TaxTMI 
TaxTMI 
TaxTMI 
2018 (4) TMI 793
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....e have heard the learned Representatives of both the parties and perused the material on record. The assesseecompany has raised three effective grounds of appeal which are decided as under. ISSUE No.1 : 4. The assessee-company challenged the addition of Rs. 18 lakhs under section 68 of the I.T. Act in respect of sundry creditor M/s. Transearch Consultations Pvt. Ltd. The A.O. on examining the details of sundry creditors and calling the information under section 133(6) of the I.T. Act found that there is a sundry creditor namely M/s. Transearch Consultations Pvt. Ltd. in a sum of Rs. 18 lakhs. No reply have been received. In the absence of any documents on record, A.O. made the addition of Rs. 18 lakhs in respect of this party under section 68 of the I.T. Act. 4.1. It was submitted before the Ld. CIT(A) that same is running account and there have been substantial movement in account during the year under consideration and as such there is no ground or basis for any addition under section 68 of the I.T. Act. Copy of the ledger account of the party was furnished before A.O. during the course of assessment proceedings. It was stated that there is no case of applicability of Section....
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....t no substantial question of law arises for consideration in this case. The appeal is accordingly dismissed." 5.1. He has also filed copy of the ledger account of the creditor to show that there is a heavy movement of the amounts in question. He has submitted books of account of assesseecompany have been accepted by the A.O. 6. On the other hand, Ld. D.R. submitted that Section 41(1) have been applied by the A.O. Therefore, addition is correctly made. 7. We have considered the rival submissions. The A.O. noted in the assessment order that notice under section 133(6) have been issued to 05 sundry creditors including M/s. Transearch Consultations Pvt. Ltd., but no reply and documents have been furnished. In the absence of requisite information/documents, the A.O. made the addition of Rs. 18 lakhs under section 68 of the I.T. Act. The assessee-company submitted before the Ld. CIT(A) that the same is running account of the creditor and there have been substantial movement in the account during the year under consideration. Copy of the ledger account was furnished before A.O. during the course of assessment proceedings. This fact has not been rebutted by the authorities below. It wo....
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....nd delete the addition of Rs. 18 lakhs. This issue is decided in favour of the assessee-company. ISSUE NO. 2 : 8. The assessee-company challenged the addition of Rs. 5 crores under section 68 of the I.T. Act in respect of unsecured loans from M/s. Maple Technology Ltd., and M/s. Marry Gold Overseas Limited. On examining the details of fresh unsecured loans taken during the year as per the audit report, it was found that assessee-company has taken unsecured loans at Rs. 3.70 crores from M/s. Maple Technologies Ltd., and Rs. 1.30 crores from M/s. Marry Gold Overseas Limited. The assessee-company was asked to furnish confirmation and supporting evidences to establish the genuineness of the loan and creditworthiness of lenders. The assessee-company has furnished the copy of the ledger account of M/s. Maple Technologies Ltd., and M/s. Marry Gold Overseas Limited, along with copy of their bank accounts. The A.O. issued notices under section 133(6) to both the creditors. In response to the same, both the lender companies sent their replies by post enclosing thereof confirmed copies of their ledger accounts, bank statements, ITR and balance-sheets. The A.O. on examining the same noted t....
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....d that this amount will be taxed separately as per the provisions of Section 115BBE of the I.T. Act and the same is not reduced from the claim of business loss. 9. The assessee-company challenged the addition before the Ld. CIT(A) and reiterated the submissions made before the A.O. and submitted that all the documents are part of the record which confirm the transaction with the creditors. Both the creditors are assessed to tax and have confirmed their transactions directly to the A.O. under section 133(6) of the I.T. Act as well as statements of the Director was recorded under section 131 of the I.T. Act in which also he has confirmed giving loans to the assessee-company. The assessee-company made interest payment on the loan which was subjected to TDS. The A.O. considered payments of interests on these loans and accepted. The loans were taken through banking channel and appeared in the bank statement and balance sheet of the creditors. Therefore, no adverse inference should be drawn against the assessee-company. The assessee-company submitted that A.O. cannot ask the assessee-company to prove source of the source and relied upon the following decisions: (i) CIT vs. Shiv Dhooti....
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....poration Pvt. Ltd., 159 ITR 78 in which it was held as under : "In this case the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the revenue that the said creditors were the income-tax assessees. Their index number was in the file of the revenue. The revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The revenue did not examine the source of income of the said alleged creditors to find out whether they were credit-worthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do any further. In the premises, if the Tribunal came to the conclusion that the assessee had discharged the burden that lay on him, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which a conclusion could be arrived at, no question of law as such could arise." 11.1. He has, therefore, submitted that assessee-company proved identity of the creditors and creditworthiness and genuine....
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.... I.T. Act and also confirmed transaction with the assessee-company in the statement recorded under section 131 of the I.T. Act. The parties have been filed confirmed copies of their ledger account, bank statements, ITR and audited balance sheet in which the giving of loan to the assessee-company has been mentioned. All the transactions are routed through banking channel. Copies of the ledger account, income tax return, balance sheet and bank statement are filed on record. In the bank statements of the creditors, no cash was found deposited before giving loans to the assessee-company. If in the case of M/s. Maple Technologies Ltd., there were transactions conducted of Rs. 10 crore would support the explanation of assessee-company that such creditor was having capacity to give loan of Rs. 3.70 crores to the assessee-company. The assessee-company paid interest on these loans to the creditor, on which, TDS have been deducted. The A.O. accepted the claim of assessee-company and did not disallow interest paid on such loans. Both the creditors are unrelated and independent parties. In the case of M/s. Marry Gold Overseas Limited the amount have been returned in subsequent year and in the ....
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....) of his creditor nor is it burden of assessee to prove creditworthiness of source(s) of sub creditors." 14.1. The Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd., ITA.No.71/2015 dated 12th August, 2015 (Del), in which it was held as under : "The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the documents submitted by the assessee, the departmental appeal was dismissed by the Hon'ble High Court. 14.2. The Hon'ble Gauhati High Court in the case of Nemi Chand Kothari vs. CIT and Another (2003) 264 ITR 254 (Gau.) in which it was held as under: Held, (i) that the assessee had established the identity of the creditors. The assessee had also shown, in accordance with the burden, which rested on him under section 106 of the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors which was not in dispute. Once the assessee had established these, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans.....
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....be charged to income-tax as the income of the assessee of that previous year, that the legislative mandate is not in terms of the words "shall be charged to income tax as the income of the assessee of that previous year", that the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as income of the assessee. The Tribunal found that the assessee had discharged the initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent account numbers and the copies of assessment orders wherever readily available, that it had also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee was not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source. Thus taking into consideration the totality of the facts and circumstances of the case, and, ....