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TMI Blog2016 (2) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmations of the depositors/creditors with full address, PAN, complete details of cheque amount & number loans/deposits; etc. The assessee has also furnished the details of TDS amount on interest payment to different creditors/depositors; photocopy of bank statement showing the deposits of loan/borrowed fund; etc. Since the assessee has furnished all the relevant evidence to prove the genuineness of the transaction and identity & creditworthiness of the creditors, we find no infirmity in the order of the ld. CIT(A) who has rightly accepted the claim of the assessee. Since no specific infirmity is pointed out in the order of the ld. CIT(A), we approve the same. - Decided in favour of assessee - ITA No. 835/LKW/2014 - - - Dated:- 3-2-2016 - Sunil Kumar Yadav (Judicial Member) And A. K. Garodia (Accountant Member) For the Petitioner : Harish Gidwani For the Respondent : Rakesh Garg ORDER Sunil Kumar Yadav (Judicial Member) This appeal is preferred by the Revenue against the order of the ld. CIT(A), inter alia, on the following grounds;- 1. The Commissioner of Income-tax (Appeals), Lucknow has erred in law and on facts of the case in deleting the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification, but the Assessing Officer did not submit the remand report despite sufficient time afforded to him. He, however, objected to the admission of the entire evidence. The ld. CIT(A) himself has examined the detailed evidence furnished by the assessee and being convinced with it, he deleted the additions. The ld. CIT(A) in his order has extracted the assessment order as well as the written submissions filed by the assessee in his order. 5. From a careful perusal of the order of the ld. CIT(A), we find that the ld. CIT(A) has categorically recorded in his order that the assessee has filed confirmations of the depositors/creditors with full address, PAN, complete details of cheque amount number of loans/deposits; photocopy of PAN of depositors/creditors; photocopy of ITRs of depositors/creditors showing interest income received from the assessee by different creditors on borrowed funds/loans; details of TDS amount on interest payment to different creditors/depositors; photocopy of bank statement showing the deposits of loan/borrowed fund; copy of relevant pages of ledger showing the creditors account. Having carefully examined, the ld. CIT(A) has ccme to the conclusion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. has examined the same. The A.O. himself mentioned in assessment order that the required details were furnished by him which are placed on record. During appellate proceedings the appellant has furnished written submissions alongwith papers/documents in support of his version that these deposits were genuine. During appellate proceedings the appellant has asked to file the papers/documents including confirmation letters of lenders, copy of their PAN ITR, bank statement and other relevant details vide order sheet entry. The appellant has filed the papers/documents, which were sent to A.O. for furnishing remand report. The A.O. has filed remand report vide letter dated 21.07.2014 and contended that the papers/documents submitted during appellate proceedings should have not been entertained, as the same are additional evidences. Further the A.O. did not provide assessment record, despite of specific direction was given to attend the appellate proceedings alongwith assessment record on 24.07.2014. The A.O. has requested to allow time for 30 days for filing of remand report vide her letter 16.07.2014 but till date the remand report has not been submitted by A.O. As men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In such a situation, the CIT (Appeals) is obliged to allow the Assessing Officer a reasonable opportunity before admitting the additional evidence. The second category deals with such evidence, which is directed to be produced by the CIT (Appeals) for the disposal of appeal before it. The voluntary character of filing the additional evidence in the first situation is missing in the second as the filing of additional evidence is necessitated due to the direction of the CIT(Appeals). When the additional evidence is filed under the second category, then there is no requirement for confronting the Assessing Officer with the documents/evidence entertained by the CIT(A) at the first appellate stage-DIT (International Taxation) v. Thoresen Chartering Singapore (Pte.) Ltd. [2009] 118ITD 416 (Mum). In yet another decision, the Bench in ITO v. Industrial Roadways [2008] 112 ITD 293(Mum.) held that where the additional evidence is obtained by the first appellate authority on its own motion, there in no requirement in law to consult or confront the Assessing Officer with such additional evidence. The Bench further held that if the additional evidence furnished by the assessee before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of A.O. in treating the loan amount received from different persons which was either credited in his capital account by appellant directly or recorded in the books of accounts of appellant as creditors in their respective names, as unexplained u/s 68 of I.T. Act cannot be said proper and justified in the eye of law. Further I have observed that the A.O. has made huge addition without conducting any enquiry/verification from the records of appellant and the concerned A.O. of creditors. Even in appellate proceedings an opportunity was provided to the A.O. to plead the case in person alongwith assessment record but the A.O. did not avail opportunity. As mentioned above the papers/documents which were received during appellate proceedings alongwith written submission of appellant, have been sent to A.O. for remand report and it was the duty of A.O. to submit the comprehensive remand report within the time provided but the A.O. did not make the compliance of the letters issued by this office. As mentioned supra the appellant has filed confirmation letters and bank statement in support of his version that from where the money was received by the appellant, PAN, copy of ITR, det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the cash creditors appeared before the AO and their statements under s. 131 were also recorded on oath. The cash creditors appeared to be from small place and it is quite possible that they may not be in a position to pin pointedly or specifically say about everything but by and large stood to the testimony and were able to explain various issues as per the question and answer reproduced by the AO himself in the assessment order. It may be that most of the cash creditors are relatives of the assessee and heavy burden lay on the assessee to prove about the cash credit but once all the cash creditors appeared before the AO, their statements having been recorded under s. 131, then insofar as the assessee is concerned, the onus which lay upon him, stood discharged as he was able to prove identity of the creditors. Once the amount was advanced by account payee cheque from their respective own bank accounts and were being assessed to income-tax, then capacity of the creditor and genuineness of the transaction stood proved. In so far as the assessee is concerned, it is correct that he is not required to prove source of the source and if the AO had any doubt, then the AO, assessing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature and should point to the assessee as the person from whom the money has actually flown to the hands of the creditor and then from the hands of the creditor to the hands of the assessee. When there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, such an addition cannot be sustained and has been rightly deleted by the both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be bases on mere suspicion. (Paras 17 to 20) Conclusion : Once the amount was advanced by the creditors by account payee cheque from their respective bank accounts and the said creditors were being assessed to income-tax, then capacity of the creditors and genuineness of the transactions stood proved and in the absence of any evidence to prove that money actually belonged to the assessee himself, addition under s. 68 was not sustainable. (2) Dwarikadhish Sugar Industries Vs. ITO (2012) 137ITD 200 (Luck) (TM) The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer and the written submissions of the appellant, As per the facts emerging from the assessment order, the appellant raised unsecured loans of ₹ 27,99,139/- from 27 persons. Out of this, an amount of ₹ 17,01,759/- concerned Shri Hari Har Singh, the Karta of the HUF-appellant, the AO made an addition of the balance of ₹ 10,97,380/- on the basis of examination of 3 accounts of Shri Mohd. Azam, Shri O.P. Singh and Smt. Reema Rastogi. In the case of Shanker Industries vs. C1T (1978) 114 ITR 689 (Cal), it was held that in order to discharge the onus under section 68 to show that the cash credits do not present the Income, the appellant has to prove- i) Identity of creditor ii) credit worthiness of the creditor iii) genuineness of the transaction 5(3) In the impugned assessment, the appellant discharged the onus by giving the identity of the persons from whom the money was received by furnishing the PAN numbers and where over possible, the copies of Voters ID card or Driving License etc. The transactions with the creditors are through cheques and interest has been paid to the creditors. The creditors who have advanced loans to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment orders passes in the cases of individual creditors, wherever available, and copies of returns filed by the creditors in the remaining cases- All loans were received and paid by the assessee by account payee cheques along with interest - thus, assessee has discharged the initial onus which lay on it in terms of sec. 68 - Assessee is not further expected to prove the genuineness of cash deposited in the bank accounts of the creditors - Merely because summons issued to some of the creditors could not be served or they failed to appear before the AO (he loans taken from those creditors could not be treated as non genuine - Further, AO has not disallowed the interest paid in relation to these credits and tax has been deducted at source out of the interest paid in relation to these credits and has been deducted at source out of the interest paid/credited to the creditors- addition not justified. B. DC IT vs. Rohini Builders 256 ITR 360(Gujarat) Appeal (High Court) - substantial Question of law - Cash Credit - Assessee furnished complete addresses of all the creditors along with GIR numbers /PAN as well as confirmations along with copies of assessment orders passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction, and (3) the capability of the person giving the cash credit, Section 68 of the Ac: makes it clear that in respect of a cash credit entry the explanation offered by the assessee can be rejected by the Income Tax Officer on cogent grounds. When such grounds themselves are based on no evidence, the question of presumption against the assessee does not arise. 4(6) I find from my examination that the assessee established the identity of the creditors, the confirmations have been filed and so have the PAN numbers of the creditors. The transactions are through banking channels and there is payment of interest to several creditors which has been accepted by the AO. It is evident therefore from the above that once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee's onus stands discharged and the latter is not further requires to prove the source from which the creditors could have acquired the money deposited with him, and therefore, the addition under section 68 cannot be sustained in the absence of anything to establish that the sources of creditors' deposits flew from the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas the ld. counsel for the assessee, besides placing reliance upon the order of the ld. CIT(A), has contended that during the course of assessment proceedings the Assessing Officer was not afforded proper opportunity to produce all the evidence on record. He, however, explained each and every credit entry found in its capital account or introduced as unsecured credit. Before the ld. CIT(A) the assessee has filed all the relevant details in order to prove the genuineness of the transaction, identity creditworthiness of the creditors. The ld. CIT(A) has called a remand report on the written submission filed by the assessee and documentary evidence in this regard, but the Assessing Officer did not submit the remand report despite repeated reminders and giving sufficient time to the Assessing Officer. The Assessing Officer has not even produced the assessment record despite direction of the ld. CIT(A). The ld. CIT(A) himself has examined all the relevant evidence produced before him in this regard and being convinced with it he deleted the addition. 7. Having carefully examined the orders of the lower authorities in the light of the rival submissions, we find that the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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