THE DY. CIT, VIJAYAWADA vs. M/S. USHA CARDIAC CINTRE LTD, VIJAYAWADA

आदेश / O R D E R

PER V. DURGA RAO, Judicial Member:

This appeal filed by the revenue is directed against order of the

CIT(A) vide ITA No.50/CIT(A)/VJA/2015-16 dated 30.8.2016 for the

assessment year 2012-13. The revenue has raised followings grounds

of appeal:

pressed, therefore, dismissed as not pressed. The facts are in brief that

the assessee is a company filed its return of income admitting total

income of ` 23,57,250/-. The return filed by the assessee was selected

for scrutiny, assessment is completed after following the due procedure

u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act').

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada

During the course of assessment proceedings, the A.O. has noted in

respect of unexplained unsecured loans as under:

4.1 During the course of case-hearing on 20.2.2015, the A.R. of the assessee was required to furnish sources for the cash deposits into their respective bank accounts, exactly before the dates on which the unsecured loans were extended to the assessee company of the following persons towards their unsecured loans to the assessee-company during the year under consideration. Sl.No. Name of the alleged unsecured creditor Amount Rs. 1. Smt. Posani Seshamma 13,00,000 2. Smt. Madala Padmavathi 1,03,50,000 Total 1,16,50,000

4.2 The AR could not furnish any details/material in support of the above alleged unsecured loans, during the course of hearing on 20.2.2015, it was proposed to treat the unsecured loans in the names of both the above persons totaling to ` 1,16,50,000/- as unexplained cash credits and to bring them to tax in the hands of the assessee company. However, the AR did not have any objections for the said proposal. Thus, the assessee has grossly failed to stand the test of (1) identity (2) creditworthiness and (3) genuineness of the transactions in respect of the above two unsecured loans as it did not file any material whatsoever to stand the test of the above three parameters. This manifests the fact that these two alleged unsecured loans for a value totaling to ` 1,16,50,000/- are squared up ones sourced out of the unaccounted funds of the assessee company. Hence, the entire unproved cash credits (alleged unsecured loans) in the names of the above two persons totaling to ` 1,16,50,000/- are hereby disallowed u/s 68 of the Income Tax Act, 1961 and brought to tax as the assessee’s income from ‘other sources’. The AR was communicated this and was given an opportunity to file objections of any. However, no objections were filed.” 3. On appeal before the Ld. CIT(A), the assessee has filed the

assessment orders for the assessment years 2010-11, 2011-12 & 2012-

13 in the case of Smt. Posani Seshamma and also in the case of Smt.

Madala Padmavathi and submitted that the assessee has proved identity

of the creditors and creditworthiness and genuineness of the

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada transactions. The Ld. CIT(A) after considering the explanation of the

assessee and also the returns filed by the creditors dated 19.12.2015

subsequent to the completion of the assessment in the case of the

assessee dated 30.3.2015, deleted the addition made by the A.O.

Tribunal. The Ld. D.R. has submitted that before the A.O., the assessee

has not filed details such as identity of the parties and creditworthiness

and genuineness of the transactions and therefore urged that the Ld.

CIT(A) is not justified in deleting the addition made by the A.O. based

on the returns filed by the creditors dated 19.12.2015 subsequent to the

completion of the assessment is not correct and the very same details

are not available with the assessing officer. The action of the Ld. CIT(A)

is a clear violation of Rule 46A of the Act. It is further submitted that

the A.O. has pointed out in the assessment order that before advancing

amounts to the assessee, there are cash deposits in the accounts of the

loan creditors i.e. Smt. P. Seshamma and Smt. M. Padmavathi. This

aspect was not addressed by the CIT(A) at all. It is also submitted that

the returns filed by the loan creditors subsequent to the assessment is

only after thought and it cannot be accepted. He prayed that addition

made by the A.O. may be sustained.

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada 5. On the other hand, the Ld. Counsel for the assessee has submitted

that the assessee has proved the identity, creditworthiness and

genuineness of the parties and therefore, the A.O. is not justified in

making the addition. The Ld. CIT(A0 by considering the returns filed by

the loan creditors addition was deleted. Therefore, the order passed by

the CIT(A) may be upheld.

on record and gone through the orders of the authorities below. In this

case, during the course of assessment proceedings, the A.O. has noticed

that the assessee has borrowed amounts from Smt. P. Seshamma of `

13 lakhs and from Smt. M. Padmavathi of ` 1,03,50,000/-. The A.O.

asked the counsel for the assessee to produce the details of Smt. P.

Seshamma and Smt. M. Padmavathi. The assessee’s counsel has not

filed any details before the A.O. The A.O. has also asked the assessee

to furnish the sources of cash deposits in respect of bank accounts of

the unsecured creditors before the date on which loans were extended

to assessee company. Before the A.O., assessee has not filed any

details and also not explained the sources for the unsecured loans given

to the assessee company. Therefore, the A.O. has treated the amount

of ` 1,16,15,000/- as unaccounted funds of the assessee company

received through alleged unsecured creditors namely Smt. P. Seshamma 5

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada and Smt. M. Padmavathi, accordingly, addition was made u/s 68 of the

Act by treating it as income from other sources.

loan creditors namely Smt. P. Seshamma and Smt. M. Padmavathi dated

19.12.2015 subsequent to the completion of the assessment order and

the Ld. CIT(A) came to the conclusion that identity, creditworthiness and

genuineness of the parties is proved. When the assessee is having

sufficient source of funds and its creditworthiness is not doubted and

transaction is also genuine, what prevented the assessee to produce the

details before details before the A.O. is neither explained before the

CIT(A) nor before us. The A.O. during the course of assessment

proceedings has given ample time from 24.11.2014 to 26.3.2015 i.e.

near about 4 months time available to the assessee to produce the

details. The assessee neither produced the details before the A.O. nor

explained before the A.O. that these transactions are genuine

transactions. When the A.O. has asked the assessee to produce these

relevant details, he has not given any explanation and simply kept silent.

Even before CIT(A) also why he was not able to file the details has not

been explained. Under these facts and circumstances of the case, the

Ld. CIT(A) is not justified in considering the returns filed by the creditors

subsequent to the completion of assessment order. That apart, the Ld. 6

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada CIT(A) without calling for the remand report simply accepted the

explanation given by the assessee and deleted the addition is clear

violation of rule 46A of the Act. Further, the CIT(A) gave a finding that

the assessee has received payment through bank to bank method of

RTGS. Therefore, he is of the opinion that the existence of both the

creditors is beyond doubt and he is also of the opinion that the assessee

has discharged the burden of proof. We find that when the A.O. has

asked the assessee’s counsel to file the details of the loan creditors and

bank statements, particularly before the date of extending loan to the

assessee, no such details were filed before the A.O. Simply because

amount received through banking channels cannot be said that the

transaction is genuine transaction unless identity and creditworthiness of

the parties and genuineness of the transaction is proved. In this case,

the assessee has not proved the identity, creditworthiness of the

creditors and even genuineness of the transactions. In our opinion, the

assessee failed to discharge burden cast upon him by filing necessary

evidence before the assessing officer. Therefore, under these facts and

circumstances of the case, in view of our discussion above, the A.O.

rightly disallowed amounts borrowed from the loan creditors u/s 68 of

the Act and the same is added in the hands of the assessee as an

income from other sources. In view of the above, we reverse the order 7

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada passed by the Ld. CIT(A) and this ground of appeal raised by the

revenue is allowed.

and no adjudication is required and ground No.4 which is already

considered and therefore, no separate adjudication is required.

C.O.28/Vizag/2017:

petition is filed by the assessee. Therefore, the cross objection filed by

the assessee is dismissed.

The above order was pronounced in the open court on 6th Apr’18.

Sd/- Sd/- ( ड.एस. . . . सु�दर "संह) (वी. दुगा�राव) (D.S. SUNDER SINGH) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER #वशाखापटणम /Visakhapatnam: 'दनांक /Dated : 06.04.2018 VG/SPS

ITA No.463 /Vizag/2016 M/s. Usha Cardiac Centre Limited, Vijayawada आदेश क� ��त)ल#प अ*े#षत/Copy of the order forwarded to:-