TMI Blog2021 (1) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... rthiness and genuineness of the transaction with the same creditors in subsequent assessment year as well, it s stand proved on record that there were no justification for the authorities below to make any addition against the assessee-company. In view of the above discussion, we set aside the orders of the authorities below and delete the entire addition - Decided in favour of assessee. - ITA.No.6448/Del./2016 - - - Dated:- 22-1-2021 - Shri Bhavnesh Saini, Judicial Member And Shri O.P. Kant, Accountant Member For the Assessee : Shri Mayank Patawari, C.A. For the Revenue : Ms. Nidhi Srivastava, CIT-DR ORDER PER BHAVNESH SAINI, J.M. This appeal by assessee has been directed against the order of Ld. CIT(A)-2, New Delhi Dated 31.08.2016 for the A.Y. 2007-2008 on the following grounds : 1. That the order of the Ld. CIT (A) is bad in law and is against the facts and circumstances of the case. 2. That having regard to the facts and circumstances of the case the Ld. CIT (A) has erred in confirming the addition made u/s 68 amounting to ₹ 36,19,25,209/- and ₹ 12,29,99,000/- credited in the names of Altar Investment (P) Ltd. and Ilac Investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal. On this ground, the Tribunal noted in its finding that assesseecompany has filed ledger of the creditors, their PAN, confirmations. The A.O. had not shown the envelope to the assessee and what was the report of non-service of notice under section 133(6) of the I.T. Act, 1961. The audited copies of the accounts of both the creditors were also available on record and they were having sufficient capital with them. In these circumstances and evidences on record, the Departmental Appeal were dismissed on this ground. 3.3. The Revenue further preferred an appeal before the Hon ble Delhi High Court in Income Tax Appeal No.3 of 2015 which was decided vide Judgment Dated 20.04.2015 and the matter has been remanded to the Ld. CIT(A) with a direction to the Ld. CIT(A) that he should enquire into the matter placed on record and should consider them. The additional documents produced by the assessee-company were directed to be taken on record and shall be duly considered. The findings of the Hon ble Delhi High Court are reproduced as under : Counsel for the assessee relied upon the findings of the CIT (A) and the ITAT and stated that relevant details in the form of the ITRs as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, confirmed the addition vide impugned order mainly on the reasons that assesseecompany has not produced the copy of the bank statements of both the creditors, therefore, the source of the funds available to them could not be verified. The findings of the Ld. CIT(A) in paras 5.1 and 5.2 of the impugned order are reproduced as under : 5.1. In compliance of the above directions of the Hon ble jurisdictional High Court, the appeal was fixed for hearing vide notice dated 15.07.2015 and subsequent notices. The AR of the appellant has filed a paper book running into 96 pages, along with his submissions and copies of ledger accounts of M/s. Ilac Investment Pvt. Ltd. and M/s. Altar Investment Pvt. Ltd. in the books of the appellant for A.Ys. 2005-06 to 2010-11. Perusal of the ledger accounts for the assessment year under appeal i.e. for F.Y. 2006-07 reveals that M/s. Ilac Investment Pvt. Ltd. made payments aggregating to ₹ 15,67,00,000/- to the appellant during the year and after taking into account the opening debit balance of 20.45 lacs and payments made by the appellant to the aforementioned party, it remained a creditor of the appellant for an amount of ₹ 12,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany when M/s. Ilac Investment Pvt. Ltd. itself paid interest/financial charges of ₹ 67,05,271/- has not been explained. Therefore, I am of the view that even after consideration of the documentary evidence furnished by the appellant before the CIT (A), the creditworthiness of M/s. Ilac Investment Pvt. Ltd. and the genuineness of the transactions remains unproved. 5.2. Coming to the evidences filed in respect of M/s. Altar Investment Pvt. Ltd.,. it is observed that the company was a creditor of the appellant at the beginning of the F.Y. 2006- 07 to the tune of ₹ 15,70,000/- and made payments worth ₹ 44,86,50,000/- to the appellant during the year and after taking into account some payments made by the appellant to the company, it was a creditor of the appellant company to the tune of ₹ 36,19,25,209/- as on 31.03.2007. Perusal of the final accounts of the company reveals that it had share capital of ₹ 4.90 crores, reserves and surplus of ₹ 2.48 crores and current liabilities and provision to the tune of ₹ 39.55 crores (which went up steeply from ₹ 34.36 lacs in the preceding year). Against this, the appellant company stood a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-company has filed paper book containing 96 pages before the Ld. CIT(A), copy of which is also placed on record, which specifically shows that assessee company filed copy of the bank statements of both the creditors before the authorities below, copies of the same are also available in the paper book of 96 pages filed before the Ld. CIT(A) as well. Learned Counsel for the Assessee also referred to copies of the confirmations, ledger accounts, PAN, balance-sheets and bank statements of both the creditors to show that both the creditors are having sufficient means to give loan to the assessee-company who are interconnected parties with the assessee-company and these were inter-corporate loans for making further investments. He has submitted that since all the transactions were carried-out through banking channel, therefore, assessee-company has proved the creditworthiness of the creditors and genuineness of the transaction in the matter. He has submitted that assessment of the assessee-company for A.Ys. 2005-2006 to 2012-2013 except for A.Y. 2010-2011 were completed under section 143(3), but, no addition on account of amount outstanding in the names of these creditors was ever made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d above. The Ld. CIT(A) confirmed the addition mainly on the reason that assessee-company did not place on record the copy of the bank statements of both the creditors, therefore, the source of the funds with the assessee-company out of which it advanced money to the assessee-company could not be ascertained and that why the assessee-company has debited the interest on financial charges to the profit and loss account. The reason given by the Ld. CIT(A) are wholly incorrect and without any basis. The findings of the Hon ble Delhi High Court is reproduced above, in which submissions of the Learned Counsel for the Assessee have been recorded that relevant details in the form of balance-sheet, profit and loss statement, bank statements etc., are part of the record which was sought to be produced under Rule 46A of the Income-Tax Rules. The Hon ble Delhi High Court in its finding have specifically mentioned that assessee-company has produced copy of the balance-sheet, profit and loss statement and bank statement pertaining to both the creditors before the Ld. CIT(A). The Ld. CIT(A), therefore, directed to look into these additional evidences on record and enquire into the same and dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, the debit balance was of ₹ 15.70 lakhs and this creditor made payments worth ₹ 44,86,50,000/- to the assessee-company in assessment year under appeal and after taking some payments made by the assessee-company to this creditor, it was a creditor of the assessee-company to the tune of ₹ 36,19,25,209/- as on 31.03.2007 [PB-37]. The balancesheet of this creditor shows it has share capital of ₹ 4.90 crores, Reserve and Surplus of ₹ 2.48 crores and current liabilities and provisions to the tune of ₹ 39.55 Crores [PB- 39]. The name of the assessee-company is appearing in their books of account [PB-46]. PB-36 is reply of the assessee-company before the Ld. CIT(A) in which assesseecompany has specifically explained that assessments of the assessee-company have been completed under section 143(3) for the A.Ys. 2005-2006 to A.Y. 2012-2013 except for the A.Y. 2010-2011, but, no additions have been made on account of amount outstanding in the names of these two creditors and no addition was made except in assessment year under appeal. The submissions of the assesseecompany have not been contradicted by the Ld. CIT(A) through any evidence on record. The L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the Ld. CIT(A) is incorrect as noted above because copies of the bank statements are part of the record before her, moreover, it is well settled Law that assessee need not be asked to prove source of the source. We rely upon the Judgment of the Hon ble Delhi High Court in the case of Dwarakadhish Investment P. Ltd., [2011] 330 ITR 298 (Del.), Judgment of Hon ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj.) and Judgment of Hon ble Allahabad High Court in the case of Zafar Ahmed Co., 30 taxmann.com 269 (Alld.). 7.3. Considering the totality of the facts and circumstances of the case, it is clear that in the ledger account of both the creditors there are loans given to the assessee-company as well as assessee paid back the amounts to them. The debit of financial charges to the profit and loss account is not a relevant criteria to consider under section 68 of the Income Tax Act, 1961. Bank statements are part of the record which also did not show if any cash have been deposited in the bank accounts of the creditors for giving loan to the assessee-company. Their bank accounts clearly show that both the creditors have sufficient funds in their ban ..... 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