DIU RESORTS PVT LIMITED,MUMBAI vs. ACIT 9 (3)(1), MUMBAI

The facts relating to the issue are discussed in brief. The assessee is engaged in the business of renting of properties. During the year under consideration, the assessee had received loans aggregating to Rs.62.70 lakhs from 13 companies. The AO asked the assessee to prove these loans in terms of sec.68 of the Act. The assessee furnished confirmation letters obtained from them and also the copies of income tax acknowledgement

Before Ld CIT(A), the assessee advanced its arguments on various creditors. Hence the Ld CIT(A) called for a remand report from the AO. In the remand report, the assessing officer reported that the notices issued to four companies have been returned back. As per the AO, even though this fact was informed to the assessee, yet it did not furnish any new address of these four companies. With regard to the remaining 9 creditors, the AO reported that they have furnished details through post. However, the assessing officer had asked the assessee to produce those parties, but the assessee did not produce them.

The assessee furnished its reply to the remand report. The assessee claimed that it has furnished fresh addresses of four companies. With regard to the remaining nine companies, the assessee contended that the required details have been furnished by them directly to the assessing officer. Accordingly, it was contended that the assessee has discharged its burden placed upon it u/s 68 of the Act. However, the Ld CIT(A) took the view that the assessee has failed to discharge the burden and accordingly confirmed the assessment made by the AO. Aggrieved, the assessee has filed this appeal before the Tribunal.

We heard the parties and perused the record. We notice that the assessee filed only confirmation letters and copy of acknowledgement for filing income tax returns by all the 13 creditors. Mere filing of these two documents, in our view, would not result in discharging of initial burden placed upon the assessee u/s 68 of the Act. In order to discharge the initial burden, it is required for the assessee to prove the identity of the creditor, credit worthiness of creditor and genuineness of transactions. The 3 Diu Resorts Pvt. Ltd. assessee, in our view, did not discharge the credit worthiness, since neither the Balance sheet of the creditor companies or their bank accounts were furnished before the AO. In the absence of copy of bank statements of the creditor companies, it cannot be said that the genuineness of the transactions were proved.

However, we notice that nine companies have directly filed certain details called for by the AO during the remand proceedings in response to the notice issued to them u/s 133(6) of the Act. We notice that neither the AO nor Ld CIT(A) has discussed about those details. Before us, those details were not furnished either by the assessee or by the revenue. It is not clear as to whether those details were shared with the assessee or not. Without considering those details, it would not be possible for the Tribunal to examine as to whether the burden placed u/s 68 of the Act was discharged. In respect of remaining four companies, the notices were issued by the AO to old addresses. However, the assessee claims that it has furnished new addresses to the assessing officer. However, it is not clear as to whether the AO did conduct any enquiry or not with those four companies. The Ld A.R, during the course of hearing before us submitted that all the 13 companies are group concerns only. If that is so, it should not be a problem for the assessee to furnish all details to discharge the burden placed u/s 68 of the Act.

Under these set of facts, we are of the view that this issue requires fresh examination at the end of AO. The assessee is directed to furnish the relevant details in respect of remaining four companies also and the assessee may furnish any other detail that may be required to discharge the initial burden placed upon it. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO. After considering all the details, the AO may take appropriate decision in accordance with the law. The assessee should be given adequate opportunity of being heard.