ITO, W-4(2), LUDHIANA vs. M/S SWARAN FASTNERS, LUDHIANA

PER N.K. SAINI, VICE PRESIDENT

This is an appeal by the Department against the order dt. 07/03/2018 of Ld. CIT(A)-2 Ludhiana.

i. Whether on the facts and the circumstances of the case and in law, the CIT(A)-2, Ludhiana was justified in deleting the addition of Rs. 20,50,000/-whereas the asses see could not explain the source of this amount credited in the capital account of Smt. Swaran Kanta to the satisfaction of the Assessing Officer. ii. Whether on the facts and the circumstances of the case and in law, the CIT(A)-2, Ludhiana was justified in deleting the addition of Rs. 40,50,000/-whereas the assessee has failed to explain the genuineness of the sums received from Sh. Ankush Gupta particularly when his credit worthiness was not established beyond doubt. iii. Whether on the facts and the circumstances of the case and in law, the CIT(A)-2, Ludhiana was justified in deleting the addition of Rs. 3,88,82,000/- whereas the assessee failed to explain the credit worthiness of M/s Shree Radha Commodity Services to the extent of Rs. 3,88,82,000/- to the satisfaction of the Assessing Officer. iv. That the order of the CIT(A) on the above issues raised in this appeal be set aside and that of the Assessing Officer be resorted to.

v. That the appellant craves leave to add or amend any grounds of appeal before it is finally disposed off.

29/06/2012 Cheque No. 858646 8,00,000/- 26/07/2012 Cheque No. 858647 50,000/- 11/08/2012 Cheque No. 858648 7,00,000/- 13/08/2012 Cheque No. 858649 5,00,000/- Total 20,50,000/-

The A.O. asked the assessee to furnish the explanation for the said addition. According to the A.O. the assessee did not file the evidence, he therefore treated the said amount as unexplained income of the assessee and made the addition.

The first ground of appeal in this case is that the additions have been made of Smt. Swaran Kanta who is Partner in the firm at Rs.2050000/- being the Capital introduced during the year under consideration. The submissions to this reply are as under:

a) Smt. SwaranKanta received the amount from her son Sh. Puneet Gupta who is Non resident and living in U.K. The photocopy of the NRE saving account of Sh. Puneet Gupta being maintained with CITI Bank, Feroze Gandhi Market,

Ludhiana is attached. The amount of Rs.8 lakh has been received from CITI Bank through RTGS in the savings account of Smt. SwaranKanta having account No.00000010007210393 with State Bank of India, Aggar Nagar, Ludhiana and the same amount was introduced on 29.06.2012 as capital in the firm. Rs.50000/- was transferred to the Capital Account on 26.07.2012 from the outstanding balance with State Bank of India. Again she received from Sh. Puneet Gupta, her son on 11.08.2012 through RTGS from NRE Account to her saving account on 11.08.2012. The amount of Rs.7 lakh was given to M/s SwaranFastnersaas capital on 11.08.2012 and Rs.5 lakh was given on 13.08.2012 to M/s SwaranFastners. The total amount of Rs.20 lakh was received from her son who is Non resident. The balance amount of Rs. 50000/- was introduced as capital being the amount outstanding in her account. The photocopy of the capital account of Smt. Swarankanta, her saving bank account with SBI and saving bank account of Sh. Puneet Gupta, NRE are placed in the paper book page no. 6 to 8.

b) The complete explanations was given to the A.O. during the proceedings along with complete evidence but the A.O. has made additions in the hands of firm without considering this fact that the amount belongs to Smt. SwaranKanta and if at all any additions was to be made it should have been made in the hands of Smt. SwaranKanta. However the complete evidences have been provided to your good self along with source of source hence the additions of Rs. 2050000/- made in the firm's hand being Partner's Capital addition should be deleted.

c) Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page no. 1 to 3. Your honor will find that in the Order sheet entries, the proceedings were started on 23.12.2015 and the last proceedings are dated on 19.02.2016 on which date the case was adjourned to 26.02.2016. From the order sheet entries your honor will find that no show cause notice has been issued to the assessee before making any additions on accounts of unexplained credits in the name of Smt. SwaranKanta which violates the Principles of Natural Justice and additions based on this issue should be deleted and assessment should be quashed.

5.1 The aforesaid submission were forwarded to the A.O. by the Ld. CIT(A) for the remand report. In response the A.O. submitted as under:

Kindly refer to reply filed by the counsel of the assessee dated 26.09.2017 addressed to you.

