9911796707
TMI Blog2019 (6) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... and Steel Pvt. Ltd. [ 2019 (3) TMI 323 - SUPREME COURT] and Delhi High Court in Pr. CIT vs. NDR Promoters Pvt. Ltd. [ 2019 (1) TMI 1089 - DELHI HIGH COURT] are different on facts and distinguishable In the present case, the assessee company has taken loan and on which it is paying interest so there is a justification for the lender company to advance money to the assessee company. Such loan and interest has been duly reflected by the lender company. Nothing adverse has come against the lender company. Further, bank statement of lender company have been submitted to establish the source of the funds along with the balance sheet and the profit and loss account. Evidences and the explanation has been rejected by the AO merely on the basis of doubt without bringing any material to discredit the document and information on record. CIT(A) has also arbitrarily rejected the explanation of the assessee company ignoring the above facts. The assessee has lead all evidences in support of its contention and the identity, creditworthiness and genuineness of the transaction stand established and hence the addition made by the AO is directed to be deleted. In the result, the appeal of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 13 persons from whom reply to notice u/s 133(6) dated 18.10.2016 were not received. After further investigations AO treated an amount of ₹ 9,46,00,000/- shown by the assessee as unsecured loan received during AY 2014-15 as undisclosed income of the assessee u/s. 68 of the Act. During appellate proceedings assessee submitted that the figure of disallowance u/s. 68 actually comes to ₹ 10,46,00,000/-. In appeal filed by the Assessee, Ld. CIT(A) deleted the addition of ₹ 1,10,00,000/- in respect of I World Business Solutions Pvt. Ltd. and ₹ 15,00,000/- in respect of KG Embroidery Mills Ltd. vide order dated 28.6.2017. Aggrieved with the aforesaid action of the Ld. CIT(A) in deleting the additions, Revenue is in appeal before the Tribunal. 3. On the other hand, Ld. DR relied upon the order of the Assessing Officer. He submitted that Ld. CIT(A) has wrongly deleted the addition of ₹ 1,11,00,000/- u/s. 68 of the Act as unsecured loan from M/s I World Business Solutions Pvt. Ltd., and deleted the addition of ₹ 15,00,000/- u/s. 68 of the Act, despite the fact that identity, creditworthiness of lender and genuineness of transaction neith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15, which was higher than the figure of loan to appellant. I hold that in this case the creditworthiness and identity of lender and the genuineness of transaction have been proved. Therefore, AO is directed to delete amount of ₹ 1.11 Cr. from the undisclosed income u/s 68 of the appellant computed by order u/s 143(3) for AY 2014-15 dated 24.12.2016. 2.2.12 M/s K G Embroidery Mills Ltd. , 3463 Gali Lallu Mishar, Sadar Bazar, Delhi- 110006 Notice u/s 133(6) of the Income Tax Act, 1961 was issued by assessing officer on 18.10.2016 to this company regarding loan of ₹ 15,00,000/- to M/s Prayag Polytech Pvt Ltd for AY 2014-15 and reply was received. The returned income of M/s K G Embroidery Mills Ltd, is ₹ 1,06,15,973/-. Vide order sheet entry 01 10 2016 Ld. AR of appellant was accorded an opportunity by assessing officer to produce the Director of M/s K G Embroidery Mills Pvt. Ltd. and summon u/s 131 dated 01.12.2016 was also sent separately but neither the AR produced the Director of M/s K G Embroidery Mills Pvt. Ltd. nor anyone appeared in compliance to the summon as a result of which AO held that the identity of lender was not est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of the assessment proceedings the AO noticed that the assessee company has received unsecured loans of ₹ 47,59,50,000/- from 45 lenders. The assessee submitted necessary details in respect of each to these parties which included confirmation, audited balance sheet, ITR, bank statement etc. The AO also made independent enquiry by issue of notice under section 133(6) as well as under section 131. The AO, however, was not satisfied about the identity and creditworthiness of 14 parties out of the 45 parties and made an addition of ₹ 9,46,00,000/- under section 68 of the Act. Aggrieved by the order of the AO the assessee filed appeal before the CIT(A), who vide his impugned order dated 28.06.2017 has deleted the addition in respect of the two parties but confirmed the addition in respect of the remaining twelve parties. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us. 9. It was submitted by the Ld. AR that AO has made addition in respect of unsecured loans raised by the assessee during the year from the fourteen parties of ₹ 10,46,00,000/- (wrongly stated as ₹ 9,46,00,000/- in the assessment order). In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the current year s profit or loss of the lending companies alone is not the only relevant criteria to decide the source/credit worthiness or genuineness of the loan transactions. The Ld. AR in support of this contention placed reliance on the judgment of coordinate bench of ITAT in the case of ITO vs. Computer Home Information Plus Pvt. Ltd. ITA No.5680/Del/2016 dated 24.05.2019 and Sunil Gupta vs. ITO Ward -34(2) ITA No.701/Del/2018 dated 29.05.2019 and also judgment of jurisdictional Delhi High Court in the case of Pr. CIT (Central)-1 vs. M/s Goodview Trading Pvt. Ltd. ITA No.377/2016 dated 21.11.2016. 10.1 The Ld. AR further submitted that it is a case where assessee has taken loan and has been paying interest regularly after deduction of tax at source. Each of these parties have shown interest income in their return filed with the department and also claimed credit of the tax deducted as is evident from the return. It was submitted that there is no allegation of any accommodation entry or any adverse statement by any person in respect of the transactions entered into by the assessee. It was submitted that there is nothing on record to doubt or pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R submitted that the AO as well as Ld. CIT(A) have gone wrong in sustaining additions by observing that the assessee could not produce the directors of the company. It was argued that the assessee company is not bound to produce the Directors/ Principle Officers of the companies from whom it has taken loan. The Ld. AR submitted that in the present case the assessee company has taken loan paid interest thereon and the loan stood repaid later on as is evident from the chart placed at paper book pages 597-599. The Ld. AR placed reliance on the judgment of the jurisdictional High Court of Delhi in the case of CIT vs. Victor Electrodes Ltd. in ITA No.586/2010, where the High Court has held that there is no legal obligation on the assessee to produce Director or other representative of the applicant companies before the Assessing Officer and failure of assessee to produce them could not by itself justify the additions. The Ld. AR also placed reliance on the judgment of Bombay High Court in the case of PCIT Vs. Chawla Interbild Construction Co. Pvt. Ltd., ITA No. 1103 of 2015, dated 28.02.2018 where a similar issue has come up. 10.3 The Ld. AR further placed reliance on fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 9.95 Crore. It has raised loans during the year from 45 lenders totaling ₹ 47,59,50,000/-. The AO made detailed enquiry during the year as is evident from the assessment order and drew adverse inference in respect of the 14 lenders and made addition on the basis of such adverse inference. The CIT(A) has deleted addition in respect of two lenders and confirmed the addition in respect of the remaining 12 lenders. Now the issue to be adjudicated by us is whether the adverse inference drawn in respect of these 12 lenders is justified. 1.1 M/s AKB Trexim Pvt. Ltd. The assessee has taken a loan of ₹ 50,00,000/- from this company which has been added by the AO. The AO has drawn adverse inference on the ground that the returned income of this company is ₹ 3,19,807/- which is less than the loan given to the assessee. It has been further stated that office of this company is in the same premises as is of Luminant Distributors Pvt. Ltd. the another lender company. It has been further stated that the director in his statement has stated that his main company is ANR International Pvt. Ltd. and he is also director in another 6 companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised loan from Kotak Mahindra Ltd. as is evident from the balance sheet at page 124. The AO had issued notice under section 133(6) and in response thereto it has confirm the account and has also filed the necessary document in support of the loan advanced by it to assessee company vide letter dated 08.12.2016 placed at paper book page 102. In response to further query by the AO it has filed another letter dated 09.12.2016 with copy of bank statement for the whole year of HDFC Bank and Oriental Bank of Commerce placed at paper book page 208. From the above facts it is evident that this company has sufficient funds with it. Not only it has share capital but also accumulated profits. The AO has drawn adverse inference on the ground that the return of income is less than the loan advance by this company. We are of the view that there is no such condition in section 68 that loan can only be advanced out of the taxable income of the current year. The requirement of section 68 are 3 i.e. identity, creditworthiness and genuineness. In the present case admittedly there is no doubt about the identity. As regards the creditworthiness the AO has gone with the presumption that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit balance of ₹ 50,00,000/- in the name of this company. This loan was return on 31.07.2013 by the assessee company. The credit of this amount is appearing in the bank account of the lender company HDFC Bank at paper book page 320. From this bank account it has transferred this amount of ₹ 50,00,000/- to its parent company ANR International Pvt. Ltd. Thereafter this company has paid a sum of ₹ 25,00,000/- on 27.09.2013 to the lender company. The amount which has been paid from the bank account maintained by