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Sachin Kapoor, C/o RRA Taxindia Versus ITO, Ward 32 (5) , New Delhi

2017 (2) TMI 684 - ITAT DELHI

Addition u/s 68 - Held that:- The assessee has established that the loan in the question has been received through banking channel and further that proprietor of M/s Lotus Corporation was assessed to tax as was evident from his PAN Number. These evidences established that all three ingredients of Section 68 of the I.T. Act, 1961 are fulfilled thus, the addition in dispute is not sustainable in the eyes of law and needs to be deleted. - Decided in favour of assessee - I.T.A. No. 4577/DEL/2016 - D .....

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ng an aggregate addition of ₹ 30,00,000/- on account of unsecured loan by treating it as alleged unexplained cash credits u/s. 68 and that too without observing the principles of natural justice. 2. That in any case and in any view of the matter, action of the Ld. CIT(A) in confirming the action of AO in making an aggregate addition of ₹ 30,00,000/- on account of unsecured loan u/s. 68, is bad in law and against the facts and circumstances of the case. 3. That having regard to the fa .....

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/-. The case was processed u/s. 143(1) of the I.T. Act, 1961. Subsequently, the case was selected under CASS. Statutory notices u/s. 143(2) of the I.T. Act dated 4.9.2014 was issued. The asessee is engaged in the business of export and works in the name of Grace Fashion Accessories during the year. AO observed that the assessee could not prove his relations/ any other business relation with M/s Lotus Corporation and also could not prove the reason of unsecured loan without any consideration / in .....

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, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 16.3.2016 has dismissed the appeal of the assessee and sustained the addition of ₹ 30,00,000/- by observing that the assessee has neither established the identity of M/s Lotus Corporation nor its creditworthiness and neither the genuineness of the transaction. 4. Aggrieved with the order of the Ld. CIT(A), Assessee is in appeal before the Tribunal. 5. Ld. Counsel of the assessee has filed the Paper Book containing .....

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1.2016 filed before AO giving the correct address of M/s Lotus Corporation; copy of assessee reply dated 9.2.2016 filed before AO together with PAN Number, Bank Statement, 2 RTGS details aggregating to Rs., 30 lacs received from M/s Lotus Corporation and copy of accounts and copy of written submission filed before the Ld. CIT(A). He further stated that assessee has raised loan of ₹ 30 lacs from M/s Lotus Corporation vide two RTGS of ₹ 15 lacs each on 16.3.2013 and 22.3.2013. He draw .....

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otus Corporation filed by the assessee as well as obtained by AO directly from the bank showing that the above said two RTGS having been made from this bank account; Page No. 34-35 of the Paper Book is the copy of RTGS Report showing the receipt of two RTGS from M/s Lotus Corporation and page no. 27 of the Paper Book which is a copy of assessee s reply in which assessee provided PAN no. of proprietor Vikram Devasi of M/s Lotus Corporation which confirms the identity of the lender. Ld. Counsel of .....

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overed by the decisions and also requested to follow the decisions and addition in dispute may be deleted accordingly. CIT vs. Sh. Raj Kumar Agarwal: ITA No. 179 of 2008 dated 17.11.2009 (Allahabad High Court). CIT vs. Sh. Ram Narain Goel 224 ITR 180 (P&H HC) Nemi Chand Kothari vs. CIT & Anr. 264 ITR 254 (Gauhati) ITAT, SMC-3, Bench, Delhi decision dated 2.8.2016 in the case of Kailash Chander vs. ITO passed in ITA No. 817/Del/2015 (AY 2010-11). 6. On the other hand, Ld. Sr. DR relied up .....

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ogether with profit and loss account and Tax Audit Report; copy of assessee s reply dated 18.11.2015 filed before AO together with the copy of assessee s bank statement of Vijaya Bank; copy of assessee s reply dated 30.12.2015 filed before AO together with copy of confirmation of M/s Lotus Corporation; copy of assessee s reply dated 11.1.2016 filed before AO giving the correct address of M/s Lotus Corporation; copy of assessee reply dated 9.2.2016 filed before AO together with PAN Number, Bank S .....

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the pages 21-23 of the PB are the copy of bank statement of assessee with Vijaya Bank showing the receipt of 2 RTGS dated 16.3.2013 and 22.3.2013 which proves the genuineness of the transaction; the page nos. 28-33 of the Paper Book shows the Bank statement of M/s Lotus Corporation filed by the assessee as well as obtained by AO directly from the bank showing that the above said two RTGS having been made from this bank account and Page No. 34-35 of the Paper Book are the copies of RTGS Report sh .....

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ed to tax as was evident from his PAN Number. These evidences established that all three ingredients of Section 68 of the I.T. Act, 1961 are fulfilled thus, the addition in dispute is not sustainable in the eyes of law and needs to be deleted. My aforesaid view is fully supported with the following decisions from which the present issue is squarely covered:- a) CIT vs. Sh. Raj Kumar Agarwal: ITA No. 179 of 2008 dated 17.11.2009 (Allahabad High Court) wherein, the Hon ble High Court has held that .....

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of evidence or proof. c) Nemi Chand Kothari vs. CIT & Anr. 264 ITR 254 (Gauhati), wherein it has been held that a person may have funds from any source and an assessee, on such information received, may take a loan from such a person. It is not the business of the assessee to find out whether the source or sources from which the creditor had agreed to advance that the amounts were genuine or not. If a creditors has, by any undisclosed source, a particular amount of money in the bank, there i .....

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7/Del/2015 (AY 2010-11). The tribunal has held as under:- 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 high i.e. ₹ 1,05,00,000/- and it is an .....

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son 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 an advance for purchase of the property situa .....

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lwant 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 agreement to sell, statement of Sh. Balwant Singh .....

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d. 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 money to be deposited with him. The fact that de .....

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, 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 the source of the credits in its books of accoun .....

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d 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 Revenue's case and in order to sustain the a .....

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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 that the assessee had given the particulars o .....

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ved 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 of these facts, could it be said that it .....

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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 companies are not existing, i.e., they have o .....

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ss 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 the same, then what kind of returns the .....

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roduced 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 cannot be made as per the law laid down .....

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(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/- representing loans received by the assessee is .....

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