DCIT, CHENNAI V. Melakardi Puthalath Farook, CHENNAI

ITA 1991/CHNY/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8183 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 06-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-07-2014
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: D ANAND
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1991/MDS/2014 / ASSESSMENT YEAR :200 9 - 1 0 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I I (1) , CHENNAI 600 034 . VS. SHRI MELAKARDI PUTHALATH FAROOK, 4/605, OLD MAHABALIPURAM ROAD, CHENNAI 600 096. [PAN: A AAPF2644P ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A. V. SREEKANTH , JCIT / RESPONDENT BY : SHRI D. ANAND , ADVOCATE / DATE OF HEARING : 0 6 . 0 1 .201 6 / DATE OF P RONOUNCEMENT : 22 . 0 1 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH I S APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT (APPEALS) - I I , CHENNAI , DATED 20 . 0 1 . 20 1 4 RELEVANT TO THE ASSESSMENT YEAR 200 9 - 1 0 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS WITH REGARD TO DELETION OF ADDITION MADE UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL , HAVING MAJOR SHARE HOLDER AND THE MANAGING DIRECTOR IN M/S. FARWOOD INDUSTRIES I.T.A. NO . 1991/M/14 2 LTD. THE ASSESSEE HAS FILED HIS RETURN OF INCOME ADMITTING TOTAL INCOME OF .12,00,000/ - . THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT ON 12.03.2011 AND THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT DATED 14.09.2011 WAS DULY SERVED ON THE ASSESSEE. ON VERIFICATION OF LEDGER ACCOUNT OF M /S. FARWOOD INDUSTRIES LTD., THE ASSESSING OFFICER HAS NOTICED THAT THERE WERE MANY CASH PAYMENTS DEBIT E D IN THE BOOKS OF THE COMPANY ON VARIOUS DATES. WHEN THE ASSESSEE WAS ASKED TO EXPLAIN THESE CASH PAYMENTS, BEFORE THE ASSESSING OFFICER, THE ASSESSEE H AS SUBMITTED AS UNDER: IN THE FY 2007 - 08, FARWOOD INDUSTRIES LIMITED (WHEREIN I AM THE MANAGING DIRECTOR) WENT FOR EXPANSION OF ITS PRODUCTION CAPACITY AND AVAILED TERM LOANS FROM STATE BANK OF INDIA. THE COMPANY FACED FINANCIAL ISSUES DUE TO WORLDWIDE RE CESSION DURING 2007 - 2008 AND COULD NOT REPAY THE INSTALLMENTS AS AGREED. STATE BANK OF INDIA THEN ISSUED A LETTER TO FARWOOD INDUSTRIES LIMITED INSISTING TO REGULARIZE THE LOAN ACCOUNTS. THIS SITUATION MADE IT DIFFICULT TO OPERATE THE COMPANY BANK ACCOUNTS FREELY. AS A TOKEN OF A SERIES CORRESPONDENCE FROM SBI AT THIS JUNCTURE, PLEASE FIND ATTACHED A COPY OF STATE BANK'S LETTER DATED 21.04.2008 WITH THE CAPTION 'IRREGULARITY IN CONDUCT OF ACCOUNTS'. AS THE MANAGING DIRECTOR OF THE COMPANY, I HAD THE NEED TO RUN THE BUSINESS THE BUSINESS OF THE COMPANY WHICH PROVIDED EMPLOYMENT - BOTH DIRECT AND INDIRECT - FOR SEVERAL EMPLOYEES OF THE COMPANY. I HAD ALSO TO PLAN FOR REPAYMENT OF ALL COMMITTED LOANS AT/EAST BY TAKING AN EXTENDED TIME. IN THIS BACKGROUND, I HAD NO OTHER OPTION BUT TO ROUTE SOME OF THE COLLECTIONS AND PAYMENTS OF FARWOOD INDUSTRIES LIMITED THROUGH MY PERSONAL BANK ACCOUNTS. ' 3. FROM THE ABOVE SUBMISSION S OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS RECEIVED MONEY ON BEHALF OF THE COMPANY. THEREFORE, T HE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT RECEIVED BY THE ASSESSEE FROM VARIOUS CUSTOMERS AMOUNTING TO I.T.A. NO . 1991/M/14 3 .1,54,45,513/ - SHOULD NOT BE TAXED IN THE HANDS OF THE ASSESSEE AGAINST WHICH, THE ASSESSEE HAS SUBMIT TED AS UNDER: THE COMPANY WHERE THE ASSESSEE IS THE PROMOTER - MANAGING DIRECTOR, FOLLOWING THE GLOBAL ECONOMIC MELTDOWN FROM FY 08 ADDS THAT THE SERIOUS FINANCIAL IMPASSE LED TO A SITUATION WHERE THE LENDING BANKER, UNFORTUNATELY FOR FIL, TOOK AN AGGRES SIVE POSTURE AS REGARDS ITS INABILITY TO SERVICE ITS REPAYMENT OBLIGATIONS TO THE BANK. SO MUCH SO, IT EVEN REACHED A SITUATION WHERE THE BANK ENFORCED UNILATERAL APPROPRIATIONS FROM REMITTANCES MADE INTO THE ACCOUNT THEREBY PUSHING FIL TO A NEAR PRECIPICE . WE HAVE ALREADY SUBMITTED A COPY OF THE BANK'S LETTER DATED 21.04.2008 GIVING AN INSIGHT INTO THE CRITICAL STATE OF THE THEN RELATIONSHIP BETWEEN THE BANK AND FIL. WE HAVE HIGHLIGHTED THE ABOVE ONLY WITH A VIEW - THAT A HOLISTIC PERSPECTIVE IS SUBMITTED IN YOUR HANDS AS REGARDS FIL, ITS STATE OF FINANCES, THE INTEGRAL ROLE OF THE ASSESSEE MR. M.P.FAROOK AS THE PROMOTER MD VIZ A VIZ FIL AND ITS NEARLY 400 EMPLOYEES AND FINALLY FIL'S OBLIGATIONS TO OTHER STAKEHOLDERS SUCH AS VENDORS, CLIENTS ETC. (IT MAY NO T BE OUT OF CONTEXT TO SUBMIT AT THIS JUNCTURE THAT THE SAME BANK HAS GONE IN TO THE MERITS OF OUR PERIODICAL SUBMISSIONS FROM FY 2008 AND HAS, IN PRINCIPLE, AGREED TO CONSIDER A COMPREHENSIVE RESTRUCTURING PACKAGE IN ORDER TO REVIVE THE OPERATIONS OF FIL. THIS IS LIKELY TO COME INTO EFFECT FROM MARCH. 2012). WE WOULD REQUEST YOU TO KEEP OUR SUBMISSIONS MADE IN PARA 1 IN FOCUS AS WE EXPLAIN THE TRANSACTIONS IN THE CURRENT ACCOUNT OF THE ASSESSEE MR. M. P. FAROOK AS 'REFLECTED IN THE BOOKS OF ACCOUNT OF FI L. WE CONFIRM THAT THE SERIES OF TRANSACTIONS EXCEPT THOSE OF PERSONAL IN NATURE DETAILED IN OUR LETTER DATED 16.12.2011, REPRESENT MONIES BEING SALE PROCEEDS OF FIL AND ROUTED THROUGH THE PERSONAL ACCOUNT OF THE ASSESSEE MR. M. P. FAROOK