TMI Blog2019 (3) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... sh had been paid by the assessee to these parties for availing the loans and had not been able to establish the cash trail at all. On the contrary, the assessee had filed the entire documents, required to establish the identity of the creditors and their creditworthiness, as well as the genuineness of the transaction. CIT(A) had rightly concluded that the loans taken by the assessee were subsequently repaid through banking channels. Thus, if these loans were not genuine, then in that eventuality the same would not have been repaid. Therefore, considering the entirtiy of the facts, the Ld. CIT(A) had rightly held that the assessee had satisfied all the ingredients of cash credit i.e. identity, creditworthiness and genuineness of transactions and accordingly deleted the additions. - Decided in favour of assessee. - I.T.A. No. 5615/Mum/2017 - - - Dated:- 1-3-2019 - Sh. Sandeep Gosain, JM And Sh. N. K. Pradhan, AM For the Appellant : Shri Awangshi Gimson, DR For the Respondent : Shri B. V. Jhaveri Kenin Bothra, AR ORDER PER SANDEEP GOSAIN, JUDICIAL MEMBER: The present Appeal has been filed by the revenue against the order of Commissioner of Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates to challenging the order of Ld. CIT(A) in deleting the addition made by AO u/s 68 of the I.T. Act, therefore we thought it fit to dispose of the same by this common order. 4. Ld. DR appearing on behalf of the revenue relied upon the orders passed by AO and submitted that Ld CIT(A) erred in granting relief with regards to the additions made u/s 68 of the Income Tax Act, 1961 by ignoring the facts that assessee had failed to prove the genuineness of the credits claimed to have availed by them. It was also argued that Ld CIT(A) ignored the facts that creditors who were claimed to have advanced loans were showing mearge income and hence lack of creditworthiness. It was submitted that AO made the additions by relying upon the facts of the present case as some of the parties had not responded to the summons issued by the AO on given dates and thus, the identity and creditworthiness could not be proved, therefore additions were made u/s 68 of the I.T. Act by treating unexplained cash credit to the total income. In this context, Ld. DR relied upon the judgment of Hon ble Delhi High Court in the case of Seema Jain Vr. ACIT (2018) 96 taxaman.com 307 (Del) 5. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter a careful consideration of the same as well as the assessment order. All grounds of appeal are correlated therefore I dealt together for sake of convenience. I proceed to rule as under. 5.1 From the assessment order I find that A.O. made addition u/s. 68 loan taken from following 8parties viz. Divyanshi Gems P. Ltd. Rs, 3,09,00,000/- I-, Manbhawan Exim P. Ltd. Rs, 2,00,00,000/-, Siddham Gems P. Ltd. ₹ 37,00,000/- Radhey Krishna Gems. P. Ltd. ₹ 1,29,00,000/-, Shri Brahma Shakti Gems P. Ltd. ₹ 1,50,00,0001-. Shankeshwar Diamonds P. Ltd. ₹ 2,27,00,000/-, Shri Charbhuja Diamonds P. Ltd. ₹ 2,10,00,000/- and Shri Jagdamba Shakti Gems P. Ltd. ₹ 1,68,00,000 totaling to ₹ 14,30,00,000/-. The addition has been done by treating the same as unexplained cash credit stating that lenders are not genuine because appellant remain failed to produce the parties before the A.O. for verification and identity of the lenders and creditworthiness was not provided by the appellant. The AO came to the conclusion that as the declared income by the respective loan creditors was less they were not capable of lending which has been done by ignoring the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Name of the company Change address With effect from 1 Shree Charbhuja Diamonds Pvt. Ltd. H. No. 5/909, 3rd floor, Gansesh Ashish Ghiya Sheri, Kamnath Road, Mahidharpura Surat, Gujrat-395003 01/07/2013 2. Shankeshwar Gems P. 6/2497, Maze Nine Floor, Office No. 21/08/2014 Ltd M3 Balaji Sadan, Limbu Sheri, Mahidharpura, Surat, 395003 21.08.14 3. Radhey Krishna Gems 6/1766, Sainath Buidling, Gundi Sheri, Mahapura, Surat, Gujrat-395003 29.04.13 All the lenders are Pvt. Ltd. Co. are registered under Companies Act. All the details of company are available on public domain. On the above fact I come to the conclusion that the DDIT(Inv.), Surat has not made adequate enquiry nor any adequate report is taken on record by AO. Only on the basis of the premises closed on one day or notices returned from the postal authority it cannot be acceptable that parties from whom the loans were taken are not in existence or they are bogus. The DDIT(Inv.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the A.O has no other corroborative evidence to show that cash had been paid by the appellant to these parties for availing the loans. An accommodation entry of this nature would perforce require the appellant to part with cash in his hands and obtain a cheque in lieu of the same. The A.O. has not been able to establish the cash trail at all. The appellant has filed the entire documents required to establish the identity of the creditors their creditworthiness, as well as the genuineness of the transaction. The source of the said loans thus stands proven. As has been held in several decisions of superior judicial authorities {MurlidharLahorima! v CIT [280 ITR 512 (guj)] , Labhchand Bohra v ITO [ 219 ITr 571 (Raj)] and CIT v Dwarkadhish Investment Private Limited [299 ITR 268 (Del)], the assessee cannot be called upon to prove the source of the source of his loans. 5.7 The AO has relied on a number of judgements, however the facts of these judgements are completely different as in this case the appellant has proved the identity and creditworthiness of the lender and the genuineness of the transactions. 5.8 As the loans have been subsequently repaid by the appellant th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmations apart from other documents as mentioned above. The record of Ministry of Corporate Affairs was also placed on record to show that the lender companies are alive. The loans, which were taken by the assessee had also been repaid and those details have also been filed by the assessee. In the case of Pr.CIT vs. Paradise Inland Shipping Pvt. Ltd. (supra) the Hon'ble High Court has categorically held that the initial onus is upon the assessee to place on record all the documentary evidences to establish the identity and creditworthiness of the lenders and genuineness of the transactions and when once the assessee produce all the documentary evidences to establish the existence of the said lenders then the burden shifts on the Revenue to establish the case. Similar view was also taken by the Hon'ble High Court in the case of CIT vs. Green Infra Ltd. (supra) wherein it was held as under: - Section 68 of the Income-tax Act, 1961 - Cash credit (Share capital) - Assessment year 2011-12 - Assessee-company offered to sell its shares - Identity of subscribers was confirmed by virtue of Assessing Officer issuing notices to them - Genuineness of entire transaction was record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... got sufficient balance in their account Moreover, amount had also been repaid through account payee cheques In view of above, Commissioner (Appeals), taking a view that loan transactions were genuine, deleted addition made by Assessing Officer Tribunal upheld order of Commissioner (Appeals) Whether on facts, impugned addition made in hands of assessee was rightly deleted Held, yes [Papa 5] [In favour of assessee]. 11. In the case of Varinder Rawlley (supra) the Hon'ble High Court has held as under: - Section 68 of the Income-tax Act, 1961 Cash credit (Sale of goods) Assessment year 2002-23 Whether where assessee received and returned amount in question by way of account payee cheques and transactions were reflected in bank accounts of assessee as well as creditor who was an income-tax assessee, assessee had sufficiently explained nature and source of credit entry and in such case entry could not be treated ass assessee‟s income when department failed to prove to contrary Held, yes [Paras 9 and 10] [In favour of assessee]. In the case of Apex Therm Packaging (P) Ltd. (supra) the Hon'ble High Court has categorically held that when the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose cases are different from the pari material contained in the present case. 14. We also noticed that Ld. CIT(A) had rightly concluded that the loans taken by the assessee were subsequently repaid through banking channels. Thus, if these loans were not genuine, then in that eventuality the same would not have been repaid. Therefore, considering the entirtiy of the facts, the Ld. CIT(A) had rightly held that the assessee had satisfied all the ingredients of cash credit i.e. identity, creditworthiness and genuineness of transactions and accordingly deleted the additions. 15. Moreover, no new facts or contrary judgments have been brought on record before us in order to controvert or rebut the findings so recorded by Ld CIT (A). Therefore, there are no reasons for us to interfere into or deviate from the findings recorded by the Ld. CIT (A). Hence, we are of the considered view that the findings so recorded by the Ld. CIT (A) are judicious and are well reasoned. Resultantly, these ground raised by the revenue stands dismissed. 14. In the net result, the appeal filed by the revenue stands dismissed with no order as to cost. Order pronounced in the open court on 1st March, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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