AMIT JAIN,DELHI vs. ACIT, CENTRAL CIRCLE- 6, NEW DELHI

ITA No.3914/Del/2019 Amit Jain

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI M BALAGANESH, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No.3914/Del/2019 िनधा�रणवष�/Assessment Year:2013-14 बनाम Amit Jain, ACIT 151, Savita Vihar, Delhi. Vs. Central Circle-6 PAN No.AAFPJ5124R Room No.364, E-2, ARA Centre, Jhandewalan, New Delhi. अपीलाथ� Appellant ��यथ�/Respondent

Assessee by Shri C.S. Anand, Adv. Revenue by Shri Zafarul Haque Tanweer, CIT DR सुनवाईक�तारीख/ Date of hearing: 08.01.2024 29.02.2024 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.

This appeal is filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Appeals) [hereinafter referred in short as “Ld.CIT(A)”]-24, New Delhi dated 29.03.2019 for the AY 2013-14. In the grounds of appeal the assessee challenged the orders of the Ld.CIT(A) in sustaining the addition of Rs.80 lakhs made u/s 68 of the Income Tax Act, 1961 (hereinafter referred in

ITA No.3914/Del/2019 Amit Jain short as “I.T. Act”) by the Assessing Officer (hereinafter referred in

short as “AO”).

u/s 153A r.w.s. 143(3) of the Act the assessee was required to

furnish complete details of unsecured loans along with confirmed

copies of account and to prove the creditworthiness, identity and

genuineness of the lenders. Assessee filed reply along with

confirmations and other details called for by the AO. On examining

the details, evidences furnished by Assessee the AO was of the view

that loan of Rs.80 lakhs taken from one Shri Sachin Dutta no

complete documentary evidences were furnished to establish the

identity, creditworthiness and genuineness of transaction. The AO,

thus, was of the view that assessee failed to discharge the onus in

proving the credit as genuine.

confirmation of ledger accounts, copy of bank statement of the

lender and submitted that the amount has been accepted through

banking channel and repaid the same through banking channel and

to prove this fact the bank statements were furnished. The

assessee also contended that Shri Sachin Dutta was a Director in Shri

Balaji Hitech Constructions Pvt. Ltd. in which he was holding 98.4% 2

ITA No.3914/Del/2019 Amit Jain of shareholding and Shri Balaji Hitech Constructions Pvt. Ltd.

advanced Rs.80 lakhs to Shri Sachin Dutta who in turn lent this

amount to the assessee. It was contended that all these

transactions are through banking channels. The assessee provided

the financials of the Balaji Hitech Constructions Pvt. Ltd. for the

assessment years 2012-13 to 2014-15 to prove that the company has

substantial income. The assessee also furnished Income tax returns

for the assessment years 2011-12 to 2013-14 of Shri Sachin Dutta the

lender and contended that the lender has shown substantial income

in his returns of income and, therefore, the assessee contended

that the identity of the creditor, genuineness of the transaction and

creditworthiness of the creditor is proved and hence, no addition is

warranted u/s 68 of the Act.

under Rule 46A of the Act before the Ld.CIT(A). The Ld.CIT(A)

called for a remand report for the comments of the AO. In the

remand report the AO submitted that assessee has been given

sufficient opportunity to file the evidences and since the assessee

has failed to file the evidences the same cannot be admitted. On

merits of the addition the AO submitted that though several

opportunities were given the assessee could not produce the

ITA No.3914/Del/2019 Amit Jain creditor and, therefore, identity of the creditor is not proved. The

AO also stated that the creditor filed return for AY 2013-14

declaring income of Rs.12,70,656/- and whereas the loan advanced

to the assessee was Rs.80 lakhs and, therefore, the lender is not

creditworthy to give such a huge loan to the assessee.

considering the remand report of the AO and the rejoinder of the

assessee the addition made u/s 68 was sustained agreeing with the

AO that the assessee failed to discharge the onus of establishing the

identity of the party as the lender was not produced before the AO.

evidences furnished before the authorities clearly establishes the

identity, creditworthiness and genuineness of the transaction. The

Ld. Counsel for the assessee referring to various documents

furnished in the Paper Book submits that the assessee has furnished

copies of returns of the assessee for various assessment years, copies

of confirmation of the lender, copies of Income tax return of the

lender, copies of bank statements of the assessee as well as the

lender to prove that the transactions were made only through

banking channels, loan received as well as loan payment. The Ld.

Counsel further submits that the assessee also furnished financials of 4

ITA No.3914/Del/2019 Amit Jain Shri Balaji Hitech Constructions Pvt. Ltd. where the lender Shri

Sachin Dutta holds 98.4% of share holding and declared profits for

the AY 2013-14 at Rs.60,11,610/- on which tax of Rs.18,84,850/- was

paid. Ld. Counsel also submits that the company had declared

taxable profit of Rs.1,58,93,142/- in the AY 2012-13 and paid taxes

of Rs.53,33,783/- on a turnover of Rs.19,36,16,223/-. Therefore,

the Ld. Counsel submits that the genuineness, identity and

creditworthiness of the creditor has been proved by the assessee

and, therefore, the addition u/s 68 of the Act is not warranted.

before us. On hearing the Ld. DR and perusing the evidences

produced before us, we find that there is substantial merit in the

submissions of the Ld. Counsel for the assessee. Assessee has

produced the following document before the AO/CIT(Appeals) : -

• Copy of Computation for Assessment Years 2011-12, 2012-13, 2013-14 and copy of ITR for Assessment Years 2011-12, 2012- 13 and 2013-14. • Copy of Bank account statement of Mr. Sachin Dutta. • Copy of audited financial statement as on 31.03.2013 and 31.03.2012 of Shri Balaji Hitech Construction Pvt. Ltd. in which Sachin Dutta is having 98.4% interest in form of shareholding. 5

ITA No.3914/Del/2019 Amit Jain

• Copy of ITR for Assessment Year 2013-14 and 2012-13. • Copy of master data of Shri Balaji Hitech Constructions Pvt. Ltd. signify credit limit of Rs.42 crores from PNB. • Confirmation as on 31.03.2013. • Balance Sheet as on 31.03.2011 of Shri Sachin Dutta stating capital of Rs.1,52,70,315/-. • That the attachment are part of remand report hence are not being attached again.” 9. The assessee produced all these evidences to establish the

genuineness, identity and creditworthiness of the lender. The AO in

the assessment proceedings required the assessee to furnish the

documents the assessee has furnished confirmation, other relevant documents. The assessee furnished all the above documents before

the AO as well as before the Ld.CIT(A). The addition was sustained

by the Ld.CIT(A) agreeing with the AO that the identity is not

proved as the assessee could not produce the creditor. This in our opinion is not justified. The assessee has furnished confirmation,

copy of Income tax returns of the lender, copy of bank statements

of the lender to prove the identity, genuineness and

creditworthiness of the transaction. The assessee also produced the financials of the company in which the lender was one of the

Directors holding 98.4% of the shareholding. According to which the

ITA No.3914/Del/2019 Amit Jain company made substantial profits and had sufficient funds to

advance amounts to the Director Shri Sachin Dutta. Therefore, the

assessee has proved the source of source also in this case although

not required to prove in law. Thus, we hold that the assessee has

proved the identity, genuineness and creditworthiness of the

creditor and therefore, the AO is erred in treating the loan of Rs.80

lakhs received by the assessee as unexplained cash credit u/s 68 of

the Act. Thus, reversing the findings of the Ld.CIT(A), we direct the

AO to delete the addition made u/s 68 of the Act.

addition of Rs.85,304/- made u/s 2(22)(e) of the Act. The AO while

completing the assessment, it is noticed from the balance sheet

that the assessee has received loan of Rs.8,75,000/- from M/s KAJ

Infrastructure Pvt. Ltd. Assessee is a Director and shareholder of

M/s KAJ Infrastructure Pvt. Ltd. holding more than 10% of voting

rights of the company. Therefore, the AO applying the provisions of

section 2(22)(e) of the Act treated the loan of Rs.8,75,000/- taken

by the assessee from M/s KAJ Infrastructure Pvt. Ltd. as deemed

dividend. However, since M/s KAJ Infrastructure Pvt. Ltd. has

accumulated profits to the extent of Rs.85,304/- as on 31.03.2013

he restricted the addition to Rs.85,304/-.

ITA No.3914/Del/2019 Amit Jain 11. On appeal the Ld.CIT(A) sustained the addition.

before the Ld.CIT(A) submitted that the company has provided loan

of Rs.8,75,000/- for purchase of agricultural land to the assessee as

the assessee has experience and expertise in arranging the land to

the company. Ld. Counsel submits that the loan was given to the

assessee for the purpose of business. However, the assessee could

not produce any substantial evidence to prove its contentions.

Therefore, we see no infirmity in the order passed by the Ld.CIT(A)

in sustaining the addition. This ground of appeal is rejected.

Order pronounced in the open court on 29.02.2024

Sd/- Sd/- (M BALAGANESH) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29.02.2024 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order

Assistant Registrar, ITAT: Delhi Benches-Delhi