IN ORDER TO CIRCU MVENT THE POSSIBILITY OF THE BANK APPROPRIATING OR FREEZING THESE REMITTANCES IN THE EVENT THEY WERE REMITTED THROUGH THE LOAN ACCOUNTS OF FIL' 4. IN VIEW OF THE ABOVE SUBMISSION MADE BY THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS RECEIVED .1,54,45,513/ - FROM VARIOUS CUSTOMERS. SINCE THE ASSESSEE IS SEPARATE PERSON FROM THE COMPANY THE AMOUNT RECEIVED BY THE ASSESSEE MUST BE I.T.A. NO . 1991/M/14 4 TAXED IN THE HANDS OF THE ASSESSEE. REGARDING THE EXPENSES CLAIMED TO BE MADE, THE ASSESSEE COULD NOT P RODUCE THE PROOF FOR THE EXPENSES CLAIMED TO BE MADE, BY THE ASSESSEE ON BEHALF OF THE COMPANY AS OF NOW. THE ASSESSING OFFICER HAS FURTHER NOTICED THAT THE COMPANY M/S. FARWOOD INDUSTRIES L TD., IN WHICH ASSESSEE IS THE MANAGING DIRECTOR HAS ALSO NOT FILED THE RETURN ON INCOME FOR THE A.Y.2009 - 10 ON OR BEFORE SEP.2009 OR EVEN WITHIN THE TIME LIMIT PERMISSIBLE FOR FILLING BELATED RETURN. THEREFORE, THE AMOUNT RECEIVED BY THE ASSESSEE AMOUNTING THE .1 ,54,45,513/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND REITERATED THE SUBMISSIONS AS MADE BEFORE THE ASSESSING OFFICER. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EXAMINING THE DETAILS FILED BEFORE THE ASSESSING OFFICER, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 6. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AND THE LD. DR SUPPORTED THE ORDER PASSED BY THE ASSESSING OFFICER. HE ALSO RELIED ON THE DECISION IN THE CASE OF HINDUSTAN TOBACCO LTD. TIOL - 726 - HC KOL - IT. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). I.T.A. NO . 1991/M/14 5 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RE CORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WHILE REITERATING THE SUBMISSIONS AS MADE BEFORE THE LD. CIT(A), THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT DUE TO SEVERE FINANCIAL PROBLEMS, M/S. FARWOOD INDUSTRIES LTD. COULD NOT REPAY THE B ANK LOANS, AS A RESULT OF WHICH THE BANKERS STALLED THE OPERATIONS OF THE COMPANY S BANK ACCOUNTS. SINCE THERE WERE HUGE OTHER LIABILITIES LIKE PAYMENT OF SALARIES, WAGES, ETC. ON DAY TO DAY BASIS AND THE COMPANY S BANK ACCOUNTS WERE NOT IN OPERATION DUE TO THE BANKER S RESTRICTIONS, THE ASSESSEE, BEING THE MD OF THE COMPANY, ALLOWED HIS PERSONAL BANK ACCOUNTS FOR THE PURPOSE OF RECEIVING THE PAYMENTS FROM THE CLIENTS OF COMPANY. AFTER RECEIVING THE AMOUNTS FROM THE COMPANY S CLIENTS, THE AMOUNTS WERE UTIL IZED FOR THE BUSINESS ACTIVITIES OF THE COMPANY LIKE PAYMENTS OF SALARIES, WAGES, CLEARING CREDITORS, ETC. IT WAS ALSO SUBMITTED BEFORE US THAT ALL THE RECEIPTS FROM THE C LIENTS CREDITED IN TO THE ABOVE BANK ACCOUNT OF THE ASSESSEE ARE SHOWN IN THE COMPANY 'S BOOKS AS INCOME/RECEIPTS. THUS, ALL THE CREDITS IN TO ASSESSEE S BANK ACCOUNT (EXCEPT FOUR ENTRIES) ARE THE RECEIPTS OF THE COMPANY FROM ITS CLIENTS AND ALL THE DEBITS (EXCEPT FOUR ENTRIES) ARE THE PAYMENTS TO THE COMPANY/ON BEHALF OF THE COMPANY. HENCE THE LD. COUNSEL FOR THE ASSESSEE HAS ARGUED THAT THERE ARE NO UNEXPLAINED CREDITS INTO THE BANK ACCOUNTS WARRANTING THE PROV ISIONS OF SECTION 68 OF THE ACT . WE FIND FORCE IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE. AFTER CAREFULLY ANALYSING THE BOOKS OF THE COMPANY, WHICH WAS I.T.A. NO . 1991/M/14 6 FURNISHED BEFORE THE ASSESSING OFFICER, THE LD. CIT(A) HAS OBSERVED AS UNDER: I HAVE CONSIDERED THE ASSESSEE'S SUBMISSIONS AND THE CONTENTS OF THE ASSESSMENT ORDER. THE ISSUE IN THE PRESENT CASE IS VERY SIMPLE. THE ASSESSEE BEFORE THE ASSESSING OFFICER HAS CLEARLY EXPLAINED THAT WHEN THE COMPANY, (M/S. FARWOOD INDUSTRIES LIMITED) IN WHICH HE IS THE MANAGING DIRECTOR, WAS NOT IN A POSITION TO OPERATE ITS BANK ACCOUNTS, THE ASSESSEE LENT HIS PERSONAL BANK ACCOUNTS (IN ICICI BA NK AND STATE BANK OF INDIA) FOR THE PURPOSE OF RECEIVING THE AMOUNTS FROM THE CLIENTS OF THE COMPANY. THE CLIENTS ISSUED CHEQUES IN THE NAME OF THE ASSESSEE (OR REMITTED THE AMOUNTS INTO THE BANK ACCOUNTS OF THE ASSESSEE), AS PER THE REQUEST OF THE COMPANY . THE ASSESSEE, BEING THE MD OF THE COMPANY, AFTER RECEIVING THE MONEY FROM THE CLIENTS OF THE COMPANY, UTILISED THE MONEY FOR THE PURPOSES OF BUSINESS OF THE COMPANY LIKE PAYMENTS OF SALARIES, WAGES, CLEARING CREDITORS ETC. ALL THE RECEIPTS (CREDITS) INTO THE BANK AND THEIR WITHDRAWALS/UTILIZATION WERE ALSO REFLECTED CLEARLY IN THE BOOKS OF ACCOUNT OF THE COMPANY. THE RECEIPTS ARE ACCOUNTED IN THE BOOKS OF THE COMPANY AS INCOME. THE LEDGER EXTRACTS OF THE COMPANY, FURNISHED BEFORE THE ASSESSING OFFICER AS WELL AS THE UNDERSIGNED, CLEARLY SHOWED THESE FACTS. IN FACT, THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PRO C EEDINGS BEFORE THE ASSESSING OFFICER HAS CLEARLY EXPLAINED THESE FACTS, VIDE ITS LETTER DATED 16.12.201L. THE ASSESSEE'S SUBMISSIONS DATED 16. 1 2.2011, FILED BEFORE THE ASSESSING OFFICER, ARE AS UNDER: I SUBMIT THE FOLLOWING DETAILS IN CONNECTION WITH MY INCOME TAX ASSESSMENT FOR A. Y. 2009 - 10 AS REQUIRED BY YOU: 1. ALL THE TRANSACTIONS (EXCEPT A FEW LISTED BELOW) IN MY BANK ACCOUNTS WITH ICI CI BANK AND STARE BANK OF INDIA DURING THE PERIOD 2008 - 09 PERTAIN TO THE COMPANY FARWOOD INDUSTRIES LIMITED WHEREIN I AM A MEMBER IN THE BOARD AS MANAGING DIRECTOR. THE ENTRIES WHICH DO NOT RELATE TO THE COMPANY ARE AS FOLLOWS: A. THREE CREDIT ENTRIES E ACH FOR RS 5,70,000 ON 07 - 06 - 2008 IN ICICI ACCOUNT B. ONE DEBIT ENTRY FOR RS 15,00,000 ON 07 - 06 - 2008 IN ICICI ACCOUNT C. ONE CREDIT ENTRY FOR RS 11,40,000 ON 09 - 06 - 2008 IN ICICI ACCOUNT D. ONE DEBIT ENTRY FOR RS 6,00,000 ON 14 - 07 - 2008 IN ICICI ACCOUN T I.T.A. NO . 1991/M/14 7 E. TWO DEBIT ENTRIES FOR RS 2,50,000 EACH ON 01 - 08 - 2008 IN ICICI ACCOUNT THESE ENTRIES PERTAIN TO COLLECTION AND REPAYMENT OF HAND LOANS. 2. IN THE FY 2007 - 08, FARWOOD INDUSTRIES LIMITED, (WHEREIN I AM THE MANAGING DIRECTOR) WENT TO EXPANSION OF I TS PRODUCTION CAPACITY AND AVAILED TERM LOANS FROM STATE BANK OF INDIA. THE COMPANY FACED FINANCIAL ISSUES DUE TO WORLDWIDE RECESSION DURING 2007 - 2008 AND COULD NOT REPAY THE INSTALLMENTS AS AGREED. STATE BANK OF INDIA THEN ISSUED A LETTER TO FARWOOD INDUS TRIES LIMITED INSISTING TO REGULARIZE THE LOAN ACCOUNTS. THIS SITUATION MADE IT DIFFICULT TO OPERATE THE COMPANY BANK ACCOUNTS FREELY. AS A TOKEN OF A SERIES CORRESPONDENCE FROM SBI AT THIS JUNCTURE, PLEASE FIND ATTACHED A COPY OF STATE BANK'S LETTER DATED 21.04 2008 WITH THE 'CAPTION 'IRREGULARITY IN CONDUCT OF ACCOUNTS'. AS THE MANAGING DIRECTOR OF THE COMPANY, I HAD THE NEED TO RUN THE BUSINESS THE BUSINESS OF THE COMPANY WHICH PROVIDED EMPLOYMENT - BOTH DIRECT AND INDIRECT - FOR SEVERAL EMPLOYEES OF THE COMPANY. I HAD ALSO TO PLAN FOR REPAYMENT OF ALL COMMITTED LOANS ATLEAST BY TAKING AN EXTENDED TIME. IN THIS BACKGROUND I HAD NO OTHER OPTION BUT TO ROUTE SOME OF THE COLLECTIONS AND PAYMENTS OF FARWOOD INDUSTRIES LIMITED THROUGH MY PERSONAL BANK ACCOUNTS. 3. HOPE HAVE CLARIFIED YOUR QUERIES TO YOUR SATISFACTION. HOWEVER THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEE'S SUBMISSIONS. THE ASSESSING OFFICER REJECTED THE ABOVE EXPLANATION OF THE ASSESSEE BASICALLY ON THE GROUND THAT THE ASSESSEE IS LEGALLY A DIFFERENT PERSON AND HENCE THE COMPANY'S AMOUNTS RECEIVED BY THE ASSESSEE ARE TO BE ASSESSED IN THE HANDS OF THE ASSESSEE ONLY. ACCORDINGLY THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 68 OF THE ACT AND ASSESSED THE SAID CREDITS TO TAX. THE ABOVE CONTENTIONS AND CONCLUSIONS OF THE ASSESSING OFFICER ARE NOT JUSTIFIED ON TWO COUNTS. FIRSTLY, THE ASSESSEE CLEARLY EXPLAINED THAT THE CREDITS INTO THE ABOVE BANK ACCOUNTS ARE THE RECEIPTS OF THE SALE (CONTRACT) PROCEEDS OF M/S. FARWOOD INDUSTRIES L IMITED AND RECEIVED ON BEHALF OF THE SAID COMPANY. FURTHER, ALL THE CREDITS INTO THE ABOVE BANK ACCOUNTS OF THE ASSESSEE ARE ACTUALLY ACCOUNTED BY THE COMPANY IN ITS BOOKS AS INCOME. IN OTHER WORDS, THE ABOVE CREDITS IN TO THE ASSESSEE'S BANK ACCOUNTS ARE THE INCOME/RECEIPTS OF THE COMPANY AND WERE PROPERLY REFLECTED IN THE BOOKS OF THE COMPANY. UNDER SUCH I.T.A. NO . 1991/M/14 8 CIRCUMSTANCES THE CREDITS INTO THE BANK ACCOUNTS OF THE ASSESSEE CANNOT BE CONSIDERED AS UNEXPLAINED CREDITS' U/S.68 OF THE ACT. SECONDLY, IN ORDER TO ATTRACT THE PROVISIONS OF 68 OF THE ACT, THREE INGREDIENTS ARE TO THE SATISFIED, I.E. THE ASSESSEE'S FAILURE TO ESTABLISH/PROVE (I) IDENTITY OF THE CREDITORS, OR (II) GENUINENESS OF THE TRANSACTION, OR (III) THE CREDIT WORTHINESS OF THE CREDITORS TO THE SATISFACTION OF THE ASSESSING OFFICER. IN OTHER WORDS, ONLY THE CREDITS FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE BECOMES 'UNEXPLAINED CREDITS' UNDER SECTION 68 OF THE ACT, ONLY WHEN THE ASSESSEE FAILS TO ESTABLISH/PROVE (I) IDENTITY OF THE CR EDITORS, OR (II) GENUINENESS OF THE TRANSACTION, OR (III) THE CREDIT WORTHINESS OF THE CREDITORS. WHEREAS, IN THE INSTANT CASE, THE NAMES AND THE ADDRESSES OF THE PERSONS FROM WHOM THE AMOUNTS HAVE COME INTO THE ASSESSEE'S BANK ACCOUNTS ARE AVAILABLE. TH E AMOUNTS ARE RECEIVED BY WAY OF CHEQUES/BANK TRANSFERS ETC. HENCE, THE FIRST TWO INGREDIENTS, I.E. (I) IDENTITY OF THE CREDITORS, AND (II) GENUINENESS OF THE TRANSACTION STAND ESTABLISHED. THE ASSESSING OFFICER NEVER SUSPECTED THE CREDITWORTHINESS OF THE CREDITORS. NOR THERE WAS ANY ATTEMPT BY THE ASSESSING OFFICER TO EXAMINE THIS ISSUE. THUS, IT CANNOT BE HELD THAT THE CREDITWORTHINESS IS NOT ESTABLISHED. THEREFORE, NONE OF THE THREE INGREDIENTS FOR ATTRACTING THE PROVISIONS OF 68 OF THE ACT ARE PROVED AG AINST THE ASSESSEE. IN FACT THE FIRST TWO INGREDIENTS ARE PROVED IN FAVOUR OF THE ASSESSEE AND THE THIRD ONE WAS NEVER SUSPECTED/ EXAMINED BY THE ASSESSING OFFICER. THE NEXT OBSERVATION OF THE ASSESSING OFFICER IS THAT THE EXPENSES (DEBITS IN THE ABOVE B ANK ACCOUNTS) ARE NOT EXPLAINED BY THE ASSESSEE. EVEN THIS OBSERVATION OF THE ASSESSING OFFICER IS CORRECT. ALL THE EXPENSES ARE REFLECTED IN THE BOOKS OF THE COMPANY. OUT OF THE TOTAL CREDITS OF RS.L,54,45,513/ - , INTO THE ASSESSEE'S BANK ACCOUNTS, ASSES SEE'S OWN TRANSACTIONS (CREDITS) ARE ONLY FOUR I.E., (I) THREE CREDITS EACH OF RS 5,70,000 ON 07 - 06 - 2008 IN ICICI ACCOUNT I.E. RS.5,70,000 X 3 = RS.17,10,000/ - I.T.A. NO . 1991/M/14 9 (II) ONE CREDIT OF RS.11 ,40,000 ON 09 - 06 - 2008 IN ICICI ACCOUNT I.E. RS.11 ,40,000 X 1 = R S. 11,50,000/ - THE ABOVE AMOUNTS (CREDITS) ARE RECEIVED FROM (I) MS. VANDANA - RS.5,70,000/ - ON 07.06.2008, (II) MS. SUMITRA - RS.5,70,000/ - ON 07.06.2008, (III) MR. PRDEEP - RS.5,70,000 / - ON 07.06.2008 AND (IV) MR. G. RAHUL - RS. 11 ,50,000/ - ON 09.06. 2008. THE AMOUNTS HAVE COME THROUGH BANKING CHANNELS AND THE PERSONS ARE IDENTIFIABLE. THEREFORE EVEN THESE AMOUNTS (CREDITS), WHICH ARE NOT RELATED TO THE COMPANY, WILL NOT COME UNDER THE PURVIEW OF THE UNEXPLAINED CREDITS U/S. 68 OF THE ACT. CONSIDERIN G THE ABOVE FACTS, I AM OF THE OPINION THE ASSESSING OFFICER IS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE ADDITION OF RS.L,54,45,513/ - MADE BY THE ASSESSING OFFICER U/S.68 OF THE ACT, IS DELETED. 8. IT IS AMPLY CLEAR THAT IF THE ASSESSEE FAILS TO ESTABLISH (I) IDENTITY OF THE CREDITORS, OR (II) GENUINENESS OF THE TRANSACTION, OR THE CREDITWORTHINESS OF THE CREDITORS, THEN THE ASSESSING AUTHORITY CAN MAKE ADDITION UNDER SECTION 68 OF THE ACT. IN THE INSTANT CASE, THE LD. CIT(A ) HAS OBSERVED THAT THE NAMES AND THE ADDRESSES OF THE PERSONS FROM WHOM THE AMOUNTS HAVE COME INTO THE ASSESSEE S BANK ACCOUNTS ARE MADE AVAILABLE TO THE ASSESSING OFFICER. FURTHER, THE AMOUNTS WERE RECEIVED BY WAY OF CHEQUES/ BANK TRANSFERS ETC. AND THEREFORE, THE IDENTITY AND GENUINENESS OF THE TRANSACTIONS HAVE BEEN ESTABLISHED BY THE ASSESSEE AND M OREOVER, IN THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOT DOUBT ED THE CR EDITWORTHINESS OF THE CREDITORS. THE REVENUE HAS PLACED RELIANCE ON THE DE CISION IN THE CASE OF HINDUSTAN TOBACCO LTD. (SUPRA), WHEREIN, IT WAS HELD THAT MERE ROUTING THE BANK TRANSACTIONS DOES NOT MEAN THAT THE AMOUNTS ARE GENUINE UNLESS THE IDENTITY I.T.A. NO . 1991/M/14 10 OF THE PARTIES ARE ESTABLISHED. IN THE INSTANT CASE, THE NAMES AND ADDRESSES O F THE PERSONS FROM WHOM THE AMOUNTS HAVE COME INTO THE ASSESSEE S BANK ACCOUNTS ARE FURNISHED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS NOT DOUBTED THE IDENTITY OF THE CREDITORS. THEREFORE, THE CASE LAW RELIED ON BY THE DEPARTMENT HAS NO A PPLICATION TO THE FACTS OF THE CASE. FURTHER, WHATEVER DETAILS FURNISHED BEFORE THE ASSESSING OFFICER WERE ONLY FURNISHED BEFORE THE LD. CIT(A) AND NO NEW EVIDENCES HAVE BEEN FURNISHED BEFORE THE LD. CIT(A) FOR WHICH, THE LD. CIT(A) IS REQUIRED TO OBTAIN R EMAND REPORT FROM THE ASSESSING OFFICER UNDER RULE 46A OF THE INCOME TAX RULES. IN VIEW OF THE ABOVE, WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 22 ND JANUARY , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 22 .0 1 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.