TMI Blog2012 (11) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... owing ground of appeal:- On the facts and in the circumstances of the case and law, the learned CIT(A) has erred in law as well as on facts in deleting the addition of Rs. 69,50,170/- made u/s 68 in respect of alleged loans to have taken from various parties i.e. Mrs. Babita Khandelwal, Shri Chandrakant Mehta, Miss Nirmala Bhandari, Miss Sushila Bhandari and Sujay Kumar Murarkar by the assessee ignoring the fact that the assessee has failed to discharge onus resting on him in terms of establishing the capacity and creditworthiness of the parties who advanced the loans. 2. Briefly stated the facts of the case are that the assessee is engaged in the business of generation and supply of electricity energy through wind mills. During the year under consideration, the assessee had shown unsecured loans of Rs. 3.96 crores. The assessee was asked to produce copy of return of income filed along with P L A/c, Balance Sheet and Bank A/c of certain parties. On verification of the said documents filed by the Assessee, the AO observed as under:- 2.1 The assessee had received Rs. 18 lakhs from Babita Khandelwal. From the acknowledgement of the return filed it is seen that she has shown on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee of Rs. 5 lakhs. Income of the person as per return of income filed is Rs. 60,310/- only. No balance sheet filed. Copy of the bank statement filed has credit balance of Rs. 715 only and there is a deposit of Rs. 5,01,000/- On the date of forwarding loan of Rs. 5,00,525/- i.e. on 09/03/2006. Assessee s representative has submitted copy of account of Sudarshan Automobiles only with rubber stamp. Here too it is not stated as to whom the amount has been given by M/s Sudarshan Automobiles. The source of such deposit could not be explained by the assessee with documentary evidence. This also proves that the person has no creditworthiness and the loan is only circulation of money. Therefore, the same is treated as unexplained cash credit in the hands of the assessee. 2.5 Shri Sanjivkumar Murarka has shown loan of Rs. 5 lakhs in support of which it has produced only balance sheet and not copy of return of income filed for AY 2006-07. The bank account submitted shows debit on 02/08/2005 and 06/08/2005 amounting to Rs. 3 lakhs and Rs. 2 lakhs. There is a credit of an equal amount 29- 30/7/2005 and 03/08/05 i.e. just before giving loan to the assessee. The source of the same cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta High Court vide i l4 ITR Page 689 (Cal ). In the case of Commissioner of Income Tax Vs. Barjatya Children Trust (1997) 225 ITR 640 (MPHC) it is held The Assessing Officer could have taken pains to examine the income tax file of all companies but instead he choose the easier course of ordinary production of the creditor which cannot be appreciated. The Assessing Officer should realize the inconveniences, which an assessee faces in producing the cash creditor before him. The production of the cash creditor in person should be insisted upon only when the, genuineness of the transaction cannot be established with the help of documents and the record of the Income Tax Department itself . Further, in the case of CIT Vs. Steller, Investment Ltd (1991) 192 ITR 287 (Delhi ) it is held Even if it be assumed that the subscribers to the increased share capital were not genuine, under no circumstances, could the amount of share capital be regarded as undisclosed income of the Company. No question of law arose out of the Tribunal s order . (SLP dismissed by Supreme Court (2000) 251 ITR 263. One more case is also important to note supports the contention of the Appellant. In the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson and also credit worthy and that she had the requisite amount for makin the investment in question, no addition could be made under section 68 in the hands of the assessee company, Revenue could not go further to find out whether the person from whom the shareholder had received money through cheque was also a genuine party and creditworthy . One more judgement is worth while to cite. In the case of CIT Vs. First Point Finance Ltd (2006) 286 ITR 477 (Rajasthan) it is held that It was also not denied that al l the shareholders/share applicants were genuinely existing persons. It was also not denied that each of them was an income tax assessee and copies of the returns of their income were also placed before the Assessing Officer. There was no presumption that the assessee was the benami owner of the investment made by the existing persons. The Tribunal was justified in deleting the addition . In the case of CIT Vs. Sophia Finance Ltd (1994) 205 ITR 98 (FB) held If the shareholders are identified and it is established that they have invested money in the purchase of shares, then the amount received by the company would be regarded as capital receipt and to that extent the obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditworthiness and not the genuineness of the transactions. He further submitted that the assessee has discharged its onus by filing confirmations and IT returns, therefore, the addition cannot be sustained. For this submission, he relied on the decision in the case of CIT Vs. Orissa Corporation (P.) Ltd., 159 ITR 78. The learned counsel for the assessee submitted that source of the sources cannot be asked to explain, for which he relied upon the decision in the case of Nemi Chand Kothari Vs. CIT and Others, 264 ITR 254. 6. We have heard both the parties and perused the record as well as gone through the orders of the authorities below. The issue involved in this appeal is relating to addition made u/s 68 of the Act. The case of the AO is that the transactions are not genuine and creditworthiness also not proved, therefore, he made the addition towards the advances received by the assessee from five parties. Whereas the learned CIT(A) deleted the addition on the ground that genuineness is not doubted by the AO and in so far as the creditworthiness is concerned, by relying on the submissions of the assessee vide page 8 of his order deleted the addition. We find that the AO in h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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