Ward -3, Bhartpur.

3. vk;dj vk;qDrvihy@ CIT(A).

4. vk;dj vk;qDr@ CIT,

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No.530/JP/2014) vknskkuqlkj@ By order, lgk;d iathdkj@ Assistant. Registrar ITA No. 530/JP/2014 A.Y. 2009-10. Shri Om Prakash Agarwal vs. ITO