TMI Blog2021 (5) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... leted. the submission of both the parties, arguments, evidences and find that the ld. CIT (A) has given very cogent reason going through each and every creditors, the copy of ITRs, bank statement, balance sheet, receipt and repayment. No perversity or factual inaccuracies or legal in congruencies could be established. Hence, we decline to interfere with the order of the ld. CIT (A). Deduction u/s 24 - Disallowance of Interest - Miscellaneous Receipts included Rental Receipt - HELD THAT:- A perusal of the facts of the case and the legal position shows that there was no challenge to the fact that the amount was received from M/s HHG Global Pte. Ltd. as Rent, and that the appellate authorities had the jurisdiction to entertain additional claims made before them. In the instant case, the claim for Deduction u/ s 24(a) had been made before the Assessing Officer during the assessment proceedings (though not by revised Return), but by revised Computation of Income, and in view of the fact that the amount in question was basically Rental Receipt, it had to be taxed as Income from House Property and hence the Deduction allowable had to be given to the Appellant. Reliance is being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. Information has been received by the Assessing Officer from the Deputy Director of Income tax (Inv.) Unit-II(3) New Delhi containing the details pertaining to RC-21 22/2008/ SVPS/365 dated 17.08. 2009 from the office of the Director-Cum-Commissioner, Vigilance Gangtok Sikkim. 6. Among the documents seized was a printout of e- mail conversations between the assessee. Sh. Harvansh Chawla (e-mail hchawla@ krcco. com), Michael Boettcher of Storm International. Narinder Grover (e- mail: ngrover@krcco.eom) and one Sh. Ivo Muijser. The subject of these e- mails is payment for 2 licenses and they seem to be related to getting licenses for casino in Sikkim. The e-mails have been exchanged in the month of November and December 2007. In the e-mail conversation there is a mention of remittance of $7,000,000. Sh. Narinder Grover also acknowledges the receipt of this money in his e- mail, further Mr. Michael in his e-mail to Sh. Harvansh Chawla mentions about the refund of the money paid to Sh. Chawla in the situation that the licenses for casino are withdrawn. 7. During the course of assessment proceedings for assessment year 2008-09 summons n/s 131 were issued to the following par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in this regard is reproduced below: Q9. In the e- mail dated 19.12.2007 from Mr. Shri Michael Boettcher (mpb@stormby.com) addressed to you Mr. Michael Boettcher written as below:- Mr. Chawla, Mr. Singh the minister from Sikkim called me today and advised me that you told him you had not received any payment from Storm for the casino license(s). I tried to reach you by telephone without success. I do not have to tell you how disappointed I am especially you have had the opportunity in build something unique and special that would have put Sikkim firmly on the map as well as creating increased employment and visions in the region based on the investments by Storm as well as the possibility of a very positive future business together. I am also advising you on behalf of Mr. Singh to send $2.5 m to Mr. Singh tomorrow. If you not he will (quite correctly in my opinion) to withdraw the casino licence. In the case of the casino license being withdrawn you will be required to return to Storm the full amount of the sum we paid to you plus any interest incurred. Yours sincerely, Michael Boettcher PRESIDENT CEO Storm International B.V. w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Grover as both are independent persons. G. That in Para 4 of show cause notice it is mentioned that the money was received with the knowledge of Shri Harvansh P. Chawla (assessee). Though there was no evidence about the knowledge of the assessee yet mere keeping the knowledge of receiving the money by some independent person (not an agent) does not make the assessee responsible for any taxation. 10. The explanation of the assessee is not accepted by the AO. He held that the assessee has merely denied that the money was received in his bank accounts or in the accounts of any of his concerns. The AO held that no sane person would receive unaccounted income in his accounts or in the accounts of any of the concerns related to him. 11. The AO held that, The email clearly fixes the liability to pay back on Shri Chawla in the event of licenses being cancelled. There is also a mention of the repayment alongwith interest. Thus, Shri Chawla is directly or indirectly the beneficiary of the amount of USD 7,000,000 mentioned in the email. It is a settled legal principal that in a situation where the evidence and preponderance of probability points against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleted the addition. 13. Before us, the respective parties relied on the submissions and information available on record. 14. The submissions of the assessee with regard to this issue before the ld. CIT (A) are as under: On going through the assessment order dated 28.12.2010 para 3, it is evident that certain documents were seized from the residence of one Shri Kunwar Omkar Singh by the Sikkim Vigilance Police which was forwarded to the Investigation wing, New Delhi, and in turn, the DDIT (lnv.) Unit II (3), New Delhi vide letter dated 17.08.2009 forwarded the same to the Id. A. O. The Ld. AO observed that it was a printout of email conversation between Shri Harvansh P. Chawla, Shri Micheal Bochcer of M/ s Strom International, Shri Narender Grover and one Shri Ivo Mujjiser. The subject matter of the emails were, pertaining to licences for casino in Sikkim and remittance of USD 70,00,000. Shri Narender Grover has also acknowledged the receipt of money in his email. With reference to said exchange of email held in November December 2007. The Ld. A.O issued summon u/s 131 to Shri Harvansh P. Chawla (Assessee), Shri Narender Grover and Shri Kunwar Omkar Singh. In respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of alleged receipt of ₹ 28,00,00,000/- as mentioned in the disputed email. However, the Ld. A.0 without appreciating the factual position and legality of the issue, wrongly added ₹ 28,00,00,000/- in the impugned assessment order. Hence, the addition of ₹ 28,00,00,000/- is liable to be deleted. The copy of submission dated 20.12. 2010 is enclosed as Annexure -1. That on going through the emails either incorporated in the assessment order or attached with the assessment order, your goodself will find that nowhere it was mentioned that the appellant had received USD 70,00,000 equivalent to ₹ 28,00,00,000/-. Further, on going through the email dated 22.11.2007 written by Shri Ivo Mujjser to Shri Narinder Grover, it is evident that Shri Ivo Mujjser has instructed to his banker to transfer the amount of USD 70,00,000. In response, Shri Narender Grover replied on 26.11.2007 confirming the receipt of said money. Thus on the basis of email exchange, it appears that Shri Ivo Mujjser has transfer USD 70,000,000 to the bank instructed by Sh. Grover and later on Shri Grover confirmed the receipt of said money. On going through the email exchange, it is evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the sending of email by Shri Narender Grover through the office server of the appellant may be a basis for enquiry, yet, it cannot be a basis for the addition in the case of appellant without having supporting evidences. No doubt, the Ld. A. O has correctly enquired the matter from the appellant by issuing the show cause notices and recording the statement on oath and also by examining the books of accounts and bank pass book etc. Since the Ld. A.O did not find any evidence of receipt of USD 70,00,000, he was required to gracefully accept the appellant submission and not to make any addition on presumption basis. In absence of any supporting evidence, the Ld. A.O was not justified by holding in para 3.8 of the assessment order, thus Shri Chawla is directly or indirectly the beneficiary of the amount of USD 70,00,000 mentioned in the email. However, the Ld. A. O failed to mention as to how Shri Harvansh Chawla was beneficiary of the said amount. The observation of the Ld. A. O is purely based on presumption, conjecture and surmises and the addition made on such presumption basis is not permissible in the eye of law. The relevant case laws are discussed in Para 1.2 of this sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. That in para 4 of show cause notice it is mentioned that the money was received with the knowledge of Sh. Harvash P Chawla (assesseee)- Though there was no evidence about the knowledge of the assessee yet mere keeping the knowledge of receiving the money by some independent person (not an agent) does not make the assessee responsible for any taxation. That in respect of aforesaid reply, the Ld. A.O in para 3.7 mentioned, the explanation of assessee is not acceptable. The assessee has merely denied that the money was received in his bank accounts or in the accounts of any of his concerns. It is given fact that no sane person would receive unaccounted income in his accounts or in the accounts of any of the concern related to him On going through the Ld. A.O observation, it is evident that the appellant, has all along denied the receipt of ₹ 28,00,00,000/- either by him directly or by anybody else on his behalf The Ld. A.O has also admitted that the said amount has neither gone to his bank account nor in his related concern. Since the amount of ₹ 28,00, 00,000/- was neither received by the appellant nor by his related concerns, it was onus on the Ld. A.0 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon' ble Apex Court, which were binding in nature. Hence, the addition of ₹ 28,00,00,000/- is liable to be deleted. (b) That in the light of copy of explanation dated 20. 12.2010 enclosed as Annexure-1 submitted before the Ld. A.O., it is brought to your kind notice that the disputed printout of email was neither signed nor acknowledged by the appellant. Hence, it was a dumb document and in the light of judicial pronouncements, no addition can be made merely and exclusively on the basis of such dumb document without having any supporting evidence. Since in the letter dated 20.12.2010 the detailed description about the case laws have already been given and such letter is enclosed with this submission, there is no need to repeat the same. The appellant rely on following case laws: a. Atul Kumar Jain Vs. DCIT (1999) 64 TTJ 768 a. Ramli Dayawal Sons Pvt. Ltd. Vs. Invert Import AIR 1981 SC 2085 b. Mohamad Yusuf Vs. D Others AIR 1968 BOB 112 c. CBI Vs. V.C. Shukla Other JT (1998) 2 SC 172; b. Dy. CIT Vs. Krorilal Aggarwal (1994) SOM (Jab) 393 c. Ashwani Kumar vs. ITO (1992) 42 TTJ Delhi 644 d. CIT Vs. Girish Chaudhary (2008) 296ITR 619 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncements, it is brought to your kind notice that the addition of ₹ 28,00,00,000/- was made only on the basis of printout of emails exchange which was seized from the premises of one Shri Kunwar Omkar Singh and not from the appellant premises. The said printout of email was forwarded by the Sikkim Vigilance Police to the DIT(Inv), New Delhi who forwarded the same to the Ld. A.O Further, the disputed email exchange was held between Shri Michael Boccoher and Shri Narender Grover, who were neither appellant' s agent nor working on behalf of the appellant. Shri Narender Grover has sent the email by misusing the official server of the appellant, when he was working in appellant office in order to professional practice and requirement in connection with M/ s Storm International case (appellant's client). Thus, the appellant neither sent any email nor he admitted the contents of any email. Moreover, sending the email by Shri Grover by misusing the official server of appellant may not be basis for the addition in appellant case, particularly when the appellant books of accounts including the bank account was examined and appellant s statement was recorded on oath and no adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiver is Mr. Narendra Grover both are persons and they are neither agent of the assessee nor they were working for and on the behalf of the assessee. (i)) In third and last email dated 19.12,2007 addressed to Mr. Chawla (specific name of the assessee is not mentioned), there is denial by Mr. Chawla about the receipt of any payment. Though the print out of the email is not a primary evidence, yet in case, it is treated as primary evidence, it is in favor of the assessee as it suggested that Mr. Chawla did not receive any money and both the payer and the payee are the independent persons. (j)) The assessee in response to Question no. 6, explained that M/ s Storm International was assessee's client and Sh. Narendra Grover was using his office on behalf of said client for certain period. (k) During that period Sh. Narendra Grover might have sent the email misusing the assessee's email id. However, no addition can be made merely on the reason of sending the email assessee' s email id. (I) In email dated 19.12.2007 addressed to Mr. Chawla, there is no inference of USD 70,00,000. (m) The Ld. AO observed that no sane person would receive unaccounted money in ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount is presumed to be received, it can also be presumed to have been paid. Thus, the incoming and the outgoing is the same and there is zero income in this transaction. Hence, no addition is called for. (e) Further, the provision of Section 68 is not applicable in this case as there is no cash credit. (f) The provision of Section 69 is not applicable as there is no unexplained investment. (g) Similarly, the provision of Section 69A is not applicable as the assessee is not found to be owner of any money, etc. (h) The provision of Section 69B is not applicable as there is no unexplained investment; hence there is no question of not fully recording in the books of accounts. (i)) The provision of Section 69C is not applicable as there is no unexplained expenditure. (j)) The provision of Section 69D is not applicable as there is no question of borrowed amount or repaid on hundi. 17. We find from the records, the Commissioner of Income Tax (Appeals)-XXVIII, New Delhi vide F.No. CIT(A)- XXVIII/2013 -14/ 341 dated 24.02.2014, sent a letter to the Additional Commissioner of Income Tax, Range - 37, New Delhi, stating as under: Kindly refer to your letter F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consultancy, if so, the evidence produced by the assessee in this regard. 10. In the assessment order it has been claimed time and again against addition made in respect of unsecured loans that the party did not have the capacity to finance the loan arid the loan has been financed through unaccounted money of the appellant by creating layer of intermediaries. Kindly give your comments on these statements of the Assessing Officer. The detailed report should be received without fail by 26.02.2014 in view of the fact that it is a high demand case which has been pending for a long time. 18. We find that, a report was sent to the Learned Commissioner of Income Tax (Appeals)- XXVIII, New Delhi by the Assessing Officer, i.e. Asstt. Commissioner of Income Tax, Circle-37(1), New Delhi vide F. No. ACIT/Cir-37(1)/2013- 14/1884 dated 26.02.2014, in response to the above mentioned letter dated 24. 