TaxTMI 
TaxTMI 
2024 (12) TMI 503
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.... the assessee, the Assessing Officer proceeded to complete the assessment u/s 144 of the Act based on the material available on record. The Assessing Officer proceeded to make disallowance u/s 14A of the Act to the extent of Rs. 67,934/- and addition u/s 68 of the Act by observing that assessee has shown unsecured loans as long term borrowings received from related parties. Out of the above long term borrowings, he observed that Rs. 6,58,28,164/- was received during the year and assessee has not filed any confirmation or any other details in the course of assessment proceedings. The same remained unverifiable, hence he proceeded to make the abovesaid additions. 3. Aggrieved, assessee preferred an appeal before the ld. CIT (A)-I, New Delhi. Assessee filed grounds of appeal and detailed submissions. After considering the submissions of the assessee, ld. CIT (A) rejected the submissions of the assessee on reasons of passing the order u/s 144 of the Act and found that the Assessing Officer has followed the due procedure laid down u/s 144(1) of the Act. He held that the Assessing Officer was justified in passing the order u/s 144 of the Act. However, on merits, ld. CIT (A) after consid....
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....loans & advance. It is a matter of change in grouping of the amount in Balance Sheet of the company. The company have not received any share application form from M/s Crayons Advertising Pvt Ltd". However, no further confirmation has been filed by the party. 3. M/s Mani Mudra Vincom (P) Ltd. 16, Netaji Subhash Road, 4th floor, BBD Bagh, Kolkata-700001 The party vide letter dated 23.8.2016 has submitted that it had advanced a demand loan of Rs. 2,50,00,000/- to the assessee company during the month of September in the relevant assessment year. Interest @12% per annum is being charged on the above loan and the closing balance as on 31.3.2012 was Rs. 2,65,54,164/-. From the details filed, it is noticed that the party has not submitted the complete bank statement for the relevant assessment period. It has only submitted the bank statement for the period 1.9.2011 to 30.9.2011. Further, from the perusal of the bank statement, it is noticed that there have been 5 credit entries totaling to Rs. 2,80,00,000/-. Further on the same day, amount of Rs. 2,25,00,000/- and Rs. 25,00,000/- has been debited in favour of the assessee company. Thus, there has been credit entries which are immed....
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.... statement, it is noticed that the opening balance of the account was only Rs. 10,225.88 and during this half year period, there are only two credit entries which are immediately followed by debit entries of the same amount, which is typical of a paper company. There was a credit entry of Rs 25,00,000/- on and on the same day, there was a debit entry in the bank account of the same amount in favour of the assessee company. It is also noticed that the party has shown returned income of Rs. 53,054/- for the AY 2012-13. The party has only shown other income of Rs. 6,57,285/- consisting of interest received and miscellaneous income. Thus, even though the identity of the party has been established, they have not been able to establish their profit generating apparatus to advance the said loan to the assessee company Therefore, the creditworthiness of the party is not proved. 6. M/s Real Vyapar (P) Ltd. Room No. 6, 4th floor, 7 Ganesh Chandra Avenue Kolkata -700013 Letter dated 17.08.2016 and 30.09.2016 were sent. However, no reply has been received. The assessee vide letter dated 23.11.2016 was asked to offer his comments on the above observation. The assessee vide letter dated 09....
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....t and addition made by the AO to the extent of Rs. 1,00,000/- u/s. 68 is upheld. As a result, ground no. 7 and 8 are partly allowed." 5. Aggrieved with the above order, Revenue is in appeal before us raising following grounds of appeal :- "1. The Ld. CIT(A) erred in deleting addition of Rs. 4,65,69,863/- made u/s. 68 of the Act being non genuine loans introduced in the name of five parties namely (i) Ms Crayons Advertising ltd. (ii) M/s Mani Mudra Vincom (P) Ltd. (iii) M/s Omni Media Communication (P) Ltd., (iv) M/s Pawansut Media Services (P) Ltd. (v) M/s Real Vyapar (P) Ltd. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 6. Assessee has also filed cross objections received following grounds of appeals :- "1. That the Ld. Assessing Officer as well as CIT (Appeal) has erred while upholding the addition of Rs. 100 lacs being amount borrowed from M/s. Ambika Tradeexpo Pvt. Ltd. u/s 68 of the Income Tax Act, 1961. 2. That Ld. Assessing Officer has erred while adding Rs. 4,65,69,863/- u/s 68 of Income Tax Act, 1961 in spite of complete evidence avail....
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....premium are:- (i) Assessee is under a legal obligation to prove the genuineness of the transaction, the identity of the creditors, and creditworthiness of the investors who should have the financial capacity to make the investments in question, to the satisfaction of the Assessing Officer, so as to discharge the primary onus. (ii) The AO is duty bound to investigate the creditworthiness of the creditors/ subscribers, verify identity of the subscribers and ascertain whether the transaction is genuine or these are bogus entries of name lenders. (iii) If the enquiries & investigation reveal that the identity of the creditors to be doubtful or dubious or lack creditworthiness, then the genuineness of the transaction would not be established. Then assessee would not have discharged the primary onus contemplated by Section 68. Based on the above principles, the Assessing Officer have made verifications in the case of the assessee relating to unaccounted money placed as share application money. The other case laws that need to be considered regarding explaining source of source are as under:- 2. PCIT Vs. Rajmandir Estates (P.) Ltd. (2016) 70 taxmann.com124 (Calcutta) "Para 2....
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...., the submission that the source of source is not a relevant enquiry does not appear to be correct." 2. CIT VS Nipun Builders & Developers (P.) Ltd (30 taxmann.com 292, 214 Taxman 429, 350 ITR 407, 256 CTR 34) Where Hon'ble Delhi High Court held that where assessee failed to prove identity and capacity of subscriber companies to pay share application money, amount so received was liable to be taxed under section 68. It was held as follows: "12. A perusal of the order of the Tribunal shows that it has gone on the basis of the documents submitted by the assessee before the AO and has held that in the light of those documents, it can be said that the assessee has established the identity of the parties. It has further been observed that the report of the investigation wing cannot conclusively prove that the assessee's own monies were brought back in the form of share application money. As noted in the earlier paragraph, it is not the burden of the AO to prove that connection. There has been no examination by the Tribunal of the assessment proceedings in any detail in order to demonstrate that the assessee has discharged its onus to prove not only the identity of the shar....
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.... did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, accordingly, it is to be presumed that the transactions were genuine. It was not for the Income-tax Officer to find out by making investigation from the bank accounts unless the assessee proves the identity of the creditors and their creditworthiness. Mere payment by account payee cheque is not sacrosanct nor can it make a non-genuine transaction genuine. In that view of the matter, the question before us is answered in the negative and in favour of the Revenue .. 6. CIT Vs Empire Builtech (P.) Ltd (366 ITR 110) Where Hon'ble Delhi High Court held that u/s 68 it is not sufficient for assessee to merely disclose address and identities of shareholders; it has to show genuineness of such individuals or entities. 7. Burden to explain source of source of the credit is on the assessee - Blessing Construction VITO [2013] 32 taxmann.com 366/214 Taxmann 645 Gujarat." 8. On the other hand, ld. AR for the assessee submitted as under :- S. No. Party Name Facts of the case 1 M/s. Crayon Advertising Ltd. The appellant has filed t....
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....ly ' 20q3 and thus squared off. 9. He further submitted in the brief synopsis as under :- "When the assessee has completely provided all the relevant details of the loan transaction to prove the identity, genuineness & credit worthiness in terms of Sec. 68 of the Income Tax Act, 1961 in the course of proceedings and all the transactions are through 'indisputable banking channel, then whether the assessee needs to further prove the source of source in terms of Sec. 68 of the Act for AY 2012-13" Covered Matter:- - By the Hon'ble Delhi High Court in the case of COMMISSIONER OF INCOME TAX-IV vs M/S DWARKADHISH INVESTMENT PVT LTD (ITA 911/2010 & ITA 913/2010 and CM APPL. 12294/2010 & CM APPL.12296/2010) in favour of the assessee. - By the Hon'ble Delhi High Court in the case of COMMISSIONER OF INCOME TAX-II vs KINETIC CAPITAL FINANACE LTD (ITA 87/2007) in favour of the assessee. - By the Hon'ble Delhi Benches of ITAT in the case of ACIT,CC-26 Vs S.P. Singla Construction P. Ltd. (ITA No. 5163/Del/2016) in favour of the assessee. - By the Hon'ble Delhi Benches of ITAT in the case of ACIT, Circle- 33(1) Vs Smt. Prem Anand (ITA No. 3514/Del/2014) in favo....
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....eshwari Metal P.Ltd. in ITA no.597/2012 judgement dated 21.1.2013 (l) ACIT V. Mis. S P Singla Constructions P. Ltd. ITA No. 5163/Del/2016 dated 17-02-2021 ( Del ITAT) 11. Considered the rival submissions and material placed on record. We observed from the record that the Assessing Officer was of the view, the assessee has declared long term borrowings received from related parties to the tune of Rs. 16,41,62,164/- and out of the above borrowings, Rs. 6,58,28,164/- was received during the year. The Assessing Officer has no occasion during the original assessment proceedings to verify the documents and the assessee has submitted various documents during appellate proceedings and the same was remanded back to Assessing Officer. The Assessing Officer verified the documents and gave a remand report after considering the additional evidences. He gave his findings in the remand report. Ld. CIT (A) considered the submissions of the assessee, remand report and discussed party-wise in detail. With regard to Manoj Sethi, ld. CIT(A) observed that he is a Director of the assessee company and assessee has declared a loan of Rs. 8,88,74,000/-. He further observed that there was an opening cred....
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...., ld. CIT (A) found that the identity, creditworthiness and genuineness of the transaction are already established. Since the assessee has submitted relevant documents to prove the conditions laid down u/s 68 of the Act, ld. CIT (A) has appreciated the issue under consideration. The issue has to be verified on the basis of credit on the books of account and the amended provisions shall apply for AY 2013-14. Therefore, we are inclined to accept the findings of ld. CIT (A). 15. Similarly, ld. CIT (A) also deleted the addition of Rs. 25,00,000/- from Pawansut Media Services Pvt. Ltd. by analysing their balance sheet and confirmation of the transactions. 16. Further with regard to Real Vyapar Pvt. Ltd., ld. CIT (A) noticed that the transaction also through banking channel. However, the Assessing Officer has stated in the remand report that this party has not replied to the notices issued u/s 133(6) of the Act. When the same was brought to notice of the assessee during remand proceedings, the assessee has submitted that they will reply to the above notice, however the Assessing Officer reported that he has not received any reply. However, ld. CIT (A) observed that assessee has submitt....