ITO 15(1)(3), MUMBAI V. KATARIA INFRASTRUCTURE, MUMBAI

ITA 3407/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59782 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 21-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: RAJIV KHANDELWALA
• Keywords: Unexplained cash credit; Source of fund; Capital receipt
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RAO , J.M. ITA NO. 3407/MUM/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER-15(1)(3), APPELLANT MATRU MANDIR, R.NO. 108, MUMBAI 400 007. VS. KATARIA INFRASTRUCTURE, RESPONDENT 72, GANDHI NAGAR, DRAINAGE CANAL ROAD, OPP. MUNICIPAL INDUSTRIAL ESTATE, WORLI, MUMBAI 400 018 (PAN AAGFK0094A) APPELLANT BY : MR. A.K. NAYAK RESPONDENT BY : MR. RAJIV KHANDELWALA ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGA INST THE ORDER OF CIT(A)-26, MUMBAI, PASSED ON 26/02/2010 FOR THE ASS ESSMENT YEAR 2006-07 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND LAW, THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 69,50,170/- MADE U/S 68 IN RESPECT OF ALLEGED LOANS TO HAVE TAKEN FROM VARIOUS PARTIES I.E. MRS. BABITA KHANDELWAL, SHRI CHANDRAKANT MEHTA, MISS NIRMALA BH ANDARI, MISS SUSHILA BHANDARI AND SUJAY KUMAR MURARKAR BY T HE ASSESSEE IGNORING THE FACT THAT THE ASSESSEE HAS FA ILED TO DISCHARGE ONUS RESTING ON HIM IN TERMS OF ESTABLISH ING THE CAPACITY AND CREDITWORTHINESS OF THE PARTIES WHO AD VANCED THE LOANS. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF GENERATION AND SUPPLY OF ELECTRICITY ENERGY THROUGH WIND MILLS. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 2 HAD SHOWN UNSECURED LOANS OF RS. 3.96 CRORES. THE A SSESSEE WAS ASKED TO PRODUCE COPY OF RETURN OF INCOME FILED ALO NG WITH P&L A/C, BALANCE SHEET AND BANK A/C OF CERTAIN PARTIES. ON V ERIFICATION OF THE SAID DOCUMENTS FILED BY THE ASSESSEE, THE AO OBSERV ED AS UNDER:- 2.1 THE ASSESSEE HAD RECEIVED RS. 18 LAKHS FROM BAB ITA KHANDELWAL. FROM THE ACKNOWLEDGEMENT OF THE RETURN FILED IT IS SEEN THAT SHE HAS SHOWN ONLY HOUSE PROPERTY INCOME OF RS. 1,11,615/- AND ENTIRE INCOME IS FROM INTEREST ONLY. NO OTHER SOURCE OF IN COME HAS BEEN SHOWN. HER CAPITAL IS RS. 11,48,812/- WHICH IS NOT SUFFICIENT TO ADVANCE LOAN OF RS. 18.49 LAKH TO THE ASSESSEE. IT IS ALSO NOT KNOWN AS TO FROM WHOM SHE GOT THIS CAPITAL AS SHE HAS NO SOURCE OF INCOME EXCEPT INTEREST AND INTEREST ITSELF IS NOT A SOURCE OF INCOME. IT IS ALSO NOT KNOWN AS TO WHY A HOUSEWIFE WILL TAKE A LOAN FR OM SOMEBODY OR EVEN FROM HER BROTHER, JUST IN ORDER TO ADVANCE LOA N TO KATARIA INFRASTRUCTURE CORPN. AND WHY WILL SHE TAKES SO MUC H OF RISK WHEN THIS INVESTMENT IS NOT SAFE. HER ACCOUNT IS MERELY USED FOR ROTATION OF FUNDS BY KATARIA GROUP WHICH IS EVIDENT FROM THE FA CT THAT THE TOTAL OF HER BALANCE SHEET RS. 19,39,152/- OUT OF WHICH SHE HAS ADVANCED RS. 18,49,034/- TO KATARIA INFRASTRUCTURE CORPN., WHICH MEANS HER ACCOUNT IS MERELY MADE TO ACCOMMODATE ENTRY. THE SA ME IS, THEREFORE, TREATED AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASSESSEE. 2.2 CHANDRAKANT MEHTA HAS SHOWN INCOME OF RS. 2,81, 565/-,WHICH IS VERY SMALL INCOME. THEREFORE, HE HAS NO CREDITWO RTHINESS TO ADVANCE LOAN OF RS. 36,50,170/-. IT WAS SUBMITTED B Y THE ASSESSEES REPRESENTATIVE THAT THE PARTY HAD INCOME FROM CAPIT AL GAIN. HOWEVER, THE AMOUNT REFLECTED IN RETURN OF INCOME AS CAPITAL GAIN IS RS. 38,749/- AND NOT RS. 71 LAKHS EXCEPT CAPITAL GAIN A S CONTENDED. THUS, IT IS EVIDENT THAT THE SOURCE OF DEPOSITS HAS NOT BEEN PROPERLY EXPLAINED WITH DOCUMENTARY EVIDENCE. THE SAME IS, T HEREFORE, TREATED AS UNEXPLAINED CASH CREDITS IN THE HANDS OF THE ASS ESSEE. ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 3 2.3 SMT. NIRMALADEVI BHANDARI HAS GIVEN LOAN TO THE ASESSEE OF RS. 5 LAKHS. HER INCOME AS PER RETURN OFINCOME FILED IS ONLY RS. 69,090/-. NO BALANCE SHEET HAS BEEN SUBMITTED. THE COPY OF BA NK ACCOUNT OF CENTRAL BANK SHOWS CREDIT BALANCE OF RS. 854/-. TWO DEPOSITS OF RS. 2,50,000/-EACH HAVE BEEN MADE ON 10/03/2006 I.E. ON THE DATE SHE HAS GIVEN TO THE ASSESSEE LOAN OF RS. 5 LAKH. THE A SSESSEES REPRESENTATIVE HAS SUBMITTED COPY OF ACCOUNT WITH R UBBER STAMP OF ANIL & BROS. HOWEVER, IT IS NOT MENTIONED AS TO WHO M THE PAYMENT HAS BEEN MADE. THIS PROVES THAT THE PERSON HAS NO C REDITWORTHINESS AND THE MONEY HAS BEEN BROUGHT INTO CIRCULATION THR OUGH HER. THEREFORE, THE SAME IS TREATED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. 2.4 SMT. SUSHILADEVI BHANDARI HAS GIVEN LOAN TO THE ASSESSEE OF RS. 5 LAKHS. INCOME OF THE PERSON AS PER RETURN OF INCO ME FILED IS RS. 60,310/- ONLY. NO BALANCE SHEET FILED. COPY OF THE BANK STATEMENT FILED HAS CREDIT BALANCE OF RS. 715 ONLY AND THERE IS A DEPOSIT OF RS. 5,01,000/- ON THE DATE OF FORWARDING LOAN OF RS. 5, 00,525/- I.E. ON 09/03/2006. ASSESSEES REPRESENTATIVE HAS SUBMITTED COPY OF ACCOUNT OF SUDARSHAN AUTOMOBILES ONLY WITH RUBBER STAMP. HE RE TOO IT IS NOT STATED AS TO WHOM THE AMOUNT HAS BEEN GIVEN BY M/S SUDARSHAN AUTOMOBILES. THE SOURCE OF SUCH DEPOSIT COULD NOT B E EXPLAINED BY THE ASSESSEE WITH DOCUMENTARY EVIDENCE. THIS ALSO PROVE S THAT THE PERSON HAS NO CREDITWORTHINESS AND THE LOAN IS ONLY CIRCUL ATION OF MONEY. THEREFORE, THE SAME IS TREATED AS UNEXPLAINED CASH CREDIT IN THE HANDS OF THE ASSESSEE. 2.5 SHRI SANJIVKUMAR MURARKA HAS SHOWN LOAN OF RS. 5 LAKHS IN SUPPORT OF WHICH IT HAS PRODUCED ONLY BALANCE SHEET AND NOT COPY OF RETURN OF INCOME FILED FOR AY 2006-07. THE BANK ACC OUNT SUBMITTED SHOWS DEBIT ON 02/08/2005 AND 06/08/2005 AMOUNTING TO RS. 3 LAKHS AND RS. 2 LAKHS. THERE IS A CREDIT OF AN EQUA L AMOUNT 29- 30/7/2005 AND 03/08/05 I.E. JUST BEFORE GIVING LOAN TO THE ASSESSEE. ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 4 THE SOURCE OF THE SAME COULD NOT BE EXPLAINED BY TH E ASSESSEE. THEREFORE, THIS AMOUNT IS ALSO TREATED AS UNEXPLAIN ED CASH CREDITS IN THE HANDS OF THE ASSESSEE. 2.6 IN VIEW OF THE ABOVE FINDINGS, THE AO TREATED T HE UNSECURED LOAN OF RS. 69,50,170/- AS UNDISCLOSED CASH CREDITS U/S 68 OF THE ACT IN THE HANDS OF THE ASSESSEE AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE M ATTER IN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION MADE BY THE AO BY OB SERVING AS UNDER:- 4. I HAVE CONSIDERED THE RIVAL SUBMISSION AND FIND ING OF THE AO CAREFULLY AND FOUND THAT LD. AO HAS ERRED IN MAKING SUCH ADDITION OF CASH CREDIT ON A TRIVIAL GROUND AS IT CAN BE SEEN F ROM THE ASSESSMENT ORDER AS WELL AS DOCUMENTS ON RECORD THAT APPELLANT HAS SUBMITTED LOAN CONFIRMATION, COPY OF BANK STATEMENTS OF THE D EPOSITORS, COPY OF THEIR INCOME TAX RETURNS ALONG WITH BALANCE-SHCEIS WHICH PROVE THE IDENTITY, GENUINENESS OF TRANSACTIONS AND CAPACITY OF LOAN, THEREFORE, THERE IS NO LEGAL GROUND FOR THE ASSESSING OFFICER, TO PRESUME OTHERWISE THAN THE VISIBLE FACTS OF NET WORTH AND GROSS TOTAL INCOME OF THESE DEPOSITORS AS ON 31.03.2006 ARE WORTHWHILE TO REPRO DUCE: - 4.1. AS IS EVIDENT FROM THE ABOVE TABLE THAT SMT. B ABITA KHANDLWAL HAS GOT CAPITAL OF RS. 11.48 LAKHS AND THEREAFTER H AS TAKEN LOAN OF RS.7.90 LAKHS AID OUT OF SUCH CAPITAL SHE HAS GIVEN CJEDIT OF RS. ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 5 18,00,000/- WHICH COULD NOT BE PRESUMED TO BE NOT F ROM KNOWN SOURCES! SIMILARLY SHRI CHANDRAKANT MEHTA HAS GOT O PENING CAPITAL OF RS.1.13 CRORES OUT O WHICH HE HAS GIVEN LOAN OF ONL Y RS.36,50,170/-. IT IS ALSO SEEN BHANDARI HAS GIVEN RS.5 LAKHS AND SIMI LARLY OUT OF OWN CAPITAL OF RS.7.72 LAKHS SMT. SUSHILADEVI BHANDARI HAS GIVEN AS A LOAN OF RS.5 LAKHS. FURTHERMORE, SHRI SANJEEVKUMR M ORARKA HAS( DEPOSITED RS:5 C ORES OUT OF HIS OWN CAPITAL OF RS. 37.20 LAKHS. ALL THESE FACTS REVEALS CREDITWORTHINESS OF THE CREDITO RS. MOREOVER, GENUINENESS OF THE TRANSACTION HAS NOT BEEN CHALLE NGED BY THE ASSESSING OFFICER, THEREFORE, THE FLIMSY GROUND OF THE AO REGARDING CAPACITY OF REPAYMENT OF LOAN CANNOT BE APPROVED. I N FACT, NOT ONLY THE IDENTITY BUT THE CAPACITY AND THE GENUINENESS OF TH E CREDITS ARE LSO PROVED BEYOND DOUBT THEREFORE, THE BURDEN CASTED UP ON THE APPELLANT TO PROVE THE GENUINENESS OF THE CREDITS IS FULLY DI SCHARGED AS HAS BEEN HELD BY HONBLE CALCUTTA HIGH COURT VIDE IL4 ITR PA GE 689 (CAL). IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BARJATYA CHI LDREN TRUST (1997) 225 ITR 640 (MPHC) IT IS HELD THE ASSESSING OFFICE R COULD HAVE TAKEN PAINS TO EXAMINE THE INCOME TAX FILE OF ALL COMPANI ES BUT INSTEAD HE CHOOSE THE EASIER COURSE OF ORDINARY PRODUCTION OF THE CREDITOR WHICH CANNOT BE APPRECIATED. THE ASSESSING OFFICER SHOULD REALIZE THE INCONVENIENCES, WHICH AN ASSESSEE FACES IN PRODUCIN G THE CASH CREDITOR BEFORE HIM. THE PRODUCTION OF THE CASH CREDITOR IN PERSON SHOULD BE INSISTED UPON ONLY WHEN THE, GENUINENESS OF THE TRA NSACTION CANNOT BE ESTABLISHED WITH THE HELP OF DOCUMENTS AND THE RECO RD OF THE INCOME TAX DEPARTMENT ITSELF. FURTHER, IN THE CASE OF CIT VS. STELLER, INVESTMENT LTD (1991) 192 ITR 287 (DELHI) IT IS HEL D EVEN IF IT BE ASSUMED THAT THE SUBSCRIBERS TO THE INCREASED SHARE CAPITAL WERE NOT GENUINE, UNDER NO CIRCUMSTANCES, COULD THE AMOUNT O F SHARE CAPITAL BE REGARDED AS UNDISCLOSED INCOME OF THE COMPANY. NO Q UESTION OF LAW AROSE OUT OF THE TRIBUNALS ORDER. (SLP DISMISSED BY SUPREME COURT (2000) 251 ITR 263. ONE MORE CASE IS ALSO IMPORTANT TO NOTE SUPPORTS THE CONTENTION OF THE APPELLANT. IN THE CASE OF CIT VS. DOWN TOWN HOSPITAL PVT. LTD (2004) 267 ITR 439 (GUJRAT), IT I S HELD AMOUNTS RECEIVED AS SHARE APPLICATION MONEYS, THE TRIBUNAL HAD GIVEN CLEAR FINDING AFTER APPRECIATION OF THE MATERIAL ON RECOR D THAT THE ASSESSEE HAD FILED THE DETAIL REGARDING THE SOURCE OF FUNDS OF SHARES AND THEIR INCOME TAX FILE NOS. BEFORE A.O. ACCORDING TO THE T RIBUNAL THE ASSESSEE HAD ALSO SUBMITTED BEFORE THE AC THE CONFIRMATION F ROM THE CREDITORS WHERE FULL ADDRESSES, INCOME TAX NO. ETC. WERE GIVE N. THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION. FURTHER, IN CA SE OF SHREE BARKII SYNTHETICS LTD VS. CIT (2006) 283 ITR 377 (RAJASTHA N) HONBLE HIGH COURT HELD IF THE TRANSACTIONS ARE MADE THROUGH BA NKING CHANNELS AND ONCE THE EXISTENCE OF PERSONS BY NAME IN THE SHARE APPLICATIONS IN WHOSE NAME THE SHARES HAVE BEEN ISSUED IN SHOWN, TH E ASSESSEE- COMPANY CANNOT BE HELD RESPONSIBLE TO PROVE WHETHER THAT PERSON HIMSELF HAS INVESTED THE SAID MONEY OR SOME OTHER P ERSON HAD MADE INVESTMENT IN THE NAME OF THAT PERSON. THE BURDEN T HEN SHIFTS ON THE REVENUE TO ESTABLISH THAT SUCH INVESTMENT HAS COME FROM THE ASSESSEE- COMPANY ITSELF. IN ANOTHER CASE OF CIT VS. METACHE M INDUSTRIES (2000) 245 ITR 160 (MPHC) IT IS ALSO HELD THAT ONCE IT IS ESTABLISHED THAT THE AMOUNT HAS BEEN INVESTED BY A PARTICULAR PERSON, BE HE A PARTNER OR AN INDIVIDUAL, THEN THE RESPONSIBILITY OF THE ASSESSEE IS OVER. WHETHER THAT PERSON IS AN INCOME TAX PAYER OR NOT AN WHERE HE HA D BROUGHT THIS MONEY FROM, IS NOT THE RESPONSIBILITY OF THE FIRM. THE MOMENT THE FIRM GIVES A SATISFACTORY EXPLANATION AND PRODUCES THE P ERSON WHO HAS ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 6 DEPOSITED THE AMOUNT, THEN THE BURDEN OF THE FIRM I S DISCHARGED AND IN THAT CASE THAT CREDIT ENTRY CANNOT BE TREATED TO BE THE INCOME OF THE FIRM OR THE PURPOSE OF INCOME TAX. SIMILAR IS THE D ECISION IN THE EASE OF CIT VS. PITHAMPUR COMPANY PVT. LTD (2000) 244 ITR 4 42 (MP) WHEREIN AN PROPOSITION IS THAT WHERE, IN APPEAL BEFORE THE TRIBUNAL, THE ASSESSEE SHOWED THAT THE CREDITS GIVEN TO THE ASSES SEE COMPANY WERE DULY DECLARED BY THE CREDITORS IN THEIR RESPECTIVE RETURNS. WHEREUPON THE TRIBUNAL CONCLUDED THAT THE INVESTMENTS IN THE AS SSEE FIRM WAS DULY EXPLAINED AND NO ADDITION WAS CALLED FOR IN TH E HANDS OF THE ASSESCE AND DELETED THE ADDITION. IN THE CASE OF CI T VS. GLOCOM IMPEX PVT. LTD (2006) 2G5 CTR 571. IT IS HELD ONCE IT WA S ESTABLISHED THAT THE SHARE HOLDER WAS A GENUINE PERSON AND ALSO CRED ITWORTHY AND THAT SHE HAD THE REQUISITE AMOUNT FOR MAKIN THE INVESTME NT IN QUESTION, NO ADDITION COULD BE MADE UNDER SECTION 68 IN THE HAND S OF THE ASSESSEE COMPANY, REVENUE COULD NOT GO FURTHER TO FIND OUT W HETHER THE PERSON FROM WHOM THE SHARE HOLDER HAD RECEIVED MONEY THROU GH CHEQUE WAS ALSO A GENUINE PARTY AND CREDITWORTHY. ONE MORE JU DGEMENT IS WORTHWHILE TO CITE. IN THE CASE OF CIT VS. FIRST PO INT FINANCE LTD (2006) 286 ITR 477 (RAJASTHAN) IT IS HELD THAT IT WAS ALS O NOT DENIED THAT ALL THE SHARE HOLDERS/SHARE APPLICANTS WERE GENUINELY E XISTING PERSONS. IT WAS ALSO NOT DENIED THAT EACH OF THEM WAS AN INCOME TAX ASSESSEE AND COPIES OF THE RETURNS OF THEIR INCOME WERE ALSO PLACED BEFORE THE ASSESSING OFFICER. THERE WAS NO PRESUMPTION THAT TH E ASSESSEE WAS THE BENAMI OWNER OF THE INVESTMENT MADE BY THE EXIS TING PERSONS. THE TRIBUNAL WAS JUSTIFIED IN DELETING THE ADDITION. I N THE CASE OF CIT VS. SOPHIA FINANCE LTD (1994) 205 ITR 98 (FB) HELD IF THE SHARE HOLDERS ARE IDENTIFIED AND IT IS ESTABLISHED THAT THEY HAVE INVESTED MONEY IN THE PURCHASE OF SHARES, THEN THE AMOUNT RECEIVED BY THE COMPANY WOULD BE REGARDED AS CAPITAL RECEIPT AND TO THAT EX TENT THE OBSERVATIONS OF CIT VS. STELLAR INVESTMENT LTD (200 1) 251 ITR 263 (SC) ARE CORRECT. FURTHER IN THE CASE OF ASSTT. COMMISSI OILER OF INCOME TAX, INDORE VS. M/S. KALANI INDUSTRIES LTD, INDORE (2007 ) 8 ITJ 165. HELD THE ASSESSEE HAS SUBMITTED OVERWHELMING DOCUMENTS F OR PROVIDE THE IDENTITY OF THE SUBSCRIBER COMPANIES WHO ARE SEPARA TE LEGAL ENTITIES AND AUDITED UNDER COMPANIES ACT. THE INSPECTOR VISI TED THE ADDRESS FROM WHERE NOTICE U/S 131 RETURNED UNSERVED. THE AS SESSING OFFICER CANNOT QUESTION THE SOURCE OF SOURCE. NO MATERIAL B ROUGHT BY ASSESSING OFFICER TO DISBELIEVE THE GENUINENESS THE CLAIM OF THE APPELLANT. IN THE CASE OF SHANKAR INDUSTRIES VS. COMMISSIONER OF LT. (1978) 114 ITR 689 (CAL.), IT HAS BEEN DECIDED THAT IT IS NECESSARY FO R THE ASSESSEE TO PROVC PRIMA FACIE THE TRANSACTION WHICH RESULTS IN CASH C REDIT IN HIS BOOKS OF ACCOUNT. SUCH PROOF INCLUDES PROOF OF THE IDENTITY OF HIS CREDITOR, THE CAPACITY OF SUCH CREDITOR TO ADVANCE THE MONEY AND, LASTLY, THE GENUINENESS OF THE TRANSACTION. THESE THINGS MUST B E PROVED THE PRIMA FACIE BY THE ASSESSEE AND ONLY AFTER THE ASSESSEE H AS ADDUCED EVIDENCE TO ESTABLISH PRIMA FACIE THE AFORESAID, TH E ONUS SHIFTS TO THE DEPARIINENT. THEREFORE, CONSIDERING THE LEGAL ASPEC TS OF THE MATTER AND FACTS OF THE CASE, I REACH TO THE CONCLUSION THAT L D. AO HAS MADE ADDITION OF CASH CREDIT OF RS.69,50.,170/- WITHOUT CONVINCING REASON AND WITHOUT APPRECIATING THE VISIBLE FACTS OF TH CA SE. THEREFORE THE AO IS DIRECTED TO DELETE THIS ADDITION. ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 7 3. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE US. 4. THE LEARNED DR, BEFORE US, SUBMITTED THAT THE AO HAS DOUBTED THE GENUINENESS AS WELL AS THE CREDITWORTHINESS OF THE CREDITORS. THE LEARNED DR HAS INVITED OUR ATTENTION TO THE PAGE 9 OF THE CIT(A)S ORDER THAT THE CIT(A) HAS CATEGORICALLY MENTIONED T HAT GENUINENESS OF THE TRANSACTION HAS NOT BEEN CHALLENGED BY THE AO IS NOT CORRECT. FOR THIS CONTENTION, HE RELIED ON VARIOUS PARAGRAPHS OF THE AOS ORDER AND SUBMITTED THAT THE AO DOUBTED THE GENUINENESS AS WE LL AS CREDITWORTHINESS OF THE CREDITORS, BUT, THE CIT(A) WITHOUT CONSIDERING THESE ASPECTS DELETED THE ADDITION MADE BY THE AO. HE FURTHER CONTENDED THAT CREDITWORTHINESS OF THE CREDITORS HA S TO BE SEEN AND NOT THE CLOSING BALANCES OF THEIR ACCOUNTS. 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THAT THE AO HAS ONLY DOUBTED THE CREDITWO RTHINESS AND NOT THE GENUINENESS OF THE TRANSACTIONS. HE FURTHER SUB MITTED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY FILING CONFIRMA TIONS AND IT RETURNS, THEREFORE, THE ADDITION CANNOT BE SUSTAINE D. FOR THIS SUBMISSION, HE RELIED ON THE DECISION IN THE CASE O F CIT VS. ORISSA CORPORATION (P.) LTD., 159 ITR 78. THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT SOURCE OF THE SOURCES CANNO T BE ASKED TO EXPLAIN, FOR WHICH HE RELIED UPON THE DECISION IN T HE CASE OF NEMI CHAND KOTHARI VS. CIT AND OTHERS, 264 ITR 254. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW . THE ISSUE INVOLVED IN THIS APPEAL IS RELATING TO ADDITION MAD E U/S 68 OF THE ACT. THE CASE OF THE AO IS THAT THE TRANSACTIONS ARE NOT GENUINE AND CREDITWORTHINESS ALSO NOT PROVED, THEREFORE, HE MAD E THE ADDITION TOWARDS THE ADVANCES RECEIVED BY THE ASSESSEE FROM FIVE PARTIES. WHEREAS THE LEARNED CIT(A) DELETED THE ADDITION ON THE GROUND THAT ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 8 GENUINENESS IS NOT DOUBTED BY THE AO AND IN SO FAR AS THE CREDITWORTHINESS IS CONCERNED, BY RELYING ON THE SU BMISSIONS OF THE ASSESSEE VIDE PAGE 8 OF HIS ORDER DELETED THE ADDIT ION. WE FIND THAT THE AO IN HIS ORDER SPECIFICALLY OBSERVED THAT IT I S NOT KNOWN WHETHER THE CAPITAL OF MRS. BABITA KHANDELWAL OF RS. 11,48 ,812/- IS SUFFICIENT TO ADVANCE A LOAN OF RS. 18.47 LAKHS TO THE ASSESSE E. HE FURTHER OBSERVED THAT IT IS ALSO NOT KNOWN AS TO FROM WHO S HE GOT THIS CAPITAL AS SHE HAS NO SOURCE OF INCOME EXCEPT INTEREST AND INTEREST ITSELF IS NOT A SOURCE OF INCOME. HE ALSO OBSERVED THAT IT IS ALSO NOT KNOWN AS TO WHY A HOUSEWIFE WILL TAKE A LOAN FROM SOMEBODY O R EVEN FROM HER BROTHER, JUST IN ORDER TO ADVANCE LOAN TO THE ASSES SEE AND WHY SHE TAKES SO MUCH OF RISK WHEN THIS INVESTMENT IS NOT S AFE. THE ABOVE FINDINGS OF THE AO SHOW THAT HE HAS DOUBTED THE GEN UINENESS OF THE TRANSACTIONS, THEREFORE, THE OBSERVATIONS OF THE CI T(A) THAT THE AO HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACTIONS ARE NOT PROPER. EVEN IN THE CASE OF CHANDRAKANT MEHTA, THE AO OBSERVED T HAT THE AMOUNT REFLECTED IN THE RETURN OF INCOME AS CAPITAL GAIN I S RS. 38,749/- AND NOT RS. 71 LAKH EXCEPT CAPITAL GAIN AS CONTENDED. H E FURTHER OBSERVED THAT EVEN IN HIS BANK ACCOUNT JUST BEFORE GIVEN LOA N OF RS. 20 LAKHS TO ASSESSEE A DEPOSIT OF RS. 25 LAKHS WAS MADE ON 24/0 8/2005 AND ANOTHER DEPOSIT RS. 27 LAKHS ON 22/09/2005. FROM TH E ABOVE FINDINGS OF THE AO, IT IS CLEAR THAT THE AO HAS DOUBTED THE GENUINENESS AS WELL AS CREDITWORTHINESS OF THE CREDITORS. SIMILARLY, IN THE REMAINING THREE CASES ALSO THE AO HAS DOUBTED THE GENUINENESS AS WE LL AS CREDITWORTHINESS OF THEM. IN OUR CONSIDERED OPINION , THE CIT(A) WITHOUT CONSIDERING THE ISSUE PROPERLY, DELETED THE ADDITION MADE BY THE AO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAS DISCHARGED ITS ONUS BY PROVIDING RELEV ANT MATERIAL. AFTER TAKING INTO CONSIDERATION OF THE FACTS AND CIRCUMST ANCES OF THE CASE, WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE EXAM INED THOROUGHLY IN ITS ENTIRETY, THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A)AND RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE DE- ITA NO. 3407/M/10/M/2010 KATARIA INFRASTRUCTURE 9 NOVO IN ACCORDANCE WITH LAW AND AFTER PROVIDING REA SONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF JANUARY, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 20 TH JANUARY, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.