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TMI Blog2024 (10) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... prove the source of source. Therefore, we do not find any infirmity in the order of the CIT A in deleting the above addition for the reason that identity, creditworthiness of the person and genuineness of the transaction is established. DR also did not show us any evidence about any of the three ingredients adversely. Accordingly we do not find that CIT A has erred in deleting the addition u/s 68 with respect to the share capital in the name of diector. Decided in favour of assessee. Admission of additional evidence under Rule 46A - assessee submitted that it was a Covid period and assessee could not submit the details because the office of the assessee was situated in a containment zone declared by the government of Maharashtra - HELD THAT:- We find that when the assessee was prevented by sufficient cause to produce necessary details before the assessing officer, the appellate authorities are empowered to admit such additional evidence in the proper administration of justice. Claim of the assessee is not disputed that office of the assessee was situated in containment zone declared by the government of Maharashtra. Therefore we do not find any infirmity in the order of the CIT A i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor and same was invested in the form of share capital. 3. On the facts and in the circumstance of the case and in law, the Ld. CIT (A) is justified in deleting the addition of Rs. 198, 10,59,501/- made by AO under section 68 of the I.T. Act without appreciating the fact that the assessee failed to prove the genuineness and creditworthiness of Creditor in light of the fact that the source of fund was borrowed from various parties by the Creditor and the same was given to the assessee company in the form of unsecured loan. 03. Assessee has also filed cross objections challenging the assessment order raising following grounds of appeal::- i. The appellant prays that the order passed under section 143 (3) read with section 144B of the income tax act, 1961 is without following the procedure laid down for conduct of assessment under section 144B of the act and therefore the assessment order is bad in law, illegal and invalid and therefore the same should be classed. ii. The assessment order was passed without issue of draft assessment order as required by provisions of section 144B (a)(xii) and therefore the assessment order passed is non est and bad in law in view of the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any M/s Nisiddh Vision Pvt. Ltd. of ₹ 198,10,59,501/ . The assessee furnished the date and mode of receipt of the above sum from the company. However, the assessee did not file further reply to the queries such as furnishing the annual accounts, income tax return et cetera and the bank statement, The learned Assessing Officer further issued notice under Section 133(6) of the Act but same was not replied and therefore, the learned Assessing Officer made an addition under section 115BE by invoking provisions of section 68 of the income tax act. 08. Thus the assessment order under section 143 (3) read with section 144B of the income tax act was passed on 21/4/2021 wherein the learned assessing officer assessed the loss of ₹ 2,724,474/ and made an addition of ₹ 2,231,058,500/ under section 68 of the act to be charged to tax under section 115BBE of the act. 09. The assessee preferred the appeal before the National Faceless Appeal Centre, Delhi [the learned CIT (A)] passed the order dated 11 May 2013. 10. Before the learned CIT (A), the assessee submitted that due to lockdown the assessee could not furnish the details before the learned Assessing Officer along. Before A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport] However, the learned CIT (A) applying the provisions of Rule 46A of Income Tax Rules, admitted the evidence. 14. The learned Assessing Officer also commented on the merits of the additions by that remand report on both the additions u/s 68 of the Act. 15. On the issue of addition under section 68 of ₹ 25 crores with respect to the share capital introduced by the director of the company, the learned Assessing Officer on the evidences submitted by the assessee issued notice under Section 133(6) of the Act on 16th December, 2022 to the director of the company who introduced the share capital. In the 133(6) information, the learned Assessing Officer asked for (i) her bank statement and the source of investment along with documentary proof to justify the source of such investment, genuineness and creditworthiness, (ii) balance sheet and profit and loss account as well as income tax returns for four years, (iii) the entry and source of money deposited in Kotak Mahindra bank and Yes Bank, (iv) to explain ₹25 crores invested in the assessee company along with the form no.16 and form no.26As for four different years. 16. This 133(6) was replied by the depositor director o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that Nisiddh Vision Pvt. Ltd. is now known as Golden Wealth Advisory Pvt. Ltd. To substantiate the source of investment the lender submitted the ledger account along with address, permanent account number, the income tax return, the bank statements, ledger copy of account of assessee in its books. For source of the fund received by the lender, it was stated to be from eight different entities. For All these entities, that company furnished the necessary bank account, bank statement and the return of income and annual accounts and Income tax Assessment orders of those entities. Thus, the lender also furnished the source of the source of loans given to the assessee. 