KUNDAN LAL SACHDEV, NEW DELHI V. ITO, WARD- 36(2), NEW DELHI

ITA 1589/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1428 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 06-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund
• Section: 133(6); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER I.T .A . NO. 1589 /DEL/201 8 ASSESSMENT YEAR: 20 13 - 14 SHRI KUNDAN LAL SACHDEV, TOWER 19-204, COMMON WEALTH GAMES VILLAGE, DELHI V S . ITO , WARD - 3 6 ( 2 ), NEW DELHI. TAN/PAN : ABNPS4378K (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI VINOD KUMAR BINDAL , CA AND MS. RINKY SHARMA, ADV. RESPONDENT BY: SHRI AMIT KUMAR JAIN , SR.D.R. DATE OF HEARING: 21 01 2 0 20 DATE OF PRONOUNCEMENT: 20 0 3 20 20 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 17.11.2017, PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-XII, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2013-14. IN THE PRESENT APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.2,27,00,000/- U/S 68 AND RS.2,27,000/- ON THE ALLEGED COMMISSION MIGHT HAVE PAID ON TAKING THE SAID LOAN. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL DERIVING INCOME FROM BUSINESS OF TRADING OF FRUITS AND INCOME I.T.A. NO.1589/DEL/2018 2 FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER OBSERVED THA T ASSESSEE HAS TAKEN AN INTEREST FREE UNSECURED LOAN AMOUNTING TO RS.2,27,00,000/- FROM M/S. SIDHESHWARI COMMOTRADE P VT. LTD. KOLKATA IN THE FINANCIAL YEAR 2012-13. IN ORDE R TO VERIFY THE GENUINENESS AND IDENTITY CREDITWORTHINESS OF TH E LOAN TRANSACTIONS THE NOTICE U/S. 133(6) WAS ISSUED TO T HE LENDER COMPANY TO PROVIDE NECESSARY DETAILS. HOWEVER, AS P ER THE ASSESSING OFFICER, THE SAID NOTICE WAS RECEIVED BAC K AS UNSERVED. WHEN ASSESSEE WAS CONFRONTED WITH THE THI S FACT, THE ASSESSEE VIDE LETTER DATED 28.03.2016 FILED A D ETAILED REPLY AND SUBMITTED THE CONFIRMATION OF ACCOUNT ALONG WIT H BANK STATEMENT, BALANCE SHEET AND THE OTHER DOCUMENTS OF M/S. SIDHESHWARI COMMOTRADE PVT. LTD. THE LD. ASSESSING OFFICER OBSERVED THAT IN THE RETURN OF INCOME THE SAID COMP ANY HAD DECLARED LOSS OF RS.44,89,038/- AND IT HAD RECEIVED HUGE SHARE PREMIUM OF RS.59,93,33,470/-. HE FURTHER EXAM INED THE WORTH OF THE LENDER COMPANY BY ADOPTING THE MET HOD OF EARNING PER SHARE AND OBSERVED THAT EPS OF THE LEND ER COMPANY WAS RS.0.39 IN THE FINANCIAL YEAR ENDING 31 ST MARCH, 2013. HE FURTHER OBSERVED THAT THE MAJOR SHARE HOLD ERS OF M/S. SIDHESHWARI COMMOTRADE WERE AS UNDER: NAME NO. OF SHARE SHARE HOLDING % TIRUPATI PLYWOOD PVT. LTD., HOUSE NO.1829, PLOT NO. 12 & 13, GALI NO.135, SHANTI NAGAR EXTN., TRI NAGAR, NEW DELHI 6000000 46.68 SUPER TRADEX PVT. LTD., HOUSE NO.1829, PLOT NO. 12 & 13, GALI NO.135, SHANTI NAGAR EXTN., TRI NAGAR, NEW DELHI. 6000000 46.68 I.T.A. NO.1589/DEL/2018 3 3. ASSESSING OFFICER ALSO DEPUTED HIS INCOME TAX IN SPECTOR TO MAKE INQUIRIES ON THE ADDRESS OF THESE TWO SHARE HOLDING COMPANIES, WHO REPORTED THAT NO SUCH ENTITY EXISTED AT THE ADDRESS MENTIONED AND THE SAID PREMISE WAS VACANT. ON THE BASIS OF INCOME TAX INSPECTORS REPORT, ASSESSING O FFICER CAME TO THE CONCLUSION THAT THESE TWO SHAREHOLDING COMPA NIES OF M/S. SIDHESHWARI COMMOTRADE PVT. LTD. ARE JUST PAPE R COMPANIES. THUS, HE HELD THAT; FIRSTLY , THE EXISTENCE OF THE LENDER COMPANY IS NOT PROVED BECAUSE NOTICE U/S. 13 3(6) COULD NOT BE SERVED; SECONDLY , THE CREDITWORTHINESS OF THE COMPANY IS NOT ESTABLISHED, BECAUSE IT HAS SHOWN LO SSES IN THE ASSESSMENT YEARS 2012-13 AND 2013-14; THIRDLY , THE PERUSAL OF THE BANK STATEMENT REVEALED THAT AS ON 0 1.03.2013 THERE WAS A MEAGER BALANCE OF RS.69,207/- AND RS.48 ,926/- AS ON 05.03.2013 AND HE FURTHER DEDUCED THAT ON THE SAME DATE THE COMPANY GETS DEPOSIT FROM OTHER PARTIES AN D SAME WAS TRANSFERRED TO THE ASSESSEE. HENCE, GENUINENESS OF THE TRANSACTION ALSO COULD NOT BE PROVED. LASTLY , LOANS TAKEN THROUGH BANKING CHANNEL IS NOT SUFFICIENT TO PROVE THE GENUINENESS OF THE TRANSACTION. THUS, IN THIS CASE, ALL THE THREE INGREDIENTS TO DISCHARGE THE BURDEN U/S.68 HA VE NOT BEEN FULFILLED. THE LD. ASSESSING OFFICER ALSO STRO NGLY RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN TH E CASE OF NR PORTFOLIO PVT. LTD. VS. CIT, ITA NO. 1019/0211 , ORDER DATED 22.11.2013 AND NOVA PROMOTERS & FINLEASE P. LTD. VS. CIT, IN ITA NO.342/0211, ORDER DATED 5.2.2012. ACCORDINGLY, HE MADE THE ADDITION OF RS.2,27,00,000 /- U/S. I.T.A. NO.1589/DEL/2018 4 68. THEREAFTER, HE MADE FURTHER ADDITION OF RS.2,27 ,000/- ON THE PRESUMPTION THAT ASSESSEE MIGHT HAVE PAID 1% COMMISSION FOR TAKING SUCH LOAN. 4. BEFORE THE LD. CIT (A), ASSESSEE GAVE PARA WISE COMMENT AND REBUTTAL ON THE OBSERVATION MADE BY THE ASSESSI NG OFFICER WHICH HAS BEEN DEALT AND INCORPORATED IN DETAIL IN THE IMPUGNED APPELLATE ORDER. ONE IMPORTANT FACT BROUGH T TO THE NOTICE AND ON RECORD OF THE LD. CIT (A) WAS THAT LE NDER COMPANY M/S. SIDHESHWARI COMMOTRADE PVT. LTD. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF HAS MADE DU E COMPLIANCE OF NOTICE U/S. 133(6) AND ALSO THROUGH E -MAIL DIRECTLY COMMUNICATED TO THE ASSESSING OFFICER AND ASSESSEE. ALONG WITH THE SAID LETTER, THE LENDER COMPANY HAS FILED THE DESIRED DETAILS WHICH INCLUDED BALANCE SHEET, BANK STATEMENT, PROFIT AND LOSS ACCOUNT, ETC. APART FROM THAT, IT WAS ALSO BROUGHT ON RECORD THAT THE LENDER COMPANY HAD NET WORTH OF MORE THAN RS.60 CRORES AND IT HAS TURNOVER /REVENUE FROM OPERATIONS WAS AT RS.95 CRORE WHICH WAS ENTIRE LY FROM TRADING, THEREFORE, IT CANNOT BE HELD THAT THE LEND ER COMPANY WAS MERELY A PAPER COMPANY. THIS FACT HAS BEEN COMP LETELY OVERLOOKED BY THE ASSESSING OFFICER AND HAS SIMPLY GONE BY THE RETURN OF INCOME WHICH CANNOT BE THE CRITERIA F OR JUDGING THE CREDITWORTHINESS OF THE LENDER COMPANY. THE MET HOD ADOPTED BY THE LD. ASSESSING OFFICER TO WORK OUT TH E VALUE OF THE SHARES AS PER THE INCOME IS FLAWED. ONE OF THE OBSERVATION OF THE LD. ASSESSING OFFICER THAT THE SAID COMPANY HAS RECEIVED HUGE SHARE PREMIUM IS NOT CORRECT, BECAUSE SHARE I.T.A. NO.1589/DEL/2018 5 PREMIUM HAD COME IN THE EARLIER YEARS WHICH IS EVID ENT FROM THE COPIES OF BALANCE SHEET ITSELF. THUS, THE ENTIR E PREMISE AND INFERENCE DRAWN BY THE LD. ASSESSING OFFICER IS NOT CORRECT. LASTLY, IT WAS SUBMITTED THAT THE INQUIRY CONDUCTED BY THE INCOME TAX INSPECTOR BEHIND THE BACK OF THE ASSESSEE ON THE SHAREHOLDERS OF THE COMPANY HAS NO RELEVANCE AT ALL, FOR THE REASON THAT FIRSTLY, CREDITWORTHINESS AND I DENTITY OF LENDER COMPANY IS TO BE SEEN; SECONDLY, ASSESSEE WA S NEVER CONFRONTED WITH THIS FACT; AND LASTLY, SHAREHOLDERS ARE DISTINGUISHED AND SEPARATE FROM THE COMPANY. 5. HOWEVER, THE LD. CIT (A) HAS CONFIRMED THE OBSER VATIONS AND THE FINDINGS OF THE ASSESSING OFFICER AND ALSO CITED CERTAIN DECISIONS TO DRAW THE ADVERSE INFERENCE, SI NCE NO NEW FINDING HAS BEEN GIVEN BY THE LD. CIT (A), THEREFOR E, SAME IS NOT DISCUSSED HEREWITH. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE, MR. VINO D KUMAR BINDAL SUBMITTED THAT BOTH THE AUTHORITIES HAVE FAI LED TO APPRECIATE THE CORRECT FACTS AND CIRCUMSTANCES OF T HE CASE. THE FACTS OF THE CASE WHICH IS EMERGES FROM THE REC ORD IS THAT, ASSESSEE HAD PURCHASED A FLAT IN AKSHARDHAM KHELGAO N FOR RS.4 CRORES FOR WHICH HE HAS TAKEN A LOAN FROM M/S. SIDHESHWARI COMMOTRADE PVT. LTD. OF RS.2,27,00,000/ -. THE LOAN WAS TAKEN BETWEEN 1 ST MARCH, 2013 TO 5 TH MARCH, 2013 AND PAYMENT FOR PURCHASE OF FLAT WAS MADE BETWEEN 2 7 TH FEBRUARY, 2013 TO 19 TH MARCH, 2013 FOR SUM OF RS.4 CRORE. AGREEMENT TO SELL WAS EXECUTED ON 19 TH MARCH, 2013. I.T.A. NO.1589/DEL/2018 6 THEREAFTER, THE ASSESSEE HAS SOLD HIS PROPERTY SITU ATED IN ROHINI FOR RS.2.40 CRORE ON 30 TH MAY, 2013 AND IMMEDIATELY WITHIN 2-3 MONTHS ASSESSEE HAS REFUNDED BACK THE LO AN TO M/S. SIDHESHWARI COMMOTRADE PVT. LTD. THE IMPORTANT DATES AND EVENTS IN THIS REGARD AS HIGHLIGHTED BY HIM WHI CH HAVE VITAL BEARING ON THE ISSUE INVOLVED ARE AS UNDER:- DATES EVENTS 01/03/2013 TO 05/03/2013 DATES OF AMOUNTS RECEIVED AS LOAN FROM SIDHESHWARI COMMOTRADE (P) LTD, KOLKATA RS. 2,27,00,000/- 27/02/2013 AND 19/03/2013 PAYMENTS OF RS 4 CRORES GIVEN FOR PURCHASE OF AKSHA RDHAM KHELGAON FLAT (RS. 1,50,00,000/- AND RS. 2,50,00,00 0/-) 19/03/2013 AGREEMENT TO SELL OF AK SHARDHAM FLAT EXECUTED BETWEEN MR RAM NIWAS BANSAL (SELLER) AND THE ASSESSEE (BUYER) 30/05/2013 SALE DEED OF ROHINI PROPERTY EXECUTED BETWEEN MR KU NDAN LAI SACHDEV (SELLER), THE ASSESSEE AND M/S ASHIANA REAL TECH (P) LTD (BUYER) 30/05/2013 AMOUNT OF RS 2.40 CRORES RECEIVED ON SALE OF THE AB OVE ROHINI PROPERTY 05/07/2013 TO 12/09/2013 LOAN OF RS 2,27,00,000/- REFUNDED OUT OF SALE PROCE EDS OF RS 2,40,00,000/- TO SIDHESHWARI COMMOTRADE (P) LTD 7. SINCE, THE LOAN WAS TAKEN FOR A VERY SHORT DURAT ION FOR PURCHASE OF FLAT AND SAME WAS REFUNDED WITHIN THE P ERIOD OF 5 MONTHS OUT OF SALE PROCEED OF PROPERTY, THEREFORE, THE ENTIRE TRANSACTION HAS TO BE VIEWED FROM THIS PROSPECTIVE ALSO. HERE, IN THIS CASE, LD. COUNSEL SUBMITTED IT IS NOT A CAS E OF ANY ACCOMMODATION ENTRY BY ANY ENTRY PROVIDER OR THERE IS NO I.T.A. NO.1589/DEL/2018 7 REPORT OR INQUIRY FROM INVESTIGATION WING WHERE ANY THING INCRIMINATING MATERIAL HAS BEEN FOUND AGAINST THE A SSESSEE OR THE LENDER COMPANY. THE ASSESSEE HAS TAKEN A LOAN F ROM A COMPANY WHICH HAS HUGE TURNOVER OF RS.95 CRORES AND HAD A NET WORTH OF MORE THAN RS.60 CRORES. THE ASSESSEE H AS DULY ADDUCED THE BANK STATEMENT OF THE LENDER COMPANY WH ICH CLEARLY SHOWS THAT THE COMPANY HAD HUGE FUNDS, OUT OF WHICH IT HAS GIVEN A LOAN; AND NOT ONLY THAT, THE LENDER COMPANY HAS DULY CONFIRMED THE TRANSACTION BY RESPONDING TO THE NOTICE U/S.133(6) WHICH HAS BEEN CONSPICUOUSLY NOT DISCUSS ED BY THE ASSESSING OFFICER. THE COPY OF SAID REPLY SENT BY THE LENDER COMPANY TO THE ASSESSING OFFICER DIRECTLY IN RESPONSE TO NOTICE U/S.133(6) HAS BEEN PLACED IN THE PAPER B OOK AT PAGE 61 ALONG WITH LEDGER ACCOUNT, BANK STATEMENT, COPY OF RETURN, BALANCE SHEET AND P & L ACCOUNT FOR YEAR EN DING 31 ST MARCH, 2013 AND YEAR ENDING 13 TH MARCH, 2014. THEREAFTER, NO ADVERSE MATERIAL HAS BEEN FOUND EITHER AGAINST T HE LENDER COMPANY OR ANY INQUIRY HAS BEEN DONE TO FIND OUT TH AT ASSESSEES TRANSACTION IS BOGUS. THROUGHOUT THE ASS ESSMENT PROCEEDINGS AND APPELLATE PROCEEDINGS, THE ASSESSEE HAS HIGHLIGHTED THE NET WORTH OF THE LENDER COMPANY ALO NG WITH LETTER DATED 22.03.2016 TO THE ASSESSING OFFICER WH EREIN THE LENDER COMPANY AS WELL ASSESSEE COMPANY HAS CONFIRM ED THE REPAYMENT OF THE LOAN. THIS FACT HAS NOT EVEN BEEN DISCUSSED IN THE ASSESSMENT ORDER. THUS, NOT ONLY THE GENUINE NESS OF THE TRANSACTION BUT ALSO THE IDENTITY AND CREDITWOR THINESS OF THE LENDER COMPANY STANDS ESTABLISHED. IN SUPPORT O F VARIOUS I.T.A. NO.1589/DEL/2018 8 CONTENTIONS, HE HAS RELIED UPON THE CATENA OF JUDGM ENT WHICH IS SEPARATE COMPILATION OF THE PAPER BOOK HAS BEEN FILED ARE AS UNDER:- HONBLE ITAT, NEW DELHI IN THE CASE OF ACIT VS PRAY AG POLYTECH (P) LTD 2019-TIOL-13 5 8-ITAT-DEL [DOD: 18/06/2019] HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PR CIT VS H K PUJARA BUILDERS 2019-TIOL-1197-HC-MUM-IT [DOD: 04/06/2019] HONBLE ITAT, NEW DELHI IN THE CASE OF ITO VS COMPU TER HOME INFORMATION PLUS (P) LTD IN ITA NO. 5680/D/2016 [DO D: 24/05/2019] HONBLE ITAT, AHMEDABAD IN THE CASE OF PARULBEN RAJ UBHAI TRIVEDI VS ITO 2019-TIOL-833-ITAT-AHM [DOD: 28/03/2019] HONBLE ITAT, MEERUT IN THE CASE OF DCIT VS SAMCO A UTO INDIA (P) LTD 2019-TIOL-515 -ITAT-MEERUT [DOD: 29/01/2019] HONBLE ITAT, KOLKATA IN THE CASE OF SRI VINAMRA DA GA VS DCIT 2018- TIOL-2446-ITAT-KOL [DOD: 16/11/2018] HONBLE ITAT, DELHI IN THE CASE OF VISHAL GUPTA HUF VS ITO 2018- TIOL-2445-ITAT-DEL [DOD: 13/11/2018] HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PR CIT VS SKYLARK BUILD 2018-TIOL-2323-HC-MUM-IT [DOD: 24/10/2018] HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT V S JALAN HARD COKE LTD [2018] 95 TAXMANN.COM 331 (SC) [DOD: 15/05/2018 ] HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS JALAN HARD COKE LTD [2018] 95 TAXMANN.COM 330 (RAJASTHAN) [DOD : 31/07/2017] HONBLE HIGH COURT OF BOMBAY IN THE CASE OF PR CIT VS VEEDHATA TOWER (P) LTD IN ITA NO. 819 OF 2015 [DOD: 17/04/20 18] HONBLE HIGH COURT OF JHARKHAND IN THE CASE OF PRAY AG TENDU LEAVES PROCESSING CO. VS CIT [2017] 88 TAXMANN.COM 23 (JHA RKHAND) [DOD: 12/10/2017] I.T.A. NO.1589/DEL/2018 9 HONBLE ITAT, MUMBAI IN THE CASE OF JAICO TAXTILES (P) LTD VS ITO 2016-TIOL-1881 -ITAT-MUM [DOD: 28/09/2016] HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS S HIV DHOOTI PEARLS AND INVESTMENT LTD 2016-TIOL-10-HC- DEL-IT [DOD: 21 /12/2015] HONBLE HIGH COURT OF GUJARAT IN THE CASE OF DCIT V S ROHINI BUILDERS [2002] 256 ITR 360 (GUJARAT) [DOD: 19/03/2001] 8. ON THE OTHER HAND, LD. DR REFERRING TO THE VARIO US OBSERVATION OF THE ASSESSING OFFICER AND LD. CIT(A) SUBMITTED THAT THE PRIMARY BURDEN ON THE ASSESSEE HAS NOT BEE N DISCHARGED BECAUSE, FIRSTLY , THE LENDER COMPANY DID NOT INITIALLY RESPONDED TO THE NOTICE U/S.133(6); SECONDLY , ON INQUIRY MADE ON THE SHAREHOLDERS OF THE LENDING COM PANY M/S. SIDHESHWARI COMMOTRADE PVT. LTD., IT WAS FOUND THAT THESE SHAREHOLDING COMPANIES DO NOT EXIST AT THE GI VEN ADDRESSES WHICH GOES TO SHOW THAT THESE WERE MERE A PAPER COMPANY; THIRDLY , BEFORE ISSUING THE CHEQUE, HUGE MONEY WAS CREDITED IN THE ACCOUNT OF THE LENDER COMPANY THROU GH BANKING CHANNEL, WHICH HAS NOT BEEN EXPLAINED; AND LASTLY , THE SAID COMPANY WAS HAVING LOSSES, THEREFORE, THE CREDITWORTHINESS DOES NOT STANDS ESTABLISHED. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE AND IN VIEW OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF NR PORTFOLIO AND NOVA PROMOTERS (SUPRA) ARE SQUARELY A PPLICABLE. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO P ERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS A S WELL AS MATERIAL REFERRED TO BEFORE US. ON GOING THROUGH TH E IMPUGNED ORDERS AS WELL AS DOCUMENTS AND EVIDENCES FILED I.T.A. NO.1589/DEL/2018 10 BEFORE THE ASSESSING OFFICER AND LD. CIT (A), IT IS SEEN THAT MOST OF THE FACTS AND ISSUES WHICH WERE TIME AND AG AIN BROUGHT TO THE NOTICE AND RECORD OF THE ASSESSING O FFICER HAVE NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER. HERE, I N THIS CASE, THE ASSESSEE HAD PURCHASED A FLAT FOR SUM OF RS.4 CRORES FOR WHICH IT HAS MADE PAYMENT ON 27 TH FEBRUARY, 2013 AND 19 TH MARCH, 2013. FOR PURCHASE OF THESE FLATS, ASSESSEE HAS TAKEN A LOAN FROM M/S. SIDHESHWARI COMMOTRADE PVT. LTD. FOR RS.2,27,00,000/- BETWEEN 1 ST MARCH, 2013 TO 5 TH MARCH, 2013. WITHIN THE FEW MONTHS OF TAKING OF THE LOAN, THE ASSESSEE HAS SOLD HIS PROPERTY ON 30 TH MAY, 2013, THE COPY OF SALE DEED HAS BEEN ENCLOSED IN THE PAPER BOOK WHICH HAS ALSO BEEN FILED BEFORE THE ASSESSING OFFICER AND LD. CIT (A) TO SHOW THAT THE SAME WAS SOLD AND IMMEDIATELY THEREAFTER T HE ASSESSEE HAS REPAID THE LOAN TO M/S. SIDHESHWARI COMMOTRADE PVT. LTD. THIS FACT HAS BEEN CONFIRMED B Y THE LENDER COMPANY AND IS ALSO EVIDENT FROM THE BANK ST ATEMENT OF THE LENDER COMPANY AS WELL AS THE ASSESSEE AND A LSO FROM THE COPY OF LEDGER ACCOUNT AND BALANCE SHEET. THE E NTIRE CASE OF THE REVENUE HINGES UPON THE PREMISE THAT; FIRSTLY , THE NOTICE U/S.133(6) SENT TO M/S. SIDHESHWARI PVT. LTD . RETURNED BACK UNSERVED, AND THEREFORE, THE IDENTITY OF THE S AID COMPANY COULD NOT BE ESTABLISHED; SECONDLY , INQUIRY WAS MADE BY THE ASSESSING OFFICER THROUGH INCOME TAX IN SPECTOR ON THE ADDRESSES OF THE SHAREHOLDER COMPANIES OF M/ S. SIDHESHWARI COMMOTRADE PVT. LTD. WHEREIN IT WAS REP ORTED THAT THESE SHAREHOLDING COMPANIES DID NOT EXIST AT THE GIVEN I.T.A. NO.1589/DEL/2018 11 ADDRESSES; AND LASTLY , THE CREDITWORTHINESS OF THE COMPANY WAS NOT PROVED BY THE FACT THAT IT HAS SHOWN RETURN ED LOSS AND THE EARNING OF THE COMPANY PER SHARE IS TOO NEG LIGIBLE. 10. FIRST OF ALL, ON THE RECORD, IT IS SEEN THAT ON 22 ND MARCH, 2016, M/S. SIDHESHWARI TRADE PVT. LTD. HAS RESPONDE D TO THE ASSESSING OFFICER WHEREIN IN RESPONSE TO NOTICE U/S 133(6) WHEREIN THEY HAVE STATED AS UNDER: TO, DATE: 22-3-2016 THE INCOME TAX OFFICER, WARD-36(2), ROOM NO.810, DR. S.P. MUKHERJEE, CIVIC CENTRE, JLN MARG, BLOCK-E-2, NEW DELHI-110002 SUBJECT: INFORMATION U/S. 133(6) OF INCOME TAX ACT, 1961, IN CASE OF SH. KUNDAN LAL SACHDEVA FOR AY 2013-14 RESPECTED SIR, SINCE WE HAVE ALREADY FILLED REPLY OF YOU NOTICE U/ S 133(6) VIDE SPEED POST TO THE OFFICE OF YOUR GOODSELF, ON REQUEST OF CAPTIONED PARTY WE ARE GIVING HEREWITH: PLEASE FIND ENCLOSED, 1. LEDGER ACCOUNT OF THE SH. KUNDAN LAL SACHDEVA I N OUR BOOKS OF ACCOUNTS FOR THE AY. 2013-14, NATURE OF AMOUNT GIVE N; AS LOAN & ADVANCES AS PARTY IS IN GOOD RELATION FOR SOME FUTU RE BUSINESS. 2. COPY OF INCOME TAX RETURN FOR THE AY. 2013-14, 3. NATURE OF BUSINESS: TRADING. 4. COPY OF BANK STATEMENT REFLECTING TRANSACTIONS. HOPE THE ABOVE REACH TO YOU IN SATISFACTION, THANKING YOU AND REGARDS YOURS FAITHFULLY, FOR SIDHESHWARI COMMOTRADE PVT. LTD. I.T.A. NO.1589/DEL/2018 12 11. ALONG WITH SAID LETTER, ALL THESE DOCUMENTS W ERE FILED. FROM THE PERUSAL OF THE BANK STATEMENT, IT IS SEEN THAT IT HAS A REGULAR FLOW OF FUNDS AND THERE ARE HUGE CREDITS AND DEBITS AND THE BALANCE SHEET REFLECTS THAT IT HAS A RESERV E SURPLUS OF RS.59.43 CRORE AND SHARE CAPITAL OF RS.1.29 CRORE A GGREGATING TO MORE THAN RS.60.71 CRORE. THE REVENUE FROM OPERA TIONS HAS BEEN REPORTED AT RS.95.6 CRORE AS IT IS A TRADI NG COMPANY. THUS, IT CANNOT BE HELD THAT THIS COMPANY IS MERELY A PAPER COMPANY AND DOES NOT HAVE NET WORTH. INCOME AND LOS S DECLARED IN THE RETURN OF INCOME CANNOT BE THE PARA METER FOR JUDGING THE CREDITWORTHINESS AS OVER ALL AVAILABILI TY OF FUNDS AND ITS UTILIZATION HAS TO BE SEEN. THE LD. ASSESSI NG OFFICER HAS TRIED TO DRAW ADVERSE INFERENCE BY OBSERVING TH AT IT HAS RECEIVED HUGE SHARE APPLICATION MONEY IN THIS YEAR WHEREAS THE MATTER OF FACT IS THAT SHARE APPLICATION MONEY WERE RECEIVED IN THE EARLIER YEARS AND NOT IN THIS YEAR. FURTHER, ANY ADVERSE INFERENCE REGARDING THE EXISTENCE OR NON EX ISTENCE OF SHAREHOLDER COMPANIES MAY NOT BE RELEVANT IF THE LE NDER COMPANY WAS HAVING SUBSTANTIAL REVENUE OPERATION AN D IS REGULARLY ASSESSED TO TAX AND NO ADVERSE INFERENCE EVER HAS BEEN DRAWN IN THE CASE OF THE LENDER COMPANY. HERE THERE IS NO ANY INQUIRY OR INFORMATION EITHER FROM THE INVES TIGATION WING OR THROUGH ANY OTHER SOURCES, THAT THIS COMPAN Y IS PAPER COMPANY OR WAS INDULGED IN SOME ACCOMMODATION ENTRY OR WAS CONTROLLED BY ANY ENTRY PROVIDER. HENC E IT CANNOT BE CASE OF ACCOMMODATION PROVIDING ENTITY ATLEAST N OTHING HAS BEEN BROUGHT ON RECORD. THE ONUS UPON THE ASSES SEE IS TO I.T.A. NO.1589/DEL/2018 13 PROVE THE NATURE OF SOURCE OF THE CREDIT U/S.68; AN D HERE THE NATURE HAS BEEN EXPLAINED THAT ASSESSEE HAS TAKEN A LOAN FOR PURCHASE OF PROPERTY WHICH HAS BEEN ACTUALLY PURCHA SED. THE ASSESSEE HAS PROVEN THE SOURCE OF THE LOAN HAS GIVE N CONFIRMATION OF THE LENDER, COPY OF ITS BANK STATEM ENT, COPY OF AUDITED BALANCE SHEET, PROFIT AND LOSS ACCOUNT, COP Y OF LEDGER ACCOUNT, ETC. IF THE NATURE OF CREDIT APPEARING IN THE BANK ACCOUNT OF THE LENDER HAS BEEN DOUBTED, THEN IT IS A LENDING COMPANY WHICH CAN EXPLAIN THE SOURCE. IN CASE THERE WAS ANY SERIOUS DOUBTS THEN ASSESSEE SHOULD HAVE BEEN CONFR ONTED TO PROVE THE SOURCE OF THE ENTRIES IN THE BANK ACCOUNT OF THE LENDER COMPANY WHICH HAS NOT BEEN DONE. THE FACTS A ND CIRCUMSTANCES CLEARLY POINT OUT THAT ASSESSEE HAS T AKEN A LOAN FOR PURCHASING A RESIDENTIAL HOUSE AND THEREAF TER WITHIN THE SPAN OF SIX MONTHS HE HAS SOLD HIS PROPERTY TO REPAY BACK THE LOAN. IF THESE FACTORS ARE TAKEN INTO CONSIDERA TION, THEN GENUINENESS OF THE LOAN CANNOT BE DOUBTED. WHEN THE FACTUM OF REPAYMENT OF LOAN IN THE NEXT FINANCIAL YEAR HAS NOT BEEN DOUBTED, NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING OFFICER NOR ANY COMMENT HAS BEEN GIVEN IN THE SUBSEQUENT ASSESSMENT YEAR NOR HAS ANY ADVERSE COMM ENT BEEN GIVEN IN THE IMPUGNED ASSESSMENT ORDER, THEN A LL THESE FACTORS PROVES THE GENUINENESS OF THE TRANSACTION. THE ONUS CAST UPON THE ASSESSEE IN OUR OPINION STANDS DISCHA RGED BECAUSE ASSESSEE HAS NOT ONLY PROVE THE NATURE OF T HE CREDIT BUT ALSO THE SOURCE WHEREIN THE LENDER COMPANY HAS DIRECTLY CONFIRMED TO THE ASSESSING OFFICER IN RESPONSE TO N OTICE I.T.A. NO.1589/DEL/2018 14 U/S.133(6) ALONG WITH ALL THE DETAILS AND THEREAFTE R NO INQUIRY HAS BEEN DONE TO REBUT THOSE MATERIAL. SIMPLY DRAWI NG AN ADVERSE INFERENCE ABOUT THE CREDITWORTHINESS BASED ON RETURN OF INCOME AND VALUE OF RETURN OF PER SHARE CANNOT B E THE PARAMETER FOR EXAMINING THE CREDITWORTHINESS OF THE LENDER COMPANY. WHAT NEEDS TO BE SEEN WHETHER THE LENDER C OMPANY HAD SOURCE OF FUNDS AVAILABLE TO LEND THE MONEY OR NOT. THE SAID COMPANY HAS DULY DISCLOSED THE LOAN IN ITS BAL ANCE SHEET AND ALSO ACKNOWLEDGED THE REPAYMENT OF LOAN IN ITS BALANCE SHEET AS ON 31 ST MARCH, 2014. APART FROM THAT IT HAD HUGE RESERVES AND SURPLUS AVAILABLE IN ITS BOOKS, WHICH PROVES THE CREDITWORTHINESS OF THE LENDER. THUS, THE ADDITION MADE U/S.68 UNDER THE FACTS AND CIRCUMSTANCES OF THE CAS E CANNOT BE SUSTAINED AND SAME IS DIRECTED TO BE DELETED. 12. IN SO FAR AS HEAVY RELIANCE PLACED BY THE DEPAR TMENT ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF NR PORTFOLIO PVT. LTD. VS. CIT IS CLEARLY DISTINGUISHABLE, BECAUSE IN THAT CASE THE SUBSCRIBER OF THE SHARE CAPITAL WE RE FOUND TO BE NONEXISTENT AS THE ADDRESS OF THE SAID COMPANY W AS FOUND TO BE INCORRECT AND WAS FOUND TO BE IN THE BUSINESS OF ENTRY OPERATION BELONGING TO MR. MAHESH GARG WHO WAS HAND LING 51 COMPANIES AND HAVING 100 BANK ACCOUNTS TO PROVIDE ACCOMMODATION ENTRY, WHICH HERE IN THIS CASE THERE IS NO IOTA OF EVIDENCE THAT LENDING COMPANY IS ENTRY OPERATOR. FURTHER IN THAT CASE SUMMONS ISSUED WERE NOT COMPLIED WITH, WH EREAS IN THE PRESENT CASE THE LENDER COMPANY HAS MADE COM PLIANCE AND HAS FILED THE CONFIRMATION AND ENTIRE DETAILS B EFORE THE I.T.A. NO.1589/DEL/2018 15 ASSESSING OFFICER SUBSEQUENTLY. THE ASSESSING OFFIC ER DOUBTED THE GENUINENESS OF THE TRANSACTION OF THE C OMPANY WITHOUT REBUTTING ALL THE DOCUMENTS AND EVIDENCES F ILED. ASSESSING OFFICER SHOULD HAVE CARRIED OUT INDEPENDE NT INQUIRY OR DIRECT THE INQUIRY BE CONDUCTED IN THE CASE OF M /S. SIDHESHWARI COMMOTRADE PVT. LTD., WHICH HAS NOT BEE N DONE. THUS, THE JUDGMENT RELIED UPON BY THE LD. DR CANNOT BE SAID TO BE APPLICABLE IN THIS CASE. SIMILARLY, THE JUDGM ENT OF NOVA PROMOTERS AND OTHER CASES ALSO, THE FACTS AND CIRCU MSTANCES ARE CLEARLY DISTINGUISHABLE. THE JUDGMENTS RELIED U PON BY THE LD. COUNSEL ARE NOT REFERRED BECAUSE ON THE FACTS A ND CIRCUMSTANCES AS DISCUSSED ABOVE, WE FIND THAT THE ADDITIONS MADE U/S.68 CANNOT BE SUSTAINED. 13. SINCE THE TRANSACTION OF LOAN HAS BEEN FOUN D TO BE GENUINE BY US ON THE FACTS AND MATERIAL DISCUSSED A BOVE, THEREFORE, THE ADDITION ON ACCOUNT OF ALLEGED COMMI SSION TO TAKE LOAN IS ALSO DELETED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2020. SD/ - SD/ - [M. BALAGANESH] [ AMIT SHUKLA ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH MARCH, 2020 PKK: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT I.T.A. NO.1589/DEL/2018 16 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR