M/s. Capaxo Logistics Pvt. Ltd, Ahmedabad V. The ITO, ward-1(1)(3), Ahmedabad

CO 190/AHD/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4766 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Bogus Share capital; Source of fund; Tangible material; Borrowed satisfaction; Set aside
• Section: 131; 68; 148; 143(3); 251; 208

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ A’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1264/AHD/2019 With C.O.No.190/Ahd/2019 िनधाᭅरण वषᭅ/Asstt. Year: 2010-2011 I.T.O., Ward-1(1)(3), Ahmedabad. Vs. M/s. Capaxo Logistics Pvt. Ltd., 302, Third Floor, 3 rd Eye, C.G.Cross Road, Ambawadi, Ahmedabad. PAN: AAECA6482D (Applicant) (Respondent) Revenue by : Shri Vijaykumar Jaiswal, CIT. D.R Assessee by : Ms Nupur Shah, A.R सुनवाई कᳱ तारीख/Date of Hearing : 09/02/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 13/04/2022 आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: The captioned appeal and CO have been filed at the instance of the Revenue and the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-1, Ahmedabad, dated 21/05/2019 (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act 1961 (here-in-after referred to as "the Act"). The assessee has filed the Cross ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 2 Objection in the Revenue’s appeal bearing ITA no.1264/Ahd/2019 for the Assessment Year 2010-2011. 2. The 1 st interconnected issue raised by the revenue in ground No. 1 is that the learned CIT (A) erred in deleting the addition made by the AO for ₹12.50 crores, representing the share application money, treating the same as unexplained cash credit under section 68 of the Act. 3. The assessee in the year under consideration has shown share application money amounting to ₹12.50 crores from 3 different parties, the details of the same stand as under: Name of person Amount of share application money received Date of receipt Hansaben M Patel 5,00,00,000 10.11.2009 Rameshbhai S. Thakor 3,50,00,000 22.05.2009 & 25.05.2009 Vinod Sharma 4,00,00,000 12.08.2009 Total 12,50,00,000 3.1 The AO found that as per the report of DDIT(Inv.), Unit-1(3), Ahmedabad, all the 3 persons were non-filer of income tax returns which is also evident from the search carried out in ITD. 3.2 The assessee with respect to two parties namely Shri Rameshji Gobarji Thakor bearing PAN AESPT-3446-H and Shri Vinod Kumar J. Sharma bearing PAN ALLPS-0605-F has not furnished the complete address and therefore it was not possible to conduct the enquiry in order to find out the genuineness of the transactions. 3.3 The aforesaid parties have made investment in the company without having any written documents/correspondence/ confirmation and share application form. In such kind of huge transactions, the oral understanding between the parties as ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 3 claimed by the assessee is not tenable. As such no prudent investor make the investment of such magnitude in the company without proper documents and carrying out due diligence. It was also seen that the assessee has given a loan of ₹10 crores in the month of February 2009 to Shri Rameshji Gobarji Thakor and Shri Vinod Kumar J. Sharma which it has received back. Even, for this transaction the assessee has not made any documents in writing which implies that the loan was advanced without any due diligence. 3.4 The authorized share capital and subscribed capital on the balance sheet date was at ₹1 crores and Rs. 91,91,900/- only besides the convertible share warrants of ₹1 crores. Thus the scope for increasing the share capital was very limited. However, the assessee without increasing the authorized share capital has accepted the share application money to the tune of ₹12.50 crores which appears to be very abnormal. The contention of the assessee that the project for which the share application money was received was subject to certain contingencies and therefore the authorized capital was not increased, which is an expensive affair, is not tenable for the reason that the assessee failed to bring the details of any specific projects. Furthermore, the amount of money received by the assessee in the form of share application, was advanced as loan immediately to the group company namely JP Fincorp P Ltd. without charging any interest which evidences that there was no project under consideration as claimed by the assessee. 3.5 The assessee in its financial statements has shown losses as on 31 March 2009 and 31 March 2010 which indicates that there was no possibility for the assessee to issue the share at premium. Furthermore, no prudent investor will make investment in a company more than the capital employed by the promoters and that too without having any written documents. ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 4 3.6 The assessee was given the opportunity to produce the investors in order to justify the genuineness of the transactions but it has expressed its inability to produce the same. 3.7 The mere transactions carried out through the banking channel does not imply ipso facto as genuine transaction. Had this been the criteria, then anybody would deposit the cash in the bank account and would transfer the same to the beneficiary which, according to the assessee, would be termed as genuine transaction. But it is not so that any transaction carried out through the banking channel is a genuine transaction. 3.8 In addition to the above, the AO also noted that besides the fact that all the parties mention above were non-filer of income tax return, the summons were issued under section 131(1A) read with section 131 of the Act to all the parties but there was no compliance. Likewise, the inspector in his report could also not raise the whereabouts of these parties. Accordingly, the assessee failed to discharge the onus imposed upon it under the provisions of section 68 of the Act. 3.9 The above facts were also brought to the notice of the assessee and to this effect summon was also issued upon it but failed to make necessary compliance. 3.10 The AO also found that there were certain land transactions deals carried out by the JP Iscon group. As such the group has sold its own lands to certain parties including Smt Hansaben at the nominal value which were again re-acquired by the group from the same persons at the much higher value. The consideration paid by the group was received back by it through the involvement of various persons by layering the funds in different companies. Indeed, there were huge amount of capital gain in the hands of the other parties but none of them has offered to tax such capital gain. Accordingly, it was alleged by the AO that the group has adopted ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 5 the modus operandi to avoid the payment of tax by indulging in certain fictitious transactions of land deals. 3.11 On enquiry from the bank, it was found out that the KYC norms were not complied with by the parties as discussed above in the bank account. Furthermore, the group including the assessee was maintaining the bank account in same branch which after some became inoperative. 3.12 In view of the above, the AO treated the impugned amount of share application money of ₹ 12.5 crores as unexplained cash credit under the provisions of section 68 of the Act and added to the total income of the assessee. 4. Aggrieved assessee preferred an appeal to the learned CIT-A. 4.1 The assessee before the learned CIT(A) made detailed submissions on all the allegations framed by the AO during the assessment proceedings which are available on pages 23 to 47 of the order of the learned CIT-A. Without prejudice to the above submission, the assessee also submitted that it has furnished all the necessary details of the parties who have advanced the share application money to the assessee. It was also submitted that all the transactions were carried out through the banking channel. The assessee has also justified the source of funds available in the hands of the investors which was mainly the sale proceeds against the sale of properties/lands. In support of the sale transactions of the property the assessee has also filed the copies of the sale deeds before the learned CIT (A). The learned CIT (A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: 4.3. 1 have carefully considered the facts of the case, assessment order and submission of the appellant. The Assessing Officer has made the addition of share application money u/s. 68 of the I. T. Act, 1961 of Rs.5,00,00,000/- received from Ms. Hansaben M. Potel, Rs.3,50,00,000/-received from Shri Rameshbhai G. Thakor and Rs.4,00,00,000/- received from Shri Vinod j. Sharma. The Assessing Officer has noted that the appellant has furnished Name, PAN No. and Address of the investors, but the address of Shri Rameshbhai S. Thakor and Shri Vinodkumar J. Sharma are not complete. The Assessing Officer has also noted ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 6 that there is no significant profit / outstanding performance of the appellant company so as any prudent investor would invest such large sum. The Assessing Officer on the bdsis of report of DDIT (Inv.), Ahmedabad hds also observed that Ms. Hansaben M. Patel has only filed return for A. Y. 2009-10 and Shri Rameshbhai G. Thakor and Shri Vinodkumar J. Sharma had not filed their return of income. The Assessing Officer based on the above observations has concluded that the identity, creditworthiness and genuineness of the investors in respect of share application money has not been proved and made addition u/s. 68 of the I. T. Act, 1961 in the total income. 4.3.1. Appellant has submitted the rebuttal of observation made by Assessing Officer in the assessment order during course of the appellate proceedings. Appellant has contended that if has discharged complete onus as required u/s. 68 of the I. T. Act, 1961 in respect of share application money received during the year which was also returned back in the subsequent year on non allotment of share. The appellant has contended that it has submitted details of name, pan and address of all investors, copy of annual accounts of appellant company, bank statement, ledger account for F. Y. 2009-10 & 2010-11. Appellant has stated that it was a part of Iscon Group which is one of leading group in the real estate market of Gujarat and has a immense goodwill. Appellant submitted that the share applicants showed interest in providing the requisite share application money as the appellant company was coming up with proposal of public issue for proposed business project requiring huge investment, guaranting a sound return. The investor has made the investment as a share application money, in the above background. However, due to non feasibility, the project could not be undertaken and the amount received as application money was returned in subsequent year. The appellant has submitted that the share application money was received in F. Y. 2009- 10 and returned back in F. Y. 2010-11 and thereafter there was no further transaction with the above investors, it was not of possible to produce them as required by the AO. However, appellant has submitted all the details of investors including pan, name and address, copy of annual report, ledger account, bank statements. Appellant submitted that the Assessing Officer on Page 15 of assessment order has reproduced the letter of Indian Bank where bank account number and complete address of investors from bank records has been mentioned as under:- (1) Ms. Hansaben Manllal Po1e[ 10-C, Desai Park, Bans! Flat, Mangaldeep Apartment, Vejalpur, Ahrnedabad - 380051 (2] Shri Vinodbhai Jwalaprasad Sharma 1068, Vishnupur. Chandkheda, Gandhinagat -382424 (3) Shri fiamesh G. Thakor 354, Balajivas, Tintoda, Gandhlnogar, The appellant has explained the source of share application money of Ms. Hansaben M. Patel as sale of immovable property for Rs. 102.93 crores during the F. Y. 2008-09. Appellant submitted copy of sale agreement along with registered sale deed with photo and signature of Ms. Hansaben M. Patel and bank statement in which money was credited. As regard to share application money of Shri Rameshbhai Thakor of Rs.3,50,00,000/-, appellant submitted the source of fund as receipt from Kamal Gohil of Rs.2,80,00,000/- and from Ms. Hansaben M. Patel of Rs.70,00,000/-. The appellant has explained the source of fund of Shri Kamal Gohil as sale of immovable property on 21/02/2009 of Rs.8,44,69,500/-. The receipt and payments are through cheque and duly reflected in the bank account. As regard to share application money of Rs.4,00,00,000/- received from Shri Vinodkumar Sharma, the appellant has submitted the source of fund for the share application money as fund received from Ambe Trade Car Pvt. Ltd. The receipt and payment are evident from the bank statement of Shri Vinodkumar Sharma. Appellant has contended that mere non production of share applicant does not addition u/s. 68 as held by Honourable Delhi High Court in the case CIT v. Victor Electrodes Ltd. [2012] 20 taxmann.com 680/[2010] 329 ITR \ 271. Appellant has contended that share application money received has been returned back in the subsequent year, and therefore, as per the decision of jurisdictional! High Court in the case of CIT, Rajkot Vs. Aayachi Chandrashekhor Narsangji [2014] 42 taxmann.corn 251 (Gujarat), the ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 7 genuineness of the transaction cannot be doubted. The appellant has also relied upon decision of Hon'bie Supreme Court in the case Commissioner of Income Tax Vs. Lovely Exports Pvt. Ltd. in which the Hon'bie Court has held that prior to amendment to proviso to section 68 w.e.f. A. Y. 2013-14, no addition of share application money could be made in the case of company and any addition of share application money is to be made in the hands of share applicants. 4.4. The Assessing Officer has held that identity of share applicants could not be proved mainly for the reason that appellant has not submitted complete address in respect of Shri Vinodkumar Sharma and Shri Rameshbhai Thakor and appellant did not produce the share applicants. However, it is seen that appellant has given the pan, name and address of the share applicants. The bank details and complete address is also evident from the inquiry made from the bank by the Investigation Wing and reproduced by AO in the assessment order at Page No. 15 of the assessment order. The appellant has given reasons for non- production of share applicants as the share application money was returned to them in Financial Year 2010-11 and it is not possible to produce them after seven years. It has been held by Honourable Delhi High Court in the case of CIT v. Victor Electrodes Ltd. [2012] 20 taxmann.com 680/[2010] 329 ITR 271that mere non production of share applicant does not attract addition u/s. 68. I have called for copy of assessment orders passed by the respective Assessing Officers in the case of Ms. Hansaben Manilal Patel, Shri / Rameshbhai Thakor and Shri Vinodbhai Sharma where income has been assessed for the A. Y. 2010-11 making addition of the bank credit. In view of the above, as the appellant has submitted pan, address, bank statement of share applicants and the department has made the assessment of all the three share applicants, the Assessing Officers finding that identity was not established is contrary to facts. 4.5 As regard to capacity of the share applicants, the appellant has submitted copy of bank statements from which the investment in share application is made. Appellant has explained not only source but the source of the source of the share applicants. Ms. Hansaben Manila! Patel has sold land for Rs.102.9 crores in Financial Year 2008-09 and the same has been assessed by the Assessing Officer, ITO, Wd. 3(3)(2), Ahmedabad 1 vide his order dated 23/12/2016 in the hands of Ms. Hansaben M. Patel. In Assessment Year 2010-11 also, the Assessing Officer vide assessment order dated 20/09/2017 has made the addition of Rs.33,36,89,804/- of the credit in her bank account in Indian Bank, Navrangpura Branch, Ahmedabad in the assessment order. Therefore, capacity of Ms. Hansaben M. Patel is well established. Similarly, in the case of Shri Rameshbhai Thakor, the source of fund is explained to be receipt from Shri Kamal Gohil of Rs.2.8 crore and receipt of Rs.70,00,000/- from Ms. Hansaben Manilal Patel. The Assessing Officer, ITO, Wd. 3, Gandhinagar vide his order dated 29/12/2017 for Assessment Year 2010-11 has assessed the credit in bank account of Rs.27,42,50,000/- in the hands of Shri Rameshji G. Thakor. In the case of Shri Vinodkumar Sharma, the appellant has explained the source of shore application money of Rs.4,00,00,000/- from Arnbe Trade Corp. Pvt. Ltd. which was finally traced from the source of Ms. Hansaben Manilal Patel. The Assessing Officer of Shri Rarneshji G. Thakor i.e. ITO, Wd. 2[2)[5], Ahmedabad in the assessment order dated 20/11/2017 has made the addition of Rs.8,00,00,000/- of the bank credit in the hands of Shri Vinodbhai J. Sharma. In view of the above, the capacity of the share applicants are established. 4.6. As regard to genuineness of the transactions, the share application money have been received from banking channel and there is no cash element involved in any transaction. Appellant company has submitted the purpose for which share application money was received, which was returned back by cheque in the subsequent year as the project could not come up. As the transactions are through banking channel and share application money received has been returned back in the subsequent year, the genuineness is established. ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 8 The Honourable Gujarat High Court in the case of CIT, Surat - 1 Vs. Shree-1 Vs. Shree Mahavir Crimpers (2018) 95 Taxman.com 323 (Gujarat) relying upon the case of CIT Vs. Aayachi Chandrashekhar Narsangi (supra), where repayment of loan has been made in subsequent year, has held the transaction to be genuine. 4.7. In view of the above, as the appellant has established identity, creditworthiness and genuineness of the share application money, the addition of share application money u/s. 68 is not justified. Further, the Honourable Supreme Court in the case of Commissioner of Income Tax Vs. Lovely Exports Pvt. Ltd., prior to amendment to proviso to section 68 w.e.f. A. Y. 2013-14, has held that any addition of share application money is to be made in the hands of share applicants and not in the case of company. In the present case, the Assessing Officers of share applicants have made addition of all bank credits including the ones out of which share application money was made in the hands of share applicants. Therefore, no addition can be made in the hands of appellant company. The ground of appeal is accordingly allowed. 5. Being aggrieved by the order of the learned CIT(A), the revenue is in appeal before us. 6. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained therein which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 6.1 On the contrary the learned AR before us filed a paper book running from pages 1 to 652 and vehemently supported the order of the ld. CIT-A. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The provision of Section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders/investor/creditor, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under Section 68 of the Act by the Hon’ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd. reported in 208 ITR 465 wherein it was held as under: “It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. “ ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 9 7.1 Now first we proceed to understand the identity of the party. The identity of the party refers existence of such party which can be proven based on evidences. As such the identity of a party can be established by furnishing the name, address and PAN detail, bank details, ITR etc. 7.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers what has been asserted is true and authentic. A genuine transaction must be proved to be genuine in all respect not merely on a piece of a paper. The documentary evidences should not a mask to cover the actual transaction or designed in way to present the transaction as true but same is not. Genuineness of transaction can be proved by submitting confirmation of the party along details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient. As such the same should also be proven by circumstantial surrounding evidences as held by the Hon’ble supreme court in case of Durga Prasad More reported in 82 ITR 540 and in case of Smt. Sumati Dayal reported in 214 ITR 801. 7.3 The last stage comes to verify the creditworthiness of the parties. The term creditworthiness as per Black Law Dictionary refers as: "creditworthy, adj. (1924) (Of a borrower) financially sound enough that a lender will extend credit in the belief default is unlikely; fiscally healthy-creditworthiness.” 7.4 Similarly in The New Lexicon Webster's Dictionary, the word "creditworthy" has been defined as under:- "creditworthy, adj. of one who is a good risk as a borrower." 7.5 It the duty of the assessee to establish that investor party has capacity to make such investment and having requisite fund in its books of account and banks. The capacity to make investment can be established by the showing sufficient income, capital and reserve or other fund in the hands of investor. It required by the AO to find out the financial strength of the investor to make investment with ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 10 judicious approach and in accordance with material available on record but not in arbitrary and mechanical manner. 7.6 In the light of the above discussion, we proceed to adjudicate the issue in hand. With respect to the identity of the party, we find that the assessee has furnished the details such as copy of ledger account, bank statements, PAN. From the above, there remains no doubt that the identity of the investor parties is not in disputed, as it has been proved beyond doubt. 7.7 With respect to the genuineness of transaction, we note that the assessee has submitted that all the transaction are carried out through banking channel and in support has furnished the copy of own bank statement as well as bank statement of parties showing the transaction. The assessee also furnished sources fund in the hand of investors by stating that Smt. Hansaben Patel sold the property for Rs. 102.93 crore. Likewise, in the case of Shri Rameshbhia Thakor and Vinod sharma, the fund was received from Smt. Hansaben Patel and Shri Kamal Gohil and sources of fund in the hand of Shri Kamal Gohil was again from sale of land property. All these transaction was carried out through banking channel and in support the assessee have submitted banks statement and copy of sale deed of land properties. Therefore, in the given facts and circumstances, the genuineness of the transaction and the creditworthiness of the parties cannot be doubted. 7.8 Be that as it may be, the undisputed fact that the amount of share application money received by the assessee was refunded to the parties. It implies that the assessee was not the beneficiary of the amount received by it as alleged by the AO. Though the share application money has been repaid by the assessee in the subsequent year, but it is difficult to hold that the assessee was the ultimate beneficiary of the impugned amount. Thus, we can assume that the impugned transaction was the genuine transactions between the assessee and the parties. 7.9 It is also pertinent to note that the learned CIT (A) has given categorical finding that there was assessment framed in case of all three parties for the year ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 11 under consideration where additions were made. This fact cannot be brushed aside merely on the ground that the investor were not produced by the assessee during the assessment proceedings. It was the revenue which wanted to verify the investors. For this purpose, lot of powers were available with the revenue such as issuing notice under Section 131 of the Act for inviting the personal attendance of the parties. But the AO has not exercised such power in the given facts and circumstances. We also feel pertinent to refer the judgment of the Hon’ble Gujarat high court in case CIT vs. Ayachi Chandrashekhar Narsangji reported in 42 taxmann.com 251 where it was held as under: It is required to note that as such an amount of Rs. 1,00,00,000 vide cheque No. 102110 and an amount of Rs. 60 lakhs vide cheque No. 102111 was given to the assessee and out of the total loan of Rs. 1.60 crores, Rs. 15 lakhs vide cheque no. 196107 was repaid and therefore, an amount of Rs. 1,45,00,000 remained outstanding to be paid to IA. It has also come on record that the said loan amount has been repaid by the assessee to 'IA' in the immediately next year and the Department had accepted the repayment of loan without probing into it. In the aforesaid facts and circumstances of the case, when the Tribunal has held that the matter is not required to be remanded as no other view would be possible, there was no reason to interfere with the impugned order passed by the Tribunal. [Para 6] 7.10 Before we conclude, we are conscious about the fact that the provisions of Section 68 of the Act are deeming provisions which implies that there are certain transactions which are not the income of the assessee but these are deemed as income under the relevant provisions of the Act. However, the question arises for the adjudication whether only the credit entries should only be considered for the purpose of cash credit entries as provided under section 68 of the Act after ignoring the debit entries. To our mind the debit entries cannot be set aside for determining the income of the assessee. It is for the reason that both the credit and debit entries are arising from the accounts of same parties. 7.11 In view of the above, we are of the opinion that, though the transactions of the share application money received by the assessee received without proper share application form or written correspondence may raise doubt but in either of the case, once application money is returned back, which has been established based on the documentary evidence, the credit entries cannot be looked into in isolation after ignoring the debit entries despite the debit entries were carried out in the later ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 12 years. Thus, in the given facts and circumstances, we hold that there is no infirmity in the order of the Ld. CIT-A. Hence, the ground of appeal of the revenue is hereby dismissed. 8. The last issue raised by the revenue is that the learned CIT(A) erred in deleting the addition made by the AO for ₹ 10 crores, treating the same as unexplained cash credit under section 68 of the Act. 9. The assessee during the year received Rs. 5 crores each from Shri Rameshbhai Thakor and Shri Vinod Sahrma and claimed that the same was represent loan and advances given in earlier occasion. However the AO treated the same as unexplained cash credit under section 68 of the Act by observing as under: The assessee has received a sum of Rs.10 crores from Rameshbhai Thakor and Vinod Sharrna during the year. The assessee has not brought any confirmation / agreement to show that the receipts are in respect of loan given earlier. Further, even as per the assessee's own submission referred earlier, no due diligence was done in respect ot\ such persons. Thus, it is not known how the assessee's claim of loan having been given earlier and that too without interest can be believed. The facts are similar to the earlier issue in respect of share application receipts and in view of the above discussion, the sum of Rs.10 crores is added as unexplained receipt to the income of the assessee and brought to tax. 10. Aggrieved assessee preferred an appeal to the learned CIT-A, who deleted the addition made by the AO by observing as under: 5.3. I have carefully considered the facts of the case, assessment order and submission filed by the appellant. The Assessing Officer has made the addition of Rs.10 crore u/s. 68 of the I. T. Act, 1961 in respect of loan received back from Shri Rameshbhai Thakor and Shri Vinodbhai Sharma. The AO has made the addition on the ground that appellant has not brought any confirmation / agreement to show that receipt were in respect of loan given earlier. The Assessing Officer has also doubted the due diligence from the above two persons as in the preceding ground on the addition of share application money from them. Appellant on the other hand has submitted the copy of balance sheet of company as on 31/03/2009 which clearly shows the debit balance of Rs.5,00,00,000/- each in the name of Shri Rameshbhai Thakor and Shri Vinodbhai Sharma. Appellant has also submitted copy of ledger account of Shri RameshbhaiThakor and Shri Vinod Sharma for the period 01/04/2008 to 31/03/2009 asper which loan of Rs.5,00,00,000/- each was made by the appellantcompany on 28/02/2009 vide cheque No.816511 to Shri RameshbhaiThakor and cheque No.816512 to Shri Vinod Sharma respectively. In view of the above, the fact that the appellant has advanced Rs.10,00,00,000/- to the above parties is evident from books of account itself. The appellant in order to establish identity, creditworthiness and genuineness has submitted pan, name and address of the above parties. Appellant has submitted copy of bank account from which repayment was made. Appellant has explained ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 13 even source of fund from which repayment has been made. It is also seen that the ITO, Wd. 3, Gandhinagar vide assessment order dated 29/12/2017 for Assessment Year 2010-11 has made the addition of the credit in bank account of Shri Rameshji G. Thakor of Rs.27,42,50,000/-. The ITO, Wd. 2(2) (5), Ahmedabad in the assessment order dated 20/11/2017 has made the addition of Rs.8,00,00,000/- of the bank credit in the hands of Shri Vinodbhai J. Sharma. It has already been held in the preceding ground that identity and creditworthiness of the above persons were proved by the appellant. As regard to genuineness, the Honourable Gujarat High Court in the case of CIT, Surat - 1 Vs. Shree Mahavir Crimpers [2018] 95 Taxman.com 323 (Gujarat) relying upon decision in the case of CIT Vs. Aayach Chandrashekhar Narsangi (supra), where repayment of loan has been made in subsequent year, has held the transaction to be genuine. In the present case, it is not the loan received during the year, but the payment of loan received back from Shri Rameshbhai Thakor and Shri Vinodbha Sharma of the loan given in the preceding year. Therefore, addition u/s. 68 of the I.T Act, 1961 of loan received back is uncalled for and unjustified. In view of the above, the addition made by the A.O is deleted. The ground of appeal is accordingly allowed. 11. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 12. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained therein which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 13. On the contrary the learned AR before us vehemently supported the order of the ld. CIT-A. 14. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly the assessee has received amount of loan and advances for Rs. 5 crore each from Shri Rameshbhai Thakor and Shri Vinod Sharma which was treated as unexplained cash credit under section 68 of the Act by the AO which was deleted by the learned CIT(A). 14.1 At the outset we note that assessee also received share application money for Rs. 3.5 core and 4 crores from each of the party namely, Shri Rameshbhai Thakore and Shri Vinod Sharma which was also treated as unexplained cash credit ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 14 under section 68 of the Act by the AO on account of lack of proof of identity of party, genuineness of transaction and creditworthiness of the parties. However while dealing with the issue of share application money in the preceding paragraph of this order, we have held that identity of parties, genuineness of transaction and creditworthiness have been established by the assessee. Therefore, the only issue remains whether assessee has given advances to these parties on earlier occasion which has been received back in the year under consideration. In this regard we note that the assessee has submitted ledger copies of both parties for the F.Y. 2008- 09 and 2009-10 which is available on pages 249 to 254 of paper book. On perusal of the same, we find that the assessee as on 28-02-2009 has provided advances to both the parties through cheque which has been received back in the year under consideration through banking channel. The assessee has also submitted bank book and bank statement showing the transaction which is available on paged 245 to 248 and 251 to 252 of paper book. 14.2 In view of the above, there remains no ambiguity that amount of Rs. 5 crore each received from Shri Ramesh Thakor and Shri Vinod Sharma represent repayment of advances given by the assessee in the month of February 2009. Therefore the provision of section 68 will not be applicable on this transaction. Hence the ground of appeal of the Revenue is hereby dismissed. 14.3 In the result appeal of the Revenue is dismissed. Coming to the CO. No. 190/AHD/2019, raised by the assessee 15. The assessee has raised the following grounds of objection: All the grounds in this Cross Objections are mutually exclusive and without prejudice to each other:- 1. The Ld. CIT (A) has erred in law and on facts in confirming the action of the Ld. AO in issuing the notice u/s. 148 of the Act dated 24.03.2017 in the case of the Respondent Company. The issue of notice u/s. 148 of the I.T. Act , 1961 in the case of Respondent Company by the Ld. AO is wrong and bad in law as much as for initiating proceedings u/s. 147, the AO is wholly and merely relied upon the information received from DDIT Inv. Unit- 1(3), Ahmedabad. ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 15 2. The Respondent humbly submits that in absence of any tangible material brought on record for recording of the reasons for reopening of the case, the notice issued u/s.148 of the Act for reopening of the case is unjustified and bad in law and the reassessment framed by the AO u/s.143(3) r.w.s.147 of the Act merely borrowed satisfaction is unjustified and bad in law in view of the various judicial pronouncements relied upon by the Respondent. 3. The Ld. CIT(A) has correctly on facts and under the law after considering the details and evidences placed on record by the Respondent as well as settled legal position held that in Para 4.4 of the appellate order that " it is seen that appellant has given the PAN, Name and Address of the share applicants. The bank details and complete address is also evident from the inquiry made from the bank by the Investigation Wing and reproduced by AO in the assessment order at page no. 15. The appellant has given reasons for non-production of share applicants as the share application money was returned to them in the F.Y.2010-11 and it is not possible to produce them after seven years. Thus, by any standard applied, the appellant has definitely discharged the onus on it for the purpose of Section 68 of the Act". Further the share application money have been received from banking channel and there is no cash element involved in any transaction. The respondent company has submitted the purpose for which share application money was received, which was returned back by cheque in subsequent year as the project could not come up. Hence the Respondent company has discharged its onus by providing not only the source, but even source of source of funds received as share application money. Hence no addition can be done even on this ground. 4. The Ld. CIT(A) has correctly held in Para 4.7 of the appellate order that the appellant has established identity, creditworthiness and genuineness of the share application money, the addition of share application money u/s.68 is not justified. Further, the Hon’ble Supreme Court in the case of CIT vs. Lovely Exports Pvt. Ltd., prior to amendment to proviso to section 68 w.e.f. AY.2013-14, has held that any addition of share application money is to be made in the hands of share applicants and not in the case of company. In the present case, the AO of share applicants have made addition of all bank credits including the ones out of which share application money was made in the hands of share applicants. Therefore, no addition can be made in the hands of appellant company" and the Ld. C1T(A) has rightly deleted the addition made by the AO under section 68 of the I.T. Act, 1961 of Rs.12,50,00,000/-. 5. The Ld. CIT(A) has correctly held that " the appellant has advanced RslO,00,00,000/- to Shri Rameshbhai Thakor and Shri Vinodbhai Sharma of Rs.5,00,00,000/- each. The appellant in order to establish identity, creditworthiness and genuineness has submitted PAN name and Address of the above parties. Appellant has submitted copy of bank account from which repayment was made. Appellant has explained even source of fund from which repayment has been made. In the present case it is not the loan received during the year, but the payment of loan received back from Shri Rameshbhai Thakor and Shri Vinodbhai Sharma of the loan given in the preceding year. Therefore, addition u/s.68 of the I.T.Act, 1961 of loan received back is uncalled for and unjustified" and the Ld. CIT(A) following the judicial pronouncement of the Hon"ble Gujarat High Court in the case of Ayachi Chandrashekhar Narsamgji (2014) 42 taxmann.com 251 has rightly deleted the addition made by the AO under section 68 of the I.T. Act, 1961 of Rs.10,00,00,000/-. 6. The Respondent craves right to add, amend, alter, modify, substitute, delete or modify all or any of the above grounds of cross objection. ITA no.1264/AHD/2019 With C.O.No.190/Ahd/2019 Asstt. Year 2010-11 16 16. The assessee in ground Nos. 1 and 2 of its objection challenged the validity of the notice issued under section 148 and assessment framed under section 143(3) r.w.s. 147 of the Act. 16.1 At the outset we note that the issue raised by the Revenue on merit in its appeal bearing ITA No. 1264/AHD/2019 has been dismissed by us. The impugned CO is arising against the appeal filed by the revenue wherein the validity of the assessment framed under section 143 3 read with section 147 of the Act was challenged. As the revenue is appeal has been dismissed on merit, meaning thereby the assessee succeeds in revenue’s appeal, we we are not inclined to give any finding on the technical issue raised by the assessee. Accordingly, we dismiss the ground numbers 1 and 2 of the CO filed by the assessee. 16.2 With respect to other issues raised by the assessee in the CO, at the outset we note that the assessee in remaining grounds of the CO filed by it has supported the order of the Ld. CIT-A. Accordingly, we hold that no separate adjudication is required for the CO filed by the assessee. Hence, we dismiss the same as Infructuous. 17. In the result, the CO filed by the assessee is dismissed. 18. In the result the appeal filed by the Revenue is dismissed whereas the C.O. filed by the Assessee is also dismissed. Order pronounced in the Court on 13/04/2022 at Ahmedabad. Sd/- Sd/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 13/04/2022 Manish