ISS HICARE P.LTD,MUMBAI vs. ITO WD 10(2)(3), MUMBAI

This is an appeal filed by the assessee against the order of CIT(A), Mumbai, dated 10-10-2013, for the assessment year 2009-2010, in the matter of order passed u/s.144 of the IT Act.

The assessee in its appeal is aggrieved by the addition made u/s.68 of the Act. 3. Rival contentions have been heard and record perused. As per the Tax Audit report, the assessee company has shown to have obtained inter corporate deposits and unsecured loans amounting to Rs.27,52,70,000/- from various concerns during the year, in the absence 2 of any supporting evidences/confirmations, it was construed in the assessment order that the assessee company has not discharged its onus of proving the identity, genuineness and creditworthiness of the lender and hence, the above amount of Rs.27,52,70,000/- was added as unexplained cash credit under sec. 68 of the Act. After considering the remand report the CIT(A) deleted the addition of Rs.26.60 crores, however, he has confirmed the addition of Rs.2.10 crores. The precise observation of the CIT(A) is as under :- 8.4 I have considered the facts and circumstances of the case. The AO in his remand report has verified the transactions. The appellant proved the identity of the debtors, genuineness of the creditors and creditworthiness of the creditors of Rs.26,60,00,000/- only and AO had added Rs.2,10,00,000/- for the four parties in which the appellant could not prove the transactions fully. AO has stated in remand report as under :- “As the assessee company was not able to furnish any documentation in respect of the creditworthiness of the above loan lenders, the AR of the assessee company was asked during the course of remand proceedings, vide order sheet noting dated 30.0.2013, to produce the above 4 loan creditors for verification along with evidence of their creditworthiness. The assessee company has shown to have obtained following amount of loan from the 4 parties mentioned above. N.T.Doshi Rs.97,70,000/- N.T.Doshi(HUF) Rs.10,30,000/- Asha Kirtilal Shah Rs.25,00,000/- Vikman Steel Ball Industries Rs.77,00,000/- However, despite being given specific opportunity, the assessee’s AR failed to produce the above loan creditors before the undersigned and also failed to file any evidence to establish the creditworthiness of the above loan lenders to provide the loans to the assessee company. In absence of any verifiable documentary evidence to establish the creditworthiness of the loan creditors, it is submitted that the creditworthiness of the loan lenders, genuineness of the transaction and their identity cannot be verified. 8.5 Regarding the addition under sec.68, the appellant has to prove the identity of the creditors, genuineness of the transactions and creditworthiness of the creditors. Regarding the four parties in which the AO had made additions, the appellant had proved the 3 identity of the transaction, genuineness of transaction and appellant had failed to prove the creditworthiness of the transaction. Regarding the four creditors for Rs.2,10,00,000/-, the appellant has to prove identity of the creditors, creditworthiness of the creditors and genuineness of the creditors in view of the following decision: i) Roshan De Hatti Vs. CIT(SC) reported in 107 ITR 938; ii) C.Kant & Co. Vs. CIT(Calcutta) 126 ITR 63; iii) Dhanalakhsmi Steel Re-rolling Mills Vs. CIT(AP) 228 ITR 780; (iv) CIT Vs. Biju Patnaik (SC) 160 ITR 674 v) Malabar Agricultural Co. Ltd. Vs. CIT(Kerala) 229 ITR 548 8.6 In view of the above decisions, the appellant has to prove all the three conditions i.e. identity of the creditor, creditworthiness of the creditor and genuineness of the transaction. As the appellant could only prove the identity of the creditors and genuineness of the transactions and failed to prove the creditworthiness of the creditors, hence, the addition of Rs.2,10,00,000/- is sustained. The AO’s addition on the above ground is for Rs.27,52,70,000/- and only Rs.2,10,00,000/- was confirmed and the rest of the amount is deleted. Ground of appeal