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2016 (4) TMI 36 - ITAT DELHI

2016 (4) TMI 36 - ITAT DELHI - [2016] 47 ITR (Trib) 708 - Addition of unsecured loans - Held that:- The appellant has filed confirmation, copy of PAN card, copy of bank statement, cheque nos., copy of passport with residence for UAE and affidavit explaining source of income and details of transactions. Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person. Genuineness of the transactions is also fully established .....

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f the creditor with centurion bank of Punjab, Connaught Place, New Delhi which indicates debit of ₹ 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 0011-408624-001. Similarly there are debit entries of ₹ 70,00,000/- vide cheque no. 429307 on 22/06/2006, ₹ 1,00,00,0001- vide cheque no. 429314 on 5/12/2006 and ₹ 1,00,00,000/- vide cheque no. 429315 on 12/12/2006 in the same account. Therefore, creditworthiness of the creditor is al .....

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. CIT(A) pertaining to assessment year 2007-08 on the following grounds:- 1. The order of the Ld. CIT(A) is not correct in law and facts. 2. Whether the Ld. CIT(A) has erred in admitting evidence under Rule 46A during the course of appellate proceedings, even though the assessee had been given sufficient opportunity during the course of assessment proceedings. 3. Whether the Ld. CIT(A) has erred in deleting the addition of ₹ 13,05,06,000/- of unsecured loans as vital facts have been ignore .....

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u/s. 143(2) was issued on 15.9.2009. Notice u/s. 142(1) alongwith questionnaire was issued on 17.9.2009. In response to the same, Assessee s Authorised Representative attended the proceedings and filed the necessary details/ clarifications. The assessee had declared income from business and profession, income from house property and income from other sources being interest from bank etc.. Thereafter, the Assessing Officer, completed the assessment u/s. 143(3) of the Act at an income of ₹ .....

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Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. 6. We have heard both the parties and perused the records, especially the Order of the revenue authorities. 6.1 Ground No. 1 & 4 are general, hence, need not be adjudicated. 6.2 Apropos Ground No. 2 relating to admission of additional evidences under rule 46A during the course of appellate proceedings .....

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on 11.12.2009 and the assessment order was passed on 29.12.2009, i.e., after a gap of 18 days. The AO could have provided some further time as he did not pass the order for a period of more than 2 weeks. It is also a fact that the AO did not rebut the categorical assertion of the Assessee s counsel that during the course of hearing, the AO was satisfied with the evidences filed as he did not raise any further query and while passing the assessment order, he changed his mind and made the additio .....

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icient cause to file the relevant evidences. We have seen the copies of summons issued to the lenders. It is very clear that summons were issued to Shri S. C. Puri, Ms. Sharmila Puri, Ms. Hanisha Puri and Ms. Priyanka Puri. But the observation of the AO is without any application of mind because during this year, no credit was received from any of these persons. We note that it is a settled law that if prima facie information is necessary to examine the claim of the assessee, the Ld.CIT(A), shou .....

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order, we are of the view that Ld. CIT(A) has rightly admitted the additional evidences, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on this ground and dismiss the ground no. 2 raised by the Revenue. 7. Apropos Ground No. 3 relating to deletion of addition of ₹ 13,05,06,000/- of unsecured loans is concerned, we find that the AO has made the additions of ₹ 13,05,06,000/- on account of alleged unexplained loans from various persons a .....

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f the impugned order. For the sake of convenience, we are reproducing the para no. 13 to 32 at pages 6 to 19 of the Ld. CIT(A) order as under:- 13. M/s Arligton Impex P. Ltd. - The AO has made the addition of ₹ 6,07,00,000/- on account of credit in the name of Mls Arlington Impex Pvt. Ltd. on the ground that the credit is unexplained because the company does not have sufficient funds of its own and creditworthiness was not established. He has also mentioned that the genuineness of transact .....

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he facts in brief are that there is an opening credit balance of ₹ 19,00,000/- as on 01/4/2006. The appellant had given ₹ 35,00,000/- to the company on 31/5/2006 thereby returning the old loan of ₹ 19,00,000/- and advancing a loan of ₹ 16,00,000/- to the company. Thereafter, the appellant received ₹ 67,00,000/- being ₹ 4,00,000/-, Rs, 3,00,000/-, ₹ 45,00,000/-, and ₹ 15,00,000/- on 5/6/2006, 1716/2006, 4/7/2006 and 118/2006 respectively. Therefore, .....

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,273/- was also repaid on 31/3/2007 by way of transfer entry. Therefore, total credit received was only ₹ 1,20,82, 273/- (51,00,000 + 69,82,273)- which was also squared up leaving NIL balance at the end of the year. Therefore, there is an arithmetical mistake in as much as the figure of ₹ 6,07,00,000/- should have been 1,20,82,273/-. Relevant extract from his submissions dated 21/3/2011 are as under: - "ii) During the course of assessment, following documents were filed before t .....

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ank account of the company. h) Loan was repaid vide alc payee cheques on various dates indicating cheque nos which were duly credited in the bank account of the company. i) Name and address of the bank of the creditor as HSBC, GK-II, New Delhi and Andhra Bank, Green Park, New Delhi. j) Creditors bank account no. as 094-135217-001 with HSBC Bank & 016204100002265 with Andhra Bank. iii) From the audited accounts of the company, it will be observed that there is no discrepancy in the balance sh .....

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dress of the bank. b) Creditworthiness of the creditor is also fully established by the fact that the amount is received by Alc Payee cheque indicating cheque no, amount, bank account no. as well as name and address of the bank. This view is fully supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kishori Lal construction Ltd., [2010] 5 Taxmann.com 60 (Delhi), the relevant extract from which is reproduced hereunder: - "After considering the arguments of both th .....

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e Department) and that the payment received during the relevant previous year was against the debt due from Yadav and Company; (c) creditworthiness of the creditor by pointing out that the amount was received by way of cheques drawn on the bank account of Yadav and Company maintained with Union Bank of India, Moti Bagh Branch, New Delhi, which, despite denial by the Yadavs, was, as per bank records, found to be opened and operated by Sh. O.P. Yadav/Mohinder Singh Yadav. The initial burden thus d .....

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e assessee is not able to explain the source of funds of the lender properly, is not correct. " v) Therefore, identity, genuineness and creditworthiness of the creditor is fully established. The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. Aa has not pointed out to any material to establish that the transaction is bogus. Hence, credit of ₹ 1,20,82,273/-. (wrongly mentioned as ₹ 6,07,00,000/- by th .....

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nt orders wherever readily available, no substantial question of law arises; appeal uls 260A dismissed." b) Orient Trading Co. Ltd. vs. CIT, (1963) 49 ITR 723 (Bom) "Cash credit-Burden of proof-When the entry stands in the name of a third party and the assessee establishes the identity of the creditor and produces evidence showing that the entry is not fictitious, initial burden lying on the assessee stands discharged; the burden shifts on to the Revenue to show that the entry represen .....

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y deposited with him and, therefore, addition under s. 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the assessee itself. " d) CIT vs. Metachem Industries, 2451TR 160 (MP) "4 once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the mo .....

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"Income-Cash credit-Share application money-CIT(A) accepted the existence of the applicants-It is very difficult for the assessee to show the creditworthiness of strangers-Revenue has not shown that the applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the assessee company-Addition rightly deleted by the Tribunal-No substantial question of law arises." 15. I have considered the AO's order, the AR's submissio .....

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the company on 31/5/2006 vide cheque no. 031643 which is duly credited in the bank account of the creditor with HSBC Bank bearing no. 094-135217-001 thereby returning the old loan of ₹ 19,00,000/- and advancing a loan of ₹ 16,00,000/- to the company. Thereafter, the appellant received ₹ 67,00,000/- being ₹ 4,00,000/- by transfer entry, Rs, 3,00,000/- by transfer entry, ₹ 45,00,000/- by transfer entry, and ₹ 15,00,000/- by transfer entry on 5/6/2006, 1716/2006 .....

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advance to the company on various dates being ₹ 1,00,00,000/- on 3/10/2006 vide Alc payee cheque, ₹ 1,00,00,000/- on 4/10/2006 vide transfer entry, ₹ 1,00,00,000/- on 9/10/2006 vide transfer entry, ₹ 17,727/- on 5/12/2006 being payment vide cheque no. 50632, ₹ 70,00,000/- on 11/12/2006 vide cheque no. 050635 and ₹ 1,00,00,000/- on 14/12/2006 vide transfer entry. Subsequently, ₹ 5,40,00,000/- were received from the company on various dates being ₹ 4 .....

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oan received was only ₹ 1,20,82,273/-. Schedule 5 of the balance sheet of the creditor pertaining to "Loans and Advances" clearly indicates the balance of loan to Shri Vikrant Puri as NIL as compared to ₹ 19,00,000/- during last year because total loan was squared up during the year. I have also considered the various case laws relied upon by the AR. In the case of CIT vs. Kishorilal Construction Ltd., (2010)5taxmann.com60,Hon'ble Delhi High Court has held that creditwo .....

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sed cheques, reflects the same in his balance sheet and filed the balance sheets alongwith the return of income with the Income Tax Department, the conclusion that the assessee is not able to explain the source of funds of the lender properly, is not correct. Genuineness of the transaction is fully established by the fact that the transaction is duly confirmed by the creditor and the fact that the amount is received by Alc Payee cheques indicating cheque nos, date, amount, bank account no. as we .....

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e of the appellant. Moreover, the AO has not brought any material on record to prove that credit is bogus. The assessee has discharged the primary onus cast upon him by filing various evidences as discussed above. Therefore, now the onus gets shifted on the AO to prove that credit is bogus which he failed to do. Therefore, under the facts and circumstances of the case, the loan from Mls Arlington Impex Pvt. Ltd. is fully explained and hence the addition of ₹ 6,07,00,000/- is hereby deleted .....

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PAN, details of jurisdiction of the assessing officer over the creditor, Bank account and Balance Sheet as well as PIL account. The relevant extract from the submissions of the AR is as under: - a) Confirmation from the creditor which gives the following particulars: - i) Name of the creditor ii) Address of the creditor iii) Telephone no. of the creditor iv) PAN of the creditor v) Jurisdiction of AO where creditor is being assessed. vi) Date of transaction vii) Amount of transaction ix) Cheque n .....

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arious dates on account of repayment of loan as per confirmation. Therefore, whole of the loan was repaid through account payee cheques. ii) Identity of M/s Mohan Exports India Pvt Ltd. is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person as held by Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., (2010) 45 DTR (Del) 281. iii) Genuineness of the transactions is also fully established by the fact that the t .....

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n'ble ITAT Mumbai in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 257/Mum/2010 and other case laws as discussed above. v) Therefore, identity, genuineness and creditworthiness of the creditor is fully established. The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. In fact, The Ld. AO has accepted the genuin .....

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ited accounts including balance sheet. These documents clearly provide name, address, PAN etc of the creditor. Details of jurisdiction of assessing officer over the creditor was also provided. The IT Return of the creditor company for the A. Y. 2006-07 indicates the returned income at ₹ 27,53,84,840/-. In the remand report, the AO has not found any fault with any of these documents though he has raised objections in respect of other creditors. I have also seen the bank statement of the cre .....

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were repaid vide cheque no. 050640 on 16/1/2007 and ₹ 1,00,00,000/- vide cheque no. 980921 on 6/2/2007. These entries represents that the loan taken during this year as well as last year were fully repaid during this year and are duly reflected in the bank account of the creditor. Therefore, creditworthiness of the creditor company is fully established and hence the addition of ₹ 2,50,00,000/- is hereby deleted. 18. Mohit Puri - Loan of ₹ 1,10,00,000/- was received from Shri M .....

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(3). The appellant could not obtain the copy from the bank because of section 132(3). Therefore, the Ld AR requested that the AO may obtain the copy of bank statement directly from the bank, if so required. The relevant extract from his arguments is as under: - ii) The Ld AO has further observed that no proof of donor's income in Dubai has been brought on record. It was explained to the Ld. AO that Shri Mohit Puri left India on 9/4/2006 for employment with M/s Friend's General Trading FZ .....

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ursement of various personal expenses. - Confirmation from Employer regarding payment of commission Agreement with M/s Smart Inspection Industrial Equipment LLC, Dubai regarding Real Estate business. - Confirmation from M/s Smart Inspection Industrial Equipment LLC, Dubai, regarding commission paid to Shri Mohit Puri from July 2006 to November 2006 - Copy of passport of Shri Mohit Puri alongwith residence VISA of UAE. iii) From the above, it is clear that the donor was paid salary of 40,000 OH p .....

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r, 2006, Shri Mohit Puri also received commission of 26,89,550 OH (Rs. 3,33,77,316 approx.} from the real estate brokerage. Therefore, he had enough funds to the tune of ₹ 10,55,35,8191- (4,96,400x9 + 6,76,90,903 + 3,33,77,316) upto December, 2006 to give a loan of ₹ 1,10,00,000/- to the appellant. iv) The fact that Sh. Mohit Puri was non-resident during AY 2007-08 was explained in detail even before DDI(lnv.), AIU, New Delhi as early as 0910512007, i.e., within 3 months of the searc .....

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erved on the parties, their identity is proved. Hence, identity of Shri Mohit Puri is fully established. vi) Genuineness of the transactions is also fully established by the fact that the transactions are duly confirmed by the creditor whose statement has also been recorded. vii) Creditworthiness of the creditor is also fully established as discussed in detail in para (iii) above. The Ld. AO has mentioned in the remand report that bank account has not been submitted. It has already been made ver .....

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nts were received as under:- Date Cheue No. Bank Amount 27/07/2006 599082 Citi Bank 65,00,000 29/7/2006 599083 Citi Bank 10,00,000 02/08/2006 599089 Citi Bank 35,00,000 TOTAL ₹ 1, 10,00,000 viii) The Ld. AO has mentioned on page 13 (para 7.1) of the assessment order that the genuineness of transaction is also in doubt. The additions cannot be based on doubts and have to be based on findings relying on evidences to that effect. This view is further confirmed by the Hon'ble ITAT Mumbai&# .....

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was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. Hence, credit of ₹ 1,10,00,000/- from Shri Mohit Puri stands duly explained." 19. The AR further relied on various case laws as under: - "a) DCIT vs. Rohini Builders, (2002) 256 ITR 360 (Guj) "Tribunal having deleted the addition uls 68 accepting the genuineness of loans which were received and repaid by assessee by Alc payee cheques, assessee having established the id .....

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not fictitious, initial burden lying on the assessee stands discharged; the burden shifts on to the Revenue to show that the entry represented assessee's suppressed income-Cash credit, in the facts and circumstances of the case, could not be treated as assessee's undisclosed income" c) Aravali Trading Co. vs. ITa, (2008) 220 CTR (Raf) 622 "Once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee .....

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individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is responsibility of that individual to account for the investment made by him. If t at person owns that entry, then, the burden of the assessee firm is discharged. It is open for the AO to undertake further investi .....

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ion rightly deleted by the Tribunal-No substantial question of law arises." 20. The AR has also argued that the appellant cannot be asked to explain the source of source. It is also judicially settled that if the revenue has any doubt about the genuineness of the source of funds in the hands of the creditors, addition could have been made in the hands of creditors and not the assessee. Reliance is placed on the following: - i) CIT vs. Diamond Products Ltd., (2009) 21 oTR (Del) 9 "AO is .....

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ount as contemplated under the provisions of the Act- Further, explanation offered by the assessee firm has not been rejected by the AO-AO cannot ask the assessee to prove the source of a source-If the AO doubted the genuineness of the source of the partners, he could have made additions in the hands of the partners only and not in the hands of the firm-Addition under s. 68 was not therefore sustainable" iii) Jaikishan oadlani vs. I TO, (2005) 4 SOT 138 (Mum) "Income from undisclosed s .....

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ted by her- Genuineness and regularity of the accounts not challenged-uls 34, Evidence Act, the accounts are prima facie proof of correctness of entry and the entry is prima facie proof of deposit of money by the person in whose name it stands- Assessee cannot be attributed the knowledge of source of the amount under section 106 of Evidence Act merely because he happens to be the husband of the depositor-Burden of proof about source of the amount of deposit cannot be paced on the firm or the par .....

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that addition cannot be made on the basis of doubts, suspicions, surmises and conjectures. Hon'ble ITAT Mumbai has clearly upheld this ratio in the case of Guruprerna Enterprises. Moreover, genuineness of the transactions is fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by a/c Payee cheques and he has confirmed the same. Therefore, it is held that genuineness of transaction is fully established. 22. As regards creditworthines .....

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enses. - Confirmation from Employer regarding payment of commission - Agreement with Mls Smart Inspection Industrial Equipment LLC, Dubai regarding Real Estate business. - Confirmation from Mls Smart Inspection Industrial Equipment LLC, Dubai, regarding commission paid to Shri Mohit Puri from July 2006 to November 2006 - Copy of passport of Shri Mohit Puri alongwith residence VISA of UAE. From the above, it is clear that the donor was paid salary of 40,000 DH per month (Rs. 4,96,4001- approx. @ .....

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ved commission of 26,89,550 OH (Rs.3,33,77,316 approx.) from the real estate brokerage. Therefore, he had enough funds to the tune of ₹ 10,55,35,819/- (4,96,400x9 + 6,76,90,903 + 3,33,77,316) upto December, 2006 to give a loan of ₹ 1,10,00,0001- to the appellant. It is very clear form the documents filed that the appellant was having an income of ₹ 10.55 crore in Dubai besides Indian income of ₹ 6,12,663/-. Therefore, creditworthiness of Shri Mohit Puri is fully establish .....

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This property was sold (1st Floor) to Shri Vinod Kumar Khanna and Ms. Ratna Shrivastava for a consideration of ₹ 2,00,00,000/- vide sale deed dated 31/10/2006 as evidenced by the sale deed filed ulr 46A, (Second Floor) to Mls Goel Plastics Pvt. Ltd. for a consideration of ₹ 2,50,00,000 - and for ground floor and basement, ₹ 2,00,00,000/- were received from Mls Ocenic Homes Pvt. Ltd. Therefore, total consideration received was ₹ 6,50,00,000/-. The Coownership of the appell .....

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. AO regarding non filing of bank account of Ms. Neelam Mohan is concerned, it is irrelevant because no loan was received from her. As regards receipt of sale considerations, they were all received through a/c payee cheques, details of which like cheque nos., date, name of bank etc are available in the sale deeds themselves. In fact, registered sale deed itself is conclusive proof of the transaction. Moreover, this amount of ₹ 80,00,000/- was paid to her on 15/1/2011 vide cheque no. 216187 .....

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the ledger account of the impugned property as well as purchase and sale deeds. It is very clear from these documents that the property was purchased for ₹ 6,35,00,000. The same was sold floor wise for a total consideration of ₹ 6,50,00,000. The ratio of ownership between Mr. Vikrant Puri and Ms. Neelam Mohan was 60:40. In respect of sale for first floor and second floor, cheques were directly received by both the co-owners in the ratio of ownership. For ground floor a consolidated .....

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ted. 25. International Building & Furnishing Company - The Loan amount of ₹ 1,50,000/- has already been accounted for in respect of credit from Shri S. C. Puri in A.Y. 2005-06 where the addition of this credit has been deleted. Therefore, same is deleted in this assessment year as it does not pertain to this year. 26. Kush Puri - The Loan amount of ₹ 3,50,000/- has already been accounted for in respect of credit from Shri S. C. Puri in A. Y. 2005-06 where the addition of this cre .....

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ocuments which were filed u/: 46A as under:- a) Confirmation from the creditors which gives the following particulars: - i) Name of the creditor ii) PAN of the creditor iii) Date of Transaction iv) Amount of Transaction v) Account Payee Cheque nos. vi) Name of the Bank on which cheques were drawn. b) Bank account with Centurian Bank of Punjab, Connaught Place, New Delhi which indicates debit of ₹ 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 001 .....

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siness in Dubai with P. O. Box No. 64834. He has further deposed that he has given a loan of ₹ 3,20,00,0001- to Shri Vikrant puri which was received back also in April, 2007. f) The Ld. AO says that the affidavit filed by Shri Pankaj Kapoor mentions about the loan given to the appellant but not the source of income. In this connection, your kind attention is invited to para 3 of the affidavit which clearly says that Shri Pankaj Kapoor is deriving income from proprietorship business under t .....

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Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., (2010) 45 DTR (Del) 281. iii) Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same. iv) Creditworthiness of the creditor is also fully established by the fact that the amount is duly debited in the bank account of the creditor. T .....

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e transaction was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. Hence, credit of ₹ 3,20,00,000/- from Shri Pankaj Kapoor stands duly explained." 28. In the Remand Report, the AO has stated that the affidavit filed by Shri Pankaj Kapoor mentions about the loan given to the appellant but not the source of income. In this connection the AR submitted that para 3 of the affidavit clearly says that Shri Pankaj Kapoor is deriving inco .....

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ls of transactions. Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person. Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same. As regards creditworthiness, it is very clear from the affidavit itself that Sh .....

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ue no. 429307 on 22/06/2006, ₹ 1,00,00,0001- vide cheque no. 429314 on 5/12/2006 and ₹ 1,00,00,000/- vide cheque no. 429315 on 12/12/2006 in the same account. Therefore, creditworthiness of the creditor is also fully established. The case laws relied upon by the AR fully support the case of the appellant. Moreover, the AO has not brought any material on record to prove that credit is bogus which he failed to do. 30. Therefore, under the facts and circumstances of the case, the loan o .....

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ct from his written submissions are as under: - "ii) These documents clearly provided the following information:- a) Name of the credit b) Address of the creditor c) PAN of the creditor d) Admittance on the part of creditor e) Jurisdiction of assessing authority over the creditor as ITO, Ward 2(1). f) Credit was received by way of transfer entry on 811112006 g) Name and address of the bank of the creditor as Andhra Bank, Green Park, New Delhi. h) Creditors bank account no. as 16204100002006 .....

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