ACIT (Central) , Ujjain, Ujjain V. M/s Globus Housing Pvt. Ltd., Bhopal

ITA 615/Ind/2018

AI Insights

The case revolves around the appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) which had deleted the additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The additions pertained to unsecured loans and advances received by M/s. Globus Housing Pvt. Ltd. from its director and other entities, which the AO had initially doubted due to insufficient proof of creditworthiness and genuineness. The Tribunal examined the evidence presented, including bank statements, income tax returns, and the outcomes of inquiries conducted by the AO, and concluded that the assessee had adequately proven the legitimacy of the transactions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130547 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 03-07-2018
• Other Referred Cases: CIT vs. Metachem Industries, S. Hastimal vs. CIT, Nemi Chand Kothari vs. CIT, CIT vs. Jauharimal Goel, Dy. CIT vs. Rohini Builders, CIT vs. Ram Narain Goel, Nabadwip Chandra Roy vs. CIT, Tolaram Daga vs. CIT, Electra Jaipur (P) Ltd. vs Inspecting Asstt. CIT, CIT vs K Ravindranathan Nair, Prabhavati S. Shah vs CIT, Manish Buildwell, Shahrukh Khan vs DCIT, ITO vs Dwarka Prasad, Rachhpal Singh vs ITO, CIT vs. Daulat Ram Rawatmull, Sarogi Credit Corporation vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: YASH
• Keywords: Additional evidence; Reasonable cause; Corroborative evidences; TDS
• Section: 132; 143(3); 142(1); 133(6); 264; 13; 153C

Judgement Text

Page 1 of 20 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No. 615/Ind/2018 (Assessment Year:2012-13) ACIT (Central) Ujjain Vs. M/s. Globus Housing Pvt. Ltd. 176, Zone-II, First Floor, M.P. Nagar, Bhopal (Appellant / Revenue) (Respondent/ Assessee) PAN: AAECG 0623 J Revenue by Shri P.K. Mishra, CIT-DR Respondent by Shri Hitesh Chimnani & Yash Kukreja, ARs Date of Hearing 20.07.2023 Date of Pronouncement 25.07.2023 O R D E R Per Vijay Pal Rao, JM: This appeal by the Revenue is directed against the order dated 06.04.2018 of Commissioner of Income Tax(Appeal), for Assessment Year 2012-13. The revenue has raised following grounds of appeal: “1. On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 71,00,000/- made u/s 68 of the I.T. Act, 1961 by the A.O in respect of unsecured loan lent to the assessee company by its director Sh. Ujjwal Singh Bhatija, who in turn shown deposits from the persons whose identification, creditworthiness and genuineness of credit was not proved. 2. On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 1,86,19,940/- made u/s 68 of the Income Tax Act, 1961 by the AO in respect of receipts ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 2 of 20 Page 2 of 20 from customers whose identification, creditworthiness and genuineness of credit could not be proved. 3. On the facts and in the circumstances of the case, the Ld. CIT(Appeals) erred in deleting the addition of Rs. 60,00,000/- made u/s 68 of the Income Tax Act, 1961 by the AO in respect of unsecured loan received from M/s Proximo Energy Concept Pvt. Ltd which on enquiry was found to be non operational company as a result of which the creditworthiness of the lender company could not be proved.” 2. Ground No.1 is regarding the addition of Rs. 71 lac made by the AO u/s 68 of the Act on account of unsecured loan taken by the assesse from its director, Shri Ujjwal Singh Bhatija which was deleted by the Ld. CIT(A). 3. Ld. DR has submitted that the AO has examined the creditworthiness of the loan creditor Shri Ujjwal Singh Bhatija who is also director of the assessee company and noted that he was earning remuneration from the company of Rs.18 lac and small amount of business income as well as rental income and thereby declared total income of Rs.23,61,840/- whereas he has advanced a loan of Rs.2,07,10,000/- to the assesse company. Ld. DR has referred to the details given by AO regarding the source of the loan taken by the assesse company from Shri Ujjwal Singh Bhatija and found that Shri Ujjwal Singh Bhatija has received funds from four persons and AO examined the bank accounts of those persons from where the fund was received by Shri Ujjwal Singh Bhatija before advancing the same to the assesse company. There was substantial amount of cash deposit almost more than Rs.70 lac in the bank account of those persons from whom Shri Ujjwal Singh Bhatija has received the funds which was subsequently advanced to the assessee company. 4. Ld. DR has submitted that when the AO examined the trail of the amount he found that cash was deposited at the down level of the chain from where the funds were transferred from one person to another person and finally given to the assesse company. Shri Ujjwal Singh Bhatija is also a partner in the firm M/s. Globus Housing Pvt. Ltd. which has paid a sum of Rs.44 lac to M/s. Rishi Construction which is a joint venture and the ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 3 of 20 Page 3 of 20 said sum was paid initial as contribution on behalf of the joint venture partners and subsequently Shri Ujjwal Singh Bhatija received a sum of Rs.22 lac from M/s Rishi Construction which was then advance to the assesse company. The AO noted that initially the amount of Rs.44 lac was paid by partnership firm M/s Globus Housing Pvt. Ltd. and there were cash deposit in the bank of M/s. Globus Housing Pvt. Ltd. Similarly a sum of Rs.5 lac and Rs.6 lac respectively received by Shri Ujjwal Singh Bhatija from Shri Baldev Wagadre however, the AO examined the bank account of Shri Baldev Wagadre and found that before the money was transferred to the bank account of Shri Bhatija there was cash deposit of bank account of Shri Baldev Wagadre. The AO also found that the cash was deposited in the bank account of one Shri Jitendra Thourani from whom Shri Bhatija received a sum of Rs.10 lac. Therefore the AO found that more than Rs.70 lac was deposited inthe bank accounts of the various persons from whom Mr. Bhatija received the fund and then advance to the assesse company. He has relied upon the order of the AO and submitted that once the AO has pointed out crucial fact of deposit of cash in the bank account of various persons from where the fund was originated and finally reached to the assesse company then the onus is shifted to the assesse company to prove the genuineness of the transactions identity of creditworthiness of the creditors which the assesse fails. 5. On the other hand, Ld. AR of the assesse has submitted that this addition was made by the AO in respect of the loan taken by the assesse company from director and the AO made the addition to the extent of amount which was received from three persons by the Director on the ground that some cash was deposited in the bank account of those three persons. Ld. AR has submitted that the assesse received the loan through banking channels from the director who has also received the funds through banking channels and therefore, there is no obligation on the assessee to prove the source of third person who is not related to the assesse. The assesse though is not under obligation to prove source of ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 4 of 20 Page 4 of 20 source however, since the loan was taken from director of the assesse company and therefore, the assesse has discharged its onus even to prove the source of source. The AO accepted the source of balance loan of more than Rs.1 crore taken from the director but made a disallowance of Rs.71 lac only on the basis of suspicion and surmises. The assesse produced all the relevant details and supporting evidence before the AO which includes the confirmation along with PAN and bank statement as well as ITR of the loan creditor. Further the AO has made disallowance u/s 68 in respect of loan amount received from the director and in turn the Director Shri Ujjwal Singh Bhatija has received some funds whereas the AO also made an addition of Rs.37 lac in the hands of Shri Ujjwal Singh Bhatija despite the fact that the said amount was repaid by Shri Ujjwal Singh Bhatija to Shri Baldev Wagadre and Shri Rajendra Nawang in the subsequent year through banking channel. Therefore, the AO cannot make the addition of the said amount in the hands of assesse company as well as in the hands of loan creditors. Once the said addition was made in the hand of loan creditor then the same cannot be made in the hands of assesse company. 6. He has relied upon the judgment of Hon’ble Jurisdictional High Court in case of CIT vs. Metachem Industries 245 ITR 160 wherein the Hon’ble High Court has held that once the assessee has established that amount has been invested by a particular person, responsibility of the assesse is over and there is no requirement on the part of the assesse-firm to further show whether amount invested has been properly taxed in the hands of the creditor. He has also relied upon the judgment of Hon’ble Madras High Court in the case of S. Hastimal vs. CIT 49 ITR 273 as well as the judgment of Hon’ble Guahati High Court in the case of Nemi Chand Kothari vs. CIT 264 ITR 254 and submitted that once the assesse has discharged its onus to prove the identity and creditworthiness of the creditor by producing the loan creditor before the AO along with all the relevant details and documentary evidences and also prove the genuineness of the transactions as the loan was taken through banking channel and the AO in the assessment of the loan creditor has accepted ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 5 of 20 Page 5 of 20 the loan advance by the loan creditor to the assessee but the addition was made on account of u/s 68 of the Act in the hands of loan creditor which prove that the transactions of advance of loan to the assessee by the loan creditor who is director of the assesse company is genuine. He supported/relied upon the impugned order of Ld. CIT(A). 7. We have considered the rival submissions as well as relevant material on record. In the scrutiny assessment the AO noted that the assesse company has received loan of Rs.2,07,10,000/- from its director to Shri Ujjwal Singh Bhatija during the financial year 2011-12 relevant to the assessment year under consideration and outstanding credit balance as on 31.03.2011 was Rs.1,98,38,145/-. The AO examined the ledger account of the of Shri Bhatija in the books of the assessee and further the bank account details, return of income and all source of income of Shri Bhatija. The AO accepted the loan transactions except a sum of Rs.71 lac which was received by Shri Bhatija from three persons Shri Baldev Wagadre, Shri Rajendra Nawang and Jitendra Thorani on the ground that cash deposit were made in their bank accounts before transferring the fund to Shri Bhatija who has advance loan to the assesse company. It is manifest from the assessment order that the assessee produced all the relevant details in respect of the loan transactions and source of the funds in hand of the loan creditor including return of income, bank account statement, confirmation from the loan creditor as well as third person from whom some funds were received by the loan creditor. The assesse even produced the bank account statement of those three persons from whom some funds were received by Shri Bhatija and the same were examined by the AO. 8. The only objection of the AO regarding the creditworthiness of the loan creditor was that cash amounts were found deposited in the bank accounts of those three persons namely Shri Baldev Wagadre and Shri Rajendra Nawang & Jitendra Thorani from whom Shri Bhatija received total amount about Rs.70 lac. It is pertinent to note that in the assessment of Shri Bhatija the AO made addition of Rs.37 lac in respect of ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 6 of 20 Page 6 of 20 the loan taken from these three persons namely Shri Baldev Wagadre and Shri Rajendra Nawang & Jitendra Thorani. Therefore, the AO did not doubt the remaining amount received by the assesse from those persons. Even otherwise when the assesse has discharged its onus to prove the identity and creditworthiness of the creditor as well as genuineness of the creditor then the disallowance u/s 68 cannot be made on the ground that the source of third person has not been proved satisfactory due to cash deposit in the bank account of those three persons. Further when the AO has examined the loan taken by Shri Bhatija in his assessment proceedings then the addition in the hands of the assesse company is not justified. The Ld. CIT(A) has discussed the relevant fact as under: “7.4 It is observed that during the course of assessment, the A.O. had the account statement in the ledger of the appellant and copy of the income tax return of Shri Jitendra Thorani and Shri Rajendra Nawang. Shri Baldev Wagadre had not filed IT return and their bank statements which showed amounts transferred to Shri Bhateja. Undisputedly the amounts have been received by the appellant from Shri Bhatija through banking channel and borrowings made by Shri. Bhateja from these persons were also through banking channels. 7.5 It is settled law that an assessee is only required to prove identity and creditworthiness of donor and genuineness of transaction. It is the onus cast on an assessee to prove nature and source of credits in its books of accounts. The assessee is not obligated to prove source of source of his credits. The primary onus of assessee is discharged when assessee has proved nature and source of his credits. In order to take an adverse view, the A.O. has to bring material on record to conclude that the identity identity and creditworthiness of donor is not proven and genuineness of transaction is doubtful. The burden of the assessee to prove the genuineness of the transaction and the creditworthiness of the creditor is in respect of transactions, which have taken place between the assessee and the creditor. 7.6 It is settled law that in the matter of discharge of 'onus', an assessee (in, whose books of account credit appears) is not required to prove source of the 'source'. Reliance in this regard has been placed by the appellant on the decision of Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of CIT vs. Metachem Industries (245 ITR 160 (MP) wherein it has been held that if the depositor a partner or any other individual owns the entry then the burden of the assessee firm is discharged. The relevant para from the judgement is reproduced below: ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 7 of 20 Page 7 of 20 "When cash credit is found in assessee-firm's books and assessee has established that amount has been invested by a particular person, responsibility of firm is over and there is no requirement on part of assessee-firm to further show whether amount invested has been properly taxed in creditor's hands" 7.7 Reliance has also been placed upon the judgement of Hon'ble Guahati High court in the case of Nemi Chand Kothari vs. CIT (264 ITR 254 (Guahati)). The relevant paras from the said decision are reproduced below: "The assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the assessee and the creditor. What follows, as a corollary, is that it is not the burden of the assessee to prove the genuineness of the transactions between his creditor and sub-creditors nor is it the burden of the assessee to prove that the sub-creditor had the creditworthiness to advance the cash credit to the creditor from whom the cash credit has been, eventually, received by the assessee. It, therefore, further logically follows that the creditor's creditworthiness has to be judged, vis-a- vis, the transactions, which have taken place between the assessee and the creditor, and it is not the business of the assessee to find out the source of money of his creditor or of the genuineness of the transaction, which took place between the creditor and sub- creditor and/or creditworthiness of the sub-creditors, for, these aspects may not be within the special knowledge of the assessee. Though under section 68, an Assessing Officer is free to show, with the help of the inquiry conducted by him into the transactions, which have taken place between the creditor and the sub-creditor. that the transactions between the two were not genuine and the sub-creditor had no creditworthiness, it will not necessarily mean that the loan advanced by the sub-creditor to the credits was income of the assessee from undisclosed sources unless there is evidence, direct or circumstantial, to show that the amount, which has been advanced by the sub- creditor to the creditor, had actually been received by the sub-creditor from the assessee. [Para 19] On failure on the part of the creditors to show that their sub-creditors had creditworthiness to advance the said amounts to the assessee, these amounts as a corollary, could not have been and ought not to have been, under the law, treated as the assessee's income from the undisclosed sources, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Therefore, the Assessing Officer had failed to show that the amounts, which had come to the hands of the creditors from the hands of sub- creditors, had actually been received by the sub- creditors from the assessee. In the absence of any such evidence on record, the ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 8 of 20 Page 8 of 20 Assessing Officer could not have treated