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TMI Blog2019 (1) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... RT), there were no justification for the authorities below to sustain the addition. - Decided in favour of assessee Addition on account of difference in balance of one creditor - Held that:- ustification to interfere with the Orders of the authorities below. Learned Counsel for the Assessee submitted that no addition can be made under section 68 of the I.T. Act on account of difference in balance of the creditor. I do not agree with the submissions of the Learned Counsel for the Assessee. Section 68 would be applicable if assessee failed to explain sum of the amounts credited in the books of account of assessee to the satisfaction of the A.O. The party has however, denied of having outstanding balance with the assessee in response to notice under section 133(6) of the I.T. Act. Therefore, addition was correctly made against the assessee - decided against assessee Addition u/s 68 on account of loan received from one Director - Held that:- Creditworthiness of the creditor have been accepted by the authorities below and that the creditor is connected with the assessee-company, therefore, the matter requires reconsideration in the light of documentary evidence and statement of af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or to cross-examine the witnesses. Their statements were recorded at the back of the assessee and in case of nonattendance of some persons, no intimation have been given to the assessee. The assessee explained the source of the amount received and nature of the transaction. The A.O. has not enquired about their creditworthiness and source. No questions whatsoever has been made regarding the source of investment made by them with the assesseecompany. The deponents have nowhere stated that money has been deposited out of the earning or saving of the current year income. The amounts are less than ₹ 50,000/- each and the persons were not having taxable income and they were having many source to make deposit with the assessee-company. Since no right of crossexamination have been allowed, therefore, their statements cannot be read in evidence against the assessee. It is also against the principles of natural justice, therefore, no adverse inference could be drawn. The assessee further made written submissions to explain the three categories of the investments made by the large number of investors which is reproduced in the appellate order in which the assessee again reiterated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Directors of the assessee-company. They have also explained their source of deposits and shares have been issued to all the share applicants. Since small amounts have been invested by various persons, therefore, the same could not be doubted. 4. The Ld. CIT(A) considering the explanation of the assessee and material on record noted that assessee has received the share application money in assessment year under appeal. On receipt of all the details from the assessee in respect of 65 share applicants, A.O. made detailed enquiry and recorded their statements on oath in which some of them denied having made investment in assesseecompany which were 03 in number. Further, statements of various Investors were recorded as noted above and they were found to have income of ₹ 80,000/- ₹ 90,000/- per year. They were having petty amounts with them. The assessee further explained that A.O. has not considered their savings and earning of the entire family. The Ld. CIT(A), therefore, confirmed the addition. 5. The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that all the share applicants except one applicant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the assessee had not come out with the true story as regards the source of the receipts. Decision of Allahabad High Court affirmed. 5.1. He has, therefore, submitted that no such addition could be made against the assessee. The assessee produced voluminous evidences in respect of the genuine share application money received which have not been properly appreciated. He has relied upon decisions of Hon ble Delhi High Court in the case of CIT vs. Kamdhenu Steel Alloys Ltd., (2014) 361 ITR 220 (Del.) and CIT vs. Fair Finvest (2013) 357 ITR 146 (Del.), decision of Hon ble Supreme Court in the case of CIT vs. Orissa Corporation Pvt. Ltd., (1986) 159 ITR 78 (SC) and Judgment of Hon ble Delhi High Court in the case of CIT vs. Divine Leasing Finance Ltd., 299 ITR 268. 6. On the other hand, Ld. D.R. relied upon the Orders of the authorities below. 7. I have considered the rival submissions and perused the material available on record. The assessment year under appeal is 2013-2014 i.e., relevant to F.Y. 2012- 2013. The assessee-company filed Certificate of Incorporation which proves that assessee-company was incorporated on 14.12.2011 i.e., in preceding F.Y. 2011- 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorities below and delete the addition. 8. In the result, Ground No. 1 to 4 of the appeal of Assessee are allowed. 9. On Ground No.5, assessee challenged the addition of ₹ 2,70,710/- on account of difference in balance of one creditor. 10. The Ld. CIT(A) after considering the facts of the case and submissions of the assessee noted that assessee has shown sundry creditor of ₹ 2,70,710/- M/s. Drishya Overseas New Delhi. On verification under section 133(6) of the I.T. Act, it was found that the above creditor has denied of having outstanding balance with the assessee. The A.O. accordingly, made the addition. The Ld. CIT(A) confirmed the addition. 11. After considering the rival submissions, I do not find any justification to interfere with the Orders of the authorities below. Learned Counsel for the Assessee submitted that no addition can be made under section 68 of the I.T. Act on account of difference in balance of the creditor. I do not agree with the submissions of the Learned Counsel for the Assessee. Section 68 would be applicable if assessee failed to explain sum of the amounts credited in the books of account of assessee to the satisfaction of the A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. He has referred to page No.278 of the paper book to show he has sufficient capital to make investment in assessee-company. He has submitted that A.O. cannot ask the assessee to prove source of the source and relied upon decision of the Hon ble Rajasthan High Court in the case of Aravali Trading Company vs. ITO 220 CTR 622. Learned Counsel for the Assessee also submitted that confirmation of the creditor was filed and ITR of the creditor supports that the creditor was having sufficient capital balance with him. In these circumstances and considering the fact that part creditworthiness of the creditor have been accepted by the authorities below and that the creditor is connected with the assessee-company, therefore, the matter requires reconsideration in the light of documentary evidence and statement of affairs of the creditor along with ITR filed on record. I, accordingly, set aside the Orders of the authorities below and restore the issue to the file of A.O. with a direction to re-decide this issue, by giving reasonable, sufficient opportunity of being heard to the assessee. Accordingly, Ground No.6 of appeal of assessee is allowed for statistical purposes. 15. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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