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TMI Blog2025 (4) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... nts submitted was only in support of confirmations and other documents already submitted and no new documents were submitted. 2. The assessee craves your indulgence to add amend or alter all or any grounds of appeal before or at the time of hearing." 3. Succinctly, the fact as culled out from the records is that the assessee filed its return of income for the year under consideration declaring total income of Rs. 4,80,41,000/- on 14.09.2018. The case was selected for Complete Scrutiny assessment under the E-assessment Scheme, 2019 on the following issues :-- S. No. Issues i. Unsecured Loans Issues ii. Deduction Claimed for Industrial Undertaking u/s 80IA/80IAB/80IAC/IB/IC/IBA/80ID/80IE/10A/10AA 3.1 Statutory notices u/s. 142(1) and 143(2) were issued to the assessee along with a detailed questionnaire. Ld. AO on perusal of the details so submitted noted that the assessee is engaged in the business of power generation though windmill at Sangli, Jaisalmer and Barmer and thereby eligible for deduction u/s. 80IA of the Act but the ld. AO based on the discussed so recorded in the order added a sum of Rs. 4,02,369 being the amount of apportionment of the expenses to the eligibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct wire and cables and generation of electricity by windmill and hence such expenses as listed by the A.O amounting to printing, dyeing, stitching, embroidery, are neither incurred nor claimed by the assessee. It is not known on what basis the A.O got these details which are not borne out by the facts on record. Accordingly, the addition of Rs 4,02,369/- is deleted and the Ground of Appeal is Allowed. 8. Ground has been raised against Ground No 2: This Ground has been raised against the action of the A.O in making an addition of Rs 32,684/- by disallowing the claim of this amount u/s 80IA of the Act. 8.1 I have perused the assessment order and the submissions of the appellant on this issue. I do not find any justification for the said addition. The A.O has not given any proper reason why the explanation of the appellant that these amounts were on account of the shor late payment of the bills of the 2 units were not to be included in the claim for 80IA especiall- since they are a part of the 10CCB report and audit report. Accordingly, the addition deleted and the Ground of Appeal is Allowed. 9. Ground No. 3: This ground has been raised against the action of the A.O in makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident in whose name such credit is recorded in the books of suc company, also offers an explanation about the nature and source of such sum so credited and (b) Such explanation in the opinion of the Assessing Officer has been found to be satisfactory. If all the above conditions exist, sum so credited may be charged to tax as income of the taxpayer of that year. 9.4 The Burden of proof is on the assessee who is required to offer an explanation to the satisfaction of the Assessing Officer so as not to ho is required thief of section 68 or for that matter section 69A. This aspect has been deliberated upon by the Hon'ble Supreme Court in numerous decisions. Relevant portion from following case laws are extracted below: i. Sreelekha Banerjee v CIT (1963) 49 1TR 112 (SC) "It seems to us that the correct approach to questions of this kind is this. If there is an entry in the account books of the assessee which shows the receipt of a sum or conversion of high denomination notes tendered for conversion by the assessee himself, it is necessary for the assessee to establish, if asked, what the source of that money is and to prove that it does not bear the nature of income. The De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sumati Dayal v. CIT [1995] 80 Taxman 89 (SC) "But, in view of Section 68 of the Act, where any sum is found credited in the books of the assessee for any previous year the same may be charged to income tax as the income of the assessee of that previous year if the explanation offered by the assessee about the nature and source thereof is, in the opinion of the Assessing Officer, not satisfactory. In such case there is, prima facie, evidence against the assessee, viz., the receipt of money, and if he fails to rebut, the said evidence being unrebutted, can be used against him by holding that it was a receipt of an income nature. While considering the explanation of the assessee the Department cannot, however, act unreasonably." iv. CIT v. P. Mohanakala [2007] 161 Taxman 169 (SC) "The expression "the assessees offer no explanation" means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true the opinion of the Assessing Officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trib.)] has held as under: "It is also a settled legal position that the onus of the assessee, of explaining nature and source of credit, does not get discharged merely by filing confirmatory letters, or demonstrating that the transactions are done through the banking channels or even by filing the income tax assessment particulars. In the case of CIT v. United Commercial and Industrial Co (P.) Ltd [1991] 187 ITR 596/56 Taxman 304 (Cal), Hon'ble Calcutta High Court has held that "it was necessary for the assessee to prove prima facie the identity of creditors, the capacity of such creditors and lastly the genuineness of transactions". Similarly, in the case of CIT v. Precision Finance (P.) Ltd [1994] 208 ITR 465/[1995] 82 Taxman 31 (Cal), it was observed that "it is for the assessee to prove the identity of creditors, their creditworthiness and genuineness of transactions". There is thus no escape from proving genuineness of a transaction." In the case of PCIT vs. NRA Iron & Steel (P) Ltd. [(2019) 103 taxmann.com 48 (SC)] the Hon'ble Supreme Court has held that "merely because assessee company had filed all primary evidence, it could not be said that onus on assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity and are just as to facilitate the Revenue to keep track of transactions and thus PAN cannot be blindly and without consideration of surrounding circumstances treated as sufficient disclosing the identity of individual". 9.7 Looking to the assessment order it is seen that the assessee had taken unsecured loans during the year. The loans taken from 24 persons had been squared up during the year, as under :- Sl. No. Name of the Creditors PAN Loan squared- up during F.Y 2017-18 (In Rs.) 1 M/s Nav Bharat Machineries Pvt. Ltd. AAACN4713G 15,00,000/- 2 Arjun Singh ADVPS9417M 10,00,000/- 3. Hulas Chand Shreepal AAAHH8042K 10.00.000/- 4. Jai Kishan Mohit Jajoo AAAHJ6317B 45,00,000/- 5. Jaishree Bhandari 30,00,000/- 6. Ranjit Ladha ABAPL7896G 1,00,00,000/- 7. Rohit Shreyans Sablawat AAJHR2509E 10,00,000/- 8. Sunil Bhargava ABZPB8037G 10,00,000/- 9. Umesh Bhandari ACOPB5632R 30,00,000/- 10 Yatendra Bihani ALAPB3202C 10,00,000/- 11 Apurva Fomra AADPF374OR 5,50,000/- 12 Dinesh Kalan AHDPK2216N 5,00,000/- 13 Manish sarda AEGPS9344M 7,00,000/- 14 Man Mohan Das Daga AANPD1118M 16,00,000/- 15 Naresh Jakhotia AITPJ6478L 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Furthermore, in the present proceedings, the appellant has submitted the confirmation, the ITR acknowledgement as well as the copy of the bank statement of some of the parties. However, looking to the assessment order it is seen that the A.O has mentioned that only the confirmations of the parties were submitted and the rest of the details such as ITR as well as the bank statements were not submitted. The appellant has not given any evidence that these details were also submitted before the assessing officer during the assessment proceedings i.e the copy of the bank statements. Accordingly, this would amount to additional evidence under Rule 46 A which cannot be considered. The appellant has not provided any application for the admission of additional evidence during these proceedings. Also, the appellant has not submitted any evidence that these details were submitted before the A.O during the assessment proceedings. 9.9 Even so, looking at the details it is seen that there are either incomplete or not legible or do not substantiate the creditworthiness of the parties. In the case of Sunil Bhargav(loan 10 lakhs) the ITR shows Gross Total Income of Rs 11.92 lakhs and the bank s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merous judicial decisions to show that merely filing the documents like PAN and ITR etc does not in itself prove the genuineness of the transactions. For all these reasons, it is held that the appellant has failed to discharge the onus of proof u/s 68 of the Act and hence the addition of Rs 1,95,000/- made by the A.O is confirmed. The Ground of Appeal is Not Allowed. 10. Ground No 4 is general in nature and does not require adjudication. 11. Resultantly, the appeal preferred by the appellant is ALLOWED IN PART." 5. Feeling dissatisfied with the finding recorded by the ld. CIT(A) while sustaining the addition of Rs. 1,95,25,000/- the assessee has preferred the present appeal. To support the solitary ground so raised by the assessee, ld. AR of the assessee, has filed the written submissions in respect of the ground raised by the assessee. The written submission so filed by the assessee reads as follows: "The assessee is a private limited company engaged in the business of power generation through windmill at Sangli, Jaisalmer and Barmer, which is eligible for deduction u/s 80IA of the Income Tax Act, 1961. The assessee filed return declaring total income of Rs. 4,80,41,000/- f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received and in what manner it was incomplete. The particulars of bank account where the money was deposited prior to transferring the same to the assessee were not disclosed to the assessee so as to enable him to furnish its defence. In these circumstances, the addition of Rs. 1,95,25,000/- made by the Learned Assessing Officer without providing adequate opportunity to the assessee is arbitrary and against the principles of equity and justice. Although it is stated that the addition is in respect of 14 squared up accounts as against total 24 squared up accounts, the learned Assessing Officer has not given the break up of Rs. 1,95,25,000/- added u/s 68. Aggrieved with the order of the Learned Assessing Officer, the assessee preferred appeal before the Learned CIT(A), NFAC, who has confirmed the addition made by the Learned Assessing Officer. Before the Learned CIT(A), the assessee furnished a detailed submission, which has been quoted on Page 6 to 20 of the appellate order of the Learned CIT(A). In this submission, the assessee had furnished PAN, copy of bank account and confirmation in respect of all the 14 squared up accounts. The Learned CIT(A) has at first observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidering the evidences filed before the Learned Assessing Officer as well as before the Learned CIT(A) as the documents submitted was only in support of the confirmations and other documents already submitted and no new documents were submitted. It is submitted that in the case of the assessee, addition of Rs. 1,95,25,000/- has been made under section 68 of the IT Act, wrongly treating the deposits in 14 squared up accounts as unexplained, first by the Learned Assessing Officer and later on upheld by the Learned CIT(A). The particulars of these 14 squared up accounts are noted below. Against each of the squared up accounts, the reason on account of which same has not been accepted as genuine by the Learned CIT(A) is mentioned and assessee has now met the objections /observations of the Learned CIT(A) which were more or less trivial and flimsy. It is submitted that each squared up account is genuine. In each account, money has come through banking channel and has been returned before the close of the year. All the depositors are having PAN and in respect of all, copy of IT returns have been furnished. Further, copy of relevant bank account in respect of each depositor has also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dinesh Kalani. Thus, it is assessee's own money which has come in the bank account of the assessee. There is no outside deposit. It is further submitted that the balance of the assessee has been fluctuating from Rs. 5,27,403/- as on April 13, 2017 to Rs. 63,310/- on 18/1/2018. The perusal of the account reveals that the assessee has been advancing loans to other persons, such as Rajeev Enterprises (Rs.250000 on 26/7/2017 Rs. 250000 on 28/7/2017 to Mohan Jhaveri) Thus, the amount of loan is proved beyond doubt. The objections raised by the Learned CIT(A) are duly met. 4 Naresh Jakhotia AITPJ6478L Rs. 1175000 1.Copy of ITR not given. 2. The bank statement is not of the relevant period. 3. The balance in the bank account is not exceeding Rs. 7.21 lacs, hence, the creditor was not in a capacity to give loan of Rs. 11 lacs. It is submitted that there appears to be some inadvertence at the stage of the Learned CIT(A). The assessee had furnished copy of bank account of Dr. Naresh Jakhotia with SBI, Shyam Nagar, Jaipur having Account No. No.00000061010466929 for the relevant period 1/4/2017 to 31/3/2018. The amount of loan has been advanced Rs.6,75,000 on 30/6/2017 and Rs.5,00,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Ramesh Chand Gupta ABDPG1277F Rs. 1500000 1. There is deposit in the bank account of Rs. 10 lac just a day before the amount of loan given. The creditor is assessed to income tax having PAN ABDPG1277F. The assessee has furnished confirmation, copy of acknowledgement of return for AY 2018-19, and copy of bank account of the creditor reflecting the transaction of loan. These evidences establish that the loan is fully explained. The return of income of the assessee for ASSESSMENT YEAR 2018-29 has been filed on 23/8/2018 disclosing income of Rs. 38,56,261/ -. The returned income discloses that the assessee was capable of advancing the loans. Further a detailed copy of bank account discloses that the assessee was having numerous transactions of heavy amounts during the year under consideration. The opening Balance in the account is also running into several lacs. The bank account continuously has got a balance running into lacs. All these facts establish the genuineness of the deposits. 9 Sarthak Bhandari AQEPG3813A Rs. 550000 (The correct amount of loan is Rs. 55,00,000) 1.Copy of ITR not furnished 2.No bank account furnished Copy of ITR for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not filed. 2. Copy of bank statement not filed Copy of ITR for A.Y. 2018-19 disclosing returned income of Rs. 50142777/- filed on 26/10/2018 is furnished. The quantum of income shown in the return of income itself establishes the capacity of the depositor. Copy of bank account is also furnished. The amount has been advanced on 12/12/2017. In the bank account Rs. 1 crore has come on 8/12/2017 from Gravita Metals. Confirmation from Gravita Metals is furnished. 14 Sunil Bhargava ABZPB8037G Rs. 1000000 1.ITR shows gross total income of Rs. 11.92 lacs 2.Bank statement does not show outstanding balance in the account. Copy of ITR for A.Y. 2018-19 disclosing income of Rs. 1042820/- is furnished. The returned income is good enough to establish the capacity of the depositor for advancing loan of Rs. 10 lacs. Copy of bank account No.676801500303 with ICICI Bank is furnished. It discloses loan advanced on 28/11/2017 and the same has been returned on 23/3/2018. The confirmation of the creditors, copy of their Income Tax returns and copy of their bank statements reflecting the loan given are available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer did not disclose the name of parties where the information was incomplete and there were deposits in bank account just prior to transfer to the assessee. The Learned Assessing Officer, thus, violated the principles of equity and justice . As a matter of fact, the Learned Assessing Officer was required to furnish the results of inquiries conducted by him by issuing notice u/s 133(6) before rejecting the same. It was only on knowing the results of inquiries conducted by the Learned Assessing Officer that the assessee could be competent to remove the defects and complete the information to the satisfaction of the Learned Assessing Officer. The Learned Assessing Officer has doubted the genuineness of deposits in the squared up accounts simply because the depositors failed to furnish some information, such as, copy of IT return or copy of bank account. However, in all cases, confirmations and PAN stood furnished. Further, out of 24 squared up accounts, complete information was received by the Learned Assessing Officer directly in compliance of notice issued by him u/s 133(6). This was good indication that the deposits in the case of the assessee were genuine. It so ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be recognized as being part of the guarantee contained in Article 14 of the Constitution of India because of the new and dynamic interpretation given by the Supreme Court to the concept of equality which is the subject-matter of that Article and that violation of principles of natural justice by a State action is a violation of Article 14. (b) Maneka Gandhi Vs. Union of India (AIR 1978 SC 597) Hon'ble Supreme Court/ Gangadharan Pillai Vs. ACED (1980) 126 ITR 356 (Kerala) A quasi-judicial or administrative decision rendered or an order made in violation of the rule of audi alteram partem is null and viod and the order mas in such a case can be struck down as invalid on that score alone. (c) Shri Ram Durgaprasad Vs. Settlement Commission (1989) 176 ITR 169 (SC) The order made in violation of principal of natural justice is void and nullity (d) CIT v. Panna Devi Saraogi [1970] 78 ITR 728 (Cal.). The opportunity of being heard should be real, reasonable and effective. The same should not be for name sake. It should not be a paper opportunity. (e) Tinbox Company Vs CIT (2001) 249 ITR 216 (SC) The principle of natural justice is so fundamental that failure to obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total of deposits in respect of the 14 squared up accounts found unexplained by the Learned Assessing Officer comes to Rs.2,58,65,000/-Not only a mistake was committed by the Learned Assessing Officer, the same was also overlooked by the Learned CIT(A) as he was also in haste in confirming the addition. Not only this, the Learned CIT(A) further committed a blunder in mentioning the amount of addition at Rs. 1,95,000/- only. All these facts go to establish that the authorities in passing the order were careless and also failed to consider the information furnished by the assessee in correct perspective. It is submitted that although the Learned CIT(A) perused and considered the information submitted by the assessee, but found the same incomplete and defective. In these circumstances, it was incumbent upon the Learned CIT(A) to have provided the assessee an opportunity for removing the defects. But this was not done. Thus, the principles of equity and justice stand violated, which render the order of the Learned CIT(A) vitiated. The Hon'ble Tribunal is requested to delete the additions in view of the detailed information furnished by the assessee. (d) Case-laws in support T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was advanced by the alleged creditor or not is basically a question of fact-Tribunal is the final fact-finding body-Finding of the Tribunal accepting the genuineness of the loan and deleting the addition could not be said to be perverse. (5) DEPUTY COMMISSIONER OF INCOME TAX vs. MAHALAXMI TMT PVT. LTD. (2021) 190 ITD 582 (ITAT, Pune) Assessee has discharged its onus by furnishing the necessary details such as a confirmation of the parties, copy of ITR- V, copy of bank statement of parties along with their balance sheet, share certificate, MOA, AOA etc. in support of identity of the parties and genuineness of transaction and credit worthiness of the parties. Similarly, there is also no dispute to the fact that all the transactions were carried out through the banking channel. What is the inference that flows from a cumulative consideration of all the aforesaid contending facts is that the assessee has discharged its onus imposed under section 68. Accordingly the AO had a suspicion that the investors as discussed above were acting as the conduit for converting the unaccounted money of the assessee in the guise of share capital /share application money and premium on shares. Conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly Exports (P) Ltd. (2008) 216 CTR (SC) 195 wherein it has been held as under : "2. Can the amount of share money be regarded as undisclosed income under s. 68 of the IT Act, 1961 ? We find no merit in this special leave petition for the simple reason that if the share application money is received by the assessee- company from alleged bogus shareholders, whose names are given to the AO, then the Department is free to proceed to reopen their individual assessments in accordance with law. Hence, we find no infirmity with the impugned judgment." Keeping in view the aforesaid mandate of law, the share application money cannot be regarded as undisclosed income of the assessee under s. 68 of the Act, 1961. (11) COMMISSIONER OF INCOME TAX vs. ORISSA CORPORATION (P) LTD. - Supreme Court of India (1986) 159 ITR 89 (SC) The assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notice under s. 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were also received through banking channels and found to be valid by the jurisdictional AO-Therefore, no addition could be made under s. 68. (13) CIT Vs. HS Builders 78 DTR 169 (Rajasthan High Court) Deposit of cash in the account of creditor just before giving loan to the assessee would not lead to the conclusion that the money was deposited by the assessee. Therefore, the ITAT was justified in deleting the addition. The Learned CIT(A) has also quoted many decisions while passing the appellate order. It is submitted that it is settled position of law that where there are two opposite views on the same issue, the one favourable to the assessee has to be followed. It is further submitted that the issue of squared up accounts is mainly an issue of facts and facts of two cases can never be identical. In view of this, the Hon'ble Tribunal is humbly requested to consider each deposits independently without being guided by the case-laws quoted by the Learned CIT(A) and delete the addition made by thye Learned Assessing Officer and sustained by the Learned CIT(A). Ground No.2 The assessee craves your indulgence to add, amend or alter all or any grounds of appeal before or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as incomplete and in which cases there were deposits in bank account just prior to transfer to the assessee. In these circumstances, the assessee was not in a position to make compliance of the Learned Assessing Officer. However, the assessee had furnished confirmations/PAN in respect of each and every creditor. Thus, because of inadequate opportunity, the assessee was prevented from furnishing copy of bank account, copy of ITRs in respect of the squared up accounts. 2. Even the Learned CIT(A) conducted the appellate proceedings without providing adequate opportunity to the assessee. The Learned CIT(A) at first found fault with the assessee in not furnishing application u/s 46A for additional evidences. However, later on, as the good sense prevailed upon the Learned CIT(A), he considered the information furnished in respect of the remaining squared up accounts, but found that the information was incomplete and defective and, therefore, sustained the addition. The Learned CIT(A) also did not provide any opportunity to the assessee to remove the defects mentioned in the appellate order with respect to information furnished in respect of the 14 squared up accounts. Thus, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support the contention so raised in the written submission reliance was placed on the following evidence / records / : Sr. No. Particular Page no. 1 Copy of acknowledgement of return with computation of total income 1-3 2 Copy of audit report along with its annexures 4-44 3 Copy of letters dated 21/12/2020 and 28/12/2020 45-49 4 Copies of confirmation, ITR and bank statements in respect of cash creditors :- Apporva Fomra Manish Sarda Dinesh Kalani Naresh Jakhotia Nikhita Loiwal Purvi Chainani Raju Krishan Kr. Marfatia Ramesh Chand Gupta Sarthak Bhandari Suman Kothari Navbharat Machineries P Ltd Arjun Singh Ranjit Lodha Sunil Bhargava 50-119 5 Copy of submission filed before the Learned. CIT(A) 120-132 8. The ld. AR of the assessee in addition to the written submission so filed as above, argued that the assessee has in fact did not file any additional evidence. The ld. CIT(A) firstly found fault with the assessee in not furnishing application u/s. 46A for additional evidence but at the same time of late on good sense prevail upon the ld. CIT(A), he considered the information furnished in respect of the remaining squared up accounts found that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... version of the assessee that they have filed all the evidence, preferred an application u/r 29 to clarify that all the information was filed and is legible. The ld. AR of the assessee submitted that ld. CIT(A) has not given the assessee an opportunity to deal with the fact that he contended, he must have provided an opportunity to the assessee but went to confirm the view simply pointing out error which are not supportive to sustain the addition. In short, the assessee filed all the details and are already available but to avoid the confusion the assessee submitted that application for additional evidence. 9. The ld. DR is heard who has relied on the findings of the lower authorities and at the same time objected to the petition moved by the assessee and that too without any attachment. The ld. DR submitted that the assessee has not submitted all the details despite the sufficient opportunity of being heard was given. So, the ld. DR objected to the application u/r 29 filed by the assessee when he failed to do before the ld. CIT(A). The assessee while filling the application under rule 29 has not specified that which are the documents were additional evidence before ld. CIT(A). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T OF CALCUTTA Commissioner of Income-tax v. Precision Finance (P.) Ltd. 10 [1991] 56 TAXMAN 304 (CAL) HIGH COURT OF CALCUTTA Commissioner of Income-tax v. United 11 [2009] 315 ITR 105 (Madras) HIGH COURT OF MADRAS Mangilal Jain v. Income-Tax Officer 12 [2012] 18 taxmann.com 217 (Delhi) HIGH COURT OF DELHI Commissioner of Income-tax v. Nova Promoters & Finlease (P) Ltd. 13 [2003] 128 Taxman 621 (Delhi) HIGH COURT OF DELHI Sajan Dass& Sons v. Commissioner of Income- 14 [2011] 9 taxmann.com 179 (Delhi) HIGH COURT OF DELHI Commissioner of Income-taxv.Oasis Hospitalities (P.) Ltd 3.1 The assessee in his written submission has quoted case laws in his favour (Sr. a to g at page no 21 to 23). The aforesaid case laws are also clearly distinguishable as below: 3.1.1 The assessing officer has accorded ample opportunity to the assessee to justify cash credits as per provisions of the section 68 of the Act in the instant case. 3.1.2 Out of the 24 entries, the replies were received in the case of 10 entries which was duly considered by the assessing officer. In remaining 14 entries, notice u/s 133(6) of the Act was issued twice to the parties (creditors). However no reply was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts related to the dispute is that during the assessment proceeding assessee has submitted the confirmation of loans accepted by the assessee. Based on that information ld. AO noted that the assessee has from 24 different parties accepted the loan and that loans have been squared up during the year under consideration. The bench noted that at page 8, 9 & 10 of the assessment order, the ld. AO has mentioned names of 24 cash creditors, to whom he has issued notices u/s. 133(6) of the Act for furnishing the details regarding the loan given by them to the assessee. The ld. AO thereafter noted that 10 cash creditors replies were received. However, there is no discussion about the remaining 14 creditors. Not only that which of the creditors which he considered as unexplained to the extent of Rs. 1,95,25,000/-. The ld. AO has already discussed and confirmed that the assessee has furnished confirmation and bank accounts in respect of all 24 parties, including persons, company and HUF. As is evident that the record that the amount of 14 creditors comes to Rs. 2,58,25,000/-, whereas ld. AO made the addition of Rs. 1,95,25,000/- without even mentioning the names of creditors and their res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as provided details on the record to prove the identity [PAN number and confirmation], genuineness [ bank statement and ITR ] and capacity [ ITR ] so the made u/s. 68 is not correct and is directed to be deleted. We get support of our view from the decision of the our Jurisdictional High Court in the case CIT Vs. Jaikumar Bakliwa [ 45 taxmann.com 203 (Rajasthan) ] where the court held that; 8. We have heard the arguments advanced by counsel for the appellant-revenue and also perused the impugned order as well as the orders passed by the lower authorities. 9. In our view as well, three things are required to be proved by recipient of money i.e. (1) identity of the creditor (2) capacity of the creditor to advance money and (3) genuineness of the transaction. From the facts emerging on the face of record, we notice that it is an admitted fact that all the above cash creditors (12 in number) are assessed to income tax and they provided a confirmation as well as their permanent account number. They have their own respective bank accounts which they have been operating and it is not the claim of the AO that the respondent-assessee was operating their bank accounts rather they have ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Gangwal as well as Mr. Akhilesh Kumar Ankur Jain (HUF) and the AO has drawn adverse inference finding some discrepancies in their respective cash books but as observed herein above, the doubt, if any, may be true but in so far as the respondent-assessee is concerned, that issue cannot be converted into an addition of income u/s 68 of the Act in the hands of the assessee and appropriate course, as observed herein above, was that the AO could have informed the AO, assessing the respective cash creditors for appropriate action in their case. 11. The Hon'ble Apex Court in the case of CIT v. Orissa Corpn. (P.) Ltd. [1986] 159 ITR 78/25 Taxman 80F (SC) held as under :- "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assesses. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of Income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isclosed source of the assessee himself. 14. The Calcutta High Court, In the case of Shankar Industries v. CIT [1978] 114 ITR 689 had observed that mere establishing identity of the creditor and nothing more is not sufficient and something more is to be proved by the assessee and in the aforesaid case, the assessee was unable to prove beyond identity and therefore, the Calcutta High Court upheld the findings of the Tribunal. However, in the present case, we notice that not only the identity of the creditor has been proved but from the facts which have been culled out, the assessee has been able to prove genuineness also. 15. This Court, in the case of Kanhailal Jangid v. Asstt. CIT [IT Appeal No. 85 of 2001, dated 2-1-2007] held that the burden does not go beyond to put the assessee under an obligation to further prove that where from the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee is not relevant for the purposes of rejecting the explanation furnished by the assessee and make additions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing such amount as the income of the assessee from undisclosed source but if there is no direct evidence in this regard, then the indirect or circumstantial evidence has to be conclusive in nature and should point to the assessee as the person from whom the money has actually flown to the hands of the creditor and then from the hands of the creditor to the hands of the creditor. 20. When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion. 21. Accordingly, in our view, the ITAT, after appreciation of evidence has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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