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TMI Blog2023 (10) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... no need to amplify the findings of CIT(A). Without reiteration of wide ranging observations led by the CIT(A), we are convinced that the onus which lays upon the assessee to explain that the entries made are real and not fictitious, has been duly discharged. Ordinarily, it is difficult to fathom an onus tagged upon the assessee to explain the circumstances as to why third party had needed such funds so long as the transactions are embedded with commercial considerations. Furthermore, the onus towards source in the hands of borrower in relation to repayment entries qua preexisting loans is indeed onerous and can seldom be visualized. We are thus in agreement with the pith and substance of plea advanced on behalf of assessee and endorse the action of the CIT(A) in toto. Appeal of the Revenue is dismissed. - SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For the Appellant by: Shri C.S. Anand, Adv. For the Respondent by: Shri T James Singson, CIT-DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-III, Delhi ( C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger account of the assessee thus denotes a mere return of pre-existing loans advanced. It was only very rare instances that the repayment to assessee by PFSPL against pre-existing loans exceeded the outstanding resulting in small credits in the hands of the Assessee. It was thus essentially submitted before the AO that the credit entries appearing in the ledger account of PFSPL in the books of the Assessee, were in the nature of repayment of subsisting loans made by PFSPL. All of the comprising transactions were stated to be undertaken during the year. 4.2 The AO however alleged that the financial statement of PFSPL does not inspire much confidence on its creditworthiness inasmuch as the total revenue of the PFSPL is meager Rs. 17.83 lakh only and the assets possessed by PFSPL are also miniscule. 4.3 The AO thus inferred that the PFSPL thus lacks capacity to provide credits to the Assessee. The AO also observed that the bank statement reveals that the bank account was used only for the purposes of routing funds. The funds were transferred by the assessee to other parties immediately on its receipt from PFSPL and there were only 2-3 parties among which funds were exchanged. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued. Vide para 3 of the remand report, the A.O. stated that the additional documents furnished b the assessee under Rule 46A do not have any bearing on the case and also that Sh. Sagar Ramdas Bomble did not have PO. After carefully considering the appellant's application u/R 46A and, the A.O's remand report) I find that the appellant was never required by the A.O. to file the documents explaining the sources of funds in the bank account of M/s Pioneer Fincon Services. I also find that the additional documents furnished by the appellant are capable of explaining the sources of funds in the hands of M/s Pioneer Fincon Services. As far as nonappearance by the director of M/s Pioneer Ficon Services in compliance to summons u/s. 131 is concerned, I find that the explanation given by the appellant to be sufficient. Furthermore, the A.O. examined Sh. Sagar Ramdas Bomble and recorded his statement on oath. It can be deduced that the purpose of summoning the Director/ Principal Officer of M/s Pioneer Fincon Services was served by examining Sh. Sagar Ramdas Bomble. I have considered the recorded statement of Sh. Sagar Ramdas Bomble and observed that he clearly told that M/s Pione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 04.05.2018. It is seen from the ledger account of M/s Pioneer Fincon Services, as appearing in the books of the appellant that interest of Rs.2,15,676/- (gross interest of Rs. 2,39,640/-) was debited. It is also seen from the ledger account of the appellant as appearing in the books of M/s Pioneer Fincon Services that interest of Rs.2,15,676/ - (gross interest of Rs. 2,39,640/-) was credited. I have also seen that in the case of M/s Pioneer Fincon Services, the assessments for A.Y. 2012-13 and A.Y. 2013-14 were done u/s 143(3) by ITO Ward 19(4) New Delhi. The appellant was also required to furnish the details showing availability of funds with it at the time of giving funds to M/s Pioneer Fincon Services and also the sources thereof. 