the lender company with Oriental Bank of Commerce where again money has come back from its parent company ANR International Pvt. Ltd. Thus, the refund has gone to parent company ANR International Pvt. Ltd. and the further payment has also come from the parent company. The assessee company has paid interest on this loan of ₹ 67,500/- after deducting tax at source of ₹ 7,500/- and further interest of ₹ 37,125/- after deducting TDS of ₹ 4,125/-. Both these interest payments got credited to the lender companies bank account with HDFC Bank as is evident from the copy of bank statement at page 224 and 227. This lender comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contention of the AO that the funds have been transferred from the another company ANR International Pvt. Ld. on the same day, that can also be not a ground to hold that creditworthiness is not established or the transaction is doubtful. In this case the AO himself has stated that in the statement the director has stated on oath that his main company is ANR International Pvt. Ltd. Thus, transfer from the parent company to this lender company which happen to be within the same group cannot be a ground to draw adverse inference. Infact in the present case as we notice from the copy of account at paper book page 221, the assessee company has returned a sum of ₹ 50,00,000/- to this lender company on 31.07.2013 which in turn has given money to ANR International Pvt. Ltd. At the same time when money was advanced by this lender company it receive ₹ 25,00,000/- from ANR International Pvt. Ltd. These are transaction between the group company and nothing adverse can be inferred. On the contrary these transactions confirmed that the source is from within the group. Similarly, the adverse inference is being drawn by the AO that the two companies are carrying out business activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company from its same bank account with Union Bank of India placed at paper book page 340. The assessee company has paid interest on this loan of ₹ 1,44,000/- after deducting tax at source of ₹ 16,000/- . The interest payment got credited to the lender companies on 08.04.2014 in the same bank account with Union Bank of India as is evident from the copy of bank statement at page 342.This lender company has filed its income tax return on 28.09.2014 declaring loss of ₹ 1,27,239/- placed at paper book page 327. As per the audited balance sheet placed at paper book page 328 this company has its own funds of ₹ 3,20,43,434/- . It has also raised loan from its promoters namely Mr. Virender Kumar Goel and Mrs. VarshaGoel of ₹ 3.24 Crore as is evident from the schedule attached to the balance sheet at paper book page 329. Further on going through the schedule attached to the balance sheet we note that this advance of ₹ 50 lacs has been shown in the name of the assessee company i.e. Prayag Polytech Pvt. Ltd. at paper book page 332. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to thesummon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignored the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor..Further, the adverse inference drawn by the AO on the ground that this company and KPC Consultant Pvt. Ltd. are carrying out business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72,46,288/- as per paper book page 347. It has further loan of ₹ 3,27,75,000/-from the promoters namely VarshaGoel and Virender Kumar Goel as is evident from the balance sheet at page 348. Further on going through the schedule attached to the balance sheet we note that this advance of ₹ 30 lacs has been shown in the name of the assessee company i.e. Prayag Polytech Pvt. Ltd. at paper book page 350. The AO had issued notice under section 133(6) and in response thereto it has confirm the account and has also filed the necessary document in support of the loan advanced by it to assessee company. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is less than the loan advanced by this company. We are of the view that there is no such condition in section 68 that loan can only be advanced out of the taxable income of the current year. The requirement of section 68 are 3 i.e. identity, creditworthiness and genuineness. In the present case admittedly there is no doubt about the identity. As regards the creditworthiness the AO has gone with the presumption that it is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. On going through the paper book we note that from the copy of account placed at paper book page 358 that the lender company has paid a sum of ₹ 1,00,00,000/- on 07.01.2014 to the assessee company. This amount has been paid by the lender company from its bank account with Dena Bank, Nehru Place out of the money received by it from SKPJ Investment as is evident from bank statement placed at paper book page 395. Theassessee company has paid interest on this loan of ₹ 2,49,000/- after deducting tax at source of ₹ 27,667/- . The interest payment got credited to the lender companies on 10.01.2014 in the same bank account with Dena Bank as is evident from the copy of bank statement at page 