AARHAT INVESTMENTS, MUMBAI V. ACIT 21(1), MUMBAI

ITA 2013/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1682 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 24-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHHAMED RIZWAN
• Keywords: Unexplained cash credit; Transactions in derivatives
• Section: 143(3); 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.2262/MUM/2014 (ASSESSMENT YEAR 2009-10) THE ACIT 21(1), 6 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 40051 ...... APPELLANT VS. M/S. AARHAT INVESTMENTS, 402, ASHA NIKETAN, 45, BAPTISTA ROAD, VILE PARLE(W), MUMBAI 400 056 PAN:AALFA 4557F .... RESPOND ENT ITA NO.2013/MUM/2014 (ASSESSMENT YEAR 2009-10) M/S. AARHAT INVESTMENTS, 402, ASHA NIKETAN, 45, BAPTISTA ROAD, VILE PARLE(W), MUMBAI 400 056 PAN:AALFA 4557F .... APPE LLANT VS. THE ACIT 21(1), 6 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 40051 ...... RESP ONDENT REVENUE BY : SHRI MOHHAMED RIZWAN ASSESSEE BY : SHRI VIJAY MEHTA DATE OF HEARING : 21 /10/2016 DATE OF PRONOUNCEMENT : 30/11/2016 2 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) ORDER PER G.S.PANNU,A.M: THESE ARE CROSS-APPEALS FILED BY THE REVENUE AND THE ASSESSEE AGAINST THE ORDER OF CIT(A)-32, MUMBAI DATED 21/01/2014, PE RTAINING TO THE ASSESSMENT YEAR 2009-10, WHICH IN TURN, HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 30/12/2011 UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN BOTH THE APPEALS, THE SUBSTANTIVE DISPUTE ARI SES FROM AN ADDITION OF RS.18,57,68,100/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED CASH CREDITS UNDER SECTION 68 OF THE ACT. NOTABLY, THE ASSESSIN G OFFICER TREATED THE CREDITS IN THE ACCOUNT OF THREE PARTIES AS UNEXPLAINED NAME LY, M/S. WALL STREET CAPITAL MARKETS P. LTD. (HEREINAFTER REFERRED IN SHORT M/S. WALL STREET) RS.7,00,00,000/- CRORES, M/S. GANESH BARTER P. LTD. ( IN SHORT M/S. GANESH) RS.5,07,68,100/- AND M/S. NOVEL FINVEST P. LTD. ( I N SHORT M/S. NOVEL) RS.6,50,00,000/-, TOTALLING TO RS.18,57,68,100/-. THE CIT(A) HAS DELETED THE ADDITION SO FAR AS IT RELATE TO M/S. WALL STREET AN D M/S. NOVEL AMOUNTING TO RS.13,50,00,000/- AND SUSTAINED THE ADDITION OF RS. 5,07,68,100/- PERTAINING TO M/S. GANESH. AS A CONSEQUENCE, REVENUE IS IN APPEA L CHALLENGING THE ACTION OF THE CIT(A) IN DELETING THE DISALLOWANCE OF RS.13,5 0,00,000/-, WHEREAS ASSESSEE IN ITS CROSS-APPEAL HAS ASSAILED THE DECISION OF TH E CIT(A) IN SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS.5,07,68,100/-. SI NCE THE CROSS-DISPUTES ARISE FROM THE COMMON ACTION OF THE ASSESSING OFFICER IN INVOKING SECTION 68 OF THE ACT, THEY ARE BEING TAKEN-UP TOGETHER. 3 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE BEFORE US IS A PARTNERSHIP FIRM, WHICH IS, INTER-ALIA, ENGAGED IN THE BUSINESS OF TRADING IN SHARES, F&O ACTIVITIES, ETC. FOR THE ASSESSMENT YE AR UNDER CONSIDERATION, IT FILED A RETURN OF INCOME DECLARING A LOSS OF RS.22, 39,492/-, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT ASSESSEE HAS SHOWN CERTAIN UNSE CURED LOANS FROM FOUR CONCERNS, AS PER DETAILS IN PARA 8.1 OF THE ASSESSM ENT ORDER. FIRSTLY, IN RELATION TO M/S. WALL STREET, THE ASSESSING OFFICER HAS NOTE D THAT A SUM OF RS.7,00,00,000/- WAS RECEIVED AND REPAID IN THE I NSTANT YEAR ITSELF AND THE CLOSING BALANCE WAS NIL. SECONDLY, IN CASE OF M/S. NOVEL, ASSESSEE HAD RECEIVED A SUM OF RS.6,50,00,000/-, WHICH WAS ALSO REPAID IN THE INSTANT YEAR ITSELF AND THE CLOSING BALANCE OUTSTANDING WAS NIL. THIRDLY, IN THE CASE OF M/S. GANESH, ASSESSEE HAD RECEIVED A SUM OF RS.5,07,68,100/- DUR ING THE YEAR, WHICH WAS OUTSTANDING AS AT THE CLOSE OF THE YEAR. FOURTHLY, IN RELATION TO ONE M/S. ASIAN FINANCE SERVICES, THE ASSESSING OFFICER NOTED THAT THERE WAS AN OPENING BALANCE OF RS.13,50,00,000/-, WHICH WAS REPAID IN T HE INSTANT YEAR AND THE BALANCE AT THE END OF THE YEAR WAS NIL. CONSIDERIN G THAT THE AFORESAID AMOUNTS WERE RECEIVED BY THE ASSESSEE WITHOUT CHARGING OF A NY INTEREST, THE ASSESSING OFFICER CALLED FOR VARIOUS DETAILS. IN RESPONSE, T HE ASSESSEE FURNISHED VARIOUS DETAILS VIZ. NAMES AND ADDRESSES OF THE PARTIES, TH EIR PAN, ETC. AND ALSO EXPLAINED THAT THE TRANSACTIONS WITH THE SAID PARTI ES WERE NOT IN THE NATURE OF ANY LOANS BUT WERE ADVANCES RECEIVED THROUGH BANKIN G CHANNELS FOR MAKING INVESTMENTS IN GOVERNMENT BONDS/SECURITIES/MUTUAL F UNDS. THE ASSESSEE ALSO EXPLAINED THAT IN THE CASE OF M/S. WALL STREET, M/S . NOVEL AND M/S. ASIAN FINANCE SERVICES, THE AMOUNTS WERE REPAID AS THE RI GHT KIND OF INVESTMENTS COULD NOT BE IDENTIFIED. THE ASSESSMENT ORDER ALSO REVEALS THAT IN THE COURSE 4 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) OF THE VERIFICATION EXERCISE, THE ASSESSING OFFICER CALLED FOR INFORMATION BY ISSUING NOTICES UNDER SECTION 133(6) OF THE ACT T O THE CREDITORS AND ALSO ISSUED COMMISSION UNDER SECTION 131(1)(D) OF THE ACT TO H IS COUNTERPART AUTHORITIES AT KOLKATTA, WHO WERE HAVING JURISDICTION OVER THE RESPECTIVE CREDITORS. NOTABLY, APART FROM REFERRING TO SUCH PROCEEDINGS A ND THE RECEIPT OF MATERIAL, THE ASSESSING OFFICER HAS NOT MADE ANY SPECIFIC ADV ERSE COMMENT AS TO THE DENIAL OF TRANSACTION BY ANY OF THE PARTIES. BE TH AT AS IT MAY, THE ASSESSING OFFICER HELD THAT THE TRANSACTION OF LOANS RECEIVED TO THE EXTENT OF RS.18,57,68,100/- FROM THREE CONCERNS WAS UNEXPLAIN ED WITHIN THE MEANING OF SECTION 68 OF THE ACT. THE ASSESSING OFFICER DID N OT DOUBT THE IDENTITY OF THE CREDITORS BUT WAS NOT SATISFIED WITH THE CAPACITY O F THE CREDITORS TO ADVANCE MONEY TO THE ASSESSEE AND HE HAS ALSO DOUBTED THE G ENUINENESS OF THE TRANSACTIONS. IN COMING TO SUCH CONCLUSION, ASSESS ING OFFICER NOTED THAT THE ADVANCES WERE MADE FREE OF INTEREST AND THAT THE IN COME FOR YEAR RETURNED BY THE CREDITORS WAS MEAGRE AND THAT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTIONS WERE NOT IN THE NATURE OF LOANS BUT IN THE NATURE OF ADVANCES FOR INVESTMENTS WAS NOT ACCEPTABLE AS IT WAS AN AFTER THOUGHT. IN SO FAR AS THE AFORE-STATED THREE CONCERNS ARE CONCERNED, THE AS SESSING OFFICER TREATED THE CREDITS AS UNEXPLAINED AND ALSO HELD THAT ASSESSEE HAD INTRODUCED ITS OWN UNACCOUNTED MONEY IN THE BOOKS OF ACCOUNT IN THE GA RB OF LOANS/ADVANCES. THE ASSESSEE CARRIED THE AFORESAID ADDITION IN APPE AL BEFORE THE CIT(A) BY CHALLENGING IT ON FACTS AND IN LAW. FROM A PERUSAL OF THE ORDER OF THE CIT(A), IT TRANSPIRES THAT EVEN DURING THE PENDENCY OF APPEAL BEFORE CIT(A), THE ASSESSING OFFICER CAUSED FURTHER ENQUIRES TO BE MA DE WITH RESPECT TO THE AFORESAID PARTIES THROUGH INVESTIGATION WING OF THE DEPARTMENT AT KOLKATTA BY ISSUANCE OF COMMISSIONS UNDER SECTION 131(1)(D) OF THE ACT DATED 04/07/2012 5 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) TO THE DDIT(INV) UNIT 1(3), KOLKATTA. IT IS EMERGI NG FROM RECORD THAT THE REPORT OF THE INVESTIGATION WING WAS FORWARDED BY THE ASSE SSING OFFICER TO THE CIT(A) , WHICH HAS ALSO BEEN CONSIDERED BY THE CIT(A) TO A DJUDICATE THE CONTROVERSY, OF COURSE AFTER ALLOWING THE ASSESSEE AN OPPORTUNIT Y OF FURNISHING ITS COMMENTS ON THE REPORT OF THE INVESTIGATION WING OF THE DEPARTMENT AT KOLKATTA. WITH RESPECT TO THE CREDITS IN THE NAME OF M/S. WALL STREET AND M/S. NOVEL, THE CIT(A) WAS SATISFIED THAT THE ASSESSEE HAS DISCHARGED THE ONUS CAST UPON IT UNDER SECTION 68 OF THE ACT BY ESTABLISHING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS THE G ENUINENESS OF THE TRANSACTIONS, AND THUS DELETED THE ADDITION TO THAT EXTENT. IN SO FAR AS THE CREDIT APPEARING IN THE NAME M/S. GANESH IS CONCERN ED, THE CIT(A) WAS SATISFIED WITH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITOR BUT WAS NOT SATISFIED WITH THE GENUINENESS OF THE TRANSACTION AND, THEREFORE, HE HAS UPHELD THE ADDITION UNDER SECTION 68 OF THE ACT. 4. AGAINST THE AFORESAID BACKGROUND, BOTH THE PARTI ES HAVE MADE THEIR RESPECTIVE SUBMISSIONS. THE LD. DEPARTMENTAL REPRE SENTATIVE HAS PRIMARILY REITERATED THE ARGUMENTS OF THE ASSESSING OFFICER A ND POINTED OUT THAT THE ADVANCES WERE GIVEN WITHOUT INTEREST AND THAT THE E XPLANATION OF THE ASSESSEE THAT TRANSACTIONS WERE IN THE NATURE OF ADVANCE FOR INVESTMENTS IN MUTUAL FUNDS WAS ONLY AN AFTERTHOUGHT BECAUSE AMOUNTS RE CEIVED IN THE CASE OF M/S. WALL STREET AND M/S. NOVEL WERE NOT USED FOR THE S TATED PURPOSE OF INVESTMENT IN MUTUAL FUNDS, ETC. THE LD. DEPARTMEN TAL REPRESENTATIVE HAS ALSO POINTED OUT THAT ALL THE TRANSACTIONS IN QUEST ION HAVE BEEN UNDERTAKEN BY THE THREE CREDITORS ONLY ON RECEIPT OF FUNDS IN THE IR RESPECTIVE BANK ACCOUNTS ON THE VERY SAME DAY AND OTHERWISE THE BALANCE IN SUCH BANK ACCOUNTS WAS MEAGRE. 6 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) 5. ON THE OTHER HAND, IN SO FAR AS THE DEPARTMENTAL APPEAL IS CONCERNED, LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THA T THE ASSESSING OFFICER HAS MADE THE ADDITION ON MERE SUSPICION ALTHOUGH NONE O F THE ENQUIRIES REVEALED ANYTHING ADVERSE, QUA THE NATURE OF THE AMOUNTS REC EIVED FROM EITHER M/S. WALL STREET OR M/S. NOVEL. IN THIS CONTEXT, OUR AT TENTION HAS BEEN DRAWN TO THE SPECIFIC FINDINGS RECORDED BY THE CIT(A) IN SUB-PA RAS (XII) TO (XXIV) OF PARA 5.7 OF HIS ORDER, WHICH CATEGORICALLY BRINGS OUT THAT NO ADDITION WAS MAINTAINABLE IN TERMS OF SECTION 68 OF THE ACT. 6. IN SO FAR AS THE APPEAL OF THE REVENUE IS CONCER NED, THE SAME RELATES TO THE CREDITS OF RS.7,00,00,000/- AND RS.6,50,00,000 /- APPEARING IN THE ACCOUNTS OF M/S. WALL STREET AND M/S. NOVEL. IN BO TH THE CASES, THE AMOUNTS HAVE BEEN RECEIVED AND REPAID DURING THE YEAR ITSEL F. IT IS ALSO NOT IN DISPUTE THAT THE TRANSACTIONS ARE THROUGH BANKING CHANNELS AND BOTH THE CONCERNS ARE INCOME TAX ASSESSEES. IN ANY CASE, SO FAR AS THE I DENTITY OF THESE CONCERNS ARE CONCERNED THERE IS NO DISPUTE. SECTION 68 OF THE A CT CASTS AN ONUS ON THE ASSESSEE TO EXPLAIN THE NATURE AND SOURCE OF THE CR EDIT APPEARING IN THE BOOKS OF ACCOUNT. IT IS A TRITE LAW THAT SECTION 68 OF T HE ACT IS A RULE OF EVIDENCE AND THE ONUS CAST ON THE ASSESSEE CAN BE SAID TO BE DIS CHARGED IF THE ASSESSEE IS ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AND THE GENUINENESS OF THE TRANSACTION. IN THE PRESENT CAS E, THE ASSESSING OFFICER HAS MADE INDEPENDENT ENQUIRIES NOT ONLY BY ISSUING NOTI CE UNDER SECTION 133(6) OF THE ACT TO THE CREDITORS, BUT ALSO BY ISSUING COMM ISSIONS OF ENQUIRY UNDER SECTION 131(1)(D) OF THE ACT TO THE INVESTIGATION W ING AT KOLKATTA AND THE JURISDICTIONAL ASSESSING AUTHORITIES OF THE CREDITO RS IN KOLKATTA IN THE PAPER BOOK FILED BEFORE US, WE FIND COPIES OF THE REPORT RECEIVED FROM THE KOLKATTA 7 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) ASSESSING AUTHORITIES IN THIS REGARD INCLUDING THE STATEMENT OF THE DIRECTORS OF THE CREDITORS RECORDED IN THE COURSE OF THE ENQUIRI ES. A PERUSAL OF THE SAID MATERIAL CLEARLY POINTS OUT THAT THE EXPLANATION RE NDERED BY THE ASSESSEE WITH REGARD TO THE NATURE OF THE TRANSACTIONS HAS NOT BE EN DISPUTED BY THE CREDITORS. AS PER THE ASSESSEE, TRANSACTIONS WERE NOT IN THE NATURE OF LOANS PER-SE BUT THEY WERE IN THE NATURE OF ADVANCES RECE IVED FOR INVESTMENTS IN MUTUAL FUNDS, ETC. THE CHARGE MADE BY THE ASSESSIN G OFFICER THAT THE SAID EXPLANATION WAS ONLY AN AFTERTHOUGHT REMAINS A BALD ASSERTION WITHOUT ANY CORROBORATIVE EVIDENCE WITH THE ASSESSING OFFICER . EVEN WITH REGARD