TaxTMI 
TaxTMI 
2019 (6) TMI 930
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..... 142(1) of the Act dated 26.4.2016 alongwith questionnaire fixing the case on 5.5.2016. In response to notices, the AR of the assessee attended the proceedings from time to time and filed necessary details which were called for and the same were examined by the AO. Subsequently, the case was transferred to Special Range-7, New Delhi vide order u/s. 127(1) of the Act dated 09.08.2016. Notice u/s. 142(1) dated 29.8.2016 was issued. The assessee company is in the business of manufacturing of Color Master Batches (plastic granules). It is a manufacturers, and suppliers of roto foam masterbatch, color masterbatches, polymer processing aid masterbatches, carbon black masterbatches, additive masterbatches, prafil compound, pracol colour, black masterbatches, roto foam powder, white master batches. During the year under consideration, an examination of the balance sheet of the assessee company as on 31.3.2014 revealed that it had received unsecured loan of Rs. 47,59,50,000/- during the FY 2013-14 from various 45 parties/lenders, to all of whom AO issued notice u/s. 133(6) letter dated 18.10.2016. Replies were received from 32 persons, notices were returned unserved in 5 cases and AO issue....
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....find that Ld. CIT(A) has elaborately discussed the issues in dispute vide para no. 2.2.11 & 2.2.12 at page no. 25 & 26 of the impugned order. For the sake of clarity, we are reproducing the relevant finding of the Ld. CIT(A) as under:- "2.2.11 I World Business Solutions Pvt. Ltd. 30/1 East Patel Nagar, New Delhi And 208, Vikram Tower, Rajendra Place New Delhi - 110008 Notice u/s 133(6) of the Income Tax Act, 1961 was issued by assessing officer on 18.10.2016 to this company regarding loan of Rs. 1,11,00,000/- to M/s Prayag Polytech Pvt Ltd for AY 2014-15 and reply was received. The returned income of M/s I World Business Solutions Pvt. Ltd, is Rs. 2,98,40,410/-. AO issued summon u/s 131 of the Income Tax Act, 1961 on 01.12.2016 in response to which there was no compliance on behalf of M/s I World Business Solutions Pvt. Ltd. as a result of which AO held that the identity is not established by the assessee creditworthiness is doubtful and the genuineness of the transaction is also suspicious. However, it is seen that M/s I World Business Solutions Pvt. Ltd. had reported income of Rs. 2,98,40,410/- for AY 2014-15, which was higher than the figure of loan to appellan....
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....anced by the companies through banking channels or from their own funds. However, there is no allegation of the AO that there was cash deposits in the bank accounts by these lenders before providing loans to the assessee and there was no adverse information with the AO in respect of the lenders. In view of above, we are of the view that Ld. CIT(A) has rightly deleted the addition of Rs. 1,11,00,000/- and Rs. 15,00,000/- by giving a well reasoned findings, which does not suffer from any illegality or infirmity. Therefore, we uphold the action of the Ld. CIT(A) on the issues in dispute and reject the grounds raised by the Revenue. 7. In the result, the Appeal of the Revenue is dismissed. ASSESSEE'S APPEAL- ITA No. 6015/DEL/2017 (AY : 2014-15) 8. The brief facts of the case are that the assessee company engaged in the business of manufacturing of colour master batches (plastic granules). It filed its return of income for assessment year under consideration on 29.11.2014 declaring an income of Rs. 9,95,10,311/-. During the course of the assessment proceedings the AO noticed that the assessee company has received unsecured loans of Rs. 47,59,50,000/- from 45 lenders. The assess....
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....s and thus the assessee has duly discharged its onus to substantiate the loan transactions and hence no addition could be made in the hands of the assessee. The AO also made a totaling error and made addition of Rs. 9,46,00,000/- as against the amount of Rs. 10,46,00,000/- alleged by him. 10. The Ld. AR submitted that the Ld. CIT(A) has upheld the action of the AO by holding that out of the 14 lenders, 12 lenders have income during the year under consideration less than the amount advanced by these 12 lenders. The CIT(A) however deleted addition in respect of 2 lenders since, returned income of the assessment year under consideration of these two lenders i.e. M/s I World Business Solutions Pvt. Ltd. and K G Embroidery Mills Ltd. was more than the loan advanced by them to the assessee. It was submitted that both AO and CIT(A) have gone wrong in ignoring the fact that the income returned has no relation to the funds available to an entity to lend the same. It was submitted that the current year's profit or loss of the lending companies alone is not the only relevant criteria to decide the source/credit worthiness or genuineness of the loan transactions. The Ld. AR in support of th....
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....es are not existing. In the present case there is no such adverse material or statement. The Ld. AR submitted that, if the creditor does not appear in response to summons issued under section 131, no adverse inference can be drawn. A.O. having initiated the investigation, he has to take it to the logical end. In the present case Ld. AO initiated enquiries by issuing notices under section 133(6) against all the fourteen lenders from whom the unsecured loans of Rs. 10,46,00,000/- were raised during the year and all the notices were served upon all the 14 lenders. The Ld. AR placed reliance on the judgment of Supreme Court in the case of CIT VS. Orissa Corporation (P) Ltd. [1986] 159 ITR 78 (SC) wherein it was held that in case the creditor does not appear in response to summons issued under section 131, no adverse inference can be drawn. A.O. having initiated the investigation, himself has to take it to the logical end. 10.2 The Ld. AR submitted that the AO as well as Ld. CIT(A) have gone wrong in sustaining additions by observing that the assessee could not produce the directors of the company. It was argued that the assessee company is not bound to produce the Directors/ Princip....
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....19) and order of the Delhi High Court in the case of Pr. CIT, New Delhi vs. NDR Promoters Pvt. Ltd. 102 taxmann.com 182 (Delhi) (2019) dated 17.01.2019. 12. We have heard the rival submissions and perused the order passed by the authorities below and the paper book filed by the assessee. It is a case where addition has been made in respect of the loan of Rs. 10,46,00,000/- raised by the assessee during the year from the 14 parties. Before discussing each of the credit it will be relevant to examine the facts of the present case. The assessee is a company engaged in manufacturing of colour master batches (plastic granules). During the year under consideration its total turnover was Rs. 308.26 Crore and it has filed its return of income declaring income of Rs. 9.95 Crore. It has raised loans during the year from 45 lenders totaling Rs. 47,59,50,000/-. The AO made detailed enquiry during the year as is evident from the assessment order and drew adverse inference in respect of the 14 lenders and made addition on the basis of such adverse inference. The CIT(A) has deleted addition in respect of two lenders and confirmed the addition in respect of the remaining 12 lenders. Now the iss....
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....book page 107. This lender company has filed its income tax return on 22.08.2014 declaring an income of Rs. 3,19,807/- placed at paper book page 176. Further, in the income tax return it has claimed credit of the tax deducted by the assessee as is evident from the details of the claim made in the ITR placed at paper book page 205. As per the audited balance sheet placed at paper book page 116 this company had revenue from operation of Rs. 63.90 lacs which includes Rs. 40,28,544/- on account of interest income as per paper book page 126. It has its own funds of Rs. 8,89,04,870/- which include beside share capital and premium and accumulated profit of Rs. 47,92,353/-. It has also raised loan from Kotak Mahindra Ltd. as is evident from the balance sheet at page 124. The AO had issued notice under section 133(6) and in response thereto it has confirm the account and has also filed the necessary document in support of the loan advanced by it to assessee company vide letter dated 08.12.2016 placed at paper book page 102. In response to further query by the AO it has filed another letter dated 09.12.2016 with copy of bank statement for the whole year of HDFC Bank and Oriental Bank of Comm....
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....ansaction stand established. 1.2 Luminant Distributors Pvt. Ltd. The assessee has taken a loan of Rs. 25,00,000/- from this company which has been added by the AO. The AO has drawn adverse inference on the ground that the returned income of this company is Rs. 2,44253/- which is less than the loan given to the assessee. Further, reasoning given by the AO for making the addition is the same as in the case of M/s AKB Trexim Pvt. Ltd. In fact the AO has dealt both these creditors in the same para. On going through the paper book we note that from the copy of account placed at paper book page 221 that there was opening credit balance of Rs. 50,00,000/- in the name of this company. This loan was return on 31.07.2013 by the assessee company. The credit of this amount is appearing in the bank account of the lender company HDFC Bank at paper book page 320. From this bank account it has transferred this amount of Rs. 50,00,000/- to its parent company ANR International Pvt. Ltd. Thereafter this company has paid a sum of Rs. 25,00,000/- on 27.09.2013 to the lender company. The amount which has been paid from the bank account maintained by the lender company with Ori....
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....hich can establish the creditworthiness. This presumption of the AO is incorrect. The creditworthiness can be established by showing the source from where the money has been paid. Such money can be paid out of its net worth, out of the loan raised by it or out of income earned by it. The source can be any of such means or mixed of these. In the present from the balance sheet of the lender company it is evident that it has net worth of more than Rs. 6 crore which include accumulated profits also. Thus, it cannot be said that the lender company did not have creditworthiness. As regards the contention of the AO that the funds have been transferred from the another company ANR International Pvt. Ld. on the same day, that can also be not a ground to hold that creditworthiness is not established or the transaction is doubtful. In this case the AO himself has stated that in the statement the director has stated on oath that his main company is ANR International Pvt. Ltd. Thus, transfer from the parent company to this lender company which happen to be within the same group cannot be a ground to draw adverse inference. Infact in the present case as we notice from the copy of account at pape....
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....nk account of the lender company on 10.04.2013 with Union Bank of India, Lajpat Nagar, Delhi placed at paper book page 343. This loan was returned on 31.07.2013 by the assessee company. This amount repaid by the assessee company got credited to the lender companies bank account with Union Bank of India on 31.07.2013 as is evident from the bank statement placed at paper book page 341. Thereafter the lender company has paid a sum of Rs. 50,00,000/- on 26.12.2013 to the assessee company. This amount has been paid by the lender company from its same bank account with Union Bank of India placed at paper book page 340. The assessee company has paid interest on this loan of Rs. 1,44,000/- after deducting tax at source of Rs. 16,000/- . The interest payment got credited to the lender companies on 08.04.2014 in the same bank account with Union Bank of India as is evident from the copy of bank statement at page 342.This lender company has filed its income tax return on 28.09.2014 declaring loss of Rs. 1,27,239/- placed at paper book page 327. As per the audited balance sheet placed at paper book page 328 this company has its own funds of Rs. 3,20,43,434/- . It has also raised loan from its p....
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.... as we notice from the copy of account at paper book page 325, the assessee company has returned a sum of Rs. 15,00,000/- to this lender company on 31.07.2013 when there was no need of the funds, probably to save interest and later on received Rs. 50,00,000/- on 26.12.2013 when it was again need of funds. Similarly, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to thesummon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignored the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an adm....
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....ter deducting tax at source of Rs. 9,600/-. This interest is credited in the bank account of Lender Company with Union Bank of India placed at paper book page 357. This lender company has filed its income tax return on 28.09.2014 placed at paper book page 346. As per the audited balance sheet placed at paper book page 347 this company had interest income of Rs. 12,40,650/- as per paper book page 351. It has its own funds of Rs. 72,46,288/- as per paper book page 347. It has further loan of Rs. 3,27,75,000/-from the promoters namely VarshaGoel and Virender Kumar Goel as is evident from the balance sheet at page 348. Further on going through the schedule attached to the balance sheet we note that this advance of Rs. 30 lacs has been shown in the name of the assessee company i.e. Prayag Polytech Pvt. Ltd. at paper book page 350. The AO had issued notice under section 133(6) and in response thereto it has confirm the account and has also filed the necessary document in support of the loan advanced by it to assessee company. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is les....
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....vely Securities Pvt. Ltd. which has given loan to the assessee company. On this basis the AO has held capacity of the creditor is not proved. The CIT(A) after recording the above facts as stated in the assessment order has upheld the addition stating none of the arguments submitted by the Ld. AR of the appellant have proved the capacity of the creditor and genuineness of the instant transaction. On going through the paper book we note that from the copy of account placed at paper book page 358 that the lender company has paid a sum of Rs. 1,00,00,000/- on 07.01.2014 to the assessee company. This amount has been paid by the lender company from its bank account with Dena Bank, Nehru Place out of the money received by it from SKPJ Investment as is evident from bank statement placed at paper book page 395. Theassessee company has paid interest on this loan of Rs. 2,49,000/- after deducting tax at source of Rs. 27,667/- . The interest payment got credited to the lender companies on 10.01.2014 in the same bank account with Dena Bank as is evident from the copy of bank statement at page 395.This lender company has filed its income tax return on 28.09.2014 declaring income of Rs. ....
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....record by the AO about the lender company i.e. AVAIL Financial Services Pvt. Ltd. nor against the SKPJ Investment. The AO having got the bank statement of the lender company indicating the source of the money from SKPJ Investment, in case he was having any doubt he could have made further enquiry. He cannot draw adverse inference merely on the basis that the amount has been advanced out of the money received from SKPJ Investment. In fact this establishes the source of the credit. Further we note in this case this lender company has declared an income of Rs. 28,85,455/- which itself establishes the credibility of lender company. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance o....
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....ote that from the copy of account placed at paper book page 396 that the lender company has paid a sum of Rs. 1,00,00,000/- on 10.12.2013 to the assessee company. This amount has been paid by the lender company from its bank account with Dena Bank, Nehru Place, New Delhi out of the money received by it from RKG Finvest as is evident from bank statement placed at paper book page 428. The assessee company has paid interest on this loan of Rs. 2,70,000/- after deducting tax at source of Rs. 30,000/-. The interest payment got credited to the lender company on 16.12.2013 in the same bank account with Dena Bank as is evident from the copy of bank statement at page 428. Further, interest of Rs. 66,000/- has been paid on 10.03.2014 after deducting TDS of Rs. 7,333/-.This lender company has filed its income tax return on 22.09.2014 declaring income of Rs. 48,0000/- and paid taxes thereon of Rs. 37,848/- and claimed a refund of Rs. 4,560/- after taking credit of TDS of Rs. 42,412/- as per the ITR placed at paper book page 398. As per the audited balance sheet placed at paper book page 411 this company has its own funds of Rs. 11.26 Crore. Further on going through the schedule attached to the....
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....brought on record by the AO about the lender company i.e. Lovely Securities Pvt. Ltd. nor against the RKG Finvest Ltd. The AO having got the bank statement of the lender company indicating the source of the money from RKG Finvest Ltd., in case he was having any doubt he could have made further enquiry. He cannot draw adverse inference merely on the basis that the amount has been advanced out of the money received from RKG Finvest Ltd. In fact this establishes the source of the source. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of nonattendance in response to the summon to the logical ....
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.... company has paid interest on this loan of Rs. 1,35,000/- after deducting tax at source of Rs. 15,000/-. Further, interest of Rs. 1,35,000/- has been paid on 01.12.2013 after deducting TDS of Rs. 15,000/-, interest of Rs. 43,500/- on 03.03.2014 after deducting TDS of Rs. 4,833/- and Rs. 33,000/- after deducting TDS Rs. 3,667/- on 03.03.2014.This lender company has filed its income tax return on 24.09.2014 declaring income of Rs. 619/-. However, it has shown tax payable of Rs. 2,94,294/- probably on the basis of book profit and claimed a refund of Rs. 18,43,300/- after taking credit of TDS of Rs. 21,37,593/- as per the ITR placed at paper book page 431. On going through the schedule annexed to the balance sheet we note that this company has earned interest income of Rs. 6.09 Crore as is evident from details in the schedule "Revenue from operations" at page 444 and interest paid Rs. 2.95 Crore as per paper book page 472. Further, as per the audited balance sheet placed at paper book page 437 this company has its own funds of Rs. 6.30 Crore. This company has also issued optionally fully convertible debenture of Rs. 24.90 Crore as per the schedule of long term borrowings at page 441. T....
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....a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor. Further, the adverse inference drawn by the AO on the ground that this company and Yashodham Merchants. ....
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..../- as per the ITR placed at paper book page 457. On going through the schedule annexed to the balance sheet we note that this company has earned interest income of Rs. 4.92 Crore as is evident from details in the schedule "Revenue from operations" at page 471 and interest expenditure of Rs. 2.95 Crore as per paper book page 472. It has profit after tax as per accounts of Rs. 90,35,930/- as per paper book page 472. Further, as per the audited balance sheet placed at paper book page 463 this company has its own funds of Rs. 17.55 Crore. This company has also issued optionally fully convertible debenture of Rs. 18.10 Crore as per the schedule of long term borrowings at page 467. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is less than the loan advanced by this company. As held hereinabove, that there is no suc....
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....erse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received rep....
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..... 6,27,799/- apparently on the basis of book profit and has claimed a refund of Rs. 1,92,470/- after taking credit of TDS of Rs. 8,20,271/- as per the ITR placed at paper book page 484. On going through the profit and loss account of this company placed at paper book page 486 we note that this company has interest income of Rs. 2.79 crore and other income of Rs. 9.03 crore. The net profit as per the profit and loss account before exceptional item is Rs. 8.99 Crore. It is only after set off of exceptional item being the loss on demerger of Rs. 8.73 Crore, the net profit is Rs. 26.17 lacs. Further, as per the audited balance sheet placed at paper book page 485 this company has its own funds of Rs. 5.36 Crore besides loans of Rs. 25.43 Crore from shareholders and corporate bodies.This company has also got overdraft facility from HDFC Bank. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this company has sufficient funds with it. ....
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....It is normal in the case of a finance company to receive funds from one entity and to lend the money so received to the other entity. Further, ongoing through the bank statement of this company we note that there is no cash deposit. The AO having got the bank statement of the lender company indicating the source of the money, in case he was having any doubt about the source of source so as to doubt the genuineness, he could have made further enquiry. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non38 attendance in response to the summon to the logical end. He cannot ignore the materi....
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....and claimed a refund of Rs. 2,28,230/- after taking credit of TDS of Rs. 4,20,800/- as per the ITR placed at paper book page 513 Further, as per the audited balance sheet placed at paper book page 514 this company has its own funds of Rs. 47.31 lacs besides loan from directors and their relatives of Rs. 4.83 Crore as is evident from the schedule at page 516. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is less than the loan advanced by this company. As held hereinabove, that there is no such condition in section 68 that loan can only be advanced out of the taxable income of the current year. The requirement of section 68 are 3 i.e. identity, creditworthiness and genuineness. In the present case admittedly there is no doubt about the identity. As regards the creditworthiness, the AO has gone with the presumpt....
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....ent order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor.From the above facts and analysis we are of the view that assessee has lead all evidences in support of its contention and the identity, creditworthiness and genuineness of the transaction stand established. 1.11 MudrakshInvestfin Pvt. Ltd. The assessee has taken a loan of Rs. 15,00,000/- from this company on 24.02.2014 which has been added by the AO. The AO has drawn adverse inference on the ground that no reply was received in response to notice issued under section 133(6) and no one attended in response to summon issued under section 131. On this basis the AO has held that identity and creditworthiness and genuineness of the loan is not proved. The CIT(A) after recording the above facts as stated in the assessment order has upheld the addition stating none of the arguments submitted by the Ld. AR of the appellant have proved the identity, creditw....
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.... for no reply and non-appearance of the creditor in response to the notice/summon issued by him. It was for AO to take the issue of no reply and non-attendance in response to the notice and summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not replied or has not appeared in response to the summon. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. From the above facts it is evident that this company has sufficient funds with it. In this case from the balance sheet of the lender company it is evident that it has net worth of more than Rs. 77.07 lacs and has further source of Rs. 3.01 Crore as loans from directors and their relatives. Thus, it cannot be said that the lender company did not have creditworthiness. From the balance sheet of this company we note that this it is a registered NBFC and it has also having NBFC reserve fund in terms of section 45(1)(c) of the Reserve Bank of India 1934 and surplus of Rs. 6.47 lacs. It is normal in the case of a finance company to receive funds from one entity and to lend the money so received....
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....vanced. The assessee company has paid interest on this loan of Rs. 4,500/- after deducting tax at source of Rs. 500/- on 31.03.2014 for the period from 29.03.2014 to 31.03.2014. This interest payment has got credited to the lenders company same bank account. Further, as per the audited profit and loss account placed at paper book page 581 it has "Revenue from operation" of Rs. 38.27 Crore. However, there was a loss during the year of Rs. 89.44 lacs because of the bad debts of Rs. 24.63 Crore written off during the year as is evident from the schedule to the profit and loss account placed at paper book page 582. Further, this company has its own funds of Rs. 10.86 Crore as is evident from the schedule at page 564. The AO had issued notice under section 133(6) and section 131which have been duly served as there is no allegation that it has been received back unserved.The adverse inference being drawn by the AO that no one appeared in response to the notice issued under section 133(6) and summon issued under section 131 cannot per se be a ground to make addition. The AO has stated that notice under section 133(6) and summon under section 131 was issued but in response no reply receive....
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....ere confirmed. In the case of CIT vs. Precision Finance Pvt. Ltd. (supra), relied upon by the AO, the additions were confirmed as the creditors were not available and the income tax file number given by the assessee were found to be incorrect and in many cases the amount advanced was not reflected in the income tax return of the creditors. Thus, the facts of the said judgment are not applicable. Similarly, the facts of the judgment in the case of Shanker Industries vs. CIT relied upon by the AO are distinguishable as in that case the creditor has confessed having not given any loan further such loan could not be established with the cash book produced by the creditor. 14. In the present case there is no such inconsistency in any of the documents on record. The assessee has received loan from the bank account of the creditor. The assessee had paid interest on such loan after deduction of tax at source and such interest has been shown as income by the creditor. Even the claim of the TDS is appearing in the income tax return of the creditor. The capacity of the creditor is established form the balance sheet on record. There is no adverse material what so ever to have any doubt abou....
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....rs and Finlease ITA No.1018 and 1019 of 2011, CIT vs. Nipun Builders and Developers 350 ITR 407 (Delhi), M/s Focus Exports P. Ltd. 51 taxmann.com 46 (Delhi) (2014) and M/s Bisakha Sales P. Ltd. ITA No. 1493/Kol/2013 are not applicable to the present case and are distinguishable. In the case of Nova Promoters and Finlease (supra) as stated by the CIT(A) itself it was held that there was link between the entry providers and incriminating evidence and that is why addition under section 68 were confirmed. In the case of Nipun Builders and Developers (supra) the High Court has taken cognizance of the fact that summon send to the companies came back unserved with the remark that no such company which was also supported by the report of the Inspector who made a visit to the creditors. It was in these circumstances the adverse view was taken. In the case of NR Portfolio and other case law relied upon by the CIT(A), the facts were quite distinguishable. In the present case, the assessee has fully cooperated and provided all the informations and nothing adverse has been found in respect of the evidences submitted in support of the loan availed by the assessee. These loans have been taken in ....