Income Tax Appellate Tribunal – Delhi
Carissa Investment (P) Ltd., … vs Acit, New Delhi on 22 January, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES “B” : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI O.P. KANT, ACCOUNTANT MEMBER
ITA.No.6448/Del./2016
Assessment Year 2007-2008
M/s. Carissa Investment (P)
Ltd., New Delhi – 110 065. The ACIT,
PAN AAACC3277A vs.
[
C/o. Mr. Rajesh Dureja, Circle – 3 (1),
Advocate, 890, Dr.
Mukherjee Nagar, Delhi. New Delhi.
PIN – 110 009.
(Appellant) (Respondent)
For Assessee : Shri Mayank Patawari, C.A.
For Revenue : Ms. Nidhi Srivastava, CIT-DR
Date of Hearing : 13.01.2021
Date of Pronouncement : 22.01.2021
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by assessee has been directed against
the order of Ld. CIT(A)-2, New Delhi Dated 31.08.2016 for
the A.Y. 2007-2008 on the following grounds :
2
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
1. That the order of the Ld. CIT (A) is bad in law and is
against the facts and circumstances of the case.
2. That having regard to the facts and circumstances of
the case the Ld. CIT (A) has erred in confirming the
addition made u/s 68 amounting to
Rs.36,19,25,209/- and Rs.12,29,99,000/- credited in
the names of Altar Investment (P) Ltd. and Ilac
Investment (P) Ltd. respectively.
3. That the Ld. CIT (A) has failed to take cognizance of
the bank statements of the lenders, which are
available on the record and thus has grossly erred in
upholding the addition u/s 68 simply for the reason
that the bank statements of the lenders were not
provided to her.
4. That in any case and in view of the matter, order
of Ld. CIT (A) in confirming the impugned addition
u/s 68 is bad in law and unjustified as the identity
of lenders, genuineness of transactions and
creditworthiness of the lenders have been duly
proved.”
3
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
2. We have heard the Learned Representative of
both the parties through video-conferencing and perused
the material available on record.
3. Briefly the facts of the case are that the assessee-
company has filed its return of income on 30.10.2007
declaring income of Rs.27,78,790/- in the computation of
income. The assessee-company is engaged in the business
of Investment and Trading in Shares. The A.O. noted that
assessee-company has taken loan from 11 parties in
assessment year under appeal. The A.O. issued notices
under section 133(6) of the Income Tax Act to all the parties
requiring them to furnish copy of the bank statements, PAN
etc., The A.O. noted that notices could not be served upon
M/s. Alter Investment Pvt. Ltd., [Rs.36,19,25,209/-] and
M/s. Ilac Investment Pvt. Ltd., [Rs.12,29,99,000/-
hereinafter mentioned as creditors]. The assessee-company
submitted copy of the ledger account, confirmations by the
parties along with their ITR and other details before A.O.
The A.O. without making further enquiry considered them
4
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
as unexplained credits and made the addition in respect of
both the creditors.
3.1. The assessee-company challenged the additions
before the Ld. CIT(A) who has decided the appeal of
assessee-company vide Order Dated 09.06.2011 by deleting
the addition. The Ld. CIT(A) noted that assessee-company
has submitted copy of the ledger account of these two
parties along with their ITR, PAN along with confirmations.
Therefore, initial burden upon the assessee-company to
prove genuineness of the credits and creditworthiness of the
creditors have been proved.
3.2. The Revenue preferred an appeal before the Delhi
B-Bench, New Delhi of ITAT in ITA.No.3959/Del./2011
which was decided by the Tribunal vide Order Dated
09.05.2014 by partly allowing the Departmental Appeal. On
this ground, the Tribunal noted in its finding that assessee-
company has filed ledger of the creditors, their PAN,
confirmations. The A.O. had not shown the envelope to the
assessee and what was the report of non-service of notice
5
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
under section 133(6) of the I.T. Act, 1961. The audited
copies of the accounts of both the creditors were also
available on record and they were having sufficient capital
with them. In these circumstances and evidences on record,
the Departmental Appeal were dismissed on this ground.
3.3. The Revenue further preferred an appeal before
the Hon’ble Delhi High Court in Income Tax Appeal No.3 of
2015 which was decided vide Judgment Dated 20.04.2015
and the matter has been remanded to the Ld. CIT(A) with a
direction to the Ld. CIT(A) that he should enquire into the
matter placed on record and should consider them. The
additional documents produced by the assessee-company
were directed to be taken on record and shall be duly
considered. The findings of the Hon’ble Delhi High Court are
reproduced as under :
“Counsel for the assessee relied upon the
findings of the CIT (A) and the ITAT and stated
that relevant details in the form of the ITRs as well
as proven identity of the parties were on the
6
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
record. Highlighting that the credits in respect of
the parties were added from the same ledger
which was accepted in the case of the eight other
creditors, learned counsel relied upon the findings
of the CIT(A) to say that when the accounts were
accepted in respect of overwhelming number of
creditors, there was no occasion to reject the
credits of two parties. He also submitted that as a
matter of fact, relevant details in the form of
balance sheets, profit and loss statements, bank
accounts etc were part of the record which was
sought to be produced under Rule 46 (A).
This Court has considered the submissions.
From the materials which appear to have been
considered, facially, it appears that the Revenue’s
grievance is that there was nothing to support the
creditworthiness of the parties and the
genuineness of the transactions. However, that is
not the end of the matter. It is an established
matter of record that in appellate proceedings
7
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
before the CIT (A), the assessee had produced
copies of the balance sheets, profit and loss
statements and bank accounts pertaining to the
concerned parties, i.e., M/s Alter Investments Pvt.
Ltd.& M/s Iliac Investments Pvt. Ltd. This was in
addition to the extracts of its own ledger records to
say that there was regularity in the transaction
between those parties and consequently all these
credits were through normal banking transactions.
In these circumstances, we are of the opinion that
the CIT(A) could not have proceeded to adjudicate
on the rights of the parties and return the findings
that he did on the basis of the materials which
existed. Whilst, the assessee may be within its
rights in saying that additions under Section 68
were not sustainable, at least, the CIT (A) should
have enquired into the materials placed on the
record and should have duly considered them.
In the light of the above findings, the
impugned order of the ITAT and CIT (A) are set
8
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
aside. Additional documents produced by the
assessee are directed to be taken on the record
and duly considered. All rights of the parties to
urge all the contentions available to them in this
regard are reserved.
The appeal is allowed in the above terms.”
3.4. The Ld. CIT(A) in view of the above directions of
the Hon’ble Delhi High Court has re-fixed the appeal for
hearing. The Ld. CIT(A), however, confirmed the addition
vide impugned order mainly on the reasons that assessee-
company has not produced the copy of the bank statements
of both the creditors, therefore, the source of the funds
available to them could not be verified. The findings of the
Ld. CIT(A) in paras 5.1 and 5.2 of the impugned order are
reproduced as under :
5.1. In compliance of the above directions of the
Hon’ble jurisdictional High Court, the appeal
was fixed for hearing vide notice dated
15.07.2015 and subsequent notices. The AR
9
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
of the appellant has filed a paper book
running into 96 pages, along with his
submissions and copies of ledger accounts of
M/s. Ilac Investment Pvt. Ltd. and M/s. Altar
Investment Pvt. Ltd. in the books of the
appellant for A.Ys. 2005-06 to 2010-11.
Perusal of the ledger accounts for the
assessment year under appeal i.e. for F.Y.
2006-07 reveals that M/s. Ilac Investment
Pvt. Ltd. made payments aggregating to
Rs.15,67,00,000/- to the appellant during the
year and after taking into account the
opening debit balance of 20.45 lacs and
payments made by the appellant to the
aforementioned party, it remained a creditor
of the appellant for an amount of
Rs.12,29,99,000/- at the end of the year. In
the paper book filed by the appellant before
me, there is copy of acknowledgment of ITR
for A.Y. 2007-08 of M/s. Ilac Investment Pvt.
10
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
Ltd., as per which it was having total income
of Rs.12,56,696/- only. Perusal of the copy of
the final accounts of M/s. Ilac Investment Pvt.
Ltd. for the year ended 31st March, 2007
shows total receipts of Rs.1,66,06,895/- in
the profit and loss account from profit on sale
of shares, dividend and hire charges, besides
other income of Rs.1,13,605/-. There is no
interest income but interest and financial
charges to the tune of Rs.67,05,271/- have
been debited to the profit and loss account.
As on 31.03.2007, the company had paid up
capital of Rs.5.28 crores, reserves and
surplus of Rs.5.21 crores and sundry
creditors had gone up from Rs.95.99 lacs in
the immediately preceding year to Rs.6.64
crores. Advances recoverable by the company
stood at Rs.21.02 crores as on 31.03.2007 in
which the amount recoverable of Rs.12.29
crores from the appellant is claimed to be
11
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
included. It is beyond one’s comprehension
why a company which had to pay
interest/financial charges of Rs.67,05,271/-
did not charge a penny of interest from the
appellant or from any other party from whom
large amounts were due to it. The purpose
and nature of the transactions between M/s.
Ilac Investment Pvt. Ltd. and the appellant
have also not been explained. The paper
book available in the record of the
undersigned does not contain the bank
statement of M/s. Ilac Investment Pvt. Ltd.
and therefore, the source of funds with the
company out of which it advanced money to
the appellant could not be ascertained. It is
seen from the figures of the preceding year,
as given in the final accounts for A.Y. 2007-
08, that cash and bank balances of M/s. Ilac
Investment Pvt. Ltd. stood at Rs.1,61,191/-
only. This means that transactions of M/s.
12
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
Ilac Investment Pvt. Ltd. to the tune of
Rs.15,67,00,000/- with the appellant
company were effected out of funds received
during the year. The sources of these funds
and whether they were received in cash or
otherwise remain unclear, in the absence of
bank statement of the party. As already
discussed above, the nature/purpose of the
transactions and why interest was not
charged by M/s. Ilac Investment Pvt. Ltd.
from the appellant company when M/s. Ilac
Investment Pvt. Ltd. itself paid
interest/financial charges of Rs.67,05,271/-
has not been explained. Therefore, I am of
the view that even after consideration of the
documentary evidence furnished by the
appellant before the CIT (A), the
creditworthiness of M/s. Ilac Investment Pvt.
Ltd. and the genuineness of the transactions
remains unproved.
13
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
5.2. Coming to the evidences filed in respect of
M/s. Altar Investment Pvt. Ltd.,. it is
observed that the company was a creditor of
the appellant at the beginning of the F.Y.
2006- 07 to the tune of Rs.15,70,000/- and
made payments worth Rs.44,86,50,000/- to
the appellant during the year and after
taking into account some payments made by
the appellant to the company, it was a
creditor of the appellant company to the tune
of Rs.36,19,25,209/- as on 31.03.2007.
Perusal of the final accounts of the company
reveals that it had share capital of Rs.4.90
crores, reserves and surplus of Rs.2.48
crores and current liabilities and provision to
the tune of Rs.39.55 crores (which went up
steeply from Rs.34.36 lacs in the preceding
year). Against this, the appellant company
stood as its debtor for the amount of
Rs.36.19 crores. Income returned by M/s.
14
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
Altar Investment Pvt. Ltd. for A.Y. 2007-08 is
nil as per its ITR acknowledgment. No
interest is shown to have been received
during the year by M/s. Altar Investment Pvt.
Ltd. and nominal interest/financial charges
of Rs.7,028/- have been claimed in the P & L
account. Investment in shares/units as on
31.03.2007 stood at Rs.78.01 lacs (at cost)
and Rs.90,88,300/- (at face value), on which
dividend income of Rs.67.12 lacs has been
received during the year. As in the case of
M/s. Ilac Investment Pvt. Ltd., there was only
receipt of huge amount of funds by the
appellant from M/s. Altar Investment Pvt.
Ltd. during the year and part repayment to it,
resulting in M/s. Altar Investment Pvt. Ltd.
being a creditor of the appellant at the end of
the year during appeal to the tune of
Rs.36.19 crores. Once again, the bank
statement of M/s. Altar Investment Pvt. Ltd.
15
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
has not been produced by the appellant so
that the source of heavy infusion of funds
into the appellant company during the year
(aggregating to Rs.45.02 crores) is not
known. Thus the creditworthiness of the
company, which filed a return of nil income
during the year, remains un-established.
Further, both in the case of M/s. Ilac
Investment Pvt. Ltd. & M/s. Altar Investment
Pvt. Ltd., the nature of their transactions with
the appellant company is not clear. Year after
year, there is inflow of funds from and
outflow of funds to them (without charging of
any interest), with the result that at the end
of a given year, the appellant is either a
debtor or creditor of these parties. Clearly,
these are mere accommodation entries taken
as per the requirement of the appellant.
Hence, in addition to the creditworthiness of
M/s. Ilac Investment Pvt. Ltd. & M/s. Altar
16
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
Investment Pvt. Ltd. not being proved (as per
discussion supra), the genuineness of the
transactions is also in doubt. Therefore, with
two of the three ingredients of section 68 not
being satisfied in the case of the two parties,
M/s. Ilac Investment Pvt. Ltd. & M/s. Altar
Investment Pvt. Ltd., the additions made by
the A.O. by treating credits from these parties
as unexplained cash credits u/s 68 are
upheld.”
4. The Learned Counsel for the Assessee reiterated
the submissions made before the authorities below and
submitted that the assessee-company has filed paper book
containing 96 pages before the Ld. CIT(A), copy of which is
also placed on record, which specifically shows that
assessee company filed copy of the bank statements of both
the creditors before the authorities below, copies of the
same are also available in the paper book of 96 pages filed
before the Ld. CIT(A) as well. Learned Counsel for the
Assessee also referred to copies of the confirmations, ledger
17
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
accounts, PAN, balance-sheets and bank statements of both
the creditors to show that both the creditors are having
sufficient means to give loan to the assessee-company who
are interconnected parties with the assessee-company and
these were inter-corporate loans for making further
investments. He has submitted that since all the
transactions were carried-out through banking channel,
therefore, assessee-company has proved the
creditworthiness of the creditors and genuineness of the
transaction in the matter. He has submitted that
assessment of the assessee-company for A.Ys. 2005-2006 to
2012-2013 except for A.Y. 2010-2011 were completed under
section 143(3), but, no addition on account of amount
outstanding in the names of these creditors was ever made
except for the year under consideration. He has referred to
assessment order of the assessee-company for the A.Y.
2008-2009 specifically [PB-168] and assessment orders of
both the creditors for A.Y. 2008-2009 under section 143(3)
of the Income Tax Act, 1961, copies of which are filed in the
paper book to show that these creditors were dealing with
18
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
the assessee-company in subsequent assessment year as
well and on the same pattern of taking loan by the assessee-
company from both these creditors. The A.O. did not take
any adverse inference against the assessee-company in the
order under section 143(3) of the Income Tax Act, 1961.
Accordingly, Learned Counsel for the Assessee was directed
to file copy of the audited accounts of the assessee-company
for subsequent A.Y. 2008 2009 which is placed on record.
Learned Counsel for the Assessee, therefore, submitted that
initial burden upon the assessee to prove creditworthiness
of the creditors and genuineness of the transaction have
been discharged. Learned Counsel for the Assessee in
support of the above contention relied upon the following
decisions in the paper book.
1. PCIT vs., E Smart Systems (P.) Ltd.,
[2019] 105 taxmann.com 158 [Del.-HC].
2. PCIT vs., Hi-Tech Residency (P) Ltd.,
[2018] 96 taxmann.com 402 [Del.-HC].
3. Mod Creations (P.) Ltd., vs., ITO
[2013] 354 ITR 282 [Del.-HC].
19
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
4. Flourish Builders & Developers (P.) Ltd., vs., DCIT
[2019] 176 ITD 409 [Del.Tribu.].
5. ACIT vs., Vikrant Puri
[2016] 47 ITR (T) 708 [Delhi-Tribu.].
6. Rajesh Bhatia vs., DCIT
[2017] 88 taxmann.com 350 [Delhi-Tribu.]
7. CIT vs., Diamond Products Limited
[2009] 177 Taxman 331 [Delhi-HC].
8. Prayag Tendu Leaves Processing Co. vs., CIT
[2017] 88 taxmann.com 23 [Jharkhand HC].
9. PCIT vs., Veedhata Tower Pvt. Ltd.,
[2018] 403 ITR 415 [Bombay-HC].
6. On the other hand, Ld. D.R. relied upon others of
the authorities below and submitted that assessee did not
prove creditworthiness and genuineness of the transaction
in the matter.
7. We have considered the rival submissions and
perused the material on record. The above matter have been
remanded by the Hon’ble Delhi High Court to the Ld. CIT(A)
to decide the issue by enquiring into the material place on
record and should consider them. The Order of the Hon’ble
Delhi High Court is reproduced above. The impugned order
20
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
of the Ld. CIT(A) is also reproduced above. The Ld. CIT(A)
confirmed the addition mainly on the reason that assessee-
company did not place on record the copy of the bank
statements of both the creditors, therefore, the source of the
funds with the assessee-company out of which it advanced
money to the assessee-company could not be ascertained
and that why the assessee-company has debited the interest
on financial charges to the profit and loss account. The
reason given by the Ld. CIT(A) are wholly incorrect and
without any basis. The findings of the Hon’ble Delhi High
Court is reproduced above, in which submissions of the
Learned Counsel for the Assessee have been recorded that
relevant details in the form of balance-sheet, profit and loss
statement, bank statements etc., are part of the record
which was sought to be produced under Rule 46A of the
Income-Tax Rules. The Hon’ble Delhi High Court in its
finding have specifically mentioned that assessee-company
has produced copy of the balance-sheet, profit and loss
statement and bank statement pertaining to both the
creditors before the Ld. CIT(A). The Ld. CIT(A), therefore,
21
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
directed to look into these additional evidences on record
and enquire into the same and dispose of the matter. The
Ld. CIT(A) has also mentioned in his findings that assessee-
company has filed paper book running into 96 pages, copy
of which is produced before us also, which contain bank
statements of both the creditors. Therefore, the whole
premise of the findings given by the Ld. CIT(A) is wholly
incorrect and baseless and it appears that the Ld. CIT(A)
without any justification has ignored the copy of the bank
statements of both the creditors already on record before
her. Thus, the finding of the Ld. CIT(A) cannot be sustained
in Law. Why the interest have been debited to the profit
and loss account has no concern whatsoever with the
ingredients of Section 68 of the Income Tax Act, 1961. Thus,
on this reason itself the Order of the Ld. CIT(A) is liable to
be set aside. However, we also consider the material and
evidences on record to consider the creditworthiness of the
creditors and genuineness of the transaction in the matter.
It is an undisputed fact that assessee-company has filed
copy of the conformations of the creditors along with their
22
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
ledger accounts, their ITRs, balance-sheets, PAN and bank
statements before the authorities below. Copy of the same
are also produced in the paper book. The Ld. CIT(A) in his
findings have specifically noted from the perusal of the
ledger account of M/s. Ilac Investment Pvt. Ltd., show that
this party has made payments aggregating to Rs.15.67
crores [PB-62] to the assessee-company during the
assessment year under appeal and after taking into the
debit balance of Rs.20.45 lakhs and the payments made by
the assessee-company to the aforesaid creditor, it remained
a creditor of the assessee-company for an amount of
Rs.12,29,99,9000/- at the end of the year. As per the ITR,
the creditor has shown net income of Rs.12,56,696/-. The
perusal of the balance-sheet of this creditor shows that the
creditor had paid-up capital of Rs.5.28 Crores, Reserve and
Surplus of Rs.5.21 crores and Secured Loans of
Rs.14,69,11,570/-. Thus, the total funds available to this
creditor were in a sum of Rs.25,18,91,314/-[PB-55]. The
name of the assessee-company is appearing in their books
of accounts against advance recovered in cash or kind [PB-
23
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
61]. Similarly, in case of M/s. Alter Investment Pvt. Ltd.,
[PB-37] the ledger account shows that it is a running
account and at the beginning of the year, the debit balance
was of Rs.15.70 lakhs and this creditor made payments
worth Rs.44,86,50,000/- to the assessee-company in
assessment year under appeal and after taking some
payments made by the assessee-company to this creditor, it
was a creditor of the assessee-company to the tune of
Rs.36,19,25,209/- as on 31.03.2007 [PB-37]. The balance-
sheet of this creditor shows it has share capital of Rs.4.90
crores, Reserve and Surplus of Rs.2.48 crores and current
liabilities and provisions to the tune of Rs.39.55 Crores [PB-
39]. The name of the assessee-company is appearing in
their books of account [PB-46]. PB-36 is reply of the
assessee-company before the Ld. CIT(A) in which assessee-
company has specifically explained that assessments of the
assessee-company have been completed under section
143(3) for the A.Ys. 2005-2006 to A.Y. 2012-2013 except for
the A.Y. 2010-2011, but, no additions have been made on
account of amount outstanding in the names of these two
24
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
creditors and no addition was made except in assessment
year under appeal. The submissions of the assessee-
company have not been contradicted by the Ld. CIT(A)
through any evidence on record. The Learned Counsel for
the Assessee has also filed copy of the assessment orders for
subsequent A.Y. 2008-2009 of assessee-company as well as
both the creditors in the paper book under section 143(3) of
the I.T. Act. The assessee-company was also directed to file
copy of the balance-sheet for subsequent A.Y. 2007-2008
which is placed on record, which shows that even in
subsequent assessment year assessee-company has been
dealing with both these creditors and payments and loans
have been received and repayment have been made by the
assessee-company. In the case of M/s. Alter Investment Pvt.
Ltd., ending on 31.03.2008 there is a debit balance of
Rs.40,00,80,209.30ps and in case of M/s. Ilac Investment
Pvt. Ltd., through-out the year there are transactions with
this creditor and from opening credit balance of
Rs.12,29,99,000/- at the year end on 31.03.2008 there is a
debit balance of Rs.37,55,93,917.73ps. These facts would
25
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
clearly show that both the creditors have transactions with
the assessee-company in subsequent A.Y. 2008-2009 of the
identical nature and the A.O. accepted the creditworthiness
of the creditors and genuineness of the transaction of
higher amounts of credits and no additions have been made
under section 143(3) in respect of the same creditors in A.Y.
2008-2009. Thus, the assessee-company has been able to
prove that both the creditors have availability of sufficient
funds to give loan to the assessee-company in assessment
year under appeal. Merely because income was low declared
by both the creditors, is no ground to make the impugned
addition against the assessee-company.
7.1. The Hon’ble jurisdictional Delhi High Court in the
case of CIT vs. Vrindavan Farms Pvt. Ltd., etc. ITA.No.71 of
2015 dated 12th August, 2015 (Del.), in which it was held as
under :
“The sole basis for the Revenue to doubt their
creditworthiness was the low income as reflected
in their return of income. It was observed by the
ITAT that the AO had not undertaken any
26
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
investigation of the veracity of the documents
submitted by the assessee, the departmental
appeal was dismissed by the Hon’ble High Court.
7.2. The Ld. CIT(A) has further gone to the extent and
observing that since copy of the bank statements of the
creditors is not produced, therefore, the source of the funds
given to the assessee-company could not have been verified.
Though the observation of the Ld. CIT(A) is incorrect as
noted above because copies of the bank statements are part
of the record before her, moreover, it is well settled Law that
assessee need not be asked to prove source of the source.
We rely upon the Judgment of the Hon’ble Delhi High Court
in the case of Dwarakadhish Investment P. Ltd., [2011] 330
ITR 298 (Del.), Judgment of Hon’ble Gujarat High Court in
the case of Rohini Builders 256 ITR 360 (Guj.) and
Judgment of Hon’ble Allahabad High Court in the case of
Zafar Ahmed & Co., 30 taxmann.com 269 (Alld.).
7.3. Considering the totality of the facts and
circumstances of the case, it is clear that in the ledger
27
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
account of both the creditors there are loans given to the
assessee-company as well as assessee paid back the
amounts to them. The debit of financial charges to the profit
and loss account is not a relevant criteria to consider under
section 68 of the Income Tax Act, 1961. Bank statements
are part of the record which also did not show if any cash
have been deposited in the bank accounts of the creditors
for giving loan to the assessee-company. Their bank
accounts clearly show that both the creditors have sufficient
funds in their bank account and all the transactions are
carried-out through banking channel only. Thus, the initial
burden upon the assessee-company to prove the
creditworthiness of the creditors and genuineness of the
transaction have been established in the matter and burden
upon assessee-company have been discharged. It may also
be noted that A.O/CIT(A) did not do anything on the
documentary evidences produced on record and no further
enquiry have been made into the matter. Since the A.O.
accepted the creditworthiness and genuineness of the
transaction with the same creditors in subsequent
28
ITA.No.6448/Del./2016 M/s. Carissa
Investment Pvt. Ltd., New Delhi.
assessment year as well, it’s stand proved on record that
there were no justification for the authorities below to make
any addition against the assessee-company. In view of the
above discussion, we set aside the orders of the authorities
below and delete the entire addition. Accordingly, appeal of
the Assessee is allowed.
8. In the result appeal of Assessee allowed.
Order pronounced in the open Court.
Sd/- Sd/-
(O.P. KANT) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 22nd January, 2021
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT ‘B’ Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
Comments