M/s. Suntex Creation Pvt.Ltd., Surat V. The ACIT.,Circle-4, Surat

CO 288/AHD/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7563 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 15-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CO NO AHD IN ITA NO A
• Keywords: Unexplained cash credit; Income from undisclosed sources; Source of fund; Reason to believe
• Section: 131; 68

Judgement Text

ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 1 IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH, AHM EDABAD (BEFORE SHRI MUKUL KR.SHRAWAT JM & SHRI ANIL CHATUR VEDI A.M.) I.T.A. NO.2434 /A HD/2010. (BY REVENUE) C.O.NO.288/AHD/2010 IN ITA NO.2434/A/10)(BY ASSESSEE) (ASSESSMENT YEAR: 2007-08 ) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, ROOM NO. 223, AAYAKAR BHAVAN, MAJURA GATE,SURAT. (APPELLANT) VS. M/S.SUNTEX CREATION PVT. LTD., 1 ST FLOOR, ABOVE DHARTI VIDEO, 78,VASTA DEVDI ROAD, KATARGAM, SURAT. (RESPONDENT) PAN: AAICS9285N APPELLANT BY : MR. S.S. JHA, SR. D.R. RESPONDENT BY : MR. MEHUL R.SHAH ( )/ ORDER DATE OF HEARING : 25-7-2012 DATE OF PRONOUNCEMENT : 7-9-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF LD. CIT (A)-IV, SURAT DATED 26-5-2010 FOR THE ASSESSMENT YEAR 2007-08 WHE REAS THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE SAME ORDER WH ICH IS UNDER APPEAL. 2. REVENUE IN ITS APPEAL RAISED FOLLOWING GROUNDS O F APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A),SURAT HAS ERRED IN DELETING THE ADD ITION OF ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 2 RS.18,07,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE I.T. ACT. 2. THE LD. CIT (A) HAS ERRED IN CONFIRMING ADDITION OF RS.2,99,950/- MADE OUT OF RS.38,49,950/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 3. GROUND NO.3 AND 4 ARE OF GENERAL IN NATURE AND H ENCE NOT ADJUDICATED. 4. SINCE GROUND NO.1 & 2 ARE INTER-CONNECTED THEY A RE DISPOSED OF TOGETHER FOR THE SAKE OF CONVENIENCE. 5. ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF EMBROIDERY WORK ON GREY CLOTH ON JOB WORK BASIS. A SSESSEE FILED ITS RETURN OF INCOME ON 13-11-2007 DECLARING TOTAL INCOME OF R S. NIL. THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS THE A.O. OBSERVED THAT ASSESSEE HAD DURING THE YEAR ISS UED SHARES OF RS.18,07,000/-AND HAD TAKEN UNSECURED LOAN OF RS.38 ,49,950/-. THE ASSESSEE WAS DIRECTED TO SUBMIT CONFIRMATIONS FROM THE SHARE APPLICANTS AND THE LENDERS. TO VERIFY THE GENUINENESS, SUMMONS WERE ISSUED TO ALL THE PERSONS U/S. 131 FOR PERSONAL ATTENDANCE. THEY WERE ASKED TO PRODUCE THE BANK PASS BOOKS ALONG WITH THE DETAILS OF TRANS ACTIONS ENTERED WITH THE ASSESSEE. THE A.O. RECORDED THE STATEMENTS OF THE P ERSONS WHO ATTENDED IN RESPONSE TO THE SUMMONS. BASED ON THEIR EXAMINAT ION THE A.O. ANALYSED THE FACTS AND OBSERVED AS UNDER: 3.6. FROM THE ABOVE ANALYSIS FOLLOWING OBSERVATIO NS ARE MADE: ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 3 I) ALL THE PERSONS HAVE ISSUED A CHEQUE/DREW D.D. I N FAVOUR OF THE ASSESSEE ON THE SAME DAY OR AFTER ONE/TWO DAYS OF D EPOSITING THE CASH IN THEIR BANK ACCOUNT. II) IN MANY CASES, WHERE UNSECURED LOANS HAVE BEEN TAKEN, THE ASSESSEE HAS FAILED TO GIVE THE PROOF OF IDENTITY. III) ALL THE PERSONS WHO HAVE APPEARED BEFORE THE U NDERSIGNED FOR RECORDING THE STATEMENT UNDER SECTION131 OF THE ACT FOUND TO HAVE BEEN BRIEFED BY THE ASSESSEE. IV) THE REPLIES FROM PRAFULLABEN VAMJA, RAJNIKANT K ANERIA AND LALJIBHAI KANERIA HAVE BEEN RECEIVED ON THE SAME D AY I.E. 16- 12-2009. THE CONTENTS OF ALL THREE LETTERS ARE SAME AND THE ENVELOPES IN WHICH THE LETTERS HAVE BEEN SENT BEARS THE SAME HANDWRITING. THEREFORE, I HAVE A REASON TO BELIEVE THAT THESE REPLIES HAVE BEEN PREPARED AND SENT WITH THE GUIDAN CE OF THE ASSESSEE. V) IN MANY CASES THE SIGNATURES ON THE CONFIRMATION S FILED BY THE ASSESSEE AND SIGNATURES ON THE CORRESPONDENCE/STATE MENT OF THE LENDERS DOES NOT MATCH. VI) THE ASSESSEE HAS NOT BEEN ABLE TO SATISFY ALL T HE THREE CONDITIONS IN RESPECT OF ALL THE PERSONS FROM WHOM UNSECURED LOANS HAVE BEEN TAKEN OR TO WHOM THE SHARES HAVE BE EN ALLOTTED. VII) THE PERSONS WHO HAVE CLAIMED TO HAVE DEPOSITED THE CASH OUT OF AGRICULTURAL INCOME DO NOT HAVE SUFFICIENT AGRIC ULTURAL INCOME TO COVER UP THE HUGE CASH DEPOSITS. 6. IN VIEW OF THE ABOVE OBSERVATIONS THE A.O. MADE ADDITION U/S.68 OF RS.56,56,950/- FOR UNSECURED LOANS AND RS.18,07,000 /- FOR SHARE CAPITAL. AGGRIEVED BY THE ACTION OF A.O., THE ASSESSEE CARRI ED THE MATTER BEFORE CIT (A). ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 4 7. BASED ON THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE CIT (A) AND AFTER CONSIDERING THE REMAND REPORT RECEIVED FROM A .O., CIT (A) DELETED THE ADDITION MADE ON ACCOUNT OF SHARE APPLICATION OF RS .18,07,000/- BY HOLDING AS UNDER: I HAVE CAREFULLY CONSIDERED THE REASONS GIVEN BY ASSESSING OFFICER AND ALSO THE SUBMISSIONS OF APPELLANT. AFTE R CAREFULLY ANALYZING THE FACTS OF THE CASE, IT IS SEEN THAT APPELLANT HA S FILED VARIOUS DETAILS OF ALL THE PARTIES TO WHOM SHARES HAVE BEEN ISSUED AND THE SAME CLEARLY ESTABLISHES THE IDENTITY OF PARTIES. IT IS FURTHER SEEN THAT OUT OF 6 SHARE APPLICANTS, 5 ARE ASSESSED TO TAX AND EVEN IN RESPECT OF ONE SHARE APPLICANT VIZ. KAILASHKUMAR VELJIBHAI, WHO IS NOT ASSESSED TO TAX, IT IS SEEN THAT ASSESSEE HAS FILED COPY OF PAN CARD ALONG WITH OTHER DETAILS VIZ. 7/12, VOTERS I.D. CARD ETC. IT I S ALSO SEEN THAT A.O. RECORDED STATEMENT OF 5 PARTIES AND ALL OF THEM CON FIRMED TO HAVE MADE INVESTMENT. HENCE, CONSIDERING THE TOTALITY OF FACTS OF THE CASE, I AM OF THE CONSIDERED OPINION THAT ISSUE UNDER CON SIDERATION STANDS SQUARELY COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. LOVELY EXPORT PVT. LTD., CITED SUPR A. I AGREE WITH THE CONTENTION OF APPELLANT THAT DISTINCTION DRAWN BY A .O. ON THE GROUND THAT IN THAT CASE, ONLY SHARE APPLICATION