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TMI Blog2016 (11) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... s 68 by the AO on account of borrowed fund from depositor without appreciating the fact that creditworthiness of the depositor had not been proved by the assessee 3. Brief facts are - during the course of assessment proceedings, it was found that the assessee had obtained unsecured loans amounting to Rs. 2,08,18,088/- from one M/s. Hanuman Enterprise, an alleged proprietorship concern of one Mr. Vinay Kashiram Agarwal. To verify the identity, creditworthiness and genuineness of the creditor, summons u/s 131 dated 10.08.2010 were issued. On perusal of P&L A/c., Balance Sheet and Tax Audit Report of the said M/s. Hanuman Enterprise, ld. AO found that it did not have enough resources to advance such huge loan to the assessee. In his statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inasmuch as no prudent businessman will stop the payment of a supplier to advance such loan to the party with whom he did not have any direct association or earlier acquaintance. In view thereof, it was held that M/s. Hanuman Enterprise did not have the genuine creditworthiness to advance impugned loan, which was based on unreliable explanation. Consequently, the impugned addition was made u/s 68 for unexplained cash credit. 4. Aggrieved, the assessee preferred first appeal where it was contended that:- i) Books of accounts were regularly maintained and audited. No discrepancies in the books were observed by the auditors; ii) M/s. Hanuman Enterprise is assessed to tax and it also maintains the regular books of accounts. It had clearly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have given loan to the appellant and confirmed all the transaction, which were entered into through account payee cheques. The A.O. has not been able to counter the contentions put forth by the appellant. Nothing has been brought on record to show that the loan was not genuine. Once the depositor had accepted the giving of loan, it was for the A.O. to prove that the loan accepted by the appellant was not genuine by bringing on record cogent adverse material in the matter. However, the A.O. has not done any further in the matter. As regards source, the depositor had clearly shown the source and the A.O. failed to counter the contention. It is also the fact that the depositor is assessed to tax and therefore if the depositor had carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some documents are produced before him, the AO has ample powers to enquire and examine whether the papers reflect correctness or not. Reliance is placed on Hon'ble Supreme Court judgment in the case of Navodaya Castle (P) Ltd vs. CIT, [2015] 230 taxman 268 (SC), holding that PAN, certificate of incorporation, etc. were not sufficient for the purpose of identification of the creditor when there was material on record to show that it was a paperbook company and not a genuine investor. 7.3 Further reliance is placed on Hon'ble Supreme Court judgment in the case of CIT vs. P. Mohanakala, [2007] 210 CTR 20 (SC), holding as under:- "... The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT vs. Apex Therm Packaging P. Ltd in Tax Appeal No.1070 of 2013, holding that if the particulars of the creditors in terms of address, name, PAN Number, copy of the Income Tax Returns, balance sheet, profit and loss accounts and computation of the total income in respect of all the creditors are furnished, then there is no question of law arises if the additions are deleted by ITAT. b) CIT vs. Diamond Products Ltd, (2009) 21 DTR 009 (Delhi), holding that... if the creditors are regularly assessed to income-tax and copies of return for the relevant year are filed before the authorities, then the assessee has discharged its burden in terms of Section 68. c) Decision of ITAT, Mumbai Bench in the case of ACIT vs. M/s. Disha Construction in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddress the serious flaws raised by the ld. AO about the authenticity of claim. Section 68 clearly contemplates that the initial onus to be on assessee and if the AO is not satisfied, same is conveyed to the assessee and thereafter the onus shift on assessee to be satisfactorily explain the objections raised by the AO. In this case, after discharging of initial onus, ld. AO raised serious concerns about the claim of the assessee, its veracity and genuineness. These concerns have not been replied by the assessee. Ld. CIT(A) without adverting to these crucial facts has gone on a tandem to hold that the source of source cannot be examined by the AO. The fact of the matter is that the AO intended to verify the correctness of the claim canvassed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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