M/S FIDELITY COMMODITY TRADERS LTD.,LUDHIANA vs. ITO, W-7(1), LUDHIANA

आदेश/ORDER Per Sanjay Garg, Judicial Member :

The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-3, Ludhiana [hereinafter referred to as ‘CIT(A)’], dated 23.2.2018 relating to assessment year 2013-14,

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passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter

referred to as ‘the Act’).

grounds:

“That order passed u/s 250(6) of the Income Tax Act, 1961 by the Ld. Commissioner of Income Tax (Appeals)-S, Ludhiana is against law and facts on the file in as much as she was not justified to uphold the action of the Ld. Assessing Officer in making an addition of Rs. 50,00,000/- on account of alleged unexplained credit in the name of M/s Sumukh Commercial Pvt. Ltd. by resort to provisions of Section 68 of Income Tax Act, 1961.” 3. Brief facts of the case are that the assessee company is

engaged in the business of dealing in investment in

securities. Return of income of the assessee had been filed

at an income of Rs.28,730/-. During the course of

assessment proceedings, from the perusal of balance sheet

filed by the assessee company for the year under

consideration, it was found by the A.O. that during the year

under consideration, the assessee had shown an amount of

Rs.50,00,000/- payable to M/s Sumukh Commercials Pvt.

Ltd. under the head ‘current liabilities’. The assessee was

asked to furnish the evidence for genuineness of transaction

and for credit worthiness and identity of the

company/person from whom an amount of Rs.50,00,000/-

was received. The assessee company was asked to file the

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ITRs, bank statement, and audited balance sheet of the

creditors, namely M/s Sumukh Commercials Pvt. Ltd. The

counsel of the assessee produced Sh. Parveen Kumar Jain,

the director of the M/s Sumukh Commercials Pvt. Ltd.,

whose statement was recorded. In his statement he admitted

that his company had given an advance of Rs. 50,00,000/-

to the assessee, for purchase of shares of M/s Gala Finance

& Investment Limited, which were available with the

assessee concern at Rs.50 per share. Further he also stated

that due to shortage of funds, his concern did not purchase

the shares of Gala finance limited and received back the

whole amount of Rs.50,00,000/- later on. The A.O., however,

observed that the director of the company had failed to

explain the source of above said credits made in the bank

account of M/s Sumukh Commercials Pvt. Ltd. Later on the

assessee explained the immediate deposits before

transferring the amount of Rs.50,00,000/-received in the

bank account of M/s Sumukh Commercials Pvt. Ltd from

following concerns:-

S.NO. Name of the person Amount Nature of receipt from received received 1. Space Corp. Ltd. 5,00,00/- Return of inter cop deposit 2. Bipin V. Shah 10,00,000/- Return 3. Olive Overseas Pvt. 31,05,000 Sundry Ltd. receivable

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The A.O. observed in the assessment order that no

books of account were produced by the creditor, even after

availing so many opportunities. In the mean time the A.O.

received an information from the DDIT(lnv.), Unit-Ill,

Mumbai, vide which it had been revealed that Olive Overseas

Pvt. Ltd. & Nakshatre Business(P) Ltd. were also paper

companies. He held that the amounts received from these

concerns could not be treated as genuine. In view of the

above facts, sources of credits in the bank account of the

creditor made immediately before transferring the amount to

the assessee, remained unexplained. In the facts of the case,

the A.O. treated the claim of the assessee company as non

genuine. Hence, the A.O. made an addition of

Rs.50,00,000/- u/s 68 of the Act to the total income of the

assessee company in view of the unexplained credits into the

account of the assessee.

A.O.

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parties and have also gone through the orders of lower

authorities. Admittedly, the amount of Rs.50,00,000/-

received by the assessee company for sale of shares of M/s

Gala Finance & Investment Limited to M/s Sumukh

Commercials Pvt. Ltd. had been returned/paid back to M/s

Sumukh Commercials Pvt. Ltd. as the transaction did not

mature. To prove the creditworthiness of the buyer and to

prove the genuineness of the transaction, the assessee

produced before the A.O. Shri Parveen Kumar Jain, Director

of M/s Sumukh Commercials Pvt. Ltd., whose statement

was also recorded, whereby he had admitted that he had

paid Rs.50,00,000/- to the assessee company for purchase

of shares of M/s Gala Finance & Investment Limited and

further that the said money had been received back as due

to shortage of funds his concern did not purchase the

shares. The transaction was done through banking channel

and all the requisite documents to prove the genuineness of

transaction, such as copy of bank account statement,

Balance Sheet, confirmation from M/s Sumukh

Commercials Pvt. Ltd. were submitted. The Ld.Counsel for

the asssessee has also produced before us the copy of the

decision of the Tribunal in the case of M/s Gala Finance &

6 ITA No.527/Chd/2018 A.Y.2013-14

Investment Limited bearing ITA No.1170/Chd/2017 decided

vide order dated 18.1.2019 of this Tribunal. In the said

case of M/s Gala Finance & Investment Limited, the

addition was made by the A.O. doubting the payment of

Rs.57,29,425/- made by the assessee company for purchase

of shares of M/s Gala Finance & Investment Limited. The

said addition stood deleted vide order dated 18.1.2019 of

this Tribunal. The facts speaks that the assessee had made

a payment of Rs.57,29,425/- for purchase of shares of M/s

Gala Finance & Investment Limited. The assessee through

the transaction in question had intended to sell those

shares and in lieu received the amount of Rs.50,00,000/-

from M/s Sumukh Commercials Pvt. Ltd. The assessee to

prove the genuineness of the transaction as noted above,

has submitted all the requisite documents as noted above.

The transaction was confirmed by the director of the

company in his statement recorded by the A.O. Even the

director of the company has also furnished the source of

the money, which was further advanced to the assessee.

Thus the assessee has not only proved the source of the

money but has also furnished the details of source of the

source. The A.O. further doubted the source of the

source i.e. the company from which from M/s Sumukh

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Commercials Pvt. Ltd. received the amount, which was utilized to advance the money to the assessee, for that, in our view, no adverse inference can be drawn against the assessee as there is no evidence on the record that it was the own money of the assessee, which was routed through the aforesaid companies. Under these circumstances, the addition in this case has been made on the basis of suspicion, whereas the primary/initial burden, which was upon the assessee, has been duly discharged by the assessee. In view of this, we do not find any justification on the part of the lower authorities in making/confirming the impugned addition in the hands of the assessee, the same is accordingly ordered to be deleted.

Order pronounced in the Open Court on 04.06.2019.

Sd/- Sd/- एन. के. सैनी संजय गग� (N.K. SAINI (SANJAY GARG ) उपा�य�/ Vice President �याय�क सद�य/ Judicial Member �दनांक /Dated: 4th June, 2019 *रती*

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

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar