TMI Blog2022 (1) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... s are proved by the assessee, then burden shifts to the Department to prove otherwise. In the instant case, assessee has only established identity of the creditor, credit-worthiness and genuineness of the transaction with the assessee have come under serious cloud, and gave rise to reasonable belief in the mind of the AO that the assessee has indulged in a dubious transaction to launder its undisclosed income. Therefore, in our view, it is a fit case where provisions of section 68 of the Act should be invoked, which the ld.AO has rightly done so - No infirmity in the impugned order of the AO, more so, in view of the reasoning given in the remand report submitted by the assessee before the ld.CIT(A). Accordingly, action of the ld.AO in invoking provisions of section 68 is upheld, and the addition deleted by the ld.CIT(A) is set aside, and order of the AO on this issue restored. Accordingly, this ground of Revenue is allowed. Disallowance of sundry creditors - CIT(A) has restricted the impugned addition on the basis of the remand report filed by the AO and also based confirmations and other details filed during the remand proceedings as well as before the appellate proceedings - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, bank statements, copy of income-tax returns and the balance sheet of the persons who gave share application money. In response to that, the assessee vide letter dated 9.12.2011 submitted unsigned ledger account of Shri Sanjay Gupta (Share application) showing receipt of share application to the tune of ₹ 3,85,44,666/- by the assessee. Further, the assessee was also asked to furnish necessary evidences showing genuineness, credit-worthiness and identity of the persons who paid the share application money. However, according to the AO, the assessee could not file satisfactory explanation with evidence to prove genuineness, credit-worthiness and identity of the persons. Therefore, since the assessee failed to substantiate its claim of share application money, the ld.AO treated the share application money to the tune of ₹ 3,85,44,666/- received from Shri Sanjay Gupta as unexplained cash credit, and accordingly made an addition under section 68 of the Income Tax Act, 1916 to the total income of the assessee. Aggrieved by the addition made by the AO, the assessee went in appeal before the ld.first appellate. 5. On the basis of the details submitted by the assessee be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified the same by making the impugned addition, which deserves to be upheld. 7. We have heard the ld.DR and also gone through the material available on record. It is pertinent to note that section 68 of the Income Tax Act contemplates that where any sum is found credited in the books 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 income of the assessee of that previous year. The case of the assessee was that transaction is genuine and identity of the person who gave share application money was established, and therefore, provisions of section 68 could not be applicable in the case of the assessee. Whereas the case of the Revenue is that there was no satisfactory explanation with supporting evidence to prove that impugned addition on account of share application received from Shri Sanjay Gupta was genuine, and therefore, the transaction in the form of share application money was bogus and fall within the ambit of section 68 of the Act. In this connection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which negligible interest payments are needed. It remains unclear as to who are the actual lenders to Sh. Gupta at such rates or interest. No explanation is offered on this count by the AR of the assessee. Furthermore, the Bank Statement of Sh. Sanjay Gupta shows a very strange pattern. While he made payments of ₹ 2 crore to NIL on 29 July 2008, he had received exactly the same amount in 4 equal amounts of ₹ 50 lacs through Axis Bank Ltd. on 28/07/2008. Who was the lender of these funds is not known from the Bank Statement. Similarly, ₹ 1.75 crores paid by Sh-Gupta to M/s. Nit on 1/08/2008 were received in his account on the same day through a Demand Draft (the number of this Demand Draft appears missing in the bank statement). Prior to this infusion of funds, the Bank Balance of Sh. Gupta stood at ₹ 69,599.79/-. Similarly, on 12/09/2008, Sh. Gupta transferred ₹ 1 crore to M/s. NIL but on the very same day he had .received the same amount through a Demand Draft of ₹ 1 crore. The submissions made by the AR of the assessee hence, merely prove the identity of the giver of funds i.e. Sh. Sanjay R Gupta. They, however, do not prove the genuineness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961. Reliance in this regard is placed on CIT vs Lovely Exports Pvt. Ltd. 216 CTR (S.C) 195. Since the identity of Shri Snjay Gupta is established beyond doubt, accordingly, I hold that addition against share application money received from Shri Sanjay Gupta cannot be made in the hands of the appellant company. In view of the above, addition of Rs, 3,85,44,666/- against share application money is ordered to be deleted. This ground of appeal is allowed. 8. On this issue, the main plank of the AO in making the impugned addition is that, apart from establishing the identity of the creditor, the assessee must establish genuineness of the transaction as well as the creditworthiness of his creditor burden lies on the assessee. We find that though identity of the person who made share application money has been established, but his credit worthiness to pay such a huge amount has not been established. All that was shown to the AO by the assessee was that of an unsigned confirmation of Shri Sanjay Gupta. This was not a sufficient proof for payment of huge amount of ₹ 3,85,44,666/-. In the remand report, the AO has noticed that on scrutiny of bank accounts of M/s.Neesa Infrastr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, a perusal of the finding extracted (supra) would reveal that the ld.CIT(A) was of the view that the Director has contributed this amount towards share application money, and he has taken loan of ₹ 77 crores which was raised by him at very lost cost. This observation was not convincing enough. The objection of the AO is that financial health of the director was not such that he could introduce a huge amount to the extent of ₹ 3.85 crores plus odd. He took the alleged unsecured loan of ₹ 77.25 crores in his balance sheet whose source could not be explained. 9. The AO has demonstrated that all these capital introduced in the capital account of share applicants are of non-verifiable nature; credit-worthiness of Shri Sanjay Gupta is very much doubtful; most of the amounts were from unknown sources. The AO has rightly assumed that the transaction is not genuine rather rooted through unsecured loans etc. whose confirmation could not be filed. We find that though the assessee had provided identity of the giver of the funds, but onus to prove creditworthiness and genuineness of transaction beyond doubt have not been discharged by the assessee. Law on this issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the ld.AO was not convinced with the evidence produced before the ld.CIT(A) by the assessee, and he observed that these details did not reflect whether any actual transactions took place or not. Therefore, veracity and genuineness of the details could not be verified, more so in the absence of PAN/TAN or the addresses of the parties. He further observed that mere submissions of ledger accounts of the parties with whom the assessee has transacted, could not prove the case of the assessee, unless the same were reflected in the profit and loss account of the assessee for the relevant year. He further submitted that onus to prove genuineness of the transactions, identity and credit-worthiness of the creditors lies with the assessee, and since the assessee failed to do so, addition was rightly made. However, the ld.CIT(A) rejected the observations of the ld.AO and deleted amount of ₹ 3,25,05,162/- out of ₹ 3,48,78,284/- made by the AO, and thus restricting only ₹ 23,73,122/-. Dissatisfied with order of the ld.CIT(A), Revenue is before the Tribunal. 12. Before us, the ld.DR supported the order of the AO. However, there was no appearance on behalf of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, the A.O. was of the opinion that sundry creditor outstanding in the name of this party is not genuine. In response to this the appellant vide its rejoinder submitted that the A.O. has not asked for confirmation from this party during the remand report proceedings. It is also submitted that addition against sundry credit of ₹ 17,44,800/- outstanding against this party cannot be made u/s.41(1) of the I.T.Act. 7.6 I have carefully considered the facts available on record. It is seen that the appellant vide its letter dated 27.4.2012 categorically submitted that complete name and address of the creditors along with their PANs and confirmation is filed. In view of this submission it is to be assumed that the appellant has furnished all these documents. These documents were forwarded to the office of the A.O. for further verification. On verification it was found that the confirmation from M/s. Goyal Power Systems were not filed. The A.O. made a categorical observation in this regard in its remand report. This remand report was duly confronted to the appellant. In the rejoinder instead of filing any evidence the appellant is trying to find fault with the A.O. In my c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors in his remand report dated 31.10.2012. This remand report was confronted to the appellant during the appellate proceedings. In response to this remand report also the appellant has not furnished any evidence to prove the genuineness of these liabilities. In view of above facts, I hold that the appellant has failed to file cogent evidence to prove that these liabilities were subsisting as on 31.3.2009. Accordingly, the appellant has failed to discharge its initial onus of proving the fact that the liabilities is subsists. Reliance in this regard is made on Keshavram Industries and Cotton Mills vs CIT 196 ITR 845 (Cal.). in view of above facts, I am of the considered view that sundry credits in respect of these two parties are not genuine and accordingly addition to the extent of ₹ 6,28,322/-is confirmed. 7.7 As a result of this appeal, the appellant will get a relief of ₹ 3,25,05,162/-(3,48,78,284 - 23,73,122/-). Addition to the extent of ₹ 23,73,122/- is confirmed. This ground of appeal is partly allowed. After going through above order of the ld.CIT(A), we find that the ld.CIT(A) has examined this issue in detail, such as details submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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