Vijay Lakshmi Printing Works Pvt. Ltd., ... vs Assessee

[Cites 1, Cited by 2]

Income Tax Appellate Tribunal - Delhi

Vijay Lakshmi Printing Works Pvt. Ltd., ... vs Assessee

IN THE INCDME TAX APPELLATE TRIBUNAL
DELHI BENCH : H : NEW DELHI

BEFDRE SHRI A.D.JA|N, JUDICIAL MEMBER
AND
SHRI T.5. KAPDDR, ACCOUNTANT MEMBER

ITA Nd.1ﬁ'!?'fDeII2ﬂ11
Assessment Year : 2{l[l?--ti8

Vijay Lakshmi Printing Werks Vs. DCIT,

Pvt. Ltd., Circle 1Tr'i1},
203, Kusai Bazar, CH Building,
32-33, Nehru Place, New Delhi.
New Delhi.

PAN : AABC"u"?D2BF

ITA Nd.283E-fDe|r2D11
Assessment 'fear : Zdtl?-DB

JCIT, Us. Uijay Lakshmi Printing Wdrks Put.
Circle 1?[l}, Ltd.,
New Delhi. 2IZl3, Kusal Elazar,
32-33. Nehru Place.
New Delhi.
PAN : AABCVFDEBF

{Appellant} {Respdndent}

assessee by : Shri "u"edJain, En
Revenue by : Shri K.l<.JaiswaI. Sr.DR

DRDER

PER A.D. JAIN, JUDICIAL MEMBER

These are El'-D55 appeals fer Assessment Year Ziiii}?--J3. ITA ND.1ﬁTT,I'DEI.l'2C|1l having been filed by the assessee and the department having preferred ITA Nd.2E3Eu'DeI.i2Dl1.

ITA Nﬂ.1BT?,fDEIJ2I'Jl1

2. The assessee has taken the fdllewing grdunds in its appeal:--

"1. Ld. Cdmmissidner df Incdme Tax {Appeals} erred in disailpwing dutstanding credit amdunt pf Fls.BD.i]ﬂ,Dl}£l ddubting 5 2 ITA No. 16? Tfﬂelfﬂ U1 ] ITA No.23 3ﬁiDe1.-*2-[I1 1 the genuineness of the creditor. lvlfs Spandan 'vanijya Pvt. Ltd. and the fact that the amount stands outstanding till date in the books with no interest being provided on it. The transaction is in the nature of interest free advance for a building currently under construction which is owned by the appellant and the lender will be allotted agreed space in the said building. Any suspicion on the creditor's legitimacy does not falter the transaction's validity where the agreement is} the payment are both legit. There lies no direct nexus between authenticity of creditor and the transaction.

2. Ld. Commissioner of Income Tax {Appeals} erred in disallowing credit amount of H.s.3"3,31,2Sﬂ of Mrs Sunny iT lnfrasoft Pvt. Ltd. The appellant gave advance to the party which was paid back in the same Financial Year. The advance was made by the appellant to a third party on behalf of Sunny IT Infrasoft Pvt. Ltd., by demand draft and during the same ﬁnancial year Sunny IT Infrasoft Pvt. Ltd, refunded the advance through a third party to the appellant. Therefore, name of the appellant was not appearing in the bank statement of Sunny IT lnfrasoft Pvt. Ltd. The Ld. Commissioner of Income Tax {Appeals} erred in treating Fts.T'3,31,2Sﬂ as creditiadvance from His Sunny IT lnfrasoft Pvt. Ltd., whereas the appellant had given advance to them.

3. Ld. Commissioner of income Tax {Appeals} erred in disallowing credit amount of Fls.3S.DS.A?'{l of ll-"|,l'S Sunny IT lnfrasoft doubting the genuineness of the creditor and the fact that outstanding credit balance at the end of the year was Fi.s.32,l}El,r1lTD only. The transaction is in the nature of interest free advance for a building currently under construction which is owned by the appellant and the lender will be allotted agreed space in the said building. There lies no direct nexus between authenticity of creditor and the transaction and any suspicion on the creditor's legitimacy does not falter the transa-::tion's validity where the agreement 15: the payment are both legit. The outstanding amount at the year end is only Fl.s.32,ﬂEl,4TD as advance of Fls.S,IIliIl,lIII.'lIZl was returned in the same ﬁnancial year as supported by bank statements."

3. As per ground No.1, the Ld. CIT {A} has erred in disallowing outstanding credit amount of t Bu lac in the name of the creditor, Mis Spandan 'v'anijya Pvt. Ltd. The facts are that according to the assessment order, the notice ufs 133 {S} of the IT Act, sent to Spandan vanijya returned undelivered. Cln query, the assessee did not file any reply, nor any documentary evidence in support of the credit amount in its boolcs was furnished. It was therefore, that the Assessing Crfficer ff 3 ]TA T~Jo.ll5??fDc|."2lJIl ITA No.233Ev"Deli'2ﬂl I added the credit amount of if 99 lac to the income of the assessee. The Ld. CIT [AI confirmed this addition by observing as follows:-

"24.1 The assessee has shown outstanding balance of Fts.9'9,99,999i'- in favour of We Spandan 'v'anijya Pvt. Ltd., Calcutta. The 14.9. added the amount uis 99 for the reason that there was no reply from the creditor for the notice issued uis 133 {9} of the Act and also no evidence was led before the 4.9. to prove the outstanding amount.

24.2 In the course of these proceedings the AP. has brought on record the following documents:-

"Copy of confirmed account copy. Bank account and ITP. Aclt. Crf Mis Spandan venijya Pvt. Ltd. which got amalgamated with Mfs Adhyay Egui Pref. Private Limited."

24.3 The assessee has received Fts.99,99,999,i-- on 25.11.99 through the UTI Bank Ltd., Arc No.9949l9299999494 maintained at Shyambazar, Calcutta vide ch. nos.59299 iFl.s.39,99,999l, S9292 iRs.29,99,999,l--}. 59291 I[Fis.39,99,999i'--}I. The amount is outstanding as on 31.93.92'. There are no other transactions. No interest is also provided. It appears to avoid TEIS payment. It is further stated by the 11.9 as on 19.99.19 that the amount is still outstanding even after 4 years. No interest is paid which is very unusual when huge amount is borrowed. No interest is also provided in the books of account of the assessee.

24.9 Mrs Spandan 'v'anijya Private Limited got amalgamated with His Adhyay Egui Pref. Private Limited. I have gone through the P&L Arc and Balance Sheet of the said company as on 31.93.92. The income receipts credited to P-SL account are as unden-

E-lalance Sheet as at 31" March, 2992 _ _ _ DESCRIPTION as at 31.93.92 As at 31.93.99 SCHEDULE "l" DTHEF1 INCOME ' Interest Income 131,945.21 24,224.29__ Speculation Profit . 39,239.23 199,994.94 Crther Income {995,929.43]I 24,249.99 Income from Mutual Fund 339,199.93 -- :

_§iividend Income 294,239.59 - f 29,994.54 219,229.94 24.9 The Elalance Sheet and PSIL Account of the said creditor do not show credibility of the said company. Share premium is Fis.11,19,93,399.l--. Advancesfloans given are 12.99 crores without any interest charged from the debtors. The said company also filed the Fleturn of income for asst year on *7 '.':'°:'-'...¢-:r"- -

. ' 'I '._ ,_.

-.1-; -l...'J_ .i§.'.;§_"l'_.-. _ ,' .._-u-I-1_ |. I 'I 4 [TA No.lﬁT?fIJc|i''2ﬁII '' ' ' ITA. No.2 33 of [}elI'2lIl1 1 ﬂB.l'.}2.IJ9 i.e.. after 1 'A years from the due date for ﬁling return of income. The creditworthiness and the genuineness of the transaction are doubtful. It appears to be a paper company. in view of the aboye discussion. there is a case for addition of Hs.ElEl.DD.lI:-ﬂﬂI- ufs E3.

4. Accordingly Ground No.5 is dismissed."

' .-. '.u - , .-- -.-i.;;.;;..y-n-i.-r.-;.;;:-. .-_ :.-

. . ; _ . .

5. The ld. counsel for the assessee has contended that while I"

wrongly conﬁrming the addition, the Ld. CIT {A} has failed to take into consideration the fact that eyen till date; the amount of ? Bl} lac is outstanding in the assessee's books. with no interest being proyided on it; that the Ld. CIT {A} has also failed to comprehend that the transaction was in the nature of an interest free adyance mad: to the assessee by Spandan 'danijya; for a building currently under construction; owned by the assessee, wherein, Spandan 'danijya is to be allotted agreed space; that it has also not been taken into consideration that the agreement in this regard and the payment in question haye not been shown to be either sham or illegal; that the assessee company had duly ﬁled before the Assessing Cifficer. the confirmation with PAH and address of Spandan Vanijya, the creditor; that the notice issued by the Assessing Clfﬁcer had been duly replied to by the creditor {attention drawn to a copy of the reply. placed at APB 211}, wherein. it was categorically stated that Spandan 'danijya had got amalgamated with Adhyay Equi Pref Pvt. Ltd. and that the amount of 2' ED lac had been paid as an adyance to the assessee company during Assessment 'fear 200?-DB; that along with the said reply, the High Court Clrder dated 2CI.l2IQ.CI?. passed by the Hon'ble Calcutta High Court {copy at APB 212 to 2221 whereby Epandan 'danijya got merged with- Adhyay Equip Pref., had also been ﬁled; that the balance sheet of Adhyay Equip Pref as on 31.03.01 {APB 229 to 235}. its bank statement {APE 243-244} and income-ta:-: return had also been placed before the Assessing Clfﬁcer along with the said reply ﬁled by the assessee; that besides. the creditor company had also furnished details of the 5 5 ITA. Hp.1tiTFfDc1r'2ﬂl 1 ITA Hp.233l:'ii'Dc1f2ﬂI I payment made tn the assessee cbmpany and these pf the credit appearing in the bank accpunt frpm which these payments had been made; that the bank statement bf the sdurce frbm which these payments were made, was a|sc:- submitted; that the fact that in the scrutiny assessment brder passed in the case pf Adhyay Equip Pref [APE 23? tcu 2391 np adyerse ﬁndings was recprded regarding the ampunt adyanced tp the assessee cbmpany, gbes tp shpw that the yalidity pf the transaction; that as ayailable frbm the balance sheet IAPEI 229}, the share capital pf Adhyay Equi Pref as pn 31.03.01, was t 1.15 crpres and its reseryes and surplus were pf t 95.43 crpre, put pf which latter the share premium was bf pnly if 11.1ﬂ crpre, as ayailable in Schedule "B". at APB 23D; that the balance ampunt pf t 35.3? crcnres was its general reserye lalsp as per Schedule 'B', APB 23(1): that thus, Adhyay Egui Pref had a spund financial base and the Ld. CIT {AI went wrbng in pbserying that the balance sheet and Prbfit 3: Less Accbunt bf the creditpr cpmpany did npt shpw its credibility; that the Ld. CIT {A}. withbut cpnsidering the abbye cc-ntents pf the balance sheet in their entirety. merely farmed an errbnec-us c:-pinibn, pbserying that the share premium was pf abput t 11.11 crpre; that mdrec-yer, the entire payment was thrc:-ugh chegues; that then, eyen the spurce bf the spurce frpm where the payment had been made stands e:-tplained elabbrately; that further as per the details pf lbans and adyances IAPEI 233}, against the name pf the assessee cpmpany, a balance pf t BU lac has been shpwn, which is exactly the ambunt dutstanding as per the bbbks bf the assessee cpmpany: that all these financial facts stand accepted by the Assessing Clfficer bf Adhyay Egui Pref in its scrutiny assessment brder; and that therefbre. the Ld. CIT {Al was npt justified in cbnfirming the addition wrpngly made.

-5. The Ld. DR, an the pther hand. has strpngly supported the impugned drder. cpntending that far the reasdns recbrded therein, the /5

-5 IT.-'5; Hb.1ﬁT?i'Dc|.-'2ﬂ]l IT.-'ﬁt 'l'~Jb..'Z33 ﬁ.*'lJelx'ElIlI l Ld. CIT [A] has cprrectly cbnfirmed the additlan; that the credit wprthiness pf the creditpr cbmpany as well as the genuineness pf the transactibn haye been held by the Ld. ClT {Al tp be clpubtful. bbserying Adhyay Equi Pref. be be merely a paper cqmpany: that these painted findings pf fact haye nbt been successfully refuted by the assessee; that mprecwer, the yery fact that the payment was made thrbugh cheque dbes net establish the genuineness pf the transactipn.

2. Haying heard the riyal cqntentibns in the light pf the material placed can recbrd, we pbserye that the ampunt pf t Bu lac represented a lean extended by Spandan Vanijya, [which get merged with edhyay Equi Pref yide Cirder dated 2i}.II}EI.iIl?. passed by the Hqn'ble Calcutta High Cpurt in Ccimpany Petitipn l*~lb.1ﬁ? bf 2l2I{Ii? {APB 212-222)] ta the assessee cdmpany thrpugh three cheques drawn c-n UTI Bank Ltd., Calcutta, wherein the creditpr cqmpany maintained a bank accciunt. The relevant entries in the said bank accqunt {APB 243} are as fpllpws:-

Date Particulars Cheque Nb. Withdrawals 25-I'~.lcw--2ﬂﬂEi Tb Uijayalaksmi PH 59280 aq_pq,ppp.qq _25--Nqy-2DElE Tb 'yijayalaksmi PH 59232 2D,Dﬂ,Dl2H;l.ﬂl2} 25-Hey-2005 Tb yijayalaksmi PR 59281 ,- 3ﬂ.ﬂu.D-:lﬂ.DU

8. This bank statement alsp cpntains the fbllbwing twp deppsit entries just abcwe the afpresaid three withdrawal entries:-

i_Date Particulars Depbsit 25-Nay-2006 Ely Chq NC:-.1'-3335 DE ?5,['.|D,CllJEI.ﬂCl 25-|"~lEW--2E|ﬂE Ely Chq HI:I.1'£l'33ﬁ DE 25,ﬂU.UDCl.DD

9. New, at APB 244 is a bank statement pf UTI Bank far accqunt hlb.lZlE-'-liII1EI2Ifl[l{JlZl':'l31'.r'. bf Mrs RNA Capital Markets Ltd.. Kplkbta. The fqllpwing twp are the debit entries therein:--

/3"

.. -.=v=:r--.=:r*-.= 2 [TA H0. 1452220-.:1.I2011-_' 115:1 I'~~I0.2B30lDel.l3ﬂ1_l [ Tran Date 'value Date Transactidn Details Che N0. Debit "] . 25-11-2000 25-11-2000 T0 Spanclan 'vanijva 10335 25.00.000.00J _ IF} Ltd. _ 25-11-2000 25-11-2005 T0 Spandan vanijva 10335 25.00.000.00 ;

{P} Ltd. , __-I

10. Thus. the tw0 credits 0f t 2'5 lac and I' 25 lac in the bank accdunt 0f Spandan 'v'anijva came threugh the bank accdunt 0f RNA Capital markets, as seen ab0ve. Hence, the spurce 01' these payments t0 the assessee cpmpanv stands duly explained, as submitted befpre the Ld. CIT {A}. It is these transactipns which stand recdrded in the balance sheet 0f the credit0r cdmpanv as dutstanding as 0n 31.3.2002 {APB 233}. The crediter cdmpariv alsd cdnfirmed these transactipns. As cprrectiv centended, Adhvav Equi Pref. as 0n 31.3.2001', had a net w0r1:h 0f 2' 103,ﬁ4,?2,313.Ei0 as available in its balance sheet {APB 229}, cdmprising 0f share capital 0f 2 2'.1E,3]I,ﬁ2IIi.iZIEI and reserves and surplus 0f f 96,-¢B,34,EEI3.9ﬂ. which, in its turn, cpmprisecl 0f a general reserve 0f if I35,3?,41.313.'£'IL'I. It had given Jeans and advances 0f if13,03,ﬁ4.1E'3.ﬂ0. The l0an 0f 2 ED lac received bv the assessee cdmpanv fprmed part pf these leans and advances extended. The said share capital. reserves and surplus and I0ans and advances 0f Adhvav Equi Pref did ndt attract anv adverse finding in its scrutinv assessment 0I'cler.

11. Fr0m the abpve facts, we d0 net find durseives at 0ne with the Ld. CIT {#1} t0 arrive at the c0nc|usi0n that Adhvav Equip Pref is merely a paper cdmpanv. 0r that its credit wdrthiness and the genuineness 0f the transactien are dpubtful. The Ld. CIT {A} has erred in n0t taking int0 accpunt the financial facts 0f the creditpr cpmpanv in cdnsideratipn as discussed ab0ve, in their entiretv. This is a case 0f credit and the s0urce 0f the pavment is what needs t0 be examined. Herein. n0t 0ni~_v the sdurce, but a|s0 the sdurce 0f the sdurce stands adequately explained. New, just because an ampunt is dutstanding f0r a lengthy peridd 0f time {mere than f0ur vears in the present case} /7 3 ITA 1"-lo.1b7TfDo1.-"2ﬂ] 1 ITA Ho.2E3ofDe].-"EH1 1 without payment of any interest thereon. by itself is not a deciding factor to hold a transaction to be ingenuine. It is a normal business.

practice with group companies to source funding from other concerns.

as per the ayailability of funds. Then. the creditor company itself .

confirmed the transaction. Nothing was brought on record to refute this confirmation. Further. though payment through cheque cannot on a stand alone basis establish a transaction to be genuine. as maintained by the Ld. DH. in the present case. which is not only merely payment through cheque which buttresses the claim of the assessee. but the factum of payment through cheque. when taken into consideration along with all the afore--discussed attending circumstances. which unequivocally point towards the yeracity. yalidity and genuineness of the transaction. beside the credit worthiness of the creditor company. And not only this. the obseryations made by the Ld. CIT {Al to arriye at the conclusion adyerse to the assessee are peripheral issues so far as regards the assessee's case. These matters would form subject matter of consideration with the Assessing Cifficer of the creditor company in that company's case. Pertinently. as obseryed. the Assessing Cifficer of Adhyay Equi Pref. the creditor company. has nowhere found fault in the transaction in the scrutiny assessment order of Adhyay Equip Pref. All these goes to show that the Ld. CIT {AI confirmed the addition merely on the basis of a doubt. Too this is evident from the obseryations of the Ld. CIT {A} that the credit worthiness and the genuineness of the transaction are "doubtful" and that it {sic the creditor company} and that it {the creditor company) "appears to be" a paper company. How. doubt. it is well settled. cannot form the basis of a yalid addition and here. other than doubt. nothing concrete whatsoeyer has been brought by the Ld. CIT in} to make out a case for sustaining the addition wrongly made by 5 the Assessing Clfficer.