During the course of assessment proceedings, it was noticed that Smt. SwaranKanta received the amount from her son Shri Puneet Gupta who is non resident and living in U.K. The photocopy of the NRE saving account of Sh. Puneet Gupta being maintained with C1TI Bank was also furnished by the assessee. But, the source of income of Shri Puneet Gupta was not produced before the then A.O. A show cause notice was also issued to the assessee on 09.03.2016 which was duly served upon the assessee on 10.03.2016(copy enclosed). Hence, an addition of Rs. 20,50,000/- was made by the A.O. during the course of assessment proceedings.

5.2 The said remand report was forwarded by the Ld. CIT(A) to the assessee for its counter comment. In response the assessee in its counter comment submitted as under:

The complete comments on the remand report dated 21.11.2017 submitted by the Income tax Officer, Ward 4(2), Ludhiana are being given as under:

The only allegation made by the A.O. in his remand report that the source of income of Sh. Puneet Gupta was not produced before the then A.O. In this connection it is submitted that he is working in U.K. and Sh. Puneet Gupta has transferred the funds from U.K. in his saving account and thereafter he has

transferred through RTGS to saving account of Smt. SwaranKanta. The amounts are transferred to State Bank of India in her saving account. From the saving account of State Bank of India the amounts were transferred through cheques to the Firm for which the complete details have been given in the written submissions and the photocopy of saving account maintained with State Bank of India is placed in paper book at page number 7 and saving account of Sh. Puneet Gupta NRE is placed in the paper book at page number 8. The assessee has given the source of source for the additions in the capital account of SwaranKanta along with documentary evidences of bank accounts for which the A.O. has not given any adverse remarks. The A.O. has simply stated that the Income of Sh. Puneet Gupta who is son of Smt. SwaranKanta and living and working in U.K. has sent the money from U.K. in his NRE account. The said amounts of Rs. 20,00,000/- for which details have already been given above were transferred through RTGS to the saving account of her mother from where she has given amounts to the Firm. The credits are fully explained in this case, the correct amount received from NRE Puneet Gupta is Rs. 20,00,000 not 20,50,000/- as assumed by the A.O. in his remand report. It is also important to mention here that Smt. SwaranKanta is being assessed separately and she is filing separate return of income for each assessment year.

It is important to mention here that the A. O. issued the notice to the assessee for clarification of written submission given by the assessee vide letter no.ITO/ward(2)/Ldh/1718/485 dated 13.10.2017 and letter no. ITO/ward(2)/Ldh/1718/540 dated 13.11.2017 and the undersigned attended and clarified each and every issue on the issue of introduction of Capital by Partner Smt. SwaranKanta. The photocopies of the enquiries letter issued by the A.O. are also attached for your kind reference. The A.O. has not uttered a single word about the amounts received by Smt. SwaranKanta from her son who is living and working in U.K. and has transferred the funds through RTGS from his NRE account. The assessee has given him all the clarifications of the amounts received from her son from his NRE account which itself proves of source also. In view of the above facts it is requested and prayed to deleted the addition of Rs. 20,50,000/- in the hands of the firm under the wrong notion of law.

5.3 It was further submitted as under:

Written submissions dated 12.02.2018 Sh. Puneet Gupta, NRE has also given the following documents to prove that the amounts were sent by him from relation Foreign Exchange department being confirmation of transactions done by Sh. Puneet Gupta and the complete details are being given as under: a) The first transaction is dated 26.06.2012 of 9000 GBP and the conversion rate is 88.45 and Indian Rupees 796050 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached.

b) The second transaction is dated 06.08.2012 of 14000 GBP and the conversion rate is 85.80 and Indian Rupees 1201200 which was transferred by Sh. Puneet

Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached.

c) The next transaction is dated 24.10.2012 of 14000 GBP and the conversion rate is 85.55 and Indian Rupees 1197700 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached.

d) The next transaction is dated 12.11.2012 of 14000 GBP and the conversion rate is 87.05 and Indian Rupees 1218700 which was transferred by Sh. Puneet Gupta, NRE from London, Barclays Bank, PLC, Canary Wharf, London as per photocopy of the document attached.

e) The next transaction is dated 26.03.2013for Rs. 1231500 being swift message of Barclays Corporate in which there is a mention the name of Sh. Puneet Gupta and the purpose mentioned is Gift to family. This transaction is done through rational foreign exchange limited, Holland house, Bury Street. London as per photocopy of the document attached.

Your honor will find that all the transaction had been done from London by Sh. Puneet Gupta who is Son of Smt. SwaranKanta Jain and brother of Sh. Ankush Gupta.

The above amounts have been transferred by Sh. Puneet Gupta in his savings account being maintained with CITI Bank and out of these transactions the amounts were transferred through RTGS/Cheques to her mother and his brother. This will again prove that the amounts had been received by Sh. Puneet Gupta from London from the accounts maintained by him at London with bank.

Written submissions dated22.02.2018 The following documents are attached:

The documents are being attached and your honor will find that all the transactions were carried out by Sh. Puneet Gupta from his bank accounts or through his company in which he was having 100% share holding. These bank statements were received by Sh. Puneet Gupta through Barclay Bank on 13.02.2018 as per copies of bank statements received through email by the family members of Sh. Puneet Gupta. This proves the source of source. It is requested and prayed to accept the contention of the assessee since the complete source of source has been established and even the funds have been transferred from U.K. from the bank accounts of Sh. Puneet Gupta.

6.5 I have considered the observations of the Assessing Officer as made by him/her in the assessment order while making the impugned addition as well as in the remand report. I have also considered written submissions filed by the assessee firm through its learned AR vide letters dated 26.09.2017, 12.02.2018 and 22.02.2018 on the issue under reference as well as counter comments of the assessee firm in connection with the remand report of the Assessing Officer. I have further considered other material placed by the learned AR of the assessee on record. On careful consideration of the assessment order, it has been noticed that the Assessing Officer has made the impugned addition as the assessee firm in the opinion of the Assessing Officer could not explain the source of additions to the capital account of Smt. Swarnkanta, Partner. On the other hand, the learned AR of the assessee had submitted that Smt. Swarnkanta, Partner received an amount of Rs.20,00,000/- from his son Sh. Puneet Gupta who is NRI and is presently settled in UK. It has also been submitted that Sh. Puneet Gupta has given this amount to his mother through his NRE account maintained by him with CITY Bank, Feroze Gandhi Market, Ludhiana. In support of his contention, the learned AR of the assessee has also enclosed copy of NRE saving bank account of Sh. Puneet Gupta. It has further been submitted that an amount of Rs.8,00,000/- has been transferred in the saving bank account bearing No. 00000010007210393 of Smt. Swarnkanta maintained by her with SBI, Agar Nagar, Ludhiana by Sh. Puneet Gupta through RTGS and the same was introduced in her capital account on 29.06.2012 as capital in the assessee firm. It has again been submitted that an amount of Rs. 12,00,000/- has again been transferred in the saving bank account bearing No. 00000010007210393 of Smt. Swarnkanta maintained by her with SBI. Agar Nagar. Ludhiana by Sh. Puneet Gupta through RTGS on 11.08.2012 and the

same was also introduced in her capital account on 11.08.2012 (Rs.7,00,000/-) and 13.08.2012 (Rs.5,00,000/-) as capital in the assessee firm. It was again submitted that an amount of Rs.50,000/- was again introduced as capital on 26.07.2012 out of outstanding balance in the bank account of Smt. Swarnkanta. It has again been submitted that the assessee firm has given complete explanation to the Assessing Officer along with documentary evidence but the Assessing Officer has made impugned addition in the hands of the assessee firm without considering the fact that the amount belongs to Smt. Swarnkanta and if at all any addition was to be made it should have been made in the hands of Smt. Swarnkanta. It has again been submitted that the Assessing Officer has not given any show cause notice before making the addition under reference which violates the principles of natural justice. On careful consideration of the rival contentions, I am of the opinion that the assessee firm has explained even the source of source in respect of the capital introduced in the capital account of Smt. Swarnkanta by producing copy of NRE account of Sh. Puneet Gupta. On perusal of the bank accounts of Sh. Puneet Gupta and Smt. Swarnkanta, I am convinced that the capital has been introduced by Smt. Swarnkanta out of explained sources. When asked to prove the source of Sh. Puneet Gupta, the learned AR of the assessee also placed on record the documents which prove beyond doubt that the amount in his NRI account has been transferred by Sh. Puneet Gupta from his own explained sources and that too in Pounds. Under such circumstances, the action of the Assessing Officer in making an addition of Rs.20,50,000/- on account of unexplained credits in the capital account of Smt. SwarnKanta, Partner cannot be said to be justified and as such the addition of Rs.20,50,000/- made by the Assessing Officer in this case on account of unexplained credits in the capital account of Smt. SwarnKanta, Partner is, therefore, directed to be deleted. In the result, the grounds No. 2 and 3 of appeal taken by the assessee firm are allowed.

• ITO Vs. Nahar Singh Sadhu Singh [2001] 253 ITR 471(P&H)

• CIT Vs. Metachem Industries [1999] 245 ITR 160 (M.P.)

10.1 Similarly the Hon'ble M.P High Court in the case of CIT Vs. Metachem Industries (supra) held as under:

“ 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 is over. Whether that person is an income-tax payer or not and where he had brought this money from, is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the income of the firm for the purposes of income-tax.”

Sr. No. Date Amount 1 09/05/2015 1,00,000 2 31/10/2012 6,00,000 3 31/10/2012 4,00,000 4 15/11/2012 4,50,000 5 15/11/2012 5,50,000 6 19/11/2012 6,00,000 7 19/11/2012 4,00,000 8 21/11/2012 1,50,000 9 20/12/2012 7,00,000 10 28/12/2012 2,00,000

13.1 He asked the assessee to furnish the evidence of source of those amount. The assessee submitted copy of the bank account from where the cheques were issued to the assessee on the following dates:

Sr. No. Date Amount 1 31/10/2012 10,00,000 2 14/11/2012 4,50,000 3 14/11/2012 1,50,000 4 14/11/2012 4,00,000 5 19/11/2012 11,50,000

13.2 The A.O. again asked the assessee to file the source of corresponding deposits in the bank account. In response the assessee submitted as under:

'The credit appearing at Rs. 10,00,000/- dated 31.10.2012 was received by Ankush Gupta from his brother Puneet Gupta . Rs 1,50,000/- and Rs. 4,00,000/-dated 14.11.2012 have been received from Sh. Aakash Bansal, brother in law , Rs 11,50,000/- dated 19.11.2012 has been received from his brother Sh. Puneet Gupta . Further Rs. 7,00,000/- dated 20.12.2012 has been given by Ankush Gupta to Swaran Fastner . Further Rs. 2,00,000/- is the correct figure instead of Rs 8,00,000/- and the correct date is 28.12.2012 instead of23.12.2012 which has also been given to Swam Fastners. "

13.3 The A.O. however was not satisfied from the submissions of the assessee and made the addition of Rs. 40,50,000/- by observing as under:

I have considered the reply of the assessee . He has stated that the creditor received the amounts from Puneet Gupta and Aakash Bansal , but no evidence for the same is filed. Further no source of amounts of Rs. 7,00,000/- and 2,00,000/- deposited on 20.12.2012 and 28.12.2012 has been filed. The assessee, vide questionnaire dated 9.03.2016 was again asked to produce evidence of sources of amounts advanced by Sh. Ankush Gupta, but again the same were not filed. The assessee simply stated vide reply dated 14.03.2016 that the same were already filed on 17.11.2015 ( wrongly mentioned as 17.11.2015 in place of 27.11.2015) whereas in that reply no evidence is filed. As such the source of amount of Rs. 40,50,000/-is not proved. Accordingly credit of Rs. 40,50,000/- in the books of the assessee, in the name of Sh. Ankush Gupta is treated as not explained and thus treated as income of the assessee. 14. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under:

The second ground of appeal is that the A.O. has made addition on account of Rs. 4050000/- received from Sh. Ankush Gupta who is son of Smt. Swarankanta and Kushal Gupta. He is also brother of Sh. Puneet Gupta. The assessee has given complete reply on this issue on 27.11.2015 and again the same was mentioned on 14.03.2016, photocopy of the reply is attached in the paper book at page no.4 and 5. Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page no.l to 3. Your honor will find that in the Order sheet entries, the proceedings were started on 23.12.2015 and the last proceedings are dated on 19.02.2016 on which date the case was adjourned to 26.02.2016. From the order sheet entries your honor will find that no show cause notice has been issued to the assessee before making any additions on accounts of unexplained credits in the name of Sh. Ankush Gupta which violates the Principles of Natural Justice and additions based on this issue should be deleted and assessment should be quashed. The reply on merits is being submitted as under:

a) Your kind attention is invited to paper book page 10 which is saving account of Ankush Gupta. The amount of Rs.30513.39 and Rs.26499.29 was received on 26.04.2012 from the Sale/Maturity of Mutual Funds. Further amount of Rs.31260.15 dated 30.04.2012 and amount of Rs.31586.79 dated 07.05.2012 were also received on Sale/Maturity of Mutual Funds. There was a balance of Rs.197250.85 on 07.05.2012 in the saving account out of which amount of Rs. 100000/- was given to SwaranFastners. This amount is mentioned on Paper book page no. 10. Further the receipt of Rs.10 lakh from Sh. Puneet Gupta, his real brother from his Brother's NRE saving account. The copy of NRE saving account is placed in the paper book page no. 16 to 18. The amount of Rs.10 lakh is mentioned in the saving account of Sh. Puneet Gupta in the paper book page 17 being maintained with C1TI bank. The amount was received by Sh. Ankush Gupta through RTGS. out of which Rs.4 lakh was given by Sh. Ankush Gupta on 31.10.2012 and the amount of Rs.6 lakh was given to SwaranFastners on 01.11.2012. These facts can be verified from the paper book page no. 12 being saving account with State Bank of India of Sh. Ankush Gupta. Sh. Ankush Gupta further received the amount of, Rs. 4 lakh, Rs.1.50 lakh, Rs.4 lakh from Sh. AkashBansal on 14.11.2012. The saving accounts of Sh. AkashBansal with State Bank of India, Account No.30784612826, (Jaitu) Faridkot from where the amount of Rs. 1.50 lakh was received by Sh. Ankush Gupta. The saving passbook is placed in the paper book page no. 19 and 20. Further Sh. Akashbansal is also maintaining saving bank account No.30343633939 with State Bank of India, Jaitu (Fardkot) and this saving account is placed at paper book page no. 21 and 22. From the saving account of Sh. AkashBansal, the amount of Rs.4 lakh was received by Sh. Ankush Gupta in the saving account and this amount is reflected in the saving account of Sh. Ankush Gupta at paper book page no. 12. Further Sh. Akash Bansal is maintaining saving account with HSBC Bank, Gurgaon from where he gave amount of Rs.450000/- to Ankush Gupta. Sh. AkashBansal is his cousin brother. Out of these amounts Rs. 550000/-and Rs.450000/- was given to SwaranFastners on 15.11.2012 and these entries are reflected in the saving bank account in paper book page no. 12 and 13. Sh. Ankush Gupta further received amount of Rs. 1150000/- from his brother Sh. Puneet Gupta on 19.11.2012, Rs.2 lakh on 08.12.2012 and Rs. 50000/- on 11.12.2012 and further amount of Rs.8 lakh was received from Sh. Puneet Gupta on 30.03.2013. All these entries are reflected in the saving bank account in paper book page no. 18. Out of Rs. 1150000/- Rs. 6 lakh and Rs.4 lakh was given to SwaranFastners on 19.11.2012. Further amount of Rs.150000/- was given on 21.11.2012. These entries are reflected in paper book page no.13 in the saving account with SBI. Further the amount of Rs.200000/- dated 08.12.2012, 50000/- on 11.12.2012 and Rs.800000/- dated 30.03.2013 were received by Sh. Ankush Gupta in the saving account with Axis Bank and this Saving bank account statement is placed in the paper book page no. 15. Further the amounts received from SwaranFastners are also indicated in the saving account with Axis Bank and this saving bank account with Axis bank is placed in the paper book page no. 15. It is important to mention here that the amount of Rs. 1050000/- dated 11.12.2012 was received by Sh. Ankush Gupta against the sale of immovable property and the photocopy of the registration deed along with photocopies of the cheque is placed in the paper book page no.24 to 29 which is the photocopy of the cheque received from sale of property. The photocopy of the registration deed which is placed in the paper book page no. 25 to 27. The photocopy of the Power of attorney which is placed in the paper book page no.28 to29. The photocopy of the Return of Income along with Computation chart is placed in the paper book page no. 30 to 32 to prove the

contention and this amount was received in the Axis Bank which is placed in the paper book page 15.

b) Further your kind attention is invited to the Order Sheet entries which has been placed in the paper book at page no. 1 to 3. Your honor will find that in the Order sheet entries, the proceedings were started on 23.12.2015 and the last proceedings are dated on 19.02.2016 on which date the case was adjourned to 26.02.2016. From the order sheet entries your honor will find that no show cause notice has been issued to the assessee before making any additions on accounts of unexplained credits in the name of Sh. Ankush Gupta which violates the Principles of Natural Justice and additions based on this issue should be deleted and assessment should be quashed.

a) The confirmed copy of account showing the complete names and addresses, PAN No. of the persons from whom the loan has been received

b) The copies of bank statements from where the amounts were received by the assessee firm along with explanation in brief.

c) The complete details where the assessees are being assessed from whom the loans have been received. Even Smt. SwaranKanta Jain was being assessed by the same A.O., hence once the onus is discharged by the assessee it becomes the duty of the A.O. to prove that the amounts are in- genuine.

d) The A. O. has not further gone to verify the amounts received from such persons to come to the conclusion that these amounts introduced as capital or unsecured loans from his son, Ankush Gupta are not genuine. Rather he should have verified from these perons by issuing notice u/s 133(6) or u/s 131(1) before making any additions in the Returned income of the assessee's firm.

e) Even the Order sheet entries are upto 19.02.2015 which itself proves that no question was asked by the A.O. during the proceedings before making any additions on this account, hence it clearly indicates that the additions on account of Partner Capital account to the tune of Rs.2050000/- and unsecured loans to the tune of Rs. 4050000/- has been made for the sake of additions on the basis of assumption, presumption, supposition and suspicious basis. The A.O. has not brought any material on record to prove that the amount of Capital introduced or unsecured Loans received from Sh. Ankush Gupta are not genuine in spite of the fact that the complete replies along with documentary evidences were given to the A.O. during the proceedings to prove this contention.

14.1 The aforesaid submissions received from the assessee were forwarded by the Ld. CIT(A) to the A.O. for the remand report. In response the A.O. submitted as under:

During the course of assessment proceedings, it was noticed that the assessee has received amounts totaling to Rs. 41,50,000/- from one ShriAnkush Gupta on various dates as under:-

Sr. Date Amount No. 1. 09.05.2015 1,00,000/- 2. 31.10.2012 6,00,000/- 3. 31.10.2012 4,00,000/- 4. 15.11.2012 4,50,000/- 5. 15.11.2012 5,50,000/- 6. 19.11.2012 6,00,000/- 7. 19.11.2012 4,00,000/- 8. 21.11.2012 1,50,000/- 9. 20.12.2012 7,00,000/- 10. 28.12.2012 2,00,000/-

The assessee vide questionnaire dated 06.11.2015 was asked to file evidence of source of corresponding deposits in the bank account of the creditor i.e. source of deposits in the bank account of Ankush Gupta in SBI. In this regard, the assessee filed reply dated 14.03.2016(copy enclosed), but no complete details have been filed. Hence, credit of Rs. 40,50,000/- in the books of the assessee, in the name of ShriAnkush Gupta was treated as not explained and the same was treated as income of the assessee by my predecessor even after considering the reply filed by the assessee dated 27.11.2015 in which the assessee; has stated that the creditor received the amounts from Puneet Gupta and AakashBansal, but no evidence for the same was filed. Further no source of amounts of Rs. 7,00,000/- and Rs. 2,00,000/- deposited on 20.12.2012 and 28.12.2012 has been filed.

14.2 The aforesaid remand report was forwarded by the Ld. CIT(A) to the assessee firm for its counter comments. In response the assessee submitted as under:

filed the complete details of credits of Rs. 40,50,000/- but the correct figure is Rs. 41,50,000/-. The A.O. has attached the copy of letter dated 14.03.2015 in which the assessee has mentioned that reply filed by the assessee dated 27.11.2015 was mentioned in reply dated 14.03.2015 in para 1 and the A. O. has also mentioned in his remand report regarding reply filed by the assessee dated 27.11.2015. Further he has stated that creditor received the amount from Sh. Puneet Gupta NRE, his brother and Sh. AkashBansal but no evidence was filed. The AO. has simply stated that the no source of amount of Rs. 7,00,000/- dated 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 has been filed. This fact is also not correct. The A.O. has not considered the amount of repayment of Rs. 7,00,000/- dated 4.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 912010063667577 with Axis Bank, Aggar Nagar, Ludhiana. Further, The A.O. has not considered the amount of repayment of Rs. 7.00,000/- dated 4.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 912010063667577 with Axis Bank, Aggar Nagar. Ludhiana. Further. The A.O. has not considered the amount of repayment of Rs. 6,00,000/- dated 4.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 912010063667577 with Axis Bank, Aggar Nagar, Ludhiana. Further, The A.O. has not considered the amount of repayment of Rs. 3,00,000/- dated 10.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 912010063667577 with Axis Bank, Aggar Nagar, Ludhiana. Further, The A.O. has not considered the amount of repayment of Rs. 8,00,000/- dated 10.12.2012 paid by the firm to Ankush Gupta and amount was deposited in the saving account number 912010063667577 with Axis Bank, Aggar Nagar, Ludhiana. Sh. Ankush Gupta has given Rs. 7,00,000/- from the Axis Bank on 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 out of the amounts received back from SwaranFastners which have been credited in his saving account. The photocopy of saving bank account number 00000030037410900 being maintained with State Bank of India placed in paper book from page number 10 to 14 and saving account number 912010063667577 being maintained with Axis Bank placed in paper book at page number 15 and saving account number 5-102915-161 with CITI Bank of Puneet Gupta NRE, his real brother who is working in U.K. is placed in paper book from page number 16 to 18. Further, the saving account number 30784612826 with State bank of Sh. AkashBansal is placed in the paper book at page number 19 and 20. Further the saving account number 30343633939 of Sh. AkashBansal maintained with SBI is placed in the paper book at page number 21 and 22. Further the copy of statement with HSBC Bank saving account number 054-057047-006 is attached on paper book page 23 and 24. Further, the amount of Rs. 10,50,000/- was received through sale of property by Ankush Gupta and photocopy of all the relevant documents for sale of property along with power of attorney are placed in the paper book from page number 24 to 29. The A. O. has not given any comments on all these documents which itself proves that he has accepted the contention of the assessee. The A.O. has further mentioned in his remand report regarding source ofRs. 7,00,000/- dated 20.12.2012 and Rs. 2,00,000/- dated 28.12.2012 for which it has been clearly mentioned that the amount were received back from firm M/s SwaranFastners by the Ankush Gupta and the copy of account of Ankush Gupta is placed in the paper book at page number 9 and the same may please be referred. It is important to mention here that the creditworthiness has been proved by the assessee firm of Ankush Gupta after explaining source of source along with documentary evidences, confirmations, PAN Number, providing saving bank accounts and further providing saving accounts of other

persons from whom the amounts have been received which proves source of source along with return of income. The A. O. has not given any adverse remarks on this issue which clearly shows that the A. O. has accepted the contention of the assessee except two amounts for which the complete explanations have been given to your honor on this issue. It is requested and prayed that the additions based on suspicion and supposition of unexplained credit of Sh. Ankush Gupta who is the son of the Partners may please be deleted. It is also important to mention here that the Ankush Gupta is being assessed separately and she is filing separate return of income for each assessment year. If at all the explanation given by the assessee firm seems to be incorrect the right course was to make the additions in the hands of Sh. Ankush Gupta who has admitted the credits in his account. In view of the above facts it is requested and prayed to deleted the addition of Rs. 41,50,000/- in the hands of the firm under the wrong notion of law.

It is important to mention here that the A.O. issued the notice to the assessee for clarification of written submission given by the assessee vide letter no.ITO/ward(2)/Ldh/l718/485 dated 13.10.2017 and letter no. ITO/ward(2)/Ldh/1718/540 dated 13.11.2017 and the undersigned attended and clarified each and every issue on the issue of introduction of Cash Credit by Sh. Ankush Gupta. The photocopies of the enquiries letter issued by the A.O. are also attached for your kind reference. The A.O. has not uttered a single word about the amounts received by Sh. Ankush Gupta from his brother who is living and working in U.K. and has transferred the funds through RTGS from his NRE account. Further he has received the amounts from Sh. AkashBansal and against the sale of property. The complete clarification was given to the A. O. at the time of attending his office during enquiries against remand report and this was accepted by him during discussions but he has not mentioned the same in his remand report. This proves the source of source of Sh. Ankush Gupta. In view of the above facts it is requested and prayed to deleted the addition of Rs. 41,50,000/- in the hands of the firm under the wrong notion of law.

7.5 I have considered the observations of the Assessing Officer as made by him/her in the assessment order while making the impugned addition as well as in the remand report. I have also considered written submissions filed by the assessee firm through its learned AR vide letters dated 26.09.2017, 12.02.2018 and 22.02.2018 on the issue under reference as well as the counter comments of the assessee firm in connection with the remand report of the Assessing Officer. I have further considered other material placed by the learned AR of the assessee on record. On careful consideration of the assessment order, it has been noticed that the Assessing Officer has made the impugned addition as the assessee firm in the opinion of the Assessing Officer could not explain the credit balance in the account of Sh. Ankush Gupta. On the other hand, the learned AR of the assessee firm had submitted that Sh. Ankush Gupta received an amount of Rs. 32,00,000/- from his brother Sh. Puneet Gupta who is NRI and is presently settled in UK which was given by him to the assessee firm on different dates. It has also been

submitted that Sh. Ankush Gupta has also received another amount of Rs.9,50,000/- on different dated from his cousin Sh. AkashBansal which was also given to the assessee firm on different dates. In support of his contention, the learned AR of the assessee firm has also enclosed copy of NRE saving bank account of Sh. Puneet Gupta as well as bank accounts of Sh. AkashBansal. It was further submitted that an amount of Rs. 1,00,000/- was given to the assessee firm out of outstanding balance in the bank account of Sh. Ankush Gupta. It has again been submitted that the assessee firm has given complete explanation to the Assessing Officer along with documentary evidence but the Assessing Officer has made impugned addition in the hands of the assessee firm without considering the fact that the amount has been transferred by Sh. Ankush Gupta out of his explained sources and if at all any addition was to be made it should have been made in the hands of ShriAnkush Gupta. It has again been submitted that the Assessing Officer has not given any show cause notice before making the addition under reference which violates the natural justice. On careful consideration of the rival contentions, I am of the opinion that the assessee firm has explained even the source of source in respect of the amount received from Sh. Ankush Gupta by producing copy of NRE account of Sh. Puneet Gupta and copies of bank account of Sh. AkashBansal. On perusal of the bank accounts of Sh. Puneet Gupta, Sh. Akash Bansal and Sh. Ankush Gupta, I am convinced that the amount which Sh. Ankush Gupta has given to the assessee firm is out of explained sources. When asked to prove the source of Sh. Puneet Gupts, the learned AR of the assessee also placed on record the documents which prove beyond doubt that the amount in his NRI account has been transferred by Sh. Puneet Gupta from his own explained sources and that too in Pounds. Under such circumstances, the action of the Assessing Officer in making an addition of Rs.40,50,000/- in this case on account of unexplained credit balance in the account of Sh. Ankush Gupta cannot be said to be justified and as such the addition of Rs.40,50,000/- made by the Assessing Officer in this case on account of unexplained credit balance in the case of Sh. Ankush Gupta is, therefore, directed to be deleted. In the result, the ground No. 4 of appeal taken by the assessee is allowed.

by Shri Ankush Gupta from his cousin Shri Akash Bansal and copy of bank account of Shri Akash Bansal was also furnished to prove the credit worthiness of Shri Ankush Gupta for making the deposit with the assessee. It was further submitted that all the documentary evidences were furnished, therefore the impugned addition made by the A.O. was not justified and the Ld. CIT(A) rightly deleted the same.

the addition of Rs. 2,26,30,000/- received from the same creditor M/s Shree Radha Commodity Services was held to be genuine and the deletion of the said addition by the Ld. CIT(A) was confirmed vide aforesaid order dated 03/10/2019 (copy of the said order was furnished which is placed on the record).

relevant findings are given in para 11 of the order dt. 03/10/2019 which read as under:

So, respectfully following the aforesaid referred to order in assessee’s own case, we do not see any merit in this ground of the Departmental appeal particularly when the cash deposited in the bank account of M/s Radha Commodity Services was accepted by the Department as genuine while framing the assessment under section 143(3) of the Act vide order dt. 23/03/2016, for the same A.Y. 2013-14; in the case of Shri Kushal Gupta proprietor of M/s Radha Commodity Services from whom the assessee received the loan through banking channel. We therefore do no see any valid ground to interfere with the findings given by the Ld.CIT(A) on this issue.

(Order pronounced in the open Court on 18/02/2021 ) Sd/- Sd/- आर.एल. नेगी एन.के.सैनी, (R.L. NEGI ) ( N.K. SAINI) �या�यक सद�य/ Judicial Member उपा�य� / VICE PRESIDENT AG Date: 18/02/2021

आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :