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

Brief facts are that in the course of assessment proceedings 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.

In the appellate proceedings, the assessee provided 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

All the above documents were filed as additional evidence 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 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.

The Ld.CIT(A) admitting the additional evidences and 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.

The Ld. Counsel submitted before us that the various 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

The Ld. DR supported the orders of the authorities below.

Heard rival submissions, perused the evidences produced 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) : -

The assessee also raised one more ground in sustaining the 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/-.

The Ld. Counsel before us reiterated the submissions made 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.

In the result, appeal of the assessee is partly allowed.