TaxTMI 
TaxTMI 
2021 (4) TMI 195
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....upta particularly when his credit worthiness was not established beyond doubt. iii. Whether on the facts and the circumstances of the case and in law, the CIT(A)-2, Ludhiana was justified in deleting the addition of Rs. 3,88,82,000/- whereas the assessee failed to explain the credit worthiness of M/s. Shree Radha Commodity Services to the extent of Rs. 3,88,82,000/- to the satisfaction of the Assessing Officer. iv. That the order of the CIT(A) on the above issues raised in this appeal be set aside and that of the Assessing Officer be resorted to. v. That the appellant craves leave to add or amend any grounds of appeal before it is finally disposed off. 3. Vide Ground No. (i) the grievance of the Department relates to the deletion of addition of Rs. 20,50,000/- made by the A.O. on account of the amount credited in the capital account of Smt. Swaran Kanta. 4. Facts related to this issue in brief are that the assessee filed the return of income on 21/09/2013 declaring an income of Rs. 1,28,240/- which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). Subsequently the case was selected for scrutin....
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....along with complete evidence but the A.O. has made additions in the hands of firm without considering this fact that the amount belongs to Smt. Swaran Kanta and if at all any additions was to be made it should have been made in the hands of Smt. Swaran Kanta. However the complete evidences have been provided to your good self along with source of source hence the additions of Rs. 2050000/- made in the firm's hand being Partner's Capital addition should be deleted. c) Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page No. 1 to 3. Your honor will find that in the Order sheet entries, the proceedings were started on 23.12.2015 and the last proceedings are dated on 19.02.2016 on which date the case was adjourned to 26.02.2016. From the order sheet entries your honor will find that no show cause notice has been issued to the assessee before making any additions on accounts of unexplained credits in the name of Smt. Swaran Kanta which violates the Principles of Natural Justice and additions based on this issue should be deleted and assessment should be quashed. 5.1. The aforesaid submission were forwarded ....
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....ving account of Sh. Puneet Gupta NRE who is the son of assessee. The amount was transferred through RTGS in the saving account of Smt. Swaran Kanta being maintained with State Bank of India. Further, again to repeat Rs. 12,00,000/- has been received on 11.08.2012 through RTGS from the saving account of Sh. Puneet Gupta NRE who is the son of assessee. The amount was transferred through RTGS in the saving account of Smt. Swaran Kanta being maintained with State Bank of India. Please note that his son is working in U.K. and he has maintained NRE account with CITI Bank, Ludhiana and the photocopy of the bank statement is placed in the paper book at page number 8 which may please be referred. It is further submitted that Rs. 50,000/- has been introduced in the capital account from the saving account number 6010007210393 with State Bank of India, Aggar Nagar, Ludhiana on 26.07.2012 from the balance outstanding in her saving account. The photocopy of bank saving account is placed in the paper book at page number 7 which may please be referred. It may be mentioned here that the A.O. in his remand report has mentioned that the amount of Rs. 20.50,000/- has been received from NRE Saving acco....
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.... uttered a single word about the amounts received by Smt. Swaran Kanta from her son who is living and working in U.K. and has transferred the funds through RTGS from his NRE account. The assessee has given him all the clarifications of the amounts received from her son from his NRE account which itself proves of source also. In view of the above facts it is requested and prayed to deleted the addition of Rs. 20,50,000/- in the hands of the firm under the wrong notion of law. 5.3. It was further submitted as under: Written submissions dated 12.02.2078 Sh. Puneet Gupta, NRE has also given the following documents to prove that the amounts were sent by him from relation Foreign Exchange department being confirmation of transactions done by Sh. Puneet Gupta and the complete details are being given as under: a) The first transaction is dated 26.06.2012 of 9000 GBP and the conversion rate is 88.45 and Indian Rs. 796050 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached. b) The second transaction is dated 06.08.2012 of 14000 GBP and the conversion rate is 85.80....
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....2012, 14000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1201200/- in his NRE Account maintained in India. 3. The copy of bank statement with Barclays Bank in the name of Sh. Puneet Gupta. In this statement on 24.10.2012, 14000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1197700/- in his NRE Account maintained in India. 4. The copy of bank statement with Barclays Bank in the name of Sh. Puneet Gupta. In this statement on 12.11.2012, 14000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1218700/- in his NRE Account maintained in India. 5. The copy of bank statement with Barclays Bank in the name of Sh. Puneet Gupta. In this statement on 22.03.2013, 15000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1231500/- in his NRE Account maintained in India. The documents are being attached and your honor will find that all the transactions were carried out by Sh. Puneet Gupta from his bank accounts or through his company in which he was having 100% share hold....
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....n the saving bank account bearing No. 00000010007210393 of Smt. Swarnkanta maintained by her with SBI. Agar Nagar. Ludhiana by Sh. Puneet Gupta through RTGS on 11.08.2012 and the same was also introduced in her capital account on 11.08.2012 (Rs. 7,00,000/-) and 13.08.2012 (Rs. 5,00,000/-) as capital in the assessee firm. It was again submitted that an amount of Rs. 50,000/- was again introduced as capital on 26.07.2012 out of outstanding balance in the bank account of Smt. Swarnkanta. It has again been submitted that the assessee firm has given complete explanation to the Assessing Officer along with documentary evidence but the Assessing Officer has made impugned addition in the hands of the assessee firm without considering the fact that the amount belongs to Smt. Swarnkanta and if at all any addition was to be made it should have been made in the hands of Smt. Swarnkanta. It has again been submitted that the Assessing Officer has not given any show cause notice before making the addition under reference which violates the principles of natural justice. On careful consideration of the rival contentions, I am of the opinion that the assessee firm has explained even the source of s....
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.... said amount was received by the partner from her son Shri Puneet Gupta who is NRI, the transaction was through banking channel out of the NRE saving bank account of Shri Puneet Gupta, therefore the addition made by the A.O. was not justified. Moreover the amount was received by the assessee firm from the partner who explained the source for the same and if at all any addition was called for that was required to be made in the hands of the partner and not in the hands of assessee firm. On an identical issue the Hon'ble Jurisdiction High Court in the case of ITO Vs. Nahar Singh Sadhu Singh (supra) held that "the partner had the requisite amount to invest towards the capital account of the firm. Since no evidence had been pointed out against that finding the amount could not be assessed as income from undisclosed sources of the firm." 10.1. Similarly the Hon'ble M.P. High Court in the case of CIT Vs. Metachem Industries (supra) held as under: "Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income-tax payer or not and where ....
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....as also been given to Swam Fastners." 13.3. The A.O. however was not satisfied from the submissions of the assessee and made the addition of Rs. 40,50,000/- by observing as under: I have considered the reply of the assessee. He has stated that the creditor received the amounts from Puneet Gupta and Aakash Bansal, but no evidence for the same is filed. Further no source of amounts of Rs. 7,00,000/- and 2,00,000/- deposited on 20.12.2012 and 28.12.2012 has been filed. The assessee, vide questionnaire dated 9.03.2016 was again asked to produce evidence of sources of amounts advanced by Sh. Ankush Gupta, but again the same were not filed. The assessee simply stated vide reply dated 14.03.2016 that the same were already filed on 17.11.2015 (wrongly mentioned as 17.11.2015 in place of 27.11.2015) whereas in that reply no evidence is filed. As such the source of amount of Rs. 40,50,000/- is not proved. Accordingly credit of Rs. 40,50,000/- in the books of the assessee, in the name of Sh. Ankush Gupta is treated as not explained and thus treated as income of the assessee. 14. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: T....
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....Rs. 4 lakh from Sh. Akash Bansal on 14.11.2012. The saving accounts of Sh. Akash Bansal with State Bank of India, Account No. 30784612826, (Jaitu) Faridkot from where the amount of Rs. 1.50 lakh was received by Sh. Ankush Gupta. The saving passbook is placed in the paper book page No. 19 and 20. Further Sh. Akashbansal is also maintaining saving bank account No. 30343633939 with State Bank of India, Jaitu (Faridkot) and this saving account is placed at paper book page No. 21 and 22. From the saving account of Sh. Akash Bansal, the amount of Rs. 4 lakh was received by Sh. Ankush Gupta in the saving account and this amount is reflected in the saving account of Sh. Ankush Gupta at paper book page No. 12. Further Sh. Akash Bansal is maintaining saving account with HSBC Bank, Gurgaon from where he gave amount of Rs. 450000/- to Ankush Gupta. Sh. Akash Bansal is his cousin brother. Out of these amounts Rs. 5500001-and Rs. 450000/- was given to Swaran Fastners on 15.11.2012 and these entries are reflected in the saving bank account in paper book page No. 12 and 13. Sh. Ankush Gupta further received amount of Rs. 1150000/- from his brother Sh. Puneet Gupta on 19.11.2012, Rs. 2 lakh on 08.1....
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....cuments in the case of Smt. Swaran Kanta and Sh. Ankush Gupta: a) The confirmed copy of account showing the complete names and addresses, PAN No. of the persons from whom the loan has been received b) The copies of bank statements from where the amounts were received by the assessee firm along with explanation in brief. c) The complete details where the assessees are being assessed from whom the loans have been received. Even Smt. Swaran Kanta Jain was being assessed by the same A.O., hence once the onus is discharged by the assessee it becomes the duty of the A.O. to prove that the amounts are in-genuine. d) The A.O. has not further gone to verify the amounts received from such persons to come to the conclusion that these amounts introduced as capital or unsecured loans from his son, Ankush Gupta are not genuine. Rather he should have verified from these persons by issuing notice u/s. 133(6) or u/s. 131(1) before making any additions in the Returned income of the assessee's firm. e) Even the Order sheet entries are upto 19.02.2015 which itself proves that no question was asked by the A.O. during the proceedings before making any add....
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....r: I. Unexplained credit of Sh. Ankush Gupta Rs. 41,50,000/-: The next issue raised by the A.O. in his remand report in para 3 on page 2 of the remand report shows the credits received from Sh. Ankush Gupta Rs. 41,50,000/- for which complete details have been given in the remand report in para 3. In the remand report the A.O. has given reference of questionnaire dated 06.11.2015 in which it has been mentioned to file evidence of source of corresponding deposits in the bank account of creditors of Sh. Ankush Gupta in the SBI. The assessee has replied on 27.11.2015 on this issue and the complete saving accounts of Sh. Ankush Gupta and Sh. Puneet Gupta brother of the creditor along with confirmed copy of account was given to the A.O. and the explanation of receipt of amounts was also given. Further in the remand report in next para the A.O. has stated that no complete details have been filed. This fact is not correct in view of reply already given to the A.O. 27.11.2015. The A.O. has further stated that the assessee has not filed the complete details of credits of Rs. 40,50,000/- but the correct figure is Rs. 41,50,000/-. The A.O. has attached the copy of letter dated 14.03.2....
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....aving account number 30784612826 with State bank of Sh. Akash Bansal is placed in the paper book at page number 19 and 20. Further the saving account number 30343633939 of Sh. Akash Bansal maintained with SBI is placed in the paper book at page number 21 and 22. Further the copy of statement with HSBC Bank saving account number 054-057047-006 is attached on paper book page 23 and 24. Further, the amount of Rs. 10,50,000/- was received through sale of property by Ankush Gupta and photocopy of all the relevant documents for sale of property along with power of attorney are placed in the paper book from page number 24 to 29. The A.O. has not given any comments on all these documents which itself proves that he has accepted the contention of the assessee. The A.O. has further mentioned in his remand report regarding source of Rs. 7,00,000/- dated 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 for which it has been clearly mentioned that the amount were received back from firm M/s. Swaran Fastners by the Ankush Gupta and the copy of account of Ankush Gupta is placed in the paper book at page number 9 and the same may please be referred. It is important to mention here that the creditwor....
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....he addition of Rs. 41,50,000/- in the hands of the firm under the wrong notion of law. 15. The Ld. CIT(A) after considering the submissions of the assessee and the remand report of the A.O. deleted the addition by observing in para 7.5 of the impugned order as under: 7.5 I have considered the observations of the Assessing Officer as made by him/her in the assessment order while making the impugned addition as well as in the remand report. I have also considered written submissions filed by the assessee firm through its learned AR vide letters dated 26.09.2017, 12.02.2018 and 22.02.2018 on the issue under reference as well as the counter comments of the assessee firm in connection with the remand report of the Assessing Officer. I have further considered other material placed by the learned AR of the assessee on record. On careful consideration of the assessment order, it has been noticed that the Assessing Officer has made the impugned addition as the assessee firm in the opinion of the Assessing Officer could not explain the credit balance in the account of Sh. Ankush Gupta. On the other hand, the learned AR of the assessee firm had submitted that Sh. Ankush Gupta rece....
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.... Officer in this case on account of unexplained credit balance in the case of Sh. Ankush Gupta is, therefore, directed to be deleted. In the result, the ground No. 4 of appeal taken by the assessee is allowed. 16. Now the Department is in appeal. 17. Ld. CIT DR strongly supported the assessment order passed by the A.O. and reiterated the observations made therein. 18. In his rival submissions the Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and strongly supported the impugned order passed by the Ld. CIT(A). It was further submitted that Shri Ankush Gupta received the amount of Rs. 32,00,000/- from his brother Shri Puneet Gupta who is the NRI and settled in UK. The evidence for the said amount was furnished and the remaining amount of Rs. 9,50,000/- was received by Shri Ankush Gupta from his cousin Shri Akash Bansal and copy of bank account of Shri Akash Bansal was also furnished to prove the credit worthiness of Shri Ankush Gupta for making the deposit with the assessee. It was further submitted that all the documentary evidences were furnished, therefore the impugned addition made by the A.O. was not justified and the Ld. CIT(A....
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.... submitted that in the similar circumstances the case of M/s. Radha Commodity Services was reopened for the A.Y. 2008-09, 2009-10, 2011-12 and 2013-14 wherein this amount was considered as genuine and no addition was made in the hands of the said creditor M/s. Radha Commodity Services. The reference was made to page No. 105 to 111 of the assessees compilation which are the copies of the assessment order of Shri Kushal Gupta, Proprietor M/s. Radha Commodity Services for the A.Y. 2013-14, 2011-12 and 2012-13 wherein the assessment has been framed under section 143(3) of the Act and no addition has been made in the hands of the said firm M/s. Radha Commodity Services a Proprietary concern of Shri Kushal Gupta. Reference was also made to page Nos. 139-142 & 143-145 of the assessee's paper book which are the copies of the Assessment Orders of Shri Kaushal Gupta completed u/s. 143(3) of the Act for the A.Y. 2008-09 & 2009-10 respectively. 24. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that an identical issue having similar facts has already been adjudicated by this Bench of the ITAT in ....