the sald amounts as income derived by the assessee from undisclosed sources. The Tribunal seriously fell in error in treating the said amounts as income derived by the assessee from undisclosed sources merely on the failure of the sub-creditors to prove their creditworthiness. [Para 20] 7.8 Reference can usefully be made to the following case laws as well :- (1) The Hon'ble Allahabad High Court vide its judgment and order dated 15.4.2005 in the case of CIT v. Jauharimal Goel [2005] 147 taxman 448 (All.) has held as under:- "11. it has been held by the various High Courts that the assessee cannot be asked to prove source of source or the origin of origin vide S. Hastimal v. CIT [1963] 49 ITR 273 (Mad), Tolaram Daga v. CIT [1966] 59 ITR 632 (Assam), CIT v. Daulat Ram Rawatmull[1972] CTR 411: [1973] 87 ITR 349 (SC), Sarogi Credit Corporation v. CIT 1975 CTR (Pat)1: (1976) 103 ITR 344 (Pat)." ii) The Hon'ble Gujarat High Court, in the case of Dy. CIT v. Rohini Builders [2002] 256 ITR 360/12003] 127 Taxman 523, has held that onus of the assessee (in whose books of account credit appears) stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor is proved. In case, the Assessing Officer is dissatisfied about the source of in the hands of the creditors', the proper course would be to assess such credit in the hands of the creditor (after making due enquiries from such creditor). (iii) The Hon'ble Punjab & Haryana High Court in CIT v. Ram Narain Goel [1997] 92 Taxman 259; Hon'ble Assam High Court in the case of Nabadwip Chandra Roy v. CIT [1962] 44 ITR 591 (Assam) and in the case of Tolaram Daga v. CIT [1966] 59 ITR 632 (Assam) have expressed similar view that the assessee is not supposed to prove the source of source of the loans. (iv) The ITAT Delhi in the case of ACIT, Vs Smt. Prem Anand (L.T.A. No. 3514/DEL/2014) held that the rule that the assessee is not required to explain source of source of the fund gets buttressed by the amendment made in section 68 with effect from 01.04.2013, which empowers the AO to examine source of source in case of share application money from 01.04.2013 and no other cases prior to that. This amendment further does not give power to the AO to examine source of source of non-share capital cases and that too prior to 01.04.2013. 7.9 In view of the above discussed judicial decisions in particular the binding decision of jurisdictional Hon'ble High Court of Madhya Pradesh in the case of CIT vs. Metachem Industries (245 ITR 160 (MP) it is concluded that law is settled that in non-share capital cases, the onus on the assessee stands fully discharged if the identity of the creditor is established and actual receipt of money from such creditor ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 9 of 20 Page 9 of 20 is proved. In this case, the creditor is the director of the appellant company, his identity cannot and has not been doubted. The unsecured loans in question were given through banking channels and the borrowings made by Shri. Bhateja from other persons were also through banking channels. All these persons are income tax assessees having their own sources of income. The A.O. was not justified in making addition in the hands of the appellant raising doubt about creditworthiness of source of the source. In case, the A.O. was dissatisfied about the source in the hands of the creditor, the proper course would be to assess such credit in the hands of the creditor. 7.10 It is important to note that subsequently the same A.O. i.c. ITO 1(4), Bhopal in the case of Sh. Ujjwal Singh Bhateja for the very same years i.c. A.Y. 2012-13 has examined in detail the cash/ cheque deposits in the bank accounts of Sh Bhateja including amount received from the three persons. The assessment order u/s 143(3)/147 dated 23.12.2016 has been filed by the appellant. The detailed discussion has been made by the A.O. in para 6, 7 and 8 of assessment order. According to the A.O., it is seen that the appellant had borrowed unsecured loans amounting to Rs. 2,98,98,006/-. The evidences furnished by the assessee in support of these loans was examined by the A.O.. The A.O. was satisfied in respect of all loans except loans of Rs. 37,00,000/- from Shri Baldev Wagadre and Shri Rajendra Nawange. Therefore, the A.O. has been made addition of Rs.37,00,000/- in respect of loans from these persons. The loan from Sh Jitender Thourani and Shri Bharat Lalwani has been found explained by the A.O. in the hands of Sh Bhateja and no adverse view has been taken in this regard. In view of subsequent assessment of Sh Bhateja, the impugned loans have been examined and considered in his hands and addition in respect of two lenders has been made in his hands. Therefore, there remains no justification of the addition in the hands of appellant. 7.11 In view of the settled law, in particular the binding decision of jurisdictional Hon'ble M. P. High Court in the case of CIT us. Metachem Industries (245 ITR 160 (MP), it is held that the A.O. was not justified in making this addition. Further, in view of subsequent assessment of Sh. Ujjwal Singh Bhateja u/s 143(3)/147 for the A.Y. 2012-13, the addition of Rs.71,00,000/- made u/s 68 of the Act in the hands of appellant is not justified and cannot be sustained. The addition is therefore, deleted. 9. Once the loan creditor was subjected to scrutiny assessment by the same assessing officer who has passed impugned order in the case of assesse then the said scrutiny assessment itself establish the identity and ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 10 of 20 Page 10 of 20 creditworthiness of the loan creditor as well as genuineness of the transactions which was not doubted by the AO. The department has also not disputed this fact that Shri Bhatija also repaid the amount received from these persons in the subsequent year then the addition made by the AO without establishing fact that the cash deposited in the bank account of the third party not related to the assesse and its director is not proper and justified. Accordingly, in the facts and circumstances of the case we do not find any error or illegality in the impugned order of the Ld. CIT(A) qua this issue. 10. Ground No.2 is regarding addition made by the AO of Rs.2,06,84,940/- on account of advances received from customers u/s 68 of the Act which was deleted by the ld. CIT(A) to the extent of Rs.1,86,19,940/-. During the course of assessment proceedings the AO noted that the assesse has shown advances of customers amounting to Rs. 16,07,64,794/- out of the which Rs.10,96,24,879/- has been received during the FY.2011-12 relevant to the assessment year under consideration. The balance amount was standing as opening balance as on 01.04.2011. The AO asked the assessee to furnish name, address and PAN of the customers from whom advances received along with details of advance amounts, mode of receipt, unit/house number booked. In reply the assessee furnished lists of customers from whom advances were received. The AO observed that the assesse did not furnish PAN, address in respect of 63 customers. Thereafter the assesse furnish confirmation letters from 44 customers from whom booking advance were received during the year under consideration. The assessee also explained that remaining customers have not paid advance during the year and one customer have cancelled booking. The AO then verified the details given by the assesse and made some adverse remarks in respect of those customers whose details were furnished by the assesse. The AO finally made addition of Rs. 2,06,84,940/- in respect of advances received from 44 customers for want of PAN number, ID proof and sale documents. The assesse challenged this action of AO before the Ld. CIT(A) who has deleted ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 11 of 20 Page 11 of 20 the addition by considering the fact that the assesse produced the sale documents effected in the subsequent year and allotment letter where sale deed was yet to be executed. 11. Before the Tribunal Ld. DR has submitted that AO examined the persons from whom the assesse claimed to have received the booking amount. After examination of the record as well as persons the AO noted that only two persons appear before AO and confirmed the payment of advance and remaining of the customers did not response to the notice issued by the AO and even some of the persons were not found at the given address. Therefore, except the persons who have appeared before the AO advance claimed to have been received from other persons are not proved by the assesse. Therefore, the assesse failed to discharge its onus to establish the genuineness of the transactions. He has relied upon the order of the AO and submitted the AO has conducted inquiry and found that existence of the persons is not proved then the burden is shifter to the assesse to prove the same. He has vehemently contended that mere production of the confirmation letter would not discharge the assesse from its onus. 12. On the other hand, Ld. AR has submitted that the assesse has constructed seven towers in Bhopal and the amounts were received against booking taken from various persons. The assesse produced the allotment letter and the sale deed in respect of the persons from whom advance was received and therefore, the assesse establish the genuineness of the transactions of taking advance against booking of the house from customers. Ld. AR has further submitted in the subsequent year the assesse offered income from sale of house to these persons from whom advance were received. Once the sale has not been disputed by the AO in subsequent year then the booking of those houses cannot be doubted. He has relied upon the order of the Ld. CIT(A). 13. We have considered the rival submissions as well as relevant material on record. The Assessing officer has asked the assesse to furnish ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 12 of 20 Page 12 of 20 the details of the customers with their address and PAN No. and mode of payment, details of the house against which advance was received from the customers. The assesse produced the confirmations from the customers from whom the advance was received however, the AO was not satisfied with the confirmation and issues notices u/s 133(6) to the customers from whom the assesse claimed to have received the advances. The AO has rejected the claim of the assesse and made the addition on the ground that assesse has not produced ID proof and sale agreement in respect of these advances. On appeal the Ld. CIT(A) has considered this issue in para 8.7 to 8.15 as under: “8.7 I have carefully considered the facts of the case, perused the impugned order & remand report of the AO and considered submission & rejoinder of the appellant. The AO objected to admission of additional evidence under Rule 46A of the 1. T. Rules. It is a fact borne from the assessment order, that this matter was taken up very late just before the time barring date. As per the assessment order, the notice u/s 142(1) requiring the appellant to establish the identity, creditworthiness and genuineness of these customers was served on 25.03.2015 at 06:30 PM. The only inference which can be drawn from these facts is that the appellant did not have sufficient time to produce required evidences. It may be seen from the details that additional evidences filed before me are produced for purpose of deciding the issue involved in this appeal. These evidences only enable me to pass an order on the issue one way or other. 8.8. In Venkataramiah vs A Seetharama Reddy AIR 1963 SC 1526 interpreting the words "any other substantial cause, it was held: There may well cases where even though the court finds that it is able to pronounce judgment on the state of record as it is, and so, it cannot strictly say that it requires additional evidence to enable it to pronounce judgment, it still considers that in the interest of justice something which remains obscure should be filled up so that it can pronounce its judgment in a more satisfactory manner. Such a case will be one for allowing additional evidence." This judgment was followed in ITO BN Bhattacharya, 112 ITR 423 (Cal). 8.9 As, for an appellate authority, it is implicit in coming to a proper conclusion; it is for this reason that though the rules require new evidence to be admitted only where there is reason for the assessee for not being able to present such evidence before the AO, it is considered not only fair but justified, where the appellate authority ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 13 of 20 Page 13 of 20 itself considers such evidence necessary. The settled law is that where there is omission to submit part of documents as required by the AO, the Appellant authority may not be justified merely by drawing an adverse inference against the assessee failing to furnish certain documentary evidences as it would amount to a punitive measure. The appellate authority may well undertake to make good such omission. Here in the present case, the appellant has reasonable cause also for admission of additional evidence as evident from the fact that the issue of these evidences was first time raised on 25.03.2015 just before the completion of the assessment. Thus, it appears that the appellant has reasonable cause in ensuring compliance. Therefore, I am of the considered view that it is a fit case for admission of additional evidence. Hence, all the documents submitted by the appellant are admitted for deciding this appeal on merit and in the interest of justice. Reliance is placed on following case laws: Shahrukh Khan vs DCIT 13 SOT 61 (Mum) ITO vs Dwarka Prasad 63 ITD I(TM)(Patna) Rachhpal Singh vs ITO 94 ITD 79 (Asr) Electra Jaipur (P) Ltd. us Inspecting Asstt. CIT 26 ITD 236(Del) CIT vs K Ravindranathan Nair 265 ITR 217(Ker) Prabhavati S. Shah vs CIT 231 ITR (Bom) Manish Buildwell (Delhi High Court; order dated 20.11.2011 8.10 It is observed that all these amounts pertain to advances received from the customers in respect of flat/ house booked. These were not in the nature of unsecured loans. All these advances have been received by cheque and through banking channels. There is force in the explanation of the appellant that in order to get a house/flat/plot allotted/registered from a builder/ developer, money is to be deposited in advance as per the schedule agreed to between the parties. Accordingly, there is nothing unusual or abnormal to receive such advances from the applicants/customers in this case too. As regards the observation of the A.O. regarding the furnishing of confirmations which included customers of outside Bhopal and even abroad, the appellant has explained that in considering the compliances required to be made to various agencies, it is a general practice to obtain confirmations with regard to advances etc at the time of payments/advance deposits from the customers and to place them in their folders/file. The explanation of the appellant is reasonable and this in itself cannot be a valid ground to reject the confirmations outrightly. ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 14 of 20 Page 14 of 20 8.11 In case of 16 persons added u/s 68 by the A.O., sale deed/ registries executed subsequently have been placed on record by the AR. As the sale deed/ registries have been executed, identity of these persons cannot be doubted. The revenue in respect of these sale deeds has been considered in subsequent years and income thereon has been offered for Further, allotment letter and agreements from the 27 out of 29 persons have also been filed. It is seen that the allotment letter are in the nature of agreement to sell between builder / developer and the allottees. The amounts have been received through banking channel. Therefore, it cannot be presumed, in absence of any sufficient material or evidence that these amounts are received from any non-existent or fictitious entities. As per the accounting practice followed, the appellant would book revenue in respect of these customers when possession is handed over or registry is executed whichever is earlier. However, in two cases, allotment letter have not been filed and in some cases, complete address is not available in the allotment letter. It has to be held that these cases are not proved satisfactorily by the appellant. 8.12 It has been pointed out by the appellant that in the follow up of search under section 132 carried out in the case of Narayan Sai and Aasharam Bapu Groups including the assessee/ other associates on 09.09.2015, the appellant has made a disclosure of Rs.6,06,50,036/- which inter alia includes a sum of Rs.2,46,99,234/- on account of profit at the rate of 5% it in respect of the total revenue of registries up to 31.03.2016 totaling to Rs.49,39,84,681/- and offered for taxation in the various assessment years vide letter of the appellant dated 26.12.2017 submitted before ACIT (Central), Indore (M.P.), A copy of this letter has been filed during the appellate proceedings. Out of the total 45 customers, sale deed/ registries of 16 customers have been executed and this revenue has been considered for taxation and income thereon has been offered for taxation. Registries in respect of balance 29 customers is yet to be made. 8.13 It is important to note that in the assessments u/s 143(3)/ 153C for A.Y. 2010-11 to 2016-17, no addition in respect of advances from customers has been made. The only addition is in A.Y. 2012-13 where the A.O. has simply adopted the income assessed u/s 143(3). As the revenue in respect of 16 customers has already been considered in subsequent years and income thereon has been assessed u/s 143(3) / 153C, there is not justification of adding the respective booking amount/advance in the year under consideration as the same would amount to double taxation of the same income. 8.14 As earlier mentioned, even during the appellate proceeding in two cases, allotment letter have not been filed and in some cases, complete address is not available in the allotment letter. It has to be held that these cases are not proved satisfactorily by the appellant. The list is as follows: ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 15 of 20 Page 15 of 20 Sr. NO. Name Amount Remark 1 D.K. Ladhiani 3,00,000 Allotment letter not filed 2. B.P. Singh 25,000 Do 3. Rajesh Kumar Arora 6,00,000 Complete Address not available 4 Sexena Ji 2,00,000 Do 5 Kavita Dixit 1,00,000 Do 6 Rizvi Ji 1,65,000 Do 7 Ravi Kumar Dubey 6,20,000 Do 8 Mr. Afroz 25000 Do 9 Parul Tandan 30,000 Do Total 20,65,000 8.15 In view of the totality of facts and circumstances discussed above, out of total addition on this count of Rs. 2,06,84,940/-, the addition of Rs. 20,65,000/- is confirmed and sustained as the appellant has failed to file allotment letter / complete address of 9 persons during the appellate proceedings. The appellant will get relief for the balance amount. 14. The ld. CIT(A) has noted that sale deed as executed and registered subsequently have been placed on record by the assesse which itself established the identity of the persons. The revenue from these sales have been considered in the subsequent year and the income has been offered to tax. The assesse also produced allotment letter and agreement from 27 out of 29 persons wherein all the details of advance payment received by the assesse through banking channel were provided. Thus the Ld. CIT(A) ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 16 of 20 Page 16 of 20 has considered the documentary evidence produced by the assesse in respect of all the booking except 9 persons where the assesse did not produced allotment letter for two persons and complete address for the remaining 7 persons and consequently the Ld. CIT(A) has restricted the addition to Rs.2,65000/- in respect of 9 persons where the assesse did not produce the allotment letter and complete address. We find that once the sale was affected in the subsequent year in majority of cases through registered sale deed and in the remaining cases there were an agreements/allotment letters containing the details of the payment received by the assesse for booking of the house then the said documentary evidence goes to prove the genuineness of the transaction. The AO has not brought anything before us to dispute the correctness of the facts as recorded in the sale deed, allotment letters/agreement regarding transaction of sale, allotment and receipt of payment through banking channel. Therefore, in the facts and circumstances of the case as discussed above, we do not find any error or illegality in the impugned order of the Ld. CIT(A) same is upheld. 15. Ground No.3 is regarding addition of Rs.60,00,000/- made by the AO u/s 68 of the Act on account of unsecured loan received from M/s. Proximo Energy Concept Pvt. Ltd. which was deleted by the Ld. CIT(A). 16. Ld. DR has submitted that the loan creditor company has shown the return income only Rs.2,43,356/- and therefore, the AO doubted the creditworthiness of the said company to give loan of Rs.60 lac to the assessee. The AO issued a commission u/s 131(1)(d) of the Act to ITO- Rajgarh camped at Shajapur who has furnished the inquiry report along with bank account statement, audit report and statement of Shri Anurag Nema, Director of M/s. Proximo Energy Concept Pvt. Ltd. Thus, the Ld. DR has submitted that the AO has conducted a due inquiry to verify the creditworthiness of the loan creditor company and found that the said company was not having sufficient fund to advance the loan to the assesse but the said company have availed bank overdraft facility to the tune of Rs.12,23,75,847/- out of which sum of Rs.60 lac has been ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 17 of 20 Page 17 of 20 claimed to have been advance to the assesse company. Therefore, the AO concluded that loan creditors was having no creditworthiness to give advance to the assesse. He has relied upon the order of the AO. 17. On the other hand, ld. AR has submitted that the AO has recorded the fact that the said company has availed overdraft facility to the tune of more than Rs.12 cr and out of which sum of Rs.60 lac has been advanced to the assessee company. This fact establishes the creditworthiness of the loan creditor and genuineness of the transaction. He has relied upon the order of the Ld. CIT(A). 18. We have considered the rival submissions as well as relevant material on record. The Assessing Officer has issued a commission for conducting inquiry through ITO-Rajgarh in respect of creditworthiness and genuineness of transaction of loan taken by the assesse company from M/s. Proximo Energy Concept Pvt. Ltd. An inquiry report was submitted by ITO-Rajgarh to the AO which has been reproduced by the AO in the assessment order as under: “On examination of the bank account statement, Auditor's Report and statement recorded of Shri Anurag Nema, the following facts has emerged: (i)M/s Proximo Energy Concept Pvt. Ltd.Rajgarh company has been incorporated on 23.08.2011. (ii) M/s Proximo Energy Concept Pvt. Ltd. Rajgarh has Share Capital of only Rs.5.00 lacs. (iii) M/s Proximo Energy Concept Pvt. Ltd.Rojgarh have no factory building and no plant and machinery or any other fixed assets, stock etc., as per Balance Sheet for the FY.2011-12 Only the amounts of unsecured creditors, Bank OD and the amounts of loans advanced have been reflected in the Balance sheet. (iv) M/s Proximo Energy Concept Pvt. Ltd.Rajgarh has availed Bank overdraft facility on the strength of quarantee provided by M/s M&B Switchgears Ltd. Indore (v) M/s M&B Switchgears Ltd Indore is known at present as M/s Ujjas Energy Ltd. ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 18 of 20 Page 18 of 20 (vi) M/s Proximo Energy Concept Pvt. Ltd.Rajgarh has not carried out any business operations at all relating to energy generation for which purpose it was formed during the FY 2011-12. (vii) As per Balance Sheet for FY 2011-12, M/s Proximo Energy Concept Pvt. Ltd Rajgarh has bank OD balance of Rs.12.23.75,847/ as on 31.03 2012 (vii) As per Balance Sheet for FY 2011-12, M/s Proximo Energy Concept Pvt. Ltd.Rajgarh has advanced loan of Rs 11,73,36,972/ out of which Rs. 60,00,000/ has been advanced to the assessee company. ix) As per Balance Sheet for FY 2011-12, M/s Proximo Energy Concept Pvt. Ltd Rajgarh has raised unsecured loan of 11,85,05,717/ and the same amount of Rs 11.85,05,717/ has been repaid in the FY 2011-12 itself. (x) M/s Proximo Energy Concept Pvt. Ltd. has advanced unsecured loans of Rs. 60,00,000/ out of advances received back from E-Ally India Consulting Pvt. Ltd (Rs.22,00,000/ out of advances received back Rs. 1,73,36,4450), M/s Gupteshwar Finance & Investment Pvt. Ltd. (Rs 18,00,000/ out of advances received back Rs.2,85,00,000) and M/s H.S.Jewellers Pvt. Ltd. (Rs.20,00,000 out of advances received back Rs. 1,36,00,000/). 19. This inquiry itself establishes that the loan creditor company M/s Proximo Energy Concept Pvt. Ltd. has advance unsecured loan of Rs.60 lac to the assesse out of the advance received from E-Ally India Consulting Pvt. Ltd. of Rs.22 lac and further advance received back of Rs.1,73,36,445/-. In the said inquiry it is stated that a sum of Rs.2,85,00,000/- was also available with the said loan creditor company and all minute details are given as how much amount of loan was given by the loan creditor to the assesse out of the funds received by the said company from various persons/company to whom the advances were given earlier and received back by the loan creditor company during the year. Once the inquiry conducted by the ITO-Rajgarh commission appointed by the AO has established availability of the funds with the loan creditor company then doubting of the creditworthiness by the AO is not ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 19 of 20 Page 19 of 20 justified. The Ld. CIT(A) has considered this issue in para 9.4 to 9.9 as under: “9.4 The addition has been made as in the opinion of A.O., M/s. Proximo did not have capacity to advance loans as all the loans advanced were either out of unsecured loans obtained by it or out of bank over draft availed on the financial strength of other company. 9.5 As already discussed in para 7 of this order, the assessee is only required to discharge primary onus u/s 68 of the Act. The assessee is not required to prove source of the source. The appellant has discharged this basic onus by furnishing ledger account, confirmation letter, bank statement, copy of audited accounts and return of income of the lender. Once the primary onus is discharged, the burden shifts on to the A.O. who has to prove on the basis of material / evidences gathered that the said loan is non genuine. 9.6 It is observed that amount in question has been advanced through banking channels and the same is reflected in the books of account of the lender whose accounts have been audited by Chartered Accountant. The party is an income tax assessee and has confirmed the transaction/advance. The A.O. has held that the lender company's capacity to advance could not be accepted as it had made the advances to the appellant out of unsecured loans and bank overdraft. These reasons are not relevant to treat the amount as unexplained. The A.O. has not brought any material or evidence to prove that the unsecured loan is non genuine. 9.7 Further, from the copy of account of this party, it is seen that interest has been paid on the loan and TDS thereon has been deducted. It is also observed that the said loan was also repaid by the appellant to the lender through banking channel in the subsequent year. All these facts prove genuineness of the said loan. 9.8 It is therefore, seen that the appellant has discharged its burden in respect of this loan also. The A.O. has not brought any material to cogently show why the assessee's case cannot be accepted. The addition made purely on the basis of assumptions in disregard of facts and law cannot be sustained. 9.9 In view of the totality of facts and circumstances, I find that the A.O. was not justified in making the addition u/s 68 by treating the said unsecured loan as unexplained. The addition is therefore, deleted.” 20. Apart from inquiry report the Ld. CIT(A) has also considered that the assesse discharged its onus by furnishing ledger account confirmation letter, bank account statement, copy of audit accounts and return of ITA No.615/Ind/2018 Globus Housing Pvt. Ltd. Page 20 of 20 Page 20 of 20 income of the loan creditor which were not disputed by the AO even after conducting the inquiry through the commission. Accordingly, in the facts and circumstances of the case we do not find any error or illegality in the impugned order of Ld. CIT(A) qua this issue the same is upheld. 21. In the result, appeal of the revenue is dismissed. The Order is pronounced in the open court on 25.07.2023. Sd/- Sd/- (B.M. BIYANI) (VIJAY PAL RAO) Accountant Member Judicial Member Indore, 25.07.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore