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TMI Blog2019 (3) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... tance of case and in law, the Ld CIT(A) erred in granting relief u/s 68 of the Income Tax Act, 1961 ignoring the factsthat apex court in the case of Sumati Dayal Vs CIT91995) 214 ITR 801 (SC) stated that burden of proof for establishing that the cash credits does not constitute the income of the assessee completely lies on the assessee and that the assessee's explanation with regard to the cash credits needs to be considered in view of the human probabilities." 2. As per the facts of the present case, the assessee is a partnership firm who is engaged in the business of real estate development. The assessee filed its return of income for the year under consideration on 28.09.13 declaring total income of Rs.NIL. The said return was scrutinized and the order was passed u/s. 143(3) of the I. T. Act, 1961, on 30.03.2016. In the said assessment order, the A.O. added Rs. 15,43,74,600/- as 'Unexplained Cash Credit' u/s. 68 of the Act on account of the loans received from eight different companies and interest paid thereon. The addition of Rs. 15,43,74,600/- comprises of Rs. 14,30,00,000/- being 'unsecured loans' availed and Rs. 1,13,74,600/- being amount of 'interest paid' on the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AN, acknowledgement of filing ITR, Company Master Data from the website of the Registrar of Companies, etc. Thus, according to Ld. AR, all the three criteria to establish, the transactions of loan was proved by the assessee and the AO could not controvert the documentary evidences produced by the assessee. Therefore, in such circumstances, the addition made by the AO u/s.68 of the Act were rightly deleted by Ld. CIT(A). In this context, Ld. AR relied upon the decisions in the case of ITO vs. Vijay Dwellers Pvt. Ltd. in ITA No.141/Mum/2018" for A.Y. 2009-10 dated 30.01.19, ITO vs. Lotus Grih Nirman Pvt. Ltd. ITA No.3998/Mum/2014 for A.Y. 2010-11 dated 18.10.2018, ITO vs. Shri Nemichand Lalchand Jain ITA No.159/Mum/2017 for A.Y. 2007-08 dated 17.12.2018, Shri Vasant Ramji Savla vs. ACIT in ITA No.6123/Mum/2017 for A.Y. 2011-12 dated 27.12. 2018, ACIT vs. Rajesh M. Shah (HUF) ITA No.7105/Mum/2016 for A.Y. 2012-13 dated 30.08.2018 and M/s. Keynote Fincorp Limited vs. DCIT in ITA Nos. 1643 & 1647/Mum/2018 for A.Ys. 2012-13 and 2013- 14 dated 5.11.2018. 6. We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as under: "4.5 Thereafter in this case compliance has been made by all the lenders of loan by speed post from the new business address. 5.3 I come on the issue of commission issued by the another AO to DDIT (Inv.), Surat. The AO received information that ITO-20(3)(1),Mumbai issued commission to DDIT, Surat u/s. 131(1)(d) to verify the genuineness and creditworthiness of lenders. The DDIT(Inv.), Surat submitted report stating that he has issued summons u/s. 131 for appearance but due to close premises summons could not be served, therefore summons were served by affixture but loan creditors not responded. In this case three parties viz. Shree Charbhuja Diamonds Pvt, Ltd, shankeshwar Diamonds Pvt. Ltd and Radhy Krishna Gems Pvt. Ltd. are related to the parties to whom commission was issued in other case. I find that registered office of these lenders have been changed. Before me appellant submitted that changed address of the lenders were provided to the AO during the proceedings. Appellant filed before me proof of change of address in form of Form No. 18/Form No. INC-22 which is the notice of situation or change of situation of registered office pursuance to section 146 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TGS. The appellant hs filed details from the records of Ministry of Corporate Affairs which also shows that lender companies are alive. Moreover, the appellant has not commenced the construction or done any booking to generate any funds. However, the A.O. brushed this aside on the grounds that the identity itself was not proved. The A.O. further held that the genuineness was not proved because these parties were not credit worthy to advance loans of such magnitude. I find that loans have been given by crossed account- payee cheques/RTGS and they are reflected in their audited books of account and filed their returns of income including bank statements from which the funds have been given to the appellant, this fact was also accepted by the AO. The appellant has produced the audited accounts and returns of income of all the parties which show that the loans given by them to the assessee are reflected in their audited accounts. These parties have not borrowed any funds and thus they have utilised their own funds for giving loans to the assessee on which they have earned interest. 5.5 1 am unable to appreciate this position of the A.O. The A.O himself states that the turnover of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch establish that the payment towards loans were received during the year under consideration. Therefore the identity of the lenders was not in dispute. We have also considered all the documents placed on record by the assessee in the shape of statement of accounts and documents to show that the transactions were carried out through banking channels and the confirmations which were filed in the form of ledger accounts which reflect that the assessee had received the amount through RTGS. All those documents prove the genuineness of the transactions. Now as far as creditworthiness of the lenders are concerned, we have perused the audited accounts of the lenders which shows the creditworthiness of the lenders to grant loans and advances. Further, we also noticed from the records that Ld. CIT(A) had rightly pointed out in its order that the AO made the additions by holding that as the declared income by the respective loan creditors was less, therefore, they were not capable of lending. However, the AO ignored the fact that the lenders had substantial turnover and had a very large base of assets as is reflected in the respective balance sheets. 8. We have also considered the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had received share application money from bogus shareholders, it was for Income-tax Officers to proceed by reopening assessment of such shareholders and assessing them to tax in accordance with law and it did not entitle revenue to add same to assessee's income as unexplained cash credit - Held, yes [Para 3] [In favour of assessee]." 10. As far as the facts of the present case, assessee has also repaid the loan which was taken to the lenders through banking channel and in such a situation the Hon'ble High Court in the case of Rahul Vineet Traders (supra) has held as under: - "Section 68 of the Income-tax Act, 1961 - Cash credits [Loan] - Assessment year 2000-01 - Assessee-firm had taken loan from 14 firms out of which loan from four firms were not found by Assessing Officer as genuine because those firms were, allegedly, related to one „G‟ involved in providing accommodation entries - Assessing Officer thus invoked section 68 and made addition to assessee‟s income on account of unexplained cash credits - Commissioner noticed that lenders were regular income-tax assessee and their PANs were on record - It was also undisputed that amount had been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been placed on record by the assessee, which is specifically mentioned in para no. 5.4 of its order had also categorically mentioned that the audited accounts and return of income of all the parties, show that the loans given by them to the assessee were reflected in their audited accounts and these parties had not borrowed any funds and thus had utilised their own funds for giving loans to the assessee on which they had earned interest. It is also important to mention here that the A.O himself stated that the turnover of these parties was in hundreds of crores and at the same time, AO stated these parties were not credit worthy. In this respect, the A.O had not placed on record any corroborative evidence to show that cash had been paid by the assessee to these parties for availing the loans and had not been able to establish the cash trail at all. On the contrary, the assessee had filed the entire documents, required to establish the identity of the creditors and their creditworthiness, as well as the genuineness of the transaction. 13. As far as the case law relied upon by the Revenue is concerned, we have considered those case law, but they are not applicable to the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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