M/s Ceylon Biscuits India Pvt. Ltd, New Delhi v. ITO, New Delhi

ITA 1898/DEL/2010 | 2006-2007
Pronouncement Date: 30-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 189820114 RSA 2010
Assessee PAN AACCC5877G
Bench Delhi
Appeal Number ITA 1898/DEL/2010
Duration Of Justice 1 year(s) 5 month(s) 2 day(s)
Appellant M/s Ceylon Biscuits India Pvt. Ltd, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-09-2011
Date Of Final Hearing 08-08-2011
Next Hearing Date 08-08-2011
Assessment Year 2006-2007
Appeal Filed On 28-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) SHRI RAJPAL YADAV JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA ACCOUNTANT MEMBER ITA NO.1898/DEL./2010 (ASSESSMENT YEAR : 2006-07) M/S. CEYLON BISCUITS INDIA PVT. LTD. VS. ITO WAR D 3 (2) C/O V.K. SEHGAL & ASSOCIATES NEW DELHI. CHARTERED ACCOUNTANTS 201 HARSH BHAWAN 64 65 NEHRU PLACE NEW DELHI 110 019. (PAN : AACCC5877G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJEEV MAGO CA REVENUE BY : SHRI ROHIT GARG SENIOR DR ORDER PER B.C. MEENA ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF CIT (APPEALS)-VI NEW DELHI DATED 08.02.2010 FOR THE AS SESSMENT YEAR 2006-07. THE GROUNDS OF APPEAL READ AS UNDER :- 1. THE LEARNED CIT (APPEALS) HAS ERRED IN HOLDING THAT THE ASSESSEE COMPANY HAS NOT DISCHARGED THE ONUS OF PRO VING THE CREDIT OF SHRI PANKAJ AGGARWAL AS PER THE REQUIREME NTS OF SECTION 68 OF THE INCOME-TAX ACT AND SUSTAINING THE ADDITION OF RS.1 21 00 000.00 MADE BY THE ASSESSING OFFICER. 2. THE LEARNED CIT (APPEALS) HAS ERRED IN NOT ACCEP TING THE COMPROMISE ARRIVED AT BETWEEN THE COMPANY AND MR. P ANKAJ ITA NO.1898/DEL./2010 2 AGGARWAL BEFORE THE COMPANY LAW BOARD PRINCIPLE BE NCH NEW DELHI IN PETITION NO.47 OF 2006. 2. ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGE D IN THE BUSINESS OF TRADING OF BISCUITS. DURING THE YEAR UNDER CONSIDE RATION THE ASSESSEE COMPANY HAS RECEIVED RS.1.21 CRORES AS UNSECURED LO ANS FROM SHRI PANKAJ AGARWAL. THE AO ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT BY HOLDING THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE TRANSA CTION AND CREDITWORTHINESS OF THE LENDER. AGAINST THIS ORDER THE ASSESSEE F ILED APPEAL BEFORE THE CIT (A). THE CIT (A) HAS DISMISSED THE APPEAL OF THE A SSESSEE BY HOLDING AS UNDER :- 4. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MA DE BY LEARNED AR AND HAVE GONE THROUGH THE ASSESSMENT ORD ER. AS PER THE DETAILS/ SUBMISSIONS FILED BY THE LEARNED AR T HE PAYMENT HAS BEEN RECEIVED BY THE ASSESSEE COMPANY THROUGH B ANKING CHANNELS AND AMOUNT WAS RECEIVED BY SHRI PANKAJ AGG ARWAL FROM SRILANKAN COMPANY. DURING THE APPEAL PROCEEDIN GS THE ASSESSING OFFICER WAS PROVIDED WITH A COPY OF THE S UBMISSIONS FILED BY LD. AR. FOR ASCERTAINING THE FACTUAL POSI TION THE ASSESSING OFFICER WAS ALSO REQUIRED TO MAKE FURTHER NECESSARY ENQUIRIES PARTICULARLY FROM BANK. THE ASSESSING OF FICE OBTAINED A COPY OF THE BANK STATEMENT OF SHRI PANKAJ KUMAR A GGARWAL FOR THE PERIOD 1.4.2005 TO 31.3.2007 FROM CANARA BA NK PATIALA AND IN HIS REMAND REPORT HE HAS REFERRED TO THE VAR IOUS ENTRIES IN THE SAID BANK STATEMENT. IT HAS BEEN SUBMITTED BY T HE ASSESSING OFFICER THAT THERE ARE CERTAIN CREDITS IN CA A/C NO .100960 WHICH IS THE ASSESSEE'S ACCOUNT BUT SUM TOTAL OF SUCH CRE DITS IS ABOUT 74 LAKHS WHICH IS LESS THAN RS.1.41 CRORES. IT HAS FUR THER BE MENTIONED BY THE ASSESSING OFFICER THAT IT WAS NOT CLEAR AS TO WHAT WAS THE SOURCE OF FUNDS WITH SHRI PANKAJ AGGAR WA1 OTHER ITA NO.1898/DEL./2010 3 THAN RS.14 LAKHS APPROXIMATELY TO MEET THE REQUIREM ENTS OF SECTION 68 OF THE ACT. A COPY OF THE REMAND REPORT AS GIVEN TO THE APPELL ANT WHO RAISED OBJECTIONS THAT A COPY OF THE BANK ACCOUNT H AS NOT BEEN PROVIDED TO HIM. HE ALSO REFERRED TO THE DEBIT ADVI CE RECEIVED BY SHRI PANKAJ AGGARWAL FROM CEYLON BISCUITS LTD. COPY OF THE LD. ARS SUBMISSIONS WERE GIVEN TO THE ASSESSING OFFICE R WHO WAS PRESENT DURING THE PROCEEDINGS AND HE WAS REQUIRED TO GIVE COMMENTS IF ANY. THE ASSESSING OFFICER PROVIDED A COPY OF THE BANK STATEMENT TO LD. AR. THE LD. AR WAS ALSO SPECI FICALLY REQUIRED TO EXPLAIN AND SUBSTANTIATE THE UNSECURED LOANS APPEARING IN THE BOOKS OF ACCOUNT AND CORRELATE WIT H THE SOURCE FROM WHERE THE MONEY HAS BEEN RECEIVED BY SHRI PANK AJ AGGARWAL SO AS TO PROVE THE CREDITWORTHINESS AND GE NUINENESS OF THE TRANSACTION IN RESPONSE THERETO LEARNED AR SUB MITTED THAT IN TERMS OF THE AGREEMENT BEFORE THE COMPANY LAW BOARD SHRI PANKAJ AGGARWAL HAS AGREED AND AFFIRMED THAT HE HAS EXTENDED A LOAN OF RS.1.21 CRORES TO THE COMPANY. ACCORDINGLY THE AMOUNT STANDS DULY CONFIRMED. IT WAS FURTHER SUBMITTED THA T OUT OF RS.1.21 CRORES A SUM OF RS.98 LAKHS HAS BEEN TRANS FERRED FROM S.B. A/C NO.3001 OF CANARA BANK PATIALA TO THE CUR RENT ACCOUNT OF THE COMPANY. THE BALANCE AMOUNT OF RS.11.80 LAKH S WAS RECEIVED FROM ANOTHER BANK ACCOUNT OF SHRI PANKAJ A GGARWAL AND THE BALANCE OF RS.11.20 LAKHS REPRESENTS THE AM OUNT INITIALLY INCURRED BY WAY OF PRELIMINARY AND PRE-OPERATIVE EX PENSES. 5. ON CAREFUL CONSIDERATION OF THE MATERIAL PLACED BEFORE ME MY OBSERVATIONS ON THE ISSUE ARE AS UNDER: I) LD. AR HAS ARGUED THAT THE SETTLEMENT AGREEMENT REACHED BEFORE THE COMPANY LAW BOARD AFFIRMS THE SAID TRANS ACTION OF UNSECURED LOAN OF RS.1.21 CRORES. A PERUSAL OF THE COMPROMISE/SETTLEMENT AGREEMENT SHOWS THAT IT A ENT ERED INTO BETWEEN SHRI PANKAJ AGGARWAL AND CEYLON BISCUITS (I NDIA) PVT. LTD. & ORS. ON 11TH MAY 2007. IN PURSUANCE TO THE SETTLEMENT THE PETITIONER SHRI PANKAJ AGGARWAL TRANSFERRED HIS ENTIRE SHARAHOLDING OF 2000 SHARES IN THE FIRST RESPONDENT COMPANY TO THE FIFTH RESPONDENT AND /OR ITS NOMINEES. THE RESP ONDENTS WERE REQUIRED TO PAY AN AMOUNT OF RS.1.5 CRORES. THIS AM OUNT WAS TOWARDS REFUND OF UNSECURED LOAN FROM THE PETITIONE R AND FOR TRANSFER AT 2000 EQUITY SHARES AS ALSO THE FULL AND FINAL SETTLEMENT ITA NO.1898/DEL./2010 4 OF ALL CLAIMS EXISTING OR FUTURE OF THE PETITIONER AGAINST THE RESPONDENTS AS SETTLED BY WAY OF COMPROMISE/ SETTLE MENT. IT IS THUS OBVIOUS THAT THE PAYMENT OF RS.1.50 C RORES IS A CONSOLIDATED AMOUNT PAID BY FIVE RESPONDENTS TOWARD S VARIOUS CLAIMS OF SHRI PANKAJ AGGARWAL. AS FAR AS UNSECURED LOAN OF RS.1.21 CRORES IS CONCERNED THE SAME IS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE COMPANY AS ON 31.3.2006 AND T HE ISSUE INVOLVED IN THE PRESENT CASE IS TO PROVE THE UNSECU RED ROAN WITH REFERENCE TO THE INCOME-TAX PROVISIONS. AS PER THE PROVISIONS OF THE INCOME TAX ACT THE ONUS LIES ON THE ASSESSEE T O PROVE THE IDENTITY CREDITWORTHINESS AND GENUINENESS OF THE U NSECURED LOANS APPEARING IN ITS BOOKS OF ACCOUNTS. II) THE APPELLANT HAS NOT FILED ANY CONFIRMATION EI THER DURING THE ASSESSMENT PROCEEDINGS NOR DURING THE APPEAL PR OCEEDINGS. THE ARGUMENT OF LD AR IS THAT AMOUNT IS RECEIVED T HROUGH BANKING CHANNELS AND SHRI PANKAJ AGGARWAL HAD RECEI VED THE AMOUNT FROM CEYLON BISCUITS LTD. SRI LANKA. IN SUP PORT OF ITS CLAIM THE APPELLANT FILED COPIES OF DEBIT ADVICE DT . 14.6.2005 AND 13.07.2005 VIDE WHICH US$ 114825 AND US$ 95351 HAVE RESPECTIVELY BEEN DEBITED IN THE NAMES OF SHRI PANK AJ AGGARWAL AND LOTUS FOOD STUFF PVT LTD. III) ON PERUSAL OF BANK STATEMENT DEBIT ADVICE AND STATEMENT FILED BY LD.AR THE FOLLOWING POSITION EMERGES: A. IN THE ACCOUNT STATEMENT OF SHRI PANKAJ AGGARWAL RS.5 00 000/- EACH IS RECEIVED ON ACCOUNT OF DD ON DELHI/DD ON 1.6.2005 17.6.2005 & 17.6.2005. THE LD. AR