TaxTMI 
TaxTMI 
2012 (11) TMI 98
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....Shukla 90,000 6 V.M. Sangle 2,00,000 7 Avitech Engineering Pvt. Ltd., 50,000 8 Virangana Mishra 40,000 9 Vidhanchandra Mishra 65,000 10 Chandrahas Mishra 95,000 11 Priti Mishra 3,16,000 12 Anil Kumar Mishra (HUF) 1,00,000 13 Anil Kumar Mishra 27,09,680 TOTAL 49,30,680 4. The AO asked the assessee to produce the above persons along with supporting evidences to prove the identity and credit worthiness of the loan creditors and the genuineness of the transactions. 5. The assessee produced the persons mentioned at Sl.Nos. 1,2, 4, 8, 9 and 10. The assessee expressed his inability to produce parties mentioned at Sl.Nos. 3, 5 and 6. The AO noted from the bank statements furnished by the assessee that in most of the cases there was cash deposit in the bank account of the respective persons immediately before issuing of DD/Cheques towards the loans. It was observed by the AO that in some cases where sources of funds were stated to be out of Agricultural income, no supporting evidences substantiating receipt of Agricultural income was filed. It was further observed by the AO that the bank acco....
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....stence of agricultural land holdings by the director of the company, Shri A.K. Mishra and his relatives. It was submitted that Shri A.K. Mishra, who is director of the company, is a native of Hardol Dist. in U.P. and it is natural for him to have his land holdings at his native place. As regards variation in the quantum of agricultural income from agricultural lands, it was clarified that agricultural produce depends on so many factors like availability of water, labour, personal attention of the owner, quality of soil, seeds, fertilizers used and so on. As regards the inter-transfer of funds to the account of various persons, it was submitted that all the persons referred to by the Assessing Officer are close relatives and such practice of transferring funds to each other have been followed for years together. It was argued that so far as there is no violation of the provisions of the Act, mere inter-transfer of transactions cannot be taken as a ground for doubting the genuineness of the transactions. It was stated that all the documentary evidences establishing the identity, and creditworthiness of the loan creditors and genuineness of the loans were produced before the Assessing....
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....utiny proceedings started. The person had no financial capacity to advance Rs. 5,50,000/- which includes Rs. 40,000/- advanced during the year. He therefore disbelieved the credit worthiness of the loan creditor and upheld the addition made by the AO amounting to Rs. 40,000/- in the case of Virangana Mishra. 11. Similarly in the case of Sri A.K. Mishra the learned CIT(A) noted that the Director had advanced a loan of Rs. 27,09,680/- and has also filed return of income declaring income at Rs. 19,06,072/-. From the details of bank account furnished by the assessee to substantiate the source of loan of Rs. 27,09,680/- the learned CIT(A) noted that the assessee has claimed to have received Rs. 5,34,680/- transferred from Smt. Priti Mishra, wife of the assessee, the details of which are as under : Rs.1,20,000/- 19-07-2004 Rs.3,00,000 /- 17-03-2005 Rs.1,14,680/- 18-03-2005 It was explained that Smt. Priti Mishra is the proprietor of M/s. Omkareshwar construction and the loan given by Priti Mishra is out of sources available with her and Omkareshwar construction. The learned CIT(A) noted from the remand report furnished by the AO that in the months of February and Ma....
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.... is not in the habit of keeping huge cash on hand. Further the income declared from contract work has been estimated u/s. 44AD. He noted from the bank account furnished by the assessee that apart from the cash deposit which were utilized for issue of cheques to the assessee there are no other cash deposits of such magnitude. All these facts according to the CIT(A) clearly establish that the credits are only accommodation entries and the amounts were transferred after receipt of equivalent amount in cash for the entry amount. The loan creditor also in his statement recorded during the course of scrutiny proceedings, could not furnish the evidence to prove that the cash deposits were made in the bank account out of the contract receipts and not received from the assessee company. Further, there was also no evidence produced before the AO or before him to substantiate that the contract receipt was received by way of cash. He observed that after excluding the tax on the income returned and the amount paid towards LIC, PPF and after deducting the personal drawings claimed to be Rs. 60,000/- per annum the loan creditor is hardly left with any amount to advance Rs. 4,90,000/- to the asses....
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....uineness of the transaction and capacity of the loan creditor and upheld the addition made by the AO. 16. In the case of Sri V.M. Sangle the learned CIT(A) upheld the action of the AO on the ground that the assessee could not produce the above party before the AO for his examination. Therefore, the identity of the creditor was not established. From the list of the unsecured loan enclosed alongwith the balance sheet filed with the return of income an amount of Rs. 6,90,000/- was shown as outstanding as on 31-03-2005. During the assessment proceedings, it was claimed that Rs. 6 lakhs was wrongly credited to this creditor instead of crediting to other creditors namely Sri Ram Avatar Shukla and Sri Ramdev Avasthi and the outstanding balance was only Rs. 90,000/-. He observed that in this case also the assessee was changing its claim regarding the actual amount received from the creditor and the amount outstanding as on 31-03-2005. He therefore doubted the genuineness of the transaction and upheld the addition made by the AO. 17. As regards loan obtained from Sri Ram Avtar Shukla and Sri Ram Dev Awasthi the learned CIT(A) noted that the assessee and the creditors have taken differ....
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....ditor has furnished evidences in support of having earned agricultural income in the form of receipts issued by Cold Storage units for period subsequent to the assessment year in appeal. However, during the appellate proceedings the assessee submitted the enclosures in the form of Cold Storage receipts which pertain to the period relevant to the assessment year in appeal. He further noted that during assessment proceedings the assessee filed the confirmation letter that he has received only Rs.95,000/- from the creditor during the year and in the affidavit it has been mentioned that it has received Rs. 2,95,000/- from the same person. Therefore, he was of the opinion that no credence can be given to the self serving affidavit filed by the assessee in the name of the creditor. He accordingly upheld the addition made by the AO. 19. Rejecting the various explanations given by the assessee, distinguishing the various decisions cited before him and relying on various other case decisions the learned CIT(A) sustained addition to the tune of Rs. 23,24,680/- out of the total addition of Rs. 49,30,680/- on the ground that the assessee failed to establish the genuineness of the transactio....
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....mises if the Tribunal came to the conclusion that assessee has discharged the burden that lay on him, then it could not be said that such conclusion was unreasonable or perverse or biased on no evidence. He accordingly submitted that no addition could have been made u/s. 68 in the case of Smt. Anita Singh. 23. So far as the amount received from Sri Rohit Dubey amounting to Rs. 4,90,000/- the learned counsel for the assessee submitted that the assessee is the brother of wife of the Managing Director Sri Anil Kumar Singh. Referring to Paper Book Page Nos. 11 to 19 he submitted the acknowledgement of the Income tax return, statement of income for assessment year 2005-06, balance sheet as on 31-03- 2005, loan confirmation and bank account details of the above person was filed before the AO. He had appeared before the AO in response to summon u/s. 131 and has given his statement confirming to have advanced the loan. Therefore, the assessee has discharged the onus cast on it and the same arguments as made in the case of Smt. Anita Singh will be applicable. 24. As regards the loan obtained from Smt. Ram Murti Devi Mishra amounting to Rs. 1,90,000/- learned counsel for the assessee s....
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....tention of the Bench to the affidavit filed by the above person along with his land holding records, Kisan Bahi etc., which is placed at Paper Book Page Nos. 67 to 93. He submitted that the assessee vide letter dated 21-12- 2007 has given the confirmation to the AO stating the reason for giving the amount by draft. He submitted that the above loan creditor appeared before the AO in response to summons u/s. 131 and has made a statement confirming to have given the loan of Rs. 15,95,000/- to the assessee out of his agricultural income. 29. As regards the loan advanced by Sri Anil Kumar Mishra (HUF) the learned counsel for the assessee drew the attention of the Bench to Paper Book Page Nos. 98 to 106 and submitted that the copy of the Income tax acknowledgement, computation of total income, capital account, balance sheet as on 31-03-2005 etc. were filed. He submitted that all these details were furnished before the AO to prove the credit worthiness of the HUF. Further the capital of the HUF as on 01-04- 2004 was Rs. 10,24,817/-, the profit from indirect income was Rs. 60,630/- and profit from Mangalam construction was Rs. 89,826/-. Therefore, there was sufficient balance in the han....
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....alal Jangid Vs. ACIT reported in 217 CTR 354 he submitted that when the assessee filed confirmation from the creditor and produced the creditor before the AO where the creditor affirmed advancement of loan to the assessee, no addition u/s. 68 could be made in the hands of the assessee on the ground that the creditor could not satisfactorily explain the source of the loan. The burden of the assessee in such cases does not extend to prove the source of the creditor from where he made the advance to the assessee. The learned counsel for the assessee submitted that the learned CIT(A) has adopted a pick up and choose policy. He has accepted other loans under identical circumstances whereas sustained the addition in some of the loans. He also relied on various other decisions including the decision of the Pune Bench of the Tribunal in the case of Neha Rathi Vs. ACIT vide ITA No. 307/PN/2010 dated 27-07-2011 for assessment year 2004-05, the decision of the Hon'ble Supreme Court in the case of CIT Vs. Lovely Exports Ltd. reported in 216 CTR 195 (SC) and the decision of Hon'ble Delhi High Court in the case of CIT Vs. Divine Leasing & Finance reported in 299 ITR 268 35. Learned D.R. on th....
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....) has held that once the assessee has disclosed the source from which he has received the loans, the burden stands discharged. It is not the burden of the assessee to show the source (s) of his creditors or to prove the credit worthiness of the sources of the sub creditors. Since in the instant case the assessee has produced the above loan creditors before the AO with sufficient details like Acknowledgments of income tax Returns, copies of profit and loss accounts, balance sheets, confirmation letters, bank statements etc. and since their statement have been recorded by AO u/s. 131 and all of them have confirmed to have given the loans, therefore, in view of the decisions cited above, we are of the considered opinion that the assessee has discharged the burden cast on him in terms of section 68 of the Income Tax Act. Nothing has been brought on record by the revenue that the assessee's own money has come back to him through these alleged loans. Therefore, the order of the CIT(A) confirming the above additions is set-aside and AO is directed to delete the above additions. 38. So far as loans of Rs. 1,90,000 received from Smt. Ram Murti Devi Mishra, mother of the Director, we find....