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2018 (4) TMI 793

company of ₹ 33 lakhs. The book results of the assessee-company have not been disturbed by the A.O. The decision in the case of CIT vs. Ritu Anurag Aggarwal (2009 (7) TMI 1247 - DELHI HIGH COURT) 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, therefore, when amount is surrendered subsequently for taxation, at the best, it could be a tax neutral exercise. Considering all no justification to sustain the addition. - Decided in favour of the assessee-company. - Addition u/s 68 in respect 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 cas .....

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ount and the same continued to be recognised as liability. In support of its contention, the assessee-company relied upon the decision of the Hon ble Delhi High Court in the case of CIT vs. Shri Vardhman Overseas Ltd., (2011) 343 ITR 408 (Del.), Decision of Gujarat High Court in the case of CIT vs. Bhogilal Ramjibhai Atara (Guj.). The assesseecompany argued before the Ld. CIT(A) the applicability of Section 41(1) clearly states that amounts should be written-off in the book before liability can cede and take form of income for the assessment relevant to financial year in which amount has been written off. The amount has been written off in subsequent financial year. However, A.O. has added the same under section 68 of the I.T. Act. The Ld. CIT(A) noted that no information has been furnished in respect of this party. Therefore, 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 aut .....

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ment order also mentioned that assessee-company filed the details and documents and case have been discussed with the assessee-company. The assesseecompany submitted before the Ld. CIT(A) that Section 41(1) would not apply because the liability have not been written back in the account. This fact is also not disputed by the authorities below. Copy of the ledger account is also filed on record which shows that during assessment year under appeal there were many transactions conducted between assessee-company and M/s. Transearch Consultations Pvt. Ltd.. This party/creditor has transferred ₹ 33 lakhs on different dates in the account of the assessee-company through banking channel and similarly there are 04 debit entries of ₹ 15 lakhs and the amount of ₹ 18 lakhs was credit closing 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 ot .....

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e M/s. Marry Gold Overseas Limited no revenue from operation is shown and against the claim of other income of ₹ 41,53,247/-, the expenses of ₹ 10,06,022/- have been claimed showing the net profit of ₹ 31,47,225/- as against the gross total income in the ITR shown at ₹ 19,36,810/-. Similarly, in the case of M/s. Maple Technologies Ltd., no revenue operation has shown and against the claim of other income of ₹ 52,58,510/-, expenses of ₹ 14,11,776/- have been claimed, leaving net profit of ₹ 38,47,744/- against this income shown in the return of income of ₹ 27,02,018/-. There is no fixed assets in the balance-sheet and there is no accumulated loss. In the bank statement of M/s. Maple Technologies Ltd., furnished for the period starting 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. I .....

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.) (2015) 64 taxmann.com 329 (Del.) (HC) (ii) CIT vs. Vrindavan Farms Pvt. Ltd., ITA.No.71/2015 dated 12th August, 2015 (Del) (HC) (iii) Nemi Chand Kothari vs. CIT and Another (2003) 264 ITR 254 (Gau.) (HC) (iv) CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC) 9.1. It was further submitted that in the case of M/s. Marry Gold Overseas Limited, the amount have been repaid in subsequent year. Therefore, it is not a case of unexplained credit. In the case of M/s. Maple Technologies Ltd., the amount has been written back and credited to other income. Therefore, it could not be undisclosed income. 10. Ld. CIT(A) however noted that the bank account of the lenders shows that the amount have been advanced on specific dates. On the 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 t .....

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ddition is liable to be deleted. 12. On the other hand, Ld. D.R. relied upon the orders of the authorities below and submitted that there was no fixed assets or the creditors and submitted that where mutual transactions were conducted through banking channel is no ground to consider the same as genuine transaction. He has relied upon decision of the Hon ble Supreme Court in the case of Suman Gupta vs. CIT 2013-LL-0122-69 (SC) confirming judgment of Hon ble Allahabad High Court in the case of Suman Gupta vs. ITO (Order dated 07.08.2012 in ITA.No.680/12) in which cash was found deposited in the account of the creditor. Similarly, the Ld. D.R. relied upon the decision of Hon ble Gujarat High Court in the case of Blessing Construction 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 .....

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s Ltd., the assessee-company written back the amount in subsequent year and shown its income. Therefore, it would amount to double addition in assessment year under appeal. It is well settled law that assessee-company cannot be asked to prove source of the source. Even then the Director of both the companies in his statement confirmed that source of giving loans to the assesseecompany was advanced return by M/s. Divine Infracon Pvt. Ltd. However, the A.O. did not believe the explanation of the creditor because copy of the Rent Agreement was not filed. The A.O. has summoned both the creditors under section 131 of the I.T. Act in order to verify the genuineness of the transaction in the matter. The A.O. may ask the creditor 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 inferen .....

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r to prove the contrary. The failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said loan amounts to the assessee, could not, under the law be treated as the income from undisclosed sources of the assessee himself when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. The Assessing Officer failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, had actually been received by the subcreditors from the assessee. Therefore, the Assessing Officer have treated the said amounts as income derived 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 a .....

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lowed the interest claimed/paid in relation to these credits in the assessment year under consideration or even in the subsequent years and tax had been deducted at source out of the interest paid/credited to the creditors, the Tribunal held that the Departmental authorities were not making the addition of ₹ 12,85,000. On appeal to the High Court : Held, that considering the facts and circumstances of the case narrated by the Tribunal and the law explained by it, the appeal was liable to be dismissed. 14.5. The Hon ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against this Judgment reported in (2002) 254 itr (St.) 275. 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 .....

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