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TMI Blog2013 (9) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... en the loan - therefore, the same in our opinion should be allowed - The AO disallowed an amount on account of loan from 7 loan creditors on the ground that the assessee could not substantiate the identity, credit worthiness and the genuineness of the transactions - We find the assessee filed certain details before the CIT(A) who called for a remand report from the AO - the assessee has produced the loan creditors before the AO who recorded their statements and since the loan creditors filed their bank accounts and the AO was satisfied regarding the genuineness of the transaction and their credit worthiness, therefore, we find no reason as to why the same should not be accepted - We therefore set-aside the order of the CIT(A) on these 2 loans and direct the AO to allow these 2 loans as genuine. - Decided in favor of assessee. - ITA No.518/PN/2011 - - - Dated:- 11-1-2013 - Shailendra Kumar Yadav and R K Panda, JJ. For the Appellant : Sri Sunil Ganoo For the Respondent : Ms Ann Kapthuama ORDER:- Per: R K Panda: This appeal filed by the assessee is directed against the order dated 07-03-2011 of the CIT(A)-II, Nashik relating to Assessment Year 2006-07. 2. In Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions of the appellant on the issue under appeal. The AO in the remand report has stated that appellant had received sub-dealers deposits of Rs.3,08,000/- in F.Y.2002-03 and Rs.1,21,000/- in F.Y.2003-04. However, the addition has been made amounting to Rs.4,29,000/-in A.Y.2006-07. Assessee has also filed copies of Balance sheets for F.Y.2002-03 and 2003-04. The same have been verified and noted that the addition was erroneously made. A perusal of the remand report suggests that addition on account of deposits are shown in the balance sheet for A.Ys 2003-04 (Rs.3,08,000/-) and 2004-05 (Rs.1,21,000/-). But that does not absolve the appellant of proving the correctness and genuineness of the said deposits. AO had taken statements from 3 persons namely Shri Ravindra Narayan, Shri Sharad Anand Wani and Shri Shaikh Rajjak S. Kamruddin (appearing in the list of sub-dealers at SN 22,31, and 33), while all 3 above persons confirmed having purchased gas connection from the appellant, they flatly denied having paid Rs.11,000/- each to become sub-dealer. They also denied having worked as subdealers for the appellant. The AO during the assessment proceedings confronted the appellant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04-05 for which the balance sheets for those years were filed. Further, the learned CIT(A) himself admits that technically the addition cannot be made u/s.68 during the year, still he had confirmed the addition, which in our opinion is not proper. Under these circumstances, the CIT(A), in our opinion, was not justified in confirming the addition made by the AO. Whatever remedy available with the department could have been utilised in the preceding years. However, the same cannot be a ground to make the addition during this year. In this view of the matter, we set-aside the order the CIT(A) and direct the AO to delete the addition. 9. The next issue in the grounds raised by the assessee relates to the order of the CIT(A) in confirming the addition of Rs.11,99,200/- on account of unexplained loan credits for nonbusiness purposes. 10. Facts of the case, in brief, are that the AO during the course of assessment proceedings noted that the assessee has taken unsecured loans amounting to Rs.11,99,200/- during the impugned assessment year from the following persons : (a) Seema Rajkumar Deoyani, of Yeotmal Rs.2,00,000/- (b) Mr. Ashokkumar Nandiram C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their bank passbook submitted before him and their confirmations. So far as the amount received from Smt. Ravi Sobasingh Sahajsinghani, Ambarnath amounting to Rs.99,600/- and Sri Shoba Singh R. Sajsinghani amounting to Rs.99,600/- the AO noted that although they appeared before him, however, they could not produce any proof and source of the said amount. Therefore, it can be decided on merit by the CIT(A). So far as the amount received from Sri Gopichand Premchandani amounting to Rs.1,00,000/- the AO reported that the summons u/s.131 could not be served on the above person. The assessee also did not bother to produce this creditor and nothing has been filed by the assessee to prove the genuineness of the credit in this case. He accordingly reported that this addition should be confirmed. 13. Based on the arguments advanced by the assessee and on the basis of the remand report received from the AO the learned CIT(A) upheld the addition made by the AO. While doing so, he was of the opinion that the affidavits filed by the assessee in case of the loan creditors were stereotype and have been filed at the insistence of the assessee in a stereotyped fashion. Further some of the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be extended to prove the source of the creditors to the hilt. Referring to the decision of the Hon ble Gauhati High Court in the case of Nemichand Kothari Vs. CIT and Another reported in 264 ITR 254 he submitted that the Hon ble High Court in the said decision has held that burden of the assessee to prove the genuineness of the transactions as well as credit worthiness of the creditor is confined to the transactions which have taken place between the assessee and the creditors and it is not the burden of the assessee to show the source(s) of his creditor or to prove the credit worthiness of the source(s) of the sub creditors. He accordingly submitted that the entire addition made by the AO and confirmed by the CIT(A) should be deleted. 15. The learned DR on the other hand heavily relied on the order of the CIT(A). He submitted that the affidavits filed by the loan creditors are stereotyped. Further the so called repayments made by the assessee to the loan creditors are after the completion of the assessment. Therefore, it does not inspire confidence regarding the genuineness of the transactions. It was only after the AO disallowed the loan amount that the assessee starte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kolhapur. If the above position/documentary evidences are considered, the credit in this case appears to be genuine. Smt. Komal Sevaldas Rejwani, Pachora Rs.3,00,000/- The statement of this lady has been recorded wherein she has confirmed about the credit. She has also filed account extract from Pachora Peoples Co.op Bank Ltd. The transaction is genuine and the same may kindly be considered. 16.1 We find despite the comments of the AO accepting the transactions as genuine the learned CIT(A) confirmed the addition. Since the assessee has produced the loan creditors before the AO who recorded their statements and since the loan creditors filed their bank accounts and the AO was satisfied regarding the genuineness of the transaction and their credit worthiness, therefore, we find no reason as to why the same should not be accepted. We therefore set-aside the order of the CIT(A) on these 2 loans and direct the AO to allow these 2 loans as genuine. 17. So far as the loan of Rs.99,600/- received from Mr. Ravisobasingh Sahajsinghani and Rs.99,600/- from Shoba Singh Sahajsinghani we find the assessee has produced the loan creditors before the AO who recorded their statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the onus on the assessee is to prove the identity, creditworthiness of the creditor, genuineness of the transaction and the same cannot be extended to prove the source of the creditors to the hilt. Therefore, having regard to the totality of facts and circumstances of the case, in our view, the invoking of section 68 of the Act to make an addition of Rs 8 lakhs representing loan received from M/s Global Marketing in this case is misplaced. Resultantly, we set aside the order of the Commissioner of Income-tax (Appeals) and direct the Assessing Officer to delete the impugned addition. 7. In the result, the appeal of the assessee is allowed. Respectfully following the decision of the coordinate Bench of the Tribunal in the case cited above and since the assessee has produced the loan creditors before the AO who have confirmed to have given the loan of Rs.99,600/- each, therefore, the same in our opinion should be allowed. We direct accordingly. 18. So far as the loan received from Smt. Seema Rajkumar Deoyani, of Yeotmal we find despite summons issued u/s.131 neither the creditor attended the office of the AO nor the assessee could produce the said loan creditor before the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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