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2019 (12) TMI 1633
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..../s Mukherjee Capital Pvt. Ltd., M/s Wimper Trading and Distributors Pvt. Ltd. and M/s Mukherjee Farms Pvt. Ltd. involving respective sums of Rs.1,10,00,000/-, 1,20,00,000/-, 2,50,00,000/- & 7,05,00,000/-; respectively as unexplained cash credits. 3. Ms. Biswas invited our attention to the assessment order to this effect dated 30.03.2015 holding that the assessee's unaccounted income itself has been routed back as loans in question through the above four entities happened to be its related parties. 4. Learned authorised representative at this stage submitted that the assessee had filed its appeal ITA No.333/Kol/2019 against the CIT(A)'s action confirming the balance addition amount of Rs.6,58,49,749/-. He then files on record learned coordinate bench's order dated 21.08.2019 deleting this balance addition as well vide following detailed discussion: "7. We have heard rival submissions and gone through the facts and circumstances of the case. The Ld. AR assailing the decision of the Ld. CIT(A) in giving only partial relief to the assessee when the facts un-disputed was that the AO has accepted the interest outgoing to the four lender companies without a murmur. When the....
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.... , the Ld. CIT(A) has held as under: "From the discussion made it can be said that the assessee has failed to prove the creditworthiness of the loan given and the genuineness of the transactions. In view of the above, the amount of loan given to the appellant company by M/s. Diamond Trading Pvt. Ltd., which were sourced from unexplained share capital and share premium received by M/s Diamond Carbon Pvt. Ltd. is held to be unexplained. Hence, out of total loan of Rs. 1,10,00,000/- received by the appellant from M/s Diamond Carbon Pvt. Ltd., an amount of Rs.21,00,101/- is from the business reserves of the appellant and is hence deemed to be explained. However the balance amount of Rs.88,99,899/- (i.e. Rs.l,10,00,000/- - Rs. 21,00,000/-) are treated to be received out of unexplained share capital and share premium received by M/s. Diamond Carbon Pvt. Ltd and to that extent the loan is treated to be unexplained. In view of this, in respect of the loan of Rs. 1,10,00,000/- received by the appellant, loans received to the extent of Rs.88,99,899/- is held to be unexplained. Hence, appeal to the extent of Rs. 21,00,101/- is allowed and appeal to the extent of Rs.88,99,899....
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.... entities, it is held that out of the total loan of Rs.7,05,00,000/-, loans to the extent of Rs.3,03,83,863/- is deemed to be explained as they are considered to be out of the accumulated reserves generated from the business operations of M/s. Mukherjee Firms Pvt. Ltd .. It was also submitted by the appellant that the appellant was having an opening balance of Rs 60,00,000/- in respect of M/s Mukherjee Farms Pvt. Ltd. This amount of Rs 60,09,000/- was paid to Ms M/s Mukherjee Firms Pvt. Ltd by the appellant and was again received back by the appellant. Hence, this amount of Rs.60,00,000/- stands explained as the amount was paid by the appellant to the lender and was again given as a loan to the appellant. Thus the amount of loan of Rs 3,63,83,863 ( Rs 3,03,83,863/- + Rs. 60,00,000/- ) is from the explained sources. However, the remaining portion of the loans taken to the extent of Rs.3,41,16,137/- is deemed to be ,out of the dubious and unexplained share capital. and share premium of M/s Mukherjee Firms Pvt. Ltd. and thus loans received to ,.the extent of Rs. 3,41,16,137/- held to be unexplained. Thus appeal to the extent of Rs. 3,41,16,137 /- is not allowed and appeal to the exten....
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.... which is signed by the directors who are also partners of the assessee firm. 2-11 3. Copy of the bank statement showing the amount given by way of loan along with the confirmation letters and the certificate from bank with regard to the maturity of the deposit account which was the source for giving the loan to the assessee company. 12-17 4. Copy of assessment order of M/s. Mukherjee Farms Pvt Ltd 18-23 5. Date wise summary of received from M/s. Mukherjee Capital Pvt. Ltd along with source Thereof 24-25 6. Copy of Audited accounts of M/s. Mukherjee Capital Pvt Ltd for 31.3.2012 which is signed by the directors who are also partners of the assessee firm. 26-35 7. Copy of the bank statement showing the amount given by way of loan along with the confirmation letters and the certificate from bank with regard to the maturity of the deposit account which was the source for giving the loan to the assessee company. 36-42 8. Copy of assessment order of M/s. Mukherjee Capital Pvt Ltd 43-47 9. Date wise summary of the loans received from M/s. Wimper Trading and Distributors Pvt Ltd along with source thereof 48 10. Copy o....
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....er book. The assessment order u/s. 143(1) in respect of all the four lender companies are found placed at paper book page 18-23, 43-47, 64-72 and 86-89 in respect of M/s. Mukherjee Farms Pvt. Ltd., M/s. Mukherjee Capital Pvt. Ltd., M/s. Wimper Trading & distributors Pvt. Ltd. and M/s. Diamond Carbon Pvt. Ltd. respectively. In respect of creditworthiness of M/s. Mukherjee Farms Pvt. Ltd. it had capital reserve and surplus of Rs.11,39,55,207 (page 5 of paper book) and had lent Rs.7,05,00,000/- only and its source of investment was from the FD and bank balance of Rs.7,96,86,759/- plus Rs.52,91,988/- (page 10 of paper book; in respect of creditworthiness of M/s. Mukherjee Capital Pvt. Ltd. it had capital reserve and surplus was to the tune of Rs.6,62,69,835/- (page 30 of paper book) and amount lent was only Rs.1,20,00,000/- and the source of investment in the form of FD and bank balances were to the tune of Rs.5,74,14,079/- and Rs.39,48,085/- (page 34 of paper book); in respect of M/s. Wimper Trading & Distributor Pvt. Ltd. creditworthiness can be seen from the capital reserve to the tune of Rs.6,04,55,860/- and it had lent only Rs.2,50,00,000/- and the source of fund lying in the FD a....
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....re has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year. In this case the legislative mandate is not in terms of the words 'shall' be charged to income-tax as the income of the assessee of that previous year". The Supreme Court while interpreting similar phraseology used in section 69 has held that in creating the legal fiction the phraseology employs the word "may" and not "shall". Thus the un-satisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [1999] 237 ITR 570. We note that against the said decision of Hon'ble Gujarat High Court the special leave petition filed by the Revenue has also been dismissed by the Hon'ble Apex Court. 13. In the case of Nemi Chand Kothari 136 Taxman 213, (supra), the Hon'ble Guahati High Court has thrown light on another aspect touching the issue of onus on assessee under section 68, by holding that the same should be decided by taking into con....
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....ledge.-When any fact is especially within the knowledge of any person, the burden) of proving that fact is upon him. " ******** What, thus, transpires from the above discussion is that white section 106 of the Evidence Act limits the onus of the assessee to the extent of his proving the source from which he has received the cash credit, section 68 gives ample freedom to the Assessing Officer to make inquiry not only into the source(s)of the creditor but also of his (creditor's) sub-creditors and prove, as a result, of such inquiry, that the money received by the assessee, in the form of loan from the creditor, though routed through the sub-creditors, actually belongs to, or was of, the assessee himself. In other words, while section 68 gives the liberty to the Assessing Officer to enquire into the source/source from where the creditor has received the money, section 106 makes the assessee liable to disclose only the source(s) from where he has himself received the credit and IT is not the burden of the assessee to prove the creditworthiness of the source(s) of the sub-creditors. If section 106 and section 68 are to stand together, which they must, then, the in....
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....ted the amount, which he advances, as loan, to the assessee is that so far as an assessee is concerned, he has to prove the genuineness of the transaction and the creditworthiness of the creditor vis-a-vis the transactions which had taken place between the assessee and the creditor and not between the creditor and the subcreditors, for, it is not even required under the law for the assessee to try to find out as to what sources from where the creditor had received the amount, his special knowledge under section 106 of the Evidence Act may very well remain confined only to the transactions, which he had' with the creditor and he may not know what transaction(s) had taken place between his creditor and the subcreditor... " ********** "In other words, though under section 68 an Assessing Officer is free to show, with the help of the inquiry conducted by him into the transactions, which have taken place between the creditor and the sub-creditor, that the transaction between the two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that the loan advanced by the sub-creditor to the creditor was income of the assessee fr....
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.... lordships, on the issue of discharge of assessee's onus in relation to a cash credit appearing in his books of account, has observed and held as under:- "4. The Tribunal has recorded a finding that the assessee has discharged the onus which was on him to explain the nature and source of cash credit in question. The assessee discharged the onus by placing (i) confirmation letters of the cash creditors; (ii) their affidavits; (iii) their full addresses and GIR numbers and permanent account numbers. It has found that the assessee's burden stood discharged and so, no addition to his total income on account of cash credit was called for. In view of this finding, we find that the Tribunal was right in reversing the order of the AA C, setting aside the assessment order." 15. We also take note of the decision of the Hon'ble High Court, Calcutta in the case of S.K. Bothra & Sons, HUF v. Income-tax Officer, Ward- 46(3), Kolkata 347 ITR 347 wherein the Court held as follows: "15. It is now a settled law that while considering the question whether the alleged loan taken by the assessee was a genuine transaction, the initial onus is always upon the assess....
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....equent year the same explanation was accepted by the Income-tax Officer. He further contended that when the Tribunal has relied on the entire judgment of the Commissioner of Income-tax (Appeals), therefore, it was not proper to take up some portion of the judgment of the Commissioner of Income-tax (Appeals) and to ignore the other portion of the same. The judicial propriety and fairness demands that the entire judgment both favourable and unfavourable should have been considered. By not doing so the Tribunal committed grave error in law in upsetting the judgment in the order of the Commissioner of Income-tax (Appeals). 9. In this connection he has drawn our attention to a decision of the Supreme Court in the case of Udhavdas Kewalram v. CIT [19671 66 ITR 462. In this judgment it is noticed that the Supreme Court as proposition of law held that the Tribunal must In deciding an appeal, consider with due care, all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. 10. We find considerable force of the submissions of the learned counsel for the appellant that t....
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....of the assessee in the light of the evidence as found by the Commissioner of Income-tax (Appeals). We also found no single word has been spared to up set the fact finding of the Commissioner of Income-tax (Appeals) that there are materials to show the cash credit was received from various persons and supply as against cash credit also made. 13. Hence, the judgment and order of the Tribunal is not sustainable. Accordingly, the same is set aside. We restore the judgment and order of the Commissioner of Income-tax (Appeals). The appeal is allowed. 17. When a question as to the creditworthiness of a creditor is to be adjudicated and if the creditor is an Income Tax assessee, it is now well settled by the decision of the Calcutta High Court that the creditworthiness of the creditor cannot be disputed by the AO of the assessee but the AO of the creditor. In this regards our attention was drawn to the decision of the Hon'ble High Court, Calcutta in the COMMISSIONER OF INCOME TAX, KOLKA TA-Ill Versus DATAWARE PRIVATE LIMITED ITAT No. 263 of 2011 Date: 21st September, 2011 wherein the Court held as follows: "In our opinion, in such circumstances, the Assessing....
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....eques. It appears from the Assessing Officers order that his grievance was that the assessee was not willing to produce the parties who had allegedly advanced the fund. In our opinion, both the Commissioner of Income-tax (Appeals) and the Tribunal below were justified in holding that after disclosure of the full particulars indicated above, the initial onus of the assessee was shifted and it was the duty of the Assessing Officer to enquire whether those particulars were correct or not and if the Assessing Officer was of the view that the particulars supplied were insufficient to detect the real share applicants, to ask for further particulars. The Assessing Officer has not adopted either of the aforesaid courses but has simply blamed the assessee for not producing those share applicants. In our view, in the case before us so long the Assessing Officer was unable to arrive at a finding that the particulars given by the assessee were false, there was no scope of adding those money under section 68 of the Income- tax Act and the Tribunal below rightly held that the onus was validly discharged. We, thus, find that both the authorities ....
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....ble jurisdictional High Court in CIT vs DATAWARE (supra) which has not been done, so no adverse view could have been drawn. Third ingredient is genuineness of the transactions, for which we note that the monies have been directly paid to the assessee company by account payee cheques out of sufficient bank balances available in their respective bank accounts. It will be evident from the paper book that the appellant has even demonstrated the source of money deposited into their bank accounts which in turn has been used by them to lend it to the assessee firm as loan. Hence the source of source of source is proved by the assessee in the instant case though the same is not required to be done by the assessee as per law as it stood/ applicable in this assessment year. The lending companies have confirmed about the loan in response to the notice u/s 133(6) of the Act and have also confirmed the payments which are duly corroborated with their respective bank statements and all the payments are by account payee cheques. 21. In this case on hand, the assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the lender companies, thereafter the onu....
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.... investment vido page 24) Source of Investment vide page, 48) Source of Investment vide page 73 Document 2 Explanation regarding source of cash credits. The Ms. Mukherjee Capital Pvt. Ltd. Rs 1,20, DU, DOOZ 20.6.2011. RS. 21.6.2011 the assessee's F.Ds Rs. The loan given by the tender during the year was 20 lakhs on 50 lakhs on 7th Sept. 2011 and Rs. 30 lakhs again on 7th Sept. 2011. The lender company hunt bank bulunce of Rs. 25,19,244 on 1st April, 2011 and FD or Rs. 5.48.94.835 with Indian Overseas Bank and that bank balance continued up fo the date of granting of loans of Rs. 20 laura are 20.6.2012. Thereafter, on were matured and 31,25,645 Rs. 31,731,795 and Rs. 31,25,645/- were received on maturity of the F.D on 21.6.2011. Out of the said amount and earlier balance, the aforesaidi cheques of Rs. 30 lakhs each were viven by way of loan to the assessee company on 7.9.2011 to two cheques of Rs. 50 Lakhs. This FD was also there in the balance sheet for 31.3.2010 which was 5,13,45,339 The company was never treated an shell company and no addition of any nature while computing the total incom....
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....d Rs. 39,65,668,- as on 31.3.2012. in Document 3 M/s. Wimper Trading and Distributors About the Company:- Rs.2,50,00,000 opening by account payee cheque. The hax bank 2017 with Indian Overseas Bank Rex. and The directors Ashok Bajpayle and Sri R B Singh were only nominee directors for the purpose of signature of statutory papers and documents since the executive and controlling directors were not always available for such work. The had a 90 lakhs which was dispute accepted in earlier years. The amount invested with the assessee during the year Rs.50 lakhs OFE 20.3.2011. 50 lakhs OR 06.6.2011 30 lakhs on 24.12.2011. Rs. 50 lakhs on 9.12.2011, and Rs. 50 lakhs on 1.2.2012 all received tender company balance of Rx. 1.17.88, SUG bi April. and that bank Balance PORN 19 the dune uÆ’ guy fours Rs. 30 fuks un fan a 2011 and a tanta an 6.6.2012. The tender ataa receted manure of the F.De FRA KR FRsh an 33.11.30 RON FAR FRAL 300 TASR DRA OR 23.11.2011, and Rs. 25,58,2847 R 23.11.2011. 3. 27,97,4247 OR 31.1.2012 Sta. 20.03.13..20rs Tam.. he bufnice four off. SOU 30 fu wee gh of ....