TMI Blog2017 (2) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of AO in charging interest u/s. 234A, 234B, 234C and 234D of the Income Tax Act, 1961. 4. That the appellant craves the leave to add, modify, amend or delete any of the ground of appeal at the time of hearing and all the grounds are without prejudice to each other. 2. The brief facts of the case are that the assessee filed its return of income on 1.10.2013 declaring income of ₹ 12,06,530/-. 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 work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Paper Book. He further draw my attention towards the page no. 21-23 of the PB which is a 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. He further draw my attention towards the page no. 28-33 of the Paper Book which is copy of 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; 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 the assessee has stated 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. Hence, he submitted that assessee has established all three ingredients of Section 68 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 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 showing the receipt of two RTGS from M/s Lotus Corporation and page no. 27 of the Paper Book 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. After perusing the aforesaid documents/ evidences, I am of the considered view 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies below observed that Shri Balwant Singh Pannu had no means and source to advance ₹ 16 lacs for the purchase of property worth of ₹ 1 Crore which 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 an advance for purchase of the property situated at Sector 51, Gurgaon. Hence, the finding of the learned CIT(A) is factually not correct. It is also noted that ₹ 16,00,000/- was received by the assessee as an advance against property situated at Sector 51, Gurgaon from Sh. Balwant Singh Pannu in pursuance of an Agreement to sell dated 12.10.2009 as is evident from cash flow statement of the assessee for financial year 2009-10. However, the Ld. CIT(A) has upheld the addition on the basis that no evidence has been furnished by Shri Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the 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 Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccounted 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 only paper existence, one can drawthe conclusion that he assessee had not been able to disclose the source of amount received and presumption under s. 68 of the Act for the purpose of addition of amount at the hands of the assessee. But, it has to be conclusively established that the company is non- existence. 15. The AO did not bother to find out from the office of the Registrar of Companies the addresses of those companies from where the registered letter 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were having enough credit to advance such loans to the assessee and cash of more or less equal amounts were deposited in their respective bank accounts before the issue of cheques to the assessee clearly establishes that the unsecured loans in the name of these persons is an arranged affair. But, I find that Ld. CIT(A) has failed to observed that unsecured loans aggregating to ₹ 5,49,000/- had been received by account payee cheques from identifiable parties who had duly confirmed that the loans had been advanced to the assessee and as such, addition so sustained is invalid and contrary to law. The assessee had raised the loan from five different persons who have filed their affidavits as well as statement of accounts through regular banking channel and by account payee cheques. In my considered view, 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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