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TMI Blog2020 (12) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : U. Mini Chandran, Sr. DR For the Respondents : C. Subrahmanyam, CA ORDER V. Durga Rao, Member (J) These appeals by the assessee are directed against the separate orders of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, both dated 31/10/2019 for the Assessment Years 2012-13 2013-14. 2. The Revenue has raised the following grounds of appeal:- 1. The order of the CIT(A) is erroneous on facts and circumstances of the case narrated in the statement of fact. 2. The CIT(A) ought to have appreciated the fact that in the sworn statement the creditor could not substantiate the sources for advancing the money. 3. The CIT(A) ought not to have admitted the claim of the creditor for the opening balance of ₹ 171.72 lakhs without verifying the cash book for the F.Y. 213-14 relating to A.Y. 2014-15. 4. Any other grounds that may be urged at the time of hearing. 3. Facts of the case in brief are that the assessee-company is engaged in the business of dealing Yamaha motorcycles, filed its return of income for the A.Y. 2015-16 on 30/09/2015 admitting business loss of ₹ 59,05,890/-. The AO has completed the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On perusal of the bank account statement of the creditor, it was noticed by the AO that the creditor had deposited cash in the bank accounts either on the same day of the transferring the amount to the assessee by way of cheque or a day earlier. It was observed that though the creditor stated in his confirmation letter that the sources for the loan advanced to the assessee comprised of opening cash balance of ₹ 171.72 lakhs, rental income, salary income and proceeds from sale of apartments. It was noticed on perusal of the computation of his total income in his return of income for the A.Y. 2015-16 he did not have sources for advancing such huge loan to the assessee. It was observed that the creditor had also paid huge interest of ₹ 56,05,824/- on the housing loans during the year. By considering the above facts, the AO has issued a show cause notice to the assessee why the said unsecured loan from Sri Bandaru Srinivasa Rao should not be considered as unexplained cash credit u/sec. 68 of the Act. In response to the show cause notice, it was stated by the assessee that the creditor had acknowledged in his confirmation letter that he had advanced th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and the details filed by the assessee simply addition was made u/sec. 68 which is not permissible in accordance with law and submitted that the addition may be deleted. The ld. CIT(A) after examining all the details deleted the addition made by the AO. 5. On being aggrieved, Revenue carried the matter in appeal before this Tribunal. 6. Ld. DR strongly supported the order passed by the AO and also submitted that the assessee has failed to discharge the creditworthiness of the creditor, therefore addition deleted by the ld. CIT(A) may be cancelled and the order of the AO may be confirmed. 7. On the other hand, ld. AR has submitted that all the funds received by the assessee are from the bank and confirmation letter also filed from the creditor, identity of the party also proved and the assessee has satisfied all the conditions before the AO that this transaction is genuine. The AO without considering the details submitted by the assessee simply made the addition on the ground that creditworthiness is not proved. 8. We have heard both the sides, perused the material available on record and orders of the authorities below. 9. The only issue involved in this appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d case was selected for scrutiny for verification of cash deposits made in the bank accounts. The issue of source for the cash deposits made in the bank accounts was examined by the AO during the course of assessment proceedings. The availability of opening cash balance of 1.72 crores was examined and was found to be correct by the AO as evident from the discussion made at para 4 of the assessment order. Further the detailed cash flow statement furnished by the creditor during the course of assessment proceedings was verified by the AO and no discrepancies were noticed in respect of the same. He noticed that the said cash flow statement contained the loan advanced to the assessee as an item of cash outflow. Further it is seen that the balance sheet of the creditor as on 31/03/2015 reflected the outstanding loan of ₹ 1,56,50,000/- in the name of the assessee. On perusal of the assessment order passed u/sec. 143(3) dated 28/12/2017 in the case of the creditor by the ITO, Ward-3(1), Vijayawada it is seen that no addition has been made towards the loan advanced to the assessee by treating the same as unexplained investment. Therefore, the AO of the creditor was satisfied regardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the creditworthiness of the creditor is confined to the transactions which have taken place between the assessee and the creditor and it is not the burden of the assessee to show the source of his creditor or to prove the creditworthiness of the source of the sub-creditors The assessee placed reliance on the following decisions in support of this contention: 1) CIT Vs. Metachem Industries (1999) 245 ITR 160 (MP) 2) Nemi Chand Kothari Vs. CIT (2003) 264 ITR 254 (Gauhati) 3) Aravali Trading Co. Vs. ITO (2007) 220 CTR 622 (Rajasthan) 4) CIT Vs. Anand Kumar Modi (2014) 88 CCH 124 Jharkhand) 5) CIT Vs. Ranchhod Jivabhai Nakhava (2012) 208 Taxman 0035 (Gujarat) 14. It was further contended by the assessee that since the creditor confirmed the loan advanced to the assessee in his confirmation letter and reiterated the same in the statement recorded u/s. 131 and since the loan amounts advanced to the assessee were demonstrated to have flown from the sank accounts of the creditor, the AO is not correct in treating the said loan as unexplained cash credit particularly when there was no direct or indirect evidence to show that the deposits in the bank accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii the bank accounts. The issue of sources for the cash deposits made in the bank accounts was examined by the AO of the creditor during the course of the assessment proceedings in the case of the creditor in view of the said reason for selection of the case for scrutiny and the letter dated 06.11.2017 received from the AO of the assessee. The availability of opening cash balance of ₹ 1.72 crores was examined and was found to be correct by the AO of the creditor as evident from the discussion made at Para 4 of the assessment order of the creditor. Further, the detailed cash flow statement furnished by the creditor during the course of his assessment proceedings was verified by the AO and discrepancies were noticed in respect of the same. It is noticed that the said cash flow statement contained the loan advanced to the assessee as an item of cash outflow. Further, it is seen that the balance sheet of the creditor as on 31.03.2015 reflected the outstanding loan of ₹ 1,56,50,000/- in the name of the assessee. On perusal of the assessment order passed u/s. 143(3) on 28.12.2017 in the case of the creditor by the ITO, Ward-3(1), Vijayawada, it is seen no addition has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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