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TMI Blog2016 (3) TMI 1449X X X X Extracts X X X X X X X X Extracts X X X X ..... T deleting the addition u/s 68 in their hands does not suffer from any legal infirmity. Respectfully following the decision in the case of PRO CIT vs. Vijay Conductors India Pvt.Ltd. and other cases [ 2015 (9) TMI 1519 - DELHI HIGH COURT] we delete the addition and allow the claim of the assessee. - ITA No. 1667/Del/2014 - - - Dated:- 1-3-2016 - Shri H. S. Sidhu, Judicial Member And Shri J. Sudhakar Reddy, Accountant Member For the Appellant : Sh. K. Sampath, Adv. And Sh. Raja Kumar, Adv For the Respondent : Sh. KK Jaiswal, D.R. ORDER Per J. Sudhakar Reddy, Accountant Member This is an appeal filed by the Assessee directed against the order of the Ld.Commissioner of Income Tax (Appeals)-XXXIII, New Delhi dated 6.11.2013 pertaining to the Assessment Year (A.Y.) 2008-09. 2. The facts of the case are brought out at para 4.1 of the Ld.CIT(A) order. These are extracted for ready reference. 4.1 The brief facts of the case are as under:- The return of income for the A.Y. 2008-09 was filed on 05/02/2009, declaring total income at ₹ 24,45,690/-. Subsequently, the case was selected for scrutiny notice u/s 143(2), dated 24/08/2009 was duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionnaire dated 1.11.2010 and again vide questionnaire 02.12.2010, the assessee was asked to furnish identity of the creditor; the creditworthiness of the creditors the genuineness of the transactions u/s 68 of the IT Act in respect of all fresh unsecured loans/deposits taken during the year (including squared up a/c, if any) including under the head- share application money; other liabilities; sundry creditors; advance/amount received etc indicating full name, address, PAN, amount of loan/deposits taken and copy of bank statement of the creditor from which payment was made and was asked to show cause as to why in the absence of the same, these amount/receipts not be treated as its deemed income u/s 68 of' the IT Act, 1961. 3.1 In response, the assessee vide its submissions dated 07.12.2010 submitted as under.- There are no unsecured loans or deposits, no Sunday Creditors and no fresh share application money introduced or squared up in the Financial Year 2007-08 In fact, the assessee has furnished unconfirmed copies of account from its books of account of some: creditors under the head loans and advance giving incomplete names and no PAN or address whatsoev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the creditors and the genuineness of the transactions as required u/s 68 of the I.T.Act, in respect of any of the sum deposited in its bank accounts during the F.Y. 2007-08. 3.7.3. The various persons/concerns of SK Gupta group have been arranged alphabetically. To be fair to the assessee and to avoid double addition, all the unexplained deposits in the bank accounts of first concern (after giving credit of inter bank transfers and returned cheques) are being added in its hands and then in the hands of the next person/concern in the series, credit is also being given for the amounts received from the person/concerns above list. The assessee being the first concern in this list, no benefit is being given to the assessee for the amounts received by it from various group concerns, as already mentioned in table in para 3.2 supra. 3.7.4. Subject to the discussions above and in the light of various provisions of the Act and various judicial pronouncements, the amount of ₹ 62,70,19,448/- (68,68.70,448-5,21,35,000-77,16,000) credited in the various bank accounts of the assessee is treated as its deemed income u/s 68 of the Act and is added to its income. (Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these conduit companies, no addition u/s 68 is made, then the entire balance sheet of these company gets approval of the Assessing Officer that the credits are genuine. Therefore, I apprehend, such step will help the beneficiary companies who have taken entries to get away from taxation net as only these conduit companies have provided cheque to the beneficiary companies. So, creditors in the hand of these beneficiary companies and these so called conduit companies only. Therefore, the giving clean cheat to these so called conduit companies will create evidence that the credits in the books of accounts of the beneficiaries are explained. Probably, the Additional commissioner of Income Tax while issuing direction u/s 144A has missed this aspect, In fact nowhere, ACIT ' has given the findings that the credit in the books of accounts of the conduit company are explained ACIT has in fact strengthened the view that the cash credits in the hands of these companies are bogus. The Ld. AR himself accepts that these are conduit companies, Therefore, admittedly the credits in the books of accounts, of the appellant company are fictitious. Then, the appellant should have recasted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of various other persons, having separate PAN etc sometimes filing return of income also. Their affidavit that they am benamidars of Sh. S.K. Gupta does not prove the case that they are benamidars, as PAN of these persons have not been surrendered neither their return of Income have been revised. Additional evidence filed by the Ld. AR during the appellate proceeding does not help the appellant. In additional evidence, Ld. AR has sought reworking of credit U/s 68 on these counts:- (i) Ld. AR has claimed that some of the amount has been received from its debtors. Once the debtors itself is bogus, then how the amount received from such bogus debtor can be treated as genuine. No benefit can be given for quantifying addition U/s 68 on the basis. (ii) Inter transaction amongst 32 conduit companies should be excluded. The assessing officer has verified the figure. However, in my view, no relief can be given for addition u/s 68 of LT. Act, for inter company transfer. I will be dealing this issue in next paragraph of the order. (iii) The next claim of Ld. AR is on account of dishonored cheque. The assessing officer has reported that cheques dishonored in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 62,70,19,448/- u/s 68 of the Income-tax Act, 1961 without appreciating the fact that the provision is applicable only in the case of credit entry in the books of accounts, whereas in the instant case, the amounts in question were all received back by the Appellant along with interest thereon from business constituents; 3. That the authorities below erred both on facts and in law in making the above addition without appreciating the fact that since in the instant case the items were outside the purview of section 68 of the Act and so there was no onus on the appellant to prove the identity, genuineness and creditworthiness of the payer; 4) That the facts had to be seen in totality as the doctrine of approbate and reprobate prohibits the Revenue department from blowing hot and cold in the same breath thereby accepting one part of the transaction as correct and not accepting the other part as valid. When the account itself had been originally accepted, the transactions of repayment of such loans/advances cannot be doubted and the amounts received on account of interest income, which had been duly taxed in the return of income filed for the instant year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta who was in the business of providing accommodation entries to various persons. During the survey, several documents, papers, laptops containing the accounts of several parties were impounded. An application was filed by Mr. Gupta before the Settlement Commission in which he admitted to carrying on the business of providing accommodation entries on which commission/brokerage was received by him. 6. The ITAT referred to the order dated 28th December 2010 of the Settlement Commission which records inter alia that Mr. Gupta was an entry provider and that in his case only the amount of premium/commission received by him after reducing expenses incurred would be his additional income. The order of the Settlement Commission also gave a list of the concerns controlled by Mr. Gupta which included the present Assessees. These companies/entities were used by Mr. Gupta as conduit for issue of cheques to the beneficiaries. 7. The Assessing Officer (AO) gave effect to the order of the Settlement Commission and determined the income of Mr. S.K. Gupta without making any addition for unexplained cash credit. During the course of assessment Proceedings of the intermediary companies, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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