3.8 It is gathered from the assessment order that the AO made addition of Rs. 47,72,95,676/- u/s. 68 in the hands of the appellant by doubting the identity of M/s Pioneer Fincon Services, the genuineness of the transactions between the appellant and M/s Pioneer Fincon Services and also the creditworthiness M/s Pioneer Fincon Services. The appellant explained the reason in this regard by stating that since the name of M/s Pioneer Fincon Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere required to be looked into. 3.10 Though the term 'creditworthiness' has a much wider meaning, yet the A.O. adopted a very narrow meaning of the term 'creditworthiness'. I am of the considered view that if a person has sufficient funds at its disposal to lend money to others, his creditworthiness cannot be doubted. I have seen from the bank statement of M/s Pioneer Fincon Services and other documents filed with the application u/s 46A that M/s Pioneer Fincon Service always had sufficient funds at its disposal to repay funds to the appellant I find that it is a case where the appellant discharged the onus cast on it u/s 68, and hold that A.O. made the addition u/s 68 of Rs. 47,72,95,676/- without bringing on record any material to establish that M/s Pioneer Fincon Services was merely a paper company, that the transactions between it and the appellant were not genuine and that the credit entries appearing in the books of account of the appellant were nothing but the appellant's own unaccounted money which was routed through the bank account of M/s Pioneer Fincon Services. 3.11 I am satisfied that the sources of funds in the hands of M/s. Pioneer Finco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. counsel for the assessee strongly supported the findings of the CIT(A) rendered in favour of the assessee and submitted that the Assessing Officer has invoked the provisions of Section 68 on misplaced exposition of facts and law. 9.1 It was contended that while invoking the provisions of s. 68, the AO has applied wrong tests and proceeded on prima facie incorrect assumption that the assessee was the beneficiary of loans from PFSPL whereas it is rather a reverse case where the short term loans of varied amounts were intermittently given by the assessee in tranches to PFSPL which were regularly returned by way of repayment after its utilization for a very short period. It was submitted that such facts are discernible from the bank statement and ledger account and the figures don t lie. The AO thus proceeded on non existing facts. 9.2 The ld. counsel next submitted that the maximum amount outstanding at any point of time during the year was only Rs.2,06,00,000/- whereas the Assessing Officer has unimaginably taken aggregate and total of all the transactions of payment and equivalent repayment standing at Rs. 47,72,95,676/- for the purposes of the s. 68 disregarding the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey, in turn, was given by PFSPL to other connected concerns as per tacit understanding. 9.4 No adverse inference could per se be drawn for non attendance of the Director. The accountant as well as the CFO attended before the Assessing Officer to offer explanation on the transactions owing to inability for compliance of personal depositions of the Director as PFSPL had ceased to exist at the time of inquiry for which relevant evidences were placed before both the authorities below. 9.5 Before the first appellate authority, all the evidences were placed to support the inter se transactions between the assessee and PFSPL and a remand report was called for by the CIT(A). The CIT(A) on consideration of totality of facts and the comments in the remand report embraced the plea of the assessee owing to such glaring facts. 9.6 The ld. counsel thus submitted that bona fides of nature and source of transactions have been duly traversed and the onus cast upon the assessee in relation to transactions was fully discharged. 10. We have carefully considered the rival submissions, perused the assessment order as well as the appellate order and also the material referred to and relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds return of income, financial statement, extract of bank statements of both the parties to the transaction were placed on record. The AO has not pointed out any disproportionate circumstance with reference to these documents which may suggest any sort of disguise on the part of the assessee and use of its own money. The transactions have been found to be routed through banking channel and reported in the return of income by the assessee as well as PFSPL. 12.3 Besides, the repayment and squaring up of loans is an overriding point of significance. As repeatedly argued, the transactions ultimately were squared up and there was no outstanding at the end of the year. Hence, the assessee cannot be said to have gained any spurious benefit at its disposal by virtue of such transaction. The factum of repayment thus also validates the stance of bonafide. The absence of any advantage arising from alleged credits also somewhat discharges the onus placed under s. 68 of the Act. Having regard to these broad facts, the CIT(A) reckoned that formidable and astounding additions were made CIT(A) concluded the issue in favour of the assessee. 12.4 At this juncture, it may be relevant to refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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