TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 617
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....to prove the bona fide of the transactions in terms of identity, creditworthiness and genuineness of such transaction? 2. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 3. It is therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of Assessing Officer may be restored to the above extent." 2. Brief facts of the case are that assessee is a company and engaged in the business of trading of rough and polished diamonds. The assessee filed its return of income for assessment year 2016-17 on 13.02.16 declaring income of Rs.56,54,590/-. The case of assessee was selected for scrutiny. From the perusal of audit report, in Form 3CD, the Assessing Officer noted that assessee has shown deposit of Rs.11.57 crores and majority of said deposits were squared off during the year. From the details in the audit report, the Assessing Officer noted that assessee has shown such deposits from thirteen persons, details of which were scanned in para-6.1 of assessment order. The Assessing Officer asked the assessee to substantiate the genuineness of such deposits and to file conf....
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....tors are abnormal low. The lenders were virtually operating fund any fixed asset. Thus, the Assessing Officer doubted the creditworthiness of depositors. On genuineness of such transaction, the Assessing Officer noted that most of the creditors were having meagre income and have weak financial credentials and existing accepted to secured loan to the assessee. Thus, the genuineness of such transactions were also doubted by the Assessing Officer. 4. The Assessing Officer further noted that in reply to the show cause notice dated 26.11.2018 and 21.12.2016, the assessee contended that they have furnished the proof of identity i.e. name, address, PAN, CIN muster data, bank statement, ITR, audited balance, all the parties replied to notice under section 133(6) and their notarized affidavits were also filed. All such evidences were not accepted by Assessing Officer by taking view the assessee failed to produce the party before him despite directing specifically. Thus, the identity of such parties were not proved. The assessee has not explained the source of such funds. On the contention of assessee that amount was returned within a short period and therefore the transaction would not fal....
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....ee was repaid during the year to all thirteen parties. Thus, the addition is erroneous and unjustified the entire advance / loans received by the assessee are in normal course of assessees business trading in diamond are absolutely genuine and bona fide transactions and huge addition made on farfetched and devoid of merits. The assessee furnished the names, addresses, certificate of importer / exporter, VAT registration certificate, CST registration certificate, rend agreement, PAN, CIN master data and the reply of notice issued under section 133(6) of the Act. Thus, the assessee proved its identity. To prove the creditworthiness and genuineness of such transactions, the assessee filed confirmation of account, assessees bank statement showing the receipt of funds during the financial year and repayment in the year itself, income tax acknowledgement of depositors, bank statement of depositors, audited balance-sheet and notarised affidavits, confirmation of such transactions. The assessee furnished similar evidences with respect to all the parties. And reiterated that they have thoroughly discharged their onus to prove all the three ingredients i.e., identity, creditworthiness of len....
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...., so naturally they are required registration with the relevant department. The assessee was directed to produce such registration of their trade or business. In compliance of order of Ld. CIT(A), the assessee filed Import-Export Code certificate, VAT/GST registration certificate, CIN master data etc. The assessee also filed lease agreements & ownership and SMC Vera Bill. The Ld. CIT(A) after considering the report of Inspector, scanned it at pages 28 to 31 of his order. The Ld. CIT(A) on considering the report of Inspector noted that out of thirteen lenders, local inquiries were made in respect of ten only, in respect of three lenders, no conclusion were drawn. There is nothing adverse against such three lenders. In case of ten lenders, the report of Ward Inspector cannot be at all adverse. The Ld. CIT(A) discussed about each and every lender about their nature of business, gross revenue and return of income; one of the affidavit of lender is also scanned at pages 38-40 in the order of Ld. CIT(A). The details mentioned in the affidavit of lender was cross-check by Ld. CIT(A) with bank account which were found in order. The Ld. CIT(A) after considering the submission of assessee fu....
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....rove the genuineness of such transaction without first verifying such fact from income tax returns of lenders. It was also held that Hon'ble jurisdictional High Court in the case of DCIT vs. Rohini Builders [2003] 127 Taxman 523 Guj.)/[2002] 256 ITR 230 (Guj.)/[2003] 182 CTR 373 (Guj.) [19-03-2001] held that when the assessee established identity of creditors by giving their complete address, GIR numbers / PAN as well as confirmation along with copy of assessment order and discharged its onus. On the aforesaid observations, the Ld. CIT(A) directed to delete the entire addition made under Section 68 of the Act. Aggrieved by the order of Ld. CIT(A) the Revenue has filed present appeal before the Tribunal. 9. We have heard the ld Commissioner of Income-tax Departmental Representative (Ld. oCIT-DR) for the revenue and Ld. Authorized Representative (Ld.AR) for the assessee and have gone through the orders of the lower authorities carefully. The Ld. CIT-DR for the Revenue submits that during the assessment, the Assessing Officer noted that assessee has received deposits / unsecured loan of Rs.11.57crores from thirteen parties and in most of the case, the amount was squared up in the....
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....iod of time. The ld. AR for the assessee submits that in few cases, the advances were refunded within one or two days. There is no allegation of Assessing Officer of any accommodation entry. The Assessing Officer merely doubted on the basis of report of Ward Inspector which is not worthy of credit. The assessee has filed numerous evidence to prove the identity of depositors / lender and their creditworthiness and genuineness of such transactions. The Ld. AR for the assessee invited our attention on page-1 of paper book, wherein he has prepared the summary of all the payment received and return back, while referring such details, it was shown to us that in respect of Sr. No.1-3 and 13 depositors / lenders, the amounts were repaid / refunded with one day, in respect of lender / depositor No. 3 & 4, the amounts were paid within a week. So far as other lenders, from Sr.No.6 to 12 are concerned, the amounts were paid within a week or in a short period which is not more than three months. 11. The Ld. AR for the assessee submits that repayment of such advances are not doubted by Assessing Officer. There is no allegation of Assessing Officer that any cash payments were received or paid to....
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....mann.com 323 (Guj.) * CIT vs. Karaj Singh 15 taxmann.com 70 (Punj &Har) 14. We have considered the rival submissions made by both the parties and have also gone through the orders of lower authorities carefully. The Assessing Officer made addition under section 68 of Rs. 11.57 Crore by taking view the assessee failed to produce the party/ creditors before him despite directing specifically and the identity of such parties were not proved. As recorded above before ld CIT(A), the assessee filed detailed written submissions. The ld CIT(A) after considering the contents of assessment order and the submissions of the assessee noted that noted that twelve lenders, out of thirteen lenders are engaged in business, so they are required registration with the relevant department. The ld CIT(A) directed assessee to produce their registration of trade or business. The assessee filed copies of Import- Export Code certificate, VAT/GST registration certificate, CIN master data etc. The assessee also filed lease agreements & ownership and SMC Vera Bill. The Ld. CIT(A) also considered the report of Inspector, and find that out of thirteen lenders, local inquiries were made in respect of ten only,....
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.... Rs. 1,40,00,000/- 07/09/2015 08/09/2015 30/09/2015 Rs. 10,00,000/- Rs. 50,00,000/- Rs. 1,30,00,000/- 6-27 days 7. M/s Rama Exports 07/05/2015 Rs. 75,00,000/- 08/09/2015 Rs. 75,00,000/- 124 days 8. M/s Kaushal Diamonds 07/05/2015 Rs. 15,00,000/- 15/09/2015 Rs. 15,00,000/- 131 days 9. M/s Kumar Exports 07/05/2015 13/05/2015 14/05/2015 Rs. 63,25,000/- Rs. 30,00,000/- Rs. 28,00,000/- 15/09/2015 1/10/2015 1/10/2015 Rs. 30,00,000/- Rs. 83,25,000/- Rs. 8,00,000/- 131-141 days 10. M/s Piyush Exports 08/05/2015 15/05/2015 19/05/2015 25/05/2015 Rs. 50,00,000/- Rs. 28,00,000/- Rs. 20,00,000/- Rs. 8,00,000/- 01/10/2015 Rs. 1,06,00,000/- 146 days 11. M/s Jai Shree Exports 19/05/2015 Rs. 27,00,000/- 1/10/2015 Rs. 27,00,000/- 135 days 12. Rajen Vasant Dhruv 29/12/2015 Rs. 2,00,00,000/- 13/05/2016 16/05/2016 Rs. 1,00,00,000/- Rs. 1,00,00,000/- 138 days 13. M/s Osiaji Exports 22/03/2016 Rs. 49,54,500/- 22/03/2016 Rs. 49,54,500/- 1 day Total Rs. 11,57,79,500/- Rs. 11,57,79,500/- 16. A bare perusal of the aforesaid details makes it clear that the assessee has refunded the entire deposits either ....