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2016 (11) TMI 445 - ITAT AHMEDABAD

2016 (11) TMI 445 - ITAT AHMEDABAD - TMI - Addition u/s 68 - borrowed fund from depositor - creditworthiness of the depositor had not been proved by the assessee - Held that:- In this case, after discharging of initial onus, ld. AO raised serious concerns about the claim of the assessee, its veracity and genuineness. These concerns have not been replied by the assessee. Ld. CIT(A) without adverting to these crucial facts has gone on a tandem to hold that the source of source cannot be examined b .....

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to meet with the rebuttal of the ld. AO as enshrined in Section 68 thus the onus which shifted to assessee has not been discharged. - Decided against assessee - ITA No. 1880/Ahd/2011 - Dated:- 9-9-2016 - SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER For The Revenue : Shri K. Madhusudan, Sr DR For The Assessee : Shri U.S. Bhati with Shri A.S. Bhati, ARs ORDER PER R.P. TOLANI, JUDICIAL MEMBER:- This appeal by the Revenue is directed against the order of the Commission .....

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e had obtained unsecured loans amounting to ₹ 2,08,18,088/- from one M/s. Hanuman Enterprise, an alleged proprietorship concern of one Mr. Vinay Kashiram Agarwal. To verify the identity, creditworthiness and genuineness of the creditor, summons u/s 131 dated 10.08.2010 were issued. On perusal of P&L A/c., Balance Sheet and Tax Audit Report of the said M/s. Hanuman Enterprise, ld. AO found that it did not have enough resources to advance such huge loan to the assessee. In his statement .....

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eived through banking channel from the said concern. Therefore, no addition u/s 68 was called for. The ld. AO did not accept the assessee s reply on following observations:- i) The income of M/s. Hanuman Enterprise was merely ₹ 4.28 lacs and the capital of the proprietor was ₹ 8.25 lacs. ii) The transactions about the turnover of M/s. Hanuman Enterprise did not inspire any confidence inasmuch as even the routine expenses like labour charges, godown rent, freight etc., which were esse .....

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es inasmuch as no prudent businessman will stop the payment of a supplier to advance such loan to the party with whom he did not have any direct association or earlier acquaintance. In view thereof, it was held that M/s. Hanuman Enterprise did not have the genuine creditworthiness to advance impugned loan, which was based on unreliable explanation. Consequently, the impugned addition was made u/s 68 for unexplained cash credit. 4. Aggrieved, the assessee preferred first appeal where it was conte .....

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ce. Reliance was placed on following judgments:- Rohini Builders vs. DCIT, (2002) 76 TTJ 521 CIT vs. Shailesh Rasiklal Mehta, (2009) 176 taxman 270 (Guj.) VTR Marketing vs. ACIT, (2005) 1 SOT 205 (Kol) SK Jain vs. ITO, (2004) 2 SOT 579 (Agra) CIT vs. Diamond products Ltd, (2009) 21 DTR (Del) 9 Mogi Printing Works vs. ITO, (2005) 97 TTJ (Jd) 573 ITO vs. Arihant X-Ray & Sonography Clinic (P) Ltd, (2007) 111 TTJ (Ahd) 528 5. The ld. CIT(A) deleted the addition by following observations:- 3.3 I .....

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red details. It is also the fact that the depositor in his statement recorded had accepted that he had given loan to the appellant. The depositor had also shown the source of giving such loan. In nutshell, the depositor had accepted to have given loan to the appellant and confirmed all the transaction, which were entered into through account payee cheques. The A.O. has not been able to counter the contentions put forth by the appellant. Nothing has been brought on record to show that the loan wa .....

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t, the department is free to take any action against him but the person who has accepted loan can not be penalized. The various decision relied upon by the appellant also support its case. In the light of the facts and legal decisions, I direct to delete the addition made of ₹ 2,08,18,088/-. The appellant accordingly gets relief of ₹ 2,08,18,088/- 6. Aggrieved, the Revenue is in appeal before us. 7. Ld. DR vehemently contends that ld. AO has demonstrated that the said creditor namely .....

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rson, i.e., the assessee. This is grossly against the surrounding circumstances, human conduct and preponderance of possibilities as held by the Hon ble Supreme Court in the case of Sumati Dayal, 241 ITR 801 (SC). 7.2 Ld. CIT(A) has solely relied on the PAN of the depositor and IT details and held that the assessee has discharged his onus by furnishing these scratchy details and the AO cannot examine source of source. It is contended that the AO is an Investigation Officer and when some document .....

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laced on Hon ble Supreme Court judgment in the case of CIT vs. P. Mohanakala, [2007] 210 CTR 20 (SC), holding as under:- … The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. The doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorit .....

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is investigation. Therefore, it is not a case of examining source of source as held by ld. CIT(A). It is contended by ld. DR that the assessee has failed to discharge its burden and the mere shaky paper work has no legs to stand. The Hon ble Supreme Court in the case of Navodaya Castle has squarely held that mere filing of papers will not amount to discharge of onus, if on record there is material leading to adverse inference. The papers cannot be relied on face value. Since the assessee s expla .....

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respect of all the creditors are furnished, then there is no question of law arises if the additions are deleted by ITAT. b) CIT vs. Diamond Products Ltd, (2009) 21 DTR 009 (Delhi), holding that… if the creditors are regularly assessed to income-tax and copies of return for the relevant year are filed before the authorities, then the assessee has discharged its burden in terms of Section 68. c) Decision of ITAT, Mumbai Bench in the case of ACIT vs. M/s. Disha Construction in ITA No.5055/M .....

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s effectively rebutted by the AO. The assessee neither before the ld. AO nor before the ld. CIT(A) nor before ITAT has addressed the serious concerns raised by the ld. AO about the veracity and genuineness of the documents. The Hon ble Supreme Court in the case of Navodaya Castle (P) Ltd (supra) has squarely held that mere filing of the paper will not amount to discharge of burden; therefore, the order of AO may be restored. 10. We have heard both the parties, perused the material available on r .....

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