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TMI Blog2020 (12) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord clearly indicates that assessee has received genuine loans from all the three parties and in case of one party even amount have been returned in assessment year under appeal which have not been doubted by the A.O. Thus, the initial burden upon the assessee to prove identity of the creditors, genuineness of the transaction and creditworthiness of the creditors have been discharged by the assessee. It is well settled Law that assessee need not to prove source of the source. Since the A.O. did not conduct any enquiry on the documentary evidences filed by the assessee and merely disbelieved the entries in the bank accounts of the creditor without any justification, therefore, there were no justification for the authorities below to make or confirm the additions. Merely low income declared in the return of income by the creditors is no ground to reject the explanation of assessee because their creditworthiness is proved by the assessee beyond doubt. In view of the above, we are of the view that the issue is covered by the Order of the ITAT, Delhi G-Bench, Delhi in the case of M/s. Thirubala Chemicals Pvt. Ltd.[ 2020 (10) TMI 405 - ITAT DELHI ] - we set aside the Orders of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt part of the bank statement of the lender. The A.O. noted that its income was of ₹ 3,912/- only. The bank statement shows from deposits through RTGS from Mumbai and then cheque was given to the assessee as loan, source of which is not explained, therefore, the A.O. added a sum of ₹ 12,75,000/-. (3) Smt. Urmil Agarwal : 3.3. This party has given unsecured loans to the tune of ₹ 26,40,350/- to the assessee. The assessee filed copy of a/c and bank statement which reveal that there are similar deposits through RTGS and cheques have been given, therefore, A.O. made the addition against the assessee. 4. The assessee challenged all the additions before the Ld. CIT(A) and filed written submissions in which it is explained that assessee filed confirmation, bank statements, ITR and all the documents of these parties. All the loans are given through banking channel. Therefore, assessee proved identity, creditworthiness and genuineness of the transaction in the matter. In the case of M/s. Satyam Shivam Sundaram, the A.O. made addition of the balance outstanding amount only. Thus, part of the transaction is accepted by the A.O. Thus, the assessee proved the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961, could not be served upon the two creditors and in case of one creditor though they have filed submissions and documents, but, the Director of the Investor Company did not appear for examination. The assessee-company, in its reply before the A.O, sought for copy of the report of the Inspector and report of the concerned A.Os. of Kolkata for making further submissions and also asked for cross-examination of the Inspector who has reported against the assessee-company. The A.O, however, did not provide any material collected at the back of the assessee-company by the Inspector of the Kolkata to the assessee and did not allow any cross examination to the assessee-company. The A.O. in the assessment order held that assessee has no absolute right to ask for the cross-examination or to seek report of the Inspector and A.Os. of Kolkata. The Ld. CIT(A) confirmed this finding of A.O. by holding that the assessee has no absolute right to ask for the material collected at the back of the assessee and to ask for cross-examination of such material and Inspector on behalf of the assessee. Thus, it is established on record that whatever material was collected by the Inspector and concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessed to tax and are existing assessees. Thus their identity have been established. All the creditors have confirmed giving loan to the assessee which is repaid in subsequent year and were subjected to interest. The A.O. did not disallow the interest paid on these loans in assessment year under appeal as well as in subsequent assessment year. The bank statements of the creditors show that no cash have been found deposited in their bank account before giving loan to the assessee. There were sufficient balances available in the bank accounts of the Creditors to give loan to the assessee. The A.O. in the assessment order also noted that the worth of the creditors is in several crores. Thus, as against loan amount in lakhs, the creditors have their worth in crores. Therefore, there were no justification to doubt the creditworthiness of the creditors and genuineness of the transaction in the matter. Thus, the initial burden upon the assessee to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors has been discharged by the assessee. The A.O. did not make any effort to make adequate enquiry on the documentary evidences submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of DCIT vs. Rohini Builders (2002) 256 ITR 360 (Gujrat) in which it was held as under : Assessee had discharged initial onus by providing identity of the creditors by giving their complete address, GIR numbers/permanent account numbers and copies of assessment orders wherever readily available. Assessee had also proved capacity of creditors by showing that amounts were received by account payee cheques drawn from bank accounts of creditors. Repayment of loans and interest thereon was also made by account payee chequesby assessee and tax also had been deducted at source on interest payments and remitted. 7.4.1. In this case, SLP filed by the Department have been dismissed. 7.5. Decision of Hon ble Delhi High Court in the case of CIT vs. Mod Creations Pvt. Ltd., (2013) 354 ITR 282 (Del.) in which it was held as under : The Tribunal has adopted an erroneous approach on the aspects of genuineness of the transactions in issue and the creditworthiness of the persons/creditors who lent money to the assessee. The first aspect, i.e., identity of the creditors was established before any of the authorities below. It will have to be kept in mind that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it had not been disputed that the share application money was received by the assessee-company by way of account payee cheques, through normal banking channels. Admittedly, copies of application for allotment of shares were also provided to the Assessing Officer. Since the applicant companies were duly incorporated, were issued PAN cards and had bank accounts from which money was transferred to the assessee by way of account payee cheques, they could not be said to be nonexistent, even if they, after submitting the share applications had changed their addresses or had stopped functioning. Therefore, the Commissioner (Appeals) and the Tribunal were justified in holding that the genuineness of the transactions had been duly established by the assessee. 7.10. Decision of Hon ble Jurisdictional Delhi High Court in the case of CIT vs. Value Capital Services Pvt. Ltd., (2008) 307 ITR 334 (Del.) (HC), in which it was held as under : Dismissing the appeal, that the additional burden was on the Department to show that even if the share applicants did not have the means to make the investment, the investment made by them actually emanated from the coffers of the assessee so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to prove identity of the creditors, genuineness of the transaction and creditworthiness of the creditors have been discharged by the assessee. It is well settled Law that assessee need not to prove source of the source. We rely upon the Judgment of the Hon ble Delhi High Court in the case of CIT vs., Dwarkadhish Investment Pvt. Ltd., [2011] 330 ITR 298 (Del.) and Judgment of Hon ble Gujrat High Court in the case of DCIT vs., Rohini Builders [2002] 256 ITR 360 (Guj.). The A.O. has also accepted that entries in the account of the creditors are through RTGS. Therefore, there should not be any doubt on the explanation of the assessee. The A.O. noted that in assessment year under appeal assessee has shown unsecured loans to the tune of ₹ 2.79 crores but made only small addition. The return of income declared by assessee is also of ₹ 1.42 crores. Therefore, the explanation of assessee should not have been doubted by the authorities below. All facts were explained. Since the A.O. did not conduct any enquiry on the documentary evidences filed by the assessee and merely disbelieved the entries in the bank accounts of the creditor without any justification, therefore, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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