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TMI Blog1997 (7) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, made an addition of Rs. 30,000 under s. 68 of IT Act, 1961. 2.2 The CIT(A) has observed that Mithan Lal had given the said loan of Rs. 30,000 out of the loan of equivalent amount of Rs. 30,000 received from Kanwar Sen. It was stated that Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. Hem Raj had returned part of this loan and this amount was deposited in the account of Kanwar Sen. The assessee filed photocopy of the bank account of Kanwar Sen showing that he gave loan of Rs. 1,50,000 on18th Feb., 1991by cheque to Hem Raj. Out of the said loan given to Hem Raj, a sum of Rs. 30,000 was received back on9th Oct., 1991, and it was this amount which was given by Kanwar Sen by way of loan to Mithan Lal. The CIT(A) observed that the creditworthiness of Kanwar Sen has not been proved as no information has been placed on record as to wherefrom Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. The CIT(A) also observed that Kanwar Sen had only declared income of Rs. 33,750 for the year under consideration. No further details in respect of this income has been filed by the assessee. He, therefore, confirmed the said addition of Rs. 30,000. 2.3 The learned counsel submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves of the parties and have perused the orders of the learned Departmental authorities. In our view, the assessee has adequately discharged the burden of proving the identity as well as capacity of Mithan Lal. The loan was received by the assessee by a cheque. Mithan Lal is an existing income-tax assessee. The assessee also produced evidence in the form of bank pass book of Mithan Lal of Kanwar Sen and copy of account from the books of Hem Raj Aggarwal Sons. The aforesaid evidence brought on record by the assessee clearly indicates that the assessee has discharged the burden of proving the genuineness of the cash credit in question. The AO is, therefore, directed to delete the addition of Rs. 30,000. 3. The next ground raised in assessee s appeal relate to confirmation of the addition of Rs. 25,000 out of share application/capital invested by Mrs. Sarita on the ground that the capacity of Smt. Saroj Gaba and Kiran Lata has not been proved. 3.1 The AO observed that Smt. Sarita Jain has invested in purchase of shares of the assessee-company a sum of Rs. 2,89,000. The AO required the assessee to prove the sources of investment of Smt. Sarita Jain. The AO observed that Smt. Sarit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove that Smt. Sarita Jain was a man of means. Her creditworthiness has also been fully established. Even assuming that two petty loans taken by Smt. Sarita Jain from Smt. Saroj Gaba and Smt. Kiran Lata have not been fully established, any addition of that amount can be considered only in the hands of Smt. Sarita Jain, who is an existing income-tax assessee. The assessee cannot be required to prove the source of source, particularly in a case where the person who gave the loan is an existing income-tax assessee. The Hon ble Delhi High Court in the case of Sophiya Finance Co. Ltd. has, inter alia, held that where the shareholders in fact exist, then, possibly, no further enquiry need be made. But where the ITO finds that the alleged shareholders do not exist, then, in fact, it was meant that there is no valid issuance of share capital as no share can be issued in the name of non-existing persons. It is clear from the aforesaid judgment of the Hon ble Delhi High Court that where the assessee proves the identity of the shareholders, no addition in respect of share application money can be validly made in the hands of the assessee-company. In the present case, the assessee has not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h credits/investment in share money made by the aforesaid three depositors. 5.4 The CIT(A) has deleted the addition of Rs. 2 lakhs given by Mithan Lal which Mithan Lal had explained having given out of loan of Rs. 2 lakhs taken from HUF of N.C. Jain. The CIT(A) has observed that the Karta of the HUF had deposed that he had received loan from Anoop Jain and Sh. Neeraj Jain and it was stated that both these persons were income-tax assessees and their computation sheets had been filed before the AO during the course of assessment proceedings. Both Neeraj Jain and Anoop Jain had shown income from lottery winning to the extent of Rs. 47,600. A certificate in respect of payment of lottery prize as well as the letter issued by the SBI showing the issue of demand draft in respect of prize money in favour of Neeraj Jain and Anoop Jain was also filed. Both of them were assessed to income-tax with ITO,Faridabad. Copies of their assessment orders were also filed before the AO. The CIT(A) after considering the aforesaid documents existing on record, deleted the said addition of Rs. 2 lakhs. 5.5 We have also gone through the relevant documents submitted in the compilation before us. Mithan L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Jain, HUF. 5.7 The aforesaid facts and evidence existing on record prove that Mithan Lal had duly confirmed the fact of advancing the entire amount of loan to the assessee. Mithan Lal had also explained the sources, inter alia, the source of loan of Rs. 2 lakhs taken from N.C. Jain, HUF. Thus Mithan Lal had also proved the source of source. The assessee also further proved the source wherefrom N.C. Jain, HUF gave loan to Mithan Lal by producing the details relating to funds and income of Neeraj Jain and Anoop Jain. We are, therefore, of the considered opinion that the CIT(A) after carefully considering all the entire relevant facts and material has rightly deleted the addition of Rs. 2 lakhs in respect of amount given by Mithan Lal. Further supporting evidence was submitted on behalf of the assessee before the CIT(A) pursuant to the requirement made by the CIT(A). This does not fall within the purview of r. 46A of IT Rules. The provisions of r. 46A can be invoked only when the assessee suo motu wants to produce further material before the CIT(A) and would not apply in a case where further material is produced at the instances of the CIT(A). Even if the supporting material subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The GIR number was also mentioned in the said affidavit. Photocopies of bank pass book of Rameshwar Das was also produced before the AO. Copies thereof have been submitted in the compilation at pp. 2 to 4. Copy of account of Rameshwar Das, partner in the books of Walayati Ram Co. has also been submitted at pp. 5 6 of the compilation. The said copy of account shows that Walayati Ram Co. had given a cheque on17th June, 1991, bearing cheque No. 31288 for Rs. 1 lakh for United Cores (assessee). Copy of intimation under s. 143(1)(a) of Rameshwar Das for asst. yr. 1992-93 has also been submitted in the compilation to show that he is an existing income-tax assessee. 6.2 On a careful consideration of the entire facts, material and evidence existing on record, we are of the view that the CIT(A) has rightly deleted the addition of Rs. 50,000 made in respect of credit in the name of Rameshwar Das. 6.3 As regards deletion of Rs. 50,000 in respect of investment made by Smt. Sarita Jain, the CIT(A) has discussed the facts in para 4 of the appellate order passed by him. Smt. Sarita Jain had invested a total sum of Rs. 2,89,000 for purchase of shares of the assessee-company. It was, in ..... 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