ACIT, NEW DELHI vs. SH. CHARANBIR SINGH SETHI, DELHI

O R D E R. PER I. C. SUDHIR, J. M. :

The Revenue has questioned first appellate order on the following grounds :-

“ 1. That the ld. CIT (Appeals) had erred in law and on facts by observing that section 68 is not applicable on the instant case;

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2. That the ld. CIT (Appeals) has committed a grave error in observing that the creditworthiness of the loan giver has been adequately established by the assessee;

3. That the ld. CIT (Appeals) has erred in not appreciating the real motive behind the loan giving transaction and that by taking too pedantic a view, the order passed by the ld. CIT (A) is erroneous legally and factually;

4. That the ld. CIT (Appeals) has not taken cognizance of the surrounding fact and circumstances governing the loan transaction and that by failing to do so, a serious infirmity has crept into his order which can be set right by the Hon’ble Tribunal;

5. That the ld. CIT (Appeals) has erroneously held that the test of prudence and test of human probabilities cannot be applied on the facts of the instant case;

2. Heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon.

3. The relevant facts are that the assessee is carrying on the business of real estate agent under the name and style, “M/s. C. S. & Associates”. The assessee had shown gross turnover of Rs.1,70,59,574/-

3 I. T. Appeal No.4820/Del/2012 Assessment Year : 2009-10. declaring net profit of Rs.68,37,132/- thereupon giving NP rate of 40.08%. During the course of assessment proceedings, the Assessing Officer noted that assessee has raised unsecured loan from one Shri Balbir Singh Sabharwal amounting to Rs.62,50,000/-. The Assessing Officer was not satisfied with the explanation of the assessee regarding identity and creditworthiness of the creditor as well as genuineness of the transaction. The ld. CIT (Appeals) has, however, held that the assessee has been able to establish all the three ingredients of section 68 of the Act i.e. identity and creditworthiness of the creditor as well as genuineness of the transaction. The ld. CIT (Appeals) has thus deleted the addition of Rs.62,50,000/- made by the Assessing Officer under section 68 of the Act.

3.1 The issue involved in the present appeal is as to whether ld. CIT (Appeals) was justified in deleting the addition of Rs.62,50,000/- made by the Assessing Officer under section 68 of the Act on account of unexplained credit.

3.2 In support of the grounds the ld. Sr. DR has basically placed reliance on the assessment order, whereas the ld. AR has tried to justify the first appellate order on the issue. He submitted that each

4 I. T. Appeal No.4820/Del/2012 Assessment Year : 2009-10. and every objection raised by the Assessing Officer has been met out by the ld. CIT (Appeals) while disposing of the appeal.

3.3 Having gone through the orders of the authorities below, we fully concur with the view of the ld. CIT (Appeals) that in view of cash credit in the assessee’s books of account, the primary onus lies on the assessee to establish the identity and creditworthiness of the creditor to advance the loan and genuineness of the transaction. Thereafter the onus shifts to the Revenue to rebut evidences filed by the assessee to establish the above three ingredients of section 68 of the Act. If an assessee is able to establish all the three above ingredients of section 68 of the Act, then addition made under section 68 of the Act by the Assessing Officer cannot be justified. When we examine facts of the present case, we find that identity of the creditor was not doubted and since transactions were made through banking channels between the creditors and assessee through account payee cheques, genuineness of transaction was also established. So far creditworthiness of the assessee is concerned, there is no rebuttal of facts noted by the ld. CIT (Appeals) that source of the loan advanced to the assessee on 3.09.2008 amounting to Rs.42,50,000/- was the over

5 I. T. Appeal No.4820/Del/2012 Assessment Year : 2009-10. draft limit sanctioned to the creditor. Out of this loan, the assessee had repaid an amount of Rs.30,00,000/- to the creditor on 18.10.2008, the source of advance of Rs.20,00,000/- to the assessee on 10.01.2009 was explained. The assessee had also furnished copy of the Income Tax return of the creditor. We thus fully agree with the ld. CIT (Appeals) that primary onus to establish the claimed credit was discharged by the assessee, which has not been dislodged by the Assessing Officer to discharge its onus to justify the addition in question. The ld. CIT (Appeals) thus has rightly deleted the addition. The same is upheld. The grounds on the issue are thus rejected.

4. In result, appeal is dismissed.

5. The order is pronounced in the Open Court on : 07th July, 2017.

Sd/- Sd/- ( L. P. SAHU ) ( I. C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : the 07th July, 2017. *MEHTA*

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Copy of the Order forwarded to:- 1. Appellant;