Brief of the case:
The Jaipur bench of ITAT in the above cited case held that the assessee is only expected to produce the documentary evidences regarding the transaction and identity of the persons from whom it has accepted the deposits. Assessee is not required to offer an explanation regarding the source of the income in the hands of lender.
Facts of the case:
- The assessee is engaged in the business of manufacturing and trading of transformers. The assessee for AY 2008-09 filed its return of income on 30/09/2008 declaring total income of Rs. 6,34,790/-. During the scrutiny proceedings , AO observed that the assessee had introduced fresh cash capital of Rs. 6,11,50,000/- in three different heads, Rs. 80,00,000/- as unsecured loan, Rs. 2,25,00,000/- in Reserve and Surplus and Rs. 3,06,50,000/- as share application money. All these amounts were found credited in the name of various private limited companies registered in Kolkata.
- A letter was sent to ADIT (Inv.), Unit-3(III), Kolkata to verify the source of cash capital introduction in the case of assessee during the F.Y. 2007-08.ADIT , Kolkata after making an inquiry issued an interim report. As per that report, in some cases the parties were not traceable and the parties which were traced failed to explain the source of the fund advanced to the assessee.
- AO held that the parties not traceable are fake and amount as shown received from them to be added as unexplained and also in case of other parties since the source of their income remain unexplained that amount also to be added to the total income.Accordingly AO made addition of Rs. 2.16 crores u/s 68 of the Act.
- On appeal to CIT(A) , he held that assessee has given sufficient documentary evidences in the form of confirmation, affidavit, PAN No., copy of return of income, R.O.C. paper showing existence and addresses of investing company etc., to establish the identity and genuineness of such companies. Further , it is settled position of law that the assessee need not to prove the source of income in the hands of lender as laid down by the Hon’ble Supreme Court in the case of Lovely Exports Private Limited.
Contention of the Assessee:
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