Sanraj Engineering Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 2268/DEL/2013

• Counselvise Citation: 226820114 RSA 2013
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 09-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Deemed dividend
• Section: 143(3); 142(1); 68

Judgement Text

ITA NO. 2268/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A.NO. 2268 /DEL/201 3 A.Y. : 200 6 - 0 7 M/S SANRAJ ENGINEERING PVT. LTD., A - 4/B - 1 MOHAN COOP. INDL. ESTATE, NEW DELHI (PAN: AACCS6897E) VS. INCOME TAX OFFICER, WARD - 7(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ASHWANI KUMAR, CA DEPARTMENT BY : SH. BRR KUMAR, SR. DR ORDER PER H.S. SIDHU : J M THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 1 7 / 1 /20 1 3 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X , NEW DELHI ON THE FOLLOWING GROUNDS: - (1) THAT THE ORDER DATED 17.01.2013 PASSED U/S 2'50 OF THE INCOME TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - X, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LEARNED INCOME TAX OFFICER, WARD 7(3), NEW DELHI IN MAKING AN ADDITION OF RS. 2,40,00,000/ - , WHICH HAD BEEN TAKEN BY THE APPELLANT, COMPANY AS UNSECURED LOANS FROM VARIOUS PARTIES, U/S SECTION 68 OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT THE APPELLANT COMPANY HAS ALLEGEDLY NOT BEEN ABLE TO DISCHARGE THE ONUS OF ESTABLISHING THE CREDITWORTHINESS OF THE PARTIES FROM WHOM THE UNSECURED LOANS WERE TAKEN. ITA NO. 2268/DEL/2013 2 (2) THAT THE ORDER DATED 17.01.2013 PASSED U/S 250 OF THE INCOME TAX ACT, 1961 BY THE LEARNED COMMISSIONER O F INCOME - TAX (APPEALS) - X, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE ACTION OF THE LEARNED INCOME TAX OFFICER, WARD 7(3), NEW DELHI IN MAKING AN ADDITION OF RS. 96,98,457/ - AS THE INCOME OF THE APPELLA NT COMPANY AS DEEMED DIVIDEND BY TAKING THE RECOURSE TO THE PROVISIONS OF SECTION 2(22)(E) OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED ON 30.11.2006, DECLARING INCOME AT NIL. THE CASE OF THE ASS ESSEE WAS PROCESSED U/S. 143(1)(A). SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. IN RESPONSE TO STATUTORY NOTICES U/S. 143(2) AND 142(1) OF THE I.T. ACT, 1961, ASSESSEE S COUNSEL ATTENDED THE ASSESSMENT PROCEEDINGS. DURING THE YEAR THE ASSESSEE COMPANY HAS EARNED DIVIDEND INCOME AND HAS CLAIMED STATUTORY EXPENSES AGAINST THE SAID INCOME. THE ASSESSEE COMPANY HAS TAKEN UNSECURED LOANS OF RS. 4,14,30,000/ - . THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE UNSECURED LOANS ALONGWITH THE CONFIRMATION OF THE PARTIES SUPPORTED WITH THE COPY OF THE BANK ACCOUNT AND IT PARTICULARS. AO OBSERVED THAT DESPITE REPEATEDLY ASKED, THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE THE CREDITWORTHINESS IN RESPECT OF THE FOLLOWING 6 PERSONS WITH THE IR BANK STATEMENT. I) SONAL GUPTA : RS. 35,00,000/ - II) GAURI GUPTA : RS. 27,25,000/ - III) NAVNEET GUPTA HUF RS. 5,75,000/ - IV) CACTUS MENSWEAR FASHION P LTD. RS. 20,00,000/ - V) NIRVANA INDIA P LTD. RS. 1,40,00,000/ - VI ) PARUL GUPTA RS. 12,00,000/ - ITA NO. 2268/DEL/2013 3 THE AO FURTHER OBSERVED THAT EXCEPT FOR PERSONS MENTIONED AT SERIAL NO. (IV) AND (V) ALL THE NOTICES WERE DULY SERVED. HOWEVER, NONE HAVE SUBMITTED THE DETAILS CALLED FOR. LASTLY, AO HELD THAT IN THE INSTANT CASE ALTHOUG H THE DETAILS AS FURNISHED LEAD TO THE CONCLUSION THAT THESE PEOPLE DO EXIST. HOWEVER, NEITHER THE ASSESSEE NOR ANY OF THE PERSONS GIVING LOAN HAVE BEEN ABLE TO JUSTIFY THEIR CREDITWORTHINESS. ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT AND MADE THE VA RIOUS ADDITIONS VIDE HIS ORDER DATED 29.12.2008 PASSED U/S. 143(3) OF THE I.T. ACT. AGGRIEVED WITH THE ABOVE, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DELETED THE ADDITIONS. AGGRIEVED WITH THE IMPUGNED ORDER THE REVENUE APPEALED BEFORE THE ITAT AND ITAT VIDE ITS ORDER DATED 14.5.2010 PASSED IN ITA 05/DEL/2010 (A.Y. 2006 - 07) HAS SET ASIDE THE ORDER ON TWO GROUNDS TO THE FILE OF THE LD. CIT(A). IN PURSUANCE TO THE ITAT ORDER DATED 14.5.2010, LD. CIT(A) VIDE HIS ORDER DATED 17.1.201 3 HAS DISMISSED THE APPEAL OF THE ASSESSEE AND AGGRIEVED WITH THE AFORESAID ORDER DATED 17.1.2013, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. LD. COUNSEL OF THE ASSESSEE HAS FILED THE PAPER BOOK CONTAINING PAGES 1 TO 113 HAVING COPY OF ITAT ORDER DAT ED 14.5.2010 PASSED IN ITA NO. 05/DEL/2010; COPY OF ASSESSMENT ORDER DATED 19.12.2008; COPY OF ANNUAL ACCOUNTS OF THE ASSESSEE COMPANY; COPY OF LETTER DATED 25.11.08 FILED BEFORE THE AO ALONGWITH CONFIRMATIONS; COPY OF WRITTEN SUBMISSION DATED 16.3.2009; C OPY OF WRITTEN SUBMISSION DATED 25.2.2011 AND COPY OF WRITTEN SUBMISSION DATED 23.11.2011. HE ALSO FILED A COPY OF REJOINDER TO REMAND REPORT DATED 17.9.2009 AND REITERATED THE CONTENTION RAISED IN THE GROUNDS OF APPEAL AND REQUESTED THAT THE ADDITIONS IN DISPUTE MAY BE DELETED AND ORDERS OF THE LOWERS AUTHORITIES MAY BE QUASHED. 4. ON THE CONTRARY, LD. DR RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT THE IMPUGNED ORDER IS A WELL REASONED ORDER AND THE SAME SHOULD BE UPHELD. 5 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES; ORDER OF THE TRIBUNAL; ITA NO. 2268/DEL/2013 4 PAPER BOOK FILED BY THE ASSESSEE AND REJOINDER TO THE REMAND REPORT FILED BY THE ASSESSEE. 5.1 WE FIND THAT T HIS APPEAL HAS BEEN INSTITUTED ON ACCOUNT OF THE ORDER OF THE ITAT - G - BENCH, NEW DELHI IN ITA NO. 5/DEL/2010 DATED 14.5.2010. THE ITAT HAS SET ASIDE THE ORDER ON TWO GROUNDS TO THE FILE FO THE CIT(A): (A) THE FIRST GROUND WAS RELATING TO THE APPLICABILITY OF PROVISIO NS OF SECTION 2(22)(E) AND (B) THE ISSUE REGARDING CREDITWORTHINESS OF THE LOAN CREDITORS FOR WHICH THE ITAT HAD DIRECTED THAT THE CIT(A) SHOULD CONSIDERED THE CREDITWORTHINESS OF THE PARTIES AND THEN PASSED A SPEAKING ORDER IN THIS REGARD. 5 . 2 THIS GROUND RELATES TO THE ADDITION OF RS.96,98,457/ - WHICH WAS MADE BY THE ASSESSING OFF ICER IN THE ORIGINAL ASSESSMENT ORDER AFTER MAKING THE OBSERVATIONS THAT THE ASSESSEE HAD NOT FURNISHED THE SHARE HOLDING PATTERN OF THE COMPANIES. THE A.O HAS OBSERVE D THAT THE COMPANY HAD ACCUMULATED PROFIT TO THE EXTENT OF RS.96,98,457/ - AND THE COMPANY HAD GIVEN ADVANCES OF RS.5,31,50,OOO/ - . ACCORDINGLY, THE A.O ADDED AN AMOUNT OF RS.96,98,457/ - U/S 2(22)(E) OF THE INCOME TAX ACT. 5 . 3 ON EARLIER OCCASION THE CIT(A) IN HIS ORDER DATED 23 - 10 - 2009, HAD OBSERVED THAT IN THIS CASE, THE PROVISIONS U/S 2(22)(E) WERE NOT ATTRACTED AND THE GROUND WAS DECIDED IN THE FAVOUR OF THE APPELLANT THEREBY DELETING THE AMOUNT OF RS.96,98,457/ - . 5 . 4 THE ITAT HAS OBSERVED THAT THE CIT (A) HAD PASSED A CRYPTIC ORDER AND THEREFORE, SET ASIDE FOR PASSING A SPEAKING ORDER . 6 . AS REGARDS TO ISSUE INVOLVED IN GROUND NO. 2 REGARDING ADDITION OF RS. 96,98,457/ - ON ACCOUNT OF DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T. ACT, 1961 IS CONCERNED, L D. COUNSEL OF THE ASSESSEE HAS STATED THAT THE ASSESSEE HAS ELABORATELY ARGUED THE CASE BEFORE THE LD. CIT(A) AND ALSO SUBMITTED WRITTEN SUBMISSION BEFORE HIM WHICH HAS NOT BEEN CONSIDERED ITA NO. 2268/DEL/2013 5 AND THE LD. CIT(A) HAS DECIDED THE ISSUE AGAINST THE ASSESSEE WH ICH IS CONTRARY TO THE PROVISIONS OF LAW. 6.1 ON THE CONTRARY, LD. DR RELIED UPON THE ORDER S OF THE REVENUE AUTHORITIES AND REQUESTED THAT THE SAME MAY BE UPHELD. 6.2 AFTER CONSIDERING THE ARGUMENTS OF BOTH THE PARTIES AND THE PROVISIONS OF LAW, WE ARE OF THE VIEW THAT TO ADJUDICATE THIS ISSUE, IT IS VERY MUCH NECESSARY TO REPRODUCE THE PROVISIONS OF SECTION 2(22)(E) HEREUNDER: - 'ANY PAYMENT BY A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, OF ANY SUM, WHETHER AS REP RESENTING A PART OF THE ASSETS OF THE COMPANY OR OTHERWISE MADE AFTER THE 31 ST DAY OF MAY, 1987, BY WAY OF ADVANCE OR LOAN TO A SHAREHOLDER, BEING A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFIT HOLDING NOT LESS THAN TEN PE R CENT OF THE VOTING POWER, OR TO ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER IN WHICH HE HAS A SUBSTANTIAL INTEREST (HEREINAFTER IN THIS CLAUSE REFERRED TO AS THE SAID CONCERN) OR ANY PAYMENT BY ANY SUCH COMPANY ON BEHALF, OR FOR THE I NDIVIDUAL BENEFIT, OF ANY SUCH SHAREHOLDERS, TO THE EXTENT TO WHICH THE COMPANY IN EITHER CASE POSSESSES ACCUMULATED PROFITS FOR A DIVIDEND TO ARISE UNDER THIS SUB - CLAUSE, THE FOLLOWING CONDITIONS SHOULD BE FULFILLED: I) THE COMPANY MUST BE A COMPANY SHARES OF WHICH ARE CLOSELY - HELD; II) MONEY (NOT MONEY'S WORTH) SHOULD BE PAID BY THE COMPANY; III) THE MONEY MUST FORM A PART OF THE ASSETS OF THE COMPANY; IV) IT MAY BE PAID EITHER BY WAY OF ADVANCE OR LOAN; ITA NO. 2268/DEL/2013 6 V) (A) THE PAYEE MUST BE A BENEFICIAL SHAREHOLDER OF THE COMPA NY HOLDING NOT LESS THAN TEN PERCENT OF THE VOTING POWER; OR (B) THE PAYEE MUST BE ANY CONCERN IN WHICH SUCH SHAREHOLDER IS A MEMBER OR A PARTNER IN WHICH HE HAS A SUBSTANTIAL INTEREST ;OR (C) THE PAYMENT BY ANY SUCH COMPANY SHOULD BE ON BEHALF, OR FOR THE INDIVIDUAL BENEFIT OF ANY SUCH SHAREHOLDER. THE EXPRESSION 'PERSON WHO HAS A SUBSTANTIAL INTEREST IN THE COMPANY' IS DEFINED TO MEAN A PERSON WHO IS THE BENEFICIAL OWNER OF SHARES, NOT BEING SHARES ENTITLED TO A FIXED RATE OF DIVIDEND WHETHER WITH OR WITHOUT A RIGHT TO PARTICIPATE IN PROFITS, CARRYING NOT LESS THAN TWENTY PER CENT OF THE VOTING POWER'. IF THESE CONDITIONS ARE FULFILLED, THEN A DIVIDEND WOULD ARISE TO THE EXTENT TO WHICH THE COMPANY POSSESSES ACCUMULATED PROFIT IN THE HANDS OF THE RECIPIENT. 6. 3 AFTER GOING THROUGH THE ABOVE PROVISION OF SECTION 2(22)(E) AND CONDITIONS THEREOF, WE ARE O F THE CONSIDERED VIEW THAT THE AFORESAID PROVISIONS MAKE S IT CLEAR THAT DEEMED DIVIDEND IS TO BE BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT COMPANY AND NOT IN THE HANDS OF THE ENTITY GRANTING THE LOAN. UNDER THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE FIND THAT THE COMPANY HAD NOT RECEIVED ANY LOANS FROM ANY OF THE PERSONS FALLING WITHIN THE AMBIT OF SEC 2(22)(E) OF THE INCOME - TAX ACT, 1 961 AND ACCORDINGLY THE ADDITION IN DISPUTE IS NOT SUSTAINABLE IN THE EYES OF LAW. THEREFORE, WE DELETE THE ADDITION OF RS. 96,98,457/ - IN DISPUTE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) AND ALLOW THE GROUND NO. 2 RAISED BY THE ASSESSEE IN ITS APPEAL. 7 . WITH REGARD TO ADDITION OF RS. 2,40, 00 , 000 / - U/S 68 OF THE INCOME TAX ACT IS CONCERNED. ON GOIN G THROUGH THE ASSESSMENT ORDER DATED 29 - 12 - ITA NO. 2268/DEL/2013 7 2008, THE ASSESSING O FFICER HAS MADE AN ADDITION OF RS.2,40,OO,OOO/ - IN THE HANDS OF THE 6 PARTIES AS ELABORATED ON PAGE 3 OF THE ASSESSMENT ORDER. THE ASSESSING O FFICER HAD HIGHLIGHTED THAT DESPITE VARIOUS OPPORT UNITIES, THE ASSESSEE COULD NOT ESTABLISHED THE CREDIT WORTHINESS OF THE PARTIES AND AT THE SAME TIME, THE ASSESSEE WAS ALSO GIVEN OPPORTUNITIES TO PROVIDE SUPPORTING INFORMATION OR PRODUCED THE PARTY TO ESTABLISH THE C RE DITWORTHINESS AND GENUINENESS OF T HE TRANSACTIONS. THE AO HAS EMPHASIZED THAT ISSUE OF THE CREDIT WORTHINESS OF THE PARTIES WHICH COULD NOT BE FULFILLED BY THE ASSESSEE. 7 .1. DURING THE EARLIER PROCEEDINGS BEFORE THE CIT(A), THE CIT(A) HAD DELETED THIS ADDITION BY OBSERVING THAT THESE CRE DITORS HAD BEEN IDENTIFIED THAT THEY HAD LENT MONEY TO THE COMPANY. HOWEVER, THE ITAT HAD SPECIFICALLY GIVEN DIRECTIONS THAT THE CREDITWORTHINESS OF THESE PARTIES NEEDS TO BE ESTABLISHED. IN THIS REGARD, OBSERVATIONS WERE MADE BY THE ITAT ON PAGE 8 (PARA - 8 ) OF ITS O RDER DATED 14 - 05 - 2010. 7 .2. AFTER GOING THROUGH THE SPECIFIC DIRECTIONS OF THE ITAT WHERE IN IT HAS BEEN DIRECTED THAT THE CREDIT WORTHINESS OF THESE LOAN CREDITORS SHOULD BE CONSIDERED BEFORE FINALIZING THE ISSUE, THE APPELLANT WAS PROVIDED OPP ORTUNITY TO ESTABLISH THIS ISSUE. 7 .3 DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE A.R WAS GIVEN OPPORTUNITIES TO ESTABLISH THE CREDITWORTHINESS OF THE PARTIES AS DIRECTED BY THE ITAT. 7 .4 THE A.R OF THE A SSESSEE PROVIDED DETAILS REGARDING PAN NO., BANK A/C DETAILS ETC. WITH REGARD TO ALL THESE 6 PARTIES, THE MAIN SUBMISSIONS OF THE A.R OF THE A SSESSEE CAN BE SUMMARIZED AS FOLLOWS: (A) THE DETAILS REGARDING THE PAN NO., BANK A/C, ITRS, ETC. OF THE VARIOUS PARTIE S HAD BEEN PROVIDED TO ESTABLISH THE CREDIT WORTHINESS OF THE PARTIES. IN VIEW OF THE SAME THERE WAS NO JUSTIFICATION FOR UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER. ITA NO. 2268/DEL/2013 8 (B) THE A.R ALSO SUBMITTED THAT COPIES OF CONFIRMATION AND THE BANK ACCOUNT OF THE PARTIES HAD ALSO BEEN PROVIDED TO ESTABLISH THE CREDIT WORTHINESS AND GENUINENESS OF THE TRANSACTIONS. IN VIEW OF THE SAME, THERE WAS NO REASON FOR THE ASSESSING OFFICER TO MAKE THIS ADDITION. ON THE BASIS OF THE ABOVE SUBMISSIONS, THE A.R OF THE A SSES SEE ARGUED THAT THESE WERE GENUINE TRANSACTIONS AND THE ADDITION U/S 68 WAS NOT JUSTIFIED. 7 . 5 . WE FIND THAT THE LD. CIT(A) HAVE GONE THROUGH THE FACTS OF THE CASE, OBSERVATIONS OF THE A.O, DIRECTIONS OF THE ITAT AND SUBSEQUENT SUBMISSIONS OF THE A.R OF THE APPELLANT FOR ESTABLISHING THE CREDIT WORTHINESS OF THE PARTIES. THESE GROUNDS ARE BEING FINALIZED AFTER MAKING THE FOLLOWING OBSERVATIONS AT PAGE 6 TO 8 VIDE PARA 5.3 (A) TO (H) OF THE IMPUGNED ORDER: - 5.3( A) THE A.R OF THE A SSESSEE HAS SUBMITTED DETAILS REGARDING THE BANK A/C, PAN NO., AND RETURNED INCOME OF THE VARIOUS PARTIES FROM WHOM THE LOAN HAVE BEEN TAKEN. DETAILS REGARDING THE INTEREST PAID HAVE ALSO BEEN SHOWN IN CASE OF 3 PARTIE S . THESE DETAILS ARE BEING PRODUCED AS FOLLOWS: S.NO . NAME ADDRESS PAN AMOUNT OF UNSECURE D LOAN TAKEN AMOUN T OF INTEREST PAID RETURNE D INCOME BANK NAME & ACCOUNT NO. POSITIO N AS OF NOW 1 SONAL GUPTA 1824 - 25, BHAGIRATH PLACE, CHANDNI CHOWK, NEW DELHI AIHPG5406B 3,500,000 634,754 4,30,072 INDIAN BANK, CHANDNI CHOWK, NEW DELHI, SB/5581 FULLY PAID 2 GAURI GUPTA 1824 - 25, BHAGIRATH PLACE, CHANDNI CHOWK, NEW DELHI AIHPG5405C 2,725,999 1,149,185 11,69,417 INDIAN BANK, CHANDNI CHOWK, NEW DELHI, SB/4528 FULLY PAID 3 NAVNEET GUPTA, HUF 1824 - 25, BHAGIRATH PLACE, CHANDNI CHOWK, NEW DELHI AACHN3752L 575,000 131,000 2,20,634 INDIAN BANK, CHANDNI CHOWK, NEW DELHI, SB/4528 FULLY PAID 4 CACTUS MANESA R FASHION PVT. LTD. 191, UDANI LAYOUT, CAMBRIDG E ROAD, NEAR FRANK ATONY AABCC1576 D 2,000,000 9,25,880 491 FULLY PAID ITA NO. 2268/DEL/2013 9 SCHOOL, BANGALORE 5 NIRVANA INDIA PVT. LTD. B - 10, OKHLA INDUSTRIAL ESTATES, NEW DELHI AABCN0782 C 14,000,000 15,84,540 JAMMU & KASHMIR BANK LTD., OKHLA, NEW DELHI 38701010000044 0 FULLY PAID 6 PARUL GUPTA 1824 - 25, BHAGIRATH PLACE, CHANDNI CHOWK, NEW DELHI AAJPG0540N 1,200,000 5,81,714 INDIAN BANK, CHANDNI CHOWK, NEW DELHI, 41249251 - 8 FULLY PAID (B) ON GOING THROUGH THE INFORMATION GIVEN ABOVE, LD. CIT(A) OBSERVED THAT THE RETURNED INCOME IN 4 CASES IS BELOW RS.I0,OO,000/ - EVEN THOUGH THE LOANS GIVEN RANGE FROM 5.75 LAKH TO 1.40 CRORES, THERE DOES NOT APPEAR TO BE ENOUGH JUSTIFICATION FOR THE HUGE AMOUNT OF LOAN GIVEN BY THESE PARTIES, SEVERAL TIMES THEIR ANNUAL INCOME. (C) ON GOING THROUGH THE BANK ALC OF SONALI GUPTA WITH THE INDIAN BANK , CHANDNI CHOWK A/C NO.5581/1256, IT IS OBSERVED THAT IMMEDIATELY BEFORE THE ISSUE OF THIS LOAN THERE IS A DEPOSIT OF RS.35,00,000/ - IN THE BANK A/C . (D) ON GOING THROUGH THE BANK ACCOUNT OF MS GAURI GUPTA IN INDIAN BANK A/C N0 . 4528/862, THERE ARE LARGE DEPOSITS IN THIS ACCOUNT ON 27 - 03 - 2006 AND 24 - 04 - 2006 AFTER WHICH THE AMOUNT OF LOAN HAS BEEN GIVEN TO THE A SSESSEE AMOUNTING TO RS.27,25,OOO/ - . IT IS PERTINENT TO NOTE THAT THE INCOME RETURNED DOES NOT SPECIFY THE NATURE OF INCOME AND, THEREFORE, THE CREDIT WORTHINESS OF THE PARTY CANNOT BE ESTABLISHED. (E) CONSIDERING THE BANK ALC OF 'SHRI NAVIN GUPTA OF INDIAN BANK ALC NO.257/478, IT IS ALSO OBSERVED THAT IM MEDIATELY PRECEDING THE LOAN ADVANCED TO THE A SSESSEE , LARGE AMOUNTS HAVE BEEN DEPOSITED IN THE BANK AL C WHICH HAVE BEEN USED TO JUSTIFY THIS LOAN. ITA NO. 2268/DEL/2013 10 (F) ON EXAMINING THE BANK ALC OF PARUL GUPTA IN INDIAN BANK, CHANDNI CHOWK, THE AMOUNT OF RS.12 LAKHS HAS ALSO BEEN PRECEDED BY AMOUNTS DEPOSITED IN THE BANK ALC ONLY FEW DAYS BACK. (G) WITH REGARD TO M / S NIRVANA INDIAN PVT. LTD, ON GOING THROUGH THE BANK AL C OF JAMMU & KASHMIR BANK LTD. OKHLA, AN AMOUNT OF RS.1.40 CRORES WAS ADVANCED TO THE APPELLANT IN JANUARY 2006 AND AN AMOUNT OF RS.2 CRORES ON JUST BEEN DEPOSITED IN THE AMOUNT ON 12TH JANUARY 2006. FURTHER, IT IS PERTINENT TO NOTE THAT THE RETURNED IN COME OF THIS PARTY WAS ONLY RS.1 5 ,84, 5 OOI - . THERE WAS NO EVIDENCE TO SHOW AS TO WHAT WAS THE REGULAR SOURCE OF INCOME OF THIS P ERSON WHICH COULD JUSTIFY ITS CREDIT WORTHINESS. (H) IT IS IMPORTANT TO KEEP IN MIND, NO INTEREST W AS PAID TO CACTUS THESE LOAN S OR RECEIVING ANY AMOUNTS FROM ANY OTHER PARTIES. MENSWEAR FASHION PVT. LTD., NIRVANA INDIA PVT. LTD AND PARUL GUPTA. IT IS VERY DIFFICULT TO IMAGINE THAT THESE UNSECURED LOANS WOULD HAVE BEEN GIVEN ON GENUINE GROUNDS WITHOUT EVEN PAYMENT OF ANY INTEREST. ON EXAMINING ALL THE 6 PARTIES, IT IS CLEAR THAT THE APPELLANT WAS NOT IN A POSITION TO ESTABLISH THE CREDIT WORTHINESS OF THESE PARTIES TO THE EXTENT THAT THEY HAD ANY REGULAR SOURCE OF INCOME OR THE CAPABILITY ON THE BASIS OF ANY ASSET FOR ADVANCING THE SE LOANS OR RECEIVING ANY AMOUNTS FROM ANY OTHER PARTIES. 7 . 6 KEEPING IN VIEW THE FACT AND CIRCUMSTANCES EXPLAINED ABOVE, WE ARE OF THE VIEW THAT THE OVERALL CIRCUMSTANCES CLEARLY INDICATE THAT THE BANK ALC OF THESE PARTIES HAVE ONLY BEEN UTILIZED FOR JU STIFYING THE LOAN OF THE A SSESSEE . CONSIDERING THE SPECIFIC DIRECTION OF THE ITAT FOR EXAMINING THE CREDIT WORTHINESS OF THE PARTIES, THE A.R OF THE A SSESSE HAS NOT PROVIDED ANY DETAIL LIKE BALANCE SHEET, REGULAR SOURCE OF INCOME OR THE REASON WHY ITA NO. 2268/DEL/2013 11 SUCH HUG E AMOUNT OF LOAN WAS GIVEN, IN SOME CASES, INTEREST FREE ALSO. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES, WE FIND CONSIDERABLE FORCE IN THE FINDING OF THE LD. CIT(A) THAT A SSESSEE HAS NOT DISCHARGED THE ONUS OF ESTABLISHING THE CREDITWORTHINESS OF THE PARTIES. ACCORDINGLY, LD. CIT(A), HAS RIGHTLY DISMISSED THIS GROUND OF THE ASSESSEE, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, WE UPHOLD THE SAME BY DISMISSING THE GROU ND NO. 1 RAISED BY THE ASSESSEE IN ITS APPEAL. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTY ALLOWED . ORDER PRONOUNCED IN THE O PEN C OURT ON 07 / 0 5 /20 1 5 . SD/ - SD/ - [ J.S. REDDY] [ H.S. SIDHU ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 07 / 0 5 /201 5 SRB H ATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES