TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 346
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....t by disregarding the evidence indicating that the loan was channeled through shell companies M/s Wellworth Tradelink Pvt. Ltd. and Desire Vincom Pvt. Ltd. to introduce unaccounted money into the assessee's books of accounts. 2. The applicant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceedings." 3. Succinctly, the fact as culled out from the records are that the assessee has filed income tax return on 29.09.2011 declaring total income of Rs. 40/-. Information has been received from the ADIT (Inv.)(OSD), Unit-4, Kolkata vide letter no. ADIT (Inv.)/Unit-4/Kol/S-110/STR No. 1000039118/2017-18 dated 09.03.2018, that the assessee company had taken credit entry of Rs. 2,00,00,000/- through M/s Wellworth Tradelink Pvt. Ltd. (New Name Xylo Infrastructure Pvt. Ltd.) and Rs. 1,08,00,000/- from Desire Vincom Pvt. Ltd, which are paper companies. The bank statements of these companies it is reveals that these accounts got credited by cash as well as transfers, and the same is transferred to various intermediary companies and ultimately to the beneficiaries who are having real business. The funds were transferred to the account of the b....
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....its annual return. Thus, it is quite evident that the identity of the said creditor company was duly established. As regards the creditworthiness of these parties, copy of financial statements of the lender in the shape of audited Balance Sheet, Profit and Loss account, ITR and bank statement through which the loan was given etc. were submitted The copy of bank statements of the relevant period of both the parties were placed on record in support of the source of fund in the hands of lenders. It was claimed that no cash was deposited in bank accounts before making such advances to the assessee. Based on that contention the assessee claimed that they have duly proved the genuineness, identity and creditworthiness of the lender and therefore no adverse inference may be taken in the matter. Ld. AO noted that the primary onus is on the assessee to establish the genuineness of the transaction claimed by it. The assessee has never objected the reasons of the reopening. Further, if the investigation done by the department leads to doubt regarding the genuineness of the transactions, it is incumbent on the assessee to produce the parties along with necessary documents to establish the gen....
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....ng escapement of income on the ground that assessee has received sum of the Rs. 3,08,00,000/- through rotation of its own money by means of capital gains and on this satisfaction, reassessment proceedings were initiated by issue of notice u/s 148. Whereas, eventually assessment has been completed after making addition on allegation that unsecured loans received by the appellant were unexplained though the same were repaid in the year itself. There is no addition in the assessment order on alleged capital gain / penny stock trading, which was recorded in the satisfaction. The appellant has also contended that it is a settled law that when no addition is made in respect to the reason for which the satisfaction is reached in the reasons recorded before issue of notice u/s 148, then the Ld. AO had no jurisdiction to make addition/ disallowance of any other income/expenditure/ loss i.e. to go beyond the jurisdiction assumed by issue of notice u/s 148 of the Income Tax Act, 1961. At para 3 of the reasons recorded under the head 'analysis of information collected / received it is stated that amount of Rs. 2,00,00,000/- received from M/s Wellworth Tradelink Pvt. Ltd. and Rs. 1,08,00,....
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....e, leaving apart for the moment, the aspect of interpretation of the word "and" as "or", the existence of the word "also" is of a great significance, being of conjunctive nature, and leaves no manner of doubt in our opinion, that it is only when, in proceedings under section 147 the AO, assesses or reassesses any income chargeable to tax, which has escaped assessment for any assessment year, with respect to which he had "reason to believe" to be so, then only, in addition, he can also put to tax, the other income, chargeable to tax, which has escaped assessment, and which has come to his notice subsequently, in the course of proceedings under section 147. 29. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the AO were to come to conclusion, that any income chargeable to tax, Which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, whic....
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....his notice during the proceedings. This interpretation will no longer hold the field after the insertion of Explanation 3 by the Finance Act (No. 2) of 2009. However, Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that the Assessing Officer has to assess or reassess the income ("such income") which escaped assessment and which was the basis of the formation of belief and if he does so, he can also assess or reassess any other income which has escaped assessment and which, comes to his notice during the course of the proceedings. However, if after issuing a notice under section 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice under section 148 would be necessary, the l....
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.... income escaping assessment in respect of items of club fees, gifts and presents, etc., but the same having not been done, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-1 which as per our discussion was not permissible. Had the Assessing Officer proceeded not to make disallowance in respect of the items of club fees, gifts and presents, etc., then in view of our discussion as above, he would have been justified as per Explanation 3 to reduce the claim of deduction under sections 80HH and 80-1 as well. 21. In view of our above discussions, the Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings are initiated but he was not so justified when the reasons for the initiation of those proceedings ceased to survive. Consequently, we answer the first part of question in affirmative in favour of revenue and the second part of the question against the revenue." It is held by the Hon'ble ITAT in the case of Assistant Commissioner of Incometax, Circle-7, Jaipur v. M.K. Exim (India) Ltd. [2017] 82 taxmann.com 61 (Jaipur - Trib.)/(2015) 173 TTJ ....
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....by the assessee to be not admissible. He consequently proceeded to make deductions under sections 80HH and 80-I and accordingly reduced the claim on these accounts. The very basis of initiation of proceedings for which reasons to believe were recorded was income escaping assessment in respect of items of club fees, gifts and presents, etc., but while these items were not disturbed, the Assessing Officer proceeded to reduce the claim of deduction under sections 80HH and 80-1 which was not permissible. The Tribunal was right in holding that the Assessing Officer had the jurisdiction to reassess issues other than the issues in respect of which proceedings were initiated but he was not justified when the reasons for the initiation of those proceedings ceased to survive." The Hon'ble Bombay High Court in the case of Jet Airways (1) Ltd. Has held as under:- "Explanation 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of section 147. An Explanation to a statutory provision is intended to explain its contents and cannot be construed to override it or render the substance and core nugatory. Section 147 has this effect that th....
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....der of Id. CIT (A) and dismiss the revenue's appeal". In view of the above discussion, the reasons of reopening are recorded or the case was reopened on the issue of rotation of own money through capital gains/ penny stock trading and the addition has been done in the assessment order only on account of unsecured loan. Thus no addition was found during assessment proceedings on the issue of rotation of own money through capital gains / penny stock trading which was the reason of reopening. In such a scenario as held by the Hon'ble Rajasthan High Court in the case of Shri Ram Singh (supra) "29. clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the AO were to come to conclusion, that any income chargeable to tax, Which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believe, would not continue to vest him with the jurisdiction, to subject to tax, any other income, chargeable to tax, which the AO may find to have escaped assessment, and which may co....
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.... for the year under appeal on 29.09.2011 declaring total income at Rs. 40/- (APB 1). Assessment proceedings u/s 147 of the Act was initiated against the assessee by issuance of notice u/s 148 of the Act on 26.03.2018. In response to notice so issued, assessee filed Return of Income on 15.11.2018 declaring total income at Rs. 40/- (APB 2-4) and reasons recorded were sought, which were supplied to assessee. On perusal of reason so recorded (APB 27-32), it is observed that the sole reason for re-opening the assessment of assessee is some information received from Asst. Director of Income Tax (Inv.) (OSD), Kolkata, according to which it was alleged that assessee company has rotated his own money through intermediary shell companies through penny stock trading and eventually concluded that money was received by assessee by means of capital gains in the year under appeal. Various details/information as sought by ld.AO were provided and assessment was completed after making addition of Rs. 4,28,00,000/- on allegation that assessee has received unsecured loans to this extent from alleged shell companies. Aggrieved of the reassessment order passed and the additions so made, assessee has p....
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.... Accordingly the addition on account of unsecured loan is not sustainable and the same is hereby directed to be deleted. Accordingly, this ground of appeal is allowed in above terms. Other contentions raised by the appellant are not required to be adjudicated as those are rendered academic. At this juncture, kind attention of your goodself is also invited to the para 3 of reasons recorded, i.e. "Analysis of information collected/received" and para 4, i.e. "Enquiries made by AO as sequel to information collected/received", which read as under: 3. Analysis of information collected/ received: From the perusal of the information it is found that the assessee had received Rs. 2,00,00,000/- from M/s Wellworth Tradelink Pvt. Ltd.(New Name- Xylo Infrastructure Pvt. Ltd.) through Axis Bank A/c No. 41101000008129, Branch H.B. Sarani and Rs. 1,08,00,000/- had been received from M/s Desire Vincom Pvt. Ltd. through Axix Bank A/c No. 910020028492524, Branch H.B. Sarani in AY 2011-12. These companies are intermediary shell companies through which the assessee's own money was rotated and received back through penny stock trading. After appraisal of information received and the material o....
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....s shell company. In view of above, it is submitted that so far as reasons were recorded regarding escapement of income by rotating its own money through capital gains, on which no addition was made eventually, addition made by alleging unsecured loans taken by assessee (for which no satisfaction was recorded) as unexplained, is contrary to the law laid down by Hon'ble Rajasthan High Court in the case of CIT v. Shri Ram Singh [2008] 306 ITR 343, wherein it was held as under- Reassessment - Income escaping assessment - Income believed to have escaped investment explained by assessee - Tribunal rightly holding reassessment proceedings initiated on non-existing facts and invalid - Income Tax Act, 1961, ss. 147, 148. Hon'ble Court in this case has inter alia held that: 29. To clarify it further, or to put it in other words, in our opinion, if in the course of proceedings under section 147, the AO were to come to conclusion, that any income chargeable to tax, which, according to his "reason to believe", had escaped assessment for any assessment year, did not escape assessment, then, the mere fact, that the AO entertained a reason to believe, albeit even a genuine reason to believ....
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....orth Tradelink Pvt. Ltd.: Date Particulars Amount Balance 14.07.2010 Loan Taken 10,00,000/- 10,00,000/- 30.07.2010 Loan taken 50,00,000/- 60,00,000/- 04.09.2010 RTGS made for repayment of Loan 60,00,000/- NIL 04.09.2010 RTGS Returned 60,00,000/- 60,00,000/- 06.09.2010 Loan repaid 60,00,000/- NIL 01.12.2010 Loan taken 2,00,00,000/- 2,00,00,000/- 22.02.2011 Loan repaid 2,00,00,000/- NIL From perusal of above, it is evident that: 1. Firstly, assessee had taken gross loan of Rs. 1,08,00,000/- from Desire Vincom Pvt. Ltd. and Rs. 2,60,00,000/- from Wellworth Tradelink Pvt. Ltd. and that the entire amount of loans taken stood repaid also in the year under consideration itself except the interest outstanding thereon. However, ld.AO made addition to the tune of Rs. 1,08,00,000/- being loan taken from M.s Desire Vincom Pvt. Ltd. and of Rs. 3,20,00,000/- being loan taken from Wellworth Tradelink (P) Ltd. Basically, one of RTGS made by assessee on 4.9.2010 of Rs. 60,00,000/- in the name of Wellworth Tradelink Pvt. Ltd. towards repayment of loan, stood returned and therefore entry of same date is appearing on debit as well as credit side of ledger confirmati....
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.... by ld.AO solely on the basis of some information received from ADIT (Inv.) (OCD), Kolkata vide letter no. ADIT (Inv.)/Unit-4/Kol/S110/STR No. 1000039118/2017-18 dated 09.03.2018 whereby it was alleged that the appellant has taken unsecured loans amounting to Rs 1,08,00,000/-from M/s Vincom Pvt Ltd and Rs 2,00,00,000/- from M/s Wellworth Tradelink Pvt Ltd. which are in alleged as paper companies. However, on the basis of confirmations furnished by assessee during the course of assessment proceedings, ld.AO made addition of Rs. 4,28,00,000/- u/s 68 of the Income Tax Act, 1961 (as against Rs. 3,08,00,000/- as per reasons recorded). As stated above, addition to the tune of Rs. 60,00,000/- was wrongly made by ld.AO, thus submission with regards to balance addition is made as under: During the course of assessment proceedings, ld.AO vide show cause notices dated 07.12.2018 and 24.12.2018 proposed to make addition on account of above loans by holding the same as received from paper companies, whereas the loans were genuinely taken by assessee during the ordinary course of business. Therefore, in order to prove genuineness of the transaction, assessee not only furnished confirmations fr....
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....vides explanation, before rejecting the same Ld. AO has to record dissatisfaction as to why the explanation furnished by appellant is not acceptable. In the instant case, appellant has not only offered explanation regarding nature and source of credits but also substantiated the same with documentary evidences in the shape of ITRs, Confirmations, Balance Sheet, Bank Statement of lender which were brushed aside by Ld. AO without pointing out any defects or without rebutting the evidences produced. Your goodself would appreciate that M/s Desire Vincom Pvt Ltd. and M/s Wellworth Tradelink Pvt Ltd are private limited companies incorporated on 13.06.2009 and 22.07.2008 under Companies Act, 1956. Financial Statements of said companies were duly audited by chartered accountant, which were furnished before ld.AO. It is also a matter of fact that such financial statements were submitted by the lender not only with its ITR but also before the Registrar of Companies along with annual return filed. Your goodself would appreciate that Ld. AO has not pointed out any discrepancy in the details furnished. It is further submitted that to come out of rigors of section 68, an assessee has to pr....
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....ply denied cross examination by observing that opportunity to cross examination is not absolute right and has then cited certain case laws. Ld. AO has relied upon one judgement of Hon'ble Rajasthan High Court in case of Rameshwar Lal Mali vs CIT reported 256 ITR 536. It is submitted that facts of said case are distinguishable as in that case, information was obtained in the course of survey conducted in the case of assessee himself and assessee was seeking cross examination of one of his own employee. Whereas in the present case, assessee sought cross examination of third parties whose statements were recorded in some other case and not in the case of assessee that too behind the back of assessee and ld. AO neither provided complete copies of documents stated to have been seized from third party nor full text of statements was provided which have been relied upon for making addition. The other decisions relied upon are also distinguishable as in none of the case the addition is solely based on the statements of third party who incidentally be the witness of the department. Hon'ble Apex court in the case of CCE Vs. Andaman Timber Industries, (324) ELT 641 has held as under: "6. ....
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.... made unless such information is provided to the assessee and opportunity of cross examination is provided more so when assessee placed on record all the evidences. The relevant findings are as under: Headnote: Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Bogus purchase) - Certain portion of purchases made by assessee was disallowed - Commissioner (Appeals) found that entire disallowance was based on third party information gathered by Investigation Wing of Department, which had not been independently subjected to further verification by Assessing Officer and he had not provided copy of such statements to appellant, thus, denying opportunity of cross examination to appellant, who on other hand, had prima facie discharged initial burden of substantiating purchases through various documentation including purchase bills, transportation bills, confirmed copy of accounts and fact of payment through cheques, VAT Registration of sellers and their Income-tax Return - He held that purchases made by appellant was acceptable and disallowance was to be deleted - Tribunal dismissed revenue's appeal - High Court affirmed judgments of Commissioner (App....
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....see to establish the genuineness of the transaction and assessee failed in discharging this onus. So far as first allegation of ld.AO regarding assessee not objecting to the reasons of the reopening, it is submitted that assessee vide his reply dated 27.12.2018 (APB 37-38) demanded Ld. AO to provide the necessary details on basis of which the adverse conclusion is reached. Thus, vide this letter itself assessee has objected the reopening, however such material was never provided by ld.AO. As far as second allegation is concerned, it may be noted that assessee has already provided the plausible evidences necessary for verifying the genuineness and creditworthiness of the lenders (APB 75-108), which included bank statement of lender as well where the transactions have been duly reflected regarding the amount received hence existence of parties from whom money was borrowed. It is thus submitted that assessee has duly discharged onus caste upon it and rather ld.AO has disregarded the crucial evidences without rebutting them in any manner and has relied upon the generalised information received. Reliance is placed on: 160 DTR (Raj.) 198 CIT. Vs. Smt. Pooja Agrawal Capital gains ....
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....es firstly by way of PAN details and confirmation of the account from the lender company in order to prove the genuineness of the loan taken from the lender company. Moreover as notice u/s 133(6) sent by AO was returned unserved and AO wanted the director of lender company to appear before her which was not materialized as director being located from Jaipur and reluctant to appear before AO, the ld. AR furnished various further details and evidences before the AO in order to substantiate his claim. The balance sheet and profit & loss account of the lender company for AY 2014-15 and copy of the ITR was furnished before the AO. Moreover the copy of bank account of the lender company was also furnished to further substantiate about loan being genuine. Moreover, the ld. AR has submitted that this company is not the defunct company and is active as it has been filing its financial statements on the online portal of Ministry of Corporate Affairs. Moreover, the company has never been declared a 'shell company' by the MCA. Other argument of the AO of profit being so meager is not of much relevance considering that she has herself rightly mentioned about reserve and surplus to the tune of R....
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.... the addition the Revenue has to pursue the inquiry and to establish the lack of creditworthiness and the mere issue of notice u/s 131 is not sufficient. Thus, the Appellant has discharged the primary burden of establishing the identity and genuineness of the creditor. 152 ITR 507(Delhi HC) Sona Electric Co. "As soon as the assessee discharged the initial burden of proof, the Assessing Officer is not entitled to reject the assessee's case. In other words, the explanation offered by the assessee can be rejected by the Income Tax Officer on cogent grounds. When such grounds are themselves based on no evidence the question of presumption does not arise." 82 ITR 542 (SC) Durga Prasad More "The discharge of onus is dependent on the facts and circumstances of each case. Whether the initial onus is discharged or not that has to be ascertained from the materials on record. Once the initial onus is discharged, the onus shifts on the revenue. Then, it is for the revenue to act on it and until it comes to a finding that the explanation is insufficient and unsatisfactory, it could either ask for further explanation or could come to a decision on the basis of such material, but it is al....
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....o Assessing Officer, it cannot be presumed that deposits made by such creditors are moneys of assessee itself - Held, yes - Whether in order to fasten liability on assessee by including such credits as its incomes from unexplained sources, a nexus has to be established by revenue that sources of creditors' deposit flow from assessee - Held, yes. 57 ITR 532 (SC) P. Seetharamamma 87 ITR 349 (SC) Daulat Ram Rawatmull It was held that the fact, that as assessee was not able to satisfy the Authority as to the source of the source, from which the creditor of assessee derive the money would not justify the addition being made in respect of such credit in the hands of assessee Balbir Sing Tomar (Dr.) V/s ACIT (Raj. HC) 20 TW 546 Where the creditors are regular assessees and have also filed their affidavits no addition of such cash credits can be made unless there is sufficient material to disprove the genuineness. CIT Vs. Heerala Chagan Lal 257 ITR 281 (Raj.) Cash Credits- Finding by Tribunal that identity of creditor had been established- Amount representing cash credits not includible in total income of assessee- Income Tax Act, 1961. Sheon Narain Moharilal Vs ACIT 24 TW ....
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....larly through penny stock trading (i.e. reason on which belief was formed) - no facts whatsoever were concealed by assessee and rather loans taken from both the companies were duly recorded in books of accounts and there is no income, which has escaped assessment. It is therefore prayed that the addition of Rs. 4,28,00,000/- is made by ld.AO is rightly deleted by ld. CIT(A) and thus order of ld. CIT(A) should be upheld." 7. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions: S. No. PARTICULARS PAGE NOS. 1. Copy of Acknowledgement of Return of Income filed u/s 139(1) on 29.09.2011 1 2. Copy of Acknowledgement of Return of Income and Computation of Total Income filed in response to notice u/s 148 on 15.11.2018 2-4 3. Copy of Auditor's report & Balance sheet set for the period ending 31.03.2011 5-25 4 Copy of Letter dated 19.11.2018 seeking reasons for re-opening assessment 26 5 Copy of letter dated 19.11.2018 providing reasons for reopening of assessment. 27-32 6. Copy of reply in response to notice issued u/s 142(1) of the I.T. Act, 1961 33-34 7. Copy of show cause notice d....
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....arat) ] submitted that where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted. 9. We have heard the rival contentions and perused the material placed on record. In this appeal the revenue has taken a solitary ground there by contended that ld. CIT(A) was not justified in deleting the addition of Rs. 4,28,00,000/- made by the Assessing Officer on account of unexplained unsecured loan u/s 68 of the Income Tax Act by disregarding the evidence indicating that the loan was channelled through shell companies M/s Wellworth Tradelink Pvt. Ltd. and Desire Vincom Pvt. Ltd. to introduce unaccounted money into the assessee's books of accounts. The brief facts related to the dispute are that revenue received information from the ADIT (Inv.)(OSD), Unit-4, Kolkata vide letter dated 09.03.2018, wherein it was revealed that the assessee company had taken credit entry of Rs. 2,....
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....the assessee to establish the genuineness of the transaction claimed by it. The assessee has never objected the reasons of the reopening. Further, if the investigation done by the department leads to doubt regarding the genuineness of the transactions, it is incumbent on the assessee to produce the parties along with necessary documents to establish the genuineness of the transaction. Payment by account payee cheque is not sacrosanct. It is a fact that the assessee deals with shell companies and has taken unsecured loan from shell companies under consideration. The assessee was trying to introduce his own money from undisclosed sources through unsecured loans. In the light of the various judicial pronouncements and the above discussion it is to be seen whether the assessee was able to establish the genuineness of the transactions claimed by it. The assessee has failed in discharging this onus. The information received from the investigation wing and clearly explains the modus operandi of this bogus transaction and accordingly total sum of Rs. 4,28,00,000 [ 3,20,00,000 + 1,08,00,000 ] was added as per provisions of section 68 of the Act. 9.1 Assessee when challenged the order of th....
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....essment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself and all transactions were carried out through banking channels, impugned addition was to be deleted to drive home to this contention ld. AR of the assessee serviced the decision of Gujarat High Court in the case of Principal Commissioner of Income-tax v. Ojas Tarmake (P.) Ltd., [ 156 taxmann.com 75 (Gujarat) ] wherein the court has held as under : 3. What is evident is that the Tribunal found on facts that the amount of loan received by the assessee was returned to the loan party during the year itself and all transactions were carried out through banking channel. The ITAT on the decision of CIT v. Rohini Builders [2003] 127 Taxman 523/[2002] 256 ITR 360 (Guj.), held in favour of the assessee. 4. On facts therefore, having perused the orders under challenge, we are of the opinion that no error of law is committed by the Ld. ITAT. In the case of Rohini Builders (supra), the Court held as under: " We have considered the rival submissions and have also gone through th....
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.... law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source as held by the Bombay High Court in the case of Orient Trading Co. Ltd. v. CIT [1963] 49 ITR 723. The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques. Merely because summons issued to some of the creditors could not be served or they failed to attend before the Assessing Officer, cannot be a ground to treat the loans taken by the assessee -from those creditors as non-genuine in view of the principles laid down by the Supreme Court in the case of Orissa Corporation [1986] 159 ITR 78. In the said decision the Supreme Court has observed that when the assessee furnishes names and addresses of the alleged creditors and the GIR numbers, the burden shifts to the Department to establish the Revenue's case and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compli....