TaxTMI 
TaxTMI 
2023 (2) TMI 806
X X X X Extracts X X X X
X X X X Extracts X X X X
....d loan u/s 68 of IT Act, 1961 inspite of furnishing confirmation of account, balance sheet and copy of return of income and addition made on account of non furnishing of bank statement whereas the said bank account of the cash creditor was seized by the same AO who is the AO of assessee company and was released subsequent to the framing of assessment order of the assessee company and the copy of bank statement and confirmation of account was submitted by the cash creditor in response to notice u/s 133(6) of IT Act, 1961 so the addition so made deserves to be deleted and the Ld. CIT(A) has erred in sustaining the same. 3. The Ld. AO has erred in law as well as the facts and circumstances of the case in disallowing interest expense of Rs.50,597/- u/s 36(1) of IT Act, 1961 and Ld. CIT(A) has erred in sustaining the same. 2.1 At the outset of the hearing, the ld. AR of the assessee has not pressed the Ground No.2. Hence, the same is dismissed being not pressed. 3.1 Apropos Ground No. 1 and 3 of the assessee, brief facts of the case are that The assessee filed its return of income on 19.07.2016 declaring total income of Rs.1,45,65,900/- and book profit u/s 115JB at Rs.1,50,46,859/-.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of assessment proceedings. The Ld. CIT(A) called for remand report. The AO submitted his remand report dt. 05.02.2020 (PB 43-44) wherein he stated that since Shri Divesh Goyal has filed the return at loss of Rs.20,85,522/- therefore, his creditworthiness is not proved in view of the decision of Hon'ble Supreme Court in case of NRA Iron & Steels (P) Ltd. 412 ITR 161 where it was held that it was worth noting that how could investor companies having filed income tax returns with a meager or nil income invest such huge sum of money. The assessee filed rejoinder to the remand report. In the appellate proceedings, the Ld. CIT(A) held that from the date of issue of first notice u/s 142(1) by the AO on 23.08.2018 to the date of attachment of bank a/c i.e. 23.10.2018, the assessee and Shri Divesh Goyal had adequate time available with them to obtain the bank statement and file written submissions. However, the assessee filed his first written submission on 11.12.2018 and Sh. Divesh Goyal chose not to comply with the notice u/s 133(6) issued by the AO on 17.10.2018. These facts shows that bank statement of Shri Divesh Goyal was not filed by the assessee or Shri Divesh Goyal before the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....17.10.2018 calling or his bank statement on or before 25.10.2018. Bank a/c of Dinesh Goyal was attached on 23.10.2018. Thus, Dinesh Goyal had a week's available with him from 17.10.2018 to 23.10.2018 to get his bank statement and prepare his submission and file it before the AO on 25.10.2018. However, Sh. Dinesh Goyal did not comply with this notice for reasons best known to him. - Thus, from the date of issue of first notice u/s 142(1) by the AO on 23.08.2018 to the date of attachment of bank a/c i.e. 23.10.2018, the Appellant and Dinesh Goyal had adequate time available with them to obtain the bank statement and file written submissions. However, the Appellant filed his first written submission on 11.12.2018 and Sh. Dinesh Goyal chose not to comply with the notice u/s 133(6) issued by the AO on 17.10.2018. -These facts show that bank statement of Dinesh Goyal was not filed by the Appellant or Dinesh Goyal before the AO inspite of the fact that adequate time was available with them prior to attachment of bank a/c. Appellant filed the bank statement of Dinesh Goyal before the AO on 26.12.2018 i.e. 13 days after the completion of assessment on 13.12.201 c) The above facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....50,597/- Since the addition made by the AO of Rs. 36,00,000/- u/s 68 has been as unexplained cash credit, then the interest debited of Rs. 50,597/- also deserves to be disallowed. Ground of Appeal No. 3 is dismissed.'' 3.3 During the course of hearing, the ld. AR of the assessee prayed that the ld. CIT(A) has erred in confirming the action of the AO for which the ld. AR submitted that only reason for making the addition is that the bank statement of the creditor was not filed to the AO before completion of assessment though there was sufficient time to furnish the same and Sh. Divesh Goyal has declared business loss of Rs.20,85,522/- and therefore, genuineness of transaction and his creditworthiness is not established. It may be noted that the bank account of Shri Divesh Goyal was attached by the AO on 23.10.2018. After release of this bank account on 14.12.2018, the same was filed to the AO on 26.12.2018 and this bank account was before the Ld. CIT(A). From the bank statement (PB 19) it can be noted that in his bank account there was a balance of Rs.2,01,266/- on 15.02.2016. On this date there is credit of Rs.30 lacs in his bank account as amount received from Rajasthan Tractor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecisions has observed that initial onus of proving the creditworthiness of the creditor was not discharged by the assessee. This is factually incorrect. The assessee has established the creditworthiness of creditors by filing his return and balance sheet for the preceding 2 years. Once the assessee has discharged the initial onus, the burden shifts on the departmental authorities to disprove the fact brought on record. Nothing has been done by the lower authorities after the assessee furnished ample evidences to prove the creditworthiness of the creditor. Hence, once the assessee has discharged the onus laid on him u/s 68 of the Act, the addition confirmed by the Ld. CIT(A) should be deleted. To this effect, reliance is placed on the following decisions of the jurisdictional High Court:- Aravali Trading Co. Vs. ITO 187 Taxman 338 (Raj.) (HC) The jurisdictional HC while deleting the addition u/s 68 of the Act held as follows:- "20. This principle is fully applicable to the present case. The fact that the explanation furnished by the aforementioned four creditors about the sources where from they acquired the money was not acceptable by the Revenue could not provide necessary n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ords, the cash credit in the name of Devendra Sankhla was rejected on the ground that the assessee has failed to prove source wherefrom deposit or advance by Sri Devendra Sankhla could be made. This finding has been consistently affirmed by CIT(A) as well as by Tribunal. We are of the opinion that in rejecting the explanation of the assessee on the undisputed facts is founded on erroneous application of law in the matter. While it was the assessee's burden to furnish explanation relating to such cash credits, the assessee's burden does not extend beyond proving the existence of the creditor and further proving that such creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee, is not relevant for the purposes of rejecting the explanation furnished by the assessee, and make additions of such deposits as income o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der to advance money to the assessee, was not a matter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. In that view of the matter, since this part of the judgment runs contrary to the judgment of the Hon'ble Supreme Court, in Daulat Ram's case (supra), while this Court in a subsequent judgment in Mangilal's case (supra) relying upon Daulat Ram's case (supra), has taken a contrary view, we stand better advised to follow the view, which has been taken in Mangilal's case (supra). 9. The net result is that all the three questions are answered in favour of the assessee and against the Revenue." CIT Vs. Jai Kumar Bakliwal (2014) 366 ITR 217/ 101 DTR 377 (Raj.) (HC) The jurisdictional HC while deleting the addition u/s 68 of the Act held as follows:- "20.When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessee had obtained unsecured loan of Rs.36 lakhs from Shri Divesh Goyal for which the AO vide issuance of notice u/s 133(6) dated 17-10-2018 to Shri Divesh Goyal desired to furnish the confirmation letter, proof of source of income and bank account through which loan was advanced, however, the Shri Divesh Goyal could not comply with the directions of the AO before the date of assessment order owing to attachment of bank account of Shri Divesh Goyal by the AO. It is pertinent to mention that the bank account of Shri Divesh Goyal was released by the AO on 14-12-2018 who vide reply dated 21-12-2018 filed the necessary documents including the bank statement and it was received by the AO on 26-12-2018 i.e. after the date of assessment order. It is also noted that the Assessee had furnished the return, balance confirmation ledger account and Adhar Card of Shri Divesh Goyal in order to establish the identity and creditworthiness besides genuineness of the transaction. From the bank statement of Shri Divesh Goyal, it is gathered that there was a balance of Rs.2,01,266/- and simultaneously there was credit of Rs.30 lacs in his bank account on 15-02-2016 as amount received from Rajast....