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TMI Blog2019 (9) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... oan creditor was not produced before him, the ld. CIT(A) categorically observed that the A.O. has sufficient power U/s 131 of the Act or to issue commission U/s 131(1)(d) of the Act, which the A.O. completely failed. The ld. CIT(A) also observed that even the bank statement which was called by the A.O. directly from the bank clearly indicate that there was sufficient credit balance in the bank account of the lender. CIT(A) considered various judicial pronouncements and after applying the ratio of these judicial pronouncements to the facts of the instant case recorded finding to the effect that the assessee has discharged his onus to fulfill all the three ingredient of loan creditor i.e. identity, genuineness and creditworthiness. The detailed finding so recorded by the ld. CIT(A) are as per the material on record and it has not been controverted by the ld. DR by bringing any positive material on record. - Decided in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... signed by Shri Anand Kumar Agarwal 27 6 7. Copy of Letter received from Shri Anand Kumar Agarwal stating his bank details from where the sums were transferred to the assessee's Bank Account 1 3 The AO, disregarding the above-mentioned documents, made addition, under section 68, of the entire amount of ₹ 2,08,45,000/-, received by the assessee from Shri Anand Kumar Agarwal. 4. By the impugned order, the ld. CIT(A) deleted the addition after observing as under: "7.2 I have carefully perused the AO order and I am not in agreement with the AO for the following reasons" 1) That identity of lender is established beyond doubt by filing of PAN Card, Aadhar Card, TT return, affidavit confirming the transaction, loan confirmation duly signed by both the parties. In my view enough evidences are filed before the AO to establish the identity. 2) That the genuineness of transaction is also proved as the loan amount is routed from lender's bank account to the appellant through RTGS- as submitted by the learned A/R and also noted by the AO himself. Thus, the loan transaction is through normal banking channels is a genuine transactions. 3) That AO view that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2001) 251 ITR 253. In this case it was held that even if it is assumed that subscriber to the increased capital were not genuine, under no circumstances that amount of share capital regarded as undisclosed income. Barkha Synthetic Ltd. v. ACIT (2003) 270 CTR 477 Rajasthan. It was held that where the share application money is received through banking channel the assessee has only to prove the existence of the person in whose name share application is received. Rajasthan Tube Mf. Co. Ltd v. DCIT TW May 2003 part-5 The Hon'ble Court held same views as held in above cases. In the case of C.I.T. Vs. Sophia Finance Ltd. (1994/205 ITR 98 (Delhi F.B.) it was held that if the shareholders are identified and it is established that they have invested money in purchase of share then the amount received by the company would be regarded as a capital receipt and cannot be treated as unexplained credits as company's income. The similar view was taken in case of CIT Vs Stellar Investment Ltd. (1991) 192 1TR 287 duly affirmed by Supreme Court in (2001) 251 ITR 263 (SC). It is also held in case of C1T vs. Sophia Finance Ltd. that only transactions which are not genuine can only be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan of ₹ 2.08 Crores to assessee, the AO should have considered the credit worthiness, funds availability of the companies in which Shri Anand Kumar Agarwal was a Director. The AO should not have considered the return of income filed by Shri Anand Kumar Agarwal alone, for the relevant previous year, in isolation. He further argued that a group which can raise an amount of ₹ 818.14 crores (789.27 cr. +28.87 cr.) in the form of Share Capital and Loans from the Financial Institutions, can be considered to have capacity to provide loan to any person at least to the extent of ₹ 2.08 crore. Reliance was placed on the decision of the Hon'ble Jurisdictional High Court in the case of Kanhaiala Jangid Vs ACIY (2008) 217 CTR 354 (Raj) and Labh Chand Bohra Vs ITO (2008) 219 CTR 571 (Raj). As per the ld AR, it was not a case of the A.O. that the loan creditor has deposited cash in his bank account before issuing of cheque. There was credit in his bank account through transfer entries and only through banking transaction. The bank statement was also procured by the A.O. directly from the bank wherein no any consistency or infirmity was pointed out so as to raise doubt that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady had knowledge and experience in the field of mining, had political connections and was working with Raj Kumar Bafna to expand his business, the assessee was approached by Shri Anand Kumar Agarwal for possibility of any kind of business opportunity. Shri Anand Kumar Agarwal was very much interested in establishing his business in Rajasthan. Through Shri Raj Kumar Bafna, he came in contact with the assessee. Relying on the past business association with Shri Raj Kumar Bafna and long experience of the assessee in the mining field and also his political connections, Shri Anand Kumar Agarwal insisted the assessee to make him as an associate in any of his upcoming venture or in the existing business. To show his genuineness of interest in the business of assessee, Shri Anand Kumar Agarwal transferred ₹ 2,08,45,000/- during the relevant previous year, to the assessee. In order to establish the identity of Shri Anand Kumar Agarwal, the assessee has submitted his PAN card, Aadhar Card, ITR returns, details of the companies owned by him, his affidavit confirming the loan transactions etc. From the record we found that Shri Anand Kumar Agarwal was Director in many companies, having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction. It is not the case that the assessee received money from an unknown person or any person of no means. Merely because, Shri Anand Kumar Agarwal could nor produce during the course of assessment proceedings because of the genuine reasons being litigation going on with the financial institution from he has taken the loan, it cannot be made a basis for considering loan received from him to be not genuine. Nowhere the AO has suggested that the money given by Shri Anand Kumar Agarwal had actually flown from the assessee. In absence of any such cogent evidence on record, no addition can be made to the income of the assessee merely on suspicion. Similar ratio was laid down by the Hon'ble Rajasthan High Court in the case of Shubh Mines Private Limited (Income Tax Appeal No. 96/15), wherein it was held that:- "...in the considered opinion of this court, in absence of any cogent evidence on record establishing that the money shown to have received as share application money, was as a matter of fact, unaccounted money belonging to the assessee company, the finding arrived at by the AO, which is based on suspicion, has rightly been held not sustainable in the eyes of law. Su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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