TaxTMI 
TaxTMI 
2014 (3) TMI 214
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....y introduced unsecured loans to the tune of Rs. 1,38,50,300/- in the following names:- IMG 2.2 The assessee company filed some letters of confirmations signed by some creditors and also produced photo copies of some cheques issued by the following 09 people in favour of the assessee company. 2.3 Thereafter, the Assessing Officer conducted enquiries and found that in case of the following creditors the rigour of section 68 was not satisfied. Accordingly, assessment was framed as under:- 3. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 3.1 As regards cash credit from Smt Nalla Divya, Director amounting to Rs.5,00,000/-, the CIT(A) observed that the Assessing Officer noticed that there was very little balance in the account of Mrs Nalla Divya. Just before she had issued the cheque referred to above, a cheque of Rs. 4,98,000/- had been deposited in her account from M/s. Nalla Malla Reddy Educational Society and M/s Nalla Reddy confirmed having received the cheque from the society. This part is confirmed by the Assessing Officer on page 8 of his assessment order. The CIT(A), therefore, held that all the 03 ingredients of section 68 i.e. identi....
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....ot verified by the bank because the details mentioned by the appellant were incorrect. Even during appeal proceedings, correct details were not filed. Accordingly, the aforementioned addition is confirmed. 3.6 As regards the addition of Rs.70,00,000/- on account of cash credits from Dr. B Gopal Reddy, the Assessing Officer noted that a confirmation letter purportedly signed by Dr. B Gopal Reddy to the effect that a sum of Rs. 70 lakhs was advanced by him to M/s. Harsha Estates Pvt. Ltd. as interest free loan vide cheque No. 092843, ICICI Bank dated 17.10.2007 is filed before the CIT(A) during the course of hearing on 29.11.2010. It is stated before the CIT(A) that since he is NRI, no returns of income are being filed in India. However, the address on the confirmation letter simply says as Jubilee Hills, Hyderabad, without mentioning any door No./locality etc., Except stating the cheque No. and Bank, nothing is mentioned in the confirmation letter regarding the Branch and Account number. The Assessing Officer, therefore, held that in the circumstances, it was not possible to make any further enquiries regarding the genuineness of the transaction in this case. 3.7 The CIT(A) ob....
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....ischarge his onus of proving the genuineness, creditworthiness as well as identity of the loan creditor. It is noticed from the information from banks that the source for the said amount of Rs.3,50,000/- is M/s Nalla Malla Reddy Educational Society only. Therefore, the Assessing Officer concluded that it is evident that the alleged creditor of the assessee company has no credit worthiness in advancing the said sum of Rs.3,50,000/-. 3.9 On appeal, the CIT(A) observed that the creditor Shri Mohan Reddy is not even an income tax assessee and his whereabouts are unknown as well as the genuineness of the transaction is in severe doubt. His bank account has clearly been used as a conduct by the appellant. He, therefore, concluded that section 68 clearly applies and the addition was confirmed. 3.10 As regards the addition of Rs.5,00,000/- on account of cash credits from Sri P Dharma Reddy, the Assessing Officer observed that the assessee company filed a letter of confirmation purportedly signed by Sri P Dharma Reddy, stating that he had invested an amount of Rs.5,00,000/-, in M/s Harsha Estates Pvt. Ltd, vide cheque No.005581 at Allahabad Boduppal Branch, Hyderabad dated 13.11.2007 ....
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....n amount of Rs.5,00,000/- M/s. Harsha Estates Pvt. Ltd, vide cheque NO.005701 at Allahabad Bank, Boduppal Branch, Hyderabad dated 18.11.2007 (However, a copy of the instrument filed shows the date as 16.10.2007). It is to be noted that Sri R Venkat Reddy is not assessed to income tax. The assessee company also filed a copy of the instrument bearing No. 005701, dated 16.10.2007 issued from the account No.1334 by the seid Sri R Venkat Reddy from the Allahabad Bank account, Boduppal in favour of the assessee company. Enquiries made with the Allahabad Bank revealed that there is a deposit of Rs.5,00,000/- by way of transfer in his said bank account prior to issue of the cheque. However, the balance before the deposit is mere Rs.1,000/- only. The Assessing Officer further observed that the bank enquiries further revealed that the said deposit in the bank account is by way of depositing the pay order bearing No.00009 issued by SBI Gowliguda through clearing. Further enquiries made with SBI, SMECC Branch, Himayat Nagar and SBI, Gowliguda Branch revealed that the origin of the said pay order is from the account of Nalla Malla Reddy Educational Society bearing NO.30051729280. A copy of the ....
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.... Officer noted that the bank enquiries further revealed that the said deposit in the bank account is by way of depositing the pay order bearing No.000011 issued by SBI Gowliguda through clearing. Further enquiries made wi th SBI, SMECC Branch, Himayat Nagar and SBI, Gowliguda Branch revealed that the origin of the said pay order is from the account of Nalla Malla Reddy Educational Society bearing No.30051729280. A copy of the said pay order has also been furnished by the bank authorities. In the light of the above information with a view to examine the alleged creditor Sri V Mohan Reddy, the assessee company was asked to produce him before the undersigned. However, the assessee company could not produce Sri V Mohan Reddy for examination as required. The Assessing Officer, therefore, held that the assessee could not discharge his onus of providing the genuineness, creditworthiness as well as identity of the loan creditor. Further, the Assessing Officer held that It is noticed from the information from the banks that the source for the said amount of Rs.5,00,000/- is M/s Nalla Malla Reddy Educational Society only and, therefore, it is evident that the alleged creditor of the assessee....
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....ssee company could not produce Sri V Mohan Reddy for examination as required. In view of the above observations, the Assessing Officer held that the assessee could not discharge his onus of providing the genuineness, creditworthiness as well as identity of the loan creditor. He further held that it is noticed from the information from the banks that the source for the said amount of Rs.5,00,000/- is M/s. Nalla Malla Reddy Educational Society only and, therefore, it is evident that the alleged creditor of the assessee company has no creditworthiness in advancing the said sum of Rs.5,00,000/-. 3.17 The CIT(A) observed that the creditor Shri Mohan Reddy is not even an income tax assessee and His whereabouts are unknown as well as the genuineness of the transaction is in severe doubt. His bank account has clearly been used as a conduct by the appellant. He, therefore, held that section 68 clearly applies and the addition made by the Assessing Officer was confirmed. 3.18 As regards the addition of Rs.20,00,000/- on account of non-production of evidence regarding certain expenses, the AO during the course of assessment proceedings while verifying the books of accounts and vouchers,....
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....the IT Act disbelieving the credit from Sri N. Mohan Reddy. 6. The learned CIT(A) erred in confirming addition of Rs. 5,00,000/- made by the Assessing Officer u/s 68 of the IT Act disbelieving the credit from Sri P. Dharma Reddy 7. The learned CIT(A) erred in confirming addition of Rs. 5,00,000/- made by the Assessing Officer u/s 68 of the IT Act disbelieving the credit from Sri R. Venkat Reddy. 8. The learned CIT(A) erred in confirming addition of Rs. 5,00,000/- made by the Assessing Officer u/s 68 of the IT Act disbelieving the credit from Sri V. Mohan Reddy. 9. The learned CIT(A) erred in confirming addition of Rs. 5,00,000/- made by the Assessing Officer u/s 68 of the IT Act disbelieving the credit from Sri R. Srinivas Reddy. 10. The learned CIT(A) erred in confirming addition of Rs. 20,00,000/- made by the Assessing Officer separately on the ground that there are no proper vouchers. 5. The Revenue is also in appeal before us with regard to the deletion of additions raising the following grounds of appeal in its appeal in ITA No. 1870/Hyd/2012: "1. The CIT(A) erred on facts and in law in granting relief to the assessee. 2. The CIT(A) erred in granting re....
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...., Charminar Branch, Hyderabad. After availing this loan on 08/10/2007, Nalla Malla Reddy Educational Society ( Nalla Malla Reddy Engg. College) repaid the loan back to these parties. On receipt of money by these parties, they issued cheques on various dates ranging from 12/10/2007 to 16/10/2007 as mentioned at para 2.2 of this order. Being so, we find that the genuineness of the transactions are established as the transactions are routed through banking channels. It is seen that the loans were received through a/c payee cheques, detail of which had been filed by the assessee by filing the copy of the bank a/c of the loan creditors. Thus where the return of income is filed by the creditors of the assessee and is accepted by the Department, and the payments are through a/c payee cheques the genuineness of the transaction cannot be doubted. Before us, the assessee has demonstrated by way of material evidence that the cash credits received by it are genuine and the assessee has fulfilled the conditions laid down u/s 68 of the Act. Therefore, we set aside the order of the CIT(A) and delete the additions made u/s 68 of the Act on account of cash credits received by the assessee. 9. An....