9911796707
TMI Blog2024 (7) TMI 1012X X X X Extracts X X X X X X X X Extracts X X X X ..... y the revenue by bringing contrary material. The onus lies upon the revenue to bring necessary corroborative material suggesting that there was a deposit in the bank account of the assessee. As such, merely based on the AIR information, there cannot be any addition to the total income of the assessee until and unless some corroborative materials are brought on record. But the revenue failed to do so. Accordingly, no addition is warranted to the total income of the assessee based on the AIR information. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. Addition on account of time deposits as unexplained - AO held that the assessee was required to explain the source of the time deposit even assuming such deposits were required to be made for issuance of LOC/Bank Guarantee but failed to do so - HELD THAT:- The present case, the assessee has made time deposits/ renewed time deposits and fixed deposits in its bank account out of the bank account disclosed in the books of accounts. The assessee in the year under consideration has shown operating receipts which is commens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sale deed duly debited in the bank of the assessee as on 22 and 23 February 2012 against the name of vendor parties. At the time of hearing, the learned DR could not controvert the facts stated above. Thus, there cannot be drawn any adverse inference against the assessee merely for the clearance of the cheques later. Hence, we set aside the finding of the ld. CITA and direct the AO to delete the addition made by him. Unexplained cash credit u/s 68 - The identity of parties/share applicant/vender/promotors has been duly established by the assessee on strength of the above document. Credit worthiness was also not in doubt as these parties were regularly filing returns of income and showing substantial income. The onus regarding the genuineness of transaction was also discharged by the assessee by furnishing the board resolution, minutes of extraordinary general meeting, ROC filing. Furthermore, the above parties have duly accounted for the transactions in their books on which offered capital gain. It is also pertinent to highlight that the transaction of land for which consideration was paid by allotting share at huge premium was between assessee company and its promotors/owner. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the appeal as they may be advised. 2.1 The first issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition of Rs. 1,21,50,000/- made on account of alleged unexplained cash credit. 2.2 The facts in brief are that the assessee, a private limited company, is engaged in the business of mechanical work on contract basis including job for maintenance of Trunkey projects. The AO during the assessment proceedings found that the following cash deposits were made in the standard chartered bank (SCB) of the assessee: Sr. No. Date of cash deposit in bank Amount in Rs. 1. 28-11-2011 37,50,000/- 2. 27-02-2011(correct date is 15.11.2011) 75,00,000/- 3. 12-03-2012 9,00,000/- Total 1,21,50,000/- 2.3 On question about the source of cash deposits, the assessee contended that the alleged cash deposit of Rs. 37.5 lakhs dated 28-11-20111 is indeed a RTGS transfer from the assessee s bank account in IDBI bank to standard chartered bank. The second alleged cash deposit entry of Rs. 75 Lakh dated 27- 02-2011 is incorrect as standard chartered bank was not opened at the relevant time. Likewise, the third alleged entry of Rs. 9 lakhs dated 12-03-2012 was not traceable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded in the amount of Rs. Rs. 61,99,514/- debited in IDBI bank. 3.1 Regarding deposit of Rs. 75 Lakh dated 15-11-2011, the assessee claimed that it received loan of Rs. 5 crores from standard chartered bank and out of such loan an amount of Rs. 4.25 crore was transferred to IDBI bank and the remaining amount of Rs. 75 lakh was deposited in standard chartered as fixed deposit against the loan. However, the assessee failed to furnish a loan sanction letter showing the loan amount transferred to IDBI bank and deposited in standard chartered bank. 3.2 Likewise, the assessee did not furnish any documentary evidence to show that amount of Rs. 9 lakhs were not deposited in bank account as on 12-03-2012 but merely stated such entry not traced in bank account which is not sufficient. Hence, the ld. CIT(A), in view of the above, confirmed the addition made by the AO. 4. Being aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 4.1 The learned AR before us filed a paper book running from pages 1 to 900 and contended that there was no cash deposit representing ₹ 37.50 lakhs in standard chartered bank rather, it was the inter-bank transfer. As such, there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the documentary evidence. Furthermore, the ld. DR has not brought anything on record contrary to the argument advanced by the ld. AR of the assessee. Thus, we are not convinced with the finding of the learned CIT-A and accordingly direct the AO to delete the addition made by him for ₹ 37.50 lakhs on account of cash deposit in the bank account of the assessee dated 28th of November 2011. 6.2 Regarding the allegation of the revenue of the cash deposit of ₹ 75 lakhs in the Standard Chartered Bank dated 15th of November 2011, we find relevant to refer the submission made by the assessee which are detailed as under: i. The bank account was opened in the Standard Chartered Bank effective from 16 November 2011. ii. There was a loan obtained from the Standard Chartered Bank amounting to ₹ 5 crores on 15 November 2011, out of which the sum of Rs. 4.25 crores were transferred to IDBI Bank, and the balance amount of ₹ 75 lakhs was deposited as margin money in the form of FD for 90 days. The relevant submission of the assessee is extracted as under: The appellant has taken a short term loan amounting to Rs. 5 crores from SCB on 15 November 2011 and for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roborative materials are brought on record. But the revenue failed to do so. Accordingly, we are of the view that no addition is warranted to the total income of the assessee based on the AIR information. Thus, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is hereby allowed. 7. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the addition of Rs. 7,23,07,611/- made on account of time deposits as unexplained. 7.1 The assessee during the year has made time deposits with IDBI bank on various dates amounting to Rs. 13,14,31,431/- only. The AO required the assessee to explain the sources of such time deposit. The assessee explained that it undertakes various job work which goes over the period from 18 to 24 months. Therefore, the customers require a letter of credit/ bank guarantees as performance guarantee. The bank for issuing LOC/bank guarantee requires deposit of margin money @ 10% of the guarantee amount in the form of time deposit. The assessee in support of its claim furnished sample copy of request letter to bank for issuance of guarantee/LOC and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tune of Rs. 6,66,83,815/- and Misunderstanding of three fixed time Deposits (as stated by the appellant) to the tune of Rs. 66,23,796/- are not explained by the appellant with supporting documentary evidences. With regard to Misunderstanding of three fixed time Deposits (as stated by the appellant), the appellant furnished its written submissions as under Others 119 15 13,95,113 13-06-2011 568 This is matured and credited in the bank account and such deposits is not made during this year. 120 116 21,78,678 26-05-2011 588 The FD made is of Rs. 218678 only which is reflected in bank statement and not Rs. 2178678 which is incorrectly mentioned in the assessment 121 38 30,50,005 02-11-2011 This FD is wrongly stated since it is neither reflected in bank statement nor reflected as renewal and nor as per AIR information copy of which was supplied by AO. Subtotal(c) 66,23,796 8.8 In view of the above, the appellant made detailed explanation in its written submissions and submitted documentary evidences in respect of new time deposits to the tune of Rs. 5,81,23,820/- However in respect of renewal of time deposits to the tune of Rs. 6,66,83,815/- and Misunderstanding of three fixed time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified from page 65 of the paper where the bank statement of the relevant date is available. As such, the fixed deposit of ₹ 2,18,678 was made out of the disclosed bank account of the assessee. 10.2 Likewise, the ld. AR also contended that there was no fixed deposit made during the year amounting to ₹ 30.50 lakhs and therefore the same cannot be treated as income of the assessee merely based on AIR information. 10.3 Regarding the time deposit of ₹ 5,81,23,820.00, the ld. AR contended that such time deposits were made out of the running bank account of the assessee which was duly disclosed in audited financial statement and therefore the learned CIT-A rightly deleted the addition made by the AO. 11. On the other hand, the learned DR contended that the assessee failed to justify the source of deposits made under the head time deposits /fixed deposits. Thus, all the additions are liable to be made/ confirmed. 11.1 Both the ld. AR and the DR before us vehemently supported the order of the authorities below to the extent favourable to them. 12. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t all such FDs were made from the bank account which was disclosed in the regular books of accounts. There were regular receipts of money out of the business operation of the assessee in the impugned bank account. The books of accounts of the assessee were duly audited and the same are not rejected by the revenue. Thus, what transpired is this that all the entries reflecting in the bank statement were duly disclosed in the audited financial statements. Furthermore, the operating income shown by the assessee for the year under consideration amounted to Rs. 285 crore is sufficient to justify the source of such these FDs/ Time Deposits. Accordingly, in our considered view, the finding of the learned CITA is not sustainable. 12.4 Furthermore, it is equally important to note that there is a double addition by the revenue with respect to certain FDs which were renewed in the year under consideration. For instance, certain FDs were made by the assessee for the 1st time in the year in dispute and the same was added by the AO to the total income of the assessee. On the maturity of such these FDs/ renewals of such FD s, the revenue has made further addition which leads to the double addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,50,000/- only, we note that there was no such FD made by the assessee. Furthermore, such amount was also not reflected in the AIR provided by the AO. Thus, we are of the view that such an amount cannot be made subject to the addition. Even at the time of hearing, the learned DR has not brought anything on record contrary to the arguments advanced by the assessee before the learned CIT-A which have been reproduced herein above. In view of the above and after considering the facts in totality, we hold that such addition of Rs. 6,66,83,815/- and Rs. 66,23,796/- on account of time deposits and fixed deposits respectively cannot be made to the total income of the assessee. Accordingly, we set aside the finding of the learned CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is hereby allowed whereas the ground of appeal of the revenue is hereby dismissed. 13. The last issue raised by the assessee is that the ld. CIT-A erred in confirming the addition made by the AO for ₹ 3,25,08,000.00 on account of investments in the land property. 13.1 The AO during the assessment proceedings based on the AIR information observed that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minute of extraordinary meeting, sale/purchase deed and ROC filing relating to the allotment of shares at premium. Further, the necessary details regarding the identity and creditworthiness of the share applicant/vendors were also provided in the form of their name address, copy of their ITRs, balance sheet, computation of income. The parties have offered capital gain on the land transferred by them to the assessee in lieu of allotment of shares at premium. 14.1 Further, the ld. CIT(A) deleted the part addition to the extent of ₹ 13,05,35,880/- out of total addition of ₹ 16,30,44,000/- made on account of investment in land by observing that consideration for such investment was made by allotment of share at a premium as discussed above. The allotment of share at premium has been held as genuine, therefore the investment in land in lieu of allotment of share at premium cannot be held as unexplained. 14.2 However, the ld. CIT-A confirmed the addition for Rs. ₹ 3,25,08,000/- being investment in land other than by allotment of shares. The ld. CIT(A) found that as per the sale deed, the land property was purchased from 3 persons on 13-12-2011 for a consideration of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cheque numbers as mentioned in sale deed (also held by the ld. CIT(A) in his finding) duly debited in the bank of the assessee as on 22 and 23 February 2012 against the name of vendor parties. At the time of hearing, the learned DR could not controvert the facts stated above. Thus, there cannot be drawn any adverse inference against the assessee merely for the clearance of the cheques later. Hence, we set aside the finding of the ld. CITA and direct the AO to delete the addition made by him. 16.1 Regarding the deletion of the addition of ₹ 13,05,35,880.00 and 13,05,35,880 on account of unexplained cash credit under section 68 of the Act and unexplained investment in the land, we note that the persons to whom shares were allotted in lieu of purchase of land are the promotors of the assessee company. The promotors were members of the Sachine Udhyognagar Sahkari Mandali Ltd and they were holding lease hold property at Sachine Udhyognagar Sahkari Mandali Ltd and such lease hold rights were transferred by the promoters to the assessee in lieu of share capital and premium. 16.2 The assessee in support of share allotment on premium to these persons/promoters in lieu of purchase o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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