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2016 (2) TMI 340 - ITAT DELHI

2016 (2) TMI 340 - ITAT DELHI - TMI - Unexplained credits introduced in the garb of unsecured loans - Accommodation entries - Held that:- CIT(A) has rightly held that when the assessee had provided the AO with the latest address of the squared up cash creditor (as the assessee had no such control on them therefore they were unable to produce before the AO and no further enquiries have been done of any kind by the AO) Ld. CIT(A) found that even the basic step i.e. summons or query letter were not .....

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held that AO was not justified in making addition on account of earnest Money, particularly when the property which was reflected as part of the inventory as on 31.03.2009 and the same is sold in the subsequent year and profit on the same has duly been reflected in and profit and loss account for assessment year 2010-11. Hence the addition made on account of earnest money was rightly deleted. - Decided against revenue

Unaccounted cash deposited in bank - Held that:- As during the yea .....

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mstances the action of the Ld. CIT(A) in deleting the addition of ₹ 9,50,000 on account of cash deposited in the bank account was a rightful one. - Decided against revenue

Addition u/s. 50C(1) - Held that:- As it is an established fact that the assessee is engaged in the real estate business, therefore, the immovable properties are appearing in assessee's books of account as stock-in-trade. Further from the perusal of Circular No. 8 of 2002 which relates to the provisions of Sec .....

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by the Ld. CIT(A) - Decided against revenue - ITA No. 4707/Del/2012 - Dated:- 18-12-2015 - H. S. Sidhu, JM And O. P. Kant, AM For the Appellant : Shri T Vasanthan, Sr. DR For the Respondent : Shri C S Anand, CA ORDER Per H. S. Sidhu, JM The Revenue has filed the present appeal against the impugned order dated 18/6/2012 passed by the Ld. Commissioner of Income Tax (Appeals)-XV, New Delhi on the following grounds:- 1. On the facts and circumstances of the case and in law, the learned CIT(A) has er .....

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On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,30,00,000/- made u/s 68 of the Act in respect of unexplained credits introduced in the garb of share application money/share capital and share premium shown to have been received from six corporate entities. 4. On the facts and circumstances of the case and. in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 95,00,000/- made u/s 68 of the Act in respect of unexp .....

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has erred in deleting the addition of ₹ 9,50,000/- made u/s 68 in respect of unexplained cash deposit in Bank account by accepting the additional evidence without providing any opportunity to the AO. 7. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 1,96,920/- made u/s 50C(1) of the Act. 8. The appellant craves leave, to add, alter-or amend any ground of appeal raised aboverat the time of the hearing. 2. The brief facts o .....

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In response to these notices Authorised Representative of the Assessee attended the assessment proceedings from time to time, filed details and produced accounts and documents which were seen on test check basis by the Assessee. Thereafter, the assessment order was passed by the AO on 29.12.2011 u/s. 143(3) of the Income Tax Act, 1961, assessing the total income at ₹ 2,87,31,150/- for the assessment year 2009-10 thereby making various additions. 3. Against the above assessment order, the .....

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cord available with us especially the impugned order passed by the Ld. CIT(A). Revenue Authorities; Case laws cited by the Ld. DR as well as Ld. Counsel for the Assessee. 7.1 With regard to issue raised in ground no. 3 relating to deletion of addition of ₹ 1,30,00,000/- made u/s. 68 of the Act in respect of unexplained credits introduced in the garb of share application money/share capital and share premium shown to have been received from six corporate entities is concerned, we find that .....

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is an established prepositions that whenever there is a cash credit in the assessee's books of account, the onus is on the assessee to prove the three things namely, identity, creditworthiness and genuineness. If the assessee fails on any of these parameters the AO is bound to add such cash credit to the Income of the assessee. 5.3 In the facts of the case in hand it is seen that the appellant who is engaged in the business of real estate had during the year allotted 1,30,000 shares and col .....

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identity, as well as the genuineness and creditworthiness of the shareholders. (i) Copy of Certificate of Incorporation. (ii) Copy of Company Master Detail, as taken out from MCA site. (iii) Copy of ITR Acknowledgement for assessment year 2009-10 & 2010-11 (iv) Copy of Bank Statement, evidencing payment made to the appellant towards share allotment. (v) Copy of Confirmation (vi) Copy of Balance Sheet as at 31.03.2009. 5.3 However the above evidences were disregarded by the AO and he held th .....

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om the account of one Gola Securities Ltd., Mumbai which is engaged in the business of finance and investment. • When summons were issued to these 6 corporate entities, there principal officer/director didn't appear and even the appellant expressed its inability to produce them. • The returns of income for assessment year 2009-10 and 2010-11 of these entities didn't show the adequate income • All the 6 entities are. On paper and process all the formalities of PAN, CIN, DIN .....

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oration, copy of details from the website of Ministry of Corporate Affairs, copies of ITR acknowledgements for assessment year 2009-10 and 2010-11, copies of bank statements etc. Even the appellant provided the AO with addresses of these 6 entities and requested AO to issue the summons under section 131. The facts that the summons were issued by the AO and all the 6 entities did responded to these summons proves the fact that these entities are in existence and thus I hold that the identity of t .....

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company Total of balance sheet as at 31.3.2009 Total Investment in equity shares as on shares in Total Investment in equity shares in assessee Zircon Exim Pvt. Ltd. 1,63,06,883.57 1,36,50,000 25,00,000 Charminar Impex Pvt. Ltd. 1,26,92,851.53 1,25,00,000 20,00,000 KPM Exim Pvt. Ltd. 98,05,010.58 80,15,000 20,00,000 Rishikesh Trexim Pvt. Ltd. 2,00,11,754.91 1,90,00,000 20,00,000 Dinanath Scrap Dealer (P) Ltd. 1,77,77,052.00 1,74,95,000 20,00,000 OPA Distributors Pvt. Ltd. 1,76,65,024.50 1,73,00,0 .....

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AO, nor any enquiry has been done from any sources internal or external sources to come to the conclusion that these 6 entities are sham and are paper companies. No doubt that these 6 corporate entities have not shown the substantial income in their return of income and in their bank account there are credit entries coming from Gola Securities immediately before the money is invested with the appellant, but without examining or without making any enquiries from the Gola Securities or from 6 corp .....

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ding entry operators / accommodation provide were provided to the AO. 5.7 There are plethora of judgments of various judicial authorities, including Hon'ble Apex Court and also the jurisdictional High Court wherein it has been held that in case of money received towards share capital, only the identity of the shareholders needs to be proved. Once identity of the shareholders is established and it is proved that the money did in fact come from them, it is not for the assessee to prove as to h .....

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vidence contained details, which set out not only the identity of the subscribers, but also gave information, with respect to their address, as well as, PAN, Assessment particulars etc. Based on these facts, the Hon'ble Delhi Court dismissed the appeal of revenue. 5.9 In yet another decision as to the correctness of treating share application money on par with cash credit, the Hon'ble Delhi High Court in CIT vs. Value Capital Services P. Ltd. (2008) 307 ITR 334 (Delhi) found after referr .....

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Even, when the appellant expressed his inability to produce the principal officers/directors, he requested the AO to issue summons to them. Further it is seen that when summons have been issued to the 6 corporate entities, these summons have not only been accepted but the shareholders have duly responded to these summons and have given the details to the AO. If the AO was not satisfied with details so submitted by the 6 corporate entities, the onus was on the AO to ensure its compliance and tak .....

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been relied upon by the Delhi ITAT in the recent judgment in the case of Babita Gupta ITA No. 2897/06, wherein it is held that "in the facts of the case before us it may be seen that from the very beginning Ld AO had shifted entire burden upon the assessee and no material was brought by him to prove his allegation that the impugned amount represented assessee company's undisclosed income. Therefore, on this ground alone the entire addition deserves to be deleted and may kindly be held .....

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thiness of shareholder. If the creditor/ subscribers is a company, then the details in the form of registered address or PAN identity etc, can be furnished. When the money is received by cheque and is transmitted through banking or other undisputable channels, the genuineness of the transaction will be proved. Other documents showing the genuineness of the transactions could be copies of the shareholders register, share application forms, share transfer registers etc. As far as credit worthiness .....

