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M/s. Starlite Lighting Limited Versus Addl. CIT, Range-1, Nashik

2015 (9) TMI 446 - ITAT PUNE

Unexplained cash credits u/s.68 - Held that:- CIT(A) while accepting loan to the tune of ₹ 48,40,992/- in respect of 4 persons sustained the addition of ₹ 10,08,079/- which is the difference between the figures shown by the assessee and the figures as per the loan confirmation letters filed before the AO by the above 4 parties. Therefore, the order of the CIT(A) sustaining the difference of ₹ 10,08,079/- is upheld.

Now coming to the balance amount of ₹ 84,99,23 .....

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fact remains that the credit worthiness of those loan creditors has not yet been proved.since the Ld. Counsel for the assessee made a plea that given an opportunity the assessee is in a position to produce the loan creditors before the AO with documentary evidence to his satisfaction regarding the credit worthiness of the loan creditors, therefore, we in the interest of justice, deem it proper to restore the issue to the file of the AO with a direction to give one more opportunity to substantiat .....

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led by the assessee are directed against the separate orders dated 30-04-2012 & 15-05-2012 of the CIT(A)-II, Nashik relating to Assessment Years 2006-07 & 2009-10 respectively. For the sake of convenience, these appeals were heard together and are being disposed of by this common order. 2. The only effective ground raised by the assessee reads as under : The Hon ble CIT(A) erred in facts and in law in confirming the addition of ₹ 95,07,316/as unexplained cash credits u/s.68 of the .....

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s of ₹ 10.65 crores during the year. During the course of assessment proceedings the AO noted addition of ₹ 5,78,07,869/- to unsecured loan. In case of the following creditors, the AO was of the view that the assessee failed to prove the genuineness of the loan transactions : Sr.No. Name Addition during the year 1 Anita Kapur Rs.17,15,165/ 2 Archana Shah Rs.15,13,779/ 3 Dalal Enterprises HUF Rs.12,03,837/ 4 Flying Horse Solution Rs.26,22,814/ 5 Gunjan Shah Rs.1,97,923/ 6 Karnik Parik .....

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I.T. Act, 1961. 5. Before CIT(A) the assessee submitted that separate documents like confirmations, PAN, and bank statement extracts for most of the loan accounts were submitted for verification and were accepted by the AO. It was submitted that in 9 cases on which addition has been made u/s.68 the required information could not be obtained in time due to various reasons, viz., the party was not available at the relevant time, party being non cooperative etc. It was argued that during the assess .....

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remand report from the AO. The AO submitted that out of the 9 persons to whom loans/summons were issued only the below mentioned 4 persons sent their confirmations, the details of which are as under : Sr.No. Name Amount 1 Shri Karnik Kantilal Parikh (HUF) Rs.21,76,198/ 2 Shri M. M. Gandhi (HUF) Rs.5,50,000/ 3 Smt. Shobhana Seth Rs.3,99,629/ 4 Smt. Anita Kapur Rs.17,15,165/ Total Rs.48,40,992/- 7. The AO reported that from the above as well as the details furnished by the assessee, there is a di .....

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d by the assessee the Ld. CIT(A) deleted an amount of ₹ 48,40,992/-. He, however, sustained the difference in the above mentioned 4 parties amounting to ₹ 10,01,079/- and the amount of loan obtained from the 5 parties amounting to ₹ 84,99,237/- in whose cases there was no response to the letter of the AO. The relevant observation of the CIT(A) at para 7 and 8 of the order reads as under : 7. I have carefully gone through the assessment order, submission of the appellant and the .....

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ecurities and Finance Ltd., Mumbai. In view of the confirmations sent directly by these 4 creditors, genuineness of cash credits is acceptable. As regards other creditors, on perusal of the xerox copies of the confirmations filed by the appellant in the case of Dalal Enterprises (HUF), Gunjan Shah, Suresh K. Shah (HUF), Flying Horse Solution and Archana Shah, it was revealed that there were cuttings in the balances (Dalal Enterprises (HUF) and Flying Horse Solution). Confirmation of Dalal Enterp .....

