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TMI Blog2023 (11) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... -filing of income-tax return by creditor, the point is well decided in Metachem Industries [ 1999 (9) TMI 21 - MADHYA PRADESH HIGH COURT] where it has been categorically held Whether that person is an income-tax payer or not or from where he has brought this money is not the responsibility of the firm . The last element of genuineness of loan is also established by the Bank Pass-Book which clearly reflects that the loan has been taken through banking channel and there is no involvement or flow of cash. Thus, all elements of section 68 are satisfied. Regarding the contention of revenue that the assessee has not paid any interest, the same is fully corroborated by the A/c Confirmation acknowledged by the creditor which does not contain any entry of interest payment. Obviously, the assessee has received interest-free loan from creditor. Lastly, we also find sufficient merit in the contention of Ld. AR that the assessee has discharged primary burden cast upon it and still if the AO was not satisfied, he could very well make enquiry or field enquiry from/of the creditor. AO has not done any enquiry, much less field-enquiry, from/of creditor and fastened the tax liability upon as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found that he has not filed any income-tax return. Ultimately, the AO noted that creditor is a non-filer of income-tax return; the bank a/c has been opened for the purpose of giving unsecured loan only; the assessee has not made any repayment of loan; and the creditor has not charged any interest on loan. Relying upon CIT Vs. N. Tarika Properties Investment (2014) 387 (SC) and PCIT Vs. NRA Iron and Steel Pvt. Ltd. (2019) (SC), the AO held that mere furnishing of PAN is not a sufficient proof of identity. Ld. AO finally concluded in Para No. 3.6 of assessment- order that the assessee has failed to prove the identity, genuineness and creditworthiness, accordingly he made addition of Rs. 9,50,000/- u/s 68. 5. During first-appeal, the CIT(A) agreed with observations of AO. He further noted (Page No. 31 of appeal-order) that the assessee has not brought on record any evidence showing income-earning activities of the creditor. He also noted that the A/c Confirmation filed by assessee did not contain complete address of the creditor which prevented the AO from conducting further enquiries (Page No. 32 of appeal-order). He also relied upon certain judicial rulings including the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for giving loan to assessee; and the genuineness is also proved by bank pass-book. 7. Ld. AR further contended that despite submission of primary documents, if at all the AO had any doubt in mind he could have conducted necessary enquiry from the creditor directly. Ld. AR submitted that the A/c confirmation given by assessee contains full address and the PAN data of creditor was also available with the AO; still no enquiry has been done by AO. Ld. AR submitted that the CIT(A) is wrong in mentioning that the A/c confirmation does not contain full address of creditor. Ld. AR contended that when the AO has not made any enquiry from concerned creditor even though the assessee has filed A/c Confirmation, Bank A/c and PAN Card of the creditor, the AO has no right to draw any adverse inference against assessee and make addition. In support of his argument, Ld. AR relied upon the decision of Hon ble Delhi High Court in CIT Vs. Gangeshwari Metal (P) Ltd. (2014) 361 ITR 10 where it was held thus: 9. As can be seen from the above extract, two types of cases have been indicated. One in which the AO carries out the exercise which is required in law and the other in which the AO sits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e further investigation with regard to that individual who has deposited this amount. 5. So far as the responsibility of the assessee is concerned, it is satisfactorily discharged. Whether that person is an income-tax payer or not or from where he has brought this money 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. It is open to the Assessing Officer to take appropriate action under Section 69 of the Act, against the person who has not been able to explain the investment. In the present case, there is the concurrent finding of both the Commissioner of Income-tax (Appeals) as well as of the Tribunal that the firm has satisfactorily explained the aforesaid entries. 6. We are, therefore, of the opinion that the view taken by the Tribunal is correct and the aforesaid question is answered against the Revenue and in favour of the assessee. 9. With these submissions, Ld. AR prayed that the addition made by AO without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income-tax return by creditor, the point is well decided by Hon ble jurisdictional High Court in Metachem Industries (supra) where it has been categorically held Whether that person is an income-tax payer or not or from where he has brought this money is not the responsibility of the firm . The last element of genuineness of loan is also established by the Bank Pass-Book which clearly reflects that the loan has been taken through banking channel and there is no involvement or flow of cash. Thus, all elements of section 68 are satisfied. Regarding the contention of revenue that the assessee has not paid any interest, the same is fully corroborated by the A/c Confirmation acknowledged by the creditor which does not contain any entry of interest payment. Obviously, the assessee has received interest-free loan from creditor. Lastly, we also find sufficient merit in the contention of Ld. AR that the assessee has discharged primary burden cast upon it and still if the AO was not satisfied, he could very well make enquiry or field enquiry from/of the creditor. The AO has not done any enquiry, much less field-enquiry, from/of creditor and fastened the tax liability upon assessee by tre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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