9911796707
TMI Blog2023 (1) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... n exercising their power under article 37 freely and virtually eliminated the element of free transferability of the shares as provided in the articles of the company and in the absence of restriction in any other articles of the company interfering with the free transfer of shares by one shareholder to another, the mere existence of an article like article 37 would not affect the free transferability of the shares within the meaning of the Explanation to section 23A(1) of the Indian Income-tax Act, 1922. The assessee-company was, therefore, regarded as one in which the public were substantially interested. It was held that article 37 did not confer any uncontrolled or unrestricted discretion upon the directors to refuse to register the transfer of shares in a given case; in other words, the directors could not act arbitrarily or capriciously. Provisions of Section 2(22)(e) is directly not applicable in this case, we do not concur with the view of the lower authorities and based on the set of facts it is clear that since, the security deposits received by the assessee from a company wherein the public are substantially interested even though not considered as commercial transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this cash balance being not disputed the genuine error of not considering the cash paid for an amount if reduced then also there exist a cash balance this fact support the contention of the assessee that it is the genuine mistake of the accountant and the ld. DR did not controvert this availability of cash on hand with the assessee before and after recording the stamp duty expenses and in view of this non disputed fact we hold that the explanation given by the assessee is on account of the genuine error on the part of his accountant and same was disclosed before the assessing officer but the view of the ld. AO is against the fact that the assessee is having sufficient cash balance and therefore, the addition made is not survived and we vacate the addition therefore the ground no. 3 raised by the assessee is allowed. Addition u/s 68 - Unexplained cash credits - HELD THAT:- As assessee has filed all the four Loan creditor s confirmation and thereafter neither he has carried out further inquiry nor asked the assessee to submit any further details and considering the jurisdiction high court decision relied upon by the ld.AR of the assessee in the case of CIT Vs. Bhawani Oil Mills [ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instant case." 3. During the course of hearing, the ld. DR fairly not objected to assessee's application for condonation of delay and prayed that Court may decide the issue as deem fit in the interest of justice. 4. We have heard the contention of the parties and perused the materials available on record. The prayer as mentioned above by the assessee for condonation of delay of 10 days has merit and we concur with the submission of the assessee. Thus the delay of 10 days in filing the appeal by the assessee is condoned in view of the decision of Hon'ble Supreme Court in the case of Collector, land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC) as the assessee is prevented by sufficient cause. 5. The assessee has marched this appeal on the following grounds of appeal:- "1. On the facts and circumstances of the case Ld Lower Authorities grossly erred in making and confirming addition of Rs. 1,50,00,000/- under section 2(22)(e) of the Act in hands of assessee ignoring the fact that the transaction made with M/s Amit Colonizers Ltd was business transaction. 2. On the facts and circumstances of the case Ld Lower Authorities grossly erred in making and confirming ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heet.From the Balance sheet of the company, as on 31.03.2012, it is noticed that the company has shown Rs. 1,66,45,521/- as "Long term loans & Advances" under the head non- current assets. On perusal of relevant details, furnished by the assessee, it has been noted that out of this amount of Rs. 1,66,45,521/-, an amount of Rs. 1.50 Crore, is given by the company to assessee as an "Loan & Advance", which is categorized in the Balance sheet as "Unsecured, Considered Good". All these facts suggests that a company, having substantial amount of Reserve & Surplus, has advanced its director having major shareholding, an amount of Rs. 1.50 Crore, as a Loan & Advance, which was considered as covered under the ambit of Sec. 2(22)(e), as such.On being confronted, the assessee has claimed that the company M/s Amit Colonizers Ltd. had advanced the amount of Rs. 1.50 Crore, as security deposit. against the land owned by him, which was to be used in a joint venture, towards, a proposed building construction (a residential apartment, as agreed upon in the relevant MOU dated. 