19. The learned Assessing Officer, to cross verify the above claim of loan given to the lender, issued 133(6) to the lender of golden wealth advisory Pvt. Ltd. [ Nisiddh Vision Private Limited]. Eight parties also responded by filing their copy of return of income, bank statements, confirmation etc. However, one party SCG Exports Pvt. Ltd., who has advanced loan of ₹9 crores did not respond, assessee was confronted. The assessee immediately obtained the reply from that party along with the loan confirmation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences were produced which were verified and based on such verification, remand report is submitted. He referred to the annual accounts of various companies noted that two of those companies have given loan to Nisiddh Vision private limited in initial year FY 2012 13. With respect to the other 7 depositors who gave money to Nisiddh Visions Private Limited he noted that that those parties have enclosed the bank statement reflecting the payment and the Ledger confirmation of the amount deposited with Nisiddh vision private limited. However, he looked at the income of those parties and noted that for assessment year, 2018 19 in case of one party loss is declared and in case of one party, the income is low. With respect to SCG exports private limited which did not respond to notice under section 133 (6) of the act, assessee has filed the return of income of that party along with the copy of assessment order for assessment year 2018 19 of that company. He further examined that the entire loan amount has been repaid by the assessee to the Nisiddh vision private limited in the subsequent year for which ledger copies and bank statements were examined. He further noted that the balance sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he loan received from Nisiddh Vision Private Limited assessee submitted that in the remand report the learned assessing officer has categorically noted that assessee has obtained a loan from Nisiddh vision private limited of ₹ 1,981,059,500/ for which the assessee has submitted the copy of the Ledger account of the parties, bank statement, confirmation, income tax return of the lender. Further assessee has also given complete details of sources of funds available with the issue in the vision private limited. The assessing officer was given complete details of nine parties from whom source of the funds were arranged by the lender. With respect to all these 9 parties assessee has submitted their income tax detail, their confirmation, the date of giving loan to initiate vision private limited substantiated with bank details and statement copies. Their annual accounts are also provided. The assessing officer in the remand report has accepted that those parties have enclosed a bank statement reflecting payments and Ledger confirmation with respect to the loans advanced by them to Nisiddh vision private limited. The learned assessing officer has also enquired independently about al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction b) copy of ITR acknowledgement deposited, c) copy of the composite application form in relation to share application, d) copy of the board resolution. ii. In remand proceedings director of the company Ms Aksha khamboj has submitted complete details in response to notice under section 133 (6) of the act i.e. a) Ledger account of the amount invested in KBJ venture private limited along with bank statement highlighting transactions of amount invested, e) Ledger account of parties from whom loan was availed along with bank statement highlighting the transaction of loan availed from those parties and f) ITR acknowledgement of the parties from whom loan was availed along with annual return. iii. As per remand report assessing officer has issued notices under section 133 (6) of the act to the parties from whom director of the company has obtained the advance/loan. iv. In his view, the onus cast upon the assessee is only to establish three things necessary to obviate attraction of section 68 of the act such as identity, creditworthiness of the party and genuineness of the transaction which has been discharged by the assessee by submitting all the necessary documents during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that party, that party and then submitted the complete details of the confirmation, income tax return, the copy of account, annual reports and bank statement to show the loan provided by it to the lender. vii. In the remand report the learned AO held that assessing officer has examined all these details and did not furnish any adverse comment with respect to creditworthiness of the parties or genuineness of the transaction. 29. Thus, when both the above additions are deleted by the learned CIT A, the learned assessing officer is aggrieved and is in appeal before us. 30. The learned CIT DR vehemently submitted that during the course of the assessment proceedings the assessee was given several opportunities but assessee did not furnish the requisite information therefore at the time of assessment assessee failed to submit those details and accordingly the learned assessing officer is aggrieved violation of the additional evidences by the learned CIT A. 31. With respect to the ground of appeal number 1, the learned AR submitted that it was a Covid period and assessee could not submit the details because the office of the assessee was situated in a containment zone declared by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the enquiries on those additional evidences. The learned assessing officer has carried out inquiries from the assessee, from the lenders, from the parties who have lent money to those lenders by issuing notices under section 133 (6) of the act. In view of this, we do not find any infirmity in the order of the learned CIT A in admitting the additional evidences and no prejudice is caused to the assessing officer. Therefore, ground number 1 of the appeal is dismissed. 33. With respect to ground number two the learned AO is aggrieved by the action of the learned CIT A in deleting the addition of ₹ 249,999,000/ made by the assessing officer under section 68 of the act without appreciating the fact that the assessee failed to prove the genuineness and creditworthiness of creditor in light of the glaring fact that the source of funds were borrowed from other parties by the creditor and same was invested in the form of share capital. 34. The learned CIT DR vehemently submitted that the amount of ₹ 25 crores invested by one of the director of the assessee company has borrowed the funds from other parties and same are invested in the assessee company. The assessee has failed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see company with the assessee is completely proved. The shares have been allotted to the director and therefore the genuineness of the transaction cannot be doubted. He further relied upon the order of the learned CIT A. It was further claimed that when all such details are submitted during the course of remand proceedings by the assessee and the director which have been independently verified by the learned assessing officer by issuing separate 133 (6) to them, which were also complied with. The learned assessing officer has nothing adverse against the assessee in the remand report. It was further stated that on the issue of amount received from Mr. Chokshi, the learned assessing officer has also made request to the assessing officer of the lender to the director, for which confirmation has not been received at the time of remand proceedings. Even otherwise, today, the learned CIT DR did not produce any adverse inferences. In view of this there is no infirmity in the order of the learned CIT A in deleting the above addition as assessee has conclusively proved the identity, creditworthiness and genuineness of the share application money of the directors and also proved source of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted by the assesee i.e. confirmation, bank account, balance sheets and profit and loss account, Ledger account and source of funds from NVPL. The assessing officer further issued a notice under section 133 (6) of the act to NVPL which also in turn submitted all those details to the assessing officer directly. It was also submitted that a small loan was also taken by the director from one Shri Nimesh Chockshi. Identical details were submitted by the director about this person. When 133(6) issued to that person, he also replied submitting all the necessary details. The assessing officer also wrote to the assessing officer of all those parties. However in case of Mr Nimesh such details have not been received from the assessing officer of Mr Nimesh. No such information is also shown to us at the time of hearing that any such adverse information is received from the assessing officer. In view of the above facts according to the provisions of section 68, initial onus is cast upon the assessee to show the identity, creditworthiness of the parties who have deposited such sum with the assessee and genuineness of the transaction. If such sum is deposited as share application, share capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT A has not considered this aspect and therefore the order of the learned CIT A is not sustainable. 38. The learned authorized representative vehemently submitted that assessee has submitted confirmation, bank statement, return of income, annual accounts, and annual return of the lender. The assessee has also submitted the source of funds received by the lender i.e. Source of funds received by the lender from nine different entities. To prove the identity, creditworthiness and genuineness of transaction of loan of those nine entities to Nissidh Vision private limited, assessee has submitted the confirmation, bank statement, annual return, return of income, annual accounts before the assessing officer. The confirmation is also provided. The learned assessing officer also exercise the powers vested with him under section 133 (6) of the act and he issued notices to Nissidh Vision private limited and all those nine entities. Out of those nine entities, eight entities responded to submitting their confirmation, bank account, return of income, their balance sheets and profit and loss account. Some of the companies also submitted their assessment orders for the respective years. Some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted before the learned CIT A and also the several judicial precedents relied upon by the parties. 40. The fact clearly shows that the learned assessing officer has made an addition under section 68 of the income tax act with respect to the loan received by the assessee company from another company Nisidh vision Private Limited as during the course of assessment proceedings the assessee failed to produce the necessary evidences. Before the learned CIT A assessee submitted additional evidences which were admitted and sent for the verification before the learned assessing officer. The additional evidences were in the form of confirmation, bank statement, annual balance sheet and profit and loss account, income tax return of NVPL. The learned assessing officer examines those evidences submitted. He issued notice under section 133 (6) of the act to NVPL. NVPL submitted the details of confirmation, its bank statement, its annual accounts, its income tax return with respect to the above loan transactions. It also submitted that in turn received loan from 9 different entities. For all those nine entities it submitted confirmation, bank statement, annual accounts, income tax return. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced money with the assessee of ₹ 3,479,746,677. Out of this the assessee has repaid to the assessee are sum of ₹ 1,498,687,176. Thus an outstanding closing balance of ₹ 1,981,059,501 is outstanding payable by the assessee to the above company. All these transactions are of the loan transaction. The assessing officer has made the addition of closing balance of ₹ 1,981,059,501 under section 68 of the act with respect to this company. There is no doubt expressed by the assessing officer wherein the credit from this company is to the tune of ₹ 348 crores approximately. Thus what the assessing officer has done is made the addition under section 68 of the closing balance of that account. The closing balance in the result of some received from that particular party by the assessee and sum paid during the year. Thus it is apparent that when the AO has accepted the credit of ₹ 348 crores but has doubted and made addition only of ₹ 198 crores out of the total sum credited in the books of accounts of the assessee in the name of NVPL itself shows that addition is not sustainable. This is for the reason that when ₹ 150 crores credited in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X
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