TaxTMI 
TaxTMI 
2022 (3) TMI 289
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....s. 80,00,000/-, by ignoring the fact that the attorney of the assessee has submitted on record that he has no further documents to file with respect to pending unsecured confirmations etc. 3. That Ld. CIT(A) has erred in law and on facts in accepting the additional evidences when the conditions of Rule 46A(1) of the I.T. Rules, 1962 are not satisfied whereas the assessee has been provided sufficient opportunity by the A.O. to adduce the evidence and the assessee was not prevented by any sufficient cause for producing the evidence before the A.O. during the assessment proceedings. 4. In the facts and circumstances of the case the CIT (Appeals) has erred holding that multiple credit entry of crores of rupees proves creditworthiness of the lender. Further, Ld. CIT(A) has erred in holding that it is also prove the identity of the creditors and genuineness of the transactions. 5. That in the facts and circumstances of the case, the order of the learned CIT (Appeal) has erred in law in deleting the addition of Rs. 57,85,077/-, being sundry creditors in a case where the liabilities were bogus or did not exist. 6. That in the facts and circumstances of t....
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....editors to the extent of Rs. 10,39,02,425/- as appearing in the balance sheet and required the assessee to file details of the creditors with name, address, PAN and confirmation of the parties. He also asked the assessee to establish genuineness and creditworthiness of these parties. According to him, since no proper confirmation was filed in respect of the some parties, he added the same u/s. 41(1) of the Act for cessation of liabilities of the following parties:- Sl.No. Name of the Sundry Creditors Amount Outstanding 1 C.A. Polytech P. Ltd. 196566 2 Climax Engineering Works (R) 186967 3 Ma Chhinamastika Sponge Iron Ltd. 796539 4 Monnet Ispat and Energy Ltd. 23566 5 Nidhi Auto Pvt. Ltd. 183401 6 Pearey Lal and Sons Ltd. 1271388 7 S.A. Iron & Alloys Ltd. 183973 8 S.D.M. Metalloys Ltd. 1542366 9 Shri Ganesh Sponge Iron Ltd. 298151 10 Trident Structures Pvt. Ltd. 703565 11 Valiabh Steel Ltd. 82957 12 Vimsa Balls Pvt. Ltd. 315638 Total 5785077 5. Lastly, from the perusal of different bank accounts of the assessee, Assessing Officer noted that there we....
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....ocuments filed before the AO as well as CIT(A). 7. The assessee's contention before the ld. CIT(A) as well as before us during the course of hearing was that, firstly, before the AO, the assessee has filed a letter submitting the confirmation of accounts and various other documents which has also been placed in the paper book before us. Details of documents furnished before the AO and CIT(A) have also been placed before us, which are summarised as under:- * PB 1 is assessee's letter dated 16-12-2011 filed to Ld. AO submitting confirmations of account and e - challan showing payment of tax and PAN of unsecured loans. * PB 8 is assessee's letter dated 20-12-2011 filed to Ld. AO submitting confirmations along with PAN in respect of four parties regarding unsecured loans have already been submitted. * PB 182 - 196 is assessee's written submissions dated 02-05-2015 made before Ld. CIT(A) relating to lending parties, specifying which parties submitted the required documents needed to establish their identity and which have not because of non -cooperation with the assessee due to non-payment of their dues timely. * PB 278 - 287 is rej....
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.... * PB 22 - 23 is relevant pages of the bank statement of the assessee company with Syndicate Bank showing the cheque was bounced. Adverse observations of Ld. AO regarding unsecured loans * On perusal of the lender's bank account and on tallying it with that of the assessee company it is seen that on the date of presentation of the cheque in the bank there was meager fund available. Further as and when the cheques were presented for clearing in the cheque issuing branch within a span of 1-2 days of it substantial credits were transferred by way of clearing. This shows incredibility. Also that for a prudent businessman it is impossible to lock such huge amount in the lending for a long period and that too, without charging of interest. * In reply it was submitted that regarding the observation in respect of availability of meager funds in the account of the lender it only reflects the quality of proper funds management and in no way reflects the non creditworthiness of the lender. Further from the perusal of the bank statement of the lender it is clear that substantial credits itself prove the credit worthiness of the lenders. * Regarding the ....
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.... are placed on record. I find that the funds of Rs. 16 lakhs were actually never realized or received by the assessee company and as such there appears to be no reasons for making any addition in respect of this Rs. 1 lakhs. In respect of M/s. Akarti Enterprises (Rs. 9 lakhs) (Page 34 of CIT(A)'s order) * The assessee has furnished the bank statement and necessary evidences during appellate proceeding, which were forwarded to AO for remand. It is observed that these cheques of Rs. 9 lakhs were deposited by assessee on 31-03-2009, but these were actually bounced; for which the necessary evidences are submitted by assessee and are placed on record. 9. On the other hand, ld. DR strongly relied upon the order of the AO. 10. After considering the relevant findings in the impugned order as well as material placed and submissions made before us, we find that insofar as addition on account of unsecure loan of Rs. 1,19,00,000/-, ld. CIT(A) has given relief in respect of following four parties for a sum aggregating of Rs. 80,00,000/-:- Sl.No. Name of the Party Amount (Rs.) 1. Amba Steels Ghaziabad 45,00,000 2. Paras Enterprises Gha....
