TMI Blog2016 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... 29301 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 also fully established. Moreover, the AO has not brought any material on record to prove that credit is bogus which he failed to do. - Decided in favour of assessee - ITA No. 3377/Del/2011 - - - Dated:- 28-3-2016 - Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member For the Petitioner : Sh. Amit Mohan Govil, CIT(DR) For the Respondent : Sh. V.K. Agarwal, AR ORDER Per O. P. Kant, A. M. The Department has filed this Appeal against the impugned Order dated 06.04.2011 passed by the Ld. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort on 22.2.2011 and copy of the Report was given to the assessee who filed his rejoinder. It is an admitted fact from the remand report itself that confirmation called for the first time on 28.10.2009 and the first hearing was fixed for 17/11/2009 subsequently on every hearing, the assessee filed confirmations. Last hearing was conducted 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 addition. The AO has nowhere mentioned either in the assessment order or in the remand report that he had pointed out any deficiency in the documents filed by the assessee to support the unsecured loans. Obviously, the assessee came to know the mind of the AO regarding his non-satisfaction of the evidences for the first time from the assessment order. Therefore, Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Ld. CIT(A) has passed a elaborate and speaking order on the issue in dispute and dealt these additions from para no. 13 to 32 from pages 6 to 19 of 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 transaction is also in doubt. 14. The AR argued that This company has given a loan of ₹ 1,20,82,273/- to the appellant. The Ld. AO made the addition of ₹ 6,07,00,000/-- by holding that the credit is unexplained on the ground that the company does not have sufficient funds of its own and creditworthiness was not established. He has considered only the credit side and not the debit side of the account of this company. He has also mentioned that the genuineness of transaction is also in doubt. The facts in brief are that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 016204100002265 with Andhra Bank. iii) From the audited accounts of the company, it will be observed that there is no discrepancy in the balance sheet. The company had sufficient funds as indicated in the balance sheet. Whatsoever funds appear in the balance sheet, they are owned by the company only. Therefore, it cannot be said that the creditor company did not have sufficient funds. a) Genuineness of the transaction is also 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, amount, bank account no. as well as name and address 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 the sides, we find ourselves in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resses, GIR nos./PAN as well as confirmations alongwith the copies of their assessment 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 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's onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him and, therefore, addition under s. 68 cannot be sustained in the absence of anything to esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41712006 and 1/8/2006 respectively which are duly debited in the same account with HSBC Bank of the creditor. Therefore, advance of ₹ 16,00,000/- was received back by the appellant and the loan received was only ₹ 51,00,000/-. This amount was also repaid on 29/9/2006 which is duly credited in the HSBC bank account of creditor by way of transfer entry from the bank account of Vikrant Puri bearing account no. 094-242476-006 with HSBC Bank. Thereafter, ₹ 4,70,17,727/-- was given 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 ₹ 40,00,000/-- on 15/2/2007 vide alc payee cheque no. 000572 which is duly debited in the bank account with HSBC Bank, ₹ 2,00,00,000/-- on 21/2/2007 by way of transfer entry from HSBC and ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 16. Mohan Exports (India) Pvt. Ltd. - Loan of ₹ 1,80,00,000/- was received from this company which was added by the Ld. AO as confirmation could not be filed. The AR argued that confirmation could not be filed because due to some disputes between the two parties, the creditor did not cooperate. During the appellate proceedings, the Directors of the company were persuaded and they cooperated by providing certain documents which were filed ulr 46A like confirmation, cheque no., IT Return, 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 cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal evidences in respect of this creditor. Hence, credit of ₹ 1,80,00,0001- from Mohan Exports India Pvt. Ltd. stands duly explained. 17. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The appellant has filed confirmation, PAN, IT return, bank statement and audited 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 creditor company with Centurion Bank of Punjab, Connaught Place, New Delhi which indicates debit of ₹ 1,80,00,000/- on 6/9/2006 vide cheque no. 597860 in favour of Shri Vikrant Puri in Alc no. 0315051000000196. There is a credit entry of ₹ 30,00,000/- vide cheque no. 023559 on 03/08/2006, credit en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding 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 per month (Rs. 4,96,400/- approx. @ 1DH = ₹ 12.41 in April, 2006) besides commission of 54,54,545 OH (Rs. 6,76,90,903/- approx.} in nine months from April, 06 to December, 2006. All his personal expenses like rent, food and beverages, travelling, communication and miscellaneous expenses were reimbursed by the employer. He was also engaged in the business of Real Estate Brokerage abroad with M/s Smart inspection Industrial Equipments LLC, Dubai. During the period from July, 2006 till November, 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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's latest judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 2571Mum12010, page 26, para 36, the relevant extract from which is as under: - The addition cannot be made by making an observation that the loans do not appear to be genuine viii) 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. 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 ide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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. 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 not permitted to examine the source of the source once the assessee is able to establish that the transaction with his creditor is genuine and the identity and creditworthiness of the creditor have been established. ii) CIT vs. Taj Borewells, (2007) 291 ITR 232 (Mad) Income-Cash credit-Genuineness-Assessee firm did not maintain any books of account-It has shown the capital contributions of the partners in the P L alc and balance sheet-P L alc and balance sheet are not books of account as contemplated under the provisions of the Act- Further, explanation offered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. As regards creditworthiness, the appellant has filed the following documents to explain the source of funds in the hands of the creditor: - - Copy of Employment Agreement with M/s Friend's General Trading - FZCO, Dubai indicating salary of 40,000 OH per month (Rs. 4,96,400/- approx. @ 1DH = ₹ 12.41 in April, 2006) + commission @ 12.5% besides reimbursement of expenses in respect of boarding, lodging, transport, communication, meals, etc. - Confirmation from Employer regarding reimbursement of various personal expenses. - 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. @ 1DH = ₹ 12.41 in April, 2006) besides commission of 54,54,545 OH (Rs. 6,76,90,903/- approx.) in nine months from April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 drawn on Andhra Bank. 24. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The confirmation itself clearly indicates that the credit is on account of sale transaction of property at E-14/13, Vasant Vihar, New Delhi. She is regularly assessed with Circle 22(1), New Delhi with PAN being AAMPM9231F as is evident from the copy of return filed for A. Y. 2007-08. I have also gone through 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 70,00,000/- vide cheque no. 429307 on 22/06/2006, ₹ 1,00,00,000/- vide cheque no. 429314 on 5/12/2006 and ₹ 1,00,00,000/- vide cheque no. 429315 on 1211212006 in the same account. c) Copy of Passport with residence visa of UAE indicating that he was a resident of UAE. d) Copy of PAN Card of the creditor e) Affidavit of Shri Pankaj Kapoor confirming that he is a NRI since 2002 and his source of income is from proprietorship business 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 the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE. g) Moreover, the amount was paid back as under: - Date Cheque No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. 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 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 Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE. I have also examined the bank account of 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 Vikra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction Ltd., [2010J 5 Taxmann.com 60 (Delhi) and Hon'ble ITAT Mumbai in its latest judgment dated 71112011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 2571Muml2010 as discussed above. 32. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. Mls Hari Impex Pvt. Ltd. is being regularly assessed with Circle 12(1), New Delhi at PAN being AABCH0774L. The income for the assessment year 2007- 08 has been declared at ₹ 40,69,683/- as is evident from the copy of return file before the AO. The bank account of the creditor with Andhra Bank, Green Park, New Delhi bearing no. 16204100002006 indicates that ₹ 3,06,000/- paid to Shri Vikrant Puri by way of transfer entry on 8/11/2006. The opening balance in the account was ₹ 23,03,465/- and even after giving the loan to the appellant the balance was ₹ 18,27,965/-. The loan was repaid in subsequent years. Therefore, the identity, genuineness and creditworthiness is considered as established and hence the addition of ₹ 3,06,000/- is hereby deleted. In view of the above findings ..... X X X X Extracts X X X X X X X X Extracts X X X X
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