02.14 of the Learned Commissioner of Income Tax (Appeals), stating as under: Kindly refer to your letter no. CIT (A)-XXVIII/2013-14/341 dated 24.02.2014 on the above mentioned subject. 2. In this connection, at the outset, it is submitted that the Remand Report sent vide this office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 22/2008/ SVPS/365 dated, 17.08.2009 it is submitted that no such letter is found in the assessment file forwarded by the Central Circle and available with this office. It may be pertinent to mention here that this case was completed in Central Circle and the assessment folder was later transferred to the present jurisdiction, but the seized record has still not been transferred from the Central Circle. Efforts are being made to get the seized material also transferred. It is plausible that the desired letter may be a part of seized material. It may not be out of place to mention that a copy of the same letter (As mentioned, in the CIT(A) s order in the case of the assessee himself for A.Y. 2007-08) was forwarded to the office of CIT'(A) by the AC IT, Central Circle- 13 during the appellate proceedings in case of the assessee for the A. Y. 2007-08. 3.6 It is reiterated that during the assessment proceedings, the assessee was confronted with all the documentary evidences, including the seized material, available. A detailed statement of the assessee was also recorded on oath during the assessment proceedings. As far as any evidence regarding the fact that the above docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worthiness of the lenders has already been dealt with in para 3.7 and 3. 8 above. 4. It is also submitted that the issue raised in the letter of CIT (A) dated 24.02.2014 have been discussed at length in the assessment order, and the same is relied upon once again. However, if CIT (A) so desires, the entire assessment record can be made available in support of various averments made in the assessment orders, for perusal and necessary verification. Further, if CIT (A) desires to pursue a fresh line of investigation, in connection with the Unsecured Loans, not yet explored by Revenue the undersigned would be most willing to carry out further investigation to the extent possible. Issuing specific instructions to the relevant Assessing Officers might also be considered. 5. It is also humbly, submitted that only one day time was given to prepare the remand report. It may be appreciated that at this state of the financial year, with a large number of time banning matters pending for disposal and this being a. high demand case, the time given was grossly inadequate. 19. Having gone through the submissions of the assessee after getting the various reports from the AO, the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve email, which is the most crucial document relied upon by the Assessing Officer to conclude that the amount of 7 Million US Dollars was received by the Appellant shows that: a. The email mentions that Mr. Singh, who is stated to be a Minister in Sikkim has told the author of the email i.e. Sh. Michael Boettcher that the recipient of the email i.e. Sh. Harvansh P Chawla told the Minister that he had not received any payment from Storm. b. The email does not specifically mention the amount of $ 7 Million or even indirectly indicate as to what was the specific amount alleged to be paid. c. The email does allege that some payment had been made by M/ s Storm, as it states that the recipient of the email will have to return the full amount of the sum paid plus Interest, but such full amount is not specified. d. The email advises the recipient to send $ 2.5 m to Mr. Singh, who is stated to be a Minister in Sikkim. 8.44 From the above it is seen that rather than proving that any payment was received by Sh. Harvansh P Chawla, the email rather informs about the denial by him, regarding having received any payment at all. Further, the email does not specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of the amount of USD 7,000,000 mentioned in the email. 8.48 An analysis of each of the above three observations and the conclusion by the Assessing Officer shows that there was absolutely no justification at all for such conclusion. No doubt, it is unlikely that an intelligent person would receive Unaccounted Income in his account s or in the accounts of any of the concerns related to him, but it is a fact that every year numerous cases are detected by the Income Tax Department where Unaccounted Income is received in the accounts of a person and in accounts of related concerns. The receipt of such Unaccounted Income in the Bank Account of the person concerned or in the Bank Accounts of his related concerns would rather be compulsory where the payment was being received through Banking Channels. In the present case, the allegation is that the payments in question amounting to $ 70, 00,000/- (US Dollars 7 Million) was sent in 6 different amounts to 3 different Bank Accounts. In such a situation, it is obvious that the payments would be received in some Bank Accounts, if the payment had actually been sent. The documents in question only show that there was an allegation or cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any allegation, and rather it is only an allegation on the Appellant. In the absence of any corroboration, it is only an Unsubstantiated Allegation . 8.51 The Learned Assessing Officer on the basis of the above observations in Para 3.7 and 3.8 of the Assessment Order has gone on to draw the conclusion that: Thus, Sh. Chawla is directly or indirectly the beneficiary of the amount of USD 7,000,000 mentioned in the email. 8.52 It is seen that the above conclusion is not at all justified in view of the discussion in Para 8.43 to 8.45 above, as each of the 3 grounds (mentioned in Para 8.41) on the basis of which the Assessing Officer has drawn such a conclusion have been shown to be baseless. Whether any such amount was actually sent or merely a claim was made through email, without the amount having been actually sent, is a matter of investigation to prove as to what exactly was the amount and as to who received the amount. 8.53 Further, a careful perusal of the email in question shows that there is no mention at all of any specific amount having been directly or indirectly been given to Sh. Chawla, as clearly pointed out above in Para 8.38 and Para 8.39. In suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments in question, i.e. the printouts of the emails were seized by the Sikkim Vigilance Police from the residence of Sh. Kunwar Onkar Singh, the Managing Director of M/s Sikkim Distilleries Ltd. The Assessing Officer has observed in the Assessment Order that Sh. Kunwar Onkar Singh did not comply to Summons u/s 131 issued to him. It has been further observed by the Assessing Officer in Para 3.4 of the Assessment Order that Sh. Harvansh P Chawla, the Appellant, in his Statement recorded by the Assessing Officer on 17.08.10 admitted that he knew Sh. Kunwar Onkar Singh, who was the Managing Director of M/ s Sikkim Distilleries Ltd. and was interested in purchasing a Nursing Home at Noida and that he had given a Cheque of ₹ 55 Crores which was seized during the course of Search at the residence of the Appellant on 28.02.07, as an expression of his serious interest in the deal, but the deal did not materialize and the Cheque was never presented and that the Nursing Home was still in the name of the Original Owner. Perusal of the Statement shows that Sh. Kunwar Onkar Singh was introduced to the Appellant through a law firm called M/ s Norten Rose of London and that he i.e. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the primary letter, i.e. the letter dated 17.08.09 from the Sikkim Vigilance Police to the Director General of Income Tax (Vigilance), Delhi, it is clear that the Sikkim Vigilance Police itself was of the opinion that Sh. Kunwar Onkar Singh was committing fraud upon M/ s Storm International, or at least that his conduct was dubious. In such a situation, it was quite likely that the persons coming in contact with the said person could be accused of wrongdoings, or having knowledge of things about which they knew nothing or of having possession of money or things about which they had no idea. 8.61 There is absolutely no doubt that there was no Minister Singh in Sikkim at that time, and whosoever discussed with M/ s Storm International posing as Minister Singh from Sikkim was committing fraud and misrepresentation. The letter dated 17.08.9 indicates that the Sikkim Vigilance Police was of the opinion that it was Sh. Kunwar Onkar Singh who was the suspect. Whether such fraud and misrepresentation was committed by Sh. Kunwar Onkar Sing; h (as strongly suspected by Sikkim Vigilance Police) or any other person is not relevant for deciding the issue in hand, as once it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee would let anyone used his office space and facilities without having the details regarding the background of that person . However, it had been clarified by the Appellant at the assessment proceedings itself that Sh. Narinder Grover was working on behalf of M/s Storm International, who was Client of the Appellant, and that it was customary among the Law Firms to provide table space and communications facilities on temporary basis to Clients still they have their own setup, and that in a similar arrangement, Sh. Narinder Grover was allowed to use the office facilities and the e-mail address. It was also stated by the Appellant that the use of these facilities was billed to the Client M/s. Storm International. The Appellant also informed that Sh. Narinder Grover used to continuously work from the office of M/s K.R. Chawla and Co. for the period starting a few days before Diwali, 2007 till December, 2007, and that after January 2008 he stopped coming to office. These facts were stated by the Appellant in reply to question 6 of his Statement, which has also been reproduced in the Assessment Order in Para 3.9. Though the Assessing Officer has reproduced the information give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not at all extraordinary. The only extraordinary or suspicious issue amongst the above three observations of the Assessing Officer in Para 3.11 of the Assessment Order was the content of the email as per which there was an allegation that the Appellant had received some money (without specifying the amount received, when and how received), which has already been discussed above in detail from Para 8.43 to 8.62 above and the clear conclusion has been drawn that there was no reason to hold that the Appellant had received any money. 8.67 The Assessing Officer on the basis of the above observations in Para 3.11 of the Assessment Order has held that the evidence points to the Assessee having received US Dollars 7 Million through Undisclosed sources, the Rupee equivalent of which being ₹ 28,00,00,000/- was treated as his Undisclosed Income. As already discussed above, neither there was any evidence against the Assessee nor there was any other material to show that the Assessee had received the alleged amount of 7 Million US Dollars, nor any of the 3 observations prove any allegation against the Appellant. 8.68 Further, the Remand. Reports from the Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he emails were not found from the premise of the Appellant hence there was no presumption u/s 132 (4) of the Income Tax Act, 1961 against the Appellant, nor there was any other evidence or material which indicated presumption against the Appellant. In fact, the Onus was upon the Assessing Officer, as mentioned in Para 8.63 above, and he has failed to discharge the same. 8.69 In view of the above discussion, it is held that there is no justification for the claim that the Appellant received $ 7 Million. Accordingly, the addition of ₹ 28,00,00,000/- as Undisclosed Income Hinder the head Income from Other Sources is hereby deleted. Ground No. 2 of the appeal is hereby allowed. 20. We find that the ld. CIT (A) has analyzed each and every aspect of the allegations made the AO called for reports, gone through the contents of the information received, the evidences before the revenue, the explanation of the assessee and the remand reports and came to a conclusion that there is no liabilities on the part of the assessee and the revenue could not bring about any cogent material to prove the allegations. Hence, we decline to interfere with the order of the ld. CIT (A). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Mansion Hotels Pvt. Ltd. ₹ 2,80,00,000/- 13. H T Recon Construction Pvt. Ltd. ₹ 85,02,276/- Total ₹ 56,91,84,,567/- 23. During course of Assessment proceedings the assessee filed the confirmation, copy of ITR, copy of Balance Sheet, Bank Statement and other relevant evidences in respect of all the parties except from Sh. NK Ahuja who was no more at that time. 24. The AO mentioned the evidences filed in the Assessment Order and made the addition holding that the assessee appears to be bringing in unaccounted money in to his books after creating the layers of intermediaries. Hence the credit worthiness of the lender and the genuineness of the transaction are not established . 25. The A.O. treated the aforesaid loans from the parties as bogus and made the addition thereof on following reasons: a. The creditors gave the loan to the appellant either after borrowing the fund or by obtaining the share application money (in case of corporate creditors only). Hence, he held that the creditors had no sufficient money of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Cash Credit (i) That in respect of genuineness of loan, it is necessary to examine the legal provision of Section 68 of the Income Tax Act. 1961. which is reproduced as below:- Where any sum is found credited in the book of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the (Assessing) Officer, satisfactory, the sum so credited may be charged to income tax as the assessee of that previous year . That going through the provision of Section 68, it is evident that following ingredients are required for the application of provision of Section 68 of the I.T Act, 1961 and also for proving the genuineness of loans/ deposits: a. Any sum found to be credited in the books of accounts of the assessee, b. Books maintained for any previous year, c. Explanation of the assessee is required about the nature and source of the said sum so credited to the satisfaction of the A.O. II. Assessee' s explanation not to be rejected arbitrarily (i)) That on going through the assessment order, your goodself will find that there is no dispute a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by merely observing that they were not satisfactory. The explanations offered by the assessee are not prima facie absurd. They were capable of being examined by the ITO. It was possible for the ITO to go into the extent of the immovable property owned by the HUF and its income. He did not care to do so. It was also possible for the ITO to go into the question of remittances