TMI Blog2020 (8) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. - ITA No.4332/Del/2015 - - - Dated:- 18-8-2020 - Shri R.K. Panda, Accountant Member And Shri Sudhanshu Srivastava, Judicial Member For the Assessee : Shri Ajay Vohra, Sr. Advocate, Shri Rohit Jain, Advocate And Ms Deepashree Rao, CA For the Revenue : Ms Rakhi Vimal, Sr. DR ORDER PER R.K. PANDA, AM: This is an appeal filed by the assessee against the order dated 9th March, 2015 passed by the CIT(A), Muzaffarnagar relating to the A.Y. 2010-11. 2. Facts of the case, in brief, are that the assessee is a society engaged in the business of manufacturing of soap. It filed its return of income on 31st August, 2010 declaring the total income at ₹ 9,84,900/-. During the course of assessment proceedings, the AO noted from the balance sheet that there was an increase of ₹ 1,88,25,151/- during the year under consideration which consists of ₹ 90 lakhs received by the Society from M/s Baldev Promoters Pvt. Ltd., B-15, 2nd Floor, Main Road, Shalimar Vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO to prove the credit worthiness of Shri Gulab Chand Verma, Shri Pratap Singh Negi expressed his inability. Since the company failed to produce the director and the assessee also failed to furnish the personal return of the director, electricity bill, rent agreement and all other annexures of balance sheet, etc., the AO disbelieved the investment made by M/s Baldev Promoters Pvt. Ltd. While doing so, he further noted that the income of M/s Baldev Promoters Pvt. Ltd., for A.Y. 2008-09 was only ₹ 12,300/-. The AO further doubted the genuineness of the company on account of the following:- (i) There are frequent transfers of money in the bank account of the company. (ii) The director who is maintaining the bank account is not signing the ITR of the company in as much as the confirmation has been given by any other person with regard to advancing of the loan. (iii) Neither the Managing director Sh. Gulab Chand Verma has been produced nor his creditworthiness of becoming a director in the company has been established. Even the copy of ITR of Sh. Verma or the current Director has not been furnished. (iv) The assessee failed to furnish the annexures of the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h such order, the assessee is in appeal before the Tribunal raising the following grounds:- 1. That the CIT(A) erred on facts and in law in upholding the action of the assessing officer in assessing the income of the appellant at ₹ 1,24,84,900 as against income of ₹ 9,84,900 declared by the appellant. 2. That the CIT(A) erred on facts and in law in not admitting additional evidences filed by the appellant under Rule 46A of the Income Tax Rules, 1962 ( the Rules ), which were extremely crucial for adjudication of the issues raised in the appeal. 3. That the CIT(A) erred on facts and in law in confirming the addition of ₹ 90,00,000 made by the assessing officer, being unsecured loan received from M/s. Baldev Promoters Pvt Ltd., as alleged unexplained cash credit under section 68 of the Income Tax Act, 1961 ( the Act ). 3.1 That the CIT(A) erred on facts and in law in holding that the appellant was not able to establish identity and creditworthiness of the creditor and genuineness of the transaction, in total disregard of the contemporaneous evidences filed by the appellant. 3.2 That the CIT(A) erred on facts and in law in affirming the action of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting for the personal attendance, however, the said notice nowhere specifically required personal attendance of the director of the said company. He submitted that in response to the aforesaid summon, Mr. Chandra Mohan Negi, employee of the loan creditor had appeared before the AO whose statement was recorded. Further, summon issued by the Assessing Officer u/s 131 of the Act to the bank of the lender M/s Baldev Promoters Pvt. Ltd., was duly responded by the bank by furnishing the requisite details as asked by him. He submitted that the assessee has successfully discharged its initial onus in terms of section 61 of the Act in so far as the identity and credit worthiness of the loan creditor and genuineness of the transaction in respect of M/s Baldev Promoters Pvt. Ltd. He submitted that mismatch if any in the photograph of Mr. Gulab Chand Verma, has no correlation whatsoever with the loan transaction undertaken by the assessee. He submitted that Shri Gulab Chand Verma was the earlier/initial director and was no longer associated with the company w.e.f. 26th March, 2010 after his resignation as a director. So far as the allegation of the AO that there was frequent transfer of the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said year. Further, the company, M/s Baldev Promoters Pvt. Ltd. has declared substantial interest income since A.Y. 2010-11 onwards which has only been increasing on a year to year basis. 11. So far as the allegation of the AO that the company has reported meagre income in its income tax returns is concerned, the ld. Counsel for the assesseee relied on various decisions and submitted that so long as the lender has sufficient sources at his disposal, meagre income is not relevant. 12. So far as the allegation that Mr. Pratap Singh Negi, the employee of M/s Baldev Promoters Pvt. Ltd. was not aware of Shri Gulab Chand Verma and is not aware whether Mr. Verma is assessed to tax or not is concerned, he submitted that this is totally irrelevant since the employee joined the company only recently whereas Shri Gulab Chand Verma resigned much earlier in March, 2010. Referring to the order of the CIT(A), he submitted that the ld.CIT(A), without considering the contemporaneous documents filed before him proceeded to confirm the addition made by the AO by incorrectly relying on the decision of the Hon ble Delhi High Court in the case of CIT vs. Nova Promoters Finlease (P) Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of such enquiry were not shared/provided to the assessee. As regards the allegation that the bank account of Mr. Raju Khan was closed after undertaking loan transaction is concerned, he submitted that no adverse inference can be drawn against the appellant merely because the account from which loan amount was disbursed was subsequently closed. He submitted that the loan was repaid in F.Y. 2012-13 through normal banking channel. Relying on various decisions, he submitted that the addition made by the AO and sustained by the CIT(A) should be deleted. 17. The ld. DR, on the other hand, heavily relied on the order of the AO and the CIT(A). He submitted that for accepting any cash credit u/s 68 of the Act, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the loan creditor and genuineness of the transaction. He submitted that the assessee, in the instant case had not filed sufficient documents to substantiate successfully the identity and credit worthiness of the loan creditor and the genuineness of the transaction. Referring to various observations made by the AO, the ld. DR sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it has filed contemporaneous documents to prove the identity and credit worthiness of the loan creditors and genuineness of the transaction and, therefore, the same should have been accepted and no addition should have been made. It is also his submission hat in the case of Shri Raju Khan, certain additional evidences were filed before the CIT(A) and the CIT(A) without accepting those vital documents which are crucial for deciding the issue sustained the addition. 19. It is the settled proposition of law that for accepting any cash credit as genuine, the onus is always on the assessee to substantiate with evidence to the satisfaction of the AO regarding the identity and credit worthiness of the loan creditor and genuineness of the transaction. In the instant case, no doubt, the assessee has filed some papers/documents before the AO. However, the assessee company failed to produce the directors of M/s Baldev Promoters Pvt. Ltd., and Shri Raju Khan. The source of Shri Raju Khan to extend such huge amount was also not substantiated. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO wi ..... 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