TMI Blog2023 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... based on their relevance and credibility, to consider if the burden is discharged or not. However, the same seems to be not the case here as presuming the information received from the investigation wing to be sacramental, the Ld. Tax Authorities have failed to appreciate the relevant evidence produced by the assessee and have failed to consider it without impeaching the credibility of that evidence. Suspicion howsoever strong cannot take place of proof. Tax Authorities have fallen in error in citing suspicion alone instead of sifting truth from the evidence produced before it. When the interest income of M/s. Arti Securities and Services Pvt. Ltd. stands accepted by the Department, then the loan disbursed by it to earn that income cannot be considered to be tainted, by attributing suspicion to the identity or creditworthiness of sources of M/s. Arti Securities and Services Ltd. as a lender. Assessee has also provided the copy of order of CIT(A) in case of M/s. Arti Securities and Services P. Ltd. CIT(A) has deleted an addition made u/s 68 in the hands of this company - so called suspicious and dubious activities of the lender M/s.Arti Securities and Services P. Ltd. have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing show cause, the unsecured loan of Rs. 1,75,00,000/- from M/s. Arti Securities and Services P. Ltd. was considered to be unexplained. Ld. AO concluded that identity of creditor and the creditworthiness was not proved. Ld. AO specifically considered a trail of deposit received by Lender, and made following relevant observations in para 8(2):- 2. Creditworthiness of the creditors In this regard, as seen above it can be stated that the M/s. Arti Securities and services P. Ltd. creditworthiness is doubtful as the source of funds received by them remains unexplained. As seen from the HDFC Bank Statement of M/s. Arti Securities and Services Pvt. Ltd. submitted by the assessee company, the assessee company has received debit entry of Rs. 50,00,000/- on 22/09/2014 and on the same day there is a credit entry of Rs. 50,00,000/- from Express Towers Pvt. Ltd. further on 23.09.2017 there is credit entry of Rs. 50,00,000/- from Express Towers Pvt. Ltd. and on the same date a debit entry in the name of the assessee company of the same amount. Further, on 17/11/2017 there is a credit entry in the bank statement of Rs. 50,00,000/- from Shridhar Portfolio Management Ltd and furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce the shareholders before the AO and if the appellant falters, the additions can be made u/s 68 of the Act. Section 68 of the Act has been amended by Finance, 2012 w.e.f. 01.04.2013 whereby the onus is cast upon the appellant company to justify the sources of deposit to explain the source of the source loans which has been held to be clarificatory in nature. In the present case, the appellant company is a private company who could not prove the genuineness of the lender. But is clear from the facts as discussed above that the appellant could not prove the same, therefore, in the light of above facts and case laws as discussed above, I am of the considered view that the AO was justified to make addition u/s 68 of the Act. Therefore, disallowance of Rs.1,75,00,000/- u/s 68 of the Act made by the AO is confirmed. These grounds of appeal are ruled against the appellant. 3. The assessee has approached the Tribunal raising following grounds : 1(i) That on facts and circumstances of the case, the CIT(A) was not justified in upholding the addition of Rs. 1,75,00,000/- u/s 68 even though same is illegal and wholly without jurisdiction. (ii) That notice u/s 143(2) was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the Ld. Tax Authorities have not disputed the genuineness of the documents placed on record of M/s. Arti Securities and Services Pvt. Ltd. and paying undue emphasis or non-production of the Directors of lender company, have drawn a presumption against the assessee. It was submitted that judgments in CIT vs. Nova Promoters and Finlease (P) Ltd. (2012) 342 ITR 169 (Del) and CIT vs. N R Portfolio (P) Ltd. (2014) 264 ctr 258 (Del.) have been relied without the facts being relevant as there in the bogus share capital was in dispute however, in the case of assessee the matter involves squared up loan account wherein the assessee has established not only the source but even the source of shares as the deposits received from M/s. Express Towers Pvt. Ltd. by M/s. Arti Securities and services P. Ltd. have been accepted by the revenue in a completed assessment of M/s. Express Tower Pvt. Ltd. u/s 143(3) of the Act. 5.1 It was submitted that in regard to the lender company the return of income declaring income from the interest has been accepted that in fact establishes/genuineness of loan transaction with the appellant company. It was submitted that in another case titled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with Interest enclosed at page 99 -102 of the paper book. Iv Confirmation from the lender company enclosed at page 103 - 105 of the paper book. V Bank Statement of lender company enclosed at page 106 -110 of the paper book. Vi MCA Current Status of lender company enclosed at page 111 of the paper book. Vii Details of year-wise interest paid to M/s Arti Securities enclosed at page 179 of the paper book. Viii Copies of Form 16A issued on deduction of TDS to M/s Arti Securities enclosed at page 180 -183 of the paper book ix. Copy of Intimation dt. 11/10/2016 of M/s Arti Securities passed u/s 143(1) for A.Y. 2015-16 enclosed at page 189 - 194 of the paper book. 7.1 The Bench is of considered opinion that when M/s. Arti Securities and Services P. ltd. is a non-banking financial institution and all particulars with regard to constitution and composition were made available by the assessee and when the ld. AO had access to all bank accounts of M/s. Arti Securities and Services Pvt. Ltd. and even examined the trail leading to loan to the assessee, then what substantial difference the appearances of Director of M/s. Arti Securities and Services Pvt. Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he copy of order of Ld. CIT(A) in case of M/s. Arti Securities and Services P. Ltd. for A.Y. 2014-15 available at page no. 112-134 of the paper book which shows that Ld. CIT(A) has deleted an addition made u/s 68 of the Act in the hands of this company and the order has attained finality order dated 06.11.2020 from Lucknow Tribunal vide ITA no. 553/Lkw/2018. The same suggests the so called suspicious and dubious activities of the lender M/s.Arti Securities and Services P. Ltd. have been examined in earlier years and nothing was proved by the Department. 10.1 In this context it can also be observed that in a case title M/s. S.P. Gupta and company vs. ITO, ITA No. 1593/Del/2018 by order dated 07.07.2021, a Co-ordinate Bench of this Tribunal has considered the loan transaction from the M/s. Arti Securities and Services Pvt. ltd. and considered it to be a genuine transaction. The identity and source being considered established. The Co-ordinate Bench has also ruled that non-appearance of lender company during assessment cannot be basis for brushing aside the clinching direct evidence brought on record by the assessee. 11. Then as held by Hon ble Delhi High Court in CIT Versu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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