395.This lender company has filed its income tax return on 28.09.2014 declaring income of ₹ 28,85,455/- and paid taxes thereon of ₹ 6,40,880/- as per the ITR placed at paper book page 360. As per the audited balance sheet placed at paper book page 372 this company has its own funds of ₹ 11.63 Crore. Further on going through the schedule attached to the balance sheet we note that this advance of ₹ 1 Crore has been shown in the name of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis that the amount has been advanced out of the money received from SKPJ Investment. In fact this establishes the source of the credit. Further we note in this case this lender company has declared an income of ₹ 28,85,455/- which itself establishes the credibility of lender company. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon. In the present case the assessee has dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om RKG Finvest as is evident from bank statement placed at paper book page 428. The assessee company has paid interest on this loan of ₹ 2,70,000/- after deducting tax at source of ₹ 30,000/-. The interest payment got credited to the lender company on 16.12.2013 in the same bank account with Dena Bank as is evident from the copy of bank statement at page 428. Further, interest of ₹ 66,000/- has been paid on 10.03.2014 after deducting TDS of ₹ 7,333/-.This lender company has filed its income tax return on 22.09.2014 declaring income of ₹ 48,0000/- and paid taxes thereon of ₹ 37,848/- and claimed a refund of ₹ 4,560/- after taking credit of TDS of ₹ 42,412/- as per the ITR placed at paper book page 398. As per the audited balance sheet placed at paper book page 411 this company has its own funds of ₹ 11.26 Crore. Further on going through the schedule attached to the balance sheet we note that this advance of ₹ 1 Crore has been shown in the name of the assessee company i.e. Prayag Polytech Pvt. Ltd. at paper book page 414. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any doubt he could have made further enquiry. He cannot draw adverse inference merely on the basis that the amount has been advanced out of the money received from RKG Finvest Ltd. In fact this establishes the source of the source. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of nonattendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon. In the present case the assessee has discharged its onus placed on it under section 68 by filing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-, interest of ₹ 43,500/- on 03.03.2014 after deducting TDS of ₹ 4,833/- and ₹ 33,000/- after deducting TDS ₹ 3,667/- on 03.03.2014.This lender company has filed its income tax return on 24.09.2014 declaring income of ₹ 619/-. However, it has shown tax payable of ₹ 2,94,294/- probably on the basis of book profit and claimed a refund of ₹ 18,43,300/- after taking credit of TDS of ₹ 21,37,593/- as per the ITR placed at paper book page 431. On going through the schedule annexed to the balance sheet we note that this company has earned interest income of ₹ 6.09 Crore as is evident from details in the schedule Revenue from operations at page 444 and interest paid ₹ 2.95 Crore as per paper book page 472. Further, as per the audited balance sheet placed at paper book page 437 this company has its own funds of ₹ 6.30 Crore. This company has also issued optionally fully convertible debenture of ₹ 24.90 Crore as per the schedule of long term borrowings at page 441. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor. Further, the adverse inference drawn by the AO on the ground that this company and Yashodham Merchants. are carrying out business activities from the same premises is unjustified. From the facts quoted in the assessment order itself it is transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexed to the balance sheet we note that this company has earned interest income of ₹ 4.92 Crore as is evident from details in the schedule Revenue from operations at page 471 and interest expenditure of ₹ 2.95 Crore as per paper book page 472. It has profit after tax as per accounts of ₹ 90,35,930/- as per paper book page 472. Further, as per the audited balance sheet placed at paper book page 463 this company has its own funds of ₹ 17.55 Crore. This company has also issued optionally fully convertible debenture of ₹ 18.10 Crore as per the schedule of long term borrowings at page 467. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is less than the loan advanced by this company. As held hereinabove, that there is no such condition in section 68 that loan can only be advanced out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non-attendance in response to the summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor.Further, the adverse in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,27,799/- apparently on the basis of book profit and has claimed a refund of ₹ 1,92,470/- after taking credit of TDS of ₹ 8,20,271/- as per the ITR placed at paper book page 484. On going through the profit and loss account of this company placed at paper book page 486 we note that this company has interest income of ₹ 2.79 crore and other income of ₹ 9.03 crore. The net profit as per the profit and loss account before exceptional item is ₹ 8.99 Crore. It is only after set off of exceptional item being the loss on demerger of ₹ 8.73 Crore, the net profit is ₹ 26.17 lacs. Further, as per the audited balance sheet placed at paper book page 485 this company has its own funds of ₹ 5.36 Crore besides loans of ₹ 25.43 Crore from shareholders and corporate bodies.This company has also got overdraft facility from HDFC Bank. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adverse inference against such source of source. It is normal in the case of a finance company to receive funds from one entity and to lend the money so received to the other entity. Further, ongoing through the bank statement of this company we note that there is no cash deposit. The AO having got the bank statement of the lender company indicating the source of the money, in case he was having any doubt about the source of source so as to doubt the genuineness, he could have made further enquiry. Further, the adverse inference being drawn by the AO that no one appeared in response to the summon issued under section 131 cannot per se be a ground to make addition. The AO himself had stated that notice under section 133(6) was issued on 18.10.2016 and reply was also received along with necessary details. The AO has further stated that summon under section 131 was issued on 18.11.2016 but in response none attended till date. This means that summon has been served. In these circumstances, the AO cannot shift the burden on the assessee for non-appearance of the creditor in response to the summon issued by him. It was for AO to take the issue of non38 attendance in response to the summo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn on 29.09.2014 declaring income of ₹ 6,23,193/- It has shown tax payable of ₹ 1,92,566/-and claimed a refund of ₹ 2,28,230/- after taking credit of TDS of ₹ 4,20,800/- as per the ITR placed at paper book page 513 Further, as per the audited balance sheet placed at paper book page 514 this company has its own funds of ₹ 47.31 lacs besides loan from directors and their relatives of ₹ 4.83 Crore as is evident from the schedule at page 516. The AO had issued notice under section 133(6) and in response thereto it has confirmed the account and has also filed the necessary document in support of the loan advanced by it to Assessee Company. This fact has been stated by the AO in the assessment order itself. From the above facts it is evident that this company has sufficient funds with it. The AO has drawn adverse inference on the ground that the return of income is less than the loan advanced by this company. As held hereinabove, that there is no such condition in section 68 that loan can only be advanced out of the taxable income of the current year. The requirement of section 68 are 3 i.e. identity, creditworthiness and genuineness. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merely on the ground that the lender has not appeared in response to the summon more so when it is an admitted fact in the assessment order that reply in response to notice under section 133(6) was received along with the evidences confirming the loan advanced to the assessee company. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. The AO has also received reply from the creditor.From the above facts and analysis we are of the view that assessee has lead all evidences in support of its contention and the identity, creditworthiness and genuineness of the transaction stand established. 1.11 MudrakshInvestfin Pvt. Ltd. The assessee has taken a loan of ₹ 15,00,000/- from this company on 24.02.2014 which has been added by the AO. The AO has drawn adverse inference on the ground that no reply was received in response to notice issued under section 133(6) and no one attended in response to summon issued under section 131. On this basis the AO has held that identity and creditworthiness and genuineness of the loan is not proved. The CIT(A) after recording the above facts as stated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in response no reply received and none attended till date. This means that notice and summon have been served. In these circumstances, the AO cannot shift the burden on the assessee for no reply and non-appearance of the creditor in response to the notice/summon issued by him. It was for AO to take the issue of no reply and non-attendance in response to the notice and summon to the logical end. He cannot ignore the material and evidences already brought on record merely on the ground that the lender has not replied or has not appeared in response to the summon. In the present case the assessee has discharged its onus placed on it under section 68 by filing all the evidences. From the above facts it is evident that this company has sufficient funds with it. In this case from the balance sheet of the lender company it is evident that it has net worth of more than ₹ 77.07 lacs and has further source of ₹ 3.01 Crore as loans from directors and their relatives. Thus, it cannot be said that the lender company did not have creditworthiness. From the balance sheet of this company we note that this it is a registered NBFC and it has also having NBFC reserve fund in terms of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of ₹ 50,00,000/- on 29.03.2014 to the assessee company. This amount has been paid by the lender company from its bank account where it was having a balance of ₹ 3,29,46,213/- as on 29.03.2014 the date when the loan was advanced. The assessee company has paid interest on this loan of ₹ 4,500/- after deducting tax at source of ₹ 500/- on 31.03.2014 for the period from 29.03.2014 to 31.03.2014. This interest payment has got credited to the lenders company same bank account. Further, as per the audited profit and loss account placed at paper book page 581 it has Revenue from operation of ₹ 38.27 Crore. However, there was a loss during the year of ₹ 89.44 lacs because of the bad debts of ₹ 24.63 Crore written off during the year as is evident from the schedule to the profit and loss account placed at paper book page 582. Further, this company has its own funds of ₹ 10.86 Crore as is evident from the schedule at page 564. The AO had issued notice under section 133(6) and section 131which have been duly served as there is no allegation that it has been received back unserved.The adverse inference being drawn by the AO that no one appeare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers (supra) relied upon by the AO, the same is on different facts. In that case there was inconsistency regarding the amount of the loan given by the creditor in his statement and the creditor has also denied having received any interest. It was in these circumstances the additions were confirmed. In the case of CIT vs. Precision Finance Pvt. Ltd. (supra), relied upon by the AO, the additions were confirmed as the creditors were not available and the income tax file number given by the assessee were found to be incorrect and in many cases the amount advanced was not reflected in the income tax return of the creditors. Thus, the facts of the said judgment are not applicable. Similarly, the facts of the judgment in the case of Shanker Industries vs. CIT relied upon by the AO are distinguishable as in that case the creditor has confessed having not given any loan further such loan could not be established with the cash book produced by the creditor. 14. In the present case there is no such inconsistency in any of the documents on record. The assessee has received loan from the bank account of the creditor. The assessee had paid interest on such loan after deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of the net worth of each of the creditor. In the present case as analyzed hereinabove each of the creditor has substantial net worth in comparison to the amount advanced as loan to the assessee company. 16. The judgments relied upon by the CIT(A) in the case of N.R. Portfolio P. Ltd. ITA No.1018 and 1019 of 2011, Nova Promoters and Finlease ITA No.1018 and 1019 of 2011, CIT vs. Nipun Builders and Developers 350 ITR 407 (Delhi), M/s Focus Exports P. Ltd. 51 taxmann.com 46 (Delhi) (2014) and M/s Bisakha Sales P. Ltd. ITA No. 1493/Kol/2013 are not applicable to the present case and are distinguishable. In the case of Nova Promoters and Finlease (supra) as stated by the CIT(A) itself it was held that there was link between the entry providers and incriminating evidence and that is why addition under section 68 were confirmed. In the case of Nipun Builders and Developers (supra) the High Court has taken cognizance of the fact that summon send to the companies came back unserved with the remark that no such company which was also supported by the report of the Inspector who made a visit to the creditors. It was in these circumstances the adverse view was take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of the fact that the shares of face value of ₹ 10/- per share were subscribed by the investor companies at premium of ₹ 190/- per share. The Supreme Court also took note of the fact that none of the investor companies could justify making investment at such a high premium. During field enquiry the investor companies were found to be none existence and almost none of the companies produced the bank statement to establish the source of funds. 19. Similarly, the facts of the judgment in the case of Pr. CIT vs. NDR Promoters Pvt. Ltd. (supra) are distinguishable. It was a case where evidence and material of bogus transaction were found during the course of search on Mr. Tarun Goyal that the companies were providing accommodation entries. The statement of employees of Mr. Tarun Goyal were on record where they have stated that they do not know about the basic details of the companies which have made investment in the case of the assessee company. The adverse statement of Mr. Tarun Goyal was also on record. The court has also taken cognizance of the fact that the assessee company did not have any business so as to establish the justification for investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
