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TMI Blog2018 (10) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... y concerns and companies in which either Shri Aseem Kumar Gupta himself or his employees, were proprietor or director. The premises of the various beneficiaries, including the assessee, were also simultaneously covered under the said operations. The assessee filed the return of income u/s 139 of the I.T. Act declared the total income of Rs. 19,75,660/-, which was processed u/s 143(1) of the Act. The assessment proceedings were conducted time to time and assessee filed the necessary details which were placed on record. Thereupon, the assessment was completed in terms of an order u/s 143(3) at a total income of Rs. 2,54,31,910/- as against returned income of Rs. 19,75,660/-, wherein the AO made the following additions: 1. Addition on account of income from house property Rs. 4,36,036/-; 2. Addition on account of un-explained loan of Rs. 2,29,73,630/-; 3. Addition on account of deemed dividend u/s 2(22)(e) on protective basis Rs. 46,588/-. 3. The assessee challenged the above additions before the Ld. CIT(A) and raised various grounds of appeal. The assessee also filed application under Rule 46A of the I.T. Rules, 1962 for admission of the additional evidences. The copy of the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. The AO grossly erred in relying on the statement of Sh. Aseem Kumar Gupta recorded during the course of search. M/s Ganpati Fincap Services P. Ltd. provided unsecured loan out of their own funds and the assessee produced all the documentary evidences to prove the genuine loan received. The various documents have been procured after completion of assessment which requires to be admitted as additional evidences. The creditor is an NBFC which was engaged in the business of providing loans which is supported by all the documents. The AO made addition of Rs. 2,29,73,630/- as against a sum of Rs. 2,14,73,630/- actually received by assessee. Thus, the addition of Rs. 15 lakhs which has been paid by the assessee to the said party during the year under consideration is liable to be deleted. The assessee again reiterated that all the documentary evidences and bank statements were filed which support M/s Ganpati Fincap Services P. Ltd. has worth of Rs. 568.47 lakhs to give impugned loan to the assessee. Party has also confirmed giving loan to the assessee. Copy of the bank account is also filed which support explanation of the assessee. The CBDT has issued a circular that no statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked to explain the genuineness of the alleged loan taken from M/s Ganpati Fincap Services P. Ltd. The AO observed that assessee failed to furnish any plausible explanation in this regard. The AO noted that unaccounted cash of assessee which was deposited in the bank account of bogus proprietary concerns that was rooted back to the assessee through cheque, disguised as a loan from M/s Ganpati Fincap Services P. Ltd. after layering it into several intermediary companies. AO also noted details of value per share purchased and major shareholders of M/s Ganpati Fincap Services P. Ltd. in the assessment order. It was, therefore, noted that major shareholders were also controlled by Sh. Aseem Kumar Gupta or his employee Sh. Manoj Kumar. The AO, therefore, observed that the said company was neither in existence, nor had the capacity to lend such huge loan. Therefore, it was held that an amount of Rs. 2,29,73,630/- including interest credited in the books of account of the assessee as unexplained and added to the income of the assessee u/s 68 of the I.T. Act. 7. The assessee challenged the addition before Ld. CIT(A). The assessee reiterated the submissions already made before the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan to the assessee. The assessee also proved sources of the source, though not required by the law. 8. The Ld. CIT(A) considering the issue noted that AO made the addition on the basis of material found during the course of search and survey and on the basis of statement of Sh. Aseem Kumar Gupta who has admitted to have provided accommodation entries. The Ld. CIT(A) on that basis and following the test of human probabilities confirmed the addition and dismissed the appeal of the assessee. 9. Ld. Counsel for the assessee reiterated the submissions made before the authorities below. PB-87 is reply before AO giving complete details of taking loan along with the documents on queries raised by the AO. PB-90 is loan agreement with M/s Ganpati Fincap Services P. Ltd., which is NBFC. PB 94 is confirmation from M/s Ganpati Fincap Services P. Ltd. (Investor Company), PB-96 is ITR of the investor, PB-97 onwards bank statement of the investor company. PB-145 is another reply filed before AO giving further details of the loan along with balance sheet of investor company showing its net worth. PB-151 is balance sheet to show the shareholding of the investor company was same in earlier year a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion money were same in assessment year under appeal as well as in the preceding AY 2009-10. It would, therefore, prove that there is no new fund received by the investor company so as to prove that it has received any unaccounted cash amount from any third person. The loan amounts have been received through banking channel, which is supported by the bank statement of the investor. Therefore, allegation of the AO that amount have been received as accommodation entry on rooting the cash is improper and such finding have not been corroborated by any material or evidence on record. The findings of the AO are unjustified that cash have been routed in this case for giving loan because in the course of the search, no material was found that any cash has been paid by the assessee. The statements of various persons were recorded during the course of search as well as post search proceedings and in none of the statements, anybody has made allegation against assessee of providing cash. The assessee specifically submitted before Ld. CIT(A) that all the statements of Sh. Aseem Kumar Gupta along with various documents seized at his premises have been obtained at the back of the assessee and hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht on record, if assessee gave any cash to the investor company for giving loan. The assessee proved that investor had sold investment during the year and has given advance to the assessee. The onus upon assessee to prove identity of the investor, its creditworthiness and genuineness of the transaction have been duly discharged. It is well settled law that assessee is not required to prove sources of the source. We, rely upon the decision of the Hon'ble Delhi High Court in the case of Dwarkadhish Investment P. Ltd. 330 ITR 298 and decision of the Gujarat High Court in the case of Rohini Builders Ltd. 256 ITR 360. It may be noted here that it is a case of interest bearing loan taken by the assessee and there is nothing illogical and there is no material found during the course of search or any adverse statement against the assessee about the loan as explained above. Ld. Counsel for the assessee referred to the assessment order u/s 143(3) of the Act dated 27.12.2011 in the case of Sh. Manoj Kumar proprietor of AMB Traders and Shiva Trading Company, copy of which is filed at page 28 of another paper book. Ld. Counsel for the assessee rightly pointed out that this addition cannot be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the documents submitted by the assessee, the departmental appeal was dismissed by the Hon'ble High Court." v. Decision of jurisdictional High Court in the case of CIT vs. Laxman Industrial Resources Pvt. Ltd., ITA.No. 169 of 2017 dated 14th March, 2017, in which it was held as under : "The CIT(A) took note of the material filed by the assessee and provided opportunity to the AO in Remand proceedings. The AO merely objected to the material furnished but did not undertake any verification. The CIT(A) deleted the addition by relying upon the decision of the Hon'ble Apex Court in the case of Lovely Exports Pvt. Ltd. (supra) and judgement of Delhi High Court in the case of CIT vs Divine Leasing & Finance Ltd. [2008] 299ITR 268. The ITAT confirmed the opinion of the Ld.CIT(A). Hon'ble High Court in view of the above findings noted that the assessee had provided several documents that could have showed light into whether truly the transactions were genuine. The assessee provided details of share applicants i.e. copy of the PAN, Assessment particulars, mode of amount invested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g money in his books either by account payee cheque or by draft or by any other mode, then the onus of proof would shift to the Revenue. Just because the creditors/share applicants could not be found at the address given, it would not give the Revenue the right to invoke section 68. One must not lose sight of the fact that it is the Revenue which has all the power and wherewithal to trace any person. Moreover, it is settled law that the assessee need not to prove the "source of source". The assesseecompany was engaged in the business of financing and trading of shares. For the assessment year 2001-02 on scrutiny of accounts, the Assessing Officer found an addition ofRs. 71,75,000 in the share capital of the assessee. The Assessing Officer sought an explanation of the assessee about this addition in the share capital. The assessee offered a detailed explanation. However, according to the Assessing Officer, the assessee failed to explain the addition of share application money from five of its subscribers. Accordingly, the Assessing Officer made an addition of Rs. 35,50,000/- with the aid of section 68 of the Act, 1961 on account of unexplained cash credits appearing in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conduct scrutiny of the documents at assessment stage and merely suspected the transaction between the investor company and the assessee because some materials found during the course of search in the case of Sh. Aseem Kumar Gupta or his statement recorded, but these would not prove anything against the assesse. It is not reported, if any, cash was found deposited in the account of the investor before making investment in assessee company. Therefore, the totality of the facts and circumstances of the case, clearly prove that assessee discharged its initial onus to prove the identity of the investor company, its creditworthiness and genuineness of the transaction in the matter. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs. 2,29,73,630/- on account of unexplained loan. Ground nos. 1 to 7 of the appeal of assessee are allowed. 13. On ground no. 8, assessee challenged the addition of Rs. 4,36,036/- on account of income from house properties made by the AO on two properties i.e. no. (i) 200, Patparganj, New Delhi and (ii) 323, Patparganj, New Delhi. The AO noted that assessee has not declared rental income in respect of the above prope ..... 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