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2017 (5) TMI 919 - ITAT AHMEDABAD

2017 (5) TMI 919 - ITAT AHMEDABAD - TMI - Section 68 addition of unexplained cash credits - assessee has not been able to prove source alongwith genuineness and creditworthiness of entity - Held that:- The assessee has filed all relevant details alongwith assessment records of the said entity explaining source of the loans to the above entity’s balance sheet indicating sufficient reserves, surplus and share premium as followed by repayment in succeeding assessment year. Learned Departmental Repr .....

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he impugned addition. - Decided in favour of assessee. - Disallowance of additional depreciation - assessee had claimed the same @20% on machinery used for crimping of yarn - Held that:- Hon’ble Bombay high court’s decision in CIT vs. Emptee Poly-Yarn (P) Ltd. (2008 (2) TMI 313 - BOMBAY HIGH COURT) takes note of CBDT Circular dated 22.11.1985 clarifying that crimping of yarn also amount to a manufacturing activity. He thus deletes the impugned disallowance. Learned Departmental Representativ .....

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his Revenue s appeal for assessment year 2009-10 arises against the CIT(A)-II, Surat s order dated 17.09.2013, passed in case no. CASII/ 265/2011-12, reversing Assessing Officer s action making Section 68 addition of unexplained cash credits amounting to ₹ 1,00,00,000/- and disallowance of additional depreciation of ₹ 38,15,241/- in assessment order dated 29.12.2011, in proceedings u/s.143(3) of the Income Tax Act, 1961, in short the Act . 2. We come to the former issue of Section 68 .....

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naccounted income in business. He further took note of the fact that the above creditor entity had got deposited huge cash amounts from family members of Bhutra Family located in Surat. The Assessing Officer then issued Section 131 process to the said six depositors/family members of above creditor entity s director. 3. The instant case file reveals that the Assessing Officer then considered the above entity s registered office at Kolkata whereas its directors/family members stayed at Surat, its .....

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se of appellate proceedings, stated that it has discharged its onus under section 68 by furnishing confirmations, assessment particulars, PAN, copy of return, audited accounts and bank statement of M/s Raj Capital & Finance Pvt Ltd. The return of income pertaining to assessment year 2009-10 of M/s Raj Capital & Finance Pvt Ltd was electronically filed on 20. 09. 2009. The loan given to the appellant is reflected in the Schedule H of the audited balance sheet of M/s Raj Capital & Fina .....

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e assessment year 2009- 10, a sum of ₹ 75,00,000 has been repaid by the appellant, during the assessment year 2010-11 .In the assessment year 2011-12, further loan of ₹ 25,00,000 has been taken by the appellant. The interest in respect of all the loan taken is being paid and the corresponding TDS is also being made. In this background, the appellant submitted that non-compliance of Summons u/s 131 of the assessing officer by the lenders, directors or share holders is not a fault on t .....

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section 68, source of source cannot be investigated, but then this is precisely what the CIT ( A) ended up doing. The factum of borrowing can also not be in dispute as the assessee has borrowed the money by way of an account payee cheque. The identity cannot be said to be in doubt either. The means of the lender have been proved in as much as he was clearly in possession of this fund, received from the shareholders. The CIT (A) was, therefore, clearly in error in confirming the addition under se .....

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ors - Not justified. ……………………………………………………………………………………...…. Creditors have explained the source of deposits in their respective bank accounts. ………………………………………&hellip .....

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ase laws relied upon by the appellant are as under :- a. Nabadwip Chandra Roy v/s CIT (1962) 44 ITR 591 ( Assam ). b. Tolaram Daga v/s CIT ( 1966) 59 ITR 632 ( Assam). c. Anand Prakash Agarwal v/s ACIT ( 2008) 6 DTR (All) (Trib) 191. d. Radheshyam v/s Safiyabai Ibrahim AIR 1988 Bom 361 : 1987 Mah 725 : 1987 Bank J 552. e. Rohini Builders 182 CTR 373 (Guj) f. Orissa Corporation (P)ltd 159 ITR 78(SC) g. P.K. Noorjahan 273 ITR 570(SC) 8. DECISION :- 8.1 The appellant "s contentions and the rat .....

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blish " source of source x rather it is a case where the appellant has been asked to establish " source of source of source 8.2 As per the balance sheet of M/s Raj Capital & Finance Pvt Ltd the loan given to the appellant is explained with the share capital and share premium. If the share holders of lender company have deposited cash in their respective bank accounts, before issue of cheque in favour of lender - company, the corresponding action lies in the hands of those share hol .....

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d. There is no evidence on record to establish that there were collusive transactions between the appellant, M/s Raj Capital & Finance Pvt Ltd and the share - holders / directors of M/s Raj Capital & Finance Pvt Ltd. If the share - holders of M/s Raj Capital & Finance Ltd or directors of the said company did not comply with the summons issued, the assessing officer was vested with the statutory powers to enforce compliance. Even after ensuring compliance, if those persons had failed .....

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t the concern of the appellant. Considering the same and the ratio of the judgments (supra ) relied upon by the appellant the addition made by the assessing officer is deleted and the ground no. 1 of the appellant is allowed. 5. We have heard both the parties. There is no dispute so far as identity of the creditor party M/s. Raj Capital & Finance Pvt. Ltd. is concerned. There is further no quarrel that the Assessing Officer does not dispute the fact that the assessee has not availed any cash .....

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