ITO, New Delhi V. Shri Lalit Kumar Poddar, New Delhi

ITA 5400/DEL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74027 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 13-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Keywords: Unexplained cash credit; Source of fund; Accommodation entries
• Section: 68

Judgement Text

ITA NO. 5400/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5400/DEL/2011 A.Y. : 200 7 - 08 ITO, WARD 5(3), ROOM NO. 409-A, CR BUILDING, NEW DELHI 110 002 VS. SH. LALIT KUMAR PODDAR, E-524, GREATER KAILASH-II, NEW DELHI-110019 (PAN:-AHZPP0556G) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : SH. S.N. BHATIA, SR. DR ASSESSEE BY : PREM LATA BANSAL, ADVOCATE ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-VIII), NEW DELHI DATED 12.9.2011 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL READ AS UNDER:- I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) ERRED IN HOLDING THAT LOSS ON ACCOU NT OF INTRA DAY TRADING IN SHARES SETTLED THROUGH CLEARIN G DIFFERENCE BILLS IS NOT SPECULATIVE IN NATURE. II) THE CIT(A) ERRED IN DELETING ADDITION U/S. 68 O F THE ACT IN RESPECT OF INTEREST FREE UNSECURED LOAN RECEIVED DU RING THE YEAR TO THE TUNE OF RS. 1,55,00,000/- DESPITE THE FACT THAT THE ASSESSEE COULD NEITHER PROVE THE ITA NO. 5400/DEL/2011 2 CREDITWORTHINESS OF THE PERSONS GIVING SUCH LOANS NOR GENUINENESS OF THE TRANSACTION OF INTEREST FREE UNS ECURED LOAN FROM UNRELATED PARTIES. III) THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. 3. APROPOS GROUND NO. 1 NATURE OF LOSS ON SHARE T RANSACTION THE ASSESSEE IN THIS CASE IS ENGAGED IN THE BUSINE SS OF TRADING IN STOCKS AND SHARES AND ACTING AS A SUB-BROKER. TH E ASSESSING OFFICER NOTED THAT IN TRADING AND PROFIT AND LOSS A CCOUNT, THE ASSESSEE HAS CLAIMED A SUM OF RS. 66,35,210/- ON AC COUNT OF CLEARING DIFFERENCE. THE AO HELD THAT THE SAME B EING SPECULATIVE IS SEPARATED FROM OTHER BUSINESS LOSS FOR THE PURPOSE OF SET OFF AND CARRY FORWARD. 4. BEFORE THE LD. CIT(A) ASSESSEE HAS MADE ELABORA TE SUBMISSIONS. CONSIDERING THE SUBMISSIONS, LD. CIT(A ) HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE O N BEHALF OF THE APPELLANT AND THE FINDINGS RECORDED B Y THE ID. AO. ON CONSIDERATION, I FIND THAT THE CLEARING DIFFERENCE OF RS. 6635210/- HAS BEEN DETERMINED BY THE APPELLANT ON THE BASIS OF STATEMENT OF PURCHASE AND SALES OF SHARES AND SECURITIES MADE ON HIS BEHALF BY M/S. INDUS PORTFOLIO (P) LTD. A PERUSAL OF THE LEDGER ACCOUNT OF INDUS PORTFOLIO (P) LTD. MAINTAINED IN THE BOOKS OF THE A PPELLANT AND THE CONTRACT NOTES ISSUED BY THE SAID COMPANY CLEARLY REVEALS THAT THE BROKER HAS ACTUALLY PURCHA SED AND SOLD SHARES AND SECURITIES ON BEHALF OF THE ASS ESSEE AND NECESSARY CHARGES ON ACCOUNT OF STT, STAMP DUTY ITA NO. 5400/DEL/2011 3 AND OTHER STATUTORY LEVIES HAVE BEEN DEBITED TO THE ASSESSEE'S ACCOUNT. THE ID. COUNSELS FOR THE APPELL ANT HAVE RIGHTLY POINTED OUT THAT WITH THE INTRODUCTION OF 'ONLINE COMPUTERIZED' TRADING OF SECURITIES, THE TRANSACTIONS ARE AUTOMATICALLY RECORDED BY THE STOC K EXCHANGES AND THERE IS NO REQUIREMENT OF PHYSICAL DELIVERY OF SAID CERTIFICATES ETC. THE PURCHASE AND SALE IS ROUTED THROUGH DEMAT ACCOUNTS AND THE ONLY WAY TO F IND OUT THE PROFIT AND LOSS ON THE PURCHASE AND SALES O F SECURITIES MADE THROUGH A BROKER IS THE ACCOUNT STATEMENT SUBMITTED BY SUCH BROKER FROM TIME TO TIM E. IN THE PRESENT CASE, THE APPELLANT HAS MAINTAINED ALL THE REGULAR BOOKS OF ACCOUNTS AND ALL NECESSARY DETAILS HAVE BEEN FILED BEFORE THE AO IN THE COURSE OF ASSESSMEN T PROCEEDINGS. THEREFORE, IN MY VIEW, THE AO WAS NOT JUSTIFIED IN HOLDING THE LOSS OF RS. 66.35 LACS AS SPECULATIVE IN NATURE. ACCORDINGLY, HE IS DIRECTED TO TREAT THE LOSS OF RS. 66.35 LACS AS NORMAL BUSINESS LOSS AS HAS BEEN DONE BY HIS PREDECESSORS AND SUCCESSOR IN THE AYS 2005-06, 2006-07 AND 2008-09. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT CLEARING DIFFERENCE OF RS. 66,35,210/- HA S BEEN DETERMINED ON THE BASIS OF STATEMENT OF PURCHASE AND SALES OF SHARES OF SECURITY MADE ON ASSESSEES BEHALF BY THE BROKER. LD. CIT(A ) EXAMINED THE LEDGER ACCOUNTS MAINTAINED BY THE ASSESSEE AND HAS ALSO EXAMINED CONTRACT NOTES ISSUED BY THE BROKER. FROM THE PERU SAL OF THE SAME, LD. CIT(A) HAS FOUND THAT THE BROKER HAS ACTUALLY P URCHASED AND SOLD THE SHARES & SECURITIES ON BEHALF OF THE ASSESSEE A ND NECESSARY CHARGES ON ACCOUNT OF STT STAMP DUTY, ANOTHER STATU TORY DUES HAVE ITA NO. 5400/DEL/2011 4 BEEN DEBITED TO THE ASSESSEES ACCOUNT. LD. CIT(A ) HAS ALSO ACCEPTED THE CONTENTION OF THE ASSESSEE THAT WITH THE INTRODUCTION OF ONLINE COMPUTERIZED TRADING OF SECURITIES, TH E TRANSACTIONS ARE AUTOMATICALLY RECORDED BY THE STOCK EXCHANGES AND T HERE IS NO REQUIREMENT OF PHYSICAL DELIVERY OF SHARE CERTIFICA TES. WE FIND THAT LD. CIT(A) HAS PROPERLY EXAMINED AND HIS FINDINGS ARE COGENT. WE FURTHER NOTE THAT SIMILAR LOSS IN THE PRECEDING AS WELL AS SUCCEEDING YEAR HAVE BEEN TREATED AS THE NORMAL BUSINESS LOSS. IN THIS VIEW OF THE MATTER ALSO THERE IS NO COGENT BASIS TO TREAT T HESE TRANSACTIONS AS SPECULATIVE TRANSACTIONS. ACCORDINGLY, WE AFFIRM THE ORDER OF THE LD. CIT(A). 7. APROPOS ISSUE OF UNSECURED LOANS AMOUNTING TO RS . 15,55,00,000/-. IN THIS CASE THE AO FOUND THAT ASSESSEE HAS BORROW ED UNSECURED LOANS FROM FOLLOWING PARTIES:- A) LABH TRONICES OVERSEAS (P) LTD. RS. 5,00,000/- B) M/S PARAS INFOTECH (P) LTD. RS. 3,00,000/-. C) M/S SALWAN DEVELOPERS & PROMOTERS PVT. LTD. RS. 10,00,000/-. D) M/S BHALOTIA AGRO INDUSTIRES LTD. RS. 12,00,000/- E) M/S FIRST HI FIN LTD. RS. 30,00,000/-; F) M/S MONISHA IMPEX P LTD., KOLKATA RS, 21,00,000/- G) UP ELECTRICAL LTD. RS. 74,00,000/- TOTAL RS. 1,55,00,000/ TOTAL RS. 1,55,00,000/ TOTAL RS. 1,55,00,000/ TOTAL RS. 1,55,00,000/- -- - 7.1 THE ASSESSEE WAS ASKED TO PROVIDE DETAILS, CON FIRMATIONS, COPIES OF BANK ACCOUNTS, COPIES OF RETURNS IN RESPE CT OF THESE PARTIES. FROM THE SUBMISSIONS OF THE ASSESSEE, ASS ESSING OFFICER WAS NOT SATISFIED AND HE HELD AS UNDER:- ITA NO. 5400/DEL/2011 5 A. THERE WERE LOANS FROM 2 PARTIES VIZ. M/S LABH TRONICES OVERSEAS (P) LTD. RS. 5,00,000/- AND M/S PARAS INFOTECH (P) LTD., RS. 3,00,0001-. THESE TWO PARTIES APPEAR IN THE LIST OF ACCOMMODATION ENTRY PROVIDERS AS DETECTED AND INVESTIGATED BY THE DELHI INVESTIGATION WING OF THE INCOME TAX DEPARTMENT. ASSESSEE DID NOT FILE COPY OF RETURN OF LABH TRONIC ES OVERSEAS (P) LTD AND ITS COPY OF BANK ACCOUNT FILED IS OF ONLY TWO DAYS AS PER WHICH ON 28/8/06, THERE ARE DEPOSIT OF TWO CHEQUES OF RS. 4 LAKHS AND ONE LAKH AND ON THE SAME DAY CHEQUE OF RS. 5 LAKHS HAS BEEN SHOWN GIVEN TO THE ASSESSEE AND ON NEXT DAY OF 29/8/06, THE BANK BALANCE IS ONLY RS. 1861/- AND BANK DEDUCTED RS. 94/- FOR NOT KEEPING MINIMUM BALANCE. IN THE CASE OF PARAS INFOTECH (P) LTD ONLY COPY OF ACKNOWLEDGMENT OF FILING OF RETURN IS FILED AS PER WHICH ITS RETUNED INCOME IS ONLY RS. 10,693/-. ASSESSEE WAS ASKED BUT HE FAILED TO PRODUCE THESE TWO PARTIES FOR EXAMINATION. THUS SUBMISSIONS IN RESPECT OF THESE T\'/O PARTIES ARE NOT ACCEPTED AND THESE ARE TREATED AS UNEXPLAINED CASH CREDITS IN TH E BOOKS OF THE ASSESSEE. B. IN THE CASE OF LOAN OF RS. 10,00,000/- FROM M/S SALWAN DEVELOPERS & PROMOTERS PVT. LTD. THE ASSESSEE FILED ONLY CONFIRMATION OF ACCOUNT, HOWEVER, NEITHER ANY COPY OF INCOME TAX RETURN NOR THE BALANCE SHEET WAS FILED. ITS COPY OF BANK ACCOUNT FILED IS ONLY FOR ONE DAY AS PER WHICH THER E IS DEPOSIT BY CHEQUE OF RS. 10 LAKHS ON 28/8/08 AND ON I .THE SAME DATE, CHEQUE OF RS. 10 LAKHS HAS ITA NO. 5400/DEL/2011 6 BEEN ISSUED TO THE ASSESSEE AND ON THE VERY DAY, BANK DEDUCTED RS. 57/- FOR NOT KEEPING MINIMUM BALANCE IN THE ACCOUNT. ASSESSEE WAS ASKED BUT HE FAILED TO PRODUCE THIS PARTY FOR EXAMINATION. IT IS THUS OBSERVED THAT THE ASSESSEE IS NOT IN A POSITIO N TO PROVE CREDIT WORTHINESS AND GENUINENESS OF THE PARTY HENCE THE SAME IS TREATED AS UNEXPLAINED CASH CREDITS IN THE BOOKS OF THE ASSESSEE. C. IN THE CASE OF LOANS FROM 4 PARTIES VIZ. M/S BHA LOTIA AGRO INDUSTRIES LTD. RS. 30,00,000/- M/S FIRST HI FIN LTD. RS. 30,00,000/- M/S MONISHA IMPEX (P) LTD., KOLKATA, RS. 21,00,000/- AND M/S U.P. ELECTRICAL L TD RS. 74,00,0001- IT WAS NOTICED THAT THE ASSEESSEE HAS PROVIDED ONLY TILE CONFIRMATIONS ALONG WITH COPIES OF ACKNOWLEDGEMENTS OF ELECTRONIC RETURNS AND NEITHER THE BALANCE SHEETS NOR OTHER ENCLOSURES HAVE BEEN FILED IN ANY OF THE CASES. UPON SCRUTINY, IT WAS NOTICED THAT THE RETURNED INCOME IN ALL THE CASES IS NIL, BESIDES, FROM THE COPIES OF BANK STATEMENTS FILED, IT IS EVIDENT FROM NATURES OF TRANSACTIONS THAT ON REGULAR BASIS THE ENTRIES OF CHEQUES RECEIVED AND ISSUED ARE SIMULTANEOUS AND NO BALANCES ARE MAINTAINED IN ACCOUNTS GENERALLY, INDICATING THEIR NATURE, BEING OF ACCOMMODATION ENTRIES. ASSESSEE WAS ASKED BUT HE FAILED TO PRODUCE THESE PARTIES FOR EXAMINATION. IT IS THUS OBSERVED THAT THE ASSESSEE IS NOT IN A POSITIO N TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THESE FOUR PARTIES HENCE THE ITA NO. 5400/DEL/2011 7 AMOUNTS RECEIVED ARE TREATED AS UNEXPLAINED CASH CREDITS IN THE BOOKS OF THE ASSESSEE. IN THE CASE OF ABOVE SIX PARTIES HAVING LOCAL ADDRE SS (EXCEPT MONISHA IMPEX (P) LTD., KOLKATA), UPON ENQU IRY CONDUCTED THROUGH THE INCOME TAX INSPECTORS OF THIS CIRCLE, THESE PARTIES WERE FOUND NOT EXISTING / FUN CTIONING AT THEIR ADDRESSES GIVEN BY THE ASSESSEE. THE GENUINENESS OF CONFIRMATIONS SAID TO BE OF THE ABOV E MENTIONED PARTIES AS FILED BY THE ASSESSEE IS ALSO DOUBTFUL AS IN ALL THE CONFIRMATIONS FROM THE SIGNA TURES PUT ON THEM, IT IS NOT VERIFIABLE AS WHAT IS THE NA ME OF THE PERSON WHO HAS SIGNED THESE CONFIRMATIONS AND I N WHAT CAPACITY HE HAS SIGNED. BESIDES, THEIR UNEXPLA INED NATURE, THE ASSESSEE HAS NOT PAID/PROVIDED ANY INTE REST IN RESPECT OF ALL ABOVE LOANS, THEREFORE, THE SAME ALSO SUFFER FROM DEFECTS AS REGARDS THE PROVISIONS CONTA INED IN SECTION 56(2)(VI) IN THE SENSE THAT THE SAME ARE WI THOUT CONSIDERATION AND THEREFORE, REQUIRED TO BE ADDED T O THE RETURNED INCOME OF THE ASSESSEE. THUS, THE 'AMOUNT OF LOANS FROM SEVEN PARTIES AS NOTED ABOVE, AMOUNTING TO RS. 1,55,00,000/- IS ADDED TO THE RETURNED INCOME O F THE ASSESSEE IN LIGHT OF THE DISCUSSIONS MADE IN THIS P ARA. 8. AGAINST THE ABOVE ORDER THE ASSESSEE APPEALED BE FORE THE LD. CIT(A). ASSESSEE ALSO FILED ADDITIONAL DOCUMENTS. LD. CIT(A) ALSO OBTAINED THE REMAND REPORT FROM THE ASSESSING OFFIC ER. CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LD. CIT(A) AGREED WITH THE CONTENTION OF THE ASSESSEE AND HE OBSERVED AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE O N BEHALF OF THE APPELLANT AND THE FINDINGS RECORDED B Y THE ITA NO. 5400/DEL/2011 8 LD. AO. ON CONSIDERATION, I FIND THAT THE APPELLANT HAS FURNISHED ALL NECESSARY EVIDENCE, NAMELY, CONFIRMA TIONS, COPY OF RETURNS, COPY OF BALANCE SHEET AND P&L A/C AND THE COPY OF BANK STATEMENTS EVIDENCING OBTAINING AN D REPAYMENT OF LOANS IN QUESTION. THEREFORE, THE PRIM ARY BURDEN PLACED ON THE APPELLANT TO PROVE THE IDENTIT Y AND CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F TRANSACTIONS WAS DULY DISCHARGED. AS REGARDS, THE F ACT THAT THE CREDITORS WERE NOT FOUND AT THEIR RESPECTI VE PLACES AT THE TIME OF INSPECTORIAL ENQUIRIES, THE A PPELLANT HAS CLARIFIED THAT ALL THE CREDITORS ARE CORPORATE ENTITIES DULY REGISTERED WITH ROC AND ARE ALSO REGULAR INCO ME TAX ASSESSEES. THEREFORE, MERELY BECAUSE AT A PARTICULA R POINT OF TIME THEY WERE NOT FOUND AT THE GIVEN ADDR ESSES WOULD NOT BE SUFFICIENT TO HOLD THAT THE SAID COMPA NIES ARE NON-EXISTENT ENTITIES AND THE TRANSACTIONS ARE BOGUS. FURTHER, ON BEING REQUIRED IN THE COURSE OF REMAND PROCEEDINGS, ALL THE CREDITORS HAVE APPEARED BEFORE THE AO AND THEIR STATEMENTS HAVE BEEN RECORDED. THEREFO RE, THE CASE OF THE APPELLANT IS THAT THE ISSUE OF LOAN S/CASH CREDITS CANNOT BE DECIDED ON THE BASIS OF A SOLITAR Y FAILURE ON THE PART OF THE APPELLANT TO PRODUCE THE CREDITO RS IN THE COURSE OF ASSESSMENT ON SHORT NOTICE. ON CONSIDERATION OF THE AFORESAID SUBMISSIONS OF THE APPELLANT AND ON CAREFUL APPRECIATION OF THE DOCUME NTS PLACED BEFORE ME, I FIND THAT THE ADDITION IN QUEST ION IS NOT SUSTAINABLE. AS STATED EARLIER, IN THE COURSE OF REMAND PROCEEDI NGS, ALL THE CASH CREDITORS HAVE APPEARED BEFORE THE ID. AO AND IN THE STATEMENTS RECORDED BY HIM ALL OF THEM HAVE CONFIRM ED THE ITA NO. 5400/DEL/2011 9 FACT OF LENDING MONEY TO THE APPELLANT AND REPAYMEN T THEREOF IN THE SUBSEQUENT FY ITSELF. A PERUSAL OF THE STATE MENTS REVEALS THAT THE AO HAS ALSO RAISED ISSUE OF IMMEDIATE SOUR CE OF MONEY PAID TO THE APPELLANT TO WHICH SPECIFIC REPLI ES HAVE BEEN GIVEN BY THE REPRESENTATIVES OF THE CREDITOR C OMPANIES IN THEIR STATEMENTS. FOR INSTANCE, SH. JITENDER KUMAR, APPEARING ON BEHALF OF M/S. BHALOTIA AGRO INDS. (P) LTD., HAS STATED THAT 'THE AMOUNT HAS BEEN TRANSFERRED FROM THE CANCELLAT ION OF PAY ORDER AMOUNTING TO RS. 50 LACS ON 05.02.2007 OUT OF WHICH RS. 12 LACS WAS PAID AS LOAN TO SH. LALIT KUMAR PODDAR. ' SIMILARLY, SH. HARIOM, APPEARING ON BEHALF OF M/S. PARAS INFOT ECH (P) LTD., HAS STATED THAT 'HE HAS INVESTED ON BEHALF OF MIS. PARAS INFOTECH (P) LTD. A SUM OF RS. 3 LACS IN FY 2006-07 .' SIMILAR STATEMENT HAS BEEN GIVEN ON BEHALF OF MONISHA IMPEX (P) LTD., SALWAN DEVELOPERS & PROMOTERS (P) LTD., M/S. UP ELE CTRICALS LTD. AND M/S. FIRST HI-FIN LTD. IN THE CASE OF M/S. UP ELECTRICALS LTD. AND FIRST HI-FIN LTD., IT WAS ALSO STATED BY S H. PRAMOD KUMAR THAT THE LOANS WERE NOT GIVEN INTEREST FREE A ND INTEREST @10% WAS CHARGEABLE. AS REGARDS, OBSERVATION OF THE AO THAT THE CREDITOR COMPANIES HAD NEGLIGIBLE /INSIGNIFICANT INCOMES IN THE RESPEC TIVE YEARS, I FIND THAT COPIES OF BALANCE SHEETS OF ALL THE CREDI TOR COMPANIES HAVE BEEN FILED BY THE APPELLANT AND THE SAME HAVE BEEN EXAMINED BY THE ID. AO, AT LEAST, IN THE COURSE OF REMAND PROCEEDINGS, IF NOT EARLIER. AS PER THE SAID BALANC E SHEETS, ALMOST ALL THE CREDITOR COMPANIES WERE HAVING SUFFI CIENT SHARE CAPITAL AN9 RESERVE AND SURPLUS NOT ONLY IN THE YEA R UNDER CONSIDERATION BUT ALSO IN THE EARLIER YEARS. ITA NO. 5400/DEL/2011 10 8.1 THEREAFTER, LD. CIT(A) HAS MADE ELABORATE ANALY SIS OF THE BALANCE SHEET OF THE PARTIES. CONSIDERING THE SAM E, LD. CIT(A) FURTHER HELD AS UNDER:- A PERUSAL OF THE AFORESAID REVEALS THAT LABHTRONIC S OVERSEAS (P) LTD. HAD SHARE CAPITAL AND RESERVE AND SURPLUS AGGREGATING TO RS. 10159065/- AS ON 31.03.2 006 AND THEREFORE, IT CANNOT BE SAID THAT IT DID NOT HA VE CAPACITY TO ADVANCE THE LOAN OF RS. 5 LACS TO THE ASSESSEE. SIMILARLY. PARAS INFOTECH (P) LT9. HAD SH ARE CAPITAL AND RESERVE AND SURPLUS OF RS. 14515959/- A S ON 31.03.2007 AND SHOULD NOT HAVE HAD ANY DIFFICULTY I N ADVANCING A LOAN OF RS. 3 LACS TO THE ASSESSEE. LIK EWISE, SALWAN DEVELOPERS AND PROMOTERS (P) LTD. HAD SHARE CAPITAL AND RESERVE AND SURPLUS OF RS. 18799200/- A S ON 31.03.2007, BHALOTIA AGRO INDUS. LTD. HAD CAPITAL A ND RESERVE AND SURPLUS OF RS.39972000/-, FIRST HI FIN LTD. HAD OWN FUNDS OF RS. 122530700/-, MONISHA IMPEX (P) LTD . HAD RS. 72376500/- AND U.P. ELECTRICALS LTD. HAD SU RPLUS FUNDS OF RS. 43443948/- AS ON 31.03.2007 AND SHOULD NOT HAVE FACED ANY DIFFICULTY IN ADVANCING LOANS TO THE ASSESSEE. IN VIEW OF THE AFORESAID, I DO NOT FIND A NY MERIT IN THE VIEW TAKEN BY THE ID. AO THAT THE CREDITOR COMPANIES HAD NO MEANS TO PAY THE MONEY TO THE ASSESSEE. FURTHER, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO SUGGEST THAT BEFORE RECEIVING LOANS, THE APPELLANT HAD MADE MONEY AVAILABLE TO THE CREDITORS . IN VIEW OF THE AFORESAID FACTS, MATERIAL ON RECORD AND CASE ITA NO. 5400/DEL/2011 11 LAWS RELIED UPON BY THE ID. COUNSELS, I HOLD THAT T HE ADDITION OF RS. 1.55 CRORES IS NOT SUSTAINABLE AND HENCE, THE SAME IS BEING DELETED. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPE AL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE ASSESSEE HAS FURNISHED ALL THE NECES SARY EVIDENCES NAMELY, CONFIRMATION, COPY OF RETURNS, COPY OF BALA NCE SHEET AND PROFIT AND LOSS ACCOUNT AND COPY OF BANK STATEMENTS . FURTHER WE NOTE THAT IN THE COURSE OF REMAND PROCEEDINGS, ALL THE CASH CREDITORS HAVE APPEARED BEFORE THE AO AND THEIR STATEMENTS HA VE BEEN RECORDED. FURTHER, WE NOTE THAT THE PARTIES ARE REGISTERED WITH THE REGISTRAR OF COMPANIES (ROC) AND ARE INCOME TAX ASS ESSEES. THEREFORE, MERELY BECAUSE AT A PARTICULAR POINT OF TIME THEY WERE NOT FOUND AT THE GIVEN ADDRESSES WOULD NOT BE SUFF ICIENT TO HOLD THAT THE SAID COMPANIES ARE NON-EXISTENT ENTITIES AND THE TRANSACTIONS ARE BOGUS. 10.1 THUS, WE NOTE THAT ALL THE CREDITORS HAVE APPE ARED BEFORE THE AO AND IN THE STATEMENTS RECORDED BY THEM CONFIRMED THE MONEY LENDING TO THE ASSESSEE AND THE REPAYMENT THEREOF I N THE SUBSEQUENT FINANCIAL YEAR ITSELF. THE FACT THAT TH E AMOUNTS BORROWED HAVE BEEN REPAID IN THE NEXT FINANCIAL YE AR HAS NOT BEEN DOUBTED BY THE REVENUE. UPON PERUSAL OF THE STATE MENTS BY THE PARTIES THE LD. CIT(A) OBSERVED THAT AO HAS RAISED ISSUE OF IMMEDIATE SOURCE OF MONEY PAID TO THE ASSESSEE TO W HICH SPECIFIC REPLIES HAS BEEN GIVEN BY THE REPRESENTATIVE OF TH E CREDITORS COMPANY IN THEIR STATEMENTS. FURTHER, AS REGARDS T HE AOS OBSERVATION THAT THE CREDITOR COMPANY HAVE NEGLIGE NT/INSIGNIFICANT INCOME, WE FIND THAT THE LD. CIT(A) HAS DULY EXAMI NED THE BALANCE ITA NO. 5400/DEL/2011 12 SHEET OF THESE PARTIES AND FROM THE ANALYSIS OF T HE SAME, IT WAS FOUND THAT THE PARTIES WERE HAVING ADEQUATE FUNDS. THIS IS NOT BEING DISPUTED BY THE REVENUE. 11. IN THESE CIRCUMSTANCES, WE NOTE THAT ALL THE DO CUMENTARY EVIDENCE REQUIRED HAVE BEEN SUBMITTED BY THE ASSESS EE, THE LOAN CREDITORS HAVE ALSO APPEARED BEFORE THE AO IN THE R EMANDS PROCEEDINGS AND CONFIRMED THE LOAN, STATEMENT REGAR DING IMMEDIATE SOURCE OF FUNDS FOR ADVANCE OF LOAN HAS A LSO BEEN GIVEN WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE. F URTHERMORE, THE LOANS HAVE BEEN REPAID IN THE SUBSEQUENT FINANCIAL YEAR. IN THESE CIRCUMSTANCES, WE FIND THAT THERE IS NO INFIRMITY I N THE ORDER OF THE LD. CIT(A) IN HOLDING THAT THE LOAN OBTAINED BY THE ASSESSEE WAS PROPERLY SUPPORTED BY THE EVIDENCES. THUS, WE AFF IRM THE ORDER OF THE CIT(A). 12. IN THE RESULT, THE REVENUES APPEAL STANDS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/1/2014. SD/- SD/- [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 17/1/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES