AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 124
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....oans to the extent of Rs. 2,79,96,163/-. The assessee was required to verify the identity, capacity, creditworthiness of the personas and genuineness of the transaction. The A.O. however disallowed Rs. 43,25,350/- in respect of the above three parties. The disallowances are as under : (1) M/s. Satyam Shivam Sundaram Trust 3.1. This party has given unsecured loans to the tune of Rs. 8,10,000/- against which Rs. 4,00,000/- have been repaid in assessment year under appeal and balance was of Rs. 4,10,000/- The assessee has filed copy of ledger a/c and copy of bank statement of the lender. However, copy of ITR was not filed by the assessee. On perusal of bank statement it has been found that the most of the deposit entry and entry are the same date just prior to cheques advanced to the assessee. The A.O. noted that assessee did not explain to these deposits entry in the bank a/c of the lender and assessee did not produced the lender also. Therefore, Rs. 4,10,000/- was added. (2) M/s. Pragati Real Estate Developers Pvt. Ltd., 3.2. This lender has given unsecured loans of Rs. 12,75,000/- during the assessment year under appeal. The assessee has filed copy of acknowledgement of the I....
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....emicals Pvt. Ltd., New Delhi vs., ITO, Ward 25(2), New Delhi in ITA.No.7130/Del./ 2019 Dated 06.10.2020 has deleted the addition. The findings of the Tribunal in paras 7 and 8 are reproduced as under : "7. We have considered the rival submissions and perused the material available on record. In this case the A.O. noted that in assessment year under appeal, assessee has received unsecured loans from three creditors as reproduced above in a sum of Rs. 1.16 crores. Initially the letters sent under section 133(6) of the I.T. Act to these three creditors were not served upon two parties. The A.O, in such circumstances, issued Commission under section 131 of the Income Tax Act, 1961 to the Kolkata A.Os. because all the three creditors were situated in Kolkata. The A.O. requested the concerned A.Os. of Kolkata to examine the genuineness of the transaction, identity of the creditors and their creditworthiness. It was also requested to make local enquiry by examining the Directors of the creditor companies. The concerned A.Os. of the Kolkata submitted the report before the A.O. based on the report of the Inspector, in which, it was intimated that the summons under section 131 of the I.T. ....
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....laced before A.O, could not be read in evidence against the assessee. It is also violation of principles of natural justice and could not be treated as any adverse material against the assessee and such evidence shall have to be excluded from consideration. Thus, the material now available on record for consideration is whether burden upon the assessee under section 68 of the Income Tax Act, 1961 have been discharged for proving the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter shall have to be considered. It is not in dispute that assessee filed documentary evidences before A.O. in respect of the genuine credits which consists of copy of the ITR of the creditors along with their assessment orders under section 143(3) of the I.T. Act, 1961, their audited balance-sheet, their confirmations to confirm the receipt of the loan, bank statement, bank statement and confirmation of subsequent year to show loans have been repaid. The assessee paid interest on these loans and deducted TDS. All these documentary evidences have not been doubted by the A.O. Thus, the documentary evidences on record clearly established that all the creditors a....
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.... 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. The High Court was, therefore, right in refusing to refer the questions sought for." 7.3. Decision of Hon'ble Gauhati High Court in the case of CIT vs. Nemi Chand Kothari reported at (2003) 264 ITR 254 (Gauhati.) in which it has been held as under : "Under section 68 of Income Tax Act creditor's creditworthiness has to be judged vis-à-vis transactions, which have taken place between assessee and creditor, and it is not business of assessee to find out source of money of his creditor or genuineness of transactions, which took place between creditor and sub-creditor and/or creditworthiness of sub-creditors for these aspects may not be within special knowledge of assessee." Rs. 7.4. Decision of Hon'ble Gujrat High Court in the case of DCIT vs.....
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....assessee and fasten the assessee with such a liability under s.68; AO failed to carry his suspicion to logical conclusion by further investigation and therefore addition under s.68 was not sustainable." 7.7. Decision of Hon'ble jurisdictional High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd., etc. ITA.No.71 of 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. 7.8. Decision of Hon'ble jurisdictional High Court in the case of Divine Leasing & Finance Ltd., 299 ITR 268, in which it was held as under : "No adverse inference should be drawn if shareholders failed to respond to the notice by A.O." 7.9. Decision of Hon'ble Delhi High Court in the case of CIT vs. Winstral Petrochemicals P. Ltd., 330 ITR 603, in which it was held as under : "Dismissing the appeal, that it had not been disputed that the share application money....
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....te that assessee filed confirmation of all the creditors supported by their computation of income, acknowledgment of filing of the returns, copy of the balancesheet, copy of the ledger account of the assessee in their books and bank statements. Copies of the same are also filed in the paper book which reveal that all the creditors are assessed to tax and have given loans to the assessee through banking channel. The name of the assessee appears in their balance-sheet as giving loans to the assessee. their capital and assets are sufficient to give small loan to the assessee. There are no cash deposits found in the bank accounts of the creditor. All entries are through banking channel. The assessee has also furnished details of their capital and assets before the Ld. CIT(A) which have not been disputed by the authorities below. Thus, all the evidences on record clearly indicates that assessee has received genuine loans from all the three parties and in case of one party even amount have been returned in assessment year under appeal which have not been doubted by the A.O. Thus, the initial burden upon the assessee to prove identity of the creditors, genuineness of the transaction and c....