The DCIT, Central Circle-1(2), Ahmedabad V. M/s. Sarthav Builders, Ahmedabad

ITA 908/AHD/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3650 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 23-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Tangible material; Third party statement; Accommodation entries; Set aside
• Section: 68; 148; 132; 143(3); 208

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ A’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And Ms MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./ITA No. 908/AHD/2019 िनधाᭅरण वषᭅ/Asstt. Year: 2010-2011 D.C.I.T., Central Circle-1(2), Ahmedabad. Vs. M/s. Sarthav Builders, B-1, Abhishree Complex, Opp. Star Bazar, Satellite, Ahmedabad. PAN: ABFFS3812C (Applicant) (Respondent) Revenue by : Shri Vijaykumar Jaiswal, CIT,D.R Shri S.S. Shukla, Sr.D.R Assessee by : Ms Nupur Shah, A.R सुनवाई कᳱ तारीख/Date of Hearing : 12/04/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 27/04/2022 आदेश/O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-11, Ahmedabad, dated 18/03/2019 (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") for the Assessment Year 2010-2011. ITA no.908/AHD/2019 Asstt. Year 2010-11 2 2. The Revenue has raised following grounds of appeal 1. On the facts and in the circumstances of the case and in law, the Ld. CIT{A) has erred in law and on facts in deleting the addition of Rs.1,10,19,084/- as unexplained cash credits u/s.68 of the Act. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1 15.45.000/- made on account of unsecured loan u/s.68 of the Act. 3. On the facts and in the circumstances of the case and in law, the Ld-CIT(A) ought to have upheld the order of the A.O. 4. It is therefore, prayed that the order of the Ld.CIT(A) be set aside and that of the A.O. be restored to the extent. 5. The appellant craves leave to add, amend , alter or delete any of the grounds of appeal. 3. The first issue raised by the Revenue is that learned CIT (A) erred in deleting the addition made by for Rs. 1,10,19,084.00 on account of unexplained cash credit under section 68 of the Act. 4. The necessary facts to be stated in brief for the purpose of the adjudication of the impugned appeal are that the assessee in the present case is a partnership firm and engaged in the business as builder, developer, society organizer and scheme organization. There was a search and seizure operation under section 132 of the Act, at the premises of Barter Group dated 4 th December 2014. Shri Anil Hiralal Shah and Sanket Jitendra Bhai being part of the group were also subjected to the same search. As a result of search, an excel sheet marked as ‘ccccc’ was found from the computer of Shri Anil Hiralal Shah. The hard copy of the same sheet was also found from the premises of Shri Sanket Jitendra Bhai. The impugned excel sheet was containing various financial transactions such as deposit of cash and withdrawal of cash from the bank besides other financial transactions. The impugned sheet was containing the transactions for the period beginning from 2 nd April 2010 to 27 th August 2010 in the name of different persons including the assessee. It was showing the cash receipt of ₹69,31,41,997/- only. Out of such receipt, a sum of ₹68,86,46,970/- was deposited in different banks accounts of different persons, used for personal expenses or used for arranging the ITA no.908/AHD/2019 Asstt. Year 2010-11 3 accommodation entries. The entries reflected in the excel sheet was duly correlated with the cash deposits in the bank accounts of different individuals/parties. In the bank account of the assessee, there was the deposit of cash amounting to ₹5 lakhs (in assessment order 52,5000) in the assessment year 2011-12 i.e. subsequent AY which was not explained and therefore the same was treated as unexplained cash credit under section 68 of the Act in the hands of the assessee. 4.1 Based on the above, the AO analyzed the bank statements of the Assessee for the year under consideration and there was cash deposit of Rs. 1,10,19,084/- which was immediately transferred to various firms and companies controlled and managed by ‘Sutaria Family/Group’ and Barter Group. Such cash deposit was not reflected in the return of income filed by the assessee. As such the assessee has filed the return of income declaring an income of Rs. 23,99,920/- only under the head business and profession. Accordingly, the AO formed the reasons to believe that the income of the assessee to the extent of cash deposit of ₹ 1,10,29,084/- has escaped assessment in respect of which the assessee failed to disclose fully and truly all material facts necessary for the assessment. Thus, the AO initiated the proceedings under section 147 of the Act by issuing a notice under section 148 of the Act. 4.2 During the assessment proceedings, it was explained by the assessee that cash deposits was made out of the cash balance available with it on account of regular withdrawal on regular interval and an amount aggregating to Rs. 30 Lacs has been deposited on account staff loan received back. According to the assessee such cash was utilized to deposit in the bank account in the year under consideration. 4.3 The assessee, likewise, further submitted that excel sheet namely CCCC.xls was seized from the premises of third party therefore it cannot make any comment on such sheet. Shri Anil Hirala Shah and Sanket J Shah from whose custody excel Sheet CCCC.xls was fund is not related to it in any capacity. Further the assessee ITA no.908/AHD/2019 Asstt. Year 2010-11 4 requested for cross examination. As per the assessee, the impugned bank account was duly disclosed in the income tax return. The assessee also submitted that there was substantive addition made on the basis excel sheet CCCC.xls in hand of Sarthav Infrastructure Pvt LTD(SIPL), hence no further addition is required to be made. Thus, the assessee contended that such cash deposit cannot be treated as unexplained cash credit under section 68 of the Act. 4.4 However, the AO during the assessment proceedings observed that there was sufficient cash balance available with the assessee all the time but despite that the assessee was withdrawing cash and depositing the same in the bank account in the denomination of ₹ 5 Lacs. The AO also perused the cash book of the assessee and found that there was no other transaction in the cash book except withdrawal from the bank and deposit the same in the bank. As per the AO, the transactions of withdrawing cash and depositing the same in the bank account was very unusual and without any rationality. Furthermore, the assessee also failed to justify the modus operandi adopted by it for withdrawing and depositing the cash in the bank account. Thus, in the absence of any justification, the AO was of the view that the transactions reflecting in the cash book are not genuine. As per the AO, it was the onus upon the assessee to explain the transactions of cash deposits and withdrawals based on the documentary evidence. But the assessee failed to do so. The submission of the assessee that cash of Rs. 30 Lacs deposited out staff loan received back is also not acceptable for the reason that details of staff from whom amount was received was not provided. Further, the assessee’s contention with regard to evidentiary value of the excel sheet found and seized from third party and pertaining to different period and demand of cross examination is also devoid of merit for the reason that addition is purposed on the basis of huge cash deposit made during the year. As such search material and statements were only referred to understand the modus operandi but no addition is purposes on the same in the year under consideration. Thus, the AO treated the amount of Rs. 1,10,29,084/- as unexplained cash credit under section 68 of the Act by making the addition to the total income of the assessee. ITA no.908/AHD/2019 Asstt. Year 2010-11 5 5. Aggrieved assessee preferred an appeal to the learned CIT-A. 6. The assessee before the learned CIT(A) reiterated that cash was deposited out of cash balance and withdrawal made during the year and all the withdrawal and deposits are duly recorded in the books of accounts and explained during the assessment proceedings. The AO without doubting the cash book and bank book merely treated the deposits as unexplained cash credits on basis of surmises and conjecture. The assessee further submitted that there is no limitation under the Act with regard to cash withdrawal or deposits. There was also no evidence brought on record by the AO that cash withdrawal was invested somewhere else and cash deposited was sourced from any other sources. Therefore, the addition made merely on basis of surmise and conjecture cannot be sustained and to support the argument, the assessee relied on various case laws which are incorporated in the order of ld. learned CIT(A). 7. The learned CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: The facts that the source of cash deposit was out of cash withdrawal from the bank on recurring basis which is verifiable from the copy of bank book and copy of cash book and the said bank book for F.Y.2009-10 relevant to A.Y.2010-11 and cash book alongwith a detailed chart were also submitted to the AO during the course of assessment proceedings vide its submission dated 10.11.2017 &13.12,2017. It is found that the AO has not taken into consideration the said chart submitted by the appellant firm. The appellant firm has made regular withdrawals at regular intervals and the amounts that were remaining with the appellant firm out of such withdrawals were re-deposited in the bank account. The appellant firm has explained each item of cash deposit with regards to its books of accounts i.e. cash book vis-a-vis bank statement and hence it cannot be said that the appellant firm had unexplained cash deposit and hence the addition made by the AO is found incorrect and is based on merely on surmises and conjectures. The cash book itself clearly reflects that the appellant firm had sufficient cash in hand to deposit the same in the bank. The appellant firm has discharged its onus by submitting cash book which clearly reflects all the cash deposits and withdrawals as all entries of withdrawals and deposits in the bank both stand recorded in the cash book and the availability of funds with the appellant firm is sufficient to meet the outflow of money deposited in the bank account and the AO cannot brush aside the said facts. The appellant firm relied upon the judgment in the case of Dhakeshwari Cotton Mills Ltd. Vs. CIT, 26 ITR 775 (SC).Considering all the aforesaid facts, I am in agreement with the contention of the appellant firm that the cash deposit in aggregate of ,Rs,1,10,19,084/- is out of the cash withdrawn from bank account which is duly explained by the appellant firm. ITA no.908/AHD/2019 Asstt. Year 2010-11 6 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX I agree with the contention of the appellant that the seized material MS excel sheet "CCCCC.xls" found and seized from the possession of Shri Anil Hiralal Shah & Shri Sanket Vora is required to be treated as dumb entry and dumb document in the case of the appellant firm having no evidential value and no addition can be made in respect of such alleged unexplained cash deposit in the hands of the appellant firm. Following the decision of _Hon’ble Apex Court in the case of B.B.I._Vs. V.C. SHUKLA & Others reported in 3 Supreme Court cases 410(1998) wherein, it has been held that the loose paper have no evidential value unless and until the authority brings on record any. independent clinching material evidence in support of the said dumb document which in the form of unsigned rough paper. Further, the said ratio has been followed by jurisdictional Gujarat_High_. Court in the case of DCIT (Asstt.) Prathana Construction_Pyt._Ltd__(Tax Appeal No. 79 of 2000) wherein, the principle and ratio laid down by the Hon'ble Supreme Court in the case of CBI vs.Shukla 1998 (3) SCC 410 that loose paper found from the possession of third party cannot be considered as an evidence in the case of the appellant unless and until the AO brings on record cogent material and/or independent clinching evidences to fasten the liability on the appellant. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX The appellant firm has also relied upon the decision of Hon'ble Supreme,Court in the case of CIT ys Shailesh Kumar Rasiklal Mehta (2014) 41 taxmann.com 550 (Gujarat) and other Tribunal decision for the principle of telescoping effect and the facts of appellant firm's case are squarely covered by the judicial pronouncements relied upon by the appellant firm for the telescoping effect that cash deposit is duly reflected in the cash book for the F.Y.2009- 10 relevant to A.Y.2010-11 which was available as withdrawals from bank on recurring basis and in absence of any material evidence being brought on record by the AO that the said cash balance was not available with the appellant firm for depositing into the bank account, the stand of the AO treating the cash deposit as unexplained cash credit u/s.68 is not justified. Considering the facts of the appellant firm's case and the judicial pronouncements relied upon by the appellant firm, I hold that the addition made by the AO for unexplained cash credit u/s. 68 for an amount of Rs.1,10,19,084/-is not justified and the same is hereby deleted. This ground of appeal is allowed. 8. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal before us. 9. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in his order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. ITA no.908/AHD/2019 Asstt. Year 2010-11 7 10. On the contrary the learned the AR before us filed a paper book running from pages 1 to 628 and submitted that cash deposits were made out of cash withdrawal which is duly verifiable from cash books. The explanation for all the credit entries in bank and in cash book was duly furnished before the AO during the assessment proceedings. The copy of the cash book and explanation sheet is available on pages 421 to 449 paper books. Similarly, the explanation of credit entries in bank, bank book and statement are available on pages 242 to 373 of paper book. 11. Both, the ld. DR and AR vehemently relied on the order of the authorities below as favorable to them. 12. We have heard the rival contentions of both the parties and perused the materials available on record. In the present case, the cash deposited by the assessee was treated as unexplained cash credit under section 68 of the Act. The definition of Section 68 of the Act is reproduced below: 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year : 12.1 On a plain reading of the above provisions, it is revealed that, the following conditions should be fulfilled for attracting the provisions of section 68 of the Act. i. There should be a credit entry in the books of accounts. ii. No explanation was offered by the assessee with respect to such credit entry or iii. The explanation offered by the assessee was not satisfactory to the AO. 12.2 Admittedly, there was credit entry in the books of accounts of the assessee, reflecting the deposits of cash in the bank account. The explanation was offered by the assessee to the AO that the cash was deposited out of the cash withdrawal from the earlier year as well as in the year under consideration. However, the explanation offered by the assessee was not found satisfactory by the AO. As such, the AO was ITA no.908/AHD/2019 Asstt. Year 2010-11 8 of the view that there was sufficient cash balance available with the assessee throughout the year and therefore there was no reason for the assessee to withdraw the cash in the denomination of ₹ 5 lacs and re-deposit the same. As per the AO the modus operandi of the assessee was very unusual. Thus the AO treated the amount of cash deposit as unexplained cash credit under section 68 of the Act. However, the learned CIT(A) was pleased to delete the addition made by the AO. In the light of the above discussion, we note that, admittedly the activity of the assessee i.e. withdrawing the cash and depositing in the bank account on regular basis, appears to be very unusual. It is for the reason that no prudent businessman will do so, particularly in a situation where there was already sufficient cash in hand available with the assessee all the time. Indeed, a suspicion arises in the mind for the genuineness of the transaction on hand as discussed above. 12.3 It is the settled law, a suspicion cannot take the place of the evidence as held by Hon’ble Supreme Court in the case of CIT vs. Daulat Ram Rawatmull reposted in 53 ITR 574, the relevant extract reads as under: “The circumstances relied upon by Mr. Sastri do raise suspicion, but suspicion cannot take the place of evidence.” 12.4 In view of the above, there cannot be any addition made to the total income of the assessee based on suspicion. A suspicion/doubt requires to investigate the facts in more detailed in order to find out some evidence so as to unearth the income of the assessee. 12.5 For the sake of repetition, we also note that indeed, the activity of withdrawing the cash and redeposit in the same in the bank is very unusual practice but there is no prohibition under any of the law for the time being in force for doing such activity. Thus, merely an unusual activity of the assessee does not give any authority to the revenue to make the addition to the total income of the assessee. 12.6 In fact the assessee in the given facts and circumstances has discharged the onus imposed under the provisions of section 68 of the Act by furnishing the ITA no.908/AHD/2019 Asstt. Year 2010-11 9 necessary details which has been elaborately discussed in the preceding paragraph. Thus the onus shifted upon the AO to disprove the contention of the assessee based on the tangible materials. But we note that the AO has not brought any iota of evidence suggesting that the amount of cash deposit was not out of the cash withdrawal from the bank. Likewise, there was no information that the assessee has spent the cash withdrawal somewhere else towards the capital or revenue expenses. At this juncture we also find pertinent to refer the order of this tribunal in case of Sudhirbhai Pravinkant Thaker vs. ITO reported in 88 taxmann.com 382, where in similar facts and circumstances it was held as under: 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld. counsel for the assessee. There is no dispute with regard to the fact that the assessee had deposited the cash of Rs.11,27,800/- starting from 07/06/2007 to 31/02/2008. The cash withdrawn from the bank was of Rs.4,20,000/- on 01/07/2006, Rs.4,90,000/- on 06/07/2006, Rs.83,000/- on 26/06/2007, Rs.51,000/- on 20/11/2007, Rs.1,28,000/- on 14/12/2007 and Rs.2,00,000/- on 07/01/2008. However, the cash was deposited on 07/06/2007 of Rs.2 lacs, on 08/06/2007 of Rs.2 lacs, on 11/06/2007 of Rs.1,50,000/-, on 12/06/2007 of Rs.2 lacs, on 13/06/2007 of Rs.2,25,000/-. The total deposits till 13/06/2007 was of Rs.9,75,000/- and the amount withdrawn till 06/07/2006 was of Rs.9,10,000/- (Rs.4,20,000 + 4,90,000). Rest of the deposits of the total addition were made on 18/06/2007, 26/06/2007 and 13/02/2008. However, withdrawal after 06/07/2006, the assessee had withdrawn on 26/06/2007 of Rs.83,000/-, on 20/11/2007 of rs.51,000/-, on 14/12/2007 of Rs.1,28,000/- and on 07/01/2008 of Rs.2,00,000/-. From 20/11/2011 to 07/01/2008 the assessee had withdrawn total amount of Rs.3,79,000/-. However, cash was deposited in the bank account after 13/06/2007 of Rs.1,52,800/-. So far as the amount of Rs.83,000/- is concerned, i.e. matching from withdrawals and deposits and rest of the amount, there is a gap between withdrawals and deposits of the amount. In respect of deposit made on 13/02/2008 is also within one month from the withdrawal of amount on 07/01/2008. In respect of other entries, the cash withdrawal is even before one year of deposit of the amount. The contention of the assessee is that the amount was kept as cash in hand. The authorities have doubted about the explanation furnished by the assessee. The authorities below have doubted the source of the cash deposits, however, the contention of the ld. counsel for the assessee is that he had withdrawn the amount from his bank account and there is no finding by the authorities below that the cash withdrawn by the assessee was utilized for any other purpose. In the absence of such finding, addition is not justified. We find merit into the contention of the ld. counsel for the assessee that there is no dispute that the amount which was withdrawn by the assessee on various dates during the year 2006 was available with him for making deposits. In the absence of finding that the amount which was previously withdrawn by the assessee had been utilized for any other purpose merely on the basis of conjecture that the amount might have been utilized for any other purpose and was not available with the assessee for making the deposits, we are unable to accept the reasoning of the authorities below. In our considered view, when the assessee has demonstrated that he had withdrawn cash from the bank and there is no finding by the authorities below that this cash available with the assessee was invested or utilized for any other purpose, in that event, it is not open to the authority to make the addition on the basis that the assessee failed to explain the source of deposits. Moreover, the authorities below have not disputed the fact that the assessee had withdrawn amount of Rs.9,10,000/- before the deposits made on various dates during the FY 2007-08. Therefore, the orders of the ITA no.908/AHD/2019 Asstt. Year 2010-11 10 authorities below are set aside and the AO is directed to delete the addition. Thus, ground raised in the assessee's appeal is allowed. 12.7 In view of the above, there cannot be any addition to the total income of the assessee on account of cash deposited in the bank unless the AO demonstrate that the amount in question has been used by the assessee for any other purpose. Thus in our considered view the addition is made on inferences and presumptions which is bad in law. Accordingly, we do not find any infirmity in the order of the learned CIT(A). Thus we direct the AO to delete the addition made by him. Hence the ground of appeal of the Revenue is hereby dismissed. 13. The next issue raised by the Revenue is that the learned CIT(A) erred in in deleting the addition made by the AO for Rs. 1,15,45,000/- on account of unexplained cash credit under section 68 of the Act. 14. The assessee in the year under consideration has shown the loan from certain parties as detailed under: Sr.No Name of Depositor PAN Amount(Rs.) 1. Abhishree Residency II AAAAA8661L 90,45,000 2. Kalpesh Haribhai Patel Not Submitted 10,00,000 3. Sthaptya Shilp Biilders AAHFS7043Q 5,00,000 4. Rajshah Enterprise Pvt. Ltd. AACCR9569C 5,00,000 5. Sthapatya Sangam Not Submitted 5,00,000 Total 1,15,45,000 15. The assessee in support of the impugned loan has filed copy of the PAN and the ledgers in order to prove the identity, creditworthiness of the parties and the genuineness of the transactions. 15.1 However, the AO during the assessment proceedings observed certain facts as detailed under: ITA no.908/AHD/2019 Asstt. Year 2010-11 11 i. There was no detail, such as copy of the PAN, ledger, ITR, bank statement, furnished by the assessee with respect to one of the party namely Shri Kalpesh Patel. ii. With respect to the remaining parties, the assessee only furnished the copies of the ledgers and the PAN. As such the copy of the ITR, bank statement (except Sthapatya Shilp Builders) were not furnished by the assessee in order to prove the creditworthiness of the parties and genuineness of the transaction. iii. On the independent enquiry conducted from ITD data base, it was found that there was not sufficient creditworthiness of the parties who could advance loan to the assessee except one party namely Rajesh Enterprise Private Ltd. Thus, the creditworthiness was not established. iv. All the parties who advanced loan to the assessee were belonging to the Barter group and Sutaria group which were engaged in providing the accommodation entries. Thus, merely the transaction was carried out through the banking channel does not establish the genuineness of the transaction. 15.2 Based on the above, the AO concluded that the assessee failed to discharge the onus cast upon it under the provisions of section 68 of the Act with respect to the identity, creditworthiness of the parties and genuineness of the transaction. Thus, the AO treated the same as unexplained cash credit of Rs. 1,17,97,000/- under section 68 of the Act and added to the total income of the assessee. 16. Aggrieved assessee preferred an appeal to the learned CIT-A. 16.1 The assessee before the learned CIT(A) submitted that during the assessment proceedings it has furnished details such as PAN, Address, confirmation, contra confirmation and bank statement which were sufficient enough to prove the identity, credit worthiness of the parties and genuineness of the transactions as held by Hon’ble Gujarat High court in case of Rohini Builder reported in 256 ITR 360. But ITA no.908/AHD/2019 Asstt. Year 2010-11 12 the AO failed to make proper consideration of the submission while making addition merely on basis of surmises and conjecture. 16.2 It was also submitted that loan was taken for temporary requirement which were repaid during the year and in case of Kalpesh Patel, Rajesh Enterprises and Sthpathya Sangam within 2 days and case of Sthpatya Shilp Bulder within 4 days. Likewise Abishiri Residency is running account where there was opening balance of Rs. 2,25,72,572/- and during the year received an amount of Rs. 90,45,000/- whereas it has repaid during the year for Rs. 4,74,90,605, thus at end loan account converted in advances. The fund was received for temporary requirement and paid within short period. Therefore, no interest was paid on such loan. 16.3 The AO was having all the details of loan parties and the assessment under section 153(C) r.w.s. 143(3) were also made in the case of some of the loan parties. Accordingly, the assessee prayed to delete the addition made under section 68 of the Act. 17. The learned CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under: The appellant firm contended that the AO in para 8.4 at page no.24 of the assessment order has observed that since assesses failed to prove the identity as well as creditworthiness of the depositors despite clearly asked in notices, this office undertook independent exercise 1 to verify the creditworthiness of these depositors. The said observation of the AO found not correct as the AO being the assessing authority of Sarthav Infrastructure Pvt. Ltd. has provided the assessment order of Sarthav Infrastructure Pvt. Ltd. for the A.Y.2D10-11at page no.99 the details with regards to Rajshah Enterprise Pvt. Ltd. and himself has stated that the PAN No. of ; Rajshah Enterprise Pvt. Ltd. and income declared in the return of income by Rajshah Enterprise Pvt. Ltd, for AY.2010-11 for a substantial amount of Rs,4,12,63,34u7- and the said lender party has also shown substantial income in the year under consideration. Show-causing the fact that the AO had access to both the PAN and the Return of Income for all of the years of the alleged party so as to say the identity and/or genuineness of the transactions was not at question since it was cross-verifiable from the said page no.99 of the assessment order so rendered by him in the case of Sarthav Infrastructure Pvt. Ltd. The appellant firm has placed before me the said relevant page no.99, which is compiled as per Exhibit-12of Synopsis of Arguments submitted on 07.03.2019. The AO himself stated the PAN and substantial income disclosed in the return of income of Rs.4,12,63,3407- of A.Y.2010-11 of lender party Rajshah Enterprise Pvt. Ltd. and further unsecured loan for an amount of Rs.5,00,000/- has been received during the ITA no.908/AHD/2019 Asstt. Year 2010-11 13 year under consideration and the said loan Rs.5,00,000/- was also repaid during the year under consideration, and hence an addition of Rs.5,00,000/- is not justified and in respect of the said lender party, the appellant firm stated that the identity of the said party are duly established beyond doubt for the reason that the A.O who was the Assessing Officer of the appellant is also the Assessing Officer of Rajshah Enterprise Pvt. Ltd.which is group of Sarthav Group and was under the assessment proceedings u/s.143(3) of the Act before the A.O and therefore, the return of income of Rajshah Enterprise Pvt. Ltd.as well as bank statements and books of accounts of the aforesaid were already available on record of the AO. Further the appellant firm has placed from its books of accounts the ledger account as well as contra confirmation of Rajshah Enterprises Pvt. Ltd. being taken place through proper banking channel. The appellant has also submitted before me the audited balance sheet of lender party Rajshah Enterprises Pvt. Ltd. as per Exhibit-X of synopsis of arguments and from verification of the said audited balance sheet it is established that the said lender party Rajshah Enterprises Pvt. Ltd. is having huge share capital, share application money and reserves aggregating to Rs.63,59,49,522/-. However, the A.O without verifying the facts of the case and records available at his disposal, wrongly made the addition of Rs.5,00,000/- .The appellant firm has already proved the creditworthiness and genuineness of the lender party by submitting various details as stated herein above and hence, an addition of Rs.5,00,000/- is not required to be made in the case of the appellant firm. So, the addition of Rs.5,00,000/- made by the A.O with respect to the unsecured loan of RajshaJL Enterprises Pvt. Ltd, is unjustified and the said addition is deleted. 6.3 The AO in para 8.2 at page no.23 of the assessment order has observed that it is to conclude that the identity of Kalpesh Patel were not proved. The \said observation of the AO is found not correct and unjustified as in case of Kalpesh Patel, on page no.99 of the assessment order of SIPL, the AO himself has stated the PAN No. of the said lender party. The appellant firm has received unsecured loan of Rs.10,00,0007- to meet the temporary shortage of fund on current account basis and the amount of Rs.10,00,000/- has been repaid back with a period of 2 days and hence the appellant firm has not paid interest on such amount. In this regard, the appellant firm has placed on my record the copy of contra confirmation alongwith the bank statement of Kalpesh Patel. The appellant firm has also placed on record the ledger account of Kalpesh Patel from the books of the appellant firm. The appellant firm also submitted the copy of confirmation and the highlighted bank statement of Kalpesh Patel as per Exhibit-VII of Synopsis of Arguments filed on 07.03.2019 proving that the transactions are been made through proper banking channel. Hence the addition of Rs.10,00.000/- made by the AO with respect to the unsecured loan of Kalpesh Patel is not justified and the said addition is deleted. 6.4 The AO in para 8.2 at page no.23 of the assessment order has observed that it is to conclude that the identity of Sthapatya Sangam were not proved. The said observation of the AO is found not correct and unjustified as appellant firm has received unsecured loan of Rs.5,00,000/- from Sthapatya Sangam to meet the temporary shortage of fund on current account basis and the amount of Rs,5,00,000/- has been repaid back with a period of 2 days and hence the appellant firm has not paid interest on such amount. Sthapatya Shilp Builder and Sthapatya Sangam are the group entity and the assessment jurisdiction falls under the jurisdiction of AO and accordingly the bank statements, income-tax returns and other details are already available with the office of AO and hence the identity and creditworthiness of the said lender party can be verified by the AO. In this regard, the appellant firm has placed on my record the copy of contra confirmation alongwith the bank statement of Sthapatya Sangam as per Exhibit-XI of synopsis of arguments submitted on 07.03.2019. The appellant firm has also placed on record the ledger account of Sthapatya Sangam from the books of the appellant firm. Thus the appellant firm has proved the identity of the lender party and creditworthiness of lender party Sthapatya Sangam. Hence the addition of Rs.5,00,000/- made by the AO with respect to the unsecured loan of Sthapatya Sangam is not justified and the said addition is deleted. ITA no.908/AHD/2019 Asstt. Year 2010-11 14 6.5 In respect of the lender party Sthapatya Shiip Builder, during the year under consideration unsecured loan for an amount of Rs.5,00,000/- has been received and an amount of Rs.5,00,000/- has been repaid within 4 days during the year and which is through proper banking channel. The appellant firm has submitted in the synopsis of arguments the copy of confirmation as per Exhibit-VIII. From the paper book submitted before me it is noticed that the appellant firm has submitted the copy of ledger account of lender party from the books of the appellant firm, cross confirmation from the books of said party and bank statement of the said party which are already available on record of the AO. So, the AO is not justified in making the observation in the assessment order regarding identity of the lender party and creditworthiness of lender party Sthapatya Shilp Builder. Hence the addition of Rs.5,00,000/- made by the AO with respect to the .unsecured loan of Sthapatya Shilp Builder is not justified and the said addition is deleted. 6.6 In respect of the lender party Abhishree Residency-11, there was opening balance of unsecured loan of Rs.2,25,72,572/- and during the year under consideration unsecured loan for an amount of Rs.90,45,000/- has been received and an amount of Rs.4,74,90,605/- has been repaid during the year which is through proper banking channel. The amount repaid is more than the amount received and hence the same is converted to loans and advances for an amount of Rs.1,58,73,033/-. The appellant firm has received unsecured Joan of Rs.90,45,000/-to meet up the temporary shortage of fund on current account basis and hence the appellant firm has not paid interest on such amount. The appellant has established the identity of Abhishree Residency-ll beyond doubt for the reason that the AO was the Assessing Officer of the appellant firm is also the Assessing officer of Abhishree Residency- ll, which is a firm of Sarthav Group and was under assessment proceedings u/s.143(3) of the Act before the AO. Therefore, the bank statements and bocks of accounts of Abhishree Residency-ll were already on record of the AO. The appellant firm has further submitted from its books of accounts the ledger \ account as well as contra confirmation of Abhishree Residency-ll being taken place i through proper banking channel. The appellant in the synopsis of arguments filed on 07.02.2019 placed on record the Bank Statement of Abhishree Residency-ll as per Exhibit-VI and thus the appellant firm has proved the identity of the depositors, genuineness of the transactions and creditworthiness of the depositor as per section 68 of the Act. The copy of income-tax return, books of accounts, bank statements were already available on record of the AO in order to examine the genuineness of loan received during the year under consideration. However, the AO is not justified in making the observation in the assessment order regarding identity of the lender party and creditworthiness of lender party Abhishree Residency-11. Hence the addition of Rs.90,45,000/- made by the AO with^ respect to the unsecured loan of Abhishree Residency- 11 is not justified and the said addition is deleted. 18. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal before us. 19. The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in his order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. ITA no.908/AHD/2019 Asstt. Year 2010-11 15 20. On the contrary the learned the AR before us submitted that the loans were procured for temporary fund requirement through proper banking channel and same were also repaid during the year under consideration through banking channel. The learned AR in this respect drawn our attention to the page number 595 to 623 of the paper book where ledger copies of the parties were placed along with other details. Accordingly, the learned AR contended there cannot be made any addition on account of loan transaction under section 68 of the Act. 20.1 Both, the ld. DR and AR vehemently relied on the order of the authorities below as favorable to them. 21. We have heard the rival contentions of both the parties and perused the materials available on record. The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon’ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd reported in 208 ITR 465 wherein it was held as under: “It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors had not been established. If the identity of the creditors had not been established, consequently, the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, it was to be presumed that the transactions were genuine. It was not for the ITO to find out by making investigation from the bank accounts unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction genuine.” 21.1 The assessee has discharged its onus by furnishing the necessary details such as a copy of PAN, ledger copy, confirmation and bank details in support of identity of the parties, genuineness of transaction and creditworthiness of the ITA no.908/AHD/2019 Asstt. Year 2010-11 16 parties. Admittedly the AO has accepted the identity of the parties except of Kalpesh Patel but the genuineness of transaction and credit worthiness of the parties were not accepted. However the learned CIT(A) held that the assessee has discharged the primary onus cast under section 68 of the Act and deleted the addition made by the AO. In this backdrop we proceeds to adjudicate the issue on hand. 21.2 Coming to first condition cast under section 68 of the Act i.e. proof of identity. The AO has held that the identity of the Kalpesh Patel was not proved by the assessee. However we note the AO in paragraph number 8.4 of his order given the detail of income declared by Kalpesh Patel for the last 3 years. Thus there is contradiction in finding of AO. Further the learned CIT-A has given categorical finding that the AO while framing the assessment of Sarthav Infrastructure Pvt Ltd (SIPL) for the year under consideration has accepted the identity of Shri Kalpesh Patel. Therefore in these facts and circumstances, no doubt remains on the identity of the loan parties. 21.3 Now coming to the second and third condition, i.e. genuineness of the transaction and creditworthiness of the parties, regarding this we note that all the transactions were carried out through banking channel and the assessee has refunded the amount through banking channel to all the parties and in some cases within 2 or 3 days. The repayment of the loan amount by the assessee was duly accepted by the Revenue. In this regard, we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of the CIT Vs. Rohini builders reported in 256 ITR 360 wherein it was held as under: “The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques.” 21.4 Thus, there remains no doubt that the transaction of the advance received by the assessee from the parties was not genuine. In our considered view, once the assessee is able to prove that the money received by it was returned during the ITA no.908/AHD/2019 Asstt. Year 2010-11 17 year in the account of the same parties, then there remains no doubt to draw an inference that the advances received by the assessee were unexplained cash credit. 21.5 Similarly, we also note that in respect of all the parties as discussed above the AO had sufficient documentary pieces of evidence including the details of the income of the loan parties namely Abhishilp Shops and Office Co. Op. Society and Sathpatya Shilp Builder who were assessed by the same AO. Similarly details of Rajesh Enterprises Private Limited and Shri Kalpesh Patel were also available with the AO as furnished by sister concern of the assessee namely SIPL in its assessment. Therefore in our considered view, the assessee has discharged its onus imposed under section 68 of the Act. In view of the above, we do not find any infirmity in the order of Ld. CIT (A). Hence the ground of appeal of the revenue is hereby dismissed. 22. In the result appeal of the Revenue is dismissed. Order pronounced in the Court on 27/04/2022 at Ahmedabad. Sd/- Sd/- (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 27/04/2022 Manish