TMI Blog2019 (2) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... i Lata Bhargav, Shri Prateek Ahluwalia, Shri Sarin Kumar, M/s T.S. Sethi & Sons, M/s C.S. Sethi & Sons and M/s G.S. Sethi & Sons. Thus, additions in their cases cannot be made in the hands of the assessee. The disallowance of interest is also deleted. In the case of Smt. Kamini Ahluwalia-(2), it is not in dispute that prior to giving loan to the assessee there were cash deposits of the equivalent amount of the credit in her bank account. There were insufficient bank balances in her account for giving loan to the assessee. In case of credit entry of ₹ 3 lakhs on 12.11.2010 cash was deposited for clearance of the cheque on 15.11.2010. These facts clearly support the findings of the authorities below that transaction of the assessee with Smt. Kamini Ahluwalia was not genuine. We confirm the addition of ₹ 9 lakhs on account of unexplained credit in case of Smt. Kamini Ahluwalia. The proportionate disallowance of interest in this case is also confirmed - Decided partly in favour of assessee. - ITA No. 2372/Del/2016 - - - Dated:- 12-2-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Assessee : Shri Kapil Goel, Adv. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Shri Sarin Kumar 8,00,000/- Return Income- ₹ 1,59,103/- Source of credit entry dated 20.10.2010 of ₹ 8,10,000/- (before 2/3 days of cheque issued) was not explained. 5. M/s T.S. Sethi Sons 9,50,000/- Return Income- ₹ 9,31,040/- Source of credit entry dated 12.04.2010 of ₹ 4,00,000/- (before 2/3 days of cheque issued) was not explained. 6. M/s C.S. Sethi Sons 9,50,000/- Return Income- ₹ 9,31,000/- Source of credit entry dated 12.04.2010 of ₹ 4,00,000/- (before 2/3 days of cheque issued) was not explained. 7. M/s G.S. Sethi Sons 10,00,000/- Return Income- ₹ 11,24,130/- Source of credit entry dated 03.06.2010 of ₹ 5,00,000/- (before 2/3 days of cheque issued) was not explained. Total 58,50,000 3. The AO, accordingly, noted that creditworthiness of the creditors and genuineness of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. Assessee relied upon several decisions to prove that genuine credits have been received. The assessee also relied upon decision of the Gujarat High Court in the case of DCIT vs. Rohini Builders 256 ITR 360 in which it was held that assessee cannot be asked to prove source of the source. As regards, the interest paid to the creditors it was submitted that addition is wholly unjustified. 5. The Ld. CIT(A) after considering the issue in detail similarly noted that in the cases of the creditors there is a low income declared and that except in the case of Smt. Kamini Ahluwalia there are clearance of cheques and thereafter, amounts have been transferred to assessee. In the case of Smt. Kamini Ahluwalia there is a deposit of the cash of ₹ 9 lakhs before giving loan to the assessee. In the cases of M/s T.S. Sethi Sons, M/s G.S. Sethi Sons M/s C.S. Sethi Sons, they have declared income from other sources for which there is no explanation. Ld. CIT(A) also noted that the creditors did not appear before AO, therefore, both the additions were confirmed. 6. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow and submitted that none of the creditor appeared before AO. No source of income have been filed. Both the Sethis are connected with the assessee but failed to appear before the AO, therefore, additions may be confirmed. 9. We have considered the rival submissions and perused the material available on record. 9.1. ITAT Delhi G Bench in the case of M/s Topline Buildtech Pvt. Ltd. vs. DCIT (supra) held in para 13 to 15 as under: 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 assesseecompany 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, issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 inference should be drawn against the assesseecompany. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the hands of the creditors from the hands of the subcreditors, 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 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined 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 below and delete the addition of ₹ 5 crores. This issue is decided in favour of the assessee-company. 10. In this case, it was considered that low income of the creditor would not be a ground to doubt the creditworthiness of the creditors. Similar views have been taken by ITAT Delhi E Bench in the case of ACIT vs. Smt. Meenu Chauhan (supra) in which also it was held that the majority of the creditors are Income tax assessees, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. 1,3,4, 5,6 7. The disallowance of interest is also deleted. 12. However, in the case of Smt. Kamini Ahluwalia-(2), it is not in dispute that prior to giving loan to the assessee there were cash deposits of the equivalent amount of the credit in her bank account. There were insufficient bank balances in her account for giving loan to the assessee. In case of credit entry of ₹ 3 lakhs on 12.11.2010 cash was deposited for clearance of the cheque on 15.11.2010. These facts clearly support the findings of the authorities below that transaction of the assessee with Smt. Kamini Ahluwalia was not genuine. In the cases of Smt. Suman Gupta vs. ITO 138 ITD 153, ITAT Agra Bench took the adverse view in the similar circumstances because the equivalent amount of the credits were deposited in cash in the bank account of the creditor and explanation of the assessee has been rejected. The order of the Tribunal has been confirmed by dismissing the appeal of assessee by the Hon ble Allahabad High Court in ITA No. 680/2012 dated 07.08.2012. The Hon ble Gujarat High Court in the case of M/s Blessing Construction vs. ITO 32 taxmann.com 366 held that where sizeable amounts were deposite ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
