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TMI Blog2021 (2) TMI 898X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and the circumstances of the case and in law, the CIT(A)-2, Ludhiana was justified in deleting the addition of Rs. 3,88,82,000/- whereas the assessee failed to explain the credit worthiness of M/s Shree Radha Commodity Services to the extent of Rs. 3,88,82,000/- to the satisfaction of the Assessing Officer. iv. That the order of the CIT(A) on the above issues raised in this appeal be set aside and that of the Assessing Officer be resorted to. v. That the appellant craves leave to add or amend any grounds of appeal before it is finally disposed off. 3. Vide Ground No. (i) the grievance of the Department relates to the deletion of addition of Rs. 20,50,000/- made by the A.O. on account of the amount credited in the capital account of Smt. Swaran Kanta. 4. Facts related to this issue in brief are that the assessee filed the return of income on 21/09/2013 declaring an income of Rs. 1,28,240/- which was processed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'Act'). Subsequently the case was selected for scrutiny. During the course of the assessment proceedings, the A.O. noticed that in the capital account of Smt. Swaran Kanta partner, a sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been made in the hands of Smt. SwaranKanta. However the complete evidences have been provided to your good self along with source of source hence the additions of Rs. 2050000/- made in the firm's hand being Partner's Capital addition should be deleted. c) Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page no. 1 to 3. Your honor will find that in the Order sheet entries, the proceedings were started on 23.12.2015 and the last proceedings are dated on 19.02.2016 on which date the case was adjourned to 26.02.2016. From the order sheet entries your honor will find that no show cause notice has been issued to the assessee before making any additions on accounts of unexplained credits in the name of Smt. SwaranKanta which violates the Principles of Natural Justice and additions based on this issue should be deleted and assessment should be quashed. 5.1 The aforesaid submission were forwarded to the A.O. by the Ld. CIT(A) for the remand report. In response the A.O. submitted as under: Kindly refer to reply filed by the counsel of the assessee dated 26.09.2017 addressed to you. 2. In this regard, it is sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 through RTGS from the saving account of Sh. Puneet Gupta NRE who is the son of assessee. The amount was transferred through RTGS in the saving account of Smt. SwaranKanta being maintained with State Bank of India. Please note that his son is working in U.K. and he has maintained NRE account with CITI Bank, Ludhiana and the photocopy of the bank statement is placed in the paper book at page number 8 which may please be referred. It is further submitted that Rs. 50,000/- has been introduced in the capital account from the saving account number 6010007210393 with State Bank of India, Aggar Nagar, Ludhiana on 26.07.2012 from the balance outstanding in her saving account. The photocopy of bank saving account is placed in the paper book at page number 7 which may please be referred. It may be mentioned here that the A.O. in his remand report has mentioned that the amount of Rs. 20.50,000/- has been received from NRE Saving account of Sh. Puneet Gupta but the correct facts are that Rs. 20,00,000/- was received from NRE Saving account by the partner Smt. SwaranKanta. The only allegation made by the A.O. in his remand report that the source of income of Sh. Puneet Gupta was not produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RE account which itself proves of source also. In view of the above facts it is requested and prayed to deleted the addition of Rs. 20,50,000/- in the hands of the firm under the wrong notion of law. 5.3 It was further submitted as under: Written submissions dated 12.02.2018 Sh. Puneet Gupta, NRE has also given the following documents to prove that the amounts were sent by him from relation Foreign Exchange department being confirmation of transactions done by Sh. Puneet Gupta and the complete details are being given as under: a) The first transaction is dated 26.06.2012 of 9000 GBP and the conversion rate is 88.45 and Indian Rs. 796050 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached. b) The second transaction is dated 06.08.2012 of 14000 GBP and the conversion rate is 85.80 and Indian Rs. 1201200 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached. c) The next transaction is dated 24.10.2012 of 14000 GBP and the conversion rate is 85.55 and Indian Rs. 1197700 which was transferred by Sh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1197700/- in his NRE Account maintained in India. 4. The copy of bank statement with Barclays Bank in the name of Sh. Puneet Gupta. In this statement on 12.11.2012, 14000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1218700/- in his NRE Account maintained in India. 5. The copy of bank statement with Barclays Bank in the name of Sh. Puneet Gupta. In this statement on 22.03.2013, 15000 GBP were transferred to Rational Foreign Exchange (FX) Department for transfer of amount of Rs. 1231500/- in his NRE Account maintained in India. The documents are being attached and your honor will find that all the transactions were carried out by Sh. Puneet Gupta from his bank accounts or through his company in which he was having 100% share holding. These bank statements were received by Sh. Puneet Gupta through Barclay Bank on 13.02.2018 as per copies of bank statements received through email by the family members of Sh. Puneet Gupta. This proves the source of source. It is requested and prayed to accept the contention of the assessee since the complete source of source has been established and even the funds have been transferred from U.