9911796707
TMI Blog2012 (9) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... osed of together for the sake of convenience. 5. Assessee is a Private Limited Company engaged in the business of embroidery work on grey cloth on job work basis. Assessee filed its return of income on 13-11-2007 declaring total income of Rs. Nil. The case was selected for scrutiny. During the course of assessment proceedings the A.O. observed that assessee had during the year issued shares of ₹ 18,07,000/-and had taken unsecured loan of ₹ 38,49,950/-. The assessee was directed to submit confirmations from the share applicants and the lenders. To verify the genuineness, summons were issued to all the persons u/s. 131 for personal attendance. They were asked to produce the bank pass books along with the details of transactions entered with the assessee. The A.O. recorded the statements of the persons who attended in response to the summons. Based on their examination the A.O. analysed the facts and observed as under: 3.6. From the above analysis following observations are made: i) All the persons have issued a cheque/drew D.D. in favour of the assessee on the same day or after one/two days of depositing the cash in their bank account. ii) In many cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case, I am of the considered opinion that issue under consideration stands squarely covered by the decision of Hon'ble Supreme Court in the case of CIT vs. Lovely Export Pvt. Ltd., cited supra. I agree with the contention of appellant that distinction drawn by A.O. on the ground that in that case, only share application money was received whereas in the instant case shares have actually been issued, is not valid as shares are ultimately issued to the persons from whom share application money is received and further, assessee has clearly established the identity of all the parties. The ratio of various other judicial pronouncements cited above is also applicable to the facts of instant case. Further, there is no cogent evidence on record which indicates that amount received as share capital represents unaccounted income of assessee. In view of the above, the addition of ₹ 18,07,000/- is directed to be deleted in the appellant company's hands and the A.O. is directed to inform the A. Os of these parties to ascertain the genuineness of the nature and quantum of claimed income and share application amounts in respective hands. 8. With respect to the addition made u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete particulars relating to them viz. I.T. acknowledgement, account confirmation, bank statements along with various other evidences in the form of computation of income, balance sheet and profit and loss account. It is further seen that one depositor viz. Shri Bhupatbhai J. Virpura from whom unsecured loan of ₹ 2 lacs has been received appeared before A.O. in response to issue of summons and he confirmed to have given loan to assessee. He also explained the source from which he gave loan to assessee. As regards other depositors who are assessed to tax, it is a fact that assessee has supplied complete details including their income particulars and therefore, if they do not turn up in response to issue of summons u/s. 131, adverse inference in assessee's case cannot be drawn especially when there are no materials on record which indicate that amount received as loan actually represents unaccounted income of assessee. Once assessee filed complete details including income tax particulars of the depositors, the initial burden lies upon the assessee in establishing the genuineness of loan transactions clearly stands established. I am of the opinion that the decision of Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also earning agricultural income. The other two depositors viz. Shri Dineshbhai L. Gundarani and Shri Paresh L. Narodiya, it is seen that said parties explained in their statements that they are doing diamond polishing work and apart from that they also earn agricultural income. As regards the other depositor viz. Shri Laljibhai N. Vekariya, it is seen that depositor mentioned in his statement that he is getting monthly pension of ₹ 5,000/- to ₹ 6,000/- approximately. It is further seen that depositor is 70 years old and as he was teacher in a primary school and his creditworthiness for giving loan of small amount of ₹ 50,000/- could not be doubted. It is thus, seen that all the depositors have explained the source of funds and considering the same and evidences on record, their creditworthiness cannot be doubted. Even otherwise also, it is seen that burden cast on assessee stands clearly discharged in view of filing of various evidences and addition cannot be made if source of source is not explained. In my opinion the decision of Hon'ble Patna High Court in the assessee of Sarogi Credit Corporation vs. CIT 103 ITR 344 (Pat) is directly applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arge the burden cast on assessee in establishing the genuineness of such loans. As these parties are not assessed to tax, burden is on assessee to prove the genuineness of loan and as they are not produced before A.O., the burden cannot be said to be shifted on to A.O. Hence, addition of ₹ 2,99,950/- pertaining to loans received from said two parties is hereby confirmed. 9. Aggrieved by the action of CIT (A), the Revenue is now in appeal before us. Before us, the Ld. D.R. strongly relied on the order of the A.O. and submitted that the order of the A.O. be upheld. On the other hand the Ld. A.R. submitted that the CIT (A) was right in deleting the addition made on account of share application money because all the share holders had appeared before the A.O. and had filed various evidence like copy of PAN card, form 7/12 etc. He relied on the decision of Hon'ble Supreme Court in the case of Lovely Export Pvt. Ltd. (216 CTR-195)(SC). With respect to the deletion of addition made on account of unsecured loan, the Ld. A.R. submitted that out of 21 depositors 12 depositors are assessed to tax. In respect to the depositors assessed to tax the assessee has filed their Income t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
