Appeal details
Counselvise Citation
[2024] 139 COUNSELVISE.COM (IT) 6735 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-11-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
21-10-2024
Assessment Year
2018-2019
Appeal Filed On
30-09-2024
Judgement Text
"आयकर अपीलीय अिधकरण, चǷीगढ़ Ɋायपीठ “बी” , चǷीगढ़ \nIN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH \n \nHEARING THROUGH: PHYSICAL MODE \n \nŵी आकाश दीप जैन, उपाȯƗ एवं ŵी क\nृणवȶ सहाय, लेखा सद˟ \nBEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. SHRI. KRINWANT SAHAY, AM \n \nआयकर अपील सं./ ITA NO.1018/Chd/2024 \n(Assessment Year: 2018-19) \n \n Sahil Singla \nSCO 80-81, 3rd Floor Sector 17-C \nChandigarh \nबनाम \n \nThe Asst. CIT \nCentral Circle-2, \nChandigarh \n˕ायी लेखा सं./PAN NO: AUIPS7844N \nअपीलाथŎ/Appellant \n \nŮȑथŎ/Respondent \n \n \nStay Application No. 27/Chd/2024 \nIn \n आयकर अपील सं./ ITA NO.1018/Chd/2024 \n(Assessment Year: 2018-19) \n \n Sahil Singla \nSCO 80-81, 3rd Floor Sector 17-C \nChandigarh \nबनाम \n \nThe Asst. CIT \nCentral Circle-2, \nChandigarh \n˕ायी लेखा सं./PAN NO: AUIPS7844N \nअपीलाथŎ/Appellant \n \nŮȑथŎ/Respondent \n \nिनधाŊįरती की ओर से/Assessee by : Shri T.N. Singla, C.A, \nराजˢ की ओर से/ Revenue by : \nSmt. Kusum Bansal, CIT, DR \n \nसुनवाई की तारीख/Date of Hearing : 21/10/2024 \nउदघोषणा की तारीख/Date of Pronouncement : 04/11/2024 \n \nआदेश/Order \n \nPER AAKASH DEEP JAIN, VP : \n \nThis is an appeal filed by the Assessee against the order of the Ld. \nCIT(A)-3, Gurgaon dt. 27/09/2024 pertaining to Assessment Year 2018-19. The \nfollowing grounds have been raised: \n1. That the order of the learned CIT(A) is bad, against the facts and law. \n \n2. That the CIT(A) has wrongly upheld additions made by the learned assessing \nofficer of Rs. 4,97,81,296/- on surmises and conjectures. \n \n3. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 2,75,81,296/- u/s 69A of the Act. \n \n\n2 \n \n4. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 70,00,000/- received from Sh. Chetan Jhalaira u/s 68 of the Act. \n \n5. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 40,00,000/- received from Sh. Sanbir Singh u/s 68 of the Act. \n \n6. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 30,00,000/- received from Sh. Jagbir Singh Randhawa u/s 68 of the Act. \n \n7. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 22,00,000/- received from M/s Evershine Resorts Pvt. Ltd. u/s 68 of the Act. \n \n8. That the CIT(A) has wrongly upheld additions made the learned assessing officer \nof Rs. 60,00,000/- received from M/s TJR properties Pvt. Ltd. u/s 68 of the Act. \n \n9. That the CIT(A) has wrongly upheld penalty proceedings initiated by the \nassessing officer u/s 271AAB(1A)(b) of the Income Tax Act, 1961. \n \n2. \nGround No. 1 is general in nature. \n3. \nGround No. 2 pertains to all the additions made. \n4. \nApropos Ground No. 3, the AO has mentioned in his order that the \nassessee has made investment of Rs. 27581926/- on 12.04.2017 and 15.04.2017 \nfrom his Kotak Mahindra Bank account with Mining Department, which was \nrefunded to the assessee on 24.04.2017. Thereafter, the assessee again made \ninvestment of Rs. 1,68,35,302/- on 11.05.2017 with Mining Department out of \nthe refund received from Mining Department. The assessing officer has also \nmentioned that the assessee has not disclosed these investments in his affairs. \nFurther, the details of these investments were not furnished by the assessee \nduring the assessment proceedings. Further, the assessee had failed to explain \nthese transactions satisfactorily and hence, made the addition u/s 69 as \nunexplained investment during the year. \n\n3 \n \n5. \nThe Ld. CIT(A) has observed that the appellant submitted that he paid the \namount of Rs. 2,75,81,926/- from explained sources as earnest money to \nparticipate in the bidding of sand mines in Punjab. However, perusal of details \non record w.r.t. source of money in appellant's bank account from various \nentities revealed that there was no business in M/s TJR Properties Pvt Ltd \nduring the year under consideration and there were no significant assets with the \ncompany, and the creditworthiness of the company was not proved so as to lend \nsuch amounts of loan. During search proceedings, the books of account of M/s \nTJR Properties Pvt Ltd and M/s Evershine Resorts Pvt Ltd were found from the \noffice premises of the CA and not from the registered address, SCO-14, Sector-\n7C, Madhya Marg, Chandigarh. The appellant had failed to establish the \ngenuineness of these transactions beyond doubt. The amounts from various \nrelated entities like M/s TJR Properties Pvt Ltd, M/s Evershine Resorts Pvt Ltd \nand other parties could not be satisfactorily explained; and that the appellant had \nnot given complete details and any cogent evidence to prove as to how the \nsource of payment for bidding process was from explained sources. \n5.1 \nThe Ld. CIT(A) further observed that the appellant failed to justify the \npurpose of these loans and also the explanation regarding the capacity/ sources \nof these creditors are not satisfactory; that further, the income of these persons \nwas not commensurate with the amount of loans provided by them to the \nappellant; that it was seen that Shri Chetan was filing ITR of Rs. 6 lakhs approx, \nbut had given a loan of Rs. 70 lakhs and all the three limbs of section 68 could \n\n4 \n \nnot be satisfied by the appellant to establish the creditworthiness and \ngenuineness of loan transaction; and that similarly, the genuineness of loan from \nShri Sanbir Singh could not be established. \n6. \nOn behalf of the assessee / appellant, it had been submitted that the \nCIT(A) has wrongly upheld addition made the learned assessing officer of Rs. \n2,75,81,296/- u/s 69 of the Act. It has been stated that the appellant submitted \nthat he paid the amount of Rs. 2,75,81,926/- from explained sources as earnest \nmoney to participate in the bidding of sand mines in Punjab. \n \n7. \nLd. DR relied on the impugned order. \n \n8. \nWe find that the addition of Rs. 2,75,81,926/- was made by the Assessing \nOfficer on the following 3 allegations: - \na) \nThat the assessee has not disclosed these investments in his \naffairs. \nb) \nThat the details of these investments have not been furnished \nby the assessee during the assessment proceedings. \nc) \nThat the assessee has failed to explain these transactions \nsatisfactorily. \n \n8.1 \nThe Ld. CIT(A) observed that the perusal of details on record w.r.t source \nof money in appellant’s bank account from various entities reveals that there \nwas no business in M/s TJR Properties Pvt. Ltd. during the year under \nconsideration and there were no significant assets with the company, and the \ncreditworthiness of the company was not proved so as to lend such amounts of \nloan. During search proceedings, the books of accounts of M/s TJR Properties \n\n5 \n \nPvt. Ltd. and M/s Evershine Resorts Pvt Ltd were found from the office \npremises of the CA and not from registered address SCO-14, Sector-7C, \nMadhya Marg, Chandigarh. The appellant has failed to establish the \ngenuineness of these transaction beyond doubt. The amounts from various \nrelated entities like M/s TJR properties Pvt Ltd. M/s Evershine Resorts Pvt. Ltd. \nand other parties could not be satisfactorily explained. The appellant has not \ngiven complete details and any cogent evidence to prove as to how the source of \npayment for bidding process was from explained sources. \n \n9. \nIn this regard, we find that it remains undisputed that all the sources of \ncredit in the said account by the appellant before deposits of aforesaid account \nof EMD with the Punjab Mining Department were explained and evidence of \nsources of these deposits were submitted by the assessee with the Assessing \nOfficer and the CIT (A). The assessee had received the following credits in his \nbank accounts with Kotak Bank Account No. 9211334539 before 11.05.2017: \n \na) \nDated 11.04.2017 of Rs. 60,00,000/- received from Sh. Tirloki Nath \nSingla (P.B. page no.450 and 15) \n \nb) \nDated 12.04.2017 of Rs. 75,00,000/- (P.B. page no. 451 and 17). \nc) \nDated 13.04.2017 of Rs.90,00,000/- from account of the appellant with \nthe PNB Account No. 87000111296355 (P.B. page no. 19 and 5) \n \nd) \nDated 15.04.2017 of Rs. 30,00,000/- from M/s TJR Properties Pvt. \nLtd. (P.B. page no. 411 and 19) \n \ne) \nDated 15.04.2017 of Rs. 30,00,000/- from Ever Shine Resorts Pvt. Ltd. \n (P.B. page no. 350 and 19). \n \nf) \nDated 11.05.2017 of Rs. 50,00,000/- from M/s TJR Properties Pvt Ltd. \nat (P.B. page no. 411 and 33). \n \n\n6 \n \n9.1 \nThe date up on which payment was made to Punjab Sand Mining \nDepartment is 11.05.2017 and all the above credits in the Kotak Bank Account \nof appellant were duly explained and the following information was submitted \nfor each of the aforesaid credit: \na) Copies of Bank Account of Sahil Singla pertaining to assessment year \n2018-,19 were submitted vide point 13 of reply dated 29.11.2019 given to \nthe Ld. Assessing Officer and also to the CIT (A) during the appellate \nproceedings and further explanation of each debit and credit exceeding Rs. \n50,000/-was also given on 29.11.2019 point 23. \nb) Cash Flow of the appellant was also filed on 12.12.2019 vide point 14 of \nthe reply. \nc) The Statement of affair of the appellant was filed on 12.12.2019 vide point \n13 of the reply. \n \n10. \nThe appellant has given the following proof of sources of the credits in \nthe bank account during the year: \na) \nThe Bank Account Statement of Sh. Tirloki Nath Singla - page no. \n319-348 of documents filed with CIT (A). \nb) Confirmation of Sh. Tirloki Nath Singla - page no. 308-316 of documents \nfiled with CIT (A). \nc) Assessment order of Sh. Tirloki Nath Singla for Assessment Year 2018-19 \npassed by the same Assessing Officer simultaneously with that of the \nappellant page no. 349-352 of documents / reply CIT (A) and the Assessing \nOfficer was having all these documents during the proceedings. \n \n10.1 Further, in the assessment of Sh. Triloki Nath Singla, the Assessing \nOfficer had accepted all credits in his bank accounts as genuine. The said \namounts of Rs.75,00,000/- and Rs. 60,00,000/-were received by the appellant \nfrom Shri T.N. Singla. Thus, no addition for the amount received from such \n\n7 \n \nperson can be made, whose sources of credit in the relevant Bank account were \nindependently examined by the same Assessing Officer and he had accepted the \nsame. Hence, the sources of aforesaid amounts of Rs. 75,00,000/- and Rs. \n60,00,000/-received from Sh. Tirloki Nath Singla cannot be doubted, as rightly \ncontended. Then, the appellant has transferred Rs. 90,00,000/- from his own \nfunds from his bank account with PNB on 13.04.2017 (P.B. Page No. 5 and 19). \nThe transfer of funds from own account of the appellant during the year, on \nwhich all credits were already examined by the Assessing Officer, cannot be \nmade in the hands of the appellant himself. Thus, the sources of credits in the \nBank accounts of the appellant before the cutoff date on 11.05.2017 were \nalready examined by the Assessing Officer and the CIT (A), and the amount \nreceived from the bank account of the company by appellant cannot be doubted. \nThe other credits in the Kotak Bank account of the appellant are Rs. 30,00,000/-\non 15.04.2017 and Rs. 50,00,000/- on 11.05.2017 received from M/s TJR \nProperties Pvt. Ltd. The Assessing Officer and the CIT (A) have independently \nexamined all credits in the Bank account of M/s TJR properties Pvt. Ltd. The \nsaid company has already been held as genuine company by the CIT (A) for \nA.Y 2012-13 to 2017-18. Further, the Chandigarh Bench of the ITAT vide its \norder dated 19.03.2024, in Appeal Nos. ITA 5/CHD/2023 and 145/CHD/2023, \nfor Assessment Year 2017-2018, (P.B. Page No. 352-397), this company has \nbeen upheld to be a genuine company. Further, it remains undisputed that the \nAssessing Officer has already examined credits received from M/s TJR \n\n8 \n \nProperties Pvt. Ltd by the appellant during the year and addition of Rs. \n60,00,000/- received from M/s TJR Properties Pvt. Ltd during the year is made \nin the hands of the appellant u/s 68, though not admitted by the appellant, in \npara 9 of his order at page no. 14-15 of the assessment order and the CIT (A) \nhas also considered all credits from M/s TJR Properties Pvt. Ltd by the \nappellant during the year, in his order at page 102 of his Order. \n \n10.2 \n Still further, it is also on record that all credits in the Bank Account of the \nsaid company during the year were independently examined by the same \nAssessing Officer, simultaneously with the order of the appellant, and once the \ncredits in the bank account of the lender company is independently examined by \nthe Assessing Officer and addition, if any, is already made in the hands of the \nunder company, then no addition for the amount advanced by the said company \nto the assessee can be made in the hands of the recipient. \n \n10.3 The other credit was of Rs. 30,00,000/-, received by the assessee from \nM/s Evershine Resorts Pvt. Ltd on 15.04.2017 (P.B. Page no. 350). The said \ncompany, again is already held as a genuine company by the CIT(A) for A.Ys. \n2012-13 to 2017-18 and by the Hon'ble ITAT vide its order dated 19.03.2024, in \nAppeal Nos. ITA 5/CHD/2023 and 145/CHD/2023 for Assessment Year 2017-\n2018. (P.B. Page No. 352-397). \n10.4 \n Then, all credits in the Bank Account of the said company during the year \nwere independently examined by the same Assessing Officer simultaneously \n\n9 \n \nwith the order of the appellant, and once the credits in the bank account of the \nlender company have been independently examined by the Assessing Officer \nand addition, if any, is already made in the hands of the under company, then no \naddition for the said amount advanced by said company can be made in the \nhands of the recipient. \n \n10.5 Too, the Assessing Officer has already examined the credits received by \nthe assessee from M/s Evershine Resorts Pvt. Ltd during the year and addition \nof the amount of Rs. 22,00,000/- received from M/s Ever Shine Resorts Pvt. Ltd \nduring the year is made in the hands of the appellant u/s 68, though not admitted \nby the appellant, in para 8 of his order at page no. 14 of the assessment order, \nand the CIT (A) has also considered all credits from M/s Ever Shine Resorts \nPvt. Ltd by the appellant during the year in his order, at page 102 thereof. Thus, \nthe payment of Rs. 2,75,81,296 - made to the Punjab Mining Department was \nfrom explained sources in the Kotak Bank Account No. 9211334539 of the \nappellant during the year and the said addition of Rs. 2,75,81,296/- was made \nsimply on surmises and conjectures without any justification. In this regard, \nreliance has rightly been placed, without any contra reliance, on judgment of \nHon'ble Punjab & Haryana high Court in case of ‘CIT Vs Ravi Kumar’, 294 ITR \n78 (P&H), wherein, after relying on the judgment of the Calcutta H.C in case of \n‘Kantilal Chandulal & Co. vs CIT’ 136 ITR 889 (Cal) it been held as follows: \n\"2 conditions are required to apply previsions of Section 69 i.e.: \nI. \nThe assessee should be found the owner of any specific asset. \nII. \nThe said asset should not be found recorded in Books of Account, if any \nmaintained by the Assessee \n\n10 \n \n \n11. \nApropos the order under appeal, the CIT (A) has upheld the additions \nmade by the assessing officer of Rs. 2,75,81,296/- u/s 69 of the Act. It remains \nirrefuted that the appellant paid E.M.D of Rs. 2,75,81,296/- on 12.04.2017 and \n15.04.2017 to GM, Mining Department, Punjab, which was required for \nparticipation in the E-auction. The aforesaid amount of Rs. 2,75,81,296/- was \npaid from the Kotak Bank Account No. 9211334539 of the appellant. The \ntender of the E- auction was cancelled and Rs. 2,75,81,296/- was received back \nin the same account on 24.04.2017. Again, the tender was published by the \nMining Department of Punjab and E.M.D of Rs. 1,68,35,302/- was deposited \nwith the GM, Mining Department Punjab, on 11.05.2017, out of the funds \nreceived back on 24.04.2017. The sources of deposits of the said amount of \nRs.2,75,81,296/- were duly explained and necessary documents/ evidences were \nsubmitted with A.O. during the Assessment proceeding, to prove the sources \nand genuineness of the credits in the said bank account, from where the \npayment of the EMD to GM Mining Department Punjab was made. \n \n12. \nAccordingly, Ground No. 3 is accepted and the addition of Rs. \n2,75,81,296/- is deleted. \n \n13. \nGround Nos. 4, 5 and 6 pertain to Rs. 70.00 lacs received by the asseessee \nfrom Shri Chetan Jhalaria, Rs. 40.00 lacs received from Shri Sanbir Singh and \nRs. 30.00 lacs received from Shri Jagbir Singh Randhawa, respectively. The \nAO observed from the bank account of the assessee with Kotak Bank, i.e., A/c \n\n11 \n \nNo. 9211334539, that the assessee had shown the following unsecured loans \nfrom outside parties: \n \nSr. No. \nDate \nName \nAmount (Rs.) \n01. \n17.05.2017 \nChetan Jhalaria \n60,00,000/- \n02. \n22.05.2017 \nJagbir Singh Randhawa \n30,00,000/- \n03. \n23.05.2017 \nSanbir Singh \n40,00,000/- \n04. \n23.05.2017 \nChetan Jhalaria \n10,00,000/- \nTOTAL 1,40,00,000/- \n \n \n14. \nThe AO observed that the assessee had failed to substantiate the \ngenuineness of the transactions and the credit worthiness of the lenders. It was \non the basis thereof, that the AO held these receipts, amounting to Rs. \n1,40,00,000/-, to be unexplained cash credit of the assessee under section 68 of \nthe Act. \n \n15. \nApropos the receipt of Rs. 70,00,000/- from M/s Jhalaria Metals through \nShri Chetan Jhalaria and loan of Rs. 40,00,000/- received from Shri Sanbir \nSingh, the ld. CIT(A) held that the assessee failed to justify the purpose of these \nloans and also, the explanation regarding the capacity/sources of these creditors \nare not satisfactory. Further, the income of these persons does not \ncommensurate with the amount of loans provided by them to the appellant. It is \nseen that Shri Chetan is filing ITR of Rs. 6 lakhs approx. but has given a loan of \nRs. 70 lakhs and all the three limbs of section 68 could not be satisfied by the \nappellant to establish the creditworthiness and genuineness of loan transaction. \nSimilarly, the genuineness of loan from Shri Sanbir Singh could not be \nestablished. \n \n\n12 \n \n16. \nSo far as regards the addition of Rs. 30,00,000/- received by the assessee \nfrom Shri Jagbir Singh Randhawa, the ld. CIT(A) held that the assessee failed to \ndischarge the onus cast upon him to substantiate the credit worthiness and \ngenuineness in respect of the transaction of Rs. 30,00,000/- in accordance with \nthe provisions of section 68 of the Act, during assessment as well as the \nappellate proceedings. \n17. \nThe ld. Counsel for the Assessee has contended that the ld. CIT(A) has \nerred in confirming the addition of Rs. 70.00 lacs, Rs. 40.00 lacs and Rs. 30.00 \nlacs, received from Shri Chetan Jhalaria, Shri Sanbir Singh and Shri Jagbir \nSingh Randhawa by the assessee. \n18. \nThe Ld. DR on the other hand, has again placed reliance on the impugned \norder. \n \n19. \nIn this regard, we find that the contention of the assessee is that it is \nclearly mentioned in the Section 68 of the Act, that the sum to be credited \nshould be in the books of the assessee. Since the appellant is an individual, he \nwas not required to maintain regular books of account as per the relevant \nprovisions of the Income Tax Act. Hence, the addition u/s 68 of the Act cannot \nbe made in the case of the appellant, as the impugned amount of Rs. \n1,40,00,00/- was credited in the bank account of the appellant and the bank \naccount is not the books of account of the appellant. Reliance has been placed \non the judgment of the Hon'ble Bombay High Court in the case of ‘The \nCommissioner of income Tax-10, Mumbai vs Manisha M. Shah’. Hence, the \n\n13 \n \nentries in the Bank passbook cannot be considered as entries in the books of the \nassessee so as to invoke Section 68 of the Act. \n19.1 The assessee maintains that the Learned Assessing Officer has considered \nthe Bank Passbook/Statements as books of account, then, no addition can be \nmade u/s 69 of the Act, as all the investments were accounted for and made \nthrough the regular Bank a/c of the appellant and if the Assessing Officer \nassents to/abides by the above judgement and agree that the Bank \nPassbook/Statements is not to be considered as books of accounts, then no \nadditions can be made u/s 68 of the Act, as all the unsecured loans were received \nin the regular Bank a/c of the Appellant. Further, without prejudice, even if the \nbank statement was to be considered as books of account, then also, the whole \nchain of funds has been completely explained with proofs to the Assessing \nOfficer during the assessment proceedings. Also, all the bank statements with \nnarration of each debit and credit entry in the bank account of the appellant with \nall other proofs like Bank Statements, Affidavits, Loan agreements and Income \nTax Returns, Balance sheet etc, of the Lenders / creditors were submitted with \nthe Assessing officer along with the Cash Flow Statement and no defect was \npointed out by the assessing officer in the details and proofs submitted during \nthe Assessment proceedings and the same have not been disputed by him in the \nAssessment Order. The DDIT (invest), on whose advise the Assessing Officer \nhas acted, recorded the statements of Sh. Chetan Jhalaria and Sh. Sanbir Singh \nand took all the necessary proofs to verify and substantiate the genuineness of \n\n14 \n \nthe transaction and the creditworthiness of the lender parties in the post-search \ninquiry. Further, the whole record, including the statements recorded and the \nproofs, was transferred by the DDIT (invest) to the Assessing Officer. No \ncopies of the same were provided to the appellant during the entire assessment \nproceedings. The appellant even mentioned in his submission during the \nassessment proceedings to consider the same, but the A.O. turned a blind eye to \nit. Further, loans taken from Sh. Chetan Jhalaria & Sanbir Singh were paid back \nwithin a few days of receipt. \n19.2 It is seen that undisputedly, in the case of unsecured loan of Rs. \n30,00,000/- received from Sh. Jagbir Singh Randhawa, the assessment of Sh. \nJagbir Singh Randhawa was completed simultaneously by the same Assessing \nOfficer for Assessment year 2018-19, wherein the sources of the said \nfunds/payment received by the Appellant were explained and also accepted by \nthe Assessing Officer during A.Y. 2010- 19 in the assessment of Sh. Jagbir Singh \nRandhawa. \n19.3 The details of the unsecured loans received or paid back by the assessee \nin the same year are as follows: \n \nSr. No. Date of \nReceipt \nDate of Re \nPayment \nName \nAmount \n(Rs.) \nProof of credibility \ngenuinity and \ncreditworthiness \n 3. \n17.05.2017 \n28.06.2017 \nChetan Jhalaria \n60,00,000/- \nAffidavit, Loan Agreement, \nITR \nBalance \nSheet \nof \nJhalaria Metals (Firm of Sh. \nChetan \nJhalaria), \nBank \nStatements \nof \nJhalaria \nMetals, ITR Jhalaria Metals, \nLedger \nA/c \nof \nJhalaria \nMetals. \n\n15 \n \n4. \n22.05.2Q17 \nNot re-paid \nJagbir Singh \nRandhawa \n30,00,000/- \nAffidavit, \nITR, \nBank \nStatements, \nAssessment \nOrder. \n5. \n23.05.2017 \n10.06.2017 \nSanbir Singh \n40,00,000/- \nAffidavit, \nITR, \nBank \nStatements, Order of CIT \n(A) and ITAT. \n6. \n23.05.2017 \n28.06.2017 \nChetan Jhalaria \n10,00,000/- \nAffidavit, Loan Agreement, \nITR \nBalance \nSheet \nof \nJhalaria Metals (Firm of Sh. \nChetan \nJhalaria), \nBank \nStatements \nof \nJhalaria \nMetals, ITR Jhalaria Metals, \nLedger \nA/c \nof \nJhalaria \nMetals. \n \n20. \nThe AO, it is observed, has, as correctly contended, ignored that Sh. \nJagbir Singh Randhawa was having agriculture income of 36 lakhs, in addition \nto Taxable Income of Rs. 1,10,700/- during the year. Further, the assessment of \nSh. Jagbir Singh Randhawa was also made u/s 143(3) r.w.s 153B(l)(b) by the \nsame Assessing Officer simultaneously with that of the appellant and the AO \nhad independently examined all the credits in his bank accounts (P.B. Page No. \n101-102). Thus, it cannot be said that Sh. Jagbir Singh Randhawa was not \nhaving any sources to advance Rs. 30,00,000/- to the appellant during the year. \nThe related documents such as Affidavit, ITR, Bank Statement and Assessment \nOrder of Sh. Jagbir Singh Randhawa are at PB pg. 95-102. \n \n20.1 In the case of Chetan Jhalaria, the notice u/s 148 (A)(d) of the Income \nTax Act was issued to his concern, M/s Jhalaria Metals on the basis of \ninformation sent by the Assessing officer of the appellant and the same was \nwithdrawn with the observation that: \n\"This amount was paid by us from our sale proceeds of Steel and other funds \nreceived from various customers during the year as our total turnover during \nthe F.Y. 2017-2018 is Rs. 18,01,82,636/-and the said amount was given out of \n\n16 \n \nthe aforesaid sale proceeds which was received back on immediately next day. \nFurther, we want to submit that the aforesaid amount ofRs. 20,00,000/- paid \non 23/05/2017 was received bock on next day, hence the profit declared in the \nreturn for the F.Y. 2017-18 is immaterial. Moreover, the partner had own \ncapital of Rs. 48,50,195/- in addition to unsecured loans of family \nmembers/associate entities of the partners as on 31/08/2018 were Rs. \n2,82,36,038/-. Hence, own funds of the partners and their associates were \navailable amounting to rupees more than 3.30 Crores as on 31/03/2018. \nTherefore, the sources of our firm cannot be doubted as our firm had \nsufficient funds in the shape of Partners Capital / loans form family members \nand associate entities/sale proceeds during the year. In addition to these, our \nfirm had Cash Credit limit of Rs. 1,35,00,000/- with Punjab National Bank \nduring the year, which proves that our firm had sufficient liguidity of funds \navailable during the F.Y. 2017-2018. We are enclosing copy of - Audited \nBalance Sheet and Profit & Loss Account along with annexures - Bank \nstatement of Punjab National Bank from 01/04/2017 to 30/06/2017 - Bank \nstatement of HDFC Bank from 01/04/2017 to 30/06/2017 - Lien Marking \nLetter for CC Limit with Punjab National Bank - Copy of VAT Return for the \nrelevant period - Copy of Income tax Return forA.Y. 2018-19. \nThe reply of the assessee duly considered and accepted as assessee is having \nsufficient fund from which the assessee can advanced the money. Hence, no \nfurther action is required in this case.\" \n \n20.2 Further, the necessary proof and evidence for said loan of Rs. 70 lakhs \nfrom Chetan Jhalaria of M/s Jhalaria metals have been enclosed at PB pg. 103-\n154. These were filed before both the authorities. Further, the said loan of Rs. \n70 lakhs was returned during the year itself by the assessee to Sh. Chetan \nJhalaria after a few days only i.e., on 28.06.2017, through banking channels. \nRegarding the loan of Rs. 40 lakhs received by the assessee from Sh. Sanbir \nSingh, the documents of proof of genuiness of credits from Sh. Sanbir Singh are \nplaced at PB Pg. 155-244. \n \n20.3 The re-assessment of Sh. Sanbir Singh was done by his Assessing officer \non the information passed by the Assessing officer of the appellant and the \nCIT(A) has accepted all sources of credits in Bank Accounts of Sh. Sanbir as \n\n17 \n \ngenuine and explained sources. The loan of Rs. 40 lakhs was given to the \nappellant from the account of Shri Sanbir Singh. Then, as in the other cases, as \ndiscussed above, the ITAT has also accepted the sources of Sh. Sanbir Singh as \ngenuine and explained sources, from where, the amount of Rs. 40 lakhs was \ngiven to the appellant. \n20.4 Thus, the sources of Sh. Sanbir Singh cannot be doubted and this being \nso, no addition in the hands of the appellant could be made of the amount \nreceived from Sh. Sanbir Singh during the year, as rightly submitted. \n20.5 This apart, the amount of Rs. 40,00,000/- has been returned to Sh. Sanbir \nSingh on 10.06.2017 during the relevant year itself. \n20.6 The Jurisdictional High Court in the case of ‘CIT vs. GP International \nLtd.’, 325 ITR 25 (P&H) is directly on the point. No contra decision has been \ncited before us by the Department. Moreover, in the case of ‘CIT vs. Lovely \nExports Pvt. Ltd.’, 216 CTR 195 (SC) it has been held that: \n\"In case lender/creditor is found to be bogus, doubtful then the department may proceed \nagainst such lender/creditor as per law.\" \n \n21. \nThe Department initiated re-assessment proceedings in the case of M/s \nJhalaria Metals (Chetan Jhalaria) and Sh. Sanbir Singh on the basis of \ninformation passed by the Assessing Officer of the appellant. The credits in \ntheir bank accounts were independently examined by their Assessing Officers/ \nAppellate Authorities and all credits in their bank accounts are accepted as \ngenuine. It was from there that the funds were transferred to the appellant. \n\n18 \n \n \n22. \nIn view of the above, the addition of Rs. 70.00 lacs received from Shri \nChetan Jhalaria (Ground No. 4), Rs. 40.00 lacs received from Shri Sanbir Singh \n(Ground No. 5) and Rs. 30.00 lacs from Shri Jagbir Singh Randhawa (Ground \nNo. 6) are deleted, answering ground Nos. 4 to 6 in favour of the assessee. \n \n23. \nGround No. 7 challenges the confirmation of the addition of Rs. 22.00 \nlacs received by the assessee from M/s Evershine Resorts Pvt. Ltd. As per \nGround No. 8, the addition of Rs. 60.00 lacs received by the assessee from M/s \nTJR Properties Pvt. Ltd. has wrongly been confirmed. \n \n24. \nThe AO, while making these additions, held that the lenders, i.e, M/s \nEvershine Resorts Pvt. Ltd. and M/s TJR Properties Pvt. Ltd. had been found to \nbe shell companies. \n \n25. \nThe ld. CIT(A) held that from the Remand Report of the AO, it was seen \nthat the appellant had shown amounts received from entities which had very \nlimited assets and no significant business or revenue to lend such amount of \nmoney, and the nature of the transaction also could not be proved that the books \nof account of M/s Evershine Resorts Pvt. Ltd. and M/s TJR Properties Pvt. Ltd. \nwere found from the office premises of the CA and not from the registered \naddress, SCO-14, Sector-7C, Madhya Marg, Chandigarh; and that thus, the \nappellant had failed to establish the genuineness of transaction beyond doubt. \n \n26. \nThe ld. Counsel for the Assessee has contended that the same CIT (A) in \nhis orders for A.Y. 2012-13 to 2017-18, and the ITAT, in the case of both the \n\n19 \n \nlender companies, for Assessment Year 2017-18, have held these companies as \ngenuine companies and have rejected the treatment of these companies as shell \ncompanies by the Assessing Officer in the Appellate Orders for the earlier \nAssessment Years. \n \n27. \nThis contention of the assessee is also found to be correct. \n \n28. \nFor A.Y. 2017-18, both, M/s Evershine Resorts Pvt. Ltd. and M/s TJR \nProperties Pvt. Ltd. have been held by this Bench to be genuine companies. \n \n29. \nThe Assessing Officer sent Deviation Note on 26.12.2019 to the DDIT \n(Investigation) regarding M/s TJR Properties Pvt. Ltd & Evershine Resorts Pvt. \nLtd., as below:- \n\"During the course of assessment proceedings u/s 153A of the Act the issue \nwas examined at length and the assessee companies was required to explain \nthe source of amount credited in their respective bank accounts and to \nsubstantiate the genuineness of the transactions. In response to the query, \nwritten replies have been submitted by the assessee companies and source of \nthe amount credited in the bank accounts of these companies have been \nsubmitted. Perusal of the reply of the assessee companies shows some \ntransactions from the related parties and some transactions in squared up \naccounts. Confirmation of amount credited in the bank account of these \ncompanies alongwith copy of ITR, bank account statement and balance sheet \netc. has been furnished by the assessee companies. Copies of replies filed by \nM/s TJR Properties Pvt. Ltd. and M/s Evershine Resorts Pvt. Ltd. for FY \n2016-17 and 2017-18 are enclosed herewith as Annexure-Tl, 12 and El, E2 \nfor your kind perusal and reference. After going through the replies of the \nassessee companies, it is observed that the amounts have been credited in the \nbank accounts of these companies from known sources, which has duly been \naccounted for by the assessee companies in their respective books of accounts \nand shown in their audit report as well as ITR filed in due course on regular \nbasis. \n \n(a) \nFurther, detailed notes dated 23.12.2019 have been submitted by these \ncompanies. These notes are enclosed herewith Annexure-T3, and E3 for your \nkind perusal and reference. as \n \n(b) \nYou are therefore requested to kindly go through the replies as wet as \ndetailed notes submitted by these companies vis-a-vis Observation of the \n\n20 \n \nInvestigation Wing in its appraisal report regarding these companies as \nmentioned here in above. It is further, requested that if you have any contrary \nfacts and version to the above discussion, so that credit entries may be treated \nas unexplained, the same may please be brought to the notice of this office as \nearly as possible, as the matter is getting time barred on 31.12.2019. \n \n29.1 The assessing officer, as per the assessee, was impliedly so overawed by \nthe dictat sent to him vide letter dated 27.12.2019 by DDIT(Inv.)(copy filed) \nthat he suddenly changed his mind overnight and passed assessment orders from \nAY 2012-13 to AY 2018-19 within 2-3 days from receipt from the DDIT (Inv.), \nfinalizing the assessments on the dictat of a third person, whereas as per the \nIncome Tax Act, the assessing officer is required to pass assessment order \nindependently, without any third party intervention and by application of his \nown mind. \n29.2 It is seen that indeed the assessing officer has not given or explained any \nreason of his dis-satisfaction with the documents submitted and the documents \nwhich were required to be submitted for his \"satisfaction\". All the relevant facts \n/ documents were submitted / made clear before the assessing officer at the time \nof the hearing during assessment proceedings. The appellant mentioned each \nand every fact in the replies and in the hearing, but the Assessing Officer held \nwithout basis that the appellant had failed to explain the documents to his \nsatisfaction. \n29.3 Now, it is trite law that once all the documents / written submissions, etc, \nwere undisputedly submitted by the assessee, the onus to prove to the contrary \nlies on the assessing officer to, rebut these documents and to collect \n\n21 \n \nincriminating material, if any, to rebut theexplanations / documents submitted \nby the assessee during the assessment proceedings. It is the duty of the assessing \nofficer to thoroughly examine the facts as presented before him. In this case, on \nthe other hand the assessing officer, acted in undue haste and completed the \nassessment proceedings on the dictat of a third party without application of his \nown mind. The allegations of the assessing officer have no legs to stand having \nbeen based on a complete misappreciation and non-appreciation of concrete \ndocumentary evidence placed on record. Reliance in this regard placed or the \njudgment of Hon'ble Madhya Pradesh High Court in the case of PCIT (1), \nIndore vs. Chain House International (P.) Ltd. reported in, 98 taxmann.com 47 \nhas rightly been placed. Therein, it has been held that- \n \n“Once genuineness, creditworthiness and identity of investors are \nestablished, no addition culd be made as cash credit”. \n \n30. \nM/s TJR Properties Pvt. Ltd. \n30.1 The appellant had received unsecured loans from M/s TJR Properties \nPrivate Limited during the year through banking channels. We find that as \nrightly submitted on behalf of the assessee, here again, the addition has illegally \nbeen confirmed in the face of voluminous documentary evidence brought on \nrecord by the assessee. \n30.2 The amount of Rs. 60,00,000/- received during the year is wrongly added \nu/s 68 of the Act to the total income of the appellant, by alleging the said \ncompany to be a shell company. The appellant submitted audited Balance Sheet, \n\n22 \n \nBank Statement, ITR, Confirmation, etc. of this company to the Learned \nAssessing Officer during the assessment proceedings. However, instead of \nverification or examination of these documents/details to ascertain the \ngenuinity, source and credibility of the lender Company as per the provisions of \nthe Act, the Assessing Officer made addition of Rs 60,00,000/- on the wrong \nallegation that the lender Company was a shell company. Per contra, the ld. CIT \n(A) and the ITAT, for A.Y. 2012-13 to 2017-18 have held it to be genuine \ncompany. \n \n30.3 The Assessing Officer made additions of the unsecured loans received by \nthe Appellant from M/s. TIR Properties Pvt. Ltd. during the year under \nconsideration, partly u/s 68 and partly u/s 69 of the Income Tax Act, without an \nconfirmed basis. Out of the total unsecured loan amounting to Rs. 1,41,00,000/- \nreceived by the appellant from M/s. TJR Properties Pvt. Ltd during the year \nunder consideration, part of the unsecured loan amounting to Rs. 60,00,000/- \nwas added by the Assessing Officer u/s 68 of the Act and the balance amounting \nto Rs. 81,00,000/- was considered by the Assessing Officer for disallowance u/s \n69 of the Act, on surmises and conjectures and nothing else. \n30.4 Further, this company was also assessed simultaneously by the same \nAssessing Officer for the same Assessment year, and all the bank accounts, etc. \nof the lender company were placed on record of the Assessing Officer. \n30.5 The assessing officer, wrongly added all the credit entries in the Bank \naccount of the said company by alleging it to be shell company, existing only on \n\n23 \n \npaper. While doing so, the credit entries were clearly proves that the Assessing \nOfficer did not apply his mind and followed the dictat of a third party, i.e., the \nADIT, Mohali. \n \n30.6 Regarding the addition made under section 68 of the Income Tax Act, the \nsaid company has filed confirmations received from each of the parties showing \nname of the party, nature of the transactions, confirmation of the party along \nwith addresses, PAN, Income Tax Return, Balance Sheet and bank statements \nof the parties. This company has also submitted copies of accounts of all the \nparties from whom amounts have been received during the year. All such \ntransactions have taken place through bank and, therefore, the primary onus cast \nupon the company was discharged and therefore there was no justification for \ninvocation of section 68 on the funds received by the Appellant from this \ncompany. \n30.7 Lastly, when the Assessing Officer had himself made addition of all \ncredits received in the bank accounts of M/s TJR Properties Pvt Ltd in the hands \nof this company during the year under consideration which also included the \naddition of Rs. 141 lacs, by treating all the credits received in bank accounts of \nM/s. TJR Properties Pvt Ltd. during the relevant year as unexplained credits of \nM/s. TJR Properties Pvt Ltd., then under no provision of the Act he could have \nagain declared the same Rs. 60 lacs or 81 lacs as unexplained cash credits of the \nappellant, which were given to the appellant out of genuine credits received \n\n24 \n \nduring the year under consideration. This, had resulted into double taxation, \nwhich is not permitted under the Income Tax Act, 1961. \n31. \nM/s Evershine Resorts Pvt. Ltd. \n31.1 The appellant had received unsecured loans from M/s Evershine Resorts \nPrivate Limited during the year through banking channels. The amount of Rs. \n22,00,000/- received is wrongly added u/s 68 of the Act to the total income of \nthe appellant, by alleging the said company to be a shell company and Rs. \n30,00,000/- is considered while making addition u/s 69 of the Act on surmises \nand conjectures. \n31.2 The appellant submitted audited Balance Sheet, Bank Statement, ITR, \nConfirmation etc. of this company to the Assessing Officer during the \nassessment proceedings, but instead of verification or examination of these \ndocuments/details submitted to ascertain the genuineness, source, credibility of \nthe lender Company as per the provisions of the Act, the Assessing Officer \nwrongly declared the genuine lender company as Shell Company on third party \ndictat without application of his own mind. On the other hand, the ld. CIT (A) \nand the ITAT, in their Appellate Orders, have held it to be a genuine company \nfor A.Y. 2012-13 to 2017-2018, as seen herein before. \n31.3 That the Assessing Officer has made additions of the unsecured loans \nreceived by the appellant from M/S. Evershine Resorts Pvt. Ltd. during the year \nunder consideration, partly u/s 68 and partly u/s 69 of the Income Tax Act. Out \nof the total unsecured loan amounting to Rs. 52,00,000/- received by the \n\n25 \n \nappellant from M/s Evershine Resorts Pvt. Ltd during the year under \nconsideration, merely on conjectures and surmises. \n31.4 Further, this company was also assessed simultaneously with the \nappellant by the same Assessing Officer, for the same Assessment year, wherein \nall the bank accounts, etc. of the lender company were placed on record of the \nAssessing Officer. The Assessing Officer, after considering the documents, \ninformation and explanation submitted by said company, had not made any \naddition. He was completely satisfied with regard to the fact that the company \nwas not a shell company and all amounts credited in bank account of the \ncompany were only from known sources which were genuine and duly \naccounted for in its books of account as at 31.03.2018 till 26.12.2019. The AO \nin fact, had prepared a deviation note for making no addition at all, on \n24/12/2019 and had sent it to the ADIT, Investigation, Mohali on 26/12/2019 at. \n06:00pm, vide letter no. 1733. In this deviation note, the Assessing Officer has \ncategorically admitted that there was no document or reasoning supplied to him \nby the Investigation Wing on the basis of which, the credit entries in the bank \naccount of the said company could be treated as unexplained. Further, he also \nstated that after going through the replies of the assessee company, he was \nsatisfied that the amounts have been credited in the bank account of the assessee \ncompany from known sources, which have been duly accounted for by the \nassessee company in their books of account and shown them in their audit \nreport as well as ITR filed in due course on a regular basis. \n\n26 \n \n31.5 It is remarkable that as contended, until the receipt of the dictat of the \nADIT, Investigation, Mohali by the Assessing Officer till 27.12.2019, the \nAssessing Officer was completely satisfied, as evident from the aforementioned \nDeviation Note, with regard to the fact that the said company was not a shell \ncompany and all banking transactions were genuine and duly accounted for in \nits books of account and the AO had proposed no addition at all. However, \nsuddenly, it was only on the receipt of the unauthorized dictat of the ADIT, \nInvestigation, Mohali, that the Assessing Officer changed his track and started \nfinding faults in the statements recorded. \n31.6 Regarding the addition made under section 68 of the Income Tax Act, we \nsubmit that the said company has filed confirmations received from each of the \nparties showing the name of the party, the nature of the transactions, \nconfirmation of the party along with addresses, PAN, Income Tax Return, \nBalance Sheet and bank statements of the lenders or creditors. This company \nhas also submitted copies of accounts of all the parties from whom unsecured \nloan has been taken during the year. All such transactions have taken place \nthrough bank and therefore primary onus cast upon the company was \ndischarged. So there was no justification for invocation of section 68 in the case \nof the appellant, on mere surmises and conjectures. \n31.7 Besides, when the Assessing Officer had himself made addition of all \ncredits received in the bank accounts of M/s. Evershine Resorts Pvt Ltd. during \nthe year under consideration, which also included the addition of Rs. \n\n27 \n \n52,00,000/, by treating all the credits received in bank accounts of M/s. \nEvershine Resorts Pvt. Ltd. during the relevant year as unexplained credits of \nM/s. Evershine Resorts Pvt. Ltd., then under no provision of the Act, could he \nhave again declared the same Rs. 22,00,000/- as unexplained cash credits in the \nhands of the appellant, which were paid to the Appellant by M/s. Evershine \nResorts Pvt. Ltd. out of sale proceeds received on sale of its land and genuine \ncredits received during the year. This, had resulted into double taxation, which \nis not permitted under the Income Tax Act, 1961. \n31.8 Reliance on the judgment of Hon'ble Apex Court in the matter of \nPrincipal Commissioner of Income Tax, Central - 1 vs Adamine Construction \n(P) Ltd, (Supreme Court) [Para 4] Citation — [2019] 107 taxmann.com 84 \nDelhi) has rightly been placed, therein, it was held that: \nThe material on record in the form of the orders of the lower the share applicants \n(upon receiving notice under Section 131 of the Act) had produced documentary \nproof These included the assessments and income-tax returns filed by the share \napplicants as well as confirmation and acknowledgment documents. If Ihe AO wished \nto pursue the matter, there were sufficient clues for him to ha/e proceeded for \ninstance, it could have Issued notices and obtained statements from the bankers of \nthe share applicants or even th e balance sheets which existed in the income-tax \nrecords of their Assessing Officers. He did not choose to pursue both but instead \nrested his conclusions entirely on the basis of remarks received from the \nCommissioner. These remarks can at best be considered opinion but not primary \nevidence to displace the inferences that had to be drawn with respect to the \ngenuineness of the transaction and the creditworthiness of the parties. \nInfact the learned assessing officer was so much influenced by the irrelevant and \nfrivolous information received from the third party that he was determined to make \nthese additions under all circumstances. Reliance in this regard is placed on the \nfollowing judgement of Hon'ble Apex Court In the case of Mathuram Agrawal vs. \nState of Madhya Pradesh (1999) 8 SCC 667 in which it was held that- \"A five Judges \nBench judgment of this Court in Mathuram Agrowal vs. State of Madhya Pradesh \n(1999) 8 SCC 667, after referring to the judgment in B.M. Kharwar (supra) as well \nas the opinion expressed by Lord Roskill on Duke of Westminster stated that the \nsubject is not to be taxed by inference or analogy, but only by the plain words of a \nstatute applicable to the facts and circumstances of each case.\" \n \n\n28 \n \nThe ITAT, Ahmedabad, in ‘Anant V Mehta vs ITO’, (2015) in 43 CCH 0017 \n(Ahd) Tribunal held that: \n\"Assessee's contention cannot be brushed aside simply on basis of surmises and \nconjectures and without bringing on record material to controvert the explanation of \nthe assessee. In absence of any material brought by AO to show that explanation of \nassessee was not plausible, no-good reason was found to interfere in order of \nCIT(A)\". . \n \nThe Hon'ble Apex Court, in ‘ACIT & others vs Marico Ltd.’ in SLP (Civil) \nDiary no. 7367/2020 held that: \n\"The non rejection of explanation in the assessment order would amount to the AO \naccepting the view of the assessee\", thus taking a view/forming an opinion\". \n \nThe Hon'ble Apex Court in ‘CIT vs Orissa Corporation Ltd.’, 159 ITR 78 (SC) , \nheld that : \nIn this case the Revenue did not examine the source of income of alleged creditor to \nfind out whether they were creditworthy or not or were such who could have \nadvanced these alleged loans. There was no effort made to pursue the alleged \ncreditors. In those circumstances, the assessee could not do anything further. The \nassessee had discharged the burden that lay on him. \n \nHon'ble Apex Court in the matter of ‘Commissioner of Income Tax Vs. Orchid \nIndustries (P.) Ltd’, [2020] 116 taxmann.com 113 (SC) held that : \nIn this case the Hon 'ble Apex court dismissed the SLP filed by the department \nagainst the judgement of Hon'ble Bombay High court in the matter of Commissioner \nof Income Tax Vs. Orchid Industries (P.) Ltd[2017] 88 taxmann.com 502 (Bombay), \nwhere it was held that the assessee had produced on record the documents to \nestablish the genuineness of the party such as PAN of all the creditors along with the \nconfirmation, their bank statements showing payment of the said amount. The \nassessee had also produced the entire record regarding issuance of shares, i.e., \nallotment of shares to these parties, their share application forms, allotment letters \nand share certificates, so also the books of account. The balance-sheet and profit and \nloss account of those persons disclosed that they had sufficient funds in their \naccounts for investing in the shares of the assessee. In view of these voluminous \ndocumentary evidence, only because those persons had not appeared before the \nAssessing Officer would not negate the case of the assessee. Therefore, the addition \nwas liable to be deleted. \n \n\n29 \n \nThe Hon'ble Apex Court in ‘PCIT Vs. Himachal Fibres Ltd.’, (2018) 259 \nTaxmann 5, it was held that: \nDecision of Hon'ble Delhi High Court was confirmed in case of PCIT Vs. Himachal \nFibres and it was held that in a case where the assessee has furnished all the relevant \nfacts within the knowledge and offered a credible explanation, then the onus reverts \nto the Revenue to prove that these facts are not correct. In such a case, Revenue \ncannot draw inference based on suspicion or doubt or perception of culpability etc. \n \nThe Hon'ble Delhi High Court in the case of ‘CIT vs. Vrindavan Farms Pvt. \nLtd., etc.’, ITA.No.71 of 2015 dated 12th August, 2015 (Del) it was held that: \nthe sole basis for the Revenue to doubt the creditworthiness of Lenders was the low \nincome reflected in their returns of income. It was observed by the ITAT that the AO \nhad not undertaken any investigation of the veracity of the documents submitted by \nthe assessee, the departmental appeal was dismissed by the Hon'ble High Court. \n \nIn Assistant Commissioner of Income-tax, Central Circle-25, New Delhi vs. \nGoodview Trading (P.) Ltd 2017] 82 taxmann.com 55 (Delhi - Trib.) it was held \nthat : \nthe assessee during the course of proceedings has discharged its liability by \nsubmitting necessary evidence available to establish the bona fide of the \ntransactions. Thereafter, the onus shifted on to the revenue to prove that the claim of \nthe assessee was factually incorrect. Simply by pointing out that the applicant \ncompanies did not have sufficient income or that the bank accounts indicated credits \nand debits in rapid succession leaving little balance does not discharge the burden \ncast upon the revenue to take an adverse view in the matter. In the present facts of \nthe case, the addition is not legally sustainable. The AO in the assessment order has \nheld that the amount received is held to be appellant's income and was added u/s 68 \nof the Act. This is a bald assertion by the AO. The AO has to bridge the gap between \nsuspicion and proof to bring home the allegation. There was neither direct nor \ncircumstantial evidence on record to show that the said loan amount actually \nbelonged to or were owned by the appellant. No material has been placed by the AO \nto allege that such sums/funds raised by the appellant was from the coffers of the \nappellant. \n \nIn Income Tax Officer Vs. Jaidka Woolen& Hosiery Mills Pvt. Ltd. \nITA.No.5302/Del./2015 the Hon'ble ITAT Delhi, it was held that: \nthere was no evidence to show that money actually emanated from the coffers of the \nassessee-company so as to be treated as undisclosed income. Additionally, if the loan \n\n30 \n \ntaken by the assessee has been repaid to the creditor, then no addition is allowed, \neven though such transactions are done to sguare off the entries entered earlier. \n \nThe Hon'ble High Court of Gujarat, in the case of ‘PCIT v. Ambe Tradecorp \n(P.) Ltd, [2022] 145 taxmann.com 27 (Gujarat) has held that: \nAs discussed above, since the requisite material was furnished by assessee showing \nthe identity and since the assessee was not beneficiary when the loan was repaid in \nthe subsequent year, even the ingredients of creditworthiness and genuineness of \ntransaction were well satisfied. \nThe Tribunal rightly recorded in para 29 of the judgment, \n\"Once repayment of the loan has been established based on the documentary \nevidence, the credit entries cannot be looked into isolation after ignoring the debit \nentries despite the debit entries were carried out in the later years. Thus, in the given \nfacts and circumstances, were hold that there is no infirmity in the order of the Ld. \nCIT-A.\" \n \nThe ITAT Delhi Bench 'F' in the case of ITO, Ward-1(3), Ghaziabad Vs Habitat \nInfrastructure Ltd. [ITA No. 6155/DEL/2015] has held that: \nThe CIT(A) has given detailed finding and taken into consideration of the \nsubmissions made by the assessee as well as the remand report of the Assessing \nOfficer called during Appellate Proceedings. In-foct, from the records it emerges that \nthe unaccounted money as alleged by the Assessing Officer was the loan which was \nrepaid subsequently by the assessee. Therefore, there is no need to interfere with the \nfindings of the CIT (A), The appeal of the Revenue is Dismissed. \n \n \n32. \nThe Department has not been able to dispute the applicability of these \ndecisions to the case at hand. No contra decision has been cited before us. \n \n33. \nIn view of the above, Ground No. 7 & 8 are accepted and the addition of \nRs. 22.00 lacs and Rs. 60.00 lacs are deleted. \n \n34. \nGround No. 9 is consequential. \n \n35. \nIn the result, appeal of the Assessee is allowed. \n\n31 \n \n36. \nIn view of the aforesaid, where the matter has been decided in favour of \nthe assessee, the stay application has become infructuous and the same is \naccordingly dismissed. \n \nOrder pronounced in the open Court on 04/11/2024 \n Sd/- \n \n \n \n \n \n \n \n Sd/- \n क\nृणवȶ सहाय \n \n \n \n \n \n आकाश दीप जैन \n (KRINWANT SAHAY) \n \n \n \n \n \n (AAKASH DEEP JAIN) \nलेखा सद˟/ ACCOUNTANT MEMBER उपाȯƗ/VICE PRESIDENT\n \n \nAG \n \nआदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : \n1. अपीलाथŎ/ The Appellant \n2. ŮȑथŎ/ The Respondent \n3. आयकर आयुƅ/ CIT \n4. आयकर आयुƅ (अपील)/ The CIT(A) \n5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH \n6. गाडŊ फाईल/ Guard File \n \nआदेशानुसार/ By order, \nसहायक पंजीकार/ Assistant Registrar \n \n"
Mehul