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2016 (9) TMI 499 - ITAT DELHI

2016 (9) TMI 499 - ITAT DELHI - TMI - Addition u/s. 68 - Held that:- The burden of the assessee in respect of the loans stand discharged and therefore, no addition is tenable. Once the amount has been received by account payee cheques and the creditors have duly confirmed the transactions no adverse inference can be drawn. Therefore, assessee shows his inability to explain the source of source, which cannot be a basis to confirm the addition u/s. 68 of the Act. Hence addition deleted. - Decided .....

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,00,000/- representing cash deposits in ICICI Bank and held to be alleged unexplained credit U/S 68 of the Act. 1.1 That the learned Commissioner of Income Tax (Appeals) has proceeded to uphold the addition by failing to appreciate that deposits in the bank stood duly explained out of the advance received from one Shri Balwant Singh Pannu who had duly confirmed the advance by appearing in person and as such the addition confirmed is legally unsustainable. 1.2 That the finding that Shri Balwant S .....

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ed Commissioner of Income Tax (Appeals) Hisar has further erred both in law and on facts in upholding addition of ₹ 5,49,000/- representing loans received by the assessee and, held to be unexplained cash credit u/s 68 of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that unsecured loans aggregating to ₹ 5,49,000/- had been received by account payee cheques from identifiable parties who had duly confirmed that loans had been advanced to th .....

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cts of the case are that the assessee filed its return of income on 5.5.2010 declaring income of ₹ 1,59,250/- and agriculture income of ₹ 4,75,000/-. The assessee has shown income from other sources and interest. The case was selected for scrutiny assessment through CASS to examine the sourc of cash deposits made by the assessee in saving bank accounts. The AO completed the assessment u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred as the Act) at income of ₹ 27,83 .....

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but none appeared on behalf of the Department, nor filed any application for adjournment from the Department side. Keeping in view the facts and circumstances of the present case and the issue involved in the present Appeal, I am of the view that no useful purpose would be served to issue notice again, therefore, I am deciding the present appeal exparte qua Revenue, after hearing the Ld. A.R. of the assessee and perusing the records. 6. Ld. A.R. of the Assessee with regard to addition of ₹ .....

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t was further stated that the lower authorities has overlooked relevant evidence placed on record and, drawn factually incorrect and legally unsustainable inferences based on irrelevant and extraneous consideration and thus, addition sustained is wholly unwarranted and not in accordance with law. To support his contention, he relied upon the following case laws and stated that the issue in dispute stands squarely covered by the said decisions and therefore, the addition in dispute may be deleted .....

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.) Saraogi Credit Corporation vs. CIT h) 151 ITR 150 (Pat.). Addl. CIT vs. Hanuman Aggarwal i) 154 ITR 244 (Pat.) Addl. CIT vs. Bahri Bros. (P) Ltd. j) 59 ITR 632 (Assam) Tolaram Daga vs. CIT k) 361 ITR 220 (Del) CIT vs. Kamdhenu Steel & Alloys Ltd. 6.1 As regards addition of ₹ 5,49,000/- representing loans received by the assessee and, held to be unexplained cash credit u/s. 68 of the Act, Ld. A.R. of the assessee stated that these are the unsecured loans aggregating to ₹ 5,49,0 .....

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l ii) 168 ITR 493 (Cal) Mather & Platt (India) Ltd. vs. CIT iii) 154 ITR 244 (Pat.) Addl. CIT vs. Bahri Bros. P Ltd. iv) 245 ITR 160 (MP) CIT vs. Metachem Industries v) 136 Taxman 213 (Gau( Nemi Chand Kothari vs. CIT vi) 219 CTR 571 (Raj) Labh Chand Bohra vs. ITO vii) CIT vs. Daulat Ram Rawatmull 87 ITR 349 (SC) viii) CIT vs. Diamond Products Ltd. 177 Taxman 331 (Del.) ix) CIT vs. Real Time Marketing (P) Ltd. 306 ITR 35 (Del.) x) ITA No. 1583/Del/2011 AY 1996-97 dated 11.5.2013 in the case o .....