TO THE CAPACITY OF THE SAID CREDITORS TO ADVANCE SUCH SUMS , THE CIT(A) IN SUB-PARA (XIII) OF PARA 5.7 HAS TABULATED FIGURES OF SHARE CAPITAL, TURNOVER AND RESERVES AND SURPLUS OF SUCH CONCERNS APPEARING IN THE BALANCE S HEET FOR THE PERIOD ENDING 31/03/2009. AFTER CONSIDERING THE FIGURES OF RESE RVE & SURPLUS, SHARE CAPITAL, ETC. THE CIT(A) CAME TO CONCLUDE THAT THERE WAS A B ONA-FIDE AVAILABILITY OF FUNDS IN THE BANK ACCOUNTS OF THE CREDITORS, OUT OF WHICH MONIES HAVE BEEN ADVANCED TO THE ASSESSEE. IN OUR CONSIDERED OPINIO N, THE REASONABILITY AND PLAUSIBILITY OF THE INFERENCE DRAWN BY THE CIT(A) C ANNOT BE DOUBTED. FOR INSTANCE, IN THE CASE OF M/S. WALL STREET, WHERE ASSESSEE HAD RECEIVED A SUM OF RS.7,00,00,000/- , THE CHARGE OF THE ASSESSING O FFICER IS THAT THE SAID CONCERN HAS NOT DECLARED ANY INCOME IN ITS RETURN OF INCOME . HOWEVER, THE CIT(A) TOOK NOTE OF THE FACT THAT THE SAID CONCERN HAS SHARE HO LDER FUNDS OF RS.2,62,08,000/-, RESERVE AND SURPLUS AT THE BEGIN NING OF THE YEAR AT RS.10,53,53,807/- AND RS.10,56,23,978/- AT THE CLOS E OF THE YEAR AND, THEREFORE, HE HELD THAT THERE WAS CREDITWORTHINESS AVAILABLE TO ADVANCE A SUM OF RS.7,00,00,000/- TO THE ASSESSEE. IN FACT, THE CIT(A) ALSO TOOK NOTE OF THE SOURCE OF THE FUNDS OUT OF WHICH ADVANCES WERE MADE TO THE ASSESSEE 8 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) WHICH ACCORDING TO HIM WERE RAISED IN THE ROUTINE C OURSE OF THE ACTIVITIES OF THE CREDITORS. WE FIND THAT THE ASSESSING OFFICER HAS RAISED A POINT THAT AMOUNTS HAVE BEEN ADVANCED TO THE ASSESSEE JUST AFT ER RECEIPT OF FUNDS BY THE CREDITORS IN THEIR BANK ACCOUNTS. IN THIS CONTEXT , THE LD. REPRESENTATIVE FOR THE ASSESSEE MADE A SPECIFIC PLEA THAT THERE WAS NO CAS H DEPOSITS IN THE BANK ACCOUNT OF THE CREDITORS BEFORE THE AMOUNT WAS ADVA NCED TO THE ASSESSEE. THE AFORESAID PLEA OF THE ASSESSEE IS NOT CONTROVER TED BY THE REVENUE AND, IN ANY CASE, THE SAME IS ALSO EMERGING FROM THE MATERI AL ON RECORD. THE CIT(A) HAS TAKEN NOTE OF THE FACT THAT M/S. WALL STREET IS A NBFC REGISTERED WITH RBI AND THE MONIES ADVANCED TO THE ASSESSEE WERE OUT OF RECEIPTS ON ACCOUNT OF REFUND OF LOANS/ADVANCES, FROM THEIR OWN FUNDS, SAL E PROCEEDS RECEIVED FROM SALE OF SHARES, ETC. IN OUR CONSIDERED OPINION, CO NSIDERING THE MATERIAL AVAILABLE ON RECORD, THE CIT(A) MADE NO MISTAKE IN SETTING-ASIDE THE ACTION OF THE ASSESSING OFFICER IN INVOKING SECTION 68 OF THE ACT BECAUSE THE ASSESSING OFFICER HAS MERELY SOUGHT TO DISBELIEVE THE STAND O F THE ASSESSEE WITHOUT ANY CLINCHING ADVERSE MATERIAL. 6.1 NOW IN SO FAR AS THE CREDIT OF RS.6,50,00,000/- APPEARING IN THE ACCOUNT OF M/S. NOVEL IS CONCERNED, HEREIN ALSO THE FINDING OF THE CIT(A) ARE PARI- MATERIA TO THOSE IN THE CASE OF M/S. WALL STREET, THOUGH THE FIGURES OF SHARE CAPITAL, RESERVE AND SURPLUS AND TURNOVER ,ETC. AR E DIFFERENT. BE THAT AS IT MAY, IN OUR VIEW, THE DISCUSSION IN THE AFORESAID P ARAS MADE BY US IN RELATION TO THE CREDIT APPEARING IN THE CASE OF M/S. WALL ST REET IS EQUALLY APPLICABLE IN THE CASE OF M/S. NOVEL ALSO AND, THEREFORE, ON THIS ASPECT ALSO WE AFFIRM THE ORDER OF THE CIT(A). THEREFORE, IN SO FAR AS THE A PPEAL OF THE REVENUE RELATING TO THE CREDITS IN THE ACCOUNT OF M/S.WALL STREET AN D M/S.NOVEL IS CONCERNED, 9 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) WE CONCUR WITH THE FINDINGS OF THE CIT(A) HAVING RE GARD TO THE MATERIAL AND EVIDENCE ON RECORD AND ACCORDINGLY REVENUE FAILS IN ITS APPEAL. 7. NOW, WE MAY TAKE UP THE APPEAL OF THE ASSESSEE I N ITA NO.2013/MUM/2014, WHEREIN THE CREDIT BALANCE OUTSTA NDING AS ON 31/03/2009 IN THE CASE OF M/S. GANESH HAS BEEN TREA TED TO BE AN UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A). IN SO FAR AS THE ASSESSI NG OFFICER WAS CONCERNED, HE ACCEPTED THE IDENTITY OF THE CREDITOR BUT WAS NOT SATISFIED WITH THE CREDITWORTHINESS OF THE CREDITOR AND THE GENUINENES S OF THE TRANSACTION. THE CIT(A), ON THE OTHER HAND, NOT ONLY ACCEPTED THE ID ENTITY BUT ALSO ACCEPTED THE CREDIT WORTHINESS OF THE CREDITOR TO ADVANCE SUCH M ONEY TO THE ASSESSEE BUT WAS NOT SATISFIED WITH THE GENUINENESS OF THE TRANS ACTION AND HENCE HE SUSTAINED THE ULTIMATE DECISION OF THE ASSESSING OF FICER TO INVOKE SECTION 68 OF THE ACT. IN SO FAR AS THE FINDING OF THE CIT(A) WI TH REGARD TO THE IDENTITY AND CAPACITY OF THE CREDITOR M/S. GANESH IS CONCERNED, REVENUE IS NOT IN APPEAL AND, THEREFORE, THE ONLY ISSUE BEFORE US IS AS TO W HETHER THE TRANSACTION CAN BE CONSIDERED AS GENUINE SO FAR AS REQUIREMENTS O F SECTION 68 OF THE ACT ARE CONCERNED. 7.1 THE RELEVANT FINDINGS OF THE CIT(A) IN THIS REG ARD ARE CONTAINED IN SUB- PARA (XXV) TO (XXXII) OF PARA 5.7 OF HIS ORDER. TH E CIT(A) HAS NOTED THE EXPLANATION OF THE ASSESSEE THAT THE MONEY WAS GIVE N TO THE ASSESSEE FOR INVESTMENT IN BONDS AND MUTUAL FUNDS BY THE CREDITO R. THE ASSESSING OFFICER HAS NOTED THAT SUBSEQUENT TO THE RECEIPT OF SUCH FU NDS FROM THE CREDITOR, THE AMOUNT WAS INVESTED BY THE ASSESSEE IN ITS OWN NAME IN MUTUAL FUNDS, SHORT TERM INCOME BONDS, ETC. THE CIT(A) ALSO NOTES THAT DURING THE SUBSEQUENT 10 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) PERIOD IT HAS NOT BEEN SHOWN WHETHER ANY PROFIT OR LOSS IN RESPECT OF INVESTMENTS MADE BY USING THE FUNDS RECEIVED FROM M/S. GANESH WAS ULTIMATELY PASSED ON TO THE CREDITOR OR NOT. FOR T HIS REASON, THE CIT(A) HAS DOUBTED THE GENUINENESS OF THE TRANSACTION, THEREBY UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT. 8. IN THIS REGARD, THE LD. REPRESENTATIVE FOR THE A SSESSEE HAS MADE VARIED SUBMISSIONS. FIRSTLY, IT WAS SUBMITTED THAT THE CI T(A) HAVING ACCEPTED THE BONA-FIDES OF THE ADVANCES RECEIVED FROM M/S. WALL STREET AND M/S. NOVEL OUGHT NOT TO HAVE REJECTED THE BONA-FIDES OF THE AD VANCE RECEIVED FROM M/S. GANESH BECAUSE THE ENQUIRIES AND THE EVIDENCES GATH ERED IN RESPECT OF ALL THE THREE PARTIES WERE SIMILAR. SECONDLY, IT IS POINTE D OUT THAT IN ALL THE ENQUIRIES MADE BY THE REVENUE, THE RESULTS WERE COHERENT AND CONSISTENT WITH THE EXPLANATIONS RENDERED BY THE ASSESSEE AND, THEREFOR E, THE CIT(A) OUGHT NOT TO HAVE DOUBTED THE GENUINENESS OF THE TRANSACTIONS WI TH M/S. GANESH IN ISOLATION. WITH REGARD TO M/S. GANESH, THE LD. RE PRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SAID CONCERN HAD FURNISHED ITS BOOKS OF ACCOUNT, DETAILS OF PAYMENTS AND RECEIPTS, RETURN OF INCOME, BALANCE SH EET AND PROFITS AND LOSS ACCOUNT, PAN AND ALSO CONFIRMATION OF THE TRANSACTI ONS WITH THE ASSESSEE. IT WAS ALSO POINTED OUT THAT IN RESPONSE TO THE COMMIS SION ISSUED BY THE ASSESSING OFFICER TO HIS COUNTERPART AT KOLKATTA U/ S. 131(1)(D) OF THE ACT, THE STATEMENT OF THE DIRECTOR OF M/S. GANESH WAS RECORD ED, WHO HAS ALSO CONFIRMED THE NATURE OF TRANSACTIONS. IN THIS CONT EXT, REFERENCE HAS BEEN MADE TO PAGES 2 TO 30 OF THE PAPER BOOK, WHERE A CO PY OF THE ENTIRE PROCEEDINGS U/S. 131(1)(D) OF THE ACT HAVE BEEN PLA CED. IT HAS BEEN POINTED OUT, WITH REFERENCE TO THE STATEMENT OF THE DIRECTO R, THAT THE NATURE OF THE TRANSACTION BEING ADVANCES MADE TO THE ASSESSEE O UT OF BUSINESS 11 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) CONSIDERATION STOOD CORROBORATED. LD. REPRESENTATI VE FOR THE ASSESSEE VEHEMENTLY ARGUED THAT NOT ONLY IN THE COURSE OF AS SESSMENT PROCEEDINGS, BUT ALSO IN THE COURSE OF APPELLATE PROCEEDINGS, ADEQUA TE ENQUIRIES WERE MADE BY THE ASSESSING OFFICER BUT NO INCONSISTENCIES WERE FOUND WITH THE EXPLANATIONS FURNISHED BY THE ASSESSEE AND, THEREFORE, THE TRAN SACTIONS HAVE BEEN UNFAIRLY DOUBTED BY THE CIT(A). 9. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE APPEARING FOR THE REVENUE HAS REITERATED THE STAND OF THE CIT(A) IN H OLDING THAT THE GENUINENESS OF THE PURPOSE OF ADVANCING MONEY BY M/S. GANESH TO ASSESSEE COULD NOT BE ESTABLISHED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. SO F AR AS THE ISSUE OF CREDIT OF RS.5,07,68,100/- APPEARING IN THE ACCOUNT OF M/S . GANESH IS CONCERNED, THE ONLY POINT OF DISPUTE BEFORE US IS AS TO WHETHER SU CH TRANSACTION IS GENUINE, QUA THE REQUIREMENTS OF SECTION 68 OF THE ACT. THE CIT(A) HAS DOUBTED THE GENUINENESS FOR THE REASON THAT THE ASSESSEE HAD MA DE USE OF THE FUNDS RECEIVED FROM M/S. GANESH IN MAKING INVESTMENT IN B ONDS, ETC. IN ITS OWN NAME AND NOT IN THE NAME OF THE CREDITOR AND THAT T HERE IS NOTHING TO SUGGEST THAT ANY PROFIT OR LOSS ON SUCH INVESTMENTS HAVE BE EN PASSED ON TO THE CREDITOR. IN OUR CONSIDERED OPINION, THE APPROACH OF THE CIT(A) IN DISSECTING THE TRANSACTION AND HOLDING IT TO BE INGENUINE IS Q UITE STRAIGHT JACKETED AND MYOPIC. THE CIT(A) IMPLIEDLY SUGGESTS THAT A TRANS ACTION IS TO BE HELD AS INGENUINE, IF THE MONEY IS NOT RETURNED BACK WHEN T HE PURPOSE FOR WHICH IT WAS GIVEN WAS NOT ACHIEVED. IN OUR CONSIDERED OPIN ION, THE AFORESAID APPROACH OF THE CIT(A) WOULD GIVE WEIGHTAGE TO SUSP ICION THAN THE EVIDENCE AVAILABLE IN ORDER TO EVALUATE THE GENUINENESS OF A TRANSACTION. IT IS QUITE WELL 12 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) UNDERSTOOD IN THE DAY-TO-DAY BUSINESS ENVIRONMENT T HAT AN ADVANCE GIVEN TO A BUSINESSMAN FOR THE PURPOSE OF MAKING INVESTMENT IN SHARES, ETC. MAY NOT YIELD EXPECTED RESULTS BECAUSE OF UNFORESEEN CIRCUM STANCES, BUT SUCH AN EVENTUALITY BY ITSELF,WOULD NOT ENABLE THE REVENUE TO TREAT THE RELATED AMOUNT AS AN UNEXPLAINED CASH CREDIT WITHIN THE MEANING OF SECTION 68 OF THE ACT. MORE IMPORTANTLY, THE GENUINENESS OF THE TRANSACTIO N HAS TO BE EVALUATED AT THE TIME WHEN THE TRANSACTION WAS CARRIED OUT. WE MAY HASTEN TO ADD HERE THAT WE ARE NOT PROFESSING THAT THE POST-TRANSACT ION EVENTS ARE NOT RELEVANT TO EVALUATE THE GENUINENESS BUT WHAT WE ARE ONLY T RYING TO EMPHASIZE IS THAT THE IMPONDERABLES OF THE BUSINESS CANNOT BE THE SOLE BASIS TO DEFEAT THE GENUINENESS OF A TRANSACTION, WHICH THE CIT(A) HAS SOUGHT TO DO IN THE PRESENT CASE. THEREFORE, CONSIDERING THE ENTIRETY OF CIRC UMSTANCES AND THE MATERIAL ON RECORD, ESPECIALLY THE FACT THAT THE EXPLANATION S RENDERED BY THE ASSESSEE HAVE NOT BEEN FOUND TO BE FALSE, WE FIND NO REASON FOR THE CIT(A) TO UPHOLD THE ADDITION U/S. 68 OF THE ACT IN RELATION TO THE CREDIT OF RS.5,07,68,100/- APPEARING IN THE NAME OF M/S. GANESH. THUS, ON THI S ASPECT ALSO ASSESSEE SUCCEEDS. 10.1 BEFORE CONCLUDING, WE MAY ALSO REFER TO AN OBS ERVATION MADE BY THE ASSESSING OFFICER IN PARA 8.14 OF HIS ORDER WHEREB Y HE HAS OBSERVED THAT THE ASSESSEE HAS INTRODUCED ITS OWN UNACCOUNTED MONEY I N ITS BOOKS OF ACCOUNT IN THE GARB OF LOANS/ADVANCES THOUGH THE SAID CHARGE HAS MADE BY THE ASSESSING OFFICER BUT WE FIND THAT NEITHER IN THE O RDERS OF THE AUTHORITIES BELOW AND NOR IN THE RESULT OF ENQUIRIES CONDUCTED BY THE REVENUE, THERE IS ANY MATERIAL TO SUPPORT THE AFORESAID CHARGE MADE B Y THE ASSESSING OFFICER WHILE INVOKING SECTION 68 OF THE ACT, QUA THE THREE CREDITORS IN QUESTION. IN ANY 13 ITA NO.2262& 2013/MUM/2014 (ASSESSMENT YEAR 2009-10) CASE, WE DO NOT FIND ANY NECESSITY TO DWELL FURTHER ON THIS ASPECT IN VIEW OF OUR EARLIER DISCUSSION. 11. RESULTANTLY, WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED, THAT OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/11/2016 SD/- SD/- ( RAM LAL NEGI) (G.S. PANNU) JUDICIAL MEMBER ACCOCUNTANT MEMBER MUMBAI, DATED /11/2016 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI