TMI Blog2016 (7) TMI 1260X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses, therefore, considering this fact, the addition of ₹ 43,358/- is reduced and restricted to ₹ 10,000/- only. Therefore, modify the orders of authorities below and restrict the addition to ₹ 10,000/- on this issue as against addition of ₹ 43,358/-. These grounds are partly allowed. - ITA No. 785/CHD/2015 - - - Dated:- 19-7-2016 - Bhavnesh Saini (Judicial Member) For the Appellant : Sudhir Sehgal For the Respondent : S. K. Mittal ORDER This appeal by assessee has been directed against the order of ld. CIT(Appeals)-2 Ludhiana dated 21.09.2015 for assessment year 2011-12. 2. I have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. 3. The ld. counsel for the assessee did not press ground No. 6 of the appeal of the assessee, same is accordingly, dismissed as not pressed. 4. On ground No. 1 2, assessee challenged the addition of ₹ 23,05,500/- on account of unexplained creditors and similarly, on ground No. 3, assessee challenged the addition of ₹ 35,057/- on account of interest paid to the above creditors. 5. Brief facts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was failed to produce these persons. The AO also asked the assessee to explain why these unsecured loans should not be disallowed. The assessee filed reply but was not acceptable by the AO. The AO was in view that the assessee had failed to discharge his onus under section 68 of the Act and the explanation offered was not found to be satisfactory. Therefore, the AO disallowed an amount to ₹ 23,05,500/- and added back the same to assessees income. 5(ii) Further the AO noted that the appellant had paid interest @ 15% on unsecured loans. Accordingly, AO disallowed ₹ 35,057/- on account of interest paid on such loans. 6. The assessee challenged the addition before ld. CIT(Appeals) and written submission of the assessee is reproduced in the appellate order in which the assessee briefly explained that details of the parties were provided during the course of assessment proceedings which proved identity of the creditors, their credit worthiness and genuineness of the transaction. The assessee filed documents in support of the above ingredients i.e. confirmed copy of the accounts, affidavits, statement of accounts in the books of M/s Ludhiana Comfin Services alongwith cop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Book. He has also relied upon decision of Hon'ble Supreme Court in the case of CIT Vs M/s Orissa Corporation Pvt. Ltd. 159 ITR 78. On the other hand, ld. DR relied upon orders of authorities below. 10. I have considered rival submissions. It is not in dispute that in assessment year 2008-09, Division Bench of ITAT Chandigarh in the case of the same assessee for assessment year 2008-09 decided the identical issue vide order dated 29.05.2014 in ITA 75/2012. The same is reproduced as under : 4. Ground Nos. 1 to 4: After hearing both the parties, we find that during assessment proceedings it was noted by the Assessing Officer that assessee has shown new unsecured loans amounting to ₹ 30,56,500/- out of which loans amounting to ₹ 19,56,000/- were introduced from persons specified u/s 40A(2)(b) of the Act. Out of these loans he further noted that source of investment by these parties was profit from the trading and commodity business. The Assessing Officer directed to produce those persons. During assessment proceedings though confirmation of loans, their PAN numbers etc. were filed but those persons were not produced. The Assessing Officer further noted that fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carefully and find that in identical circumstances in the case of Shri Seva Ram Vs. ITO (supra) the issue was adjudicated vide para 9 to 10 by the Tribunal, which are as under:- 9. We have heard the rival submissions carefully and it has to be noted that addition has not been made u/s 68 of the Act but the addition has been made by observing that commodity profit earned by eight family members is income from undisclosed sources of the assessee. It is very strange that the AO has nowhere stated that income from commodity transactions is bogus or not genuine. In fact the assessee has shown an amount from eight members as per detailed below as loans:- Sewa Ram (HUF) ₹ 2,09,700.00 Smt. Shakuntla ₹ 2,12,300.00 Smt. Raj Kumari ₹ 2,16,000.00 Smt. Jyoti Kinger ₹ 2,17,100.00 Shri Vijay Kumar ₹ 2,15,000.00 Vijay Kumar (HUF) ₹ 2,14,050.00 Shri Vinod Kumar S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30,000.00 -- 782,326.00 31.3.2007 By Amount of interest -- 87,325.00 869,651.00 31.3.2007 To amount of TDS 8,907.00 -- 860,744.00 Total 129,301.00 990,045.00 Credit balance as on 31.3.2007 860,744.00 Above clearly shows that during the year Sewa Ram HUF has further given four cheques amounting to ₹ 36,466/-, ₹ 48,200/-, ₹ 60,200/- and ₹ 101,300/- on 28.9.2006, 13.10.2006, 3.11.2006, 30.1.2007. Out of these last three cheques i.e. ₹ 48,200/-, ₹ 60,200/- and ₹ 101,300/- have been doubted by the AO on the basis that these amounts have been received as profit from the commodity transactions. First of all once if there was any doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing each and every copy of account separately. Other serious objection raised by the AO is that profits have been earned in the equal installments by all the family members, this may be matter of chance. This may even raise some doubt also but in that case the AO should have specifically enquired from each of the family members but no such enquiries have been made. Third serious objection raised by the AO is that since income of various family members was lower and that is why it cannot be accepted and it must have been earned by the assessee. This objection is not correct because there is no finding that such individual family members were acting as benamidar of the assessee. Family members are regular income tax assessees and even similar income from commodity transactions was accepted in the hands of such family members in the immediately previous year also. Fourth serious objection raised is irregularity in the filing of registration forms but the AO has not pointed out what is the irregularity. Only thing which has been pointed out is that Shri Vijay Kumar i.e. son of the assessee was interacting with M/s Satya Narayan Online Trading Pvt Ltd., Ludhiana on behalf of the famil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gifts to Srinivasan and his family members. It is further held that in all probabilities Sampathkumar may have received compensatory payments in lieu of the gifts made by him. The letters according to the AO suggest that Sampathkumar reserved his right to receive suitable compensation from the respondents-assessees. The AO in the circumstances came to the conclusion that the gifts though apparent are not real and accordingly treated all those amounts credited in the books of the assessee as the income of the assessees. The additions were confirmed by the ld. CIT(A). The matter traveled to the Tribunal where there was a difference of opinion between the two Members, therefore, the matter was referred to the Sr. Vice President who concurred with the findings of the AO. In this background the Court referred to various decisions including the decision of Sumati Dayal, 214 ITR 801 and made various observations including observations in para 24 which reads as under:- It is true that even after rejecting the explanation given by the assessee if found unacceptable, the crucial aspect whether on the facts and circumstances of the case it should be inferred the sums credited in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y case the Hon'ble Supreme Court has itself mentioned in this observation that the same is rebuttable and we again highlight the observation, Such opinion formed itself constitutes a prima facie evidence against the assessees, viz., the receipt of money, and if the assessees fail to rebut the said evidence the same can be used against the assessees by holding that it was a receipt of an income nature. Whereas in case before us the assessee had discharged its onus by clearly filing copy of account, PAN No., income-tax return, bank statement, source of funds regarding loan to discharge burden envisaged u/s 68 of the Act. The above observations are definitely in the context of gift received in that case and cannot be made applicable in all the cases of cash credits. In any case, it has not been shown before us how reply of the assessee is not satisfactory. As pointed out earlier that in case of loan transaction only three ingredients i.e. identity of the creditor, genuineness of the transaction and capacity of the depositor or loanee is required to be proved which have been clearly proved in case before us. In fact in this case the observations of Hon'ble Supreme Court while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtment. Therefore, even in this year without pointing out any defect in such amounts or without recording the finding of such profit was bogus, same could not have been addedto the income of the assessee. In these facts and circumstances of the case we set aside the order of ld. CIT(A) and deleted the addition of ₹ 17,21,100/-. 9. In the above noted paras even the decision of Hon'ble Supreme Court has been considered in detail. In fact, if the Assessing Officer has suspicion that commodity profit was not genuine in the hands of various family members, the same could have been added in their assessments by reopening the same but the same cannot be assessed in the hand of assessee because such persons have confirmed the transactions of loans and has filed the relevant papers. Therefore, in our opinion the view taken in the case of Seva Ram v ITO (supra) is squarely applicable in this case also and we decide the issue in favour of the assessee. 10(i) The order of the Division Bench is binding on the Single Bench. The issue is, therefore, identical and covered in favour of the assessee. All points raised in the present appeal have already been decided by Division Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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