V. K. Bindal, CA for the Petitioner. Sushma Singh, CIT DR for the Respondent.

1. This appeal by the assessee is preferred against the order of the CIT(A)-3, Gurgaon dated 24.11.2017 pertaining to A.Y. 2012-13.

2. The sum and substance of the grievance of the assessee is that the CIT(A) erred in confirming the addition of Rs. 1.50 crores u/s. 68 (of Income Tax Act, 1961).

3. Briefly stated the facts of the case are that the residential as well as office premises of M/s. Krrish Group of cases were subjected to search and seizure operations on 09.11.2011 accordingly assessment jurisdiction over the assessee has been transferred to the circle Gurgaon. Statutory notices were issued and served upon the assessee and the assessee filed his return of income declared total income of Rs.12573480/-.

4. While scrutinizing the return of income the AO noticed that the assessee has received unsecured loan of Rs.1.50 crores from Pankaj Kapoor. On the basis of the incriminating material found during the course of search operations the AO formed a belief that Pankaj Kapoor is routing the unaccounted money of the M/s. Krrish Group Companies and its directors back to the group in the form of share in the companies and unsecured loans in the individuals and the group companies.

5. Accordingly, the assessee was asked to explain the loan transaction from Pankaj Kapoor in the light of the provisions of section 68 (of Income Tax Act, 1961).

6. Assessee furnished the copy of account, confirmation, income tax details and bank statements.

7. After observing the details furnished by the assessee and after discussing various judicial decision the AO came to the conclusion that Rs.1.50 crores taken from Pankaj Kapoor is unexplained cash credit and accordingly made the addition u/s.68 (of Income Tax Act, 1961).

8. Assessee carried the matter before the CIT(A) but without any success.

9. Before us the counsel for the assessee reiterated what has been stated before the lower authorities. The counsel vehemently stated that the assessee has furnished all the documentary evidences which he could have furnished to explain the transaction in the light of section 68 (of Income Tax Act, 1961). The counsel further stated that in earlier years also the assessee has taken loan from Pankaj Kapoor which have been accepted by the AO under scrutiny assessment, therefore, the identity and the capacity cannot be doubted during the year under consideration.

10. The counsel further referred to the documents which were in the public domain. The counsel further brought to our notice the news report from the Times of India dated 13.08.2011 which relates to the search operations conducted by the enforcement directorate. The said news item shows the net worth of Pankaj Kapoor by more than Rs.1000/- crores. The counsel concluded by saying that the assessee has discharged the onus cast upon him by provision of section 68 (of Income Tax Act, 1961), and, therefore, the addition should be deleted.

11. Per contra the DR strongly supported the findings of the AO and the CIT(A) and read the relevant portion of assessment order as well as the order of the first appellate authority.

12. We have carefully considered the orders of the authorities below. We have also carefully perused the documentary evidences brought on record in the form of paper book in the light of rule 18(6) of the ITAT rules. It is true that the assessee has taken loan from Pankaj Kapoor in earlier assessment years the same can be seen from the following ledger account in page-63 of the paper book :-

13. The transaction pertain to F.Y. 2007-08 relevant to A.Y.2008-09. In A.Y. 2008-09 the assessment was framed u/s. 153 (of Income Tax Act, 1961) A of the Act vide order dated 24.03.2014 by the same AO i.e. Pratibha Meena. The assessment order for the year under consideration is also framed on 24.03.2014 which means that the AO knew the transactions of A.Y.2008-09. When the same AO has accepted the transaction for A.Y.2008-09 than the same AO cannot and should not question the identity of the lender in the year under consideration. Since the loan amount of Rs.1.74 crores was accepted in A.Y.2008-09 this means that the capacity was also accepted by the AO. We fail to understand why the capacity of the same person have been questioned during the year under consideration. Moreover as per the news report in the public domain when the enforcement director itself is saying that the net worth of the Pankaj Kapoor is more than Rs.1000 crores the capacity of Pankaj to lend Rs.1.50 crores should not be questioned. Be that as it may, considering facts in totality the assessee has successfully proved the identity, genuineness of the transactions prima facie, capacity of the lender prima facie, and has successfully discharged the initial onus cast upon him by the provisions of the 68 of the Act. We accordingly direct the AO to delete the addition of Rs.1.50 crores..

14. In the result, the appeal filed by the assessee is allowed.

Order pronounced in the open court on 20.07.2021.

Sd/- Sd/-

(MAHAVIR PRASAD) (N. K. BILLAIYA)

JUDICIAL MEMBER ACCOUNTANT MEMBER

NEHA

Date:-20.07.2021