TMI Blog2022 (9) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... by the CIT(A) who had rightly vacated the characterization of the loans raised by the assessee company from the aforementioned seven lenders as unexplained cash credits u/s.68 uphold the same. Thus, the Grounds of appeal raised by the revenue are dismissed in terms of our aforesaid observation - Decided against revenue. - ITA No.125/RPR/2018 - - - Dated:- 23-9-2022 - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : Shri Amit M Jain, Advocate For the Revenue : Shri G.N Singh, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the department is directed against the order passed by the CIT(Appeals)-II, Raipur, dated 27.04.2018, which in turn arises from the order passed by the A.O under Sec 143(3) of the Income-tax Act, 1961 (in short the Act ) dated 31.03.2016 for assessment year 2013-14. Before us the department has assailed the impugned order on the following grounds of appeal: 1. On the facts and in the circumstances of the case, the CIT(A) erred in deleting the additions u/s.68 of the Income Tax Act, 1961 of Rs.2,70,00,000/- being unexplained cash credits in the form of unsecur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akiranTradecomPvt. Ltd. Rs.25,00,000/- 7. Vinishar Commercial Pvt. Ltd. Rs.20,00,000/- Total Rs.2,70,00,000/- As is discernible from the assessment order, the A.O in order to verify the authenticity of the loan transactions is stated to have constituted a team which was sent to Kolkata to make necessary verifications as regards the authenticity of the aforesaid loan transactions. However, as stated by the A.O, the aforesaid team had therein reported that as none of the aforesaid lender companies were found at their respective addresses, therefore, necessary enquiries about the veracity of the loan transactions could not be carried out. On being confronted with the aforesaid fact the assessee denied the allegation. It was claim of the assesee that as all the aforesaid lenders were holding corporate identity numbers and were duly registered under the Companies Act, 1956 and were regularly filing their returns with the registrar of companies, therefore, it was absolutely incorrect fact that the whereabouts of the said companies c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contentions advanced by the assessee before him concurred with him that the loans in question raised from the seven parties could not have been held as unexplained cash credits u/s.68 of the Act. It was observed by the CIT(Appeals) that a perusal of the assessment record did not make any mention about any enquiry carried out by the A.O as regards the lender companies as was relied upon by him for drawing adverse inferences as regards the very existence of the aforesaid companies. It was noticed by the CIT(Appeals) that there was no whisper in the assessment order about the details of enquiry conducted and places which were visited by the team that was stated to have been deputed to carry out enquiries as regards the lender companies. The CIT(Appeals) observed that the assessee company had duly substantiated the source of source of the lender companies on the basis of the details which were filed in the course of the assessment proceeding. The CIT(Appeals) further taking cognizance of the balance sheets of the seven lenders companies observed, that the same duly substantiated their financial credibility for advancing the respective loans to the assessee company. It was observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s drawn in the hands of the assessee. Also, it was observed by the CIT(Appeals) that though the assessee had duly substantiated the identity and creditworthiness of the lender companies, and also the genuineness of loan transaction in question, but the A.O had summarily drawn adverse inferences without carrying out any verifications and taking recourse to the provision of section 133(6) or Section 131(1) of the Act. Relying upon the judgment of the Hon ble High Court of Chhattisgarh in the case of Pawan Kumar Agarwal, Tax Case No.24 of 2011 dated 04.04.2017, it was the claim of the assessee before the CIT (Appeals) that now when it had discharged the onus that was cast upon it as regards proving the authenticity of the loan transactions in question, then, that a mandatory obligation was cast upon the A.O to have for rebutted the genuineness of the transaction as had been substantiated by the assessee on the basis of documentary evidence before him by carrying out verifications and taking recourse to the provisions of section 133(6) or Section 131(1) of the Act. The CIT(Appeals) considering the totality of facts involved in the case before him was of the view that as the assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta, ledger accounts of the lender companies, bank account/statement of the assessee company, copies of returns of income of the lenders, audited financial statements of the lenders, sources out of which the lender companies had advanced loans, confirmations of the lender companies, bank account statements of the lender companies, memorandum of association and article of association of the lender companies, but strangely no reference of the same is discernible from the order passed by the A.O. Also, as regards the creditworthiness of the aforementioned lender companies, the Ld. Authorized Representative (for short AR ) for the assessee during the course of the hearing of the appeal had taken us through the financial statements of the respective lender companies, which as noticed by the CIT(Appeals) duly substantiated their creditworthiness for advancing the respective loans to the assessee company by observing as under: In the case of Apnapan Mercantile Pvt. Ltd, Kolkatta I observe that the revenue from operations has been declared at Rs.2,65,78,946/- plus other income of Rs.1,883,014/- totaling Rs.2,84,61,960/-. This company has given a loan of Rs.37.50 lakhs. In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the lender companies the authenticity of the loan transactions have duly been substantiated by the assessee by placing on record details as regards the source out of which loans were advanced by them to the assessee company, which fact as is discernible from the records to which our attention was drawn by the Ld. AR are for the sake of clarity culled out as under: (Apnapan Mercantile Pvt. Ltd.) Source of fund for F.Y.2012-13 (Bhimtal Nirmal Pvt. Ltd.) E. Source of Fund : that the fund was received from Mr. Sachin Deshmukh towards refund of Loans: Amount Name Address PAN 5000000/- Sachin Deshmukh (Goodfaith Infra Ventures Private Limited) 5. Source of Fund : that the money for loan given to M/s. Mahavir Infracom Pvt. Ltd. was received from M/s. Coutnrywide Tradecom Pvt. Ltd. against sale of shares: Date Amount Name Address PAN 01-02-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amount of Rs.8,63,105/- was in fact advanced by the assessee company to the aforementioned party during the year in which, thereafter was received back by the assessee in the succeeding year on 10.03.2015 3. Confident Vinimay Private Limited Loan repaid in two tranches (including interest) (i) 25.11.2013 Rs. 14,00,000/- (ii) 27.11.2013 Rs.13,11,094/- Total Rs.27,11,094/- 4. Good Faith Infra Ventures Pvt. Ltd. Loan repaid in three tranches (including interest) (i) 26.11.2013 Rs. 8,00,000/- (ii) 27.11.2013 Rs.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him u/s.133(6) or u/s.131 of the Act for disproving the assessee s claim of having raised genuine loans from the aforementioned parties, but we find that nothing had been done by the AO in the case before us. In fact, we would mince no words in observing that there had been no attempt on the part of the AO in even carrying out any exercise to dislodge the authenticity of the loan transactions in question. Also, our aforesaid view that in case the A.O had any doubts as regards the authenticity of the loan transactions under consideration then he ought to have exercised the powers vested with him u/s.131 of the Act and summoned the said lenders and made requisite enquiries from them is supported by the judgment of the Hon ble High Court of Karnataka in the case of G. Shubha Devi Vs. ITO, 307 CTR 536 (Kar.). 11. On the basis of our aforesaid deliberations, we concur with the view taken by the CIT(Appeals) that as not only the assessee had duly substantiated the authenticity of the transaction to the hilt on the basis of supporting corroborative documentary evidences, but it is also a fact to which we cannot be oblivion that the A.O in the present case before us had except for ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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