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TMI Blog2012 (11) TMI 938X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 only house property income of Rs. 1,11,615/- and entire income is from interest only. No other source of income has been shown. Her capital is Rs. 11,48,812/- which is not sufficient to advance loan of Rs. 18.49 lakh to the assessee. It is also not known as to from whom she got this capital as she has no source of income except interest and interest itself is not a source of income. It is also not known as to why a housewife will take a loan from somebody or even from her brother, just in order to advance loan to Kataria Infrastructure Corpn. And why will she takes so much of risk when this investment is not safe. Her account is merely used for rotation of funds by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation 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 could not be explained by the assessee. Therefore, this amount is also treated as unexplained cash credits in the hands of the assessee. 2.6 In view of the above findings, the AO treated the unsecured loan of Rs. 69,50,170/- as undisclosed cash credits u/s 68 of the Act in the hands of the assessee and added the same to the total income of the assessee. Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after considering the submissions of the assessee, deleted the addition made by the AO by observing as under:- "4. I have considered the rival submission and finding of the AO carefully and found that Ld. AO has erred in making su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 case of CIT Vs. Down Town Hospital Pvt. Ltd (2004) 267 ITR 439 (Gujrat), it is held "Amounts received as share application moneys, the Tribunal had given clear finding after appreciation of the material on record that the assessee had filed the detail regarding the source of funds of shares and their income tax file nos. before A.O. According to the Tribunal the assessee had also submitted before the AC the confirmation from the creditors where full addresses, income tax no. etc. were given. The Tribunal was justified in deleting the addition." Further, in case of Shree Barkii Synthetics Ltd Vs. CIT (2006) 283 ITR 377 (Rajasthan) Hon'ble High Court held "If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 observations of CIT Vs. Stellar Investment Ltd (2001) 251 ITR 263 (SC) are correct. Further in the case of Asstt. Commissioner of Income tax, Indore Vs. M/s. Kalani Industries Ltd, Indore (2007) 8 ITJ 165. Held - The assessee has submitted overwhelming documents for provide the identity of the subscriber companies who are separate legal entities and audited under Companies Act. The Inspector visited the address from where notice u/s 131 returned unserved. The Assessing Officer cannot question the source of source. No material brought by Assessing Officer to disbelieve the genuineness the claim of the appellant. In the case of Shankar Industries Vs. Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 his order specifically observed that it is not known whether the capital of Mrs. Babita Khandelwal of Rs. 11,48,812/- is sufficient to advance a loan of Rs. 18.47 lakhs to the assessee. He further observed that it is also not known as to from who she got this capital as she has no source of income except interest and interest itself is not a source of income. He also observed that it is also not known as to why a housewife will take a loan from somebody or even from her brother, just in order to advance loan to the assessee and why she takes so much of risk when this investment is not safe. The above findings of the AO show that he has doubted the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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