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evidence in support of genuineness of these cash credits except xerox copies of the confirmations which too are full of discrepancies as mentioned above. While letters sent to Suresh K. Shah and Archana Shah by the AO u/s.133(6) of the Act during remand report proceedings returned undelivered with a remark 'not known', others did not respond to the summons/letters of the AO. The appellant did not produce any evidence to rebut the presumption drawn against him u/s. 68 of the Act by produc .....

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ed 5 creditors. The appellant has failed to establish the genuineness of the transactions as well as the creditworthiness of the creditors with regard to the transactions that have taken place between it and the creditors through one KSN securities and Finance Ltd., Mumbai. The very fact that all the transactions were entered into between the parties through account payee cheques wilt not be suffice to prove the genuineness of the transactions. Similarly mere mention of the PAN by the creditors .....

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to prove Identification and credit worthiness of these creditors. M/s. K S M Securities and Finance Ltd which is stated to have arranged these loans also did not respond to appellant's letters as stated orally by AR during the appellate proceedings. Under the facts and circumstances of the case, the following cash credits have not been found to be genuine. Sr.No. Name Amount 1 Dalal Enterprises, (HUF) ₹ 12,03,837 2 Gunian Shah ₹ 1,97,923 3 Suresh K.Shah (HUF) Rs.29,60,884 4 Flyin .....

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ts a relief of ₹ 48,40,992/( 1,43,48,308 ₹ 95,07,316). 9. In the result, the appeal of the appellant is partly allowed. 9. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). He submitted that the assessee has taken the loans from the loan creditors by account payee cheque and has also returned the loans by account payee cheque. Thus, the entire transactions are through banking .....

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was fully justified in sustaining the addition of ₹ 95,07,316/-. 12. The Ld. Counsel for the assessee in his rejoinder submitted that despite request by the assessee to summon the loan creditors the AO did not summon the parties. Relying on various decisions he submitted that under such circumstances the addition made u/s.68 cannot be sustained. However, in an alternate submission he submitted that given an opportunity the assessee will produce the loan creditors to substantiate their cred .....

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his satisfaction, the AO made addition of ₹ 1,43,48,308/- u/s.68 of the I.T. Act. We find the assessee before the CIT(A) filed certain details based on which the Ld. CIT(A) called for a remand report from the AO. We find during the remand proceedings the AO issued letters to the 7 persons whose confirmations were filed. We find only 4 persons out of the 7 persons had sent their confirmations. From the confirmations filed by the loan creditors as well as balance outstanding in the books of .....

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efore, the Ld. CIT(A) while accepting loan to the tune of ₹ 48,40,992/- in respect of 4 persons sustained the addition of ₹ 10,08,079/- which is the difference between the figures shown by the assessee and the figures as per the loan confirmation letters filed before the AO by the above 4 parties. Therefore, the order of the CIT(A) sustaining the difference of ₹ 10,08,079/- is upheld. 14. Now coming to the balance amount of ₹ 84,99,237/- taken from the 5 parties, it is a .....

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s of those loan creditors has not yet been proved. Merely because the assessee has filed certain confirmation letters from the above parties the same cannot absolve the assessee from the onus cast on it. However, since the Ld. Counsel for the assessee made a plea that given an opportunity the assessee is in a position to produce the loan creditors before the AO with documentary evidence to his satisfaction regarding the credit worthiness of the loan creditors, therefore, we in the interest of ju .....

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before the AO to which the Ld. Counsel for the assessee has agreed. We hold and direct accordingly. The ground raised by the assessee is accordingly partly allowed for statistical purposes. ITA No.1371/PN/2012 (A.Y. 2009-10) : 15. After hearing both the sides, we find the AO made addition of ₹ 27,67,599/- u/s.68 of the I.T. Act in respect of the loans obtained by the assessee from the following parties : Sr.No. Name Amount 1 Archana Shah Rs.1,72,697/- 2 Flying Horse Solution Rs.3,63,451/- .....

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