TMI Blog2018 (2) TMI 1702X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-2018 - SHRI B. P. JAIN, ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER For The Appellant : Sh. Kaushalendra Tiwari, Sr.D.R. For The Respondent : Sh. Salil Agarwal, Adv. Sh. Shailesh Gupta, Adv. Sh. Madhur Agarwal, Adv. ORDER PER BEENA A PILLAI, JUDICIAL MEMBER The present appeal has been preferred by revenue against order dated 29/05/12 passed by Ld.CIT(A)-27, New Delhi for assessment year 2009-10 on the following grounds of appeal: 1. That the ld.CIT(A) had erred in law and on facts by observing that section 68 is not applicable on the instant case. 2. That the Ld.CIT(A) has committed a grave error in observing that the creditworthiness of the loan givers has been adequately established by the assessee. 3. That the Ld.CIT(A) has erred in not appreciating the real motive behind the loan giving transaction and that by taking too pedantic a view, the order passed by the Ld.CIT(A) is erroneous legally and factually. 4. That the Ld.CIT(A) has not taken cognizance of the surrounding fact and circumstances governing the loan transaction and that by failing to do so, a serious infirmity has crept into his order which c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors under section 68 of the Act and accordingly assessee was asked to file the ITRs, bank statements and confirmed copy of accounts of all the loans given in respect of fresh unsecured loan raised during the year from the lenders. He was also directed to establish their identity, creditworthiness and genuineness. In response to the query raised by Ld.AO, assessee submitted the copy of accounts with M/s Tarunika Gaur Housing and Construction Ltd, i.e. profit and loss account of share trading business, balance sheet and ITR of M/s Tarunika Gaur Housing and construction Ltd. 2.3. Assessee submitted that the creditors were his relatives and friends working with him. It was submitted that since 2004-05, business activity in Delhi and NCR area was going on very fast, and investment in business was also needed to be replenished, for which assessee requested the above referred people to help financially. 2.4 . Assessee was further asked to provide copies of ITR in respect of unsecured loans raised from each lender and also directed to establish their creditworthiness and genuineness as proposed under section 68 of the Act. In response to the same assessee vide letter dated 02/11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.54% shareholding in M/s. Tarunika Gaur Housing Construction Ltd. He observed that this company has made numerous payments to assessee for which an explanation was sought in a proposal to invoke section 2 (22) (e) of the Act. Assessee in response submitted that all these payments made by this company were repayment of loan given by assessee to the company. Assessee filed books of the companies showing the daily closing balance reflecting that there is no debit balance throughout the year in support of the same. Ld. AO however rejected the submissions advanced by assessee and made addition of ₹ 2,35,78,675/-by invoking provisions of section 2(22)(e) of the Act. 3. Aggrieved by the order of Ld.AO, assessee preferred appeal before Ld.CIT (A) who deleted the addition. 3.1. Aggrieved by the order of Ld.CIT (A) revenue is in appeal before us now. 4. Ground No. 1 - 6 Revenue has alleged that assessee failed to establish three ingredients, as required under section 68 of the Act. Ld. DR submitted that no doubt two parties appeared before Ld. AO and provided confirmation regarding amount given by them to assessee, however assessee has not been able to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence of their creditworthiness and genuineness of the transaction. Specific reference is made to page Nos. 215 268 of paper book of the creditors are for limited period only showing the payment having been disbursed from creditors accounts to assessee with a meagre opening balance. Most of the passbooks statements reveals that the accounts were opened just before the alleged advances having been made to assessee. Therefore according to us, assessee did not discharge the initial onus cast upon, with respect to cash credit by employees and other relatives as per S.68 satisfactorily. Ld.Counsel submitted that lenders Mohit Gaur and Kanishk Gaur appeared before the Ld. AO whose statements were recorded under section 131 of the Act and that these lenders have accepted the fact of giving loans to assessee. He advocated upon the fact that assessee explained the source of giving the said loan which was by way of over draft facility from Allahabad bank. Ld.counsel submitted that these statement have to be considered, of assessee having discharged the initial onus cast upon the assessee to identify the creditors and also prove creditworthiness and genuineness of the transaction. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem to the income of the appellant by observing that the conduct of both these lenders was against prudence and reasonableness. According to the A.O. no prudent person will first take a loan by mortgaging his property and then advance the same to another person. The A.O. confronted his observations to both the lenders in their statement. Sh. Mohit Gaur in answer of this query of the A.O. stated that Sh. Sanjeev Gaur, the appellant, was his cousin brother and was in need of money and he being a family member helped the appellant. Whenever Sh. Sanjeev Gaur will have the money, he will return it back to him. In fact, he had already returned back ₹ 16.00 Lacs and ₹ 34.00 Lacs only was due to him. The A.O. found this reply of the lender puzzling in response to which Sh. Mohit Gaur stated that it was not at all puzzling and he being a member of the family, Sh. Mohit Gaur helped the appellant. Whenever he (Mohit Gaur) will need help, he (Sanjeev Gaur) will help him. Being a member of the family whatsoever he felt justified he did so at that time. Similarly, Sh.Kanishk Sharma, in response to this query submitted before the A.O. that Sh. Sanjeev Gaur, the appellant, was his brot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o without any enquiry in this regard when the appellant had provided complete address of the creditor, copy of his bank account statement and in many cases PAN and copy of acknowledgement for having filed the return of income by the creditor. Moreover the AO has not pointed out or discussed any specific instance of a particular creditor. He has simply made a general observation about cash deposit entries in the bank accounts of these creditors. 15. The case laws relied upon by the A.O. and the appellant are not being discussed in detail as the legal position in respect of cash credits is fairly well established by now. What the assessee is required to do in such cases is to prima facie establish the identity creditors, their capacity to advance the loan to the assessee and the genuineness of the transactions. In the instant case, the appellant had duly discharged his onus by filing the documentary evidence in the form of copy of confirmation, copy of bank account of the creditors, and copy of ITR of most of the creditors. In the case of Sh. Mohit Gaur and Sh. Kanishk Sharma, the AO has recorded their statements also as discussed above. On the basis of copies of acknowledgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maining creditors have not been established by assessee as required u/s 68 of the Act. Thus, in our view, Ld.CIT(A) was wrong in deleting the entire addition. Therefore we confirm the addition to the extent of credit entries other than of Sh.Mohit Gaur and Sh.Kanishk Sharma. Accordingly ground no.1-6 of revenue s appeal stands partly allowed. 5. Ground nos. 7-10:- These grounds have been raised by revenue as the addition has been deleted by Ld.CIT(A) made by Ld.AO u/s 2(22)(e) of the Act. Facts of the issue are that assessee had advanced loan to M/s Tarunika Gaur Housing Construction Ltd. where assessee was a MD and was having 97.54% share holding. Ld.A.O. while perusing details filed by assessee observed that M/s Tarunika Gaur Housing Construction Ltd. had made numerous payments to assessee. On a query raised by Ld.AO, assessee replied that these were repayment of loans advanced by assessee to M/s Tarunika Gaur Housing Construction Ltd. amounting to ₹ 2,35,78,675/-. Ld.AO made addition of the said amount in the hands of assessee u/s 2(22)(e) of the Act. 6 . Aggrieved by the said addition an appeal was preferred before Ld.CIT(A). Ld.CIT(A) decided a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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