TMI Blog2023 (7) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... en filed against the order CIT(A)-I, New Delhi dated 18.03.2016 for A.Y. 2011-12. 2. The ground has been raised by the revenue is as follows:- 1. The Ld. CIT(A) has erred in law and on facts in deleting addition of Rs. 3,60,00,000/- made by A.O. u/s. 68 of I.T ACT 1961, being unexplained cash credit. 3. The ld. Senior DR supporting the assessment order submitted that during the year under consideration the assessee had taken unsecured loan of Rs. 3.60 crore from M/s. Fennie Commercial Pvt. Ltd. and the assessee was asked by the Assessing Officer to give documentary supportive evidence establishing the creditworthiness of creditor/lender and genuineness transaction explaining the source of credits to discharge onus as per requirement of sec 68 of the Act. The ld. Senior DR further submitted that despite several opportunities given by the Assessing Officer the assessee failed to prove creditworthiness of lender and genuineness of transaction till the date of passing assessment order. Therefore the Assessing Officer was quite correct and justified in making addition u/s. 68 of the Act treating the unsecured loan as unexplained credit. He further submitted that despite abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein it was clear that the assessee company was having share premium reserve in the immediately preceding previous year out of which unsecured loan amount was given to the assessee company. The ld. counsel vehemently pointed out that the ld. CIT(A) has granted relief to the assessee after judicious examination of documentary evidences filed by the assessee therefore no interference is called for therein. 6. The ld. counsel submitted that the ld. CIT(A) has rightly considered remand report of Assessing Officer along with other documentary evidences which were vital to the issue and clearly established identity, capacity and creditworthiness of lender company as well as genuineness of transaction and thus his conclusion deleting the base less addition is quite correct and justified which may kindly be upheld. He has also placed reliance on various judgments including judgment of Hon ble Supreme Court in the case of CIT vs Odeon Builders Pvt. Ltd. in Review Petition (C) Diary No. 22394 of 2019 in Civil Appeal No. 9604-9605 of 2018 and judgment of Hon ble jurisdictional High Court of Delhi in the case CIT vs Vrindavan Farms (P) Ltd. in ITA No. 71 of 2015 dated 12.08.2015 and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary enquiry with reference to the lender party. The Assessing Officer after conducting enquiries with reference to the lender party has submitted remand report vide his letter dated 2.03.2016 which was forwarded by the Addl. CIT, Range 2 vide his letter dated 08.03.2016. The relevant part of the remand report is submitted as under: 4. As per directions received, the submissions made by the assessee before your good self as well as additional evidence submitted by it for admission at the appellate stage have been carefully perused. Besides, the additional evidence furnished by the assessee has also been independently verified from this Office by way of issue of letter us 133(6) of the Income Tax Act, 1961, to the third party concerned, i.e., to Ms Fennie Commercial Private Limited, 96-AV9, Neelkanth Apartments, Kishan Ganj, Vasant Kunj, New Delhi - 110070. 5 The said party has furnished its detailed reply to the letter issued us 133(6) vide its letter dated 08.01.2016, which is placed on record. The said party has given the details of the share application money of Rs. 3.60 crores advanced by it to the appellant company and also produced the ledger account of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ennie Commercial Private Limited, PAN AAACF9549A, from whom it had allegedly received unsecured loan of Rs. 3.60 crores whereas the said party is showing this Loan Advance as Share Application Money . It is seen from the remand report that Assessing Officer has carried out enquiry with the lender party us 133(6) of the I.T. Act. The said party furnished the detailed reply vide its letter dated 08.01.2016. It has been reported by the AO that Ms Fennie Commercial Pvt. Ltd. has confirmed that it has given share application money of Rs. 3.60 crore which has been accounted for by the appellant as unsecured loan in its balance sheet. The AO has also examined the ledger account of the appellant company from the lender party's books of accounts. The lender party has also filed copy of its return of income, audit report, balance sheet, profit loss account and annexures. It has been observed by the AO from the annexures of the audit report that lender has shown loans and advances totaling Rs. 7,41,00,000/- in its balance sheet. The appellant's name is also appearing in the loan and advances and has been shown as share application money of Rs. 3.60 crore in the name of appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine it and reject it on tenable grounds. In case he wishes to rely on report of investigation authorities, some meaningful enquiry ought to be conducted by him to establish a link between assessee and alleged hawala operators. Where assessee had filed documents including certified copies issued by Registrar of Companies in relation to share application, affidavits of directors, Form 2 filed with Registrar of Companies by such applicants, confirmations by applicants for company's shares, certificates by auditors, etc., Assessing Officer was not justified in making addition under section 68 on account of share application money merely on general inference to be drawn from the reading of the investigation report. The least that Assessing Officer ought to have done was to enquire into matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors. b. Commissioner of Income-tax v. Mark Hospitals (P.) Ltd. [ 2015 ] 58 taxmann.com 226 (Madras) HIGH COURT OF MADRAS Section 68 of the Income-tax Act, 1961 - Cash credit (Burden of proof - Assessment year 2006-07 - Assessee had obtained unsecured loans from agriculturists and submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions rendered by the hon'ble Supreme Court of India as well as the hon'ble jurisdictional High Court in the impugned order and finally has held that the assessee has substantiated the transaction regarding share application money received by it was genuine transaction and the same were not accommodation entries. He did not find any evidence collected by the Assessing Officer which could prove otherwise and deleted the additions in dispute. As regard the addition of Rs. 12,500 made on account of commission which was presumed to have been allowed by the assessee for obtaining the hawala entry in dispute, the learned Commissioner of Income-tax (Appeals) observed that the Assessing Officer was not able to bring anything on record that it was the assessee's own money which was routed in the form of share application money and has rightly deleted the same. 7. Keeping in view all the facts and circumstances, we are of the considered view that the learned first appellate authority has passed the impugned order under the law and according to the facts of the present case and has rightly deleted the addition in dispute. We find no infirmity in the impugned order and upho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... romoters (supra), the Court has taken note of a situation where the complete particulars of the share applicants are furnished to the AO and the AO fails to conduct an inquiry. The Court has observed that in that event no addition can be made in the hands of the Assessee under Section 68 of the Act and it will be open to the Revenue to move against the share applicants in accordance with law. 5. In the facts and circumstances of the present appeals, the Court is satisfied that no substantial question of law arises. The appeals are dismissed. The facts of the above cited judicial pronouncements are identical with the facts of the appellant case, therefore, the ratio of the above cited judicial pronouncements is squarely applicable to the facts of the appellant case, hence, unsecured loan received by the appellant from M/s Fennie Commercial Pvt. Ltd. cannot be termed as unexplained income of the appellant and cannot be added u/s 68 of the I.T. Act. Therefore, the unsecured loan received from the above mentioned party is treated as genuine transaction and cannot be added us 68 of the I.T. Act. Therefore, the addition of Rs. 3,60,00,000/- is deleted. 9. At the very outse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deposited by the lender company prior to transmitting amount to the said assessee but no such situation of factual matrix has been found in the present case. On being asked by the bench the ld. Senior DR could not show us any specific point or factual position which could lead us to apply the said prepositions to the present case in favour of the revenue as the facts and circumstances of present are quite distinguishable from said two cases. 11. In view of foregoing discussion we are inclined to agree with the conclusion drawn by the ld. CIT(A) that the assessee has successfully discharge onus lay on him as per requirement of section 68 of the Act and hence proved identity, capacity and creditworthiness of lender company and genuineness of transaction and no addition u/s. 68 of the Act was required to be made thus he was right in deleting the addition. our conclusion also gets strong support from the judgments Hon ble Supreme Court in the case of CIT vs Odeon Builders Pvt. Ltd. (supra) and judgment of Hon ble jurisdictional High Court of Delhi in the case CIT vs Vrindavan Farms (P) Ltd. (supra) and in the case of PCIT vs. Goodveiw Trading Company (supra). Accordingly, grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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