O.P. Kant ORDER
1. This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-27, New Delhi, Dated 25.04.2016, for the A.Y. 2013-2014, on the following grounds:
1. "That the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 2.00 crores made u/s. 68 of the Act, without properly appreciating the facts and circumstances as the assessee was ultimate beneficiary has taken loan from dubious company M/s. Varrenyam Securities Pvt. Ltd. where source of fund remain unexplained.
2. That the Ld. CIT(A) erred in law and facts in deleting the addition of Rs. 2.00 crores u/s. 68 of the Act, despite that the assessee has failed to prove the identity of the creditor, creditworthiness of the creditor and the genuineness of the transaction which was in turn a accommodation entry from intermediary dubious company M/s. Varrenyam Securities Pvt. Ltd.
3. That the Ld. CIT(A) erred in law and in ignoring the fact that the source of funds which came as unsecured loans in the assessee company were clearly bogus as has been admitted by the entry operator Sh. Himanshi Verma, on oath".
2. We have heard the Learned Representatives of both the parties through video conferencing and perused the Orders of the authorities below.
3. Brief facts of the case are that the assessee is a company and filed return of income on 23.09.2013 showing loss of Rs. 35,53,560/-. The A.O. noted that in assessment year under appeal the assessee company has received an amount of unsecured loan of Rs. 2 crores from M/s. Varrenyam Securities Pvt. Ltd., The A.O. noted back ground of the case with regard to bogus accommodation entry provided by various entities controlled by Shri S.K. Jain and Shri V.K. Jain and Investigation conducted by Investigation Wing of the Department. The A.O. has given an opportunity to the assessee to prove creditworthiness of the investor and genuineness of the transaction and required the assessee to produce Director Shri Kishore Kumar Munzal, Director of M/s. Varrenyam Securities Pvt. Ltd., and Shri Atul Khandelwal, C.A. who has arranged the funds in the matter. The case was adjourned to 30.12.2015. However, both the above persons were not produced. The A.O. after considering the fact that burden is upon the assessee to prove the ingredients of Section 68 of the I.T. Act i.e., identity of the creditor, creditworthiness of the of the creditors and genuineness of the transaction, found that assessee failed to prove the same, therefore, addition of Rs. 2 crores was made against the assessee under section 68 of the I.T. Act, 1961.
3.1. The assessee challenged the addition before the Ld. CIT(A). The Ld. CIT(A) reproduced the written submissions of the assessee Dated 13.04.2016 in the appellate order and deleted the addition by giving the following findings:
"7. I have carefully considered the above submissions and find that the following facts are uncontroversial and undisputed:
a) That the assessment of AY 2012-13 of M/s. Varrenyam Securities Private Limited was framed by DCIT, CC-20, New Delhi (the same AO in the case of the appellant) determining its total income at Rs. 25,11,04,450/- vide his order u/s. 143(3) dated 24.03.2015;
b) That M/s. Varrenyam Securities Private Limited is a much bigger company than the appellant company;
c) That the appellant company had taken a loan of Rs. 26.85 crores from; M/s. Varrenyam Securities Private Limited and returned Rs. 20,15,58,047/- during the year 2011-12;
d) That a new loan of Rs. 2.00 crores was taken by the appellant company, which was fully repaid through banking channels with interest;
e) The aforesaid interest was claimed by the appellant and allowed by the A.O.;
f) That the impugned addition of Rs. 2.00 crores were already brought to tax in the hands of M/s. Varrenyam Securities Private Limited by the same AO vide his order u/s. 143 (3) dated 24.03.2015, in the assessment year 2012-13.
7.1. In view of the above facts about which there is no dispute, I hold that the Assessing Officer was not at all justified in including the sum of Rs. 2.00 Crores in the Total Income of the appellant by invoking the provisions of Section 68 of the Income Tax Act, 1961. Thus the aforesaid addition of Rs. 2.00 Crores is accordingly deleted.
8. In the result, the appeal is allowed."
4. The Ld. D.R. at the outset contended that the Order of the Ld. CIT(A) is cryptic and without giving any reasons for the decisions, she has submitted that the Ld. CIT(A) did not give any finding with regard to ingredients of section 68 of the I.T. Act in the light of finding of fact recorded by the A.O. based on report of Investigation Wing etc. The Ld. D.R., therefore, submitted that the matter may be remanded to the Ld. CIT(A) to pass Order afresh, in accordance with Law, by giving reasonable, sufficient opportunity of being heard to the A.O.
5. On the other hand, Learned Counsel for the Assessee submitted that at the end of the Order the Ld. CIT(A) have also noted that in preceding A.Y. 2012-2013 an identical matter was considered by the A.O. The Ld. CIT(A) has deleted the addition, on which, the Departmental appeal have been dismissed by the ITAT E-Bench vide Order Dated 12.12.2019, copy of which is placed on record. Learned Counsel for the Assessee, however, could not point out as to whether any findings of fact have been recorded by the Ld. CIT(A) in his order pertaining to the assessment year under appeal i.e., 2013-2014.
6. On consideration of the rival submissions, we are of the view that the matter requires reconsideration at the level of the Ld. CIT(A). It is well settled Law that burden is upon the assessee under section 68 of the I.T. Act to prove identity of the creditor, its creditworthiness and genuineness of the transaction in the matter. The A.O. in the present case directed the assessee to produce Director of the lender company and the person who has arranged the amount in question, but, both of them were not produced before A.O. for examination on behalf of A.O. The Ld. CIT(A) in his finding reproduced above has merely referred to the facts noted in the preceding A.Y. 2012-013 with regard to loan transaction between the assessee and the Investor company. Merely because loan is repaid through banking channel in assessment year by itself may not be a ground to delete the addition because ultimately assessee shall have to prove the ingredients of Section 68 of the I.T. Act to the satisfaction of the A.O. According to Section 250(6) of the I.T. Act, the Ld. CIT(A) is required to mention point for determination and reasons for decision in the appellate order while deciding the appeal. The impugned findings of the Ld. CIT(A) however clearly show that he did not mention the evidence and material on record in the light of finding of fact arrived at by the A.O. in appellate order. The Ld. CIT(A) has also not recorded any finding of fact for deleting the addition in the matter. The Ld. CIT(A) did not give any finding as to what is the implication of making addition of Rs. 2 crores in the hands of the creditor in preceding A.Y. 2012-2013. The findings of the Ld. CIT(A) clearly spell-out that Ld. CIT(A) merely mentioned some facts for preceding A.Y. 2012-2013 and did not give any finding of fact pertaining to A.Y. 2013-2014 for assessment year under appeal. The Ld. D.R., therefore, rightly contended that since the Ld. CIT(A) has not recorded any finding of fact for assessment year under appeal i.e., A.Y. 2013-2014, therefore, the matter requires reconsideration at the level of the Ld. CIT(A). In view of the above discussion and without deciding the issue on merits, we set aside the Order of the Ld. CIT(A) and restore the matter in issue to his file with a direction to re-decide the appeal of assessee in accordance with Law by giving reasons for decision in appellate order based on the evidences on record in the light of finding of fact recorded by the A.O., by giving reasonable, sufficient opportunity of being heard to the assessee and the A.O. The assessee is at liberty to raise all the points before the Ld. CIT(A) for disposal of the appeal.
7. In the result, appeal of the Revenue allowed for statistical purposes.
Order pronounced in the open Court.
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