TaxTMI 
TaxTMI 
2023 (7) TMI 1276
X X X X Extracts X X X X
X X X X Extracts X X X X
....redits to discharge onus as per requirement of sec 68 of the Act. The ld. Senior DR further submitted that despite several opportunities given by the Assessing Officer the assessee failed to prove creditworthiness of lender and genuineness of transaction till the date of passing assessment order. Therefore the Assessing Officer was quite correct and justified in making addition u/s. 68 of the Act treating the unsecured loan as unexplained credit. He further submitted that despite above noted factual position against the assessee the ld. CIT(A) has granted relief to the assessee without any justified reason or basis therefore impugned first appellate order may kindly be set aside by restoring that of the Assessing Officer. The ld. Senior DR also placed reliance on the judgment of Hon'ble Supreme Court in the case of PCIT vs. NRA Iron & Steel Pvt. Ltd. dated 05.03.2019 and judgment of Hon'ble jurisdictional High Court of Delhi in the case of CIT vs. Nova Promoters & Finlease (P) Ltd. reported as 342 ITR 169 (Del.). 4. Replying to the above, the ld. counsel of assessee submitted that in response to notice of the Assessing Officer the assessee filed copy of PAN, financial statement ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hus his conclusion deleting the base less addition is quite correct and justified which may kindly be upheld. He has also placed reliance on various judgments including judgment of Hon'ble Supreme Court in the case of CIT vs Odeon Builders Pvt. Ltd. in Review Petition (C) Diary No. 22394 of 2019 in Civil Appeal No. 9604-9605 of 2018 and judgment of Hon'ble jurisdictional High Court of Delhi in the case CIT vs Vrindavan Farms (P) Ltd. in ITA No. 71 of 2015 dated 12.08.2015 and in the case of PCIT vs. Goodveiw Trading Company in ITA No. 377/2016 dated 21.11.2016 to submit that the ld. CIT(A) was right in concluding the appeal in favour of the assessee. 7. On careful consideration of above rival submission, first of all, we note that the Assessing Officer made addition u/s. 68 of the Act, by observing that despite several opportunity the assessee failed to prove creditworthiness of lender and genuineness of transaction and thus could not discharge onus as per requirement of sec 68 of the Act. The assessee carried the matter before ld. CIT(A) and filed additional evidence under rule 46A of the Rules on which remand report was called wherein the Assessing Officer did not made any adv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter us 133(6) of the Income Tax Act, 1961, to the third party concerned, i.e., to Ms Fennie Commercial Private Limited, 96-AV9, Neelkanth Apartments, Kishan Ganj, Vasant Kunj, New Delhi - 110070. 5 The said party has furnished its detailed reply to the letter issued us 133(6) vide its letter dated 08.01.2016, which is placed on record. The said party has given the details of the share application money of Rs. 3.60 crores advanced by it to the appellant company and also produced the ledger account of the assessee company in its books for the relevant period, apart from the copy of the ITR-V in its case, copy of the Audit Report, Balance sheet, P & L Account and annexures. It is also seen from the annexures to the Audit Report that under the head "Loans & Advances (totaling Rs. 7,41,00,000/-), the name of the appellant company is appearing the List of Share application money given details wherein the sum of Rs. 3.60 crores has been shown against the name of the appellant company, amongst other entities to whom share application money had been advanced by this company. As regards the source of investment made by this company, it has been submitted that the same has been made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... examined the ledger account of the appellant company from the lender party's books of accounts. The lender party has also filed copy of its return of income, audit report, balance sheet, profit & loss account and annexures. It has been observed by the AO from the annexures of the audit report that lender has shown loans and advances totaling Rs. 7,41,00,000/- in its balance sheet. The appellant's name is also appearing in the loan and advances and has been shown as share application money of Rs. 3.60 crore in the name of appellant. AO has also verified the balance sheet of the lender company and it is seen that said company has shown share premium reserve in its balance sheet in A.Y. 2010-11 out of which the amount has been given to the appellant. All these facts establish the identity, creditworthiness and genuineness of the transactions. It is seen that the said party has confirmed the transactions with the appellant and source of the money is also explained. M/s Fennie Commercial Pvt. Ltd. is assessed to tax with Ward 9(1). New Delhi and filing its return of income. The appellant company has filed copies of their bank statement, balance sheets and profit & loss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y merely on general inference to be drawn from the reading of the investigation report. The least that Assessing Officer ought to have done was to enquire into matter by, if necessary, invoking his powers under section 131 summoning the share applicants or directors. b. Commissioner of Income-tax v. Mark Hospitals (P.) Ltd. [ 2015 ] 58 taxmann.com 226 (Madras) HIGH COURT OF MADRAS "Section 68 of the Income-tax Act, 1961 - Cash credit (Burden of proof - Assessment year 2006-07 - Assessee had obtained unsecured loans from agriculturists and submitted their names and addresses, but did not provide their PAN cards - Assessing Officer made addition under section 68 - It was found that loans were given to assessee through cheques and all creditors had confirmed that they had advanced loans mentioned against their names to assessee and, thus, identity of creditors could not be disputed - Further, all creditors were agriculturists and therefore, they did not have PAN card - Whether, on facts, no addition could be made - Held, yes [Para 6] [In favour of assessee]" c. ITO Vs. Neelkanth Finbuild Ltd., [2015] 61 taxmann.com 132 (Delhi - Trib.), held that "6.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he learned Commissioner of Income-tax (Appeals) observed that the Assessing Officer was not able to bring anything on record that it was the assessee's own money which was routed in the form of share application money and has rightly deleted the same. 7. Keeping in view all the facts and circumstances, we are of the considered view that the learned first appellate authority has passed the impugned order under the law and according to the facts of the present case and has rightly deleted the addition in dispute. We find no infirmity in the impugned order and uphold the impugned order by dismissing the appeal filed by the Revenue." d. Honorable Supreme Court of India in the case of CIT v. Kamdhenu Steel & Alloys Ltd., SLP (CC) no. 15640 of 2012, dated 17-09-2012 (Supreme Court), wherein the Hon'ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against the decision of Hon'ble Delhi High Court in the case CIT v. Kamdhenu Steel & Alloys Ltd. in which it has been held by Hon'ble Court that once adequate evidence/material given by the assessee, which would prima facie discharge the burden of the assessee in proving t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icial pronouncements are identical with the facts of the appellant case, therefore, the ratio of the above cited judicial pronouncements is squarely applicable to the facts of the appellant case, hence, unsecured loan received by the appellant from M/s Fennie Commercial Pvt. Ltd. cannot be termed as unexplained income of the appellant and cannot be added u/s 68 of the I.T. Act. Therefore, the unsecured loan received from the above mentioned party is treated as genuine transaction and cannot be added us 68 of the I.T. Act. Therefore, the addition of Rs. 3,60,00,000/- is deleted. 9. At the very outset, we deem it appropriate and necessary to reproduce the relevant para 5 of Revenue Report, which have been relied by the Ld. CIT(A), while granting relief to the assessee, which is as follows:- The said party has furnished its detailed reply to the letter issued u/s 133(6) vide its letter dated 08.01.2016, which is placed on record. The said party has given the details of the share application money of Rs. 3.60 crores advanced by it to the appellant company and also produced the ledger account of the assessee company in its books for the relevant period, apart from the copy o....