made by Kannan Kunhi from Ceylon. Here again the ITO did not choose to do so. It was not even suggested by the ITO that the assesses was having any business activity in India prior to 17th Aug., 1950, or any other source of income taxable wider the Act If the explanation given by the assessee that part of the initial business capital was supplied by Kannan Kunhi is correct then the same is a good explanation. That explanation has not been examined at all. Similarly, the assessee' s explanation that he was having income from the agricultural property has not been examined. The AAC also did not choose to examine the explanation given nor did the Tribunal care to go into that explanation. It just brushed aside that explanation with the observation that the assessee had no proper or satisfactory explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in the case OF CTT VS Rohini Builders (2002) 256 ITR 360 (Guj) held that where the assessee has proved the identity of the creditors, and the amounts were received by account payee cheques, the initial burden on the assessee is discharged. The finding of the tribunal that cash credit should be treated as proved in absence of any further material to discredit the same has to be upheld. (iv)) That Hon ble Guahati High Court in the case of Kundanmal Kothari(HUF) vs. CIT (1997) 93 Taxmann 620 (Goa) found that the loan of ₹ 1,25,000/- was entered in the books of account and the creditor was also identified. The creditor himself was an assessee under the Act. In spite of that the AO did not accept the entries made in the boosk of account as well as in the returns and required further proof. Confirmatory letters were produced and the creditor himself appeared before the ITO to give his statement confirming the fact that the amount had been paid by him to the assessee. In the light of these evidences the Hon'ble Guahati High Court held that the addition u/ s 68 was not justified. Consequently, the deletion of said addition was upheld. (v) That Hon' ble Bombay High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor was proved by giving the source as the creditors received money from Lucky Draw. In this regard, before the AO relevant certificate was also produced, there was no violation of Rule 46 A by the CIT(A). Considering the totality of the facts and in the absence of any new evidence/ material, against the order of the learned CIT(A), the CIT(A) rightly deleted the addition and no interference is required in the order of the CIT(A). The same is hereby upheld. The assessee should not be asked to prove the source of sources. That on going through the provision of Section 68 of the Income Tax Act, 1961, it is evident that the assessee is required to offer the explanation about the nature and source of the sum credited in his books of accounts. In other words, the assessee cannot be asked to prove the source of sources, i.e. from where the creditor has brought the money is not required to be proved by the assessee. Hon' ble Madras High Court in the case of Hastimal Vs. CIT (1963) 49 ITR 273 (Mad) herd that an assessee should not be placed upon the rack and called upon to explain not merely the origin and source of a capital contribution but the origin of origin and source o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of Tola Ram Dhaga vs CIT (supra) held that once the assessee discloses the source(s) from which he has received, the loans, his burden under Sec. 106 of the Indian Evidence Act stands discharged and the onus, then, shifts to the AO to show, if he wants to treat the, loan as an income of the assessee from undisclosed source. The Hon ble High Court further observed that the harmonious construction of Section 106 of the Evidence Act and. Section 68 of the IT Act will be that though apart from establishing the identity, of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor. The burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. It is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transactions which took between the creditor and sub-creditor and/or creditworthiness of the sub- creditors. In the instant case, the assessee has proved the identity of the creditors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na Hotel Pvt. Ltd. ii. Loan of ₹ 1,03,34,000/- from Kareena Hospitality Pvt. Ltd. iii. Loan of ₹ 7,01,49,880/- from Navya Securities Pvt. Ltd. iv. Loan of ₹ 46,50,000/- from Storm Hotel Pvt. Ltd. All the aforesaid parties are the legal entities registered with ROC. There details are verifiable from MCA21 website. They are regularly assessed to Income Tax in Delhi itself. The creditors have filed their confirmation showing their PAN, their copy of acknowledgement of ITR, copy of Balance Sheet and Profit Loss account, copy of their Bank Statement. All the loans were received through banking channels and the same have also been repaid in subsequent years through banking channel. In respect of loan of ₹ 98, 80,000/- from M/ s KP and Associates, the relevant evidences have been filed from page 92 to page 99 of the paper book dated 16.03. 2012. It is a proprietary concern of Sh. Kishan Prasad Sharma. The confirmation and copy of acknowledgement of ITR have been filed. The loan was received through banking channel and the same was repaid during AY 2012-13 through banking channel for which the copy of account is placed on Page 98 of the Paper Book. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2009 showing the previous year figures has been filed. On going through the Balance Sheet of M/s. Karina Hotel Pvt. Ltd. as on 31.03. 2008, it is evident that the said loan amount of ₹ 1,01,60,000/- is appearing in Schedule - 3. The creditor Balance Sheet tallies to the extent of ₹ 5,55, 95,520/- with suggest that the creditor had capacity to give the loan to the extent of₹ 1,01, 60,000/-. That enclosing the aforesaid evidences pertaining to the creditor M/ s Karina Hotel Pvt. Ltd. as Annexure -3, it is brought to your kind notice that the identity of the creditor, being legal entity having PAN and assessed to tax is proved. Since the loan has been received through banking channel, its genuineness cannot be denied. The creditor Balance Sheet for the relevant period tallies to the extent of ₹ 5,55, 95,520/-, hence, there is no scope to deny the capacity of the creditor to advance the loan to the extent of₹ 1,01,60,000/-. In the light of these evidences, your goodself will appreciate that all the conditions required proving the genuineness of the loan is fulfilled in this case. Hence, the Ld. A.O was not justified to treat, the unsecured loan as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hi. The appellant received the unsecured loan of ₹ 7,01,49,880/- during the year through banking channel. Confirmatory letter showing the PAN- AAACN3106 H of the creditor, copy of bank statement of the creditor, copy of the balance sheet as on 31.03.2008 was filed before the A.O. and the same are against enclosed. On going through the Balance Sheet of M/s. Navya Securities Pvt. Ltd. as on 31.03.2008, it is evident that the said loan amount of ₹ 5,92,32,577+ 1,09,17,303 = ₹ 7,01,49,880/- is appearing in Schedule - 5. The creditor Balance Sheet tallies to the extent of ₹ 8,93,60,445/- which suggest that the creditor had capacity to give the loan to the extent of ₹ 7,01,49,880/-. (b) That enclosing the aforesaid evidences pertaining to the creditor M/ s. Navya Securities Pvt. Ltd. as Annexure -5, it is brought to your kind notice that the entity of the creditor, being legal entity having- PAN and assessed to tax is proved. Since the loan has been received through banking channel, its genuineness cannot be denied. The creditor Balance Sheet for the relevant period tallies to the extent of ₹ 8,93,60,445/- hence, there is no scope to deny the capaci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 17.03.2008 through banking channel. Confirmatory letter showing the PAN- AAMCS0343K of the creditor, copy of bank statement of the creditor, copy of the balance sheet as on 31.03.2009 has been filed. On going through the Balance Sheet of M/ s Storm Hotels Pvt. Ltd. as on 31.03.2009, it is evident, that the said loan amount of ₹ 46,50,000/- is appearing in Asset Side. The creditor Balance Sheet tallies to the extent of ₹ 99,46,918/- which suggest that the creditor had capacity to give the loan to the extent of ₹ 46,50.000/-. (b] That enclosing the aforesaid evidences pertaining to the creditor M/s Storm Hotels Pvt. Ltd, as Annexure - 7, it is brought to your kind notice that the identity of the creditor, being legal entity having PAN and assessed to tax is proved. Since the loan has been received through banking channel, its genuineness cannot be denied. The creditor Balance Sheet for A.Y. 2009 - 10 tallies to the extent of ₹ 99,46, 918/-, Hence, there is no scope to deny the capacity of the creditor to advance the loan to the extent of ₹ 46,50,000/-. In. the light of these evidences, your goodself will appreciate that all the conditions requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All the creditors except M/s KP Associates are the legal entities and their status are verifiable from the website of the ROC. M/s KP Associates is also a firm. All the creditors have filed their confirmatory letters with supporting evidences. In the situation, the identity of the creditors, genuineness of the loans credit worthiness of the creditors are proved. Hence all the ingredients required U/ S 68 of the IT Act, 1961 are fulfilled. The Ld. A.O. have made addition of ₹ 10,61,67,051/- (10,91,67,051- 30,00,000), on the reason that the creditors have given the loan, after borrowing the fund from third person which was not a valid ground for making the addition. The Ld. A.O. was not entitled to make the addition on enquiring the source of sources. All the creditors are assessed to tax and the source of loan amount can he enquired only in creditor s case and not in appellant case. Hence, your goodself is requested to kindly delete the addition of ₹ 10,61,67,051/-. 34. The order of the ld. CIT (A) on the issue of creditors is as under: 8.70 In Ground No. 3 of the Appeal, the Appellant has challenged the addition of ₹ 10,91,67,051/- on account of Unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Company does not have any significant funds of its own. The Assessing Officer has further observed that The assessee appears to be bringing in unaccounted money into his books after creating layers of intermediaries' , and on such basis has concluded in Para 5.1 of the Assessment Order that the creditworthiness of the lender and genuineness of the transaction are not established . Thus, despite the fact that there was no doubt about the Identity of the Lender and the availability of funds with the Lender and the fact that the funds were actually given to the Appellant, the Assessing Officer has drawn adverse conclusion merely on the basis that the Lender Company had itself borrowed funds and has got the suspicion that the Assessee appears to be bringing in unaccounted money into his books having created layers of intermediaries, and on basis of such suspicion has concluded that the creditworthiness of the lender and genuineness of the transaction are not established. 8.72 The Appellant has mentioned that That the M/s. Karina Hotels Pvt. Ltd. was incorporated on 03.09.2007 and its last ACM was held on 23:05.2011 and Balance Sheet as on 31.03.2011 was filed to the Regi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arina Hospitality Pvt. Ltd. during the F.Y. 07-08 and that the Assessee was required to furnish the details of the amount received and evidence in support of identity and creditworthiness of the Lender and also the genuineness of the transactions. The Assessment Order mentions that in response the Assessee submitted a confirmation from M/s Karina Hospitality Pvt. Ltd. and filed a copy of Income Tax Return Acknowledgment, Bank Statement and Balance Sheet. It has been observed by the Assessing Officer that the Lender Company has shown a Loss of ₹ 33,80,530/- and that the Loan given to the Appellant has been financed through borrowings and Share application money and that the Company does not have any significant funds of its own. The Assessing Officer has further observed that The assessee appears to be bringing in unaccounted money into his books after creating layers of intermediaries , and on such basis has concluded in Para 6.1 of the Assessment Order that the creditworthiness of the lender and genuineness of the transaction are not established . Thus, despite the fact that there was no doubt about the Identity of the Lender and the availability of funds with the Lender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee. The Remand Reports from the Assessing Officer and the comments/Reports from the Joint/ Addl. Commissioner heading the Range only reiterate the stand of the Assessing Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan amounting to ₹ 1,03,34,000/- from M/s Karina Hospitality Pvt. Ltd. as Unexplained, and hence the addition of ₹ 1,03,34,000/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. Navya Securities Pvt. Ltd. The Assessing Officer has stated that the Assessee received Unsecured Loan of ₹ 7,01,49,880/- from M/s Navya Securities Pvt. Ltd. during the F.Y. 07-08 and that the Assessee was required to furnish the details of the amount received and evidence in support of identity and creditworthiness of the Lender and also the genuineness of the transactions. The Assessment Order mentions that in response the Assessee submitted a confirmation from. M/s Navya Securities Pvt. Ltd. and filed a copy of Income Tax Return Acknowledgment, Bank Statement and Balance Sheet. It has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee to have created layers of intermediaries to bring in Unaccounted money, and on the basis of such suspicion, drew adverse conclusion against the genuineness of the Unsecured Loan and treated it as Unexplained merely on the basis of such suspicion, without giving any finding regarding the claim and the documents submitted in support of the claim regarding availability of funds with the Lender and the flow of funds from the Lender to the Assessee. No doubt, the Assessing Officer can have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be a ground for adverse conclusion against the Assessee. The Remand Reports from the Assessing Officer and the comments/Reports from the Joint/ Addl. Commissioner heading the Range only reiterate the stand of the Assessing Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan amounting to ₹ 7,01,49,880/- from M/s Navya Securities Pvt. Ltd. as Unexplained, and hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g regarding the claim and the documents submitted in support of the claim regarding availability of funds with the Lender and the flow of funds from the Lender to the Assessee. No doubt, the Assessing Officer can have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be a ground for adverse conclusion against the Assessee. The Remand Reports from the Assessing Officer and the comments/ Reports from the Joint/ Addl. Commissioner heading the Range only reiterate the stand of the Assessing Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan amounting to ₹ 9,93,171/- from M/s H.N. Consultants Pvt. Ltd as Unexplained, and hence the addition of ₹ 9, 93,171/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. M/s Storm Hotels Pvt. Ltd. The Assessing Officer has stated that the Assessee received Unsecured Loan of ₹ 46,50,000/- from M/ s Storm Hotels Pvt. Ltd. during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of ₹ 46,50,000/- was received was a genuine Company and its Identity could not be rejected merely because the Lender Company did not file Income Tax Return for the first year of operation. In any case, the Assessee had placed before the Learned Assessing Officer, the documents evidencing the making of accounts for more than an year, but rather than Investigating further, the Assessing Officer merely took the non filing of Income Tax Return for A.Y. 08-09 by the Lender Company as an excuse to deny its Identity, Creditworthiness and Genuineness of the transactions. Once the accounts for the extended year had been placed before the Assessing Officer, alongwith Bank Statement, Confirmation from the Lender Company, documents from RoC etc., then the non filing of Income Tax Return for A.Y. 08 -09 and the source of funds being primarily from Share application money could have been cause for suspicion and led to further Investigation by the Assessing Officer, but it cannot be a ground for adverse conclusion against the Assessee, particularly when the accounts had been made for extended period for A.Y. 09-10. The Remand Reports from the Assessing Officer and the comments/Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be a ground for adverse conclusion against the Assessee. The Remand Reports from the Assessing Officer and the comments/Reports from the Joint/ Addl. Commissioner heading the Range have not brought to light anything against the Appellant, despite specific directions for inquiry by Commissioner (Appeals). 8.91 The most notable aspect for this addition is that the Assessing Officer, in addition to observing that the Loan appeared to be an accommodation entry, was of the opinion that the identity of the Lender is not established as the relationship of Sh. Krishan Prasad Sharma and the Lender M/s K. P. Associates is not furnished . The Assessing Officer has doubted whether Sh. Krishan Prasad Sharma was the proprietor of M/ s K. P. Associates and has stated that the relationship of this person with the Lendor is not established. However, as mentioned above, perusal of the Returns filed by Sh. Krishan Prasad Sharma for A.Y. 08-09 does not specifically mention the same, but the Returns for A.Y. 09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Lender and the relationship of the Sh. Krishan Prasad Sharma with the Lender, M/s K.P. Associates was totally unfounded. As already discussed above, there was no cogent reason with the Assessing Officer to hold that the Loans from M/s K. P. Associates appeared to be an accommodation entry . 8.93 In view of the entire facts of the case, as discussed above, there is no justification to treat the Unsecured Loan amounting to ₹ 98,80,000/- from M/ s K. P. Associates as Unexplained, and hence the addition of ₹ 98,80,000/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. A.Y. 2009 -10 Karina Hotels Pvt. Ltd. The Assessing Officer has stated that the Assessee received Unsecured Loan of ₹ 28,00,000/- from M/s Karina Hotels Pvt. Ltd. during the F.Y. 08 -09 (relevant to A.Y. 09-10) and that the Assessee was required to furnish the details of the amount received and evidence in support of identity and creditworthiness of the Lender and also the genuineness of the transactions. The Assessment Order mentions that in response the Assessee submitted a Confirmation from M/ s Karina Hotels Pvt. Ltd. and filed a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter showing the PAN- AADCK7127J of the creditor, (b) The copy of Bank Statement of the creditor, (c) The copy of the Balance Sheet as on 31.03.2009 of the Creditor. On going through the Balance Sheet of M/s Karina Hotel Pvt. Ltd. as on 31.03.2009, it is evident that the balance loan amount of ' ₹ 1,17,92,000/ which includes ₹ 28,00,000/- is appearing in Schedule - 3 in the name of K.R. Chawla Co. The creditor' s Balance Sheet tallies to the extent of ₹ 5,84,96,104/- which suggest that the creditor had capacity to give the loan to the extent of ₹ 28,00,000/-. (d) The copy of Acknowledgment of ITR of Karina Hotel Pvt. Ltd for AY 2009- 10 is also enclosed. 8.28 It is seen that merely because the Lender Company had substantial funds through borrowings, the Assessing Officer suspected the Assessee to have created layers of intermediaries to bring in Unaccounted money, and on the basis of such suspicion, drew adverse conclusion against the genuineness of the Unsecured Loan and treated it as Unexplained merely on the basis of such suspicion, without giving any finding regarding the claim and the documents submitted in support of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant in A.Y. 2008 -09 had received the loan from the said party against which there was a opening credit balance of ₹ 7,01,49,880/- in this year. During the year the appellant has repaid ₹ 1,52,25,846/- against such opening balance of Rs,7,01,49,880/-. II. That in respect of receipt of ₹ 1,79,201/- during the year, it is brought to your kind notice that the said sum of ₹ 1,79,201/- included the credit of library expenses of ₹ 29,201/-. It means, the net receipt is only for ₹ 1,50,000/- during the year. In this regard, it is explained that due to certain reason M/s Navya Securities Pvt. Ltd. refunded ₹ 1,50,000/- out of repayment of ₹ 1,52,25,846/-. Hence, the Ld. A. O. was not justified to treat the said amount of ₹ 1,50,000/- being receipt out of refunded amount and expenditure of ₹ 29,201/- totaling to ₹ 1,79,201/- as unexplained cash credit u/s 68 of the IT Act, 1961. III. That it is further brought to your kind notice that the appellant had received new loan in AY 2008-09 from M/s Navya Securities Pvt. Ltd. and out of that the opening credit balance of ₹ 7,01,49,880/- was shown in this year. In re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Lender Company did not give any separate Confirmation for A.Y. 09 - 10 and other documents separately in the assessment proceedings for A.Y. 09-10, the Assessing Officer suspected the Assessee to have created layers of intermediaries to bring in Unaccounted money, and on the basis of such suspicion, drew adverse conclusion against the genuineness of the amount of ₹ 1,79,201/- received during the year from that party and treated it as Unexplained merely on the basis of such suspicion. However, the transactions with the party, i.e. M/s Navya Securities Pvt. Ltd. have to be looked into in totality, particularly with reference to the Unsecured Loan of ₹ 7,01,49,880/- given by that party in the A.Y. 08-09 (i. e. the immediately preceding year), and it having also submitted Confirmation for the same alongwith ITR, Bank Statements etc. No doubt, the Assessing Officer can have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be the only ground for adverse conclusion against the Assessee. Once the Appellant did not file any separate Confirmation f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es , and on such basis has concluded in Para 7.1 of the Assessment Order that the creditworthiness of the lender and genuineness of the transaction are not established . Thus, despite the fact that there was no doubt about the Identity of the Lender and the availability of funds with the Lender and the fact that the funds were actually given to the Appellant, the Assessing Officer has drawn adverse conclusion merely on the basis that the Lender Company had itself borrowed funds and has got the suspicion that the Assessee appears to be bringing in unaccounted money into his books having created layers of intermediaries, and on basis of such suspicion has concluded that the creditworthiness of the lender and genuineness of the transaction are not established. 8.34 The Appellant has mentioned that That M/s K. R. Chawla Consulting Pvt. Ltd. was incorporated 11/02/2003. These facts are verifiable from the Master Details f the MCA 21 website. The company is assessed to tax with ITO, W3 5(1), New Delhi. The appellant received the unsecured loan of ₹ 9,16,42,740/- during the year through banking channel. The copy Confirmatory letter showing the PAN-AACCK2723P of the Credit co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of the transactions. The Assessment Order mentions that in response the Assessee submitted copy of Income Tax Return Acknowledgment, Bank Statement and Balance Sheet of M/s K. R. Chawla Infra Aviation Academy Pvt. Ltd. It has been observed by the Assessing Officer that the Lender Company has shown a Loss of ₹ 2,27,02,134/- for the A.Y. 09 -10 and that the main source of funds for the Company is Unsecured Loans of ₹ 58,82,13,608/- as on 31.03.09. It has been held by the Assessing Officer that the Loan given to the Appellant has been financed through borrowings and the Company does not have any significant funds of its own. The Assessing Officer has further observed that The assessee appears to be bringing in unaccounted money into his books after creating layers of intermediaries , and on such basis has concluded in Para 8.1 of the Assessment Order that the creditworthiness of the lender and genuineness of the transaction are not established. Thus, despite the fact that there was no doubt about the Identity of the Lender and the availability of funds with the Lender and the fact that the funds were actually given to the Appellant, the Assessing Officer has drawn a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan amounting to ₹ 32,88,93,299/- from M/s K. R. Chawla Infra Aviation Academy Pvt. Ltd. as Unexplained, and hence the addition of ₹ 32,88,93,299/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. Mansion Hotels Pvt. Ltd. 8.39 The Assessing Officer has stated that the Assessee received Unsecured Loan of ₹ 2, 80,00,000/- from M/s Mansion Hotels Pvt. Ltd. during the F.Y. 08-09 (relevant to A.Y. 09 -10) and that the Assessee was required to furnish the details of the amount received and evidence in support of identity and creditworthiness of the Lender and also the genuineness of the transactions. The Assessment Order mentions that in response the Assessee submitted copy of Income Tax Return Acknowledgment, Bank Statement and Balance Sheet of M/ s Mansion Hotels Pvt. Ltd. It has been observed by the Assessing Officer that the Lender Company has shown an Income of only Nil for the A.Y. 09-10 and that the main source of funds for the Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of such suspicion, drew adverse conclusion against the genuineness of the Unsecured Loan and treated it as Unexplained merely on the basis of such suspicion. In fact, though the Confirmation from that party was filed, the Assessment Order has not acknowledged the same. No doubt, the Assessing Officer can have suspicion regarding a particular transaction or group of transactions, but such suspicion can only be a ground for further Investigation to determine the true facts, but it cannot be a ground for adverse conclusion against the Assessee. The Remand Reports from the Assessing Officer and the comments/Reports from the Joint/ Addl. Commissioner heading the Range only reiterate the stand of the Assessing Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Unsecured Loan amounting to ₹ 2,80,00,000/- from M/s Mansion Hotels Pvt. Ltd. as Unexplained, and hence the addition of ₹ 2,80,00,000/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. M/s H. T. Recon Constructions Pvt. Ltd. The Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessment Order mentions that there was absence of Income level and that Bank Account Statement of the Lender was absent, but has failed to explain as to how there was absence of Income level and Bank Account Statement, particularly when the Appellant has clearly stated that all the documents required by the Assessing Officer were filed during assessment proceedings. It is seen that the Assessing Officer has given the cryptic finding in Para 10.1 of the Assessment Order regarding the Unsecured Loans of ₹ 85,02,276/- being Unexplained only on the basis of his observation (without any justification) regarding absence of the income level and the bank account statement of the lender. It is noteworthy that the Appellant has stated that as in the case of others Creditors (other than Navya Securities Pvt. Ltd. for which the documents were submitted in preceding year, i. e. AY 08 -09), the documents being Confirmation from that Party alongwith copy of Bank Statement, Acknowledgment of Income Tax Return for A.Y. 09- 10 and copy of Balance Sheet as on 31.03.09, were filed in the case of M/s H.T. Recon Constructions Pvt. Ltd.. However, the Assessing Officer has mentioned about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was an Opening Credit Balance of ₹ 47,02,276/- as on 01.04.08, and that the Creditor advanced a further amount of only ₹ 38,00,000/- during the year. Thus, the Assessing Officer has not properly appreciated the facts of the case at all. It appears as if having added the Credits from other parties, the Assessing Officer was of the view that the Credit from M/ s H. T. Recon Constructions Pvt. Ltd. should also be added, and proceeded to add the Credit from that party, ignoring the documents filed and the full facts of the case. The Remand Reports from the Assessing Officer and the comments/Reports from the Joint/ Addl. Commissioner heading the Range only reiterate the stand of the Assessing Officer and there is nothing to add to the contentions and conclusions of the Assessing Officer. In view of the entire facts of the case, there is no justification to treat the Credit as on 31.03.9 amounting to ₹ 85,02,276/- from M/s H.T. Recon Constructions Pvt. Ltd. as Unexplained, and hence the addition of ₹ 85,02,276/- made by the Assessing Officer treating this Loan as Unexplained is hereby deleted. 35. We have gone through the complete factum, the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total ₹ 1, 25, 30, 519/- 38. A perusal of the facts of the case and the legal position shows that there was no challenge to the fact that the amount of ₹ 1,25,30,519/- was received from M/s HHG Global Pte. Ltd. as Rent, and that the appellate authorities had the jurisdiction to entertain additional claims made before them. In the instant case, the claim for Deduction u/ s 24(a) had been made before the Assessing Officer during the assessment proceedings (though not by revised Return), but by revised Computation of Income, and in view of the fact that the amount in question i.e. ₹ 1,25,30,519/- was basically Rental Receipt, it had to be taxed as Income from House Property and hence the Deduction allowable had to be given to the Appellant. Reliance is being placed on order of the Hon ble Apex Court in the case of Goetze India Ltd. Vs CIT 284 ITR 323. Hence, we decline to interfere with the order of the ld. CIT (A). Dividend u/ s 14A: 39. The Assessing Officer disallowed ₹ 4,15,141/- u/ s 14A. We find that the assessee has not earned any exempt income and hence we direct that no disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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