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.07.2012 out of outstanding balance in the bank account of Smt. Swarnkanta. It has again been submitted that the assessee firm has given complete explanation to the Assessing Officer along with documentary evidence but the Assessing Officer has made impugned addition in the hands of the assessee firm without considering the fact that the amount belongs to Smt. Swarnkanta and if at all any addition was to be made it should have been made in the hands of Smt. Swarnkanta. It has again been submitted that the Assessing Officer has not given any show cause notice before making the addition under reference which violates the principles of natural justice. On careful consideration of the rival contentions, I am of the opinion that the assessee firm has explained even the source of source in respect of the capital introduced in the capital account of Smt. Swarnkanta by producing copy of NRE account of Sh. Puneet Gupta. On perusal of the bank accounts of Sh. Puneet Gupta and Smt. Swarnkanta, I am convinced that the capital has been introduced by Smt. Swarnkanta out of explained sources. When asked to prove the source of Sh. Puneet Gupta, the learned AR of the assessee also placed on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner and not in the hands of assessee firm. On an identical issue the Hon'ble Jurisdiction High Court in the case of ITO Vs. Nahar Singh Sadhu Singh (supra) held that " the partner had the requisite amount to invest towards the capital account of the firm. Since no evidence had been pointed out against that finding the amount could not be assessed as income from undisclosed sources of the firm." 10.1 Similarly the Hon'ble M.P High Court in the case of CIT Vs. Metachem Industries (supra) held as under: " Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income-tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income-tax." 11. We therefore by keeping in view the aforesaid discussion and the ratio laid down by the Hon'ble High Courts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of amounts advanced by Sh. Ankush Gupta, but again the same were not filed. The assessee simply stated vide reply dated 14.03.2016 that the same were already filed on 17.11.2015 ( wrongly mentioned as 17.11.2015 in place of 27.11.2015) whereas in that reply no evidence is filed. As such the source of amount of Rs. 40,50,000/-is not proved. Accordingly credit of Rs. 40,50,000/- in the books of the assessee, in the name of Sh. Ankush Gupta is treated as not explained and thus treated as income of the assessee. 14. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: The second ground of appeal is that the A.O. has made addition on account of Rs. 4050000/- received from Sh. Ankush Gupta who is son of Smt. Swarankanta and Kushal Gupta. He is also brother of Sh. Puneet Gupta. The assessee has given complete reply on this issue on 27.11.2015 and again the same was mentioned on 14.03.2016, photocopy of the reply is attached in the paper book at page no.4 and 5. Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page no.l to 3. Your honor will find that in the Order sheet entries, the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e saving account and this amount is reflected in the saving account of Sh. Ankush Gupta at paper book page no. 12. Further Sh. Akash Bansal is maintaining saving account with HSBC Bank, Gurgaon from where he gave amount of Rs. 450000/- to Ankush Gupta. Sh. AkashBansal is his cousin brother. Out of these amounts Rs. 550000/-and Rs. 450000/- was given to SwaranFastners on 15.11.2012 and these entries are reflected in the saving bank account in paper book page no. 12 and 13. Sh. Ankush Gupta further received amount of Rs. 1150000/- from his brother Sh. Puneet Gupta on 19.11.2012, Rs. 2 lakh on 08.12.2012 and Rs. 50000/- on 11.12.2012 and further amount of Rs. 8 lakh was received from Sh. Puneet Gupta on 30.03.2013. All these entries are reflected in the saving bank account in paper book page no. 18. Out of Rs. 1150000/- Rs. 6 lakh and Rs. 4 lakh was given to SwaranFastners on 19.11.2012. Further amount of Rs. 150000/- was given on 21.11.2012. These entries are reflected in paper book page no.13 in the saving account with SBI. Further the amount of Rs. 200000/- dated 08.12.2012, 50000/- on 11.12.2012 and Rs. 800000/- dated 30.03.2013 were received by Sh. Ankush Gupta in the saving acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) The A. O. has not further gone to verify the amounts received from such persons to come to the conclusion that these amounts introduced as capital or unsecured loans from his son, Ankush Gupta are not genuine. Rather he should have verified from these perons by issuing notice u/s 133(6) or u/s 131(1) before making any additions in the Returned income of the assessee's firm. e) Even the Order sheet entries are upto 19.02.2015 which itself proves that no question was asked by the A.O. during the proceedings before making any additions on this account, hence it clearly indicates that the additions on account of Partner Capital account to the tune of Rs. 2050000/- and unsecured loans to the tune of Rs. 4050000/- has been made for the sake of additions on the basis of assumption, presumption, supposition and suspicious basis. The A.O. has not brought any material on record to prove that the amount of Capital introduced or unsecured Loans received from Sh. Ankush Gupta are not genuine in spite of the fact that the complete replies along with documentary evidences were given to the A.O. during the proceedings to prove this contention. 14.1 The aforesaid submissions received f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . O. and the explanation of receipt of amounts was also given. Further in the remand report in next para the A. O. has stated that no complete details have been filed. This fact is not correct in view of reply already given to the A.O. 27.11.2015. The A.O. has further stated that the assessee has not filed the complete details of credits of Rs. 40,50,000/- but the correct figure is Rs. 41,50,000/-. The A.O. has attached the copy of letter dated 14.03.2015 in which the assessee has mentioned that reply filed by the assessee dated 27.11.2015 was mentioned in reply dated 14.03.2015 in para 1 and the A. O. has also mentioned in his remand report regarding reply filed by the assessee dated 27.11.2015. Further he has stated that creditor received the amount from Sh. Puneet Gupta NRE, his brother and Sh. AkashBansal but no evidence was filed. The AO. has simply stated that the no source of amount of Rs. 7,00,000/- dated 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 has been filed. This fact is also not correct. The A.O. has not considered the amount of repayment of Rs. 7,00,000/- dated 4.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 9120 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the assessee. The A.O. has further mentioned in his remand report regarding source of Rs. 7,00,000/- dated 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 for which it has been clearly mentioned that the amount were received back from firm M/s SwaranFastners by the Ankush Gupta and the copy of account of Ankush Gupta is placed in the paper book at page number 9 and the same may please be referred. It is important to mention here that the creditworthiness has been proved by the assessee firm of Ankush Gupta after explaining source of source along with documentary evidences, confirmations, PAN Number, providing saving bank accounts and further providing saving accounts of other persons from whom the amounts have been received which proves source of source along with return of income. The A. O. has not given any adverse remarks on this issue which clearly shows that the A. O. has accepted the contention of the assessee except two amounts for which the complete explanations have been given to your honor on this issue. It is requested and prayed that the additions based on suspicion and supposition of unexplained credit of Sh. Ankush Gupta who is the son of the Partners may pleas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further considered other material placed by the learned AR of the assessee on record. On careful consideration of the assessment order, it has been noticed that the Assessing Officer has made the impugned addition as the assessee firm in the opinion of the Assessing Officer could not explain the credit balance in the account of Sh. Ankush Gupta. On the other hand, the learned AR of the assessee firm had submitted that Sh. Ankush Gupta received an amount of Rs. 32,00,000/- from his brother Sh. Puneet Gupta who is NRI and is presently settled in UK which was given by him to the assessee firm on different dates. It has also been submitted that Sh. Ankush Gupta has also received another amount of Rs. 9,50,000/- on different dated from his cousin Sh. AkashBansal which was also given to the assessee firm on different dates. In support of his contention, the learned AR of the assessee firm has also enclosed copy of NRE saving bank account of Sh. Puneet Gupta as well as bank accounts of Sh. AkashBansal. It was further submitted that an amount of Rs. 1,00,000/- was given to the assessee firm out of outstanding balance in the bank account of Sh. Ankush Gupta. It has again been submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed and the remaining amount of Rs. 9,50,000/- was received by Shri Ankush Gupta from his cousin Shri Akash Bansal and copy of bank account of Shri Akash Bansal was also furnished to prove the credit worthiness of Shri Ankush Gupta for making the deposit with the assessee. It was further submitted that all the documentary evidences were furnished, therefore the impugned addition made by the A.O. was not justified and the Ld. CIT(A) rightly deleted the same. 19. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case it is not in dispute that the assessee received a sum of Rs. 41,50,000/- from Shri Ankush Gupta through banking channel and the source of source was explained by the assessee by furnishing the documentary evidences to prove the credit worthiness of Shri Punit Gupta and Shri Akash Bansal from whom Shri Ankush Gupta received the amount. The said documents revealed that the amount of Rs. 32,00,000/- was received by Shri Ankush Gupta from his brother Shri Puneet Gupta who is the NRI and settled in UK. The said amount was transferred from the NRE account. The Assessee also explained the sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's paper book which are the copies of the Assessment Orders of Shri Kaushal Gupta completed u/s 143(3) of the Act for the A.Y. 2008-09 & 2009- 10 respectively. 24. We have considered the submissions of both the parties and perused the material available on the record. In the present case it is noticed that an identical issue having similar facts has already been adjudicated by this Bench of the ITAT in ITA No. 728/Chd/2018 for the A.Y. 2008-09 in assessees own case wherein the Departmental appeal on similar issue was dismissed and the relevant findings are given in para 11 of the order dt. 03/10/2019 which read as under: 11. We have considered the submissions of both the parties and perused the material available on the record. In the present case it appears that the A.O. made the impugned addition on the basis that the assessee could not explain the source of cash deposited in the bank account of M/s Shree Radha Commodities Services from whom the assessee had received the impugned amount during the year under consideration. The explanation of the assessee before the Ld. CIT(A) was that the confirmed copy of the account of M/s Shree Radha Commodities Services whose proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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