9911796707
TMI Blog2016 (12) TMI 1678X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) in granting relief in respect of loan taken from M/s ACPL . Set aside the order passed by Ld CIT(A) in respect of loan taken from M/s NVPL and M/s SVPL and direct the AO to delete the additions relating to them. - Decided in favour of assessee - ITA No.593/Mum/2015 - - - Dated:- 27-12-2016 - SHRI R.C.SHARMA, AM SHRI PAWAN SINGH, JM Revenue by : Shri K.C.Kanoja Assessee by : Shri Prakash K. Jotwani O R D E R PER R.C.SHARMA (A.M): This is an appeal filed by the revenue against the order of CIT(A) for the Assessment Year 2010-11 wherein following ground has been taken by the revenue. i. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 5,12,50,000/- u/s 68 of the Act. ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has failed to appreciate the fact that a company with a meager income of ₹ 20,000 / - can advance such huge amounts of loans. iii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the report of DDI(Inv) that these companies were upfront loan givers and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25,00,000/- Total 11,40,00,000/- 5. The A.O in its order observed that during the year under consideration, the assessee has received loan of ₹ 4 crores from a new party i.e. the party which was not a loan creditor during the assessment year 2009-10 and hence was not referred to in the report of DDIT(Inv), Kolkota. However, the party from whom another loan of ₹ 1,12,50,000/- was received during the year under consideration was referred to in the report of investigation by the DDIT(Inv) kolkota. The A.O. issued notice u/s. 133(6) to the aforesaid parties. The A.O. also asked the assessee as to why the said loans should not be considered as non-genuine. The assessee vide letter dated 22/03/2013 filed his reply (a copy of which has been filed during appellate proceedings) wherein he has submitted the confirmations from these two parties along with detailed books of accounts of the loan parties such as copy of Pan card of lender company, copy of Audited annual accounts, balance sheet profit loss account of lender company, copy of acknowledgement of return filed by the lender, copy of ITR for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcantile Pvt. Ltd. were operating from the same address. The AO has also observed that the appellant has not charged any interest on the aforesaid loans. Similarly there was no written agreement about the sharing of profit or interest or anything of that sort. Finally the AO held that in the garb of loans, the appellant is routing its own unaccounted money by making an arrangement to this effect. 5.8.2. As opposed to the above observation's of the AO, the Ld. AR very vehemently argued that addition made by the AO is not justified and is not legally tenable in the case of the appellant as the identity, creditworthiness and genuineness of the loan transactions stands proved beyond doubt in the light of the various evidences/documents submitted by it by vide letter dated 22.03.2013. The Ld. A.R. argued that AO has not brought on record any fresh material to disprove the contention of assessee in respect of identity, creditworthiness and genuineness of the said loan transactions. 5.8.3. The Ld. AR further argued that the present AO has not given any new reasoning's for making the impugned addition. The AO has given the same reasons which were given by the DDIT(Inv.)-Kolka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. The AO in the assessment proceedings has questioned the creditworthiness of the creditor parties and has observed that the lender companies which have shown such a meager income, probably cannot extend such huge loans to the appellant. In this regard, it is stated that the test of creditworthiness of a particular creditor cannot be based on the returned income during a particular year under consideration. What is required to be seen is the availability of funds with them from explained sources which both the loan creditors proved by submitting the requisite documents/evidences in reply to notice u/s 133(6) issued to them. The AO has not been able to pin point any discrepancy in respect of such details filed by the appellant and / or filed by the both the loan parties which shows that creditors have sold their investments to the third party companies and consequent availability of the funds with them which was advanced to the appellant. 5.9.1. It is also submitted by the Ld. AR that the assessed own fund / capital of M/s. Albright Consultants Pvt. Ltd. was ₹ 16.74 crores till the A.Y. 2006-07 which has also been noted in the assessment order of this company passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onable. Such observations made by the AO / DDIT (Inv.) Kolkata cannot dispute the creditworthiness of such creditors. 5.9.5. Even if circumstantially such loans advanced to the appellant appear to be in-genuine or accommodation in nature, the same have to be proven with respect to their individual identity, creditworthiness and genuinity of the transactions. In the facts of the case discussed hereinabove the identities of the creditor companies together with their creditworthiness are not found to be disputable. 5.9.6. The appellant in its submission has contended that since the entire credits from these two companies have been taken through the banking channels, the genuinity of such transactions also cannot be disputed. In this regard it is stated that the creditor companies are registered NBFCs and the money which has been advanced is for the commercial purposes of the appellant and the creditors. It is also submitted by the Ld. AR that the funds which has been advanced to the appellant should meet the stated purpose of advancing loan to the appellant. 5.10. The Ld AR has submitted that the amount of ₹ 1,12,50,000/-which was advanced to the assessee during the yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction has taken place through banking channel. The receipt of loan, corresponding repayment of the entire loan together with a lumpsum compensation of ₹ 20 lakh is clearly evidenced from the records, from the ledger account and from the confirmation of accounts submitted by the appellant in this regard. Accordingly the genuinity of this transaction of credit of ₹ 4,00,00,000/- crores from M/s. Sital Mercantile Pvt. Ltd stands substantiated. 5.11. In view of the above facts and circumstances of the case, the identity, creditworthiness and genuinity of the transaction in respect of loan received from M/ s Albright consultants Pvt. Ltd. of ₹ 1,12,50,000/- .and loan received from M/s Sital mercantile Pvt. Ltd. of ₹ 4,00,00,000/ - clearly gets proved and therefore the addition of these credits of ₹ 5,12,50,000/- u/s 68 of the Act in the hand of appellant is not found to be justifiable and therefore, the AO is directed to delete the addition of ₹ 5,12,50,000/-. In the result, the ground No.1-14 of the appellant which are related to the addition of ₹ 5,12,50,000/- u/s 68 are allowed. 8. Against the above order of CIT(A), revenue is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being NBFC, could have given loan interest free, as the same is not in accordance with their objectives. 15. We have earlier noticed that the provisions of sec. 68 places initial burden of proof upon the assessee. In the instant cases, there is no dispute between the parties that the identity of the loan creditors has been established. Even though the assessing officer has expressed doubt about the credit worthiness of the creditors on the basis of low income reported by them, yet the Ld CIT(A) has rightly appreciated the fact that these companies have used their own capital funds for advancing loan to the assessee company. The quantum of own funds held by these companies has also been discussed by Ld CIT(A). In our view, the Ld CIT(A) was justified in holding that the income declared by these loan companies are not the criteria, but the source for giving the loans to the assessee company is the determinative of the credit worthiness. Thus, the Ld CIT(A) has rightly held that the credit worthiness of the loan creditors has also been established. 16. It is a well settled proposition that the genuineness of the transactions shall stand established if the transactions are routed ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
