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TMI Blog2019 (10) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... ot have any business activity in the assessment year under appeal and no business income have been earned. It is, therefore, unbelievable that without setting-up a plant in previous year relevant to assessment year under appeal, the assessee would earn undisclosed income in the same year of establishment of manufacturing plant ? A manufacturing firm would take some time to earn profit after setting-up its plant. Though the assessee may not be able to prove the creditworthiness of the creditors, but, the creditors have confirmed giving loans to the assessee for setting-up of the manufacturing unit. Hence, it could be reasonably assumed that cash credit entries represented the capital receipts. though, the assessee is not able to establish the creditworthiness of the creditors. - Additions deleted. - ITA.No.5049/Del./2018 - - - Dated:- 15-3-2019 - Shri Bhavnesh Saini, Judicial Member For the Assessee : Ms. Rano Jain And Shri Venktesh Chourasia, Advocates. For the Revenue : Shri S.L. Anuragi, Sr.D.R. ORDER This appeal by assessee has been directed against the order of Learned CIT(A), Dehradun, Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le copy of the ITRs for preceding two assessment years i.e., 2006-2007 and 2007-2008. However, no reply was submitted. The assessing officer also noted that assessee had accepted loans in amounts less than ₹ 20,000/-. The details of all the lenders are mentioned that page-3 of the assessment order, who are 12 persons. In 04 cases, no ITR copies were filed. The assessing officer noted that these lenders have given loans more than the amount declared by them as income in their ITRs. No documentary evidences were submitted to prove creditworthiness of the lenders and genuineness of the transaction in the matter. The assessing officer, therefore, noted that assessee was already having a firm prior to establishment of the firm at Kotdwar. Therefore, assessee was aware of the relevant Law. No copy of the ITRs for preceding assessment year have been filed and no bank details have been filed. The assessing officer, therefore, treated the same as unexplained credit under section 68 of the Income Tax Act and made the addition of ₹ 17,84,000/-. 2.1. The assessing officer further noted that during the year under consideration, assessee claimed tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents and confirmation filed on record, at the most established the identity of the lenders and in some cases copy of the ITRs is filed, but, these documents would not prove the creditworthiness of the creditors. The addition on merit was, therefore, confirmed. Reopening was also held justified. Therefore, appeal of assessee was dismissed. 4. I have heard the Learned Representatives of both the parties and perused the material available on record. Learned Counsel for the Assessee as regards the reopening of assessment argued that the Joint Commissioner of Income Tax ( JCIT ) while giving satisfaction/approval to the reopening of the assessment has merely mentioned Yes . I am satisfied that it is a fit case for issue of notice under section 148. Learned Counsel for the Assessee relied upon order of the ITAT, Delhi Bench, in the case of Sunil Agarwal vs., ITO, Ward-1(3)(3), Haridwar 2018(7)-TMI-231, in which the Tribunal held as under : 6.3 It is further noted that the proceedings have been initiated on the basis of no material much less any tangible and, relevant material and as such reasons record do not constitute valid r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asstt. DIT (2000) 246 ITR 363 (MP), the same question has been considered by a Coordinate Bench of this Court and the following principles are laid down:- The Commissioner acted, of course, mechanically in order to discharge his statutory obligation properly in the matter of recording sanction as he merely wrote on the format Yes, I am satisfied which indicates as if he was to sign only on the dotted line. Even otherwise also, the exercise is shown to have been performed in less than 24 hours of time which also goes to indicate that the Commissioner did not apply his mind at all while granting sanction. The satisfaction has to be with objectivity on objective material 8. If the case in hand is analysed on the basis of the aforesaid principle, the mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable and we find that on such consideration both the appellate authorities have interfered into the matter. In doing so, no error has been committed warranting reconsideration. (C.) Hon ble Supreme Court of India in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified and reiterated the submission made before the authorities below. She has referred to the documents filed before the authorities below in this regard. 8. On the other hand, Learned D.R. relied upon orders of the authorities below. 9. I have considered the rival submissions. It is not in dispute that assessee firm came into existence on 17th July 2007, the day when Partnership Deed [PB-29] was executed between the Partners, who have formed the Partnership-Firm in the name of Print Pack Industries [Assessee]. It is also not in dispute that assessee filed return of income at Rs.NIL and the assessing officer also assessed the NIL business income. The assessing officer in the assessment order noted that during the assessment year under appeal, assessee was engaged in process of establishing a manufacturing plant at Kotdwar. The balance sheet and other documents filed on record also suggest that no business activity was carried on by the assessee during assessment year under appeal. The assessee also pleaded before Learned CIT(A) that during the assessment year under appeal, assessee obtained loan from his Bank and purchased the land for setting- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade very soon after the company commenced its activities : Held, that the inference drawn from the facts proved was a question of fact and the Tribunal's finding on that question was final. A construction company took time to earn profits and it could not have earned a huge profit within a few days after the commencement of its business. Hence, it was reasonable to assume that the cash credit entries represented capital receipts though for one reason or another the assessee had not come out with the true story as regards the source of the receipts. Decision of the Allahabad High Court affirmed. 9.1. Considering the totality of the facts and circumstances of the case, I set aside the Orders of the authorities below and delete the addition of ₹ 17,84,000/-. This ground of appeal of assessee is allowed. 10. As regards addition of ₹ 87,115/- on account of bogus creditor, Learned Counsel for the Assessee did not argue the same and no infirmity have been pointed-out in the orders of the authorities below. Since it was found specifically that the creditor has denied the liability to the above amount, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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