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TMI Blog2019 (2) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... tworthiness and genuineness of the transaction in the cases of the creditors namely Smt. Shashi Lata Bhargav, Shri Prateek Ahluwalia, Shri Sarin Kumar, M/s T.S. Sethi 3 lakhs on 12.11.2010 cash was deposited for clearance of the cheque on 15.11.2010. These facts clearly support the findings of the authorities below that transaction of the assessee with Smt. Kamini Ahluwalia was not genuine. We confirm the addition of 9 lakhs on account of unexplained credit in case of Smt. Kamini Ahluwalia. The proportionate disallowance of interest in this case is also confirmed - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO, accordingly, noted that creditworthiness of the creditors and genuineness of the loan transaction have not been satisfactorily explained. The AO, therefore, added ₹ 58,50,000/- on account of unexplained cash credits u/s 68 of the Act. The interest paid on these loans @12% was also disallowed which worked out to ₹ 7,02,000/- which was also added. 4. The assessee challenged the addition before Ld. CIT(A). The written submission of the assessee is reproduced in the Appellate Order. The assessee as regards Smt. Shashi Lata Bhargav submitted that she is assessed to tax and confirmed the loan transaction, copy of acknowledgement of filing of the return of income was filed and copy of the bank statement was also filed. The credit amounts have been received in her bank account through her banking channel. In the case of Smt. Kamini Ahluwalia it was explained that she is assessed to tax and filed confirmation of the loan amount. Acknowledgement of filing of the return of income was also filed, copy of the bank statement was also filed. In the case of Prateek Ahluwalia it was submitted that he is assessed to tax and filed confirmation and acknowledgment of filing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppear before AO, therefore, both the additions were confirmed. 6. The assessee is in appeal on the above grounds. 7. Ld. Counsel for assessee reiterated the submissions made before authorities below and submitted that assessee filed confirmation from all the creditors, copy of the ITR and bank statements. The creditors have confirmed the transaction with the assessee. Except in the case of Kamini Ahluwalia, there is no cash deposit in any of the bank account of the creditors. The AO cannot ask for the source of the source. The assessee proved identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. In the case of three persons i.e. Sethis & Sons, they have declared income from other sources and paid taxes thereon, therefore, AO cannot question about their source of income. He has submitted that five creditors have also responded directly to the AO in response to the summons u/s 131 of the I.T. Act and confirmed the transaction with the assessee which are M/s T.S. Sethi & Sons, M/s G.S. Sethi & Sons, Shri Sarin Kumar, Shri Prateek Ahluwalia and Smt. Shashi Lata Bhargav, copies of reply are filed in the Paper Book. He has submitted that pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration. The A.O. therefore, in order to verify the transactions, issued summons under section 131 to both the creditors and their common Director Shri Hitesh Garg who appeared before the A.O. in response to summon and confirmed the giving of loans to the assessee-company in his statement recorded under section 131 of the I.T. Act. The A.O. however, did not believe statement of this person because copy of the agreement was not filed. These facts and material on record clearly prove that identity of both the creditors are not in dispute because both the creditors are assessed to tax and have filed confirmation directly to the A.O. in response to notice issued under section 133(6) of the I.T. Act and also confirmed transaction with the assesseecompany in the statement recorded under section 131 of the I.T. Act. The parties have been filed confirmed copies of theirledger account, bank statements, ITR and audited balance sheet in which the giving of loan to the assesseecompany has been mentioned. All the transactions are routed through banking channel. Copies of the ledger account, income tax return, balance sheet and bank statement are filed on record. In the bank statements of the cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re having sufficient amounts in their bank accounts for giving loans to the assessee-company. The A.O. have not made any investigation and nothing has been brought on record if the amount of loan given by both the creditors actually received from the coffers of the assessee-company so as to enable it to be treated as undisclosed income of the assessee-company. 14. The Hon'ble Delhi High Court in the case of CIT vs. Shiv Dhooti Pearls and Investment Ltd., (Del.) (2015) 64 taxmann.com 329 (Del.) in which it was held as under : "In terms of Section 68, assessee is liable to disclose only source(s) from where he has himself received credit and it is not burden of assessee to show source(s) of his creditor nor is it burden of assessee to prove creditworthiness of source(s) of sub creditors." 14.1. The Hon'ble Delhi High Court in the case of CIT vs. Vrindavan Farms Pvt. Ltd., ITA.No.71/2015 dated 12th August, 2015 (Del), in which it was held as under : "The sole basis for the Revenue to doubt their creditworthiness was the low income as reflected in their return of income. It was observed by the ITAT that the AO had not undertaken any investigation of the veracity of the docu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmations giving full addresses, G1R numbers/permanent account numbers, etc., of all the depositors. The Assessing Officer however issued summons to some of the creditors and also conducted inquiries into the genuineness or otherwise of the loans taken by the assessee. After considering the evidence, the Assessing Officer made an addition of ₹ 12,85,000 to the returned income of the assessee. This was confirmed by the Commissioner of Income-tax (Appeals). On further appeal to the Tribunal the Tribunal held that the phraseology of section 68 of the Income-tax Act, 1961, was clear, that the Legislature has laid down that in the absence of a satisfactory explanation, the unexplained cash credit may be charged to income-tax as the income of the assessee of that previous year, that the legislative mandate is not in terms of the words "shall be charged to income tax as the income of the assessee of that previous year", that the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as income of the assessee. The Tribunal found that the assessee had discharged the initial onus which lay on it in termsof sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Income tax assessees, but they have not returned substantial income that does not mean that they are not creditworthy. The Departmental appeal was dismissed". In the case of DCIT vs. M/s Landmark Exim Pvt. Ltd. (supra) similar views have been taken in favour of the assessee. 11. Considering the facts of the case in the light of the above decisions, it is clear that assessee filed confirmation from all the creditors before A.O. All the credits are taken through banking channel. The assessee filed their ledger account with their bank statements. Five of the creditors have also responded directly to the AO in response to the summons u/s 131 of the Act and have confirmed the transaction with the assessee, supported by the affidavits and the documentary evidences. It is well settled law that Department cannot ask the assessee to prove source of the source. In the cases of three creditors at Sl. No. 1, 3, 4, there were cheques cleared through banking channel before giving loan to the assessee. In the case of creditors mentioned at Sl. No. 5, 6 & 7, they have declared income from other sources and paid the taxes. Therefore, all these creditors were having sufficient bank balances in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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