TMI Blog2018 (4) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of unsecured loans from M/s. Maple Technology Ltd., and M/s. Marry Gold Overseas Limited - Held that:- As the assessee-company proved the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. The decisions relied upon by the Ld. D.R. do not support the case of the Revenue - no justification to sustain the addition - ITA.No.6507/Del./2017 - - - Dated:- 13-4-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Shri R.S. Singhvi, Advocate Fo The Revenue : Shri Kaushlendra Tiwari, Sr.DR ORDER PER BHAVNESH SAINI, J.M. This appeal by assessee has been directed against the order of the Ld. CIT(A)-43, New Delhi, dated 22nd September, 2017, for the A.Y. 2013-2014. 2. Briefly, the facts of the case are that the assesseecompany filed return of income declaring loss of ₹ 5,30,72,598/- and paid taxes at the book profit of ₹ 6,42,609/-. The nature of business of assessee-company is civil construction as contractor and real estate development. The assessee-company filed required details before A.O. at assessment stage which have been examined by A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, onus upon assessee-company had not been discharged to prove the genuineness of the amount in question. The argument that amount have been written back in subsequent year proves that amounts were not genuine in the first place. The Ld. CIT(A) accordingly confirmed this addition. 5. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that Section 68 is not applicable in respect of trade creditor and relied upon decision of the Hon ble Delhi High Court in the case of CIT vs. Ritu Anurag Aggarwal (2010) 02 taxmann.com 134 (Del.) in which it was held as under : 3. This finding of Assessing Officer remained undisturbed before the CIT(A) as well and has been accepted by the ITAT. Proceeding on this basis, the ITAT observed that the sales, purchases as well as gross profits as disclosed by the assessee have been accepted by the Assessing Officer. 4. Once this is accepted, we are of the opinion that the approach of the ITAT was correct inasmuch as the Assessing Officer did not consider this aspect while making additions of the sundry creditors under section 68 of the Income Tax Act. As there was no case for disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losing balance at the end of the year. On 31st March, 2014, the same amount was written off in the books of account and has been offered for taxation. These facts would support the explanation of assessee-company that amount in question was received through banking channel and there are various entries between the parties and only addition was made of the closing balance without disturbing the other entries in the account of the creditor. Addition of closing balance was, therefore, not justified on facts of case. Otherwise, the A.O. should have made full addition against the assesseecompany of ₹ 33 lakhs. The book results of the assesseecompany have not been disturbed by the A.O. The decision in the case of CIT vs. Ritu Anurag Aggarwal (supra) would support the case of the assessee-company. The assessee-company has also written back the amount in question in subsequent year which is also supported by the ledger account of this party. Since the assessee-company has offered the same amount for taxation in subsequent year, therefore, if the said addition is maintained in the assessment year under appeal, it would amount to double addition. Otherwise also, it is a case of loss, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g from 03rd October, 2012 to 28th March, 2013 for about six months, there are transactions totaling into more than ₹ 10 crore which are neither justified by the receipt of ₹ 52.85 lakhs shown in the P L A/c nor by the size of its balance-sheet totaling to ₹ 3.84 crores. In the case of M/s. Marry Gold Overseas Limited only one page bank statement for March, 2013, has been furnished. It is not only the volume of transactions but also manner of debits and credits reflected in the bank statements only to speak out one thing that they are receiving funds in round figures. The A.O. therefore, issued summons under section 131 of the I.T. Act to the creditor Shri Hitesh Garg, claimed to be the Director in both the Companies, who attended the proceedings before A.O. and his statement was recorded on oath under section 131 of the I.T. Act and he confirmed source of the amount was received on return of advances given to M/s. Divine Infracon P. Ltd. He informed that these advances were given against property in respect of which they were receiving rental income on regular basis. However, copy of the agreement was not furnished. The reply of the assessee-company was called f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of the amount is transferred, just prior to the transfer, there is a deposit of the same amount in the account. The Ld. CIT(A) accordingly dismissed this ground of appeal of assessee-company. 