2012 (3) TMI 622

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.... (iii) The assessee also requested to the Assessing Officer that in assessee of any doubt, he can collect information directly from shareholders. 4. The assessee also filed copy of Bank statement highlighting the investment made in the share application money, copy of certificate of Bank statement, confirming the investment made in the share application money, copy of audited final accounts for the year ending on 31.3.2005, 31.3.2006 in the case of Purvi Finevest Limited. Copy of assessment order passed u/s 143(3) for the assessment year 2005-06, 2006-07 and 2007-08 was also filed. In respect of Eastwest Finvest Private Limited, the assessee has filed copy of Bank statement, copy of audited final accounts for the year 31.3.2005 and 31.3.2006 and copy of share application form duly signed and properly filed. The assessee has also filed copy of assessment order passed u/s 143(3) in the said company for assessment year 2005-06 to 2007-08. 5. The Assessing Officer did not accept the genuineness of share application transaction, accordingly, added the same u/s 68. By the impugned order, the CIT(A) deleted addition and revenue is in appeal before us. 6. We have gone throu....

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.... furnished. The amount to all these parties have been paid through account payee cheque in the subsequent years, therefore, there appears to be no reason for treating the amount outstanding as on 31st March, 2004, as liable for provisions of Section 41(1). The ld. CIT(A) has also deleted the addition by discussing various decisions of Hon'ble High Court as reported at 282 ITR 379, 49 ITR 578, 62 ITR 34, 24 SOT 393. The ld. CIT(A) has also elaborately discussed the decision of Hon'ble Supreme Court in the case of Sugali Sugar Works Private Limited, 236 ITR 518. 13. As there is no dispute to the fact that the outstanding amount to all these parties have been paid through account payee cheques in subsequent years, we do not find any reason to interfere in the order of CIT(A) for deleting the addition made u/s 41(1) of the Income-tax Act, 1961,. 14. In the assessment year 2005-06, the Revenue is aggrieved for deletion of addition made on account of unsecured loan of Rs. 1.10 crores from five parties and interest paid thereon 15. The ld. CIT(A) has deleted the addition by observing as under :- "4.2.3 In the context of the facts and findings as given in the Lunk....

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....As per CIT(A), if he confirmed the same addition in the hands of the assessee company, it will amount to double addition in respect of the same amount of income. We found that additions have been made in the hands of Lunkad Group on the plea that the source of share capital received by them could not be explained. However, addition has been made in the hands of the assessee company on the plea that genuineness of the loan transactions has not been established in view of the incriminating documents found during course of survey at Lunkad Group. Incriminating documents was found pertained to the month of April, 2006, which indicated that Lunkad Group was in receipt of cash from various beneficiaries including assessee and which has again been given to the beneficiaries through cheques. There is no dispute to the well settled legal proposition that in case of cash credit, assessee is not only required to prove the identity of the loan creditor but also the genuineness of transaction of loan as well as capacity of the loan creditor to advance the said amount of loan. In the instant case, there is no dispute to the identity in so far as Lunkad Group is also on Department's record and a ....

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....the ld. CIT(A) was not justified in deleting the addition in the hands of the assessee company merely on the plea that the same amount has been added in the hands of the creditor company. We found that in case of Lunkad Group addition was made in respect of cash received by it from persons, whose name, address and other particulars could not be furnished before Assessing Officer. This addition is mothering to do with the genuineness of loan received by assessee from Lunkad Group. Before reaching to the third criteria of creditworthiness, assessee have to cross the barrier of genuineness of loan transaction, which has become doubtful in view of the incriminating material found during course of survey at Lunkad Group with regard to receipt of cash from the assessee company and issue of cheque against such cash in favour of the assessee company. Thus, a legally wrong view has been taken by the ld.CIT(A), which made the Department entitled to file an appeal against such order of CIT(A). Thus, there is no merit in the argument of ld. Authorized Representative to the effect that the Department had wrongly come in appeal against the order of CIT(A)." 18. However, the issue of additi....

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....uce the Director of Lunkad Group before them. The assessee had produced loan confirmation letters and affidavit of Lunkad Group to substantiate the loan transaction, but the assessee failed to produce the Directors of Lunkad Group in person. Under these circumstances, the Department has taken a view that all the transaction of loan starting from financial year 2001-02 till date of search were not genuine and it was assessee's own money, which has been given back to the assessee in the form of loan entry. Here the contention of the ld. Authorized Representative was that Mr.Lunkad had challenged the survey action conducted by Income Tax Department before the Hon'ble High Court. Since the writ as filed by Lunkad Group is pending before the Hon'ble High Court for the reasons he has grievance with the Income Tax Department. Due to dispute of Lunkad Group with Department and pendency of writ petition in the Hon'ble High Court, assessee could not persuade the Lunkad Group to appear in person before the Department. His further contention was that impounded document from Lunkad Group only pertained to the month of April, 2006, and there was no incriminating material for any period other....

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....uent inquiry suggesting any cash given by assessee to Lunkad Group in consideration of loans so taken nor receipt of any cash whenever there was repayment of loan by assessee to Lunkad Group. Under these circumstances and in the interest of justice, one more opportunity should be given to assessee for producing the loan creditor for confirming the contents of confirmation and affidavits so filed. Keeping in view incriminating documents found during the course of survey at Lunkad Group for the period 1.4.2006 to 1.5.2006 pertaining to the assessment year 2007-08, even though related to one month only, the Department was justified in making addition in the hands of the assessee company in the assessment year 2007-08 by disbelieving the loan transactions. As per our considered view, addition should be made with respect to the amount of cash found to be given by the assessee to the Lunkad Group as per incriminating documents so found at Lunkad Group during survey after giving opportunity to assessee for cross examination. Mere presumptions without any material on record to the effect that even in respect of all the earlier years, the assessee might have given cash to the Lunkad Group f....