MONEY WAS RECEIVED WHEREAS IN THE INSTANT CASE SHARES HAVE ACTUALLY BEEN ISSUE D, IS NOT VALID AS SHARES ARE ULTIMATELY ISSUED TO THE PERSONS FROM WH OM SHARE APPLICATION MONEY IS RECEIVED AND FURTHER, ASSESSEE HAS CLEARLY ESTABLISHED THE IDENTITY OF ALL THE PARTIES. THE R ATIO OF VARIOUS OTHER JUDICIAL PRONOUNCEMENTS CITED ABOVE IS ALSO APPLICA BLE TO THE FACTS OF INSTANT CASE. FURTHER, THERE IS NO COGENT EVIDENCE ON RECORD WHICH INDICATES THAT AMOUNT RECEIVED AS SHARE CAPITAL REP RESENTS UNACCOUNTED INCOME OF ASSESSEE. IN VIEW OF THE ABOV E, THE ADDITION OF RS.18,07,000/- IS DIRECTED TO BE DELETED IN THE APPELLANT COMPANYS HANDS AND THE A.O. IS DIRECTED TO INFORM THE A. OS OF THESE PARTIES TO ASCERTAIN THE GENUINENESS OF THE NATURE AND QUANTUM OF CLAIMED INCOME AND SHARE APPLICATION AMOUNTS IN RESPECTIVE HANDS. 8. WITH RESPECT TO THE ADDITION MADE U/S.68 TO UNSE CURED LOANS, CIT (A) GAVE PARTIAL RELIEF BY HOLDING AS UNDER: ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 5 I HAVE CAREFULLY CONSIDERED THE REASONS GIVEN BY A.O. AND ALSO THE SUBMISSIONS OF APPELLANT. AFTER CAREFULLY ANAL YZING THE FACTS OF THE CASE, IT IS SEEN THAT CONTENTION OF ASSESSEE RE LATING TO MISTAKE IN FIGURE OF LOAN IN CASE OF SHRI LALJIBHAI N. VEKARIA IS FOUND TO BE CORRECT AND THUS, THE FIGURE OF TOTAL UNSECURED LOA NS RAISED DURING THE YEAR COMES TO RS.33,99,950/- AS AGAINST RS.38,49,95 0/- ADOPTED BY A.O. AND THUS, ADDITION TO THE EXTENT OF RS.4,50,00 0/- IS HEREBY DELETED. IT IS FURTHER SEEN THAT ASSESSEE RECEIVED ABOVE LOANS FROM 21 DEPOSITORS AND OUT OF THEM, 9 DEPOSITORS ARE ASSESS ED TO TAX. DETAILS RELATING TO THE NAME OF DEPOSITORS AND THE AMOUNT O F LOAN BORROWED FROM THE DEPOSITORS WHO ARE ASSESSED TO TAX ARE AS UNDER:- SR.NO. NAME OF PARTY. AMOUNT (RS.) 1. BHUPATBHAI J. VIPARA 2,00,000 2 CHANDRIKABEN VAMJA 50,000 3 JENTILAL DAHYABHAI PATEL 1,00,000 4 KAILASH TRADING CO. 5,00,000 5 KIRTIKUMAR M. HARANAIYA 1,00,000 6. PRAFULABEN M. VAMJA 1,00,000 7. PRIYESH J. GOJARIA 1,00,000` 8. RADHA TEXTILES 1,00,000 9. RAJNIKANT R. KANERIA 1,50,000 10. SURESHBHAI R. GOL 1,00,000 11 TULSI TEXTILES 1,00,000 12. JITUBHAI R. PATEL 1,00,000 TOTAL AMOUNT. 17,00,000 THUS, ASSESSEE HAS BORROWED TOTAL AMOUNT OF RS.17, 00,000/- FROM DEPOSITORS WHO ARE ASSESSED TO TAX AND THE BAL ANCE AMOUNT PERTAINS TO BORROWINGS WHO ARE NOT ASSESSED TO TAX. IN RESPECT OF ABOVE DEPOSITORS WHO ARE ASSESSED TO TAX, IT IS SEE N THAT ASSESSEE HAS FILED COMPLETE PARTICULARS RELATING TO THEM VIZ . I.T. ACKNOWLEDGEMENT, ACCOUNT CONFIRMATION, BANK STATEME NTS ALONG WITH ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 6 VARIOUS OTHER EVIDENCES IN THE FORM OF COMPUTATION OF INCOME, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. IT IS FU RTHER SEEN THAT ONE DEPOSITOR VIZ. SHRI BHUPATBHAI J. VIRPURA FROM WHOM UNSECURED LOAN OF RS.2 LACS HAS BEEN RECEIVED APPEARED BEFORE A.O. IN RESPONSE TO ISSUE OF SUMMONS AND HE CONFIRMED TO HAVE GIVEN LOA N TO ASSESSEE. HE ALSO EXPLAINED THE SOURCE FROM WHICH HE GAVE LOA N TO ASSESSEE. AS REGARDS OTHER DEPOSITORS WHO ARE ASSESSED TO TAX , IT IS A FACT THAT ASSESSEE HAS SUPPLIED COMPLETE DETAILS INCLUDING TH EIR INCOME PARTICULARS AND THEREFORE, IF THEY DO NOT TURN UP I N RESPONSE TO ISSUE OF SUMMONS U/S. 131, ADVERSE INFERENCE IN ASSESSEES C ASE CANNOT BE DRAWN ESPECIALLY WHEN THERE ARE NO MATERIALS ON REC ORD WHICH INDICATE THAT AMOUNT RECEIVED AS LOAN ACTUALLY REPR ESENTS UNACCOUNTED INCOME OF ASSESSEE. ONCE ASSESSEE FILED COMPLETE DETAILS INCLUDING INCOME TAX PARTICULARS OF THE DEP OSITORS, THE INITIAL BURDEN LIES UPON THE ASSESSEE IN ESTABLISHING THE G ENUINENESS OF LOAN TRANSACTIONS CLEARLY STANDS ESTABLISHED. I AM OF THE OPINION THAT THE DECISION OF HONBLE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF DY. CIT VS. ROHINI BUILDERS. (256 ITR 230)(GUJ.) IS DIRECTLY APPLICABLE TO THE FACTS OF THE CASE. HENCE, ASSESSEE HAS CLEA RLY DISCHARGED THE BURDEN CAST ON IT IN ESTABLISHING THE GENUINENESS O F LOANS AND IN VIEW OF ABOVE DECISION OF GUJARAT HIGH COURT, THE ADDITI ON OF RS.17,00,000/- IS NOT SUSTAINABLE AND HENCE, THE SA ME IS DIRECTED TO BE DELETED. AS REGARDS THE REMAINING 9 PARTIES WHO ARE NOT ASSE SSEE TO TAX, IT IS SEEN THAT ONE PARTY VIZ. SHRI JIGNESH R. VAMJA FROM WHOM LOAN OF RS.1,50,000/- IS RECEIVED BY ASSESSEE APPEA RED BEFORE A.O. AT THE TIME OF ASSESSMENT PROCEEDINGS AND SIX PARTI ES VIZ.BALWANT N. VEKARIYA AND PARESH H. MEHTA,DAMJIBHAI J. SAYJA, DI NESHBHAI L. GUNDARANI, LALJIBHAI N.VEKARIYA AND PARESH L. NAROD IYA FROM WHOM LOANS AGGREGATING TO RS.12,50,000/- HAS BEEN RECEIV ED APPEARED BEFORE A.O. DURING THE REMAND PROCEEDINGS IN RESPON SE TO ISSUE OF SUMMONS U/S.131 OF THE ACT. IT IS FURTHER SEEN THAT ALL THE PARTIES WHO APPEARED BEFORE A.O. HAVE CONFIRMED THE LOAN TRANSA CTIONS. IT IS SEEN THAT MAJORITY OF THEM ARE AGRICULTURISTS AND ASSESS EE HAS ALSO FILED FORMS NO.7/12 AS A PROOFS RELATING TO AGRICULTURAL LANDS. IT IS ALSO SEEN THAT SAID PARTIES DULY EXPLAINED THE SOURCE FROM WH ICH LOANS HAVE BEEN GIVEN BY THEM TO ASSESSEE. IT IS SEEN THAT A.O . HAS DRAWN ADVERSE INFERENCE MAINLY ON THE GROUND THAT THESE P ARTIES WERE ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 7 COOKED UP TO GIVE STATEMENT IN FAVOUR OF ASSESSEE. HOWEVER, IN SUPPORT OF SUCH CONTENTION NO COGENT EVIDENCE HAS B EEN BROUGHT ON RECORD. IT IS SEEN THAT A.O. HAS DRAWN SAID INFERE NCE ON THE GROUND THAT THERE ARE DIFFERENCES IN SIGNATURES AND THAT T HE PARTIES DO NOT HAVE ENOUGH CREDITWORTHINESS TO GIVE LOAN TO ASSESS EE. BUT IN MY VIEW AS ALL THE PARTIES HAVE DULY CONFIRMED THE LOA N TRANSACTIONS IN THEIR STATEMENT ON OATH RECORDED U/S. 131 OF THE AC T AND AS THE FUNDS IN QUESTION UNDOUBTEDLY CAME FROM THE BANK ACCOUNT OF DEPOSITORS AND COPES OF BANK ACCOUNT ARE ALREADY FILED, ADDITI ON CANNOT BE MADE ON THE GROUND OF DIFFERENCES IN SIGNATURE. IT IS ALSO SEEN ON PERUSAL OF THREE DEPOSITORS VIZ . SHRI BALWANT H. MEHTA, CHANDRAKANT H. MEHTA AND SHRI DAMJIBHAI L . SAYJA THAT THEY RECEIVED SUBSTANTIAL COMPENSATION FROM GOVERNM ENT ON ACCOUNT OF ACQUISITION OF LAND BELONGING TO THEM ON ACCOUNT OF DAM CONSTRUCTION. THEY FURTHER EXPLAINED IN THEIR STATE MENTS THAT THEY ARE ALSO EARNING AGRICULTURAL INCOME. THE OTHER TWO DEP OSITORS VIZ. SHRI DINESHBHAI L. GUNDARANI AND SHRI PARESH L. NARODIYA , IT IS SEEN THAT SAID PARTIES EXPLAINED IN THEIR STATEMENTS THAT THE Y ARE DOING DIAMOND POLISHING WORK AND APART FROM THAT THEY ALSO EARN A GRICULTURAL INCOME. AS REGARDS THE OTHER DEPOSITOR VIZ. SHRI LALJIBHAI N. VEKARIYA, IT IS SEEN THAT DEPOSITOR MENTIONED IN HIS STATEMENT THAT HE IS GETTING MONTHLY PENSION OF RS.5,000/- TO RS.6,000/- APPROXI MATELY. IT IS FURTHER SEEN THAT DEPOSITOR IS 70 YEARS OLD AND AS HE WAS TEACHER IN A PRIMARY SCHOOL AND HIS CREDITWORTHINESS FOR GIVING LOAN OF SMALL AMOUNT OF RS.50,000/- COULD NOT BE DOUBTED. IT IS T HUS, SEEN THAT ALL THE DEPOSITORS HAVE EXPLAINED THE SOURCE OF FUNDS A ND CONSIDERING THE SAME AND EVIDENCES ON RECORD, THEIR CREDITWORTH INESS CANNOT BE DOUBTED. EVEN OTHERWISE ALSO, IT IS SEEN THAT BURDE N CAST ON ASSESSEE STANDS CLEARLY DISCHARGED IN VIEW OF FILIN G OF VARIOUS EVIDENCES AND ADDITION CANNOT BE MADE IF SOURCE OF SOURCE IS NOT EXPLAINED. IN MY OPINION THE DECISION OF HONBLE PATNA HIGH CO URT IN THE ASSESSEE OF SAROGI CREDIT CORPORATION VS. CIT 103 I TR 344 (PAT) IS DIRECTLY APPLICABLE TO THE FACTS OF THE INSTANT CAS E. IN SAID CASE, IT HAS BEEN HELD THAT ONCE THE IDENTITY OF THIRD PARTY CRE DITOR IS ESTABLISHED BEFORE THE ITO AND THE CREDITORS HAVE PLEDGED THEIR OATH THAT THEY HAVE ADVANCED THE AMOUNTS IN QUESTION TO ASSESSEE, THE BURDEN ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 8 IMMEDIATELY SHIFTS ON TO THE DEPARTMENT TO SHOW AS TO WHY ASSESSEES CASE COULD NOT BE ACCEPTED AND AS TO WHY IT MUST BE HELD THAT THE ENTRY THOUGH PURPORTING TO BE IN THE NAME OF A THIRD PARTY, STILL REPRESENTED THE INCOME OF ASSESSEE FROM A SUPPRESSE D SOURCE. THE ABOVE DECISION OF PATNA HIGH COURT HAS ALSO BEEN CO NCURRED WITH BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. P RAGATI CO- OPERATIVE BANK LTD. 278 ITR 170 (GUJ.) .APART FROM ABOVE, THE DECISION OF MADHYA PRADESH HIGH COURT IN CASE OF CI T VS. METACHEM INDUSTRIES 245 ITR 160 (MP) RELIED UPON BY THE AS SESSEE IS ALSO APPLICABLE TO THE FACTS OF THE CASE. AS SUCH IN VIE W OF THE ABOVE DECISIONS INCLUDING THAT OF JURISDICTIONAL HIGH COU RT, I AM OF THE OPINION THAT ASSESSEE HAS CLEARLY DISCHARGED THE BU RDEN CAST ON IT U/S. 68 OF THE ACT. IT IS FURTHER SEEN THAT THERE ARE NO DIRECT OR INDIRECT EVIDENCES ON RECORD WHICH COULD LEAD TO THE CONCLUS ION THAT LOAN RECEIVED FROM VARIOUS DEPOSITORS REPRESENTS UNACCOU NTED INCOME OF ASSESSEE. IN ABSENCE OF ANY OTHER CONTRARY EVIDENCE ON RECORD, THE EXPLANATION OF DEPOSITORS RELATING TO THE SOURCE FR OM THEY GAVE LOAN TO ASSESSEE CANNOT BE DOUBTED. HENCE,. ADDITION OF RS.14,00,000/- IN RESPECT OF LOANS OBTAINED FROM SAID PARTIES CANNOT BE MADE U/S./ 68 OF THE ACT AND THE SAME IS DIRECTED TO BE DELETED. HOWEVER NOTHING STOPS THE A.O. TO INFORM THE ASSESSING AUTHORITIES HAVING GEOGRAPHICAL JURISDICTIONS OVER RESPECTIVE PARTIES TO ASCERTAIN THE TAXABILITY OF CLAIMED INCOME AND GENUINENESS OF SOU RCE THEREOF. AS A MATTER OF FACT THE A.O. IS DIRECTED TO DO SO BY SEN DING INTIMATIONS ACCORDINGLY IN ALL THE CASES OF CREDITORS MENTIONED IN PRECEDING PARAGRAPHS. HOWEVER, THE TWO PARTIES VIZ.SHRI ARVINDBHAI V. VEK ARIYA AND KAILASHBHAI D. KOTADIYA FROM WHOM LOANS OF RS.2,00 ,000/- AND RS.99,950/- HAVE BEEN RECEIVED DID NOT APPEAR BEFOR E A.O. ALTHOUGH SUMMONS U/S. 131 OF THE ACT WERE ISSUED BY A.O. IT IS SEEN THAT THESE TWO PARTIES ARE NOT ASSESSED TO TAX AND ALTHOUGH IT IS CONTENDED THAT SUMMONS HAVE BEEN DULY SERVED ON THEM WHICH ESTABLI SHES THE EXISTENCE OF PARTIES YET THE SAME DOES NOT FULLY DI SCHARGE THE BURDEN CAST ON ASSESSEE IN ESTABLISHING THE GENUINENESS OF SUCH LOANS. AS THESE PARTIES ARE NOT ASSESSED TO TAX, BURDEN IS ON ASSESSEE TO PROVE THE GENUINENESS OF LOAN AND AS THEY ARE NOT PRODUCE D BEFORE A.O., THE BURDEN CANNOT BE SAID TO BE SHIFTED ON TO A.O. HENCE, ADDITION OF ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 9 RS.2,99,950/- PERTAINING TO LOANS RECEIVED FROM SAI D TWO PARTIES IS HEREBY CONFIRMED. 9. AGGRIEVED BY THE ACTION OF CIT (A), THE REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US, THE LD. D.R. STRONGLY RELIED ON THE ORDER OF THE A.O. AND SUBMITTED THAT THE ORDER OF THE A.O. BE UPHELD. ON THE OTHER HAND THE LD. A.R. SUBMITTED THAT THE CIT (A) WAS RIGHT IN DE LETING THE ADDITION MADE ON ACCOUNT OF SHARE APPLICATION MONEY BECAUSE ALL T HE SHARE HOLDERS HAD APPEARED BEFORE THE A.O. AND HAD FILED VARIOUS EVID ENCE LIKE COPY OF PAN CARD, FORM 7/12 ETC. HE RELIED ON THE DECISION OF H ONBLE SUPREME COURT IN THE CASE OF LOVELY EXPORT PVT. LTD. (216 CTR-195)(S C). WITH RESPECT TO THE DELETION OF ADDITION MADE ON ACCOUNT OF UNSECURED L OAN, THE LD. A.R. SUBMITTED THAT OUT OF 21 DEPOSITORS 12 DEPOSITORS A RE ASSESSED TO TAX. IN RESPECT TO THE DEPOSITORS ASSESSED TO TAX THE ASSES SEE HAS FILED THEIR INCOME TAX RETURN ACKNOWLEDGEMENT, ACCOUNT STATEMEN T ETC. IN RESPECT OF THE REMAINING 9 DEPOSITORS, THEY HAD APPEARED BEFOR E THE A.O. DURING THE COURSE OF REMAND PROCEEDINGS, HAVE CONFIRMED THE LO AN TRANSACTIONS AND FURNISHED THE PROOF RELATING TO AGRICULTURAL LAND T O SUPPORT THEIR CAPACITY. THE ASSESSEE RELIED ON THE DECISION OF SAROGI CREDI T CORPORATION VS. CIT 103 ITR 344 (PAT.). HE THUS RELIED ON THE ORDER OF CIT (A) AND URGED THAT THE SAME BE UPHELD. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE FACTUAL MATRIX OF THE CASE IS THAT THE ASSESSEE HAD RECEIVED SHARE APPLICATION AMOUNTING TO RS.18,07,000/- AND U NSECURED LOANS OF RS.38,49,950/- DURING THE YEAR. THE ASSESSEE WAS AS KED TO PRODUCE THE LENDERS AND SUBMIT THE NECESSARY PROOF TO ESTABLISH THE IDENTITY, ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 10 CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . THE A.O. MADE ADDITION U/S. 68 FOR THE REASON THAT THE ASSESSEE C OULD NOT ESTABLISH THE CREDITWORTHINESS, IDENTITY AND GENUINENESS OF THE T RANSACTIONS. AFTER CONSIDERING THE SUBMISSIONS AND TAKING INTO CONSIDE RATION THE REMAND REPORT, THE ADDITION MADE BY THE A.O. WERE DELETED BY CIT (A). CIT (A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD E STABLISHED THE IDENTITY OF THE PARTIES AND THE LENDERS HAVE CONFIRMED THE GIVI NG OF LOAN AND MAKING THE INVESTMENTS IN THE ASSESSEE-COMPANY. HE HAS FUR THER GIVEN A FINDING THAT THE ISSUE OF SHARE APPLICATION MONEY IS FULLY COVERED BY THE DECISION OF APEX COURT IN THE CASE OF LOVELY EXPORTS (SUPRA). W ITH RESPECT TO THE LOAN CREDITORS ALSO, CIT (A) HAS GIVEN A FINDING THAT TH E ASSESSEE HAS BEEN IN A POSITION TO ESTABLISH THE IDENTITY, CREDITWORTHINES S AND GENUINENESS OF TRANSACTIONS EXCEPT IN 2 CASES WHERE THE AMOUNT INV OLVED WAS RS.2,99,950/-. THE REVENUE HAS NOT BROUGHT ANY MATE RIAL ON RECORD TO CONTRADICT THE FINDINGS OF CIT (A). IN VIEW OF THES E FACTS WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A). WE ACCORDINGL Y UPHOLD HIS ORDER. ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSED. 11. GROUND OF CROSS OBJECTION RAISED BY THE ASSESSE E IS WITH RESPECT TO THE ACTION OF CIT (A) IN CONFIRMING ADDITION OF RS .2,99,950/-. CIT (A) HAS GIVEN A FINDING THAT THE AMOUNT OF RS.2,99,950/- CO MPRISED OF LOAN OF RS.2 LACS FROM ARVINDBHAI VEKARIYA AND OF RS.99,950/- FR OM KAILASHBHAI KOTADIYA. BOTH THE LENDERS WERE SUMMONED U/S. 131 B UT DID NOT APPEAR BEFORE THE A.O. AND THEY ARE NOT ASSESSED TO INCOME TAX. THE ASSESSEE COULD NOT DISCHARGE ONUS CAST UPON HIM TO ESTABLISH THE GENUINENESS OF LOAN. THE ASSESSEE COULD NOT PROVE BEFORE US THE GE NUINENESS OF LOAN. IN ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 11 VIEW OF THESE FACTS WE FIND NO REASON TO INTERFERE TO THE ORDER OF CIT (A) ON THIS POINT. WE THEREFORE, CONFIRM HIS ORDER. IN THE RESULT, THE C.O. OF THE ASSESSEE IS DISMISSED. 12. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 7 - 9 - 2012. SD/- SD/- (MUKUL KUMAR SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-IV, SURAT. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO 2434 /AHD/2010 WITH C.O. NO.288/AH D/2010 A.YR.. 2007 -08 12 1.DATE OF DICTATION 9 - 8 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 21 / 8 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 5 - 9 -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 7 - 9 -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 7 - 9 -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 - 9 -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..