11. Learned Counsel for the Assessee reiterated the submissions made before the authorities below. He has submitted that addition have been made without appreciating the facts and material on record. Loans were raised from corporate entities and their identity is not disputed. The loans were taken through account payee cheque and interest was also paid on such loans after deduction of TDS. The A.O. made investigation directly from the creditors under section 133(6) of the I.T. Act, who have confirmed giving loans to the assesseecompany with supporting documents. The A.O. also recorded statement of the Director under section 131 of the I.T. Act in which he has confirmed giving loans to the assessee-company. The assessee-company furnished all the documentary evidences of confirmations of loans on record which support the explanation of assessee-company of receipt of genuine amount in question. No cash was found deposited in the account of the creditors. The authorities below have not d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction vs. ITO (2013) 214 Taxman 645 (Guj.) in which it was found that where sizable amounts were deposited in cash in account of the depositors only before their withdrawal through cheques in favour of assessee, addition was justified. 13. We have considered the rival submissions. The A.O. found that there are fresh credits received by assessee-company from two creditors mentioned above. The assessee-company furnished copy of the ledger account, copies of their bank statements. The A.O. then issued notice under section 133(6) of the I.T. Act to both the creditors and both the creditors in their replies filed before A.O. confirmed giving of loans to the assessee-company which is supported by confirmed copies of their accounts, bank statements, ITR and balance-sheet. The A.O. however, noted that the creditors do not have any fixed assets or trade debtors/trade creditors and there were no revenue from the operation. The A.O. therefore, in order to verify the transactions, issued summons under section 131 to both the creditors and their common Director Shri Hitesh Garg who appeared before the A.O. in response to summon and confirmed the giving of loans to the assessee-company in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to explain the source but assessee-company cannot be asked to explain the source of the source. Since Shri Hitesh Garg was summoned as witness of the Department and in case, he did not produce the Rent Agreement subsequently, A.O. should explain as to what steps have been taken by the him against this witness of the Department for production of the Rent Agreement as per law. Therefore, if the A.O. has not taken any steps against his own witness, no adverse inference should be drawn against the assessee-company. Thus, the sole basis left for consideration is that Revenue doubted the creditworthiness of the creditors because of the low income reflected in their return of income and that they have no fixed assets or debtors or creditors. However, A.O. has not undertaken any investigation of the veracity of the documents submitted by the assessee-company. The bank statement of the creditors show that both creditors were having sufficient amounts in their bank accounts for giving loans to the assessee-company. The A.O. have not made any investigation and nothing has been brought on record if the amount of loan given by both the creditors actually received from the coffers of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee from undisclosed sources. 14.3. The Hon ble Delhi High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) in which it was held as under: Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. No substantial question of law arose. 14.4. The Hon ble Gujarat High Court in the case of DCIT vs. Rohini Builders (2002) 256 ITR 360 (Guj.) held as under : The assessee was a firm, engaged in the business of dealings in land. During the assessment year under consideration the assessee had taken loans from various parties and during the course of assessment proceedings, the assessee had furnished the loan confirmations giving full addresses, G1R numbers/permanent account numbers, etc., of all the depositors. The Assessing Officer however issued summons to some of the creditors and also conducted inquiries into the genuineness or otherwise of the loans taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. The decisions relied upon by the Learned Counsel for the Assessee squarely apply to the facts and circumstances of the case. Thus, the assessee-company proved the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. The decisions relied upon by the Ld. D.R. do not support the case of the Revenue. In view of the above discussion and evidence and material on record, we do not find any justification to sustain the addition. We, accordingly, set aside the orders of the authorities below and delete the addition of ₹ 5 crores. This issue is decided in favour of the assesseecompany. ISSUE NO.3 : 16. The A.O. while making the addition under section 68 of the I.T. Act noted that the same would be taxed separately under the provisions of Section 115BBE as the same would not be reduced from the claim of business losses. Though both the parties have made their respective contentions on this issue regarding applicability of these provisions to the case of assessee-company, however, we are of the view that since we have deleted the additions under section 68 of the I.T. Act, therefore, this issue is left with academic discussion ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