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probe the matter further. However, to discredit the documents produced by the assessee on the aspects, there had to be some cogent reasons and materials for the assessing officer and he cannot go into the realm of suspicion. 5.13 In view of the factual position as well as the judicial pronouncement on the subject, discussed above, I am of the considered view that the appellant has discharged the onus of establishing the bona-fides of the transactions and the AO was not justified in ignoring var .....

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e AO have no bearing on the case of the appellant. It may not be out of place to mention here that most of the decisions relied upon by the AO are already referred to/discussed in the decisions pronounced subsequently in favor of the appellant Hon'ble Delhi High Court, while deciding the cases of Divine Leasing & Finance Ltd., General Exports & Credits Ltd. and Lovely Exports Pvt. Ltd. (299 ITR 268), had taken care of the earlier decisions in the cases of Stellar Investment Ltd. (251 .....

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y the AO are not relevant to the case of the appellant. 5.15 Reliance in this regard is also placed on the decision of Hon'ble Delhi High Court in the case of CIT vs. Pondy Metal and Rolling Mill Pvt Ltd (Delhi) (ITA No. 788/2006) dated 19.02.2007, wherein the Hon'ble Court concurred with the findings of the Appellate Tribunal, Delhi Bench 'F' that once the identity of the investor has been manifest and is proved, the investment cannot be said to be the undisclosed income of the .....

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ions and the same was not an accommodation entry. I also do not find any evidence collected by the AO which could prove otherwise. Accordingly, the AO is not justified in treating the amount of share capital money received by the appellant as its undisclosed income. In view of our aforesaid discussion, I delete the addition of ₹ 1,30,00,000 made by the AO under Section 68 of the Income Tax Act, 1961." 7.2 We note that during the hearing, Ld. DR filed a copy of judgment dated 27.1.2014 .....

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ssee has stated that during the course of assessment proceedings, the assessee had furnished the confirmations with supporting documents in respect of all the six companies. Vide letter dt.22.11.2011 (page 11), the assessee had stated to the Id. A.O. that (i) all the six companies who had subscribed it's share capital during the year are very much available on the present addresses, as given in their confirmations and are regularly assessed to income tax; (ii) AO should make investigations e .....

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to the A.O. He further stated that the A.O. had sat back with folded hands on such information/documentary evidences and thereafter had made additions in the hands of the company. To support his contention, he filed a copy of judgment dated 21.1.2013 of the Hon'ble Delhi High Court in the case of CIT vs. Gangeshwari Metal Pvt. Ltd. wherien the Hon'ble High Court has decided the issue in favour of the assessee and stated that the present issue is squarely covered by the judgment dated 21. .....

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precedent in the case of CIT vs. Gangeshwari Metal Pvt. Ltd. (Supra), we are of the of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has decided the issue in dispute in favour of the assessee after appreciating the evidence filed by the assessee as well as various decisions rendered by the Hon'ble Supreme Court as well as Hon'ble High Court and the decisions of the ITAT Benches. We are of the view that t .....

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pect of unexplained credits introduced in the garb of unsecured loans shown to have been received from three corporate entities is concerned, we find that Ld. CIT(A) has elaborately discussed/given the findings on the issue in dispute vide para no. 7 to 7.7 from pages 27 to 30 of the impugned order. For the sake of convenience, we are reproducing the findings of the Ld. CIT(A) as under:- "7. I have gone through the above submission of the appellant and have considered the facts and evidence .....

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ash credit to the assessee's income under section 68 of the Act. 7.2 In the facts of the case in hand, I find that in respect of Mr. Manoj Kumar from whom the appellant received ₹ 5,01,000 as cash credit on 03.02.2009, no details whatsoever were made available to the AO, no confirmation, no PAN number, no details etc were made available with the AO, from which one could ascertain the identity and creditworthiness of Mr. Manoj Kumar. The only details filed with the AO was the bank state .....

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,00,000), and Synfonia Pharmaceuticals (P) Ltd. (Rs. 35,00,000), I find that the appellant filed the copy of certificate of incorporations, details from the website of Ministry of Corporate Affairs, copy of Income-tax return, Copy of balance sheet, Copy of confirmation in respect of these 3 entities. Apart from above, the appellant also filed the copy of its own bank statement for assessment year 2010-11, evidencing that the loan were re-paid bank to the above mentioned 3 entities and file the c .....

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ties and requested the AO to issue the summons to them. 7.5 In my considered view the appellant by filing the copy of confirmation, copy of Income Tax Return, and by providing the latest addresses to the AO has discharged the initial onus cast upon him to prove the identity, genuineness and creditworthiness of its creditor. Therefore it was the task of the AO to make the enquiries by issuing summons or deputing inspector etc. or other and external or internal sources etc. before coming to the co .....

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other 2 parties were filed during the appellate proceeding but as discussed the AO's case is not that payment is received in cash, but his case is that the 3 corporate entities who have given among as cash creditor are sham and bogus. 7.6 From the Income Tax details as well as balance sheet and other evidence of these 3 corporate entities, I find that all the corporate entities are assessed to tax in Delhi, their PAN number and Income Tax return are available on record. Further the balance s .....

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red up cash creditor (as the appellant had no such control on them therefore they were unable to produce before the AO and no further enquiries have been done of any kind by the AO) I find that even the basic step i.e. summons or query letter were not issued, to these cash creditor and not an iota of evidence has been collected and brought on record which indicates or prove that the cash credit money was appellant's own money, in such an event, I hold that AO is not correct in holding the &# .....

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s raised in the grounds of appeal. 8.2 On the contrary, Ld. Counsel for the Assessee relied upon the order of the Ld. CIT(A) and stated that the same may be upheld. In support of his contention, he submitted before us that during the course of assessment proceedings, the assessee had furnished the confirmations with supporting documents in respect of the three companies. He further submitted that the assessee vide letter dated 5.12.2011 & 21.12.2011 requested the AO to make direct inquiries .....

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order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly held that when the assessee had provided the AO with the latest address of the squared up cash creditor (as the assessee had no such control on them therefore they were unable to produce before the AO and no further enquiries have been done of any kind by the AO) Ld. CIT(A) found that even the basic step i.e. summons or query letter were not issued, to these cash creditor and not an iota of evidence has been collected and brough .....

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round no. 5 relating to deletion of addition of ₹ 15,00,000/- made u/s. 68 of the Act in respect of unexplained earnest money shown to have been received from two parties, by accepting the additional evidence without providing any opportunity to the AO is concerned, we find that Ld. CIT(A) has elaborately discussed/given the findings on the issue in dispute vide para no. 9 at page 32 of the impugned order. For the sake of convenience, we are reproducing the findings of the Ld. CIT(A) as un .....

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profit on the same has duly been reflected in and profit and loss account for assessment year 2010-11. Hence the addition of ₹ 15,00,000 made on account of earnest money is deleted." 9.1 On this issue , Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 9.2 On the contrary, Ld. Counsel for the Assessee relied upon the order of the Ld. CIT(A) and stated that the same may be upheld. In support of his contention, he submitted that the .....

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00,000/- in the hands of the assessee. On the specific direction of the Ld. CIT(A), the assessee had furnished the details of sale / purchase made in FY 2009-10 and also the P&L A/c for the FY 2009-10. After verification, the Ld. CIT(A) had deleted the addition. 9.3 In the background of the aforesaid discussions, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly held that AO was not justifi .....

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Ld. CIT(A), hence, we uphold the same by rejecting the ground no. 5 raised by the Revenue. 10. With regard to issue raised in ground no. 6 relating to deletion of addition of ₹ 9,50,000/- made u/s. 68 in respect of unexplained cash deposit in Bank account by accepting the additional evidence without providing any opportunity to the AO. On this issue , Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 10.1 On the contrary, Ld. Counsel for .....

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ction of the Ld. CIT(A), the assessee had furnished the property wise details of sales made in the year and closing stock as on 31.3.2008, 31.3.2009 and 31.3.2010. After verification the Ld. CIT(A) had deleted the addition of ₹ 9,50,000/-. 10.2 In view of above, we are of the considered view that no interference is called for in the well reasoned order passed by the Ld. CIT(A), because the Ld. CIT(A) has rightly observed that during the year the assessee sold 2 of properties, namely Proper .....

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