TMI Blog2022 (1) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... d to M/s Phulchand Export Pvt. Ltd, then there was no reason for it (M/s Phulchand Export Pvt. Ltd.) to offer the income for the same transaction before the settlement commission for the transactions in which it was not party. Thus a doubt arises why Phulchand Export Pvt. Ltd has made a disclosure before the settlement commission in the transaction in which it was not the party even if it was the majority shareholder in the advance lifestyle Ltd. Therefore, we are not convinced with the finding of the AO. There were certain loose papers/diary found during the survey operation containing certain date wise amount. On confrontation, one Shri Pradeep Aggarwal son of Shri Phulchand Aggarwal who was neither director in M/s Phulchand Export Pvt. Ltd or in M/s Advance Lifestyle Ltd stated that noting represent cash received from the assessee on hand against sale of the property at New Manik Mills. However, the name of the assessee, signature and address of the assessee was not appearing therein i.e. on the seized documents. Accordingly, we are of the view that such documents in the absence of other corroborative materials cannot substitute the evidence. Hon ble Supreme Court in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the statement under section 131(1) in survey operation except the circumstances provided under subsection 6 to the section 133A of the Act - revenue can resort to the provisions of section 131 of the Act if the assessee doesn t co-operate during the survey proceedings or tries to evade the relevant formations. However in the case on hand, we note that there is no such allegation that the assessee was not cooperating during the assessment proceedings. Thus we hold that the revenue has acted beyond the jurisdiction by recording the statement under section 131 of the Act. Accordingly, no reference can be made to such statements. There was a loose paper containing the figure of construction cost which the assessee had made for the purpose of the bank loan. Such information was improperly written on a piece of paper which is nothing but a dumb documents. Therefore, it cannot be said that such information was furnished to the bank - we disagree with the order of the authorities below. Accordingly we set aside the finding of the Ld. CIT-A, and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed whereas the ground of appeal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be borne by the other party. Provisions of section 37 Act deals for the admissibility of the expenses which have been incurred for the purpose of the business. The expenses which are personal and capital in nature, and not incurred for the purpose of the business cannot be allowed as deduction under section 37 the Act. In such facts and circumstances, the assessee at the best of his wisdom has decided to incur the expenses which are purely for the purpose of commercial expediency. We are inclined to hold that the expenses incurred by the assessee are in course of the business and therefore the same are eligible for deduction under section 37 of the Act. Hence, we set aside the finding of the learned CIT-A, and direct the AO to delete the addition made by him. Hence the ground of appeal raised by the assessee is allowed. Addition u/s 68 of the Act on account of low creditworthiness of the loan parties - HELD THAT:- The assessee has discharged its onus by furnishing the necessary details such as a copy of PAN, bank details, and ITR etc. in support of identity of the parties, genuineness of transaction and creditworthiness of the parties. Admittedly the learned CIT-A has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the addition u/s 69B of IT Act without considering the fact that the promoter group of the company selling the said land had accepted receipt of unaccounted cash from the assessee towards the sale of land and had declared the same before the Settlement Commission. 1.1 The Ld. CIT(A) has grossly erred in law and on facts by not giving due cognizance to the provisions of 292C of the IT. Act (with respect to the impounded documents during the course of survey u/s. 133A), which mandates that the contents of such impounded documents are to be presumed to be true. 1.2 The Ld. CIT(A) has grossly erred in law and on facts by invoking and travelling to the provisions of section 34 of the Evidence Act (which is with respect to the entries in books of accounts) when the relevant section for the said impounded documents is section 292C of the I.T. Act. 1.3 The Ld. CIT(A) has grossly erred in relying on the decisions of the Hon'ble Supreme Court which were in respect of criminal or quasi-criminal proceedings, which are not based on proof beyond doubt', whereas the IT. proceedings are based on the principle of preponderance of probability and human behav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, which may be necessary. 3. The first issue raised by the Revenue is that the Ld. CIT-A erred in deleting the addition made by the AO for ₹ 33.92 crores on account of investments not disclosed in the books of accounts as required under section 69B of the Act. 4. The stated facts are that the assessee in the present case is a private company and engaged in the business of development of land. There was a property located at Manek Chowk which was known as New Manek Mills/ New Manek Chowk Textile Mills. The impugned property was purchased by M/s Advance Lifestyle Ltd. through its Special Purpose Vehicle namely M/s. Advance Life Space Private Ltd. in an E-auction dated 31st December 2010. The impugned property was sold by National style Textile Corporation to Advance Life Space Private Ltd. 5. Afterward, the assessee purchased the shares of Advance Life Space Private Ltd which were held by M/s Advance Lifestyle Ltd vide MOU dated 17th January 2012 for a total consideration of ₹ 143.55 crores. Effectively, the impugned property was transferred to the assessee by virtue of the transfer of shareholdings. 6. Subsequently, there was the survey operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have received the total consideration at ₹ 160 crores whereas in application for the settlement it was mentioned at ₹ 235.61 crores cash. As such there was the mismatch in the amount of total consideration for the sale/purchase of the shares/property. Likewise, the survey was conducted at the third party premises and there was no material found for any cash transaction. Thus such statement cannot be relied upon. 9. The assessee further submitted that there was no supporting material furnished before the settlement commission evidencing the involvement of any cash transaction in the impugned deal for the purchase of shares/property. Furthermore, the order of the settlement commission is not binding on the third party. 10. There was also a survey operation at the premise of the assessee under section 133A of the Act dated 17 October 2013 but there was not found any document of incriminating nature suggesting any undisclosed transaction of cash in the impugned property deal. 11. However, the AO disregarded the contention of the assessee by observing that the directors of M/s Phulchand Exports Pvt. Ltd and M/s Advance Lifestyle Ltd. have categorically adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Lifestyle Ltd. As such, he was not the director in any of the company. Therefore, no addition shall stand merely on the basis of the statement and that too of a third party. 17. For making any addition under the provisions of section 69B of the Act, there has to be some tangible materials indicating the investment made in cash which was not recorded in the books of accounts. In the absence of any tangible material, no addition under the provisions of section 69B can be made. Admittedly, in case of assesse no such material is available. 18. There were found certain loose papers/diaries containing the noting of certain amounts which cannot be equated as an evidence under the provision of section 34 of the Evidence Act, to draw an inference that there was unexplained investment made by the assessee. As such, these noting must be supported by corroborative materials. Even, Shri Pradeep Aggarwal in his statement recorded under section 131 of the Act failed to substantiate based on the documentary evidence that there was the cash payment made by the assessee. Even at the time of cross-examination, Shri Agarwal failed to substantiate to have received any money from the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has made any payment of cash as alleged by the AO. It was also contended by the learned AR that the decision of settlement commission cannot bind the assessee. The learned AR vehemently supported the order of the learned CIT-appeal. 23. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case on hand have already been elaborated in the preceding paragraph which are not in dispute. Therefore, for the sake of brevity and convenience, we are not inclined to repeat the same. From the preceding discussion, we note that the addition in entirety was based on the statement recorded in the course of survey operation under section 133A of the Act at the premises of the third party namely M/s Phulchand Export Pvt Ltd. The copy of the survey statement is placed on pages 82 to 101 of the paper book. On perusal of the same, it is deciphered that no material of incriminating nature has been referred therein indicating/suggesting that the assessee has made payment in cash for the acquisition of the shares of the company namely M/s Advance Life Space Pvt Ltd which were held by M/s Advance Life Style Ltd except a diary co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to produce any supporting document in respect of your query. Further I am convinced that I will not be in position to produce such evidences in future also. 25. We also note that the CBDT in instruction no 286/2/2003-IT(Inv.II) has instructed the revenue authority to make addition in search or survey proceeding only on the basis of cogent material found instead of mere admission. The relevant extract of the instruction reads as under: Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, such confessions during the course of search seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income-tax Department. Similarly, while recording statement during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulchan Exports Pvt. Ltd. and M/s Advance Lifestyle Ltd and the assessee was not connected with such proceedings. Thus the decision of the Hon ble Settlement Commission in the case of a third party cannot bind the assessee. In holding so we draw support and guidance from the judgment of Hon ble Delhi High Court in the case of CIT vs. Vineeta Gupta reported in 46 taxmann.com 439 wherein it was held as under: The impugned order does not call for any interference. The fact that sellers had declared a sum of ₹ 16 crores as undisclosed income in respect of the said transaction cannot bind the assessee and her husband. They were not privy to the settlement application filed on behalf of sellers. In any event, what the Settlement Commission has said in the order in respect of sellers is that as per their calculations the premium amount came to ₹ 13.3 crores but since they had declared more than that, the disclosure needed no disturbance. 29. We have also analyzed the transaction from a different angle. For the sake of clarity but without admitting, assuming the assessee paid the amount in cash against the acquisition of the shares. In the present case, admittedly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind that Hon ble Supreme Court in CBI vs. V.C. Shukla [1998] (3) SCC 410 held that entry can be made by any person against the name of any other person in any sheet, paper or computer, but the same cannot be the basis of making charges against the person whose name noted on sheet without corroborating the same. The relevant extract reads as under: From a plain reading of the Section it is manifest that to make an entry relevant thereunder it must be shown that it has been made in a book, that book is a book of account and that book of account has been regularly kept in the course of business. From the above Section it is also manifest that even if the above requirements are fulfilled and the entry becomes admissible as relevant evidence, still, the statement made therein shall not alone be sufficient evidence, still, the statement made therein shall not along be sufficient evidence to charge any person with liability. It is thus seen that while the first part of the section speaks of the relevancy of the entry as evidence, the second park speaks, in a negative way, of its evidentiary value for charging a person with a liability. It will, therefore, be necessary for us to firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hown under the head of loans and advances and not under the head of other current liabilities in the balance sheet. 4.6. The appellant has also submitted that the advances received from the members, it has issued the receipt vouchers which contained the name of the member, shop / office allotted and cheque no., bank name and branch etc. in respect of the advances received from each of such members. These details were duly verifiable from the bank statement of the appellant in which such advances have been credited. Further oil the payments have been received through cheques. Therefore, there is no doubt about the genuineness of the advances received from the members as the same were through banking channels. The above were duly accounted for in the books of accounts of the appellant which were before the AO in the assessment proceedings. 4.7. The appellant has also submitted that it has maintained the ledger account copies of each of the parties in which the payments received from the member / sales effected to them and / or repayment of refund in case of cancellation has been accounted for. These ledger accounts are part of the books of accounts which have been produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authorities below as favourable to them. 41. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case there were certain credit entries appearing in the books of accounts of the assessee which were treated as unexplained cash credit under the provisions of section 68 of the Act. Admittedly the onus lies upon the assessee under the provisions of section 68 of the Act to offer an explanation based on the documentary evidence about the nature and source of such cash credit entries. As such the assessee, has to justify the identity, creditworthiness of the parties and genuineness of the transactions. 42. It was contended by the assessee that the impugned credit entries were representing the advance booking received from the members. The assessee qua to such credit entries has also furnished name, addresses, booking of the shop, agreement date and the cancellation deed. This fact can be verified from the details placed on pages 217 to 237 of the paper book. Likewise, the assessee has also furnished the booking receipts and service tax paid on such booking advance which is evident from pages 235 to 245 of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions of the Hon'ble Supreme Court which were in respect of criminal or quasi-criminal proceedings, which are not based on proof beyond doubt', whereas the I.T, proceedings are based on the principle of preponderance of probability and human behavior and are in governed by the rule of evidence as provided for in the I.T. Act, in this case section 292C. 1.4 The Ld. CIT(A) has failed to appreciate that the statement of Shri Pradeep Agarwal was recorded u/s. 131 of the I.T. Act which provide that the officers/I.T. Authority have the same powers as are vested in a court under the Code of Civil Procedure 1908; therefore, such statement could not be taken lightly or dismissed outrightly, as has been done by the Ld. CIT(A). 1.5 The Ld. CIT(A) has failed to appreciate that the figure of unaccounted money was not a figment of imagination by the AO, but it was what was found recorded in the impounded documents. 1.6 The Ld. CIT(A) has failed to appreciate that the seller company i.e. M/s. Advance Life Style Ltd., the holding company of the SPV, namely M/s. Advance Life Spaces Pvt. Ltd., and M/s. Phulchand Exports Pvt. Ltd. are all related co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure in respect of work in progress to the extent of ₹ 41,60,76,489/- made on the basis of estimated working regarding working in rough diary which was made for bank loan purpose as categorically stated in the statement recorded during the course of survey. Addition retained without corroborative evidence ignoring the audited accounts is patently wrong. It be so held now and entire addition of work in progress be directed to be deleted. 2. The Ld. CIT (A) erred in law and on facts in ignoring the submission that estimated WIP working includes the land value and if land value from estimated WIP is removed then estimated working tallies as per the audited books of accounts. Ld. CIT (A) ought to have considered the submission and ought to have deleted the addition in toto. It be so held now. 3. Ld. CIT (A) erred in law and on facts in confirming addition of WIP of ₹ 41,60,76,489/- without rejecting the books of accounts of the appellant u/s 145(3) or without pointing out any defects in book results. Ld. CIT (A) ought to have considered the fact that books of account of appellant are audited under Companies Act as well as under income tax Act and there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Initiation of penalty proceedings u/s 271(l)(c) of the Act is unjustified. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 49. The first issue raised by the assessee in ground Nos. 1 to 4 of its appeal is that the Ld. CIT-A erred in confirming the addition of ₹ 41,60,76,489/- out of the total addition made by the AO at ₹ 68,93,96,668/- instead of deleting the same in entirety. 50. There was a survey operation under section 133A of the Act dated 17th October 2013 at the premises of the assessee. In the course of survey operation, a diary marked as annexure AS-2 was found wherein the construction cost as on the date of survey was recorded at ₹ 90,63,11,765/- whereas the construction cost in the books of accounts was recorded at ₹ 49,02,35,276/- only. The director of the company namely Shri Bharatbhai Shah has admitted the difference in the construction cost recorded in the books viz a viz found in the impugned diary for a sum of ₹ 41,60,76,489/- as unaccounted income of the assessee. However, the assessee in the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Ld. CIT-A submitted that there was no material found during the survey operation suggesting that the assessee has incurred any expense on the construction outside the books of accounts. In fact, noting in the diary is the working for the estimated market value for the purpose of availing the bank loan facilities. Thus, the addition has been made by the AO without any proper basis. 58. The assessee also admitted that in the statement, it was duly furnished that the project cost has been estimated at market value for the purpose of the bank loan. Accordingly, no credential could be given to the value recorded in the diary for the project construction cost as no any other corroborative material was found. The assessee also submitted that the statement obtained during the survey proceedings has no evidentiary value and therefore there cannot be any addition based on the same. 59. The assessee further submitted that estimated project revenue at ₹ 267,94,01,400/- includes the value of the land which does not belong to the assessee. If the value of land is reduced/ excluded from the estimated revenue the profit declared by the assessee will be in the line of esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any material or evidence in support thereof. In our opinion, it is not merely a question of morality; such conduct may involve criminality also. The authority should be wary in accepting the selfserving explanation that the assessee deliberately inflated the stock in the declaration to the bank with a view to obtain higher loan-facility. In any event, the mere statement of the assessee in that behalf could never be accepted. The Tribunal has considered all relevant materials in this behalf and its view is reasonable. 3.6 Appellant has further relied on the decision of CIT vs. Kaderkhan (supra) that statement recorded u/s. 133A does not have evidential value. The appellant s reliance is misplaced as the unaccounted WIP mentioned by AO in the assessment order is based on the impounded material which has been affirmed by Director of the company in his detailed statement recorded on oath u/s. 131 of the Income Tax Act, 1961. The reliance of appellant on other case laws are distinguishable on facts. In view of the above, it is held that appellant has unaccounted WIP of ₹ 41,60,76,489/-. Accordingly the addition made by the AO to the extent of ₹ 41,60,76,489/- on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in such document. The question arises whether such figure represents the income of the assessee. Admittedly, in any survey operation, there are various documents found by the authorities but such documents cannot be said representing the income of the assessee until and unless those are corroborated on the basis of some documentary evidence. For example, a loose paper containing various financial transactions should be matched with the books of accounts of the assessee at least to some extent. If part of the transactions recorded in a loose paper are matching with the books of accounts of the assessee then the remaining transactions can be assumed that these are actual transactions. Similarly, noting in loose paper should corroborate with some other documents or material suggesting the genuineness of the noting found in the survey proceeding then it can be assumed as actual transaction. There can be a situation that the assessee for any purpose has made noting of certain figures but the same cannot be characterized as income of the assessee until and unless some supporting documents are found qua to such loose papers. 66.1 Likewise, there can be loose papers having financial t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding authority, has returned a certain set of facts. We find no perversity in such findings and, consequently, no question of law, what to speak of a substantial question of law, arises for our consideration. 68. Further, the Hon'ble Delhi ITAT on similar lines in case of Ashwini Kumar v. ITO [1991] 39 ITD 183 held that in the case of dumb document, revenue should collect necessary evidence to prove that the figures represent incomes earned by the assessee. 69. In view of the above and after considering the facts in totality, we are of the view that there cannot be any addition merely on the basis of loose papers found during the survey operation until and unless there were some corroborating evidences found. 70. At this juncture, it is also pertinent to note that the revenue is authorized record the statement under section 133A(3)(iii) of the Act during the survey operation. There is no provision for recording the statement under section 131(1) in survey operation except the circumstances provided under subsection 6 to the section 133A of the Act. In other words the revenue can resort to the provisions of section 131 of the Act if the assessee doesn t co-operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration. However, the assessee in the year under consideration has changed method of accounting for recognizing the income from project completion method to percentage completion method. Based on such change in the method of recognizing the income, the assessee computed an income of ₹ 15,87,80,951/- crores and offered the same to tax in the income tax return. 75. However, the AO found that the assessee was to construct 8,20,589 sq. ft. area for its project. Out of such total construction area, the assessee has already made sale/received booking advance for 6,78,475 sq. ft. area. The AO also found that the assessee has estimated the total profit for its project at ₹27,37,58,452/- crores which is applicable to the total construction area of 8,20,589 sq. ft. Thus the AO worked out the profit attributable to the area i.e. 678475 sq. ft. sold by the assessee in the year under consideration amounting to ₹ 22,63,47,496/- and compared the same with the amount of profit declared by the assessee at ₹ 15,87,80,951/-. Thus it was also found out by the AO that the assessee has declared less profit by ₹ 6,75,66,545/- (₹ 22,63,47,496/ - &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 65 to 72 of this order. Thus, we are of the view that such addition of ₹ 6,75,66,545/- gets revived in the given facts and circumstances. Accordingly, it becomes necessary to adjudicate the issue on hand with respect to the addition of ₹ 6,75,66,545/. 83. From the preceding discussion we note that the assessee has claimed to have adopted percentage completion method and computed the profit of ₹ 15,87,80,951/- whereas the revenue has computed the profit at ₹ 22,63,47,496/ on the basis of the sales of the constructed area made by the assessee leading to a difference of ₹ 6,75,66,545/ only. Under percentage completion method, the profits is determined in the manner as detailed below: Revenue = cost incurred to date / estimated total cost x contract price revenue already recognized 84. Based on the above method, there is no reference to be made to the value of the sales. In other words, under percentage completion method, income of the assessee is computed based on cost incurred to date in proportionate with total estimated cost and total estimated revenue. This method of recognizing the profit is very well accepted by the industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l building under the project name City Centre. There were certain encroachments on such property which were cleared after incurring an expense of ₹ 1,36,25,000/-. Thus the assessee contended that such expenses were incurred in the course of the business and therefore the same are eligible for deduction under the provisions of law. 89. However, the AO was not satisfied with the contention of the assessee on the reasoning that as per the agreement between the assessee and the vendor, it was the duty of the vendor to incur such expenses. Therefore, it was proposed by the AO that the assessee has not incurred such expenses in the course of the business. 90. Nevertheless, the assessee on the question by the AO, submitted that the MOU was cancelled and thereafter development agreement was entered with the owner of the impugned property. As such, the assessee being a developer, was under the obligation to complete the project on time hence incurred such expenses to get the property vacated. As per the assessee, such expenses were incurred in the course of the business. 91. However, the AO disregarded the contention of the assessee by observing that there is no documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and from M/s. Advance Life Style Limited for ₹ 160 crore which included ₹ 5 crore on account of vacation of shops. As the liability to clear the encroachment was of M/s. Advance Life Style Limited, AO has correctly disallowed the claim. In view of the above, the ground of appeal is dismissed. 95. Being aggrieved by the order of the Ld. CIT-A, the assessee is in appeal before us. 95.1 The ld. AR before us contended that impugned expense has been incurred in the course of the business and therefore the same is eligible for deduction. 95.2 On the other hand, the ld. DR before us vehemently supported the order of the authorities below. 96. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the authorities below has made the disallowance on the reasoning that the assessee was not under the obligation to incur such expenses as provided in the MOU with the M/s Advance Lifestyle Ltd. First of all we note that the genuineness of the expenses have nowhere in doubted by the authorities below. It is also an admitted fact on records that the assessee was construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter-alia, found that the assessee has taken loan from the following 5 parties: Hannah Enterprises Pvt. Ltd. ₹ 14,14,291/- Boaston Tradelinks Pvt. Ltd. ₹ 2,87,50,414/- Biraj Manimpex Pvt. Ltd. ₹ 2,64,81,455/- Vansh Glass Industries Pvt. Ltd. ₹ 3,36,84,947/- Sawaca Business Machines Ltd. ₹ 5,39,59,358/- Total ₹ 14,42,90,465/- 101. The AO required the assessee to produce the above 5 parties personally for the purpose of verifying the identity/genuineness of the transaction and creditworthiness of the parties. But the assessee failed to produce such parties. Therefore the AO treated the same as unexplained cash credit under section 68 of the Act and added to the total income of the assessee. 102. Aggrieved assessee preferred an appeal to the Ld. CIT-A 103. The assessee before the Ld. CIT-A contended that it has furnished the primary documentary eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove facts, capacity of the company to lend ₹ 14,14,291/- is not proved. 6.6. As regard Boaston Tradelinks Pvt. Ltd., appellant has submitted copy of confirmation, copy of annual report and copy of acknowledgement of I.T. return before the AO. The appellant has shown unsecured loan of ₹ 2,87,50,414/- from the above company. On perusal of balance sheet, it is seen that the company has share capital of ₹ 1 lac and reserve and surplus of ₹ 6,14,633/-. The income of the company for A. Y. 2014-15 is ₹ 3,15,621/-. In view of the above, capacity of lender is not proved. 6.7. As regard Biraj Manimpex Pvt. Ltd., appellant has submitted copy of confirmation, copy of annual report and copy of acknowledgement of I. T. return before the AO. The appellant has shown unsecured loan of ₹ 2,64,81,455/- from the above company. The income of the company for A.Y. 2014-15 is ₹ 9,01,581/. In view of the above, capacity of lender is not proved. 6.8. As regard Vansh Giass Industries Pvt. Ltd., appellant has submitted copy of confirmation and copy of acknowledgement of I. T. return before the AO. The appellant has shown unsecured loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd reported in 208 ITR 465 wherein it was held as under: It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity of the creditors had not been established, consequently, the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, it was to be presumed that the transactions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharged its onus imposed under section 68 of the Act. 111. In view of the above, we set aside the finding Ld. CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 112. In the result, appeal of the assessee is allowed. Coming to ITA No. 547/Ahd/2018 an appeal by the Revenue for A.Y. 2014-15 113. The Revenue has raised following grounds of appeal: 1. The Ld. CIT(A) has erred in law and on facts in restricting the unexplained work in progress without taking into consideration the fact that the assessee has adopted percentage completion method for determining the revenue during the under consideration 1.1 The Ld CIT(A) failed to appreciate that the assessee has by its own submission estimated the net profit at 10.21% of the total estimated sales 1.2 The Ld. CIT(A) has erred in law and on facts in deleting the addition u/s 69 of the Act ₹ 38,69,50,307/- on account of bogus Booking Advances 2.1 The Ld CIT(A) failed to appreciate that the assessee has riot produced any material confirmation, PAN, address etc of the persons to prove the genuineness of the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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