HAS NOT EXPLAINED THE SOURCE OF THESE AMOUNTS DESPITE SPECI FIC OBJECTION RAISED BY THE ASSESSING OFFICER AND DESPITE SPECIFI C OPPORTUNITY BEING PROVIDED TO HIM TO EXPLAIN VARIOUS ENTRIES AN D TO CORRELATE THEM WITH THE AMOUNTS ADVANCED TO THE ASSESSEE CONC ERN. B. AS REGARDS DEBIT ADVICE OF 13.07.2005~ THE BENEF ICIARY IS LOTUS FOOD STUFF PVT. LTD.' NO EVIDENCE HAS BEEN FILED TO PROVE THAT THIS AMOUNT OF US$ 95351 WAS AVAILABLE IN THE HANDS OF SHRI PANKAJ AGGARWAL. THE OTHER DEBIT ADVICE IS DT. 14.6.2005 AND ACCORDING TO THIS SHRI PANKAJ AGGARWAL'S ACCOU NT HAS BEEN DEBITED BY US $ 114825. HOWEVER THIS AMOUNT IS NOT CO-RELATED WITH THE AMOUNTS ADVANCED TO THE ASSESSEE CONCERN. IN THE ITA NO.1898/DEL./2010 5 ACCOUNT STATEMENT OF SH. PANKAJ AGGARWAL AN ENTRY OF RS.49 92 781 IS APPEARING ON 16.06.2005 ON ACCOUNT OF CA 100960 FROM WHERE FURTHER ADVANCES HAVE BEEN GIVEN TO THE ASSESSEE. IT IS RELEVANT TO MENTION HERE THAT THE C A 100960 IS THE CURRENT ACCOUNT NUMBER OF THE ASSESSEE COMPANY ITSE LF. THUS THE APPELLANT'S SUBMISSIONS THAT THE LOAN HAS BEEN GIVE N FROM THE FUNDS RECEIVED BY SH. PANKAJ AGGARWAL FROM CEYLON B ISCUITS LTD. SRI LANKA ARE NOT SUBSTANTIATED NOR ARE THEY L INKED UP WITH THE ENTRIES APPEARING IN SH. AGGARWAL'S BANK ACCOUN T. D. THE LEARNED AR HAS FURTHER SUBMITTED THAT A SUM OF RS.11.80 LAKH WAS RECEIVED FROM ANOTHER ACCOUNT OF SHRI PANKAJ AGGARWAL. HOWEVER NEITHER ANY DETAILS HAVE BEEN FI LED NOR ANY DOCUMENTS HAVE BEEN FURNISHED TO SUBSTANTIATE THE S AME. IT HAS FURTHER BEEN SUBMITTED THAT THE BALANCE OF RS.11.20 LAKHS REPRESENT THE AMOUNT INITIALLY INCURRED BY WAY OF P RELIMINARY AND PREOPERATIVE EXPENSES. HOWEVER THESE SUBMISSIO NS ARE NOT SUPPORTED BY ANY EVIDENCE. E. FROM THE ABOVE DISCUSSION IT IS EVIDENT THAT TH E SOURCE OF THE AMOUNTS ADVANCED TO THE ASSESSEE CONCERN REMAIN S UNEXPLAINED. IT HAS BEEN HELD BY HON'BLE DELHI HIG H COURT IN THE CASE OF INDUS VALLEY PROMOTERS LTD. VS.CIT 174 TAXMAN 516 (DELHI) THAT IT IS WELL-SETTLED THAT THE ASSESSEE MUST DISCHARGE THE BURDEN OF PROVING THE IDENTITY OF THE CREDITORS AND ALSO TO GIVE THE SOURCE OF THE DEPOSITS. IN OTHER WORDS TH E CREDITWORTHINESS OF THE DEPOSITORS MUST BE ESTABLIS HED TO THE SATISFACTION OF THE ASSESSING OFFICER. WHERE TH ERE IS AN UNEXPLAINED CASH CREDIT IT IS OPEN TO THE ASSES SING OFFICER TO HOLD THAT IT IS INCOME OF THE ASSESSES A ND NO FURTHER BURDEN LIES ON THE ASSESSING OFFICER TO SHO W THAT INCOME IN QUESTION COMES FROM ANY PARTICULAR SOURCE . IN THE CASE OF BLOWELL AUTO {P) LTD. 171 TAXMAN 261 HON'BLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT: IT IS WELL SETTLED THAT IT IS FOR THE ASSESSEE TO P ROVE NOT ONLY THE IDENTITY OF THE CREDITOR BUT THE CAPACITY OF THE CREDITOR TO ADVANCE THE MONEY END ALSO THE GENUINEN ESS OF THE TRANSACTION. ITA NO.1898/DEL./2010 6 IN THE CASE OF SANIL K.M.P. VS. CIT 171TAXMAN 481 HON'BIE KERALA HIGH COURT HAS HELD THAT: WANT OF SOURCE OF FUNDS AFFECTS THE GENUINENESS OF THE TRANSACTION AND UNLESS SOURCE IS PROVED THE LOAN C REDITORS CANNOT BE SAID TO HAVE DISCHARGED THE DUTY OF PROVI NG THAT THE LOANS SHOWN IN THE ACCOUNTS WERE GENUINELY ADVA NCED BY THEM TO THE ASSESSEE. E. IN THE PRESENT CASE THE APPELLANT HAS NOT BEEN ABLE TO PROVE THE CREDITWORTHINESS OF SH. PANKAJ AGGARWAL A ND GENUINENESS OF THE TRANSACTION. IT IS ALSO PERTINEN T TO MENTION HERE THAT APPELLANT HAS ITSELF SUBMITTED THAT SH AG GARWAL DID NOT HAVE ENOUGH MONEY AND THEREFORE CEYLON BISCUITS LT D. SRILANKA HAD OFFERED A LOAN TO HIM. HOWEVER AS DIS CUSSED ABOVE THE AVAILABILITY OF SUCH FUNDS IN THE HANDS OF SH. AGGARWAL FOR ADVANCING THE SAME TO THE ASSESSEE IS NOT ESTABLISHED AND LINKED UP WITH THE LOAN ENTRIES. I N SUCH CIRCUMSTANCES THE ADDITION MADE BY THE ASSESSMENT OFFICER IS UPHELD. 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE THE LE ARNED AR SUBMITTED THAT THIS AMOUNT WAS RECEIVED FROM PANKAJ AGARWAL AND AT THE LATER STAGE THE ASSESSEE WAS NOT IN GOOD TERMS WITH PANKAJ AGARWAL AND WHO HAS NOT COOPERATED IN SUBMITTING THE NECESSARY DOCUMENTS. HE ALSO PLEADED THAT THERE WAS A SETTLEMENT BETWEEN THE ASSESSEE AND PANKAJ AG ARWAL BEFORE THE COMPANY LAW BOARD AND IN THAT UNSECURED LOAN OF RS .1.21 CRORES HAS BEEN CONFIRMED. THIS COMPROMISE/SETTLEMENT AGREEMENT WA S ENTERED INTO ON 11.05.2007. HE PLEADED THAT PANKAJ AGARWAL HAS DUL Y ACKNOWLEDGED IN THE JUDICIAL PROCEEDINGS BEFORE THE COMPANY LAW BOARD R EGARDING THE FACT THAT HE HAS DEPOSITED A SUM OF RS.1.21 CRORES IN THE ASS ESSEE COMPANY. SHRI ITA NO.1898/DEL./2010 7 PANKAJ AGARWALS OWN RESPONSE TO THE NOTICE ISSUED U/S 133(6) CANNOT BE TAKEN AS A REPUDIATION OF THE FACT OF THE LOAN. TH IS FACT SHOULD BE VIEWED IN THE CONTEXT OF STRAINED RELATIONS BETWEEN THE ASSES SEE AND PANKAJ AGGARWAL. HE IS DELIBERATELY AND INTENTIONALLY NOT COOPERATIN G WITH THE ASSESSEE. THE DEED OF COMPROMISE/SETTLEMENT IS A DIRECT CORROBORA TIVE EVIDENCE OF THE FACT THAT THE AMOUNT HAS BEEN DEPOSITED BY PANKAJ AGGARW AL IN THE ASSESSEE COMPANY AND THE MONEY HAS BEEN SUBSEQUENTLY PAID BA CK TO HIM. HE PLEADED THAT RS.98.50 LACS WERE TRANSFERRED FROM SB ACCOUNT NO.3001 OF PANKAJ AGGARWAL HELD WITH CANARA BANK BARADARI BRANCH PA TIALA AND THE BALANCE AMOUNT HAS BEEN RECEIVED FROM HIS DELHI BANK ACCOUN T. HE FURTHER PLEADED THAT THIS AMOUNT WAS DEPOSITED WITH THE ASSESSEE CO MPANY AS SHARE APPLICATION MONEY THEREFORE NO ADDITION CAN BE MA DE IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THIS ISSUE AND HE RELIED ON THE FOLLOWING CASE LAWS:- (I) CIT VS. M/S. LOVELY EXPORTS PRIVATE LTD. 216 CTR 195 (HON'BLE SUPREME COURT); (II) CIT VS. OASIS HOSPITALITIES (P) LTD. 198 TAX MAN 247; (III) CIT VS. DIVINE LEASING & FINANCE LTD. 158 TAXMAN 4 40 (DEL.) (IV) CIT VS. SIRI RAM SYAL HYDRO POWER (P) LTD 196 TAXM AN 441 (DEL.) ITA NO.1898/DEL./2010 8 (V) CIT VS. DWARKADHISH INVESTMENT (P) LTD. 194 TAXMAN 43 (DEL.); (VI) CIT VS. MODERN ENGINEERING WORKS 330 ITR 416 (DEL. ); (VII) CIT VS. DERBY OVERSEAS P. LTD CASE NO.1497/2010 1 518//2010 DATED 1.10.2010 (DEL.); (VIII) CIT VS. M/S. DURABLE PROPERTIES APPEAL NO.865/2010 (DEL.); (IX) CIT VS. KISHORI LAL CONSTRUCTION LTD. 191 TAXMAN 1 94 (DEL.); (X) CIT VS. M/S. SIDH VINAYAK DEVELOPMENT PVT. LTD. HE PLEADED THAT WHEREVER THE SHARE APPLICATION MONE Y HAS BEEN RECEIVED NO ADDITION CAN BE MADE U/S 68 OF THE INCOME-TAX ACT A ND IF ANYTHING FOUND WRONG AND WHEN THE IDENTITY OF THE SHAREHOLDER IS K NOWN TO THE REVENUE THEN THE REVENUE IS FREE TO PROCEED TO REOPEN THE ASSESS MENT OF THE SHARE APPLICANT. HE PLEADED TO SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW. 4. ON THE OTHER HAND LEARNED DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND PLEADED THAT THE ASSESSEE IS CHANGING THE STAND AND CLAIMING IT AS SHARE APPLICATION MONEY. THE MONEY WAS NOT FOR TH E SHARE APPLICATION BUT IT WAS AN UNSECURED LOAN. THE BALANCE SHEET OF THE AS SESSEE FOR 31.3.2006 SHOWS THAT THIS AMOUNT HAS BEEN CLASSIFIED UNDER TH E HEAD LOAN AND FUNDS UNSECURED LOANS WHICH IS ALSO CLEAR FORM THE SCHED ULE 3 FOR UNSECURED LOANS. THE UNSECURED LOANS FROM THE SHAREHOLDERS WERE RS.1 .21 CRORES. THEREFORE ALL THE CASE LAWS RELIED UPON BY THE ASSESSEE IN RE SPECT OF THE SHARE APPLICATION ITA NO.1898/DEL./2010 9 MONEY ARE NOT APPLICABLE TO THE FACTS OF THE ASSESS EES CASE. THIS IS A CLEAR CASE OF CASH CREDITS IN THE BOOKS OF THE ASSESSEE A ND THE ONUS IS ON THE ASSESSEE TO PROVE THE IDENTITY GENUINENESS OF TRAN SACTION AND CREDITWORTHINESS OF THE DEPOSITOR. HE PLEADED TO SUSTAIN THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. IT I S A FACT THAT ASSESSEE HAS SHOWN A RECEIPT OF RS.1.21 CRORES FROM PANKAJ AGARW AL WHO IS ALSO A SHAREHOLDER OF ASSESSEE COMPANY. THIS AMOUNT HAS BEEN CLASSIFIED AS A LOAN IN THE BALANCE SHEET ENDING 31.3.2006 WHICH IS EVI DENT FROM BALANCE SHEET AS WELL AS ANNEXURE THERETO. THUS THIS AMOUNT WAS AN UNSECURED LOAN FROM ONE OF THE SHARE HOLDER. THIS AMOUNT IS NOT TOWARDS SH ARE APPLICATION MONEY. AFTER CLOSE PERUSAL OF THE RELEVANT FACTS AVAILABLE ON RECORD WE FIND THAT THE AMOUNT OF RS.98.50 LACS HAS BEEN RECEIVED FROM THE BANK OF PANKAJ AGARWAL AT CANARA BANK PATIALA. REGARDING THE BALANCE AMO UNT OF RS.22 70 000/- NO DOCUMENT PRODUCED WHICH COULD ESTABLISH THE SOURCE OF IT. THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE EXCEPT MAKING A STAT EMENT THAT PART OF THE AMOUNT WAS RECEIVED BY DEMAND DRAFT FROM SHRI PANKA J AGARWAL ACCOUNT AND PART OF THE AMOUNT WERE START UP EXPENSES MADE BY P ANKAJ AGARWAL. NO DETAILS IN THIS REGARD ARE AVAILABLE ON RECORD. SI NCE THE AMOUNT WAS CASH CREDIT IN THE BOOKS OF THE ASSESSEE AND IT WAS NOT CLASSIFIED AS SHARE APPLICATION MONEY THEREFORE ALL THE CASE LAWS REL IED UPON ARE NOT APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. ASSESSEE HAS TO PROVE ALL THREE INGREDIENTS ITA NO.1898/DEL./2010 10 U/S 68 OF THE INCOME-TAX ACT I.E. IDENTITY CREDI TWORTHINESS AND GENUINENESS OF THE TRANSACTION. ALTHOUGH THE ASSESSEE HAS SUBM ITTED THE SETTLEMENT/ COMPROMISE AGREEMENT HOWEVER THIS IS NOT SUFFICIE NT TO DISCHARGE THE ONUS ON THE ASSESSEE U/S 68 OF THE INCOME-TAX ACT. THE ORIGIN OF THE DEMAND DRAFT DEPOSITED COULD NOT BE EXPLAINED BY THE ASSESSEE W HAT WERE THE SOURCES OF THESE DRAFTS IS NOT EXPLAINED. FURTHER NO DETAILS IN RESPECT OF THE START UP EXPENSES CREDITED IN THE ACCOUNT OF PANKAJ AGARWAL HAVE BEEN FILED WHAT WERE THE EXPENSES WHEN INCURRED WHAT WAS THE PURP OSE AND WHAT WAS THE SOURCE. ALL THESE REMAIN EXPLAINED. THESE CLAIMS CANNOT BE ACCEPTED WITHOUT ANY EVIDENCE. THEREFORE IN OUR CONSIDERED VIEW A SSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THE AMOUNT TO THE EXTENT OF R S.22 70 000/-. THEREFORE WE SUSTAIN THE ADDITION TO THAT EXTENT. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER 2011/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-VI NEW DELHI. 5.CIT(ITAT) NEW DELHI. AR ITAT NEW DELHI.