04.08.2011). Assessee has also furnished copy of this MOU and his account in the books of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, does not partake its character as loan and advance, as the real intention and purpose of such transaction is relevant, in this regard his view is that just by disclosing any transaction as security deposit does not leads to the conclusion that this is the security deposit, as such. Actually, accounting treatment of any transaction is not a deciding factor to ascertain the true character of any transaction. It is always to be judged in the light of all the relevant set of facts and circumstantial evidences.The ld. AO therefore noted that the property, in question, for which MOU has been entered into, has been purchased by assessee through purchase deed dated 08.08.2011 and a reference of this deed is also mentioned on page No. 2 of this MOU. How it can be believed that the property which was purchased by assessee on 08.08.2011, can be the subject matter of an MOU dated 04.08.2011 and how it can find place in that MOU dated 04.08.2011. Moreover, this MOU is neither registered nor notarized and even not witnessed.In this regard it is submitted by the assessee that they have already purchased the property through agreement dated 25.12.2010 entered into between him and various parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on such "verbal terms and conditions as mutually agreed by the company" and the second party i.e. director and moreover the term and condition of MOU would have to be taken in writing on any other convenient day. All these unreasonable and un realistic facts as extended by the assessee, simply suggest that this is just eye wash and an afterthought to circumvent the provision of section 2(22)(e). The ld. AO stated that the explanation given by the assessee is found not acceptable, for the following incremental facts- 1. No documentary evidence of such meeting held on 04/08/2011 has been provided. 2. No minutes of the above said meeting are also filed to support the story. 3. It is highly unbelievable that the term and condition of MOU had also not been decided in writing in the meeting itself and only mutual consent of all the directors of the board, on verbal term and condition of the MOU, was taken. In normal business affair, No company will agree to take such a huge step of releasing a huge amount of Rs. 1.5 crore, in favour of an individual, without any documentary agreement of term and conditions. Here, it is also pertinent to note that the so- called MOU is an internal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vation made above it is evident that the all the arguments made by the assessee, in this regard, are nothing but an eye-wash and afterthought, just to circumvent the provision of Sec. 2(22)(e).The ld. AO also stated that in view of the above facts show cause as to why the MOU entered into with M/s ACL should not be treated as a sham document, which just prepared to give colour of genuine transaction. In this regard, the assessee submitted that the MOU has been taken in writing copy of ledger account of M/s. ACL Mall A/c stating in the books of the company as on 16.02.2015 and actual photograph of the site were placed on record of the ld. AO also submitted that it is immaterial whether the MOU is registered, notarized, witnessed or not. It is a document enforceable under the eyes of law and valid document and the same cannot be considered as sham document. The ld. AO referred the explanation of the assessee as it is patently wrong and untenable, because in the beginning of MOU. "Memorandum of understanding today 04.08.2011 इस्वीको ………………" Thus this specific mention of date of an 04.08.11 in the MOU b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding when the issue came up for examination) and it is not a valid document in the eye of law for the detailed reasons discussed as above. It is therefore, held by the ld. AO that this MOU is a sham document deserves to be ignored, as such and based these facts the ld. AO asked the assessee as to why this amount of Rs. 1,50,00,000/- should not be treated as deemed dividend within the meaning as per section 2(22)(e) of the IT Act, 1961. In response the assessee submitted that section (2)(22)(e) of the Act refers to only any payment of any sum by way of advance or loan. It does not refer to or talk of a security deposit. In response ld. AO stated that the submission/ arguments of the assessee have been given thoughtful consideration but found not convincing for the following reasons that in a case of genuine security deposit, there must be one party with a clear title of holding of an asset against which he is demanding security deposit. In our case, this is not so (the assessee was not owner of the asset as on 04/08/2011, against which he received amount of Rs. 50 lacs on 04/08/2011).Here the assessee is the M.D. of the company and giving security deposit to himself on behalf the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm that this is purely a business deal not for the benefit of the assessee but for the benefit of the company.Not agreeing the contention of the assessee , the ld. AO discussed the origin of rights over the property in question by the assessee or of company in which the assessee is managing director. The first agreement made on 25/12/2010 (the date on which property was booked by giving a token money of Rs. 21,000/- in cash as a signing amount) is the most relevant document for this purpose. This document says that the deal was finalized between the seller parties and the assessee in the capacity of director of M/s Amit Colonizers Ltd. The buyer's name is mentioned as M/s Amit Colonizers Ltd. through Director of Shri Vijay Kumar Vijayvergiya. This proves it beyond doubt that it was the company who made negotiation for purchase of property in question and who gave Rs. 21,000/- as an signing amount to the seller parties and the assessee was simply the executor on behalf of company.A simple glance of assessee's balance sheet as on 31.03.2011 make it crystal clear that if the above said advance of Rs. 21,000/- (two cheques for Rs. 5 lacs) against property booking in December, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction made with company M/s ACL.The assessee further submitted that the company is a public limited company in which there are more than 130 members from various sections of the society having about 48 % shareholding in the company and hence it is not covered by the provisions of section 2(22)(e) of the Act. We have already furnished the copy of Memorandum and Articles of Association of the company having its incorporation certificate and list of members for your kind perusal and record.The ld. AO did not agree with that Amit Colonized Pvt. Ltd. is not a company which covered under the definition of a company in which public are substantially interested, as provided by the Act. Based on these observation the ld. AO held that the transaction is well covered u/s 2(22)(e) and that the amount of Rs. 1.50 crore was the amount, given as advance to its director ( the assessee), who is stake holder of more than 10% of its shares, is squarely covered under deemed dividend u/s 2(22)(e) of the IT Act and the arguments of security deposit is nothing but a colourable device to circumvent the provisions of section 2(22)(e). 9. Against this additionthe ld. CIT(A) holds a view that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90 & 302 of Mr. Vijay Kumar vijayvergiya for A.Y. 2012-13 137-141 16. Copy of profit and loss account along with details of expenditure for the period 01.04.2017 to 20.11.2017 for Hotel Vijay Palance 142-148 17. Copy of FSSAI Certificate along with form ST-2 of Hotel Vijay Palace. 149-151 18. Copy of Map along with Catalogue of Hotel Vijay Palace 152-157 19. Copy of written submission filed with CIT(A) 158-165 Based on the above set of documents the ld. AR of the assessee of reiterated the submission made before the lower authority and submitted that the transaction between the company and the assessee is pure commercial transaction and thus it does not attract the provision of section 2(22)(e), as the company is public limited company where in public are substantially interested and this being the fact there is no restriction on transfer of shares of the company the provision of section 2(22)(e), will not apply. He has further submitted that the assessee has paid substantial amount of Rs. 1,61,00,000/- on 04.08.2011 and in fact company has paid only 50,00,000/- as on that against the security deposit part payment and the subsequent payment is made in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) and the property was already subject to agreement to sale and thus the assessee has already entered into an agreement to sale for this property on 25.12.2010. Based on these set of facts the transaction cannot be considered as loan by the ACL to the assessee. We have also analyzed the contention of the ld. AR of the assessee that looking to the facts and circumstances of the case, the assessee is out of the preview of the provisions of Section 2(22)(2) of the Act r.w.s. 2(18) of the Act. Therefore, it is better to understand that the provisions of both these sections of the Act and the same is extracted herein below:- "Section 2(22)(e) any payment by a company, not being a company in which the public are substantially interested, of any sum (whether as representing a part of the assets of the company or otherwise) made after the 31st day of May, 1987, by way of advance or loan to a shareholder, being a person who is the beneficial owner of shares (not being shares entitled to a fixed rate of dividend whether with or without a right to participate in profits) holding not less than ten per cent of the voting power, or to any concern in which such shareholder is a member or a part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration owned or controlled by the Government under any law for the time being in force, include any profits of the company prior to three successive previous years immediately preceding the previous year in which such acquisition took place. Explanation 2A.-In the case of an amalgamated company, the accumulated profits, whether capitalised or not, or loss, as the case may be, shall be increased by the accumulated profits, whether capitalised or not, of the amalgamating company on the date of amalgamation. Explanation 3.-For the purposes of this clause,- (a) "concern" means a Hindu undivided family, or a firm or an association of persons or a body of individuals or a company ; (b) a person shall be deemed to have a substantial interest in a concern, other than a company, if he is, at any time during the previous year, beneficially entitled to not less than twenty per cent of the income of such concern ;" "Section 2(18) "company in which the public are substantially interested"-a company is said to be a company in which the public are substantially interested- (a) if it is a company owned by the Government or the Reserve Bank of India or in which not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nally by, and were throughout the relevant previous year beneficially held by- (a) the Government, or (b) a corporation established by a Central, State or Provincial Act, or (c) any company to which this clause applies or any subsidiary company of such company if the whole of the share capital of such subsidiary company has been held by the parent company or by its nominees throughout the previous year. Explanation.-In its application to an Indian company whose business consists mainly in the construction of ships or in the manufacture or processing of goods or in mining or in the generation or distribution of electricity or any other form of power, item (B) shall have effect as if for the words "not less than fifty per cent", the words "not less than forty per cent" had been substituted ; 13. In respect of ground No. 1, in addition to the facts of the case the provision of section 2(22)(e) shall not apply but even otherwise on going through the provisions of above sections it is eventually clear that the assessee company is not a private limited company and the shares of the companies are not restricted for transfer, therefore, considering the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares were freely transferable or not, the power of the directors not to transfer the shares was held of a general nature and it was observed that there is no evidence of the directors having acted in a manner refusing to transfer at any point of time any share, as no instance was found for refusal to transfer the shares and on the other hand, the assessee has submitted that there had been many transfers of shares in spite of this clause and, therefore, the Tribunal came to the conclusion that the affairs of the company or the shares carrying more than 50 per cent. of its voting power were at no time during the relevant previous year controlled or held by five or less persons. It was observed that it is common ground that more than 50 per cent. of the shares of the assessee company were held by other C public limited companies and the assessee-company must be treated as company in which the public are substantially interested. Regarding the allegation that the assessee-company acted in concert with other companies of the Birla group, it was observed that no material on record has been placed to come to that conclusion. The finding which has been recorded by the Tribunal is b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plain reading of the provisions of section 2(18) of the Act, we are of the opinion that all the conditions are duly fulfilled and the provisions of section 104 are not attracted. The Income-tax Appellate Tribunal was justified in coming to the conclusion that the provisions of section 104 are not attracted. The reference is accordingly answered in favour of the assessee and against the Revenue. No orders as to costs." 14. Respectfully following the similar view of the jurisdictional High Court we are of the view that since, the provisions of Section 2(22)(e) is directly not applicable in this case, we do not concur with the view of the lower authorities and based on the set of facts it is clear that since, the security deposits received by the assessee from a company wherein the public are substantially interested even though not considered as commercial transaction then even based on the above findings the provisions of section 2(22)(e) is not applicable and therefore, we vacated the addition made by the Assessing Officer and thus the ground No. 1 of the assessee is allowed. 15. As regards in ground No. 2, the ld. AO noted from the ledger account, copy of Mr. Vijay Kumar Vij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand in the nature of property and capital asset of the company in the eyes of law and, thus, not disclosed in monetary terms in the financial statements as part of the asset of the company. Any property which is not in existence cannot be said that it has been received. When nothing is received, deemed income will not arise.In the present case, there is neither a transfer in favour of the assessee, nor is the issuer-company the owner of the equity shares. The section which requires "receives from any person or persons will not per se apply in the case of the assessee, as the company issuing the equity shares is not the owner of the equity shares. As allotment of equity shares is not a transfer of capital asset and the company issuing the equity shares is not the owner of the shares, the transaction could not be considered as a "receipt from any person or persons". Therefore, in the case of initial allotment of equity shares the provisions of section 56(2)(vii)(c) of the Act will not attract."But the ld. AO did not agree with the contention of the assessee stated that the assessee has just tried to misinterpret the phrases used, in the section i.e. "Receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not attract for that the has relied upon the judgment of this bench in the case of Mr. Prakash Chand Sharma HUF in ITA no. 325/JP/2021 dated 06.04.2022. 19. Per contra on this issue the ld. DR submitted a report of the Assessing Officer on account of addition of Rs. 83,96,410/- made by the Assessing Officer U/s 56(2)(vii)(c) of the Act and the report of the Assessing Officer is reproduced here in below :- "In this connection it is to submit that vide order u/s 143(3) dated 31.03.2015, the addition made by the AO u/s 56(2)(vii) amounting to Rs. 83,96,410/- was as per the provisions of law. In this regard the AO has given his detailed finding in the assessment order: The Hon'ble ITAT in the judgment ITA No. 325/JP/2021 dated 06.04.2022 in the case of Mr. Prakash Chand Sharma HUF (PAN: AADHP4019H) vs. ITO, W-3(5), Jaipur has deleted the similar issue i.e. addition of Rs. 4.56,000 u/s 56(2)(vii)C of the IT Act. It is learnt that the department has not accepted the decision of Hon'ble ITAT on merits. However, further appeal is not filed in this case due to the low tax effect as prescribed by the CBDT. In this decision the Hon'ble ITAT has held that it is a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO has rightly made the addition u/s 56(2)(vii)C of the IT Act and the CIT(Appeals) has rightly confirmed the addition in this case." 20. We have considered the rival contentions and submission placed on record by both the parties and have also considered the orders of the lower authorities. The bench noted that the assessee has received share in an allotment from the company M/s. Amit Colonisers Private Limited at the rate of face value of Rs. 10 per share. As the consideration, whereas the fair market value of these shares as on 31.03.2012 comes @ 47/-. The difference in the face value and fair market value of the shares is (47-10) Rs. 37. The total number of shares, received by the assessee are 2,26,930. Accordingly, the difference in value of total number of shares comes to 226930*37= 83,96,410/-. In view of the above, the ld. AO made addition of Rs. 83,96,410/- u/s 56(2)(vii)(C) of the Income Tax act, 1961. The bench further noted that since there is no transfer of assets the provisions of Section 56(2)(vii)(c) of the IT Act is not applicable. This issuesis covered in favour of the assessee by the earlier decision of the Coordinate Bench of Jaipur benches. In this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of shares the property comes into existence after it is allotted. C. Whether assesses comes under the definition of Relative? The definition of close relative given in the act under section 56(2)(vii)(c) of the act in Explanation is as under: (e) "relative" means,- (i) in case of an individual- (A) spouse of the individual; (B) brother or sister of the individual; (C) brother or sister of the spouse of the individual; (D) brother or sister of either of the parents of the individual; (E) any lineal ascendant or descendant of the individual; (F) any lineal ascendant or descendant of the spouse of the individual; (G) spouse of the person referred to in items (B) to (F); and (ii) in case of a Hindu undivided family, any member thereof;] There is no dispute in the contention of the assessee is that all the shareholders are relatives and 95% of the shares have been within the relatives . The transaction between the close relatives is not taxable under the head 'income from other sources u/s 56(2) of the Act. We are of the opinion that the section 56(2)(vii)(c) has no application and the company is liable to be taxed . The opinion and well known f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO at Rs. 676.55 on 5th April, 2013 and Rs. 14.48 per shares on 26th March, 2014. If the share value as on 5th April, 2013 is to be adopted @ Rs. 676.55 the book value of the assets would be increase to astronomical figure of 260 crores for 38,50,560 which is nowhere near the actual value of assets. According to the learned Authorised Representative, the valuation date means, the date on which the property or consideration as the case may be received by the assessee. Thus, argued that for arriving FMV fresh allotment of shares also required to be included in the existing paid up share capital and to arrive at FMV of the shares by dividing the book value of the assets with paid up capital of the shares including fresh allotment. However, during the appeal hearing, learned Authorised Representative submitted that prior to 5th April, 2013 there were only two shareholders in the company i.e., assessee and his brother Mr. Y. Ramesh Chandra, therefore argued that any excess consideration passed on by the assessee from his brother is exempt under s. 56(2)(viii)(c)(ii) of the Act and for this purpose, the assessee has relied on the decision in the case of Kumar Pappu Singh (supra). Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2)(vii)(c). Therefore, surrender of the rights of the close relatives in favour of the another close relative is covered for exemption under s. 56(2)(vii)(c) of the Act. In the decision rendered by the Hon'ble Madras High Court in the case CIT vs. Kay Arr Enterprises &Ors. (2008) 215 CTR (Mad) 244 : (2008) 3 DTR (Mad) 205 : (2008) 299 ITR 348 (Mad) and in the decision of the Hon'ble Karnataka High Court in the case CIT vs. R. Nagaraja Rao (2013) 352 ITR 565 (Kar) : (2012) 207 Taxman 236 (Kar) it has been categorically held that 'where there are transactions involving family arrangement with respect to transfer of shares, the corporate veil of the company has to be lifted and inferred that there is no transfer of shares and accordingly capital gain tax is not exigible.' From the above it is apparent that even when there are transfer of shares physically, in the event of family arrangements, the Hon'ble High Courts have held that the entire transactions have to be viewed lifting the corporate veil and treat the transaction as if there is no transfer of shares and hence capital gain tax is not attracted. The transaction between the closer relatives should not be seen as introducing bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned Departmental Representative, since, prior to the allotment of shares on 5th April, 2013 the shareholders are only the assessee and his brother. In the fresh allotment apart from the assessee some applicants were allotted the shares. Therefore whatever the shares allotted to the assessee was from the interest of his brother who is a close relative. Hence, to the extent of shares allotted to the assessee the same is covered by the decision of this Tribunal. Thus, we hold that there is no case for making any addition for allotment of shares allotted on 5th April, 2013. Accordingly, we set aside the orders of the authorities below on this issue and delete the addition made by the AO." Taking into consideration the facts, circumstances of the case and also the decision in the case of ACIT vs. Venkanna Choudhary (Supra) we allow the appeal of the assessee and set aside the order of CIT(A) and addition confirmed by the CIT(A) is deleted. In the result, the appeal of the assessee is allowed." On being consistent on the view and as the ld. DR did not controvert the finding by drawing the contrary decision Ground No. 2 raised by the assessee is allowed. 21. The ground no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages was an effort to escape from the sight of the AO, but when asked particularly pin pointing the issue, there was no way to escape and the assessee had to admit that the value shown in the balance sheet is under stated by Rs. 6,75,000/- Now the option left with the assessee was manipulation in the entries of balance sheet which he exercised. A person who is MD) of a company having good business volume is not expected to maintain is account books in this manner and also not expected to cover up the mistake by such manipulative practices. It is therefore held that the stamp duty expenses of Rs. 6,73,000/- have been made by the asses from his income from unexplained sources which the invested in purchase of aforesaid two properties And addition of Rs. 6,75,000/- is therefore made u/s 69 of the 1.T. Act 1961. 22. Being aggrieved from the action of the assessing officer assessee has preferred an appeal before the ld. CIT(A) and the relevant finding of the ld. CIT(A) on this issue is reproduced here in below : "2(b) This ground relates to addition of Rs.6,75,000/- under section 69 of the Act. The Ld. Assessing officer after going through the accounts of the appellant found that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s account books in this manner and also not expected to cover up the mistake by such manipulative practices. It is therefore held that the stamp duty expenses of Rs. 6,73,000/- have been made by the asses from his income from unexplained sources which the invested in purchase of aforesaid two properties And addition of Rs. 6,75,000/- is therefore made u/s 69 of the 1.T. Act 1961." 24. Per contra on this issue the ld. DR relied upon the order of the lower authorities and findings given in that orders and submitted that the assessee is MD of company and he has made such mistake is nothing but an afterthought and supported the addition made by the AO. 25. We have considered the rival contentions and submission placed on record by both the parties and have also considered the orders of the lower authorities. It is not disputed by the lower authority that the assessee is having sufficient cash balance of Rs. 13,61,290/- in the balance sheet already filed and placed on record this cash balance being not disputed the genuine error of not considering the cash paid for an amount of Rs. 6,75,000/- if reduced then also there exist a cash balance of Rs. 6,86,290/- this fact support the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee failed to submit the specific requirements with regard to unsecured loans taken by him, the genuineness of these transactions could not be examined. The assessee has submitted confirmation only. Even in the confirmation of Shri Sita Ram Gupta (loan taken Rs. 7,50,000/-). PAN is not mentioned. Mere furnishing of confirmation does not prove the cash credits as guanine. The assessee has not furnished copy of relevant bank accounts, though specifically asked for. No other documentary evidences in support of entity and creditworthiness of these creditors have been furnished by the assessee. In these circumstances, the genuineness of these transactions of loan taken are not established and the cash credits remain unproved. Therefore, the cash credits of Rs 29,50,000/-, credited during the year under consideration in the books of the assessee are held as non genuine and added to the total income of the assessee u/s 68 of the IT Act 1961. For the same reason, the interest of Rs. 1,37,700/ credited to these creditors have also been added u/s 68 of the Act, meaning there by total addition of Rs. 30,87,700/-." 27. Being aggrieved by the AO the assessee preferred an appeal befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor's confirmation and thereafter neither he has carried out further inquiry nor asked the assessee to submit any further details and considering the jurisdiction high court decision relied upon by the ld.AR of the assessee where in the court has held as under: " On perusal of the order passed by the ITAT, we find that mere non-appearance of eight other persons in response to the notice given of the Assessing officer, by itself cannot be a reason to discard their version particularly when one of them had appeared and admitted advancement of loan. Even if others have subsequently filed their confirmations supported by their affidavits, it cannot be assumed that they would not have made same statements, if they had appeared in response to the notice issued by the Assessing officer. Assessing officer was required to have examined those confirmations and the contents of the affidavits on their merits treating as if they were statements given to him. Their version contained in the affidavits could not be treated as of a lesser importance than the statement given by one of the creditors i.e. Shri K.K. Sharma before the Assessing officer. Although, it is another matter that the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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