? ITA Hp. Il5TI'i"Dc1fEli| i ITA Hu.233Eil"De|.'2ﬂ]l

12. Hence. we find merit in the grieyance sdught tci be raised by the assessee by way bf grdund pf appeal Fig.1 and the same is hereby accepted.

13. Coming tcu grpund N-as.2 and 3. the Assessing Dfficer made additipns pf it TEl.31,25Ei;'- and t 3T,i1|El.4Tﬂ.l--. tptal ampunting tn 1 1.1E.4l}.T2Eli- in respect pf credit in the name pf Mis Sunny IT lnfraspft Pyt. Ltd. while dciing sci. it was pbseryed. inter alia. as fpllpws:--

"3.4 Sunny Infra Scift Pyt. Ltd.

hlptice uis 133 {E} was sent tn the said party. In respcinse be the same. the said party sent written reply yide letter dated 24.12.2009, alpng with capy pf its lTFl and twp Elank statement. The cppy pf ITH filed by the Assessee shpws the returned incpme at F:s.l'~.li|.

Surprisingly, the ledger accpunt attached by the said party with the afciresaid letter was generated frpm the Banks ef the Assessee. rather than frcim the Banks ef the said party. The perusal ef the said cepy pf accpunt cc-ntain the fpllpwing receipts by the Assessee:

3D.|.'.'.|E~.2ﬂﬂﬁ Fl5.3}'.DEl,4'i'ﬂi'~

22.ﬂ1.2ﬂ|.Tr' Hs.}"EiI.3l,25ﬂi'-

The said transactipns were further perused with the Bank statements at the said party and it was fciund that the transactibns pf credit entry pf Fl.s.T9.3l.25l]i- was ncuwhere appearing inidebited frpm the Bani: Statement bf the said party. it is therefore established an reccird that the said transactions as claimed to have receiyed by the Assessee frbm the said party was in fact net paid by the said party. Mprepyer. it is wcirth reiterating that the said part ccinyeniently aypided tcu furnish the ledger accdunt of the Assessee frcim its Bpdks.

Under such facts and circumstances. the Assessee failed tp discharge the anus lay in it by the Act with regard tn the said credit sum in its Edplcs. In absence pf any dpcumentary eyidence in suppprt pl' the said credit amciunt. the said sum pf Rs.T9.31,25ﬂi- is hereby added tn': the incpme at the Assessee fer the year under cpnsideratidn.

Add iticlrl ti-f F-is . TE}. 31,25lll--

lﬂ ITA i"~Jo.1ﬁT"?r'lJcI.-"EH11 [TA No.2E3 ti.-'Do1r'2ﬂ1 I Further, with regard to the sum of Fts.3T.ﬂQ_4?ﬂ,f-. the credit worthiness of the party remained unproyed on record. particularly in yiew of the fact that the Income Tax Fteturn of the said party shows the returned income at Rs. Nil and neither the Balance sheet,u'FinanciaJ Statement of the said party nor any other documents were filed to prove the credit worthiness of the said party and genuineness of the transactions.

Under such facts and circumstances. the Assessee failed to discharge the onus lay in it by the Act with regard to the said credit sum in its Books. Hence the said sum of Fts.3?.i}E1,4?Dr'-- is also hereby added to the income of the Assessee for the year under consideration.

Addition of Fi5.3'.-',U"El,4Tﬂ.r'-."

14. By yirtue of the impugned order, the Ld. CIT {A} confirmed these additions. He observed as follows:-

"2B.1 The assessee was in receipt of the following amounts from Mrs Sunny IT lnfrasoft Pvt. Ltd. as seen from the account maintained in the name of the assessee in the books of Mrs Sunny IT Infrasoft Pvt. Ltd.

Date Amount 2{}.ﬂﬁ.ﬂﬁ 3?.ﬂS.4?Dr'-

1EI.t'J1.ﬂT TB,31.25ﬂy'-

BB2 The assessee furnished a confirmed account copy maintained in the books of creditor in the name of the assessee. Mo sources are found explained by the creditor as observed by the AD. in the order. The Bank Account of the said creditor is not found debited to the extent of the said amount.

2B3 I haye gone through the FBL account and Balance Sheet of the creditor i.e.. Sunny IT Infrasoft Pvt. Ltd. The details of the P B L Arc are as under:--

_! Profit 5.: Loss account for the year ended 31" March. EBB? PARTICULARS SCHEDULE AS at 31.ﬂ3.D}' A5 at 31.03.05 {P-5.} iBs.i Sales Other income - -

Closing Stock -- -

_TDTAL {A} Clpening Stock - -

Purchase - --

ll ITA No. ibT?l'Do|i2ﬂ]l ITA 1'Jo.'2335fDol.-'EH1 1 Administration 5 E~2.l:'-?1.lZl[l -- Expenses Depreciation - --

Preliminary 3E,5?'ﬁ.Dl3l -

Espenses Wfoff TDTAL {B} E-i'E'l;24';'.Dl3l -

28.4 There is no income whatsoever. Moreover, it is seen that there are unsecured loans to the tune of F~'.s.12.42,2lIl.421;'-- and there are advances to the tune of Hs.B,3E-_44.}"El1.l-- without any interest being charged on the advances made and similarly no interest was paid on the amounts borrowed. These are very unusual features noticed. It is to avoid TDS provisions. I suppose. It is further seen that some of the creditors to the assessee are ﬁguring either as creditors or debtors of Mfs Sunny IT lnfrasoft Pvt. Ltd. Prima facie. Mrs Sunny IT lnfrasoft Pvt. Ltd.

is a paper company. Accordingly the action of the AD. is upheld.

Conﬁrmed : Hs.1.1ﬁ.4lIl,?2ﬂ;'--

Accordingly Ground No.6 is dismissed."

15. Before us, the Id. counsel for the assessee has contended that the amount of 2' }'El,31.25lIli- represented advance given by the-

assessee to a third party on behalf of Mis Sunny IT lnfrasoft Pvt. Ltd., by demand draft, which was paid back in the same financial year by Sunny IT lnfrasoft through the third party to the assessee; that it was therefore. that the name of the assessee did not appear in the bank statement of Sunny IT lnfrasoft; that the Ld. CIT {A} erred in treating this amount of E' i".3l_31,25l];'- as creditiladvance to the assessee from Sunny IT lnfrasoft, whereas the situation was the opposite, i.e.; that it was the assessee who had given advance to them; that the Ld. CIT {Al erroneously disallowed the credit amount of t 39;l]'£i,-t1}'l§l.l- of Sunny IT lnfrasoft, doubting the genuineness of the creditor and the fact that the outstanding credit balance at the end of the year was of t 32_i.Il9,£l'.r'[l;'- only; that the Ld. CIT {A} failed to take into consideration the fact that the transaction was in the nature of interest free advance for a building owned by the assessee currently under consideration; that it was also erroneously lost sight of that the latter would be 5 1.7.'. ITA He. 1 6? T";-"[}eIi"2 [H l ITA. Ne.2E3ﬁr'TJ-:1.-'2iIl1 I alldtted agreed space in the said building: that there is np direct nexus between the authenticity pf the creditpr and the transactipn; that the yalidity bf the transaction ddes ncut get lcnst merely due tci suspicipn en the legitimacy pf the creditor, when the agreement as well as the payment are perfectly illegal: that it alsb remain ta be cbnsidered that the dutstanding ampunt at the end bf the year was dnly pf 1' 32,-:Zi':'I,-=lIr'I'.'l.?-, as the advance pf t 5 lac stcibd returned in the same financial year, which fact stands duly sup-parted by bank statements furnished by the assessee; that the Ld. CIT {A} erred in hdlding that the creditor did net earn income and that there were unsecured |EIEll"l5 amdunting tci t 12.42 crbres and adyances cnf t 8.35 crdres as per the creditors balance sheet, on which, he interest was being charged, whereas interest was being paid an the unsecured ldans; that the Ld. CIT IA] errdnedusly cdncluded that His Sunny IT lnfrasbft was a mere paper ccnmpany; that the Ld. CIT {A} wrcmgly igndred the fact that an the cbnfirmatiun and necessary details haying been filed by the assessee befdre the Assessing Crfficer, the Assessing Cifficer had issued nptice dated 15.12.2009 far making inquiry, which ncitice was receiyed back unseryed, as infcurmed tn the assessee; that it was there upon that the assessee cpmpany prpyided the new address cnf the creditdr cc-mpany be the Assessing Cifficer; that the Assessing Cifficer issued letter dated 18.12.2009 ta the creditpr; that in this letter the Assessing Cvfficer asked for certiﬁed cdpy bf the account, PAH and details pf the Assessing Clfficer c-f the creditpr ccimpany and the cdpy bf its incurne- tax return; that yide reply dated 24.12.2[ll]Ei, the creditcir cdmpany furnished all these details, failing therewith, its ccipy bf inccime--tax return, ccinfirmaticin bf accuunt and bank statement; that thereafter, the Assessing Cifficer did net deem it fit to make any further inquiry frpm the creditor cdmpany; that hciweyer, the Assessing Crfficer still drew inference adyerse tci the assessee: that the assessee had specifically pc-inted cuut befpre the Ld. CIT {A} that the Assessing Clfficer K ,1' 13 ITA. Ne.16??r'De1r2ﬂ| 1 ITA. He.233ﬁr'Dc1r2[Il'I had net called fer the ﬁnancial statement ef the crediter cempany and there was ne basis te draw an adverse inference against the assessee; that the assessee had alse filed the crediter's ledger acceunt as appearing in the beeks ef the assessee cempany, explaining that the Assessing Officer had failed te appreciate the debit and credit entries as appearing in the bank statement ef the crediter cempany; that hewever, the Ld. CIT [AI erred in cenfirming the additien en the basis ef a mere deubt; that aprepes the first transactien, the assessee had received an ameunt ef E ?EI,31,25ﬂr--, pertaining te greund Ne.2 the assessee cempany had given advance te Mrs Sunny IT Infraseft en 25.11.2005. Thereafter, this ameunt had been received back by the assessee cempany, which fact is evident frem the cepy ef acceunt {APB 25D}, en 1'§I.I.'J1.2I.'I-3?: that this gees te shew that it was net a case ef credit in faveur ef the assessee; that thus, it is amply evident that this was ne lean taken by the assessee cempany, rather it was an advance grven by the assessee; that gua the refund ef this ameunt, this refund came threugh a demand draft ef E' 1,24,55,215, issued frern the bank acceunt ef SE5 Traders Pvt. Ltd., cepy at APE 255; that a perusal ef this bank acceunt shews that it cemprised ef twe payments fer and en behalf ef Sunny IT, ene ef which payments is the ameunt in guestien: that as such, the Assessing Cifficer erred in ebserving that the transactien ef credit entry ef ? ?'F.I,31,25lIIr- was nevvhere appearing in the bank statement ef the party, i.e., Mrs Sunny lT,- that in fact, beth the autherities belew have failed te appreciate the ea-cplanatien effered by the assessee cempany; that mereever, even as per the balance sheet ef Mrs Sunny IT, which was alse filed, a sum ef t 32,es,4:»'er-, being the clesing balance, was appearing in the name ef the assessee cempany, as available at APE: 253; that the inceme-tax return filed by the crediter cempany, i.e., Mrs Sunny IT had been submitted te scrutiny and in the assessment erder passed urs 143 [3] ef the Act, in the case ef Mrs Sunny IT, these transactiens entered inte by Mrs Sunny .5"

