ITA No. 3377/Del/2011

Shri H. S. Sidhu, Judicial Member And Shri O. P. Kant, Accountant Member

Sh. Amit Mohan Govil, CIT(DR) For the Petitioner :
Sh. V.K. Agarwal, AR For the Respondent :

ORDER

The order of the Bench was delivered by

O. P. Kant, A. M.-The Department has filed this Appeal against the impugned Order dated 06.04.2011 passed by the Ld. CIT(A) pertaining to assessment year 2007-08 on the following grounds:-

“1. The order of the Ld. CIT(A) is not correct in law and facts.

2. Whether the Ld. CIT(A) has erred in admitting evidence under Rule 46A during the course of appellate proceedings, even though the assessee had been given sufficient opportunity during the course of assessment proceedings.

3. Whether the Ld. CIT(A) has erred in deleting the addition of Rs. 13,05,06,000/- of unsecured loans as vital facts have been ignored while deciding the appeal.

4. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the appellate proceedings.

2. The brief facts of the case are that the search and seizure action u/s. 132 of the I.T. Act, 1961 was carried out in Suresh Nanda Group of cases on 28.2.2007. The case was centralized by CIT, Kolkata vide order u/s. 127(2) of the I.T. Act. The assessee has filed return of income declaring an income of Rs. 95,88,893/- on 2.6.2009. Notice u/s. 143(2) was issued on 15.9.2009. Notice u/s. 142(1) alongwith questionnaire was issued on 17.9.2009. In response to the same, Assessee’s Authorised Representative attended the proceedings and filed the necessary details/ clarifications. The assessee had declared income from business and profession, income from house property and income from other sources being interest from bank etc.. Thereafter, the Assessing Officer, completed the assessment u/s. 143(3) of the Act at an income of Rs. 13,98,94,893/- passed vide order dated 29.12.2009 and made various additions.

3. Aggrieved with the Assessment order dated 29.12.2009, Assessee filed appeal before the Ld. CIT(A) who vide impugned order dated 06.4.2011 has partly allowed the appeal of the Assessee.
4. Aggrieved with the order of the Ld. CIT(A)’s, Revenue is in appeal before the Tribunal.

5. Ld. DR relied upon the order of the Assessing Officer and reiterated the contentions raised in the grounds of Appeal.

5.1 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld.

6. We have heard both the parties and perused the records, especially the Order of the revenue authorities.

6.1 Ground No. 1 & 4 are general, hence, need not be adjudicated.

6.2 Apropos Ground No. 2 relating to admission of additional evidences under rule 46A during the course of appellate proceedings is concerned, we find that assessee has filed an Application u/r. 46A before the Ld. CIT(A) who forwarded the same to the AO for Report and AO has sent his report on 22.2.2011 and copy of the Report was given to the assessee who filed his rejoinder. It is an admitted fact from the remand report itself that confirmation called for the first time on 28.10.2009 and the first hearing was fixed for 17/11/2009 subsequently on every hearing, the assessee filed confirmations. Last hearing was conducted on 11.12.2009 and the assessment order was passed on 29.12.2009, i.e., after a gap of 18 days. The AO could have provided some further time as he did not pass the order for a period of more than 2 weeks. It is also a fact that the AO did not rebut the categorical assertion of the Assessee’s counsel that during the course of hearing, the AO was satisfied with the evidences filed as he did not raise any further query and while passing the assessment order, he changed his mind and made the addition. The AO has nowhere mentioned either in the assessment order or in the remand report that he had pointed out any deficiency in the documents filed by the assessee to support the unsecured loans. Obviously, the assessee came to know the mind of the AO regarding his non-satisfaction of the evidences for the first time from the assessment order. Therefore, Ld. CIT(A) has rightly observed that he is satisfied that sufficient opportunity was not provided to the assessee and he was prevented by sufficient cause to file the relevant evidences. We have seen the copies of summons issued to the lenders. It is very clear that summons were issued to Shri S. C. Puri, Ms. Sharmila Puri, Ms. Hanisha Puri and Ms. Priyanka Puri. But the observation of the AO is without any application of mind because during this year, no credit was received from any of these persons. We note that it is a settled law that if prima facie information is necessary to examine the claim of the assessee, the Ld.CIT(A), should consider the necessary evidence in exercise of his powers u/s. 250(4) and it is also a settled law that when a statutory authority has the power to do something, then it has a corresponding duty to exercise such powers whenever circumstances warranting exercise of such powers exist. This view is supported by the ITAT, Calcutta Bench decision in the case of ITO vs. Bajoria Foundation (254 ITR (AT) 65).

6.3 In the background of the aforesaid discussions and precedent relied upon in the CIT(A)’s order, we are of the view that Ld. CIT(A) has rightly admitted the additional evidences, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on this ground and dismiss the ground no. 2 raised by the Revenue.

7. Apropos Ground No. 3 relating to deletion of addition of Rs. 13,05,06,000/- of unsecured loans is concerned, we find that the AO has made the additions of Rs. 13,05,06,000/- on account of alleged unexplained loans from various persons as under:-

7.1 We find that the Ld. CIT(A) has passed a elaborate and speaking order on the issue in dispute and dealt these additions from para no. 13 to 32 from pages 6 to 19 of the impugned order. For the sake of convenience, we are reproducing the para no. 13 to 32 at pages 6 to 19 of the Ld. CIT(A) order as under:-

“13. M/s Arligton Impex P. Ltd. - The AO has made the addition of Rs. 6,07,00,000/- on account of credit in the name of Mls Arlington Impex Pvt. Ltd. on the ground that the credit is unexplained because the company does not have sufficient funds of its own and creditworthiness was not established. He has also mentioned that the genuineness of transaction is also in doubt.

14. The AR argued that This company has given a loan of Rs. 1,20,82,273/- to the appellant. The Ld. AO made the addition of Rs. 6,07,00,000/-- by holding that the credit is unexplained on the ground that the company does not have sufficient funds of its own and creditworthiness was not established. He has considered only the credit side and not the debit side of the account of this company. He has also mentioned that the genuineness of transaction is also in doubt. The facts in brief are that there is an opening credit balance of Rs. 19,00,000/- as on 01/4/2006. The appellant had given Rs. 35,00,000/- to the company on 31/5/2006 thereby returning the old loan of Rs. 19,00,000/- and advancing a loan of Rs. 16,00,000/- to the company. Thereafter, the appellant received Rs. 67,00,000/- being Rs. 4,00,000/--, Rs, 3,00,000/-, Rs. 45,00,000/-, and Rs. 15,00,000/- on 5/6/2006, 1716/2006, 4/7/2006 and 118/2006 respectively. Therefore, advance of Rs. 16,00,001/- was received back by the appellant and the loan received was only Rs. 51,00,000/-- which was also repaid on 29/9/2006 vide A/c payee cheque no.048161 drawn on HSBC Bank. Thereafter, Rs. 4,70,17,7271- was given advance to the company on various dates. Subsequently, Rs. 5,40,00,000/- were received from the company on various dates which means a loan of Rs. 69,82,273/- only after adjusting the advance of Rs. 4,70,17,727/-. The loan of Rs. 69,82,273/- was also repaid on 31/3/2007 by way of transfer entry. Therefore, total credit received was only Rs. 1,20,82, 273/- (51,00,000 + 69,82,273)- which was also squared up leaving NIL balance at the end of the year. Therefore, there is an arithmetical mistake in as much as the figure of Rs. 6,07,00,000/- should have been 1,20,82,273/-. Relevant extract from his submissions dated 21/3/2011 are as under: -

"ii) During the course of assessment, following documents were filed before the Ld. AO:-
a) Confirmation
b) Copy of bank accounts
c) Income Tax return
d) Audit report alongwith balance sheet as well as P/L Alc
These documents clearly provided the following information: -
a) Name of the creditor
b) Address of the creditor
c) PAN of the creditor
d) Admittance on the part of creditor
e) Jurisdiction of assessing authority over the creditor as ITO, Ward 2(1).

f) Credit was received vide alc payee cheques on various dates indicating cheque nos which were duly debited in the bank account of the company.

h) Loan was repaid vide alc payee cheques on various dates indicating cheque nos which were duly credited in the bank account of the company.

i) Name and address of the bank of the creditor as HSBC, GK-II, New Delhi and Andhra Bank, Green Park, New Delhi.

j) Creditors bank account no. as 094-135217-001 with HSBC Bank & 016204100002265 with Andhra Bank.

iii) From the audited accounts of the company, it will be observed that there is no discrepancy in the balance sheet. The company had sufficient funds as indicated in the balance sheet. Whatsoever funds appear in the balance sheet, they are owned by the company only. Therefore, it cannot be said that the creditor company did not have sufficient funds.

a) Genuineness of the transaction is also fully established by the fact that the transaction is duly confirmed by the creditor and the fact that the amount is received by Alc Payee cheques indicating cheque nos, amount, bank account no. as well as name and address of the bank.

b) Creditworthiness of the creditor is also fully established by the fact that the amount is received by Alc Payee cheque indicating cheque no, amount, bank account no. as well as name and address of the bank. This view is fully supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kishori Lal construction Ltd., [2010] 5 Taxmann.com 60 (Delhi), the relevant extract from which is reproduced hereunder: -

"After considering the arguments of both the sides, we find ourselves in favour of the submission made by learned counsel for the respondent. As mentioned above the assessee had produced the following which would clearly demonstrate it has discharged its initial burden: (a) The identity of Yadav and Company, by filing their confirmation and their assessment particulars; (b) genuineness of the transaction by pointing out that the assessee had sold shares to Yadav and Company in the immediately preceding year (which has been accepted by the Department) and that the payment received during the relevant previous year was against the debt due from Yadav and Company; (c) creditworthiness of the creditor by pointing out that the amount was received by way of cheques drawn on the bank account of Yadav and Company maintained with Union Bank of India, Moti Bagh Branch, New Delhi, which, despite denial by the Yadavs, was, as per bank records, found to be opened and operated by Sh. O.P. Yadav/Mohinder Singh Yadav.

The initial burden thus discharged, it was for the Revenue to establish that the transaction in question was bogus. "

c) Hon'ble ITAT Mumbai in its latest judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255, 256 & 257/Mum/2010 has held on page 25, para 35 as under: -

"When a lender gives money by way of crossed cheques, reflects the same in his balance sheet and filed the balance sheets alongwith the return of income with the Income Tax Department, the conclusion that the assessee is not able to explain the source of funds of the lender properly, is not correct. "

v) Therefore, identity, genuineness and creditworthiness of the creditor is fully established. The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. Aa has not pointed out to any material to establish that the transaction is bogus. Hence, credit of Rs. 1,20,82,273/-. (wrongly mentioned as Rs. 6,07,00,000/- by the Ld. AO) from M/s Arlington Impex Pvt. Ltd. stands duly explained.

