No section 68 addition for merely not producing cash creditors before AO

ITO Vs Hi Link City Homes Pvt. Ltd (ITAT Indore)

ITAT held that merely for not producing the cash creditors before the Ld. AO even when all the necessary documents as required to prove the identity, creditworthiness and genuineness of the cash creditors are furnished by the assessee, cannot be a reasonable basis to make addition for unexplained cash credit u/s 68 of the Act.

During assessment-proceeding, Ld. AO treated M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. as paper companies and the loans taken by assessee therefrom as mere accommodation-entries and, therefore, assessed the loans as undisclosed income of assessee u/s 68 of the act. During appellate-proceeding before Ld. CIT(A), the assessee made a detailed submission with documentary evidences to prove that the loans were genuine. The Ld. CIT(A) carefully considered the submission of assessee and deleted addition by holding as under:

“5.17 It is clear from the above facts and judicial decisions so discussed above that the AO had made the addition solely on the basis of non­appearance of the Principal Officer before the AO. But in the written reply, the appellant has relied on the decision of Delta Transformer (supra) of Jurisdictional Bench of ITAT, Indore wherein the Hon’ble Bench had given its findings that merely for not producing the cash creditors before the Ld. AO even when all the necessary documents as required to prove the identity, creditworthiness and genuineness of the cash creditors are furnished by the assessee, cannot be a reasonable basis to make addition for unexplained cash credit u/s 68 of the Act. Further, the appellant has also submitted all the required documents to prove the identity, creditworthiness and genuineness of the transactions. Hence, keeping in view the various judicial decisions so discussed above, the documents so submitted by the appellant and the fact that none of these evidences could be controverted by the AO neither in the assessment-order nor in the remand-report so submitted; the addition so made by the AO is hereby deleted and accordingly, this ground of appeal is hereby allowed.”

During hearing before us, representatives of both sides fairly agreed that the lenders i.e. M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. have been found as genuine companies and the loans taken by other assessees from those lenders have been found to be genuine and additions made by revenue u/s 68 in the assessment of those assessees, have been deleted in a plethora of decisions by ITAT, Indore Bench.

Respectfully following the decision of Co-ordinate Bench and taking into account fair acceptance by both sides, we are inclined to hold that the loan of Rs. 1,15,00,000/- and Rs. 85,00,000/- taken by assessee from M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. respectively do no warrant any addition u/s 68 and the Ld. CIT(A) was justified in deleting the addition made by Ld. AO.

FULL TEXT OF THE ORDER OF ITAT INDORE

Feeling aggrieved by appeal-order dated 26.08.2020 of learned Commissioner of Income-Tax (Appeals)-III, Indore [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 27.03.2015 passed by learned ITO, Ward-2(1), Indore [“Ld. AO”] u/s 143(3) of the Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the revenue has filed this appeal on following grounds:

1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the appeal of the assessee, though the Assessing Officer vide remand report requested to hold the decision of the appeal till the cross examination and confirmations of loans from the Principal Officers of the lenders company. The order of the Ld CIT(A) is against the principle of natural justice as it was passed without affording the opportunity to the Assessing Officer and therefore, same in perverse.

2 Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,50,00,000/-in respect of unsecured loans taken from M/s Jayant Securities and finance Ltd and Rs. 85,00,000/- form M/s Jay Jyoti India Pvt Ltd, without considering the fact the companies such as M/s Jayant Securities and Finance Ltd and M/s Jay Jyoti India Pvt Ltd have been prove to be entry provider companies after investigation by DDIT(Inv.), Unit-2(1), Kolkata who disseminated a very important report in respect of the malpractice of accommodation entries by shell companies M/s Jayant Securities and finance Ltd and M/s Jay Jyoti India Pvt Ltd.

3. Whether on the facts in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs. 1,50,00,000/-and Rs. 85,00,000/- ignoring the information available that assessee has taken and accommodation entry from M/s Jayant Securities and Finance Ltd and M/s Jay Jyoti India Pvt. Ltd, companies engaged purely in malpractice of accommodation entries to prospective beneficiaries.

4. Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition on account of cash credit amounting to Rs. 24,52,910/from Nilesh Jain ignoring fact that Shri Nilesh Jain filled ITR for A.Y. 2012-13 at Rs. 3,14,240/- and he has not attended for examination to establish genuineness of the transaction, identity and credit worthiness.

5 Whether on the facts and in the circumstance of the case and in law, the Ld. CIT(A) was justified in deleting the addition on account of commission for obtaining unexplained cash credits Rs. 6,00,000/- and Interest on unexplained cash credits Rs. 18,85,033/- as the assessee has filed the genuineness of transactions.”

2. The registry has informed that that the present appeal was required to be filed by 16.11.2020 but the same was actually filed on 05.01.2021, after a delay of 50 days. The Ld. AR prayed that the delay has occurred due to Covid-19 Pandemic. The Ld. AR further placed reliance on the order of Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 read with Misc. Applications, by which suo motu extension of the limitation-period for filing of appeals w.e.f. 15.03.2020 under all laws has been granted and hence there is no delay in fact. We confronted the Ld. DR who agreed to the submission of Ld. AR. In view of this, the appeal is proceeded with for hearing, there being no delay.

3. The assessee-company filed return of relevant-assessment year declaring a total income of Rs. 39,030/-, which was subjected to scrutiny, statutory notices u/s 143(2)/142(1) were issued and ultimately the assessment-order was passed u/s 143(3) at a total income of Rs. 2,49,76,970/- after making certain additions. Aggrieved, assessee filed appeal to Ld. CIT(A) and got relief. Being aggrieved by order of Ld. CIT(A), now the revenue is in appeal before us. We shall proceed ground by ground.

Ground No. 1:

4. At the time of hearing, no submission was made by appellant qua this ground. Hence the ground is taken as non-pressed and dismissed.

Ground No. 2 and 3:

5. In these Grounds, the issue involved is the addition of Rs. 1,15,00,000/- (Rs. 1,50,00,000/- is wrongly mentioned in ground) and Rs. 85,00,000/- in respect of loans taken by assessee from M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. respectively.

6. During assessment-proceeding, Ld. AO treated M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. as paper companies and the loans taken by assessee therefrom as mere accommodation-entries and, therefore, assessed the loans as undisclosed income of assessee u/s 68 of the act. During appellate-proceeding before Ld. CIT(A), the assessee made a detailed submission with documentary evidences to prove that the loans were genuine. The Ld. CIT(A) carefully considered the submission of assessee and deleted addition by holding as under:

“5.17 It is clear from the above facts and judicial decisions so discussed above that the AO had made the addition solely on the basis of non­appearance of the Principal Officer before the AO. But in the written reply, the appellant has relied on the decision of Delta Transformer (supra) of Jurisdictional Bench of ITAT, Indore wherein the Hon’ble Bench had given its findings that merely for not producing the cash creditors before the Ld. AO even when all the necessary documents as required to prove the identity, creditworthiness and genuineness of the cash creditors are furnished by the assessee, cannot be a reasonable basis to make addition for unexplained cash credit u/s 68 of the Act. Further, the appellant has also submitted all the required documents to prove the identity, creditworthiness and genuineness of the transactions. Hence, keeping in view the various judicial decisions so discussed above, the documents so submitted by the appellant and the fact that none of these evidences could be controverted by the AO neither in the assessment-order nor in the remand-report so submitted; the addition so made by the AO is hereby deleted and accordingly, this ground of appeal is hereby allowed.”

7. During hearing before us, representatives of both sides fairly agreed that the lenders i.e. M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. have been found as genuine companies and the loans taken by other assessees from those lenders have been found to be genuine and additions made by revenue u/s 68 in the assessment of those assessees, have been deleted in a plethora of decisions by ITAT, Indore Bench. A few decisions are quoted below:

(i) Decisions related to M/s Jayant Securities and Finance Ltd.:

(a) Radhishwari Developers P. Ltd. ITA No. 493/Ind/2018

(b) Sanjay Shukla Vs. ACIT ITA No. 333/Ind/2020

(c) Global Realcon Ltd. ITSSA No. 170 to 174/Ind/2020

(d) M/s Admanum Finance Ltd. ITA No. 331/Ind/2018

(e) Tirupati Construction ITA No. 522/Ind/2014

(f) K. Patel Finance Ltd. ITA No. 440/Ind/2010

(ii) Decisions related to M/s Jay Jyoti India Pvt. Ltd.:

(a) Radhishwari Developers P. Ltd. ITA No. 493/In/2018

(b) Sanjay Shukla Vs. ACIT ITA No. 333/Ind/2020

(c) Global Realcon Ltd. ITSSA No. 170 to 174/Ind/2020

8. We have perused the order of ITAT in Sanjay Shukla Vs. ACIT ITA No. 333/Ind/2020 (supra), where it was held thus:

“12.5. As regards the loan taken from Jayant Security and Finance Ltd.  Badodara at Rs. 1.25 crores and interest paid thereon at Rs.8,79,041/-, we find that the alleged cash creditor is a limited Shri Sanjay Shukla, Indore 10 company, Permanent Account No. and address has been provided. Loan taken through proper banking channel Confirmation of account is on record. Jayant Security and Finance Ltd. is a nonbanking financial company having experience of 26 years. This company is regularly assessed to tax and has also been subjected to scrutiny assessment and the additions made thereon have traveled before Coordinate Bench Ahmedabad in the case of M/s. Jayant Security and Finance Ltd. in ITANo.753/Ahd/2012. We also find that the loan taken from alleged company has been treated as genuine and the additions made in the hands of other loan receivers have been deleted by this Tribunal in the case of M/s Tirupati Construction ITANo.533/Ind/2014 and M/s K.K. Patel Finance Ltd. ITANo.440/Ind/2010. We, therefore, find no reason to doubt the genuineness and creditworthiness of Jayant Security and Finance Ltd. and identity is well proved which has been rightly appreciated by Ld. CIT(A) in order to delete the addition made u/s 68 of the Act at Rs.1.25 cr and interest disallowance at Rs.8,79,041/-.

12.6. As regards the cash creditor namely M/s Jay Jyoti India Pvt. Ltd. Mumbai we find that this company was incorporated in 1999. As on 31.03.2013 it had share capital of Rs. 6,33,50,500/- and net reserves and surplus of Rs.1,08,62,25,646/-. Bank statement, confirmation of account, ledger statement, audited financial statement, Memorandum of Association and tax deducted at source certificate are placed on record which in totality are sufficient to prove identity of this company, genuineness of the transaction and creditworthiness of this company It is further proved with the fact Shri Sanjay Shukla, Indore 11 that it had merely advanced 0.75% of the funds which it was capable of i.e. it had financial capacity of advancing 133 times more than the loan given to the assessee company. Thus, Ld. CIT(A) has rightly appreciated these facts for deleting addition for made u/s 68 of the Act as well as the interest disallowance.”

9. Respectfully following the decision of Co-ordinate Bench and taking into account fair acceptance by both sides, we are inclined to hold that the loan of Rs. 1,15,00,000/- and Rs. 85,00,000/- taken by assessee from M/s Jayant Securities and Finance Ltd. and M/s Jay Jyoti India Pvt. Ltd. respectively do no warrant any addition u/s 68 and the Ld. CIT(A) was justified in deleting the addition made by Ld. AO. We, therefore, uphold the action of Ld. CIT(A). With, this Ground No. 2 and 3 of the revenue are dismissed.

Ground No. 4:

10. During assessment-proceeding, Ld. AO observed that the assesee-company had shown a cash-credit of Rs. 24,52,910/- from Shri Nilesh Jain. On enquiry by Ld. AO, the assessee submitted that it purchased stamp papers from Shri Nilesh Jain in regard to registries made for purchase of lands and the amounts of stamp-papers was outstanding. On further digging from database of Income-tax department, Ld. AO observed following financials of Shri Nilesh Jain:

Ld. AO further observed that the assessee-company and other group-companies of assessee had shown outstanding amount of stamp-papers payable to Shri Nilesh Jain amounting to Rs. 1,21,49,560/- (which includes Rs. 24,52,910/- payable by assessee). Ld. AO did not find any trust in the claim of assessee that such a huge amount can be outstanding when Shri Nilesh Jain is not a person of sound means. Ld. AO further observed that Nilesh Jain receives just a commission of 1.50% on stamps value and for such small income, how can he invest a sum of Rs. 1,21,49,560/-? Ld. AO also issued notices u/s 133(6) and 131 to Shri Nilesh Jain, but there was no response from Nilesh Jain. Finding no response, Ld. AO once again confronted the assessee in the matter, to which the assessee filed following reply:

“7. With reference to your query regarding Shri Nilesh Jain, it is submitted that we have already given you the confirmation, PAN No. and income-tax return of Shri Nilesh Jain. Also we are given the copies of registries in which they provide the stamps. Also we have requested you vide in our earlier reply that you may call their records directly at the cost of the assessee. We therefore request you kindly consider the above and oblige.”

After this reply from assessee, the Ld. AO did not make further efforts and just completed assessment by making an addition of Rs. 24,52,910/-.

11. During appellate-proceeding, Ld. CIT(A) deleted addition by observing as under:

“7.2 The appellant has submitted the confirmation duly signed by Shri Nilesh Jain and his income tax return was also submitted by the appellant. (Vouchers were also presented before the AO during assessment proceedings who also verified them).

Shri Nilesh Jain S/o Shri Rajkumar Jain (Stamp-vendor)

7.3 The appellant has stated that Shri Nilesh Jain had been working as a licensed stamp vendor since last many years. The appellant has purchased stamp papers from him in regard to registries made to purchase the lands. The notices were duly served on Shri Nilesh Jain. The ITR of shri Nilesh Jain has been provided. The confirmation of outstanding balance duly signed by Mr. Nilesh Jain himself has been submitted. The Registries and sale deed have been provided to substantiate purchase of stamps. Books of accounts, bills and vouchers have been presented before the AO and been verified by him and no fabrication has been pointed out. The AO just on basis of doubt that the creditor has no creditworthiness to lend the stamps has made the addition. The appellant has further stated that even if we go as per the version of the AO that Shri Nilesh Jain has not shown the income of sale of stamps in his return of income then also additions must be made in his income and not in the income of appellant.

7.4 Hence, in light of the above facts, it is very clear that the appellant had purchase stamp papers from shri Nilesh Jain appellant has also submitted the registries and sale deed to prove the same. The appellant has submitted all the required documents before the AO and the same was verified by the AO during the assessment proceedings. Hence, in light of the above, discussions, the addition so made by the AO is hereby deleted and accordingly, this ground of appeal is allowed.”

12. Before us, Ld. DR placed a strong reliance on the observations made by Ld. AO. He strongly contested that the total sum of Rs. 1,21,49,560/- (of which Rs. 24,52,910/- is related to assessee) is not a petty sum, it is a whopping sum. Ld. DR submitted that the department has found that the taxable income of Nilesh Jain is very nominal and by no stretch of imagination, he has worth to make a hefty-investment of Rs. 1,21,49,560/-and allow credit to the assessee and group-companies of assessee and that too for earning a small amount of commission. Ld. DR submitted that the opportunity cost for making credit-sale would be much higher than earning commission. Ld. DR submitted that the Ld. AO has also served notices u/s 133(6) and 131 upon Nilesh Jain but he has not appeared to support the assessee’s stand. Ld. DR submitted that, in such circumstances, it is quite obvious that the nature and source of credit-entry of Rs. 24,52,910/-appearing in books of account of assessee is not satisfactorily explained. Ld. DR further submitted that the Ld. CIT(A) has not dealt with this issue adequately. With these submissions, Ld. DR made a strong contention that the Ld. AO has rightly made an addition of Rs. 24,52,910/-, which must be upheld.

13. Per contra, Ld. AR submitted that the assessee has filed sufficient documentary evidences to Ld. AO during the course of assessment-proceeding in the form of A/c Confirmation and Copy of income-tax return of Nilesh Jain. Ld. AR submitted that non-compliance of notices u/s 133(6) / 131 by Nilesh Jain is not within the control of assessee and that is why the assessee has even written to Ld. AO to proceed at his cost. Ld. AR has also invited our attention to the verdict of section 68 and placed certain judicial decisions to canvas that section 68 cannot apply to the issue in hand.

14. We have considered rival submissions of both sides and also perused the record as well as judicial precedents cited. We observe that a total sum of Rs. 1,21,49,560/- (assessee’s part is Rs. 24,52,910/-) has been shown as outstanding by assessee and its group companies as payable to Nilesh Jain towards purchase of stamp papers for the registries made for purchase of land. On verification of data available with income-tax department, the Ld. AO observed that Mr. Nilesh does not have such a sound worth as to invest the sum of Rs. 1,21,49,560/- and allow credit to assessee just to earn a small % in the form of commission. We have also perused the A/c Confirmation of Nilesh Jain filed in the Paper-Book and observed the date-wise details of the outstanding sum of Rs. 24,52,910/- as under:

Thus, we observe that the outstanding of Rs. 24,52,910/- as on 31.03.2012 shown by assessee relates to the stamps purchased on 20.10.2011. At the first blush, we find a very strong force in the submission of Ld. DR that by no stretch of imagination, a person having a small worth can afford to allow credit of Rs. 1,21,49,560/- to the assessee and its group-companies for a period of so many months and that too on account of purchase of stamps. Therefore, according to us, the credit shown by assessee in books of account is surrounded by a thick cloud of suspicion which the assessee is obliged to dispel.

15. We also observe that during assessment-proceeding, the Ld. AO served notices u/s 133(6) / 131 but Shri Nilesh Jain did not respond. We also observe that the assessee has written to Ld. AO to take action at his cost, but the assessee has not demonstrated that he has also made any effort to secure presence of Shri Nilesh Jain before the departmental authorities to explain satisfactorily the nature and source of receipt as contemplated by section 68. It is a settled law that the initial onus is upon the assessee to establish by cogent evidence the genuineness of the transaction and credit-worthiness of the person u/s 68 of the Act. The Hon’ble Supreme Court has very loudly held these requirements of section 68 in PCIT Vs. NRA Iron and Steel Pvt. Ltd. SLP (Civil) No. 29855 of 2018, dated 05.03.2019. The relevant paras are reproduced below:

“13. The lower appellate authorities appear to have ignored the detailed findings of the AO from the field enquiry and investigations carried out by his office. The authorities below have erroneously held that merely because the Respondent Company – Assessee had filed all the primary evidence, the onus on the Assessee stood discharged. The lower appellate authorities failed to appreciate that the  investor companies which had filed income tax returns with a meagre or nil income had to explain how they had invested such huge sums of money in the  Assesse Company – Respondent. Clearly the onus to establish the credit worthiness of the investor companies was not discharged. The entire transaction seemed bogus, and lacked credibility. The Court/Authorities below did not even advert to the field enquiry conducted by the AO which revealed that in several cases the investor companies were found to be non-existent, and the onus to establish the identity of the investor companies, was not discharged by the assessee.”

“15. On the facts of the present case, clearly the Assessee Company-Respondent failed to discharge the onus required under Section 68 of the Act, the Assessing Officer was justified in adding back the amounts to the Assessee’s income.”

One may say that the aforesaid decision by Hon’ble Supreme Court was given in the context of share capital, but such an argument would, in our view, be futile because the Hon’ble Court has clearly explained the requirements of section 68. We are bound to obey the decision of Hon’ble Apex Court in letter and spirit.

16. We further observe that the Ld. AR has tried to impress upon us that section 68 uses the word “any sum” and therefore section applies only if there is an inflow of money credited in the books of assessee. We are afraid to accept such an interpretation. In our view section 68 is applicable to non-genuine liabilities credited in the books of account too and such a proposition has been upheld by ITAT Lucknow Bench in the case of DCIT Vs Allied Leather Finishers (P) Ltd. 32 SOT 549:

“21.7 A liability could not be treated as a cessation if it was being merely carried forward for years. A non-genuine non-trading liability standing in the balance sheet can be taxed but under  section 68 if it came in the books in the current year. If such non-genuine non-trading liability came in the books in an earlier year than same cannot be taxed in the current year even under section 68.”

Ld. AR has also cited certain decisions where section 68 was held as non-applicable but in those decisions, the genuineness or creditworthiness was not doubted. Those decisions are not of any help to the assessee because in the present case, the creditworthiness of Nilesh Jain is seriously at stake, having regard to the whopping sum involved and weak financials of Nilesh Jain.

17. We may gainfully analyse the verdict of section 68 which reads as under:

“Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.”

Thus, the section 68 prescribes in unambiguous terms that not only an explanation must be offered by the assessee but also the explanation must be satisfactory in the opinion of Assessing Officer, else addition can be made. Interpreting this section, it has been vehemently held in several decisions that section 68 requires satisfaction of all three ingredients, viz. (i) identity, (ii) genuineness, and (iii) creditworthiness. We observe that creditworthiness is also an important ingredient and the same has to be proved by assessee. But, however, the creditworthiness is not satisfactorily proved yet in this case. We observe that the Ld. CIT(A) has also not given meticulous attention to this core point, he has simply iterated submission of assessee or dealt with other aspects. For instance, Ld. CIT(A) has mentioned “Vouchers were also presented before the AO during assessment proceedings who also verified them”; “The Registries and sale deed have been provided to substantiate purchase of stamps. Books of accounts, bills and vouchers have been presented before the AO and been verified by him and no fabrication has been pointed out”; “The appellant has further stated that even if we go as per the version of the AO that Shri Nilesh Jain has not shown the income of sale of stamps in his return of income then also additions must be made in his income and not in the income of appellant”. We are not able to understand how these observations are relevant to the controversy involved in this issue.

18. Thus, from the above discussion, it is clear that there is a severe necessity to examine the creditworthiness of Nilesh Jain satisfactorily in terms of section 68 to arrive at a proper conclusion in the matter. Having observed so, we now turn back to the assessment-order and reproduce below, which we have earlier too repeated, the submission made by assessee to Ld. AO:

“7. With reference to your query regarding Shri Nilesh Jain, it is submitted that we have already given you the confirmation, PAN No. and income-tax return of Shri Nilesh Jain. Also we are given the copies of registries in which they provide the stamps. Also we have requested you vide in our earlier reply that you may call their records directly at the cost of the assessee. We therefore request you kindly consider the above and oblige.”

As observed earlier, after this submission of assessee, the Ld. AO completed assessment without making any further effort. In such a situation, we feel it would be more appropriate to allow a fair play to both sides i.e. assessee as well revenue by remanding this issue back to Ld. AO for further enquiry. Needless to mention that the Ld. AO, in discharge of governmental function, is armed with sufficient powers under the scheme of Income-tax Law to investigate and adjudicate on the issues. Accordingly, the Ld. AO would once again take all necessary steps as required to unearth the truth and decide the issue afresh in accordance with law. Accordingly, this Ground No. 4 is remanded back to Ld. AO.

Ground No. 5:

19. In this Ground, the revenue has claimed that Ld. CIT(A) has erred in deleting the additions made by Ld. AO on account of estimated commission of Rs. 6,00,000/- incurred by assessee for obtaining loans and interest of Rs. 18,85,033/- on loans claimed as deduction.

20. Ld. AO made an addition of Rs. 6,00,000/- on the footing that the assessee must have paid commission @ 3% for arranging accommodation entries of Rs. 2,00,00,000/- (Rs. 1,15,00,000/- from M/s Jayant Securities Finance Pvt. Ltd. and Rs. 85,00,000/- from M/s Jay Jyoti India Pvt. Ltd.). Similarly, Ld. AO has disallowed the interest of Rs. 18,85,033/- (Rs. 10,99,214/- paid by assessee to M/s Jayant Securities Finance Pvt. Ltd. and Rs. 7,85,819/- paid to M/s Jay Jyoti India Pvt. Ltd.) for the reason that the underlying loans were held as in-genuine and added u/s 68 of the Act. During appellate-proceeding, Ld. CIT(A) deleted the addition of Rs. 6,00,000/- as well as Rs. 18,85,033/- because the findings of Ld. AO were reversed and underlying loans were held as genuine. Since, in the foregoing paragraphs, we have also held that the underlying loans were genuine, the addition of Rs. 6,00,000/- and 18,85,033/- do not have legs to stand.

Therefore, we do not find any merit in the Ground of revenue. Accordingly, Ground No. 5 is dismissed.

21. In the result, this appeal of revenue is partly allowed for statistical purpose.

Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 19/09/2022.