14 [TA I*~Te.ll5'rT"r1'Je1r2[l|1l ITA Ne.2E3brDelr'2Cl1 I IT with the assessee cempany had been accepted by the Assessing Dfficer; that Mrs SE5 Traders Pvt. Ltd. was alse assessed te ta:-s: and it was threugh the bank acceunt ef this cencern, that the meney was paid back te the assessee cempany; that the inceme assessed by Mrs SE5 Traders was ef 1 1,?r,a3,3e4r-; that beth the autherities belew had erred in ebserving against the assessee en the basis that the crediter cempany had unsecured leans ef E' 12.42 creres and advances ef t 3.35 creres: that rather, the ebservatiens made by the Assessing Drficer itself gees te explain the seurce ef meney frem which the payment was made te the assessee by the crediter: that in fact there was ne adverse material er evidence available with the Assessing Dfficer regarding the unsecured leans raised by the crediter cempany, whereas the same steed accepted in the case ef the crediter cempany in scrutiny assessment, establishing thereby, the genuineness ef such leans; that se far as regards the ether ameunt ef E 3?,ea,4?er-, relating te greund £'~le.3, this ameunt had been received by the assessee cempany frem Mrs Sunny IT, en 2l2i.t'Jﬁ.2{iDﬁ vide chegue l=le.'r34'Eil]3,- that this payment had been made by Mrs Sunny IT frem its bank acceunt hle.32D4 maintained with the Punjab 45: Singh Bank as available frem its bank statement. cepy at APB 252; and that against this ameunt, the assessee cempany had returned a sum ef if 5 lac en 111.2005, which is clear frem the cepy el' acceunt, APE 25:2}: that the cheque ef the said ameunt ef ? 5 lac was credited in the bank acceunt ef Mrs Sunny iT en 111.2-DUE, as is clear frem the entry ef t 4,aa,35er-, credited after deducting a sum ef 2' 1,E5Elr-, en acceunt ef bank charges, as available at APB 2'53.

lb. The Ld, DR, en the ether hand, strengly supperted the impugned erder in this regard, submitting that beth the autherities belew have cencurrently decided that the transactiens entered inte by the assessee cempany were deubtful in nature; that the assessee 'f 15 ITA No.lﬁ??tDo1tED1 I ITA No.2E3Ey'De1I2ﬂl I company had raised loans without paying interest thereon; that non- payment of interest itself raised a doubt about the genuineness of the transactions; that more oyer. the genuineness of the transaction is also brought under doubt by the fact that the assessee company is also not showing much income.

1?. Haying heard the riyal contentions in the light of the material brought on record with regard to these two amounts, we find that so far as regards the amount of it 7r'Ei,31,25IIir-- concerning ground No.2. this amount was, first of all giyen by the assessee company to Mts Sunny IT Infrasoft, on 25.11.2i}lClE-+ This is ayailable from APB 250. which is a copy of details of the accounts of Mrs Sunny lT lnfrasoft, as standing in the books of the assessee company for the period from 1.4.2-ﬂtiﬁ to 3l.3.2DlI'.|'.-'. The releyant entry therein reads as follows.--

.l'I Date Particulars Credit Amount 25-hloy-2006 [as per detailsi Tr'El,31.25ﬂ.[ll] Betrrg Eatarrce amt. o'e,o*osr'teo' at Nofda l'l.r'or'o'a E9, ?5.t?t?t?.t?t}' Dr tease Rent 51.5 5, 25H. tit?' Dr'

13. This amount is shown to haye been returned in the aforesaid account of Mrs Sunny IT lnfrasoft in the books of the assessee company, as follows [APB 250}:-

Date Particulars Debit Amount 19-Jan-EDD? NDIDA Plot ?Ei.31.25iIl.i3-El Hemp ti-'5' Made to Fe your of Vy'aya .='.a..w:or' Footing Works Pvt. trot

19. The aboye details of the account of hits Sunny IT lnfrasoft in the books of account of the assessee company as produced before the assessing ﬂfficer duly establishes the assertion on behalf of the assessee company that this amount of t Tr'El,31.25EIr'-- was first lb ITA I'~Id.ll5"l"'Ir'l"[}elf.'?lJ1l ITA H0233 ISFDEI.-"'2lIl1 1 adyanced by the assessee cpmpany be We Sunny IT Infraspft and it was, thereafter, receiyed back by the assessee cpmpany. E!-efdre us, the Ld. DP; has remained unable tp dispute this fact. Neither at the authnrities belpw haye been able td appreciate it and this being the pdsitipn, in dur cpnsidered yiew, recpurse tn the prpyisipns pf Sectipn 53 pt the IT Act is net applicable. Be that as it may, the assessee has successfully explained the spurce frpm which the amdunt was paid back t-::- it by Mrs Sunny IT Infraspft, by placing dpcumentary evidence as abpye en recprd. Further, it remains undenied that the cdmpany is alsp assessed ta tax and has shdwn substantial incdme.

21:1. In the facts and circumstances as discussed abdye, the Ld. CIT {A} was ﬂbyiﬂusly in errpr in cpnfirming the addition wrpngly made by the Assessing ﬂfﬁcer.

21. Turning tn the ether amdunt at t 3?,ﬂ9,4?ﬂi'--, the assessee has placed befdre us, at APE252, a cppy pf statement pf accdunt pf Mrs Sunny IT Infraspfl: with Punjab 5.: Sind Bank, Nehru Place. New Delhi, fer the peripd frdm 23.3.2005 tp Ei.1Ei.2I.'.H3-E. As per this accpunt ND.3EU=£1, this amdunt bf if 3}',lZl'3,4?D,l- was paid thrdugh EJEI.lIuI.C. Ii.Ip.?EI4'EID3 an 2L'I.E.2lJI'.IE-. As against this, as available frpm the details pf the accpunts pf Sunny IT Infrasdft in the banks bf the assessee cdmpany {APB 250}, an amdunt df t 5 lac was returned by the assessee cdmpany an T.11.2ﬂDﬁ, the releyant entry being as fdlIdws:-

Date Particulars Credit Ampunt T-Nu'-J-Eﬂﬂﬁ [as per details] 5,ﬂﬂ,ﬂDﬂ.ﬂD Ch. Np. .' Being amt. rec.-:1'. from Infaya Laxnif Printing i«1r'p.nl:.s Pvt.

Ltd'.

Bank" Charges 1', 550. (iii? Dr Punjab .5} Sin.-:1' Bank Ens 103053 4, 93.350. {Jr} Dr.

22. This current accdunt pf Mrs Sunny IT Infraspft with Punjab IS-I Sind Bank, 43, Janpath, New Delhi fur the period frnm ﬂ3.1lII.2ClElb tn 5 1? [TA Ne.1l5TTi"Dc1r'ElIll 1 ITFL Ne.2E3ﬁrDc1r2U| I

22.e2.2ee? is at APB 253-254 and the ameunt ef ? 4.98.35-J.ﬂ[l has been shewn as receipt therein. as en 'r.11.2[ll.'.Iﬁ. This left a balance ef ? 32,lZlS,4?ﬂ.Uﬂ, which is alse appearing at APB 263, as leans and adyances. in Schedule l'y' te the Schedules ferming part ef the balance sheet and Prefit E: Less Acceunt ef Mrs Sunny IT Infraseft. APB 23? te 239 is a cepy ef the assessment erder dated 2?r'.12.2ﬂ1IZl. passed by the Assessing Dfficer in the case ef Mrs Adhyay Eeui Pref. er Mrs Sunny IT Infraseft. fer Assessment 'rear ZDE:-B--l1I'Z-I, wherein, ne adyerse inference has been drawn en scrutiny ef the beeks ef acceunt filed aleng with bills and yeuchers and necessary details and infermatien as called fer, was furnished by that cempany befere the Assessing Clfficer. Thereferel merely because Mrs Sunny IT lnfraseft had unsecured leans ef c 12.42 creres and had giyen adyances ef t 3.35 creres. this fact, by itself dees net lead te any adyerse inference being drawn against the assessee and the autherlties belew were entirely unjustified in deing se. Rather, this gees te explain the seurce ef the adyance extended te the assessee cempany by Mrs Sunny IT lnfraseft. Furthermere, it alse gees te amply dispreye the remark wrengly made by the Ld. CIT irii te the effect that Mrs Sunny IT Infraseft was a mere paper cempany. In fact. there is ne material whatseeyer en recerd against Mrs Sunny IT Infraseft te call fer such an ebseryatien. The balance sheet ef Mrs Sunny IT lnfraseft shews that it had fixed assets ef 1 4.51 creres in the ferm bf a plet at Nelda [the Balance Sheet as en 31.3+2l3-III?' (APE 2E-1) shews the fixed assets ef Sunny IT Infraseft as per Schedule III at t4S.1?lJ,-'-l35.L'llJ and the Schedule III {APB E53} shews uncler 'Fixed r1.ssets*, plet at Neida - I' 4S,1?Cl,435.ﬂl.'i}. The list [Schedule III appended giyes the names and details ef the unsecured leans ef 2' 12.42 creres receiyed by Mrs Sunny IT Infraseft. Schedule II shews the tetal unsecured leans at if 12.42,2IZl.421.[iﬂ. The cempany had acquired the plet at Nelda by utilizing a part ef these leans. The balance ameunt was giyen te yarieus cencerns as adyance. In the 5 1B |T.#iil~lo.1E-II*?y'Del.i'2Ei11 lT.i'|il'-lo.2E3E,i"[ZIe|,i'§."|Ill1 auditor's report {AFB 253-259} of Mrs Sunny IT Infrasoft, at Item 3 Ijcji. the auditors have certified that the balance sheet and Proﬁt 5.: Loss Account of Ii-il.is Sunny IT Infrasoft are in agreement with the books of account of the said company.

23. The observation of the Ld. CIT {A} that some of the creditors of the assessee are figuring either as creditors or as auditors of Mrs sunny IT Infrasoft. also does not lead to any adverse inference against the assessee company. particularly in the absence of even an iota of adverse information or material against the assessee company. Such observation of the Ld. i:1T in} is nothing but a doubt which. as is well settled. cannot lead to any adverse inference. in fact, the assessee company, through the afore-discussed voluminous documentary evidence. has successfully explained the transactions in both the cases beyond the shadow of a doubt. Still. during the course of the hearing before us. the assessee was asked to co-relate the figures of the Balance Sheet with the list of the debtors and creditors. Cin going through the list of creditors it is noticed that a sum of Fts.'r"El.31.25iZi.i- is outstanding as credit received from Sunny IT Infrasoft Pvt. Ltd. and a sum of Fts.+*-I'I.21.'.r'3tI is outstanding as debit in the name of Sunny IT Infrasoft Pvt. Ltd. Thus the net balance outstanding is Fts.31i.tii~3.4?o.

23.1 It was the contention of the id. .i'-'iFt. that the assessee had advanced a sum of Hs.]'Ei.31.25l.'.'i.i'- to Sunny IT Infrasoft on 25th November, 2iZli2iE- and it was returned by Sunny IT Infrasoft to the assessee on 1'9"' January. 2Eii.'.i}'.

23.2 Since a sum of Fts.Ii'Si.31.25i'.l.i- is still being shown as advance from Sunny IT Infrasoft Pvt. Ltd. in the list of creditors. we deem it appropriate to remit this matter to the file of the no for the limited purpose of verifying that the net amount outstanding in the name of Sunny IT Infrasoft Pvt. Ltd. as on 31.|.'.I3.2iJtI? was of Fts.32.Ei'_3Ii.=I'r'iZI.i'--. i.e.. Credit Fts.?Ei.3-1.25ti,i-{--] Fts.-*-I?.21.?El{l.i- and there was. initially, a debit in the account of Sunny IT Infrasoft Pvt. Ltd. of Rs.?9.31,.'25tIi'--. which was received by the assessee later on from Sunny IT Infrasoft Pvt. Ltd. The AD is directed that if the above fact is found to be correct, both these additions shall be deleted. Ground No.2 and 3 raised by the assessee are, accordingly. allowed. for statistical purposes-

ITA No-2El3Er.i_'DE1i_'2Dll

24. In the first of its ﬁve grounds raised. the department has challenged the action of the learned ClT{.i5t} in deleting the addition of 1' 13.El].tll'.lilli'--. made ufs lid of the IT Act on account of alleged unexplained receipt of unsecured loans by the assessee from Mrs Perfect Softech Pvt. Ltd. As per the assessment order, in response to the notice sent to this creditor of the assessee uis 133 {6} of the Act. the said company submitted its reply dated 1-12.2i'.liIiEi aiong with the relevant portion of its banlt statement and copy of acknowledgement of filing of its income--ta:-:

return. The Assessing Dfficer observed that the returned income of this company was nil. it was observed that neither the balance sheet or financial statement of this company. nor 19 ITA I*~lo.1i5'l"T-'I'TJi:I«"2i]] 1 [TA I'~io.233ﬁi'Do|-'2Eli 1 any other document was filed to proye the credit worthiness of this company and the genuineness of the transactions; that thus. the assessee company had failed to establish the credit worthinessffinancial strength of the said company and the genuineness of the transactions. The amount of t 13.3Ei.i}ﬂiJl'-- was. as such. added to the income of the assessee ufs E8 of the Act. The Ld. CIT IA} deleted the addition.

25. In this regard. the Ld. DP. has argued before us that the Ld. CIT IA} erroneously deleted the addition well made. despite the fact that the assessee had remained utterly unable to establish before the Assessing Crfficer. despite adequate opportunity granted. either the credit worthiness of the creditor company. or the genuineness of the transaction; that the Ld. CIT {A} has failed to meet the obsenrations made by the Assessing Cifficer in this regard; and that the Ld. CIT IA} transgressed the provisions of Rule 45A of the IT Rules in admitting additional evidence at the back of the Assessing Cifficer.

25. The Ld. Counsel of the assessee. on the other hand. has strongly supported the impugned order, contending that the Assessing Cifficer had gone wrong in stating that the assessee had failed to submit the balance sheebifinancial statement of lvllis Perfect Softech inasmuch as the Assessing Clfﬁcer had neyer asked the assessee to produce such documents; that moreoyer. the Assessing Clfficer had himself made an independent inquiry that His Perfect Softech u.r's 133 Id} of the Act. in which inquiry. nothing adverse to the assessee had come to surface; that had the Assessing Cifficer still remained with any doubt in this regard. he was empowered under law to call for such information as deemed fit from the creditor party. which was not done for the reasons best known to the Assessing Cifficer; that the Ld. CIT (Al. in deciding the issue in fayour of the assessee. has duly taken into consideration all these facts; that in fact. the Ld. CIT IA] had eyen called for a 57 so [TA Na.1sTvbe1r2o1 -1 ITA 1~ia.2s3ivoa1.eoi 1 remand report from the Assessing Dfficer: that the additional evidence furnished by the assessee was admitted by the Ld. CIT IA} entirely in accordance with the provisions of Rule 46A of the Rules: that the remand report called for by the Ld. CIT IA} from the Assessing Citficer was also sought on the point of additional evidence ﬁled by the assessee: that the Assessing Cifﬁcer had submitted remand report dated 15.12.2lJ1I3, which was duly considered by the Ld. CIT {A} before admitting the additional evidence filed by the assessee; and that as observed by the Ld. CIT (Al in para 4.2 of the impugned order. the additional evidence was admitted as it was required for proper adjudication of the grounds of appeal raised by the assessee company.

2?. In this regard. it is seen that the addition has been deleted by the Ld. CIT {A} by observing as follows:--

"3.1 The assessee has shown outstanding balance of P.s.13,Eil3.i2IElEl.i-- in favour of His Perfect Softech Private Limited. The A.CI. made enquiries ufs 133 {El and Mrs Perfect Softech Private Limited has responded by furnishing details like Eiank Statement and copy of ITR Acknowledgement. The A.Ci. disbelieved the outstanding amount payable on the ground that copies of Balance Sheet and other ﬁnancial statements were not provided and made the addition ufs 58. In the course of these proceedings the AP has brought on record the financial statements by way of additional evidence as mentioned in para 4.1 above. It is seen that His Perfect Sottech Private Ltd. is the promoter company which had provided loans to the appellant company as and when required.

3.2 There has been series of transactions between the assessee and His Perfect Softech Private Ltd. These transactions were accepted by the A.C-. A scrutiny assessment was made in the appellant's case for Air. {J4-U5 on 23.12.06 and no addition has been made in respect of outstanding amount payable to the creditor for Fts.1.3l.??',13[}.I- as on 31.03.04 [Ivoida E!-ranch]. I have no hesitation to conclude that identity, credit worthiness and genuineness of the transaction as envisaged ufs B3 are adequately proved. The A.Cr. has made the addition in a mechanical manner. The addition is hereby deleted.

5 21 ITA. No.15-TL"De1f2ﬁl 1

ITA No.233ﬁ.l'De1f2{l11

23. on a thoughtful consideration of the matter, we find that in the assessment proceedings, the assessee had furnished a confirmation from the creditor party with regard to the transaction, along with a copy of account of the creditor party. A copy thereof is at APB 12o. A copy of ledger account of Perfect Softech Pyt. Ltd. for the period from 1.4.05 to 31.3.0? is at APB 121-122. Dissatisfied, the Assessing Dfficer had issued a notice ufs 133 id} to Pulls Perfect softech, which notice was duly replied to by the creditor. A copy of the notice has been placed at APB 123. A copy of the reply of the creditor party is to be found at APB 124. The notice dated 23.11.09 sent by the Assessing ilifficer to Mrs Perfect softech reads as follows:-

"During the course of assessment proceedings, it is noticed that you haye made certain amount to Mfs Vijayalakshmi Printing Works Pyt. Ltd. for Air'. 2IIiIJ}'-D8. You are requested to furnish the fo|lowing:--

{ii The details in respect of Assessing Dfficer with whom you are presently filing your return of income along with PAH.

liii Documentary eyidence regarding ﬁling of return.

{iii} Details of income declared by you in your return of income for Afr'. 2DEi?--DB.

{iyl Documentary eyidence as to the source of your contribution and mode of payment [copy of bank statement for previous 3 months including the month in which the contribution is made.]"

2'3. A perusal of the aboye notice shows that fndeeogas contended on behalf of the assessee,&the balance sheetffinancial statement of Mrs .-r»1,._II~f _ perfect softech were' called for by the Assessing Eifficer.

so. The reply filed by Mrs Perfect Softech is as follows:-

"1. We are presently filing our lTFt with Assessing Office 14 ill, New Delhi under PAN Mo.AAACP5iJ14E. Copy of ITP; Acknowledgement for Air'. iII'Ei--1Ei enclosed Ann:-:.1.

n /5 E2 ITA Ne.lﬁT?fDe|l"2lJl l ITA Ne.2E3Eil'Dbl."2lJl I

2. We have ﬁled ITR shewing I'~lil Inceme fer A.'r'. U?-D3 cepy ef Acknowledgement enclesed. Anne:-:.2

3. We had giyen 13,Eil'.l.i.'lElD.ﬂﬂ during the year fer F.'r'. ElE--D? by MC Payee Cheque. Cepy ef bank statement evidencing the payment is enclesed. Ann.'~:.3"

31. The assessment erder dees net refer te any inquiry haying been cenducted by the Assessing Elfﬁcer pest the receipt ef the aferesaid reply dated El1.12.IZl9 filed by Mrs Perfect Seftech in respense te the netice ulls 133 {E} ef the Act. This shews that the Assessing Clfficer had been satisfied with the reply se ﬁled. In this baclcdrep. as rightly centended by the Id. ceunsel fer the assessee. the Assessing C-'ffiCEr' was incerrect in ebserying that the assessee had failed te submit the balance sheetffinancial statement ef the crediter party.

32. Elefere the Ld. CIT (Al. the assessee had ﬁled written submissiens. These haye been repreduced by the Ld. CIT {A} in para E- ef his erder. The assessee. inter alia. had centended that since in the netice uis 133 [El ef the Act. the lender had net been asked te preduce its balance sheetrﬁnancial statement, the lender had net preyided its balance sheetifinancial statement; and that the balance sheet ef falls Perfect Seftech fer the year was being enclesed. New. since this balance sheet cemprised additienal eyidence filed by the assessee. the ClT {Al ferwarded the same te the Assessing Crfficer fer her cemments. In the remand repert dated l5.12.2ﬂ1ﬂ. the Assessing Clfficer did net raise any ebjectien te the admissien ef additienal eyidence. Aprepes additien per se, the Assessing Crfficer asked the CIT {A} te decide the issue en merit. it was enly thereafter. that the additienal eyidence was admitted by the Le. CIT {A}. ebserying it te be required te be admitted fer preper adjudicatien ef the matter. As such. there is he justificatien in the greund raised by the reyenue te the extent ef challenging the admissien ef the additienal eyidence. allegedly in yielatien ef the if 23 ITA Nd.1ﬁTI"I"De|f10'I l ITA Nd.233ﬁI"De|i'E0l1 prdvisidns crl' Rule 46A cf the IT Rules. Nd such viplatidn bf the Rule stands established.

33. New, cdming td the issue c-f credit wdrthiness cf the party and the genuineness df the transactidn. here alsd, it is seen that the assessee has duly discharged its dnus. This was by way pf filing bf cdnfirmatidn, ITFI, bank statement and balance sheet. The creditdr had duly cdnfirmed the factum df the lean. Sd far as regards the actidn dn the part cf the Assessing 0fficer. the Assessing 0fficer did ndt bring any material whatsdever dn recdrd sd as td lead tp the inference that the genulneness bf the transactibn was dciubtful. There was a credit balance df t 1.EJ.'35.3E0.00 cf the creditdr party in its running bank accdunt. The lc-an df t 1.11.3?.500.:'-- was repaid by the assessee cdmpany. During the year, it had received an amdunt pf ? 13,Ei0_000,i--. As a result. the cldsing balance was c-f t 30,33,380!-. The Ld. CIT IA} dbserved that there had been a series df transactidns between the assessee and the creditdr party. The creditdr party. Mrs Perfect sdftech was assessed under scrutiny assessment and therein, the transactidn in guestidn was ndt ddubted.

34. In view cf the abdve. we find that the Ld. CIT {A} be be perfectly justified in deleting the additidn. This deletidn is. accdrdingIy_ upheld.

35. As such. grdund H0.1 raised by the department is rejected.

36. Grc-und Hd.2 cf the department challenges the deletidn cf the additidn pf t 1.00.50.000.a'- made an accc-uht pf alleged unexplained receipts bf unsecured ldans by the assessee frdm Mrs 'v'ipul IT Infrasdft lF'] Ltd. The facts pertain td this party are similar td thdse dealt with by us in the case pf Mrs Perfect Sdftech. A ndtice urs 133 {E} was sent by the Assessing Dfficer td Mrs 'vipul IT Infrasdft [Pl Ltd. Mrs 'v'ipul IT Infrasdft {P} Ltd. submitted its reply vide letter dated 30.11.2000 aldng with the relevant pdrticm pf its bank: statement and cdpy df "E 24 ITA I"Jo.lbTr'fDeIf2l]l.l ITA I"~.io.E33ﬁl'Delf2lJi i acknowledgement of its ITR filed with the Department. The Assessing Clfficer obseryed that as per the income-ta:-I: return, the returned income of Mfs 'yiipul IT lnfrasoft (PI Ltd was if nil; that neither the balance sheeblﬁnancial statement of Mrs Vipul IT Infrasoft [P] Ltd nor any other document was filed by the assessee to prove the credit worthiness of the party and the genuineness of the transactions; that therefore, it was clear that despite so many and specific opportunities provided, the assessee company had failed to establish the credit worthinessffinancial strength of the party, as well as the genuineness of the transactions; and that hence, the assessee had failed to discharge its onus with regard to the credit entry in its books. It was as such, that the Assessing Cvfficer made the addition of ? 1.5lZI,lZICH.'.l.i-- to the income of the assessee ufs E3 of the IT Act.

3?. By yirtue of the impugned order, the Ld. CIT [AI deleted the addition.

38. Challenging the impugned order in this regard, the Ld. DH submitted before us that the CIT {Al baa.-Iferred in deleting the addition correctly made. failing to take into consideration that the assessee had remained unable to establish before the Assessing Iﬂfficer, either the credit worthiness of Mrs 'ylipul IT Infrasoft (Pl Ltd or the genuineness of the transactions, despite adequate opportunity provided; that the obseryations of the Assessing Dfficer in the assessment order have not been entirely dealt with and adjudicated on merits by the Ld. CIT {A},- that the Ld. CIT {A} also erred in admitting additional eyidence at the back of the Assessing Crfficer in violation of Rule IIEA of the IT Rules.

39. The Id. counsel for the assessee, per contra, stated that the Ld. CIT [Al was perfectly justiﬁed in deleting the addition which ought not to haye been made; that the assessee had led sufficient evidence to establish the credit worthiness of the creditor as well as the 25 ITA No.16? T"fDc1.='2CI1 I ITA No.2 33 Ev" iJe1.-"EU 1 I genuineness of the transactions; that the Assessing Cifficer had been incorrect in observing that the assessee had not submitted the balance sheetfﬁnancial statement, income-tar.-: return and bank statement of the creditor party; that here also, as in the case of We Perfect Sdftech, there is no violation whatsoever of Rule 45A of the Rules.

as. Cln this issue. it is seen that like in the case of Mfs Perfect Softech, there is no violation of Rule «tide. of the IT Rules, the Ld. CIT ta} having legitimately admitted the additional evidence on following due procedure bv way of putting the evidence to the assessing Clfficer and asking for a remand report and the Assessing Cifficer not making any adverse comment in the remand report filed. Then, the assessee had filed the confirmation from the creditor partv. Income-ta:-c return and financial statement and balance sheet of Mrs vipul IT lnfrasoft {P} Ltd had also been filed. The pavment had been routed through an account pavee cheque. in the balance sheet of We 'viipul IT lnfrasofl: {P} Ltd Icopv atAPB1ﬂ1-1ElIJ}, the creditor partv had shown a share capital of t 3.29 crores. This Is evident from APE! 136. It had also shown fixed assets of t 3.??? crore It 8,22,54,54? -- Al'-'E 136). It was being assessed to income-tax. In the details of loans and advances of I'-llfs vipul IT lnfrasoft {P} Ltd for Financial 'rear 2i2II:ii:':-III? {APE 1Eii3I}, against the name of the assessee companv, an amount of E 1,E}ﬂ,5lIl,lJCIEl.l]El has been shown.

41. The Ld. CIT {A}, as seen from the observations made in para 12.1 to 12.3 of the impugned order, has duly taken into consideration the fact that in the remand report, the Assessing Cifficer had asked for the issue to be decided dn merits. The Ld. CIT {A} in para 12.3, observed that independent inquiries had revealed the existence of the creditor companv; that the details of assessment furnished had not been disputed bv the Assessing C:-fficer; that non-furnishing of the balance sheet was not fatal; that it had been submitted on behalf of the /5 Eb ITA No. ]Ei'rT"rDe1.-"EH1 'J ITA Ho.2E3ﬁrDc1.-"Em 1 assessee that the outstanding balance as on 1i.'l.iJE.2ﬂ1IZl was of only E

23.:»'5.ooor-, and that since the requirement of the Assessing Crfficer had been met, there was no case for addition.

42. From the above, evidently, the onus of the assessee urs E3 of the Act has been duly discharged. Therefore, this grievance of the department is also not justified. The Ld. CIT [A] is correct in deleting the addition made. Accordingly, ground No.2 is also rejected.

43. As per ground No.3, the Ld. CIT [A]: has erred in deleting the addition of 2o,21,4aar- on account of unconfirmed sundry creditor Mrs Shri Sai lmpei-i: Company. The Assessing Cifficer issued a notice urs 133 {6} of the Act to Mrs Shri Sai Impeii; Company. However, this party did not respond to the notice. The Assessing Cifficer as such, asked the assessee to show cause as to why an adverse inference be not drawn and the amount be not added as the income of the assessee. As per the assessment order, the assessee neither furnished any reply, nor filed any documentary evidence in support of the said credit amount in its books. Not even a confirmation letter from the party was ﬁled. The Assessing Cifficer, therefore, held that the assessee had failed to discharge its onus with regard to the amount in question and, accordingly, the Assessing Cifficer added the amount of t 2lJ,21,483r- to the income of the assessee. The Ld. CIT {A} having deleted this addition also, has given rise to ground No.3 before us.

44. Before us, the Ld. [JR submitted that the assessee has failed to furnish any explanation or documentary evidence in support of the genuineness of the creditor party, i.e.. Mrs Shri Sai Impe:-i Company; that the Ld. CIT IA], despite thereof, has erroneously deleted the addition correctly made by the Assessing Cifficer, without meeting the observations made by the Assessing Crfficer in the assessment order and violating the provisions of Rule 46A of the IT Rules in admitting the 6?' 2? [TA No.1 ﬁT"'."f'l_?iel.i'f»_*lIli 1 ITA i'"~lo.2B3ﬁfDc1f2l}1 I additional eyidence produced by the assessee at the back of the Assessing Cifficer.

45. The Id. counsel for the assessee, on the other hand, has contended that this is a case of a supplier; that a copy of the ledger account in support of the credit balance was filed before the Assessing Cifficer in the assessment proceedings; that this ledger account showed that the assessee company was making purchases from the supplier. Mfs Shri Sal lmpes Company and was making regular payments; that the credit appearing as on the last date was the closing balance; that the assessee company was maintaining regular books of account which was accepted by the Assessing Cifficer in the assessment; that the credit in question appeared on account of the purchases; that these purchases were doubted by the Assessing Clfficer despite the fact that the assessee had produced copies of purchase inyoices issued by the creditor party; that therefore. the Assessing C:-fficer was not correct in making the addition which has correctly been deleted by the Ld. CIT IA}. The Id. counsel for the assessee has also contended that the Ld. DH has not been able to show as to how there had been any yiolation of Rule 46A of the IT Rules at the end of the Ld. CIT (Al.

46. Apropos the additional eyidence ﬁled by the assessee with regard to this issuejonce again_ we find thft the Ld. CIT {A} has correctly admitted the additional eyidenceiéi following due procedure of law. So far as regards merits of the addition. it is seen that as per the ledger account of Mrs Shri Sai lmpe:-s: Company [copy at APE: 191- 1921. there was an opening balance of ? 5;?1,1ﬁAf-. During the year, the assessee company had made purchase of t 'f'.r'.2ﬂ,919f-. Payment of this was made by the assessee company to the creditor party, to the extent of 1 ﬁ2.?B,5'-.'~i5f- and as a result, there was a credit balance of f 2lZI,2l,43Bi'-- at the end of the year. The assessee has also furnished a 5 23 ITA. Nb. I-b?TiDb1f2{}]'} ITA I"~Ib-233ISi'Dc H2131 ] cbnfirmatibn cbpy bf the accbunt frbm Mfs Shri Sai Impex Cbmpany. II-Iis Shri Sal Impex Cbmpany was being assessed tb incbme-ta:-:: and was haying a PAN. Cbpies bf purchase bills cbncerning the credit"

appearing in the accbunt had alsb been prbduced. The assessee cbmpany was engaged in the business bf printing wbrk and the purchase was bf paper which was purchase made in the cburse bf the assessee's business. The trading accbunt bf the assessee cbmpany was nbt dbubted by the Assessing Cdfflcer. Mbrebyer. nb material br eyidence was brbught bn recbrd by the Assessing Dfficer tb dbubt the transactibns entered intb by the assessee cbmpany. The Ld. CIT {Al deleted the additibn by bbserying as fb|lbws:-

"16. The assessee has shbwn butstanding balance bf Hs.2-121.21,-48.';-I in faybur bf Mfs Shri Sal Impe:-a: Cbmpany. East bf l-cailash Hagar. The A.CI. added the ambunt fbr the simple reasbn that there was nb reply frbm the creditbr fbr the nbtice issued and alsb nb eyidence was led befbre the A.CI. tb prbye the butstanding ambunt. In the cburse bf these prbceedings, the AFI has brbught bn recbrd the cbnﬁrmed accbunt cbpy. The said party is a regular supplier bf paper. The accbunt maintained in the bbblcs bf the appellant is gbne thrbugh and there are several transactibns bf purchase bf paper. The assessee has made purchase bf paper in the earlier year alsb. Cbnsidering the nature bf eyidence, there is nb case fbr additibn ufs E-B. Relief: 2['l.21.4BE!-."

4?. J In yiew bf the abbye discussibn. we db nbt find any errbr in the aEé§b"a§ bf the Ld. CIT [AI in deleting the additibn wrbngly made by the Assessing Clfficer. Accbrdingly, grbund Nb.3 raised by the department is alsb stand rejected.

AEI. Turning tb grbund ND.-'-1. it states that the Ld. CIT {A} has erred in deleting the additibn bf E 11.I3rIII,I-2-I2:-IZI.f- made bn accbunt bf uncbnfirmed sundry creditbr. Mrs United Paper Agency. The facts bf this party are Identical tb thbse bf Mfs Shri Sai Impe:-t Cbmpany. Here alsb. a nbtice ufs 133 I6} bf the Act was issued by the Assessing Clfficer tb the party. whb did nbt. Cln query. as per the assessment brder. the assessee /I 29 ITA Ho. 1 ~fiT"'l'l'Dc1l".'7'.{i*l 1 ITA i'~io.233ﬁl'1'Je]I2{}Ii neither furnished any reply, nor was any documentary eyidence filed in support of the credit amount in the assessee's books. Not eyen a confirmation letter from Mfs United Paper Agency was ﬁled. As such, the Assessing Cifficer. holding that the assessee had failed to discharge its onus, made the addition. The Ld. CIT {Al deleted the same by holding {in para 2lJ.2 of the impugned order} that in the appellate proceedings, the assessee had brought on record the account copy of the assessee maintained in the books of the creditor and also a copy of the ITR acknowledgement; that the creditor had filed the return of income for Assessment 'fear ZUDT-I'.':-El through e-filing account No.EEi1£lﬂElﬂ311ﬂﬂ?, declaring an income of 1 3.23.252!-: that Mfs United Paper Agency was a supplier of paper to the assessee company; that on going through the account copy, no suspicious features were noticed; and that considering the nature of eyidence brought on record, the transactions were found to be genuine and there was no case for addition of the outstanding amount in fayour of the creditor.

49. Here. the copy of the ledger account is to be found at APB 201. Supplies of f 1I.3,i.'l1,l542f-- were made. Thereagainst, payments of ?

5.lIl1.{lE2f- were made, resulting in a credit balance of t 11,00,550!-_ The credit balance, it is noticed, is in receipt of the supplies made in the months of February and March, 2El-3?. The purchases of paper in respect of which the credit was appearing were as per the purchase inyoices. Mfs United Paper Agency, the creditor company, which is assessed to tax, had duly giyen a confirmation.

50. Therefore. finding no infirmity therein. the order under appeal with regard to this issue is also confirmed and ground No.4 is rejected.

51. Ground No.5 states that the Ld. CIT [A] has erred in setting aside the issue of yeriﬁcation of repayment of t 50 lac by the assessee to Mute-::h Supply Pvt. Ltd. Here also. a notice ufs 133 {E} of the Act was if so ITA 1'~Jo.'l simbelreoi 1"

ITA No.2ssameioos_;1 sent to the party by the Assessing Dfﬁcer. However, the party did not respond. A reminder was sent. to which also, there was no reply. The Assessing Dfﬁcer observed that the assessee neither furnished any reply nor any documentary evidence in support of the credit. It was also observed that the amount of 1'' SD lac in round figure did not suggest the nature of the said credit amount to be that of a sundry creditor. The Assessing Clfficer observed that on 31.12.2tlEl9. the assessee furnished a confirmation account along with one extract of transactions claimed as bank statement of lvutech Supply Pvt. Ltd;; that the said extract sheet did not contain even the name of the bank to which it pertained: that further, in the said statement. the address of the party was given as 'Anwar C-anj', Kanpur. whereas the address of the party as provided by the assessee as well as that mentioned in the ITR of the party was of Saklat Place. ltolkata; that further still. the JTR of the party for the year showed the income returned by the party to be at t TITS; that therefore, the assessee had failed to discharge its onus with regard to the said amount; and that in the absence of any documentary evidence in support of the credit amount. the amount of t 50 lac was being added to the income of the assessee. The Ld. CIT (Al deleted the addition.

52. The Ld. DR has contended that the Ld. CIT {Al has erred in setting aside the issue of verification of repayment of t 50 lac by the assessee to hlutech Supply Pvt. Ltd., to the file of the Assessing Cifficer, failing to consider that before the Assessing Cifficer. the assessee had remained unable to establish both the credit worthiness of hlutech Supply Pvt. Ltd. as well as the genuineness of the transaction, despite adequate opportunity haying been granted; that the Ld. CIT {A} erred in not adjudicating on merits. the observations made by the Assessing Cifﬁcer in the assessment order; that the Ld. CIT {A} erred in failing to consider that simple repayment of the amount of t 50 lac. even if '5 31 ITA Ho. l6?'l'lDc1I2ﬂl 1 [TA No.233(ii'Dc1i"2ﬂl I accepted. would neither prove the genuineness of the original transaction leading to treatment of lvutech Supply Pvt. Ltd. as a sundry creditor nor prove the credit worthiness of the party at the time of original transaction; that the Ld. CIT {A} erred in not calling for a remand report from the Assessing Cifficer on the issue at hand. failing to appreciate that w.e.f. L'i1.ﬂE'-.2[IiIl1, the powers of the Ld. CIT {Al to set aside issues decided in scrutiny assessment has been curtailed; that the Ld. CIT {A} has failed to decide the appeal on the issue in accordance with CHE:-T Circular No.14 dated l2.12.2ﬂI}1.

S3. The Id. counsel for the assessee. on the other hand, supported the impugned order on this issue. It was contended that the notice issued by the Assessing Cifﬁcer had not been received back unserved:

that the Assessing Clfficer had not taken the inquiry to its logical conclusion; that the assessee had duly filed the confirmation with the details; that on the other hand. the Assessing Cifficer did not provide adequate opportunity to the assessee to explain its stand and wrongly drew an adverse inference against the assessee; that before the Ld. CIT IA]. all the observations made by the Assessing Crfficer were successfully repelled by the assessee by filing the bank statement of Ivutech Supply Pvt. Ltd. with ICICI Bank Ltd.. copy of income--ta:.~: return of Nutech Supply Pvt. Ltd. and balance sheet of Nutech Supply Pvt. Ltd.. besides. the details of the repayment made subseguently; that the Ld. CIT {Al had sought further clarification, which had been furnished by the assessee vide letter dated 11.IIiEI.2iJ1L'l; that it is not a case of setting aside of the issue to the Assessing C:-fficer; that the Ld. CIT {Al has merely asked the Assessing Dfficer to verify the repayment of the loan; that if the repayment is found to be genuine by the Assessing Cifflcer. he is to uphold the same; and that therefore. the Ld. CIT {A} has only asked the Assessing Cifficer to carry out the above said 7

32 [TA Hp.lﬁ?'.l'fDe1f2ﬂ-11 IT;-'-'l. Hp.EE3ﬁ!Ue1.r'2ﬂ1} yerificatidn and the issue has. as such. ndt been per say set aside tn the file ef the Assessing Gfﬁcer.

5-1. In this regard, the dbseryatipns pf the Ld. CIT {A} are as fpllews:-

"31. l have gene threugh the assessment erder and the detailed written submissidns filed by the AF! in this regard.

32.1 The assessee has shdwn dutstanding balance at Fts.SEl,l1lZl.l1£1l1,l~ in faydur df l'~lutech Supply Pvt. Ltd. the AC}. added the ampunt fer the simple reasdn that there was nd reply frdm the crediter fer the nc-tice issued ufs 133 {E} and alsd nd evidence was led befere the A.-'.21. tp prc-ye the receipt df Hs.'.'-lIl.lIllZl,l.Ill."II.':lr'--. The AH brdught en recprd the fdlldwing ddcuments in the cpurse pf these prpceedings:--

"Cdpy bf cc-ntirmed acceunt cdpy, Balance sheet and Bank acceunt in the case pf Nutech Supply Pyt. Ltd."

32.2. The AP. yide letter ﬁled en 11.lIlEl.1lIl stated that the amduht was repaid. Hdweyer nb details are furnished. The AD- is hereby directed te verify the repayment and if it is fclund genuine. there is np case fpr additien."

55. Se as td discharge its enus regarding the credit werthiness ef the party and the genuineness ef the transaction. the assessee had furnished cdnﬁrmatidn and bank statement {APB 213} df Mrs Nutech Supply Pyt. Ltd. as per the banlr; statement. it is seengthag Nutech Supply Pvt. Ltd. had made payment pf t SE} lac tn: the assessee cdmpany dn 22.-:IIl1.2ﬂlZl'l" yide cheque |-"'-.|l2l.3113ﬂ1. Mfs Nutech Supply Pyt. Ltd. is assessed td incdme-tax. Its ITR and PAN were furnished by the assessee. Ndthing adyerse was breught en recerd by the Assessing Dfficer. The Balance Sheet pf hlutech Supply Pvt. Ltd. {APE EH2-293} shdws, in its Schedule pf Ldans IS-l! Advances. an amdunt pl" if 50 lac in the name ef the assessee cdmpany. Frdm all this. eyidently, the assessee has duly discharged its dnus cdncerning the credit wclrthiness cf the crediter and the genuineness ef the transactidn. Eyen the details bf the repayment made in the subsequent year were 27 as rra Np.IETTfDelfED11 ITA Np.EE3Eu'Delf2U11 filed. The Id. CIT {A} has directed the Assessing Clfficer td upheld the credit if these repayments are fdund tp be genuine. withput dpupt. the Id. CIT {A} dpes npt haye pdwer tp set aside an issue tn: the Assessing Dfficer. w.e.f. E.'r1.EIﬁ.2lZli'.I1. Hpweyer, ﬁnding that the repayment as alleged by the assessee needs tp he yerified, we remit this issue td the file pf the Assessing Dfficer. The Assessing Dfficer is directed tp examine this issue in the light pf pur preceding dhseryatidns and tp decide the matter in accdrdance with the law. Acct:-rdingly. grpund NEL5 raised by the department is treated as accepted, fdr statistical purpdses.

SE. In the result. the appeal at the assessee in ITA Np.1ﬁT?lDeIl2ﬂ11 and the appeal pf the Department in ITA Nd.2B3ﬁ.lDe|.l2ﬂ11 are partly allc-wed, as indicated.

The Drder prpnpunced in the ppen cpurt an E .11.2E:-13.

[T. 5. KA Ms-""

ACCOUNTANT MEMBER JUDICIAL MEMBER Dated, .l A / W} 2013.

dk Cdpy fdrwarded tt:-:-

1. Appellant

2. Respsdndent

3. CIT

4. CITIAI

5. DR, ITAT TFLUE CCIFT EIY Drder Deputy Registrar, ITAT, Delhi Benches

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Vijay Lakshmi Printing Works Pvt. Ltd., ... vs Assessee