TaxTMI 
TaxTMI 
TaxTMI 
2012 (9) TMI 995
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....re inter-connected they are disposed of together for the sake of convenience. 5. Assessee is a Private Limited Company engaged in the business of embroidery work on grey cloth on job work basis. Assessee filed its return of income on 13-11-2007 declaring total income of Rs. Nil. The case was selected for scrutiny. During the course of assessment proceedings the A.O. observed that assessee had during the year issued shares of ₹ 18,07,000/-and had taken unsecured loan of ₹ 38,49,950/-. The assessee was directed to submit confirmations from the share applicants and the lenders. To verify the genuineness, summons were issued to all the persons u/s. 131 for personal attendance. They were asked to produce the bank pass books along with the details of transactions entered with the assessee. The A.O. recorded the statements of the persons who attended in response to the summons. Based on their examination the A.O. analysed the facts and observed as under: "3.6. From the above analysis following observations are made: i) All the persons have issued a cheque/drew D.D. in favour of the assessee on the same day or after one/two days of depositing the cash in their bank ac....
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.... of facts of the case, I am of the considered opinion that issue under consideration stands squarely covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Lovely Export Pvt. Ltd., cited supra. I agree with the contention of appellant that distinction drawn by A.O. on the ground that in that case, only share application money was received whereas in the instant case shares have actually been issued, is not valid as shares are ultimately issued to the persons from whom share application money is received and further, assessee has clearly established the identity of all the parties. The ratio of various other judicial pronouncements cited above is also applicable to the facts of instant case. Further, there is no cogent evidence on record which indicates that amount received as share capital represents unaccounted income of assessee. In view of the above, the addition of ₹ 18,07,000/- is directed to be deleted in the appellant company's hands and the A.O. is directed to inform the A. Os of these parties to ascertain the genuineness of the nature and quantum of claimed income and share application amounts in respective hands." 8. With respect to th....
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....rawn especially when there are no materials on record which indicate that amount received as loan actually represents unaccounted income of assessee. Once assessee filed complete details including income tax particulars of the depositors, the initial burden lies upon the assessee in establishing the genuineness of loan transactions clearly stands established. I am of the opinion that the decision of Hon'ble jurisdictional Gujarat High Court in the case of Dy. CIT vs. Rohini Builders. (256 ITR 230)(Guj.) is directly applicable to the facts of the case. Hence, assessee has clearly discharged the burden cast on it in establishing the genuineness of loans and in view of above decision of Gujarat High Court, the addition of ₹ 17,00,000/- is not sustainable and hence, the same is directed to be deleted. As regards the remaining 9 parties who are not assessee to tax, it is seen that one party viz. Shri Jignesh R. Vamja from whom loan of ₹ 1,50,000/- is received by assessee appeared before A.O. at the time of assessment proceedings and six parties viz.Balwant N. Vekariya and Paresh H. Mehta,Damjibhai J. Sayja, Dineshbhai L. Gundarani, Laljibhai N.Vekariya and Paresh L. Na....
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.... record, their creditworthiness cannot be doubted. Even otherwise also, it is seen that burden cast on assessee stands clearly discharged in view of filing of various evidences and addition cannot be made if source of source is not explained. In my opinion the decision of Hon'ble Patna High Court in the assessee of Sarogi Credit Corporation vs. CIT 103 ITR 344 (Pat) is directly applicable to the facts of the instant case. In said case, it has been held that once the identity of third party creditor is established before the ITO and the creditors have pledged their oath that they have advanced the amounts in question to assessee, the burden immediately shifts on to the department to show as to why assessee's case could not be accepted and as to why it must be held that the entry though purporting to be in the name of a third party, still represented the income of assessee from a suppressed source. The above decision of Patna High Court has also been concurred with by Hon'ble Gujarat High Court in the case of CIT vs. Pragati Co- operative Bank Ltd. 278 ITR 170 (Guj.) .Apart from above, the decision of Madhya Pradesh High Court in case of CIT vs. Metachem Industries - 24....
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....idence like copy of PAN card, form 7/12 etc. He relied on the decision of Hon'ble Supreme Court in the case of Lovely Export Pvt. Ltd. (216 CTR-195)(SC). With respect to the deletion of addition made on account of unsecured loan, the Ld. A.R. submitted that out of 21 depositors 12 depositors are assessed to tax. In respect to the depositors assessed to tax the assessee has filed their Income tax return acknowledgement, account statement etc. In respect of the remaining 9 depositors, they had appeared before the A.O. during the course of remand proceedings, have confirmed the loan transactions and furnished the proof relating to agricultural land to support their capacity. The assessee relied on the decision of Sarogi Credit Corporation vs. CIT 103 ITR 344 (Pat.). He thus relied on the order of CIT (A) and urged that the same be upheld. 10. We have heard the rival submissions and perused the material on record. The factual matrix of the case is that the assessee had received share application amounting to ₹ 18,07,000/- and unsecured loans of ₹ 38,49,950/- during the year. The assessee was asked to produce the lenders and submit the necessary proof to establish the i....