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e Assessee may be allowed. 7. I have heard both the parties and perused the records available with me. 7.1 With regard to addition of ₹ 16 lacs is concerned, I find that in the instant case the Assessing officer and CIT(A) observed that "The Ikrarnama was made on 12.10.2009 whereas the conveyance deed, was to be executed on 12.07.2010 i.e. after a period of 10 months, which is abnormal in such transactions." It is submitted that, the amount involved in the instant transaction was .....

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hich is a wrong presumption. However, the person concerned was an Executive in the Land Mortgage Bank who retired in 2004 and was practicing in the Punjab and Haryana High Court since then. Further he also owned 20 acres of Agricultural Land against which he has also availed Kisan Credit Card Limit of ₹ 5,00,000/- from nationalized bank. In my view, Shri Balwant Singh Pannu was a person was of sufficient creditworthiness and was in a position to advance an amount of ₹ 16,00,000/- as .....

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hat no evidence has been furnished by Shri Balwant Singh Pannu regarding advance of ₹ 5,00,000/- each from Sh. Maman and Sh. Udaivir and the source of availability of the cash lying at his home. I find considerable cogency in the assesee s AR contention that Shri Balwant Singh Pannu was the source of cash deposited in the assessee's bank account. Also, it is evident from his statement recorded on 26.2.3013 that advance given to the tune of ₹ 16,00,000/-. Further, the copy of agre .....

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gly, the addition of ₹ 16 lacs is deleted. My aforesaid view is fortified by the following decisions:- a) 220 CTR 622 (Raj) Aravali Trading Co. vs. ITO "held that neither the provisions of section 68 nor on general principle it can be said that once the existence of person in whose name credits are found in the books of the assessee is proved and such person own such credit with the assessee, still the assessee is to further prove the source from which creditors could have acquired mo .....

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e creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove th .....

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he creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Re .....

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ands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the AO is dissatisfied about the source of cash deposited in the bank accounts of the creditors', the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). " d) 361 ITR 220 (Del) CIT vs, Kamdhenu Steel & Alloys Ltd "12 What does follow from the aforesaid? It is not in doubt th .....

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ee cheques. 13 No doubt, what the AO observed may make him suspicious about such companies, either their existence, which may be only on papers and/or genuineness of the transactions, when he found that investing companies are not available at given addresses or that the issuance of the cheque representing share application money or preceded by the deposit of cash in the bank account of these investment companies. 14 The important question which arises at this stage is as to whether on the basis .....

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money belongs to the assessee and becomes unaccounted money. According to us, the assessee appears to be correct on this aspect. We feel that something more which was necessary and required to be done by the AO was not done. The AO failed to carry his suspicious to logical conclusion by further investigation. After the registered letters sent to the investing company had been received back undelivered, toe AO presumed that these companies did not exist at the given address. No doubt, if the comp .....

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received back undelivered. If the address was same at which the letter was sent or the Inspector visited and no change in address was communicated, perhaps it may have been one factor. In support of the conclusion which the AO wanted to arrive at, that by itself cannot be treated as the conclusive factor. As pointed out above, these applicant companies have PANs and assessed income tax No effort was made to examine as to whether these companies were filing the IT returns and if they were filing .....

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ccounts and are the signatories, who introduced those bank accounts and the manner in which transactions were carried out and the bank accounts operated. This kind of inquiry would have given some more material to the AO to find out as to whether the assessee can be convicted with the transactions which were allegedly bogus and/or companies were also bogus and were treated for namesake. We say so with more emphasis because of the reason that normally such kind of presumption against the assessee .....

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(2010) 45 DTR (Del) 281 : (2011) 239 CTR (Del) 478-Ed.] in the following words: "Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke s. 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the 'source of source'. 7.2 With regard to addition of ₹ 5,49,000/- repres .....

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