vi) Reliance is also placed on the following case laws: -
a) DCIT vs. Rohini Builders, (2002) 256 ITR 360 (Guj)
"Tribunal having deleted the addition uls 68 accepting the genuineness of loans which were received and repaid by assessee by Alc payee cheques, assessee having established the identity of the creditors by giving their complete addresses, GIR nos./PAN as well as confirmations alongwith the copies of their assessment orders wherever readily available, no substantial question of law arises; appeal uls 260A dismissed."

b) Orient Trading Co. Ltd. vs. CIT, (1963) 49 ITR 723 (Bom)
"Cash credit-Burden of proof-When the entry stands in the name of a third party and the assessee establishes the identity of the creditor and produces evidence showing that the entry is not fictitious, initial burden lying on the assessee stands discharged; the burden shifts on to the Revenue to show that the entry represented assessee's suppressed income-Cash credit, in the facts and circumstances of the case, could not be treated as assessee's undisclosed income"

c) Aravali Trading Co. vs. ITa, (2008) 220 CTR (Raf) 622
"Once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee's onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him and, therefore, addition under s. 68 cannot be sustained in the absence of anything to establish that the sources of the creditors deposits flew from the assessee itself. "

d) CIT vs. Metachem Industries, 2451TR 160 (MP)
"4 once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is responsibility of that individual to account for the investment made by him. If that person owns that entry, then, the burden of the assessee firm is discharged. It is open for the Aa to undertake further investigation with regard to that individual who has deposited this amount."

e) CIT vs. Value Capital Services (P) Ltd., (2008) 307 ITR 334 (Del)

"Income-Cash credit-Share application money-CIT(A) accepted the existence of the applicants-It is very difficult for the assessee to show the creditworthiness of strangers-Revenue has not shown that the applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the assessee company-Addition rightly deleted by the Tribunal-No substantial question of law arises."

15. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The appellant has filed confirmation, PAN, IT return, bank statement and audited accounts including balance sheet. These documents clearly provide name, address, PAN etc of the creditor. Details of jurisdiction of assessing officer over the creditor was also provided. I have also seen the bank statements of the creditor which clearly indicate that the appellant had given Rs. 35,00,000/- to the company on 31/5/2006 vide cheque no. 031643 which is duly credited in the bank account of the creditor with HSBC Bank bearing no. 094-135217-001 thereby returning the old loan of Rs. 19,00,000/- and advancing a loan of Rs. 16,00,000/- to the company. Thereafter, the appellant received Rs. 67,00,000/-- being Rs. 4,00,000/-- by transfer entry, Rs, 3,00,000/- - by transfer entry, Rs. 45,00,000/-- by transfer entry, and Rs. 15,00,000/- by transfer entry on 5/6/2006, 1716/2006, 41712006 and 1/8/2006 respectively which are duly debited in the same account with HSBC Bank of the creditor. Therefore, advance of Rs. 16,00,000/- was received back by the appellant and the loan received was only Rs. 51,00,000/-. This amount was also repaid on 29/9/2006 which is duly credited in the HSBC bank account of creditor by way of transfer entry from the bank account of Vikrant Puri bearing account no. 094-242476-006 with HSBC Bank. Thereafter, Rs. 4,70,17,727/-- was given advance to the company on various dates being Rs. 1,00,00,000/- on 3/10/2006 vide Alc payee cheque, Rs. 1,00,00,000/-- on 4/10/2006 vide transfer entry, Rs. 1,00,00,000/-- on 9/10/2006 vide transfer entry, Rs. 17,727/- on 5/12/2006 being payment vide cheque no. 50632, Rs. 70,00,000/-- on 11/12/2006 vide cheque no. 050635 and Rs. 1,00,00,000/-- on 14/12/2006 vide transfer entry. Subsequently, Rs. 5,40,00,000/-- were received from the company on various dates being Rs. 40,00,000/-- on 15/2/2007 vide alc payee cheque no. 000572 which is duly debited in the bank account with HSBC Bank, Rs. 2,00,00,000/-- on 21/2/2007 by way of transfer entry from HSBC and Rs. 3,00,00,000/-- on 30/3/2007 by way of transfer entry from Andhra Bank bearing no. CA l01/00002265. This means a loan of Rs. 69,82,273/- only after adjusting the advance of Rs. 4,70,17,727/-. The loan of Rs. 69,82,273/- was also repaid on 31/3/2007 by way of transfer entry. Therefore, total loan received was only Rs. 1,20,82,273/-. Schedule 5 of the balance sheet of the creditor pertaining to "Loans and Advances" clearly indicates the balance of loan to Shri Vikrant Puri as NIL as compared to Rs. 19,00,000/- during last year because total loan was squared up during the year. I have also considered the various case laws relied upon by the AR. In the case of CIT vs. Kishorilal Construction Ltd., (2010)5taxmann.com60,Hon'ble Delhi High Court has held that creditworthiness of the creditor has been established because the amount was received by way of cheques drawn on the Bank account of the creditor though the creditor denied the same. The initial burden thus discharged, it was for the Revenue to establish that the transaction in question was bogus. Similarly, Hon'ble ITAT Mumbai in its latest judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT, ITA No.255,256 & 257/Mum/2010 has held that when a lender gives money by way of crossed cheques, reflects the same in his balance sheet and filed the balance sheets alongwith the return of income with the Income Tax Department, the conclusion that the assessee is not able to explain the source of funds of the lender properly, is not correct. Genuineness of the transaction is fully established by the fact that the transaction is duly confirmed by the creditor and the fact that the amount is received by Alc Payee cheques indicating cheque nos, date, amount, bank account no. as well as name and address of the bank. Creditworthiness of the creditor is also fully established by the fact that the amount is received by Alc Payee cheques indicating cheque nos, date, amount, bank account no. as well as name and address of the bank and in view of the fact that the bank account of the creditor clearly shows the debit and credit pertaining to loan and its repayment. Moreover, the accounts of the creditor are duly audited. The case laws relied upon by the AR fully supports the case of the appellant. Moreover, the AO has not brought any material on record to prove that credit is bogus. The assessee has discharged the primary onus cast upon him by filing various evidences as discussed above. Therefore, now the onus gets shifted on the AO to prove that credit is bogus which he failed to do. Therefore, under the facts and circumstances of the case, the loan from Mls Arlington Impex Pvt. Ltd. is fully explained and hence the addition of Rs. 6,07,00,000/- is hereby deleted.

16. Mohan Exports (India) Pvt. Ltd. - Loan of Rs. 1,80,00,000/- was received from this company which was added by the Ld. AO as confirmation could not be filed. The AR argued that confirmation could not be filed because due to some disputes between the two parties, the creditor did not cooperate. During the appellate proceedings, the Directors of the company were persuaded and they cooperated by providing certain documents which were filed ulr 46A like confirmation, cheque no., IT Return, PAN, details of jurisdiction of the assessing officer over the creditor, Bank account and Balance Sheet as well as PIL account. The relevant extract from the submissions of the AR is as under: -

a) Confirmation from the creditor which gives the following particulars: -
i) Name of the creditor
ii) Address of the creditor
iii) Telephone no. of the creditor
iv) PAN of the creditor
v) Jurisdiction of AO where creditor is being assessed.
vi) Date of transaction
vii) Amount of transaction
ix) Cheque no.
b) IT Return where income has been declared at Rs. 27,53,84,840/- for A. Y. 2007-08.

c) Bank account with Lord Krishna Bank(formerly Centurion Bank of Punjab), Connaught Place, New Delhi which indicates debit of Rs. 1,80,00,000/- crore vide cheque no. 597860 in favour of Shri Vikrant Puri on 6109/2006 in Alc no. 0315051000000196.

d) Bank account with Lord Krishna Bank(formerly Centurion Bank of Punjab), Connaught Place, New Delhi which further indicates credits of various amounts on various dates on account of repayment of loan as per confirmation. Therefore, whole of the loan was repaid through account payee cheques.

ii) Identity of M/s Mohan Exports India Pvt Ltd. is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person as held by Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., (2010) 45 DTR (Del) 281.

iii) Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same.

iv) Creditworthiness of the creditor is also fully established by the fact that the amount is duly debited in the bank account of the creditor company. This view is fully supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kishori Lal construction Ltd., [2010] 5 Taxmann.com 60 (Delhi), Hon'ble ITAT Mumbai in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 257/Mum/2010 and other caselaws as discussed above.

v) Therefore, identity, genuineness and creditworthiness of the creditor is fully established. The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. In fact, The Ld. AO has accepted the genuineness and creditworthiness of this creditor in the remand report as he has not at all commented on the additional evidences in respect of this creditor. Hence, credit of Rs. 1,80,00,0001- from Mohan Exports India Pvt. Ltd. stands duly explained."

17. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The appellant has filed confirmation, PAN, IT return, bank statement and audited accounts including balance sheet. These documents clearly provide name, address, PAN etc of the creditor. Details of jurisdiction of assessing officer over the creditor was also provided. The IT Return of the creditor company for the A. Y. 2006-07 indicates the returned income at Rs. 27,53,84,840/-. In the remand report, the AO has not found any fault with any of these documents though he has raised objections in respect of other creditors. I have also seen the bank statement of the creditor company with Centurion Bank of Punjab, Connaught Place, New Delhi which indicates debit of Rs. 1,80,00,000/- on 6/9/2006 vide cheque no. 597860 in favour of Shri Vikrant Puri in Alc no. 0315051000000196. There is a credit entry of Rs. 30,00,000/- vide cheque no. 023559 on 03/08/2006, credit entry of Rs. 1,00,00,000/-- vide cheque no. 566581 on 15/11/2006 and credit entry of Rs. 1,50,00,000/-- vide cheque no. 566582 on 17/1/2006 in the same account. Further Rs. 50,00,000/-- were repaid vide cheque no. 050640 on 16/1/2007 and Rs. 1,00,00,000/-- vide cheque no. 980921 on 6/2/2007. These entries represents that the loan taken during this year as well as last year were fully repaid during this year and are duly reflected in the bank account of the creditor. Therefore, creditworthiness of the creditor company is fully established and hence the addition of Rs. 2,50,00,000/- is hereby deleted.
18. Mohit Puri - Loan of Rs. 1,10,00,000/- was received from Shri Mohit Puri, brother of the appellant. The Ld. AO added the same holding that creditworthiness was not established and genuineness is also in doubt. The AR argued that during the course of assessment, confirmation was filed from Shri Mohit Puri. Subsequently, the assessee has filed the copy of IT Return and PAN communication to establish the genuineness and creditworthiness of the creditor. The copy of bank account with CITI bank was not filed on the ground that the same is under restraint uls 132(3). The appellant could not obtain the copy from the bank because of section 132(3). Therefore, the Ld AR requested that the AO may obtain the copy of bank statement directly from the bank, if so required. The relevant extract from his arguments is as under: -

“ii) The Ld AO has further observed that no proof of donor's income in Dubai has been brought on record. It was explained to the Ld. AO that Shri Mohit Puri left India on 9/4/2006 for employment with M/s Friend's General Trading FZCO, Dubai. In this regard your kind attention is invited to the letter dated 1010212011 vide which further documents were filed ulr 46A as under: -

- Copy of Employment Agreement with M/s Friend's General Trading FZCO, Dubai indicating salary of 40,000 OH per month (Rs. 4,96,4001- approx. @ 1DH = Rs. 12.41 in April, 2006) + commission @ 12.5% besides reimbursement of expenses in respect of boarding, lodging, transport, communication, meals, etc.

- Confirmation from Employer regarding reimbursement of various personal expenses.
- Confirmation from Employer regarding payment of commission Agreement with M/s Smart Inspection Industrial Equipment LLC, Dubai regarding Real Estate business.

- Confirmation from M/s Smart Inspection Industrial Equipment LLC, Dubai, regarding commission paid to Shri Mohit Puri from July 2006 to November 2006

- Copy of passport of Shri Mohit Puri alongwith residence VISA of UAE.
iii) From the above, it is clear that the donor was paid salary of 40,000 OH per month (Rs. 4,96,400/- approx. @ 1DH = Rs. 12.41 in April, 2006) besides commission of 54,54,545 OH (Rs. 6,76,90,903/- approx.} in nine months from April, 06 to December, 2006. All his personal expenses like rent, food and beverages, travelling, communication and miscellaneous expenses were reimbursed by the employer. He was also engaged in the business of Real Estate Brokerage abroad with M/s Smart inspection Industrial Equipments LLC, Dubai. During the period from July, 2006 till November, 2006, Shri Mohit Puri also received commission of 26,89,550 OH (Rs. 3,33,77,316 approx.} from the real estate brokerage. Therefore, he had enough funds to the tune of Rs. 10,55,35,8191- (4,96,400x9 + 6,76,90,903 + 3,33,77,316) upto December, 2006 to give a loan of Rs. 1,10,00,000/- to the appellant.

iv) The fact that Sh. Mohit Puri was non-resident during AY 2007-08 was explained in detail even before DDI(lnv.), AIU, New Delhi as early as 0910512007, i.e., within 3 months of the search. A copy of this letter is placed in the paper book.

v) Identity of Shri Mohit Puri is established by the name, address, PAN and the fact that communication from the ITO was served on him. PAN is enough to prove the identity of a person as held by Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., (2010) 45 DTR (Del) 281. It has also been held by Hon'ble ITAT Agra in the case of ITO vs. Mayur Agarwal, 133 TT J (Agr) TM 1, that once the summons were dully served on the parties, their identity is proved. Hence, identity of Shri Mohit Puri is fully established.

vi) Genuineness of the transactions is also fully established by the fact that the transactions are duly confirmed by the creditor whose statement has also been recorded.

vii) Creditworthiness of the creditor is also fully established as discussed in detail in para (iii) above. The Ld. AO has mentioned in the remand report that bank account has not been submitted. It has already been made very clear in the application made u/r 46A that bank statement could not be filed as the bank account with CITI Bank, G. K.. New Delhi is under restraint order uls 132(3). A copy of the restraint order uls 132(3) is placed in the paper book.

Under the circumstances only Revenue Authorities can obtain the copy from the bank. If the Ld. AO had any doubt he could have verified the confirmation w.r.t. bank account by obtaining a copy from the bank itself In fact, confirmation clearly indicates that aments were received as under:-

viii) The Ld. AO has mentioned on page 13 (para 7.1) of the assessment order that the genuineness of transaction is also in doubt. The additions cannot be based on doubts and have to be based on findings relying on evidences to that effect. This view is further confirmed by the Hon'ble ITAT Mumbai's latest judgment dated 7/1/2011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 2571Mum12010, page 26, para 36, the relevant extract from which is as under: -

"The addition cannot be made by making an observation that the loans do not appear to be genuine"
viii) Therefore, identity, genuineness and creditworthiness of the creditor is fully established.

The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. Hence, credit of Rs. 1,10,00,000/- from Shri Mohit Puri stands duly explained."

19. The AR further relied on various case laws as under: -
"a) DCIT vs. Rohini Builders, (2002) 256 ITR 360 (Guj)
"Tribunal having deleted the addition uls 68 accepting the genuineness of loans which were received and repaid by assessee by Alc payee cheques, assessee having established the identity of the creditors by giving their complete addresses, GIR nos. / PAN as well as confirmations alongwith the copies of their assessment orders wherever readily available, no substantial question of law arises; appeal uls 260A dismissed. "

b) Orient Trading Co. Ltd. vs. CIT, (1963) 49 ITR 723 (Bom)
"Cash credit-Burden of proof-When the entry stands in the name of a third party and the assessee establishes the identity of the creditor and produces evidence showing that the entry is not fictitious, initial burden lying on the assessee stands discharged; the burden shifts on to the Revenue to show that the entry represented assessee's suppressed income-Cash credit, in the facts and circumstances of the case, could not be treated as assessee's undisclosed income"

c) Aravali Trading Co. vs. ITa, (2008) 220 CTR (Raf) 622
"Once the existence of the creditors is proved and such persons own the credits which are found in the books of the assessee, the assessee's onus stands discharged and the latter is not further required to prove the source from which the creditors could have acquired the money deposited with him and, therefore, addition under s. 68 cannot be sustained in the absence of anything to establish that the sources of the creditors' deposits flew from the assessee itself"

d) CIT vs. Metachem Industries, 245 ITR 160 (MP)
"4 once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment whether the money invested is properly taxed or not. The assessee is only to explain that this investment has been made by the particular individual and it is responsibility of that individual to account for the investment made by him. If t at person owns that entry, then, the burden of the assessee firm is discharged. It is open for the AO to undertake further investigation with regard to that individual who has deposited this amount. "

e) CIT vs. Value Capital Services (P) Ltd., (2008) 307 ITR 334 (Del)
"Income-Cash credit-Share application money-CIT(A) accepted the existence of the applicants. It is very difficult for the assessee to show the creditworthiness of strangers-Revenue has not shown that the applicants did not have the means to make the investment and that such investment actually emanated from the coffers of the assessee company-Addition rightly deleted by the Tribunal-No substantial question of law arises."

20. The AR has also argued that the appellant cannot be asked to explain the source of source. It is also judicially settled that if the revenue has any doubt about the genuineness of the source of funds in the hands of the creditors, addition could have been made in the hands of creditors and not the assessee. Reliance is placed on the following: -

i) CIT vs. Diamond Products Ltd., (2009) 21 oTR (Del) 9
"AO is not permitted to examine the source of the source once the assessee is able to establish that the transaction with his creditor is genuine and the identity and creditworthiness of the creditor have been established.

ii) CIT vs. Taj Borewells, (2007) 291 ITR 232 (Mad)
"Income-Cash credit-Genuineness-Assessee firm did not maintain any books of account-It has shown the capital contributions of the partners in the P&L alc and balance sheet-P&L alc and balance sheet are not books of account as contemplated under the provisions of the Act- Further, explanation offered by the assessee firm has not been rejected by the AO-AO cannot ask the assessee to prove the source of a source-If the AO doubted the genuineness of the source of the partners, he could have made additions in the hands of the partners only and not in the hands of the firm-Addition under s. 68 was not therefore sustainable"

iii) Jaikishan oadlani vs. I TO, (2005) 4 SOT 138 (Mum)
"Income from undisclosed sources-Cash credit-Genuineness-While examining applicability of s. 68, source of source cannot be investigated-Factum of borrowing and identity of creditor not being in doubt, no addition could be made under s. 68"

iv) Tolaram oaga vs. CIT, (1966) 59 ITR 632 (Assam)

"Income from undisclosed sources-Burden of proof-Cash credit found in the books of firm in which assessee is a partner in the name of assessee's wife-Wife claiming the money as belonging to her and as having been deposited by her- Genuineness and regularity of the accounts not challenged-uls 34, Evidence Act, the accounts are prima facie proof of correctness of entry and the entry is prima facie proof of deposit of money by the person in whose name it stands- Assessee cannot be attributed the knowledge of source of the amount under section 106 of Evidence Act merely because he happens to be the husband of the depositor-Burden of proof about source of the amount of deposit cannot be paced on the firm or the partners-Amount could not be treated as undisclosed income of assessee."

21. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. I have also considered the bank account of the creditor. I have also gone through the case laws relied upon by the AR. The additions cannot be based on doubts and have to be based on definite findings relying on evidences to that effect. I agree with the AR that addition cannot be made on the basis of doubts, suspicions, surmises and conjectures. Hon'ble ITAT Mumbai has clearly upheld this ratio in the case of Guruprerna Enterprises.

Moreover, genuineness of the transactions is fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by a/c Payee cheques and he has confirmed the same. Therefore, it is held that genuineness of transaction is fully established.

22. As regards creditworthiness, the appellant has filed the following documents to explain the source of funds in the hands of the creditor: -

- Copy of Employment Agreement with M/s Friend's General Trading
- FZCO, Dubai indicating salary of 40,000 OH per month (Rs. 4,96,400/- approx. @ 1DH = Rs. 12.41 in April, 2006) + commission @ 12.5% besides reimbursement of expenses in respect of boarding, lodging, transport, communication, meals, etc.
- Confirmation from Employer regarding reimbursement of various personal expenses.
- Confirmation from Employer regarding payment of commission
- Agreement with Mls Smart Inspection Industrial Equipment LLC, Dubai regarding Real Estate business.
- Confirmation from Mls Smart Inspection Industrial Equipment LLC, Dubai, regarding commission paid to Shri Mohit Puri from July 2006 to November 2006

- Copy of passport of Shri Mohit Puri alongwith residence VISA of UAE. From the above, it is clear that the donor was paid salary of 40,000 DH per month (Rs. 4,96,4001- approx. @ 1DH = Rs. 12.41 in April, 2006) besides commission of 54,54,545 OH (Rs. 6,76,90,903/- approx.) in nine months from April, 06 to December, 2006. All his personal expenses like rent, food and beverages, travelling, communication and miscellaneous expenses were reimbursed by the employer. He was also engaged in the business of Real Estate Brokerage abroad with Mls Smart inspection Industrial Equipments LLC, Dubai. During the period from July, 2006 till November, 2006, Shri Mohit Puri also received commission of 26,89,550 OH (Rs.3,33,77,316 approx.) from the real estate brokerage. Therefore, he had enough funds to the tune of Rs. 10,55,35,819/- (4,96,400x9 + 6,76,90,903 + 3,33,77,316) upto December, 2006 to give a loan of Rs. 1,10,00,0001- to the appellant. It is very clear form the documents filed that the appellant was having an income of Rs. 10.55 crore in Dubai besides Indian income of Rs. 6,12,663/-. Therefore, creditworthiness of Shri Mohit Puri is fully established. Accordingly, addition of Rs. 1,10,00,000/- is hereby deleted.

23. Neelam Mohan - The Ld. AO has made an addition of Rs. 80,00,0001- by treating the credit entry in the name of Ms. Neelam Mohan as unsecured loan. The AR contended that no loan was received from Ms. Neelam Mohan. He stated that Shri Vikrant puri and Ms. Neelam Mohan purchased a property located E-14/13, Vasant Vihar, New Delhi for a consideration of Rs. 6,35,00,0001- as evidenced by the purchase deed filed ulr 46A. This property was sold (1st Floor) to Shri Vinod Kumar Khanna and Ms. Ratna Shrivastava for a consideration of Rs. 2,00,00,000/- vide sale deed dated 31/10/2006 as evidenced by the sale deed filed ulr 46A, (Second Floor) to Mls Goel Plastics Pvt. Ltd. for a consideration of Rs. 2,50,00,000 - and for ground floor and basement, Rs. 2,00,00,000/- were received from Mls Ocenic Homes Pvt. Ltd. Therefore, total consideration received was Rs. 6,50,00,000/-. The Coownership of the appellant and Ms. Neelam Mohan was in the ratio of 60 : 40. Therefore, out of gain of Rs. 15,00,000- (6,50,00,000 - 6,35,00,000), share of appellant was only Rs. 9,00,000/- The share of the appellant in the sale consideration was only 3,90,00,000/- being 60% of Rs. 6,50,00,000/-. Since, the appellant received Rs. 4,70,00,000/--, Rs. 80,00,000/-- were to be handed over to Ms. Neelam Mohan. Therefore, there was no unsecured loan from Ms. Neelam Mohan. As regards the objection of the Ld. AO regarding non filing of bank account of Ms. Neelam Mohan is concerned, it is irrelevant because no loan was received from her. As regards receipt of sale considerations, they were all received through a/c payee cheques, details of which like cheque nos., date, name of bank etc are available in the sale deeds themselves. In fact, registered sale deed itself is conclusive proof of the transaction. Moreover, this amount of Rs. 80,00,000/- was paid to her on 15/1/2011 vide cheque no. 216187 drawn on Andhra Bank.

24. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The confirmation itself clearly indicates that the credit is on account of sale transaction of property at E-14/13, Vasant Vihar, New Delhi. She is regularly assessed with Circle 22(1), New Delhi with PAN being AAMPM9231F as is evident from the copy of return filed for A. Y. 2007-08. I have also gone through the ledger account of the impugned property as well as purchase and sale deeds. It is very clear from these documents that the property was purchased for Rs. 6,35,00,000. The same was sold floor wise for a total consideration of Rs. 6,50,00,000. The ratio of ownership between Mr. Vikrant Puri and Ms. Neelam Mohan was 60:40. In respect of sale for first floor and second floor, cheques were directly received by both the co-owners in the ratio of ownership. For ground floor a consolidated cheque of Rs. 2,00,00,000/- was received which was credited in the account of Shri Vikrant Puri. Out of this, Share of Neelam Mohan being 80 Lacs was to be returned to her which was paid in subsequent years. Therefore it is clearly established that there was no loan received by the appellant from Ms. Neelam Mohan. Since, the credit entry represents share of Ms. Neelam Mohan in respect of transaction in property which has been duly explained, the addition of Rs. 80,00,000/- is hereby deleted.

25. International Building & Furnishing Company - The Loan amount of Rs. 1,50,000/- has already been accounted for in respect of credit from Shri S. C. Puri in A.Y. 2005-06 where the addition of this credit has been deleted. Therefore, same is deleted in this assessment year as it does not pertain to this year.

26. Kush Puri - The Loan amount of Rs. 3,50,000/- has already been accounted for in respect of credit from Shri S. C. Puri in A. Y. 2005-06 where the addition of this credit has been deleted. Therefore, same is deleted in this assessment year as it does not pertain to this year.

27. Panakj Kapoor - Loan of Rs. 3,20,00,000/- was received from Shri Pankaj Kapoor which was added by the Ld. AO as confirmation could not be filed. The AR argued as under: -

"confirmation could not be filed because due to some disputes between the two parties, the creditor did not cooperate. During appellate proceedings, he was persuaded and he cooperated by providing certain documents which were filed u/: 46A as under:-

a) Confirmation from the creditors which gives the following particulars: -

i) Name of the creditor
ii) PAN of the creditor
iii) Date of Transaction
iv) Amount of Transaction
v) Account Payee Cheque nos.
vi) Name of the Bank on which cheques were drawn.

b) Bank account with Centurian Bank of Punjab, Connaught Place, New Delhi which indicates debit of Rs. 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 0011-408624-001. Similarly there are debit entries of Rs. 70,00,000/- vide cheque no. 429307 on 22/06/2006, Rs. 1,00,00,000/- vide cheque no. 429314 on 5/12/2006 and Rs. 1,00,00,000/- vide cheque no. 429315 on 1211212006 in the same account.

c) Copy of Passport with residence visa of UAE indicating that he was a resident of UAE.
d) Copy of PAN Card of the creditor

e) Affidavit of Shri Pankaj Kapoor confirming that he is a NRI since 2002 and his source of income is from proprietorship business in Dubai with P. O. Box No. 64834. He has further deposed that he has given a loan of Rs. 3,20,00,0001- to Shri Vikrant puri which was received back also in April, 2007.

f) The Ld. AO says that the affidavit filed by Shri Pankaj Kapoor mentions about the loan given to the appellant but not the source of income. In this connection, your kind attention is invited to para 3 of the affidavit which clearly says that Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE.

g) Moreover, the amount was paid back as under: -

ii) Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person as held by Hon'ble Delhi High Court in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd., (2010) 45 DTR (Del) 281.

iii) Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same.

iv) Creditworthiness of the creditor is also fully established by the fact that the amount is duly debited in the bank account of the creditor. This view is fully supported by the judgment of Hon'ble Delhi High Court in thecase of CIT vs. Kishori Lal construction Ltd., [2010] 5 Taxmann.com 60 (Delhi), Hon'ble ITAT Mumbai in thecase of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 2571Mum12010 and other case laws as discussed above.

v) Therefore, identity, genuineness and creditworthiness of the creditor is fully established. The initial burden on the assessee thus discharged, it was for the revenue to establish that the transaction was bogus. But the Ld. AO has not pointed out to any material to establish that the transactions are bogus. Hence, credit of Rs. 3,20,00,000/- from Shri Pankaj Kapoor stands duly explained."

28. In the Remand Report, the AO has stated that the affidavit filed by Shri Pankaj Kapoor mentions about the loan given to the appellant but not the source of income. In this connection the AR submitted that para 3 of the affidavit clearly says that Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE.

29. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. The appellant has filed confirmation, copy of PAN card, copy of bank statement, cheque nos., copy of passport with residence for UAE and affidavit explaining source of income and details of transactions. Identity of Shri Pankaj Kapoor is established by the name, address, PAN and confirmation. PAN is enough to prove the identity of a person. Genuineness of the transactions is also fully established by the fact that the transaction is duly confirmed by the creditor and the amount is received by Alc Payee cheques which are duly debited in the bank account of the creditor which has confirmed the same. As regards creditworthiness, it is very clear from the affidavit itself that Shri Pankaj Kapoor is deriving income from proprietorship business under the name and style Mls Oracle General Trading having its business address as - P. O. Box - 64834, Dubai, UAE. I have also examined the bank account of the creditor with centurion bank of Punjab, Connaught Place, New Delhi which indicates debit of Rs. 50,00,000/- vide cheque no. 429301 in favour of Shri Vikrant Puri on 04/05/2006 in Alc no. 0011-408624-001. Similarly there are debit entries of Rs. 70,00,000/- vide cheque no. 429307 on 22/06/2006, Rs. 1,00,00,0001- vide cheque no. 429314 on 5/12/2006 and Rs. 1,00,00,000/- vide cheque no. 429315 on 12/12/2006 in the same account. Therefore, creditworthiness of the creditor is also fully established. Thecase laws relied upon by the AR fully support the case of the appellant. Moreover, the AO has not brought any material on record to prove that credit is bogus which he failed to do.

30. Therefore, under the facts and circumstances of the case, the loan of Rs. 3,20,00,000/- given by Sh. Pankaj Kapoor is considered as explained and hence the addition of Rs. 3,20,00,000/- is hereby deleted.

31. Hari Impex Pvt. Ltd. - Loan of Rs. 3,06,0001- was received from this creditor which was added by the Ld. AO on the ground that confirmation was not filed. The AR argued that the AO has ignored the documents filed before him like confirmation, copy of bank account, IT Return and Audit Report alongwith Balance Sheet and P/L Alc. The relevant extract from his written submissions are as under: -

"ii) These documents clearly provided the following information:-
a) Name of the credit
b) Address of the creditor
c) PAN of the creditor
d) Admittance on the part of creditor
e) Jurisdiction of assessing authority over the creditor as ITO, Ward 2(1).
f) Credit was received by way of transfer entry on 811112006
g) Name and address of the bank of the creditor as Andhra Bank, Green Park, New Delhi.
h) Creditors bank account no. as 16204100002006
iii) Moreover, the loan was repaid on 15/112011 vide Alc Payee cheque no. 216186 drawn on Andhra Bank.

iv) a) Genuineness of the transaction is also fully established by the fact that the transaction is duly confirmed by the creditor and the fact that the amount is received by Alc Payee cheque indicating cheque no, amount, bank account no. as well as name and address of the bank.

b) Creditworthiness of the creditor is also fully established by the fact that the amount is received by Alc Payee cheque indicating cheque no, amount, bank account no. as well as name and address of the bank. This view is fully supported by the judgment of Hon'ble Delhi High Court in the case of CIT vs. Kishori Lal construction Ltd., [2010J 5 Taxmann.com 60 (Delhi) and Hon'ble ITAT Mumbai in its latest judgment dated 71112011 in the case of Guruprerna Enterprises vs. ACIT, ITA No. 255,256 & 2571Muml2010 as discussed above." 32. I have considered the AO's order, the AR's submissions, the remand report and the rejoinder by the AR as well as the position of law and the facts of case. Mls Hari Impex Pvt. Ltd. is being regularly assessed with Circle 12(1), New Delhi at PAN being AABCH0774L. The income for the assessment year 2007- 08 has been declared at Rs. 40,69,683/- as is evident from the copy of return file before the AO. The bank account of the creditor with Andhra Bank, Green Park, New Delhi bearing no. 16204100002006 indicates that Rs. 3,06,000/- paid to Shri Vikrant Puri by way of transfer entry on 8/11/2006. The opening balance in the account was Rs. 23,03,465/- and even after giving the loan to the appellant the balance was Rs. 18,27,965/-. The loan was repaid in subsequent years. Therefore, the identity, genuineness and creditworthiness is considered as established and hence the addition of Rs. 3,06,000/- is hereby deleted. In view of the above findings, ground no 3 is therefore allowed.”

8. After going through the Order of the Ld. CIT(A), we find that Ld. CIT(A) has elaborately discussed the issue in dispute in coming to his conclusion in deleting the impugned additions, we do not find any flaw or infirmity to take a contrary decision. Accordingly, Ld. CIT(A)’s order is upheld.
9. In the result, the Revenue’s Appeal stands dismissed.

The order pronounced in the open court on 28/03/2016.