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.... two other parties for which sum aggregating to Rs. 1,19,00,000/- which has been confirmed by him is as under:- "7.1.4 Considering all facts and documents on record; my observation regarding leader-wise factual position and my inferences are as under:- (a) Akarti Enterprises (Rs. 22.50 lacs) The assessee has furnished the confirmation & assessment details during assessment proceedings & has submitted bank account during appellate proceedings, which were forwarded to AO for remand. Out of Rs. 22.50 lacs, the cheque of Rs. 9 lacs deposited by assessee on 31.3.09 was actually bounced, the necessary evidences for which submitted by assessee & are placed on record. Thus this Rs. 9 lacs were actually never realized/received by the assessee company and as such there appears to be no reasons for making any addition in respect of this Rs. 9 lacs. Regarding balance Rs. 13.50 lacs, I find that cash has been deposited in the bank account of the lender before clearance of the cheque of the assessee. The introduction of cash in the bank account of lender remains unexplained and as such the addition of Rs. 13.50 lacs is hereby confirmed. (b) Amba Steel....
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.... Thus, I find that the identity, genuineness of the transaction & creditworthiness of the lender cannot be doubted and there appears to be no reasons for making any addition in this respect. (f) Remaining unsecured loans of Rs. 18.50 lacs Sine no evidences of any kind were furnished in respect of M/s. S.S. Exports, Shree Nath Steel and M/s. Shree Syam Steel Corporation, by the assessee either before AO or before me, the addition of Rs. 18.50 lacs is hereby confirmed. 7.1.5 Thus, overall, I conclude that addition to the tune of Rs. 80 lacs requires deletion, while addition of Rs. 39.50 lacs (Rs. 13.50 lacs + Rs. 7.50 lacs + Rs. 18.50 lacs) is hereby confirmed." 13. In case of Akarti Enterprise who has given Rs. 22,50,000/-, as per the record and also the finding of the ld. CIT(A) as incorporated above, not only confirmation was filed during the assessment proceedings but also bank account which was filed during appellate proceedings which was confronted to the AO and remand report was sought for. Out of this sum of Rs. 22,50,000/-, cheque of Rs. 9,00,000/- deposited with the bank was bounced, therefore, to this extent, the amount was never real....
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....ers & Akarti Enterprise, for a sum aggregating to Rs. 80,00,000/- is upheld and the Revenue's appeal on this ground is dismissed. 20. Insofar as addition of Rs. 13,50,000/- in the case of Akarti Enterprise and addition of Rs. 7,50,000/- in case of Arihant Engineering Works confirmed by the ld. CIT(A), which has been challenged by the assessee, we find that the only reason cited by the ld. CIT(A) is that prior to the clearance of the cheque of the assessee, there was cash deposit in the account of the lender. Qua these two parties, we find that not only they have directly confirmed to the AO but also given bank details. The source of cash deposit, if at all, was required to be enquired from the lender and it is not the assessee's onus to prove the cash deposit in their bank accounts. The assessee's onus is only to prove that the loan received from the creditor and not the lender. The onus cast upon the assessee is to prove prima facie identity, genuineness and creditworthiness of the lender which stands established from the bank details and the loan has been shown by them to be given from their source of income. Thus the onus cast upon the assessee stood duly discharg....
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.... during the relevant year i.e. the second primary condition for applicability of sec. 41(1) is also not satisfied. Regarding genuineness & creditworthiness, though the same has no role to play for application of sec. 41(1). The appellant has submitted the copies of purchase bills of these creditors showing their sales tax registration no., excise no., PLA no. etc. etc. It is observed that all the creditors are either ltd. companies or pvt. ltd. companies & that the payments are always made thro' banking channels." 23. Ld. CIT(A) has also referred to various decisions and held that once the liabilities have been duly acknowledged by the assessee and no parties have been given their claim, no addition can be made u/s. 41(1) of the Act. 24. Before us, ld. counsel for the assessee submitted that the entire creditors were genuine and the liability was duly acknowledged in the balance sheet and was very much payable to the creditors and there cannot be any presumption of cessation of liability in absence of any evidence. He further pointed out that assessee has given catena of evidences during assessment proceedings as well as appellate proceedings which are illustrated as unde....
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.... Iron & Alloys Ltd. PB 100- M/s. Vailabh Steel Ltd. PB 182 - 196 Assessee's written submissions dated 02-05-2012 made before Ld. CIT(A), Ghaziabad citing reasons for non-applicability of section 41 (1). PB 199-256: Assessee's submissions before Ld, CIT(A), Ghaziabad dated 29-05-2012 furnishing the copies of invoices related to purchases made during the year under consideration on which addition was made by Ld. AO are as follows-M/s. C.A. Poly tech (P) Ltd. PB 202 Ledger Account in the books of Assessee. PB 203-205 Invoices. M/s. Climax Engineering Works (R) PB 206 Ledger Account in the books of assessee. PB 207 Invoices. M/s. Monnet Ispat & Energy Ltd. PB 208 Ledger Account in the books of assessee. PB 209-213 Invoices. M/s. Pearey La. & Sons Limited. PB 214 Ledger Account in the books of assessee. PB 215 Invoices. M/s. S.A. Iron & Alloys Ltd. PB 216 Ledger Account in the books of assessee. PB 217-226 Excise cum tax invoice. M/s. S.D.M. Metalloys Ltd. PB 227 Ledger Account in the books of assessee. PB 228-....