United Cores (P) Ltd. vs Assistant Commissioner Of Income ...
1997 Latest Caselaw 595 Del

ORDER

B. M. Kothari, AM

These cross-appeals, one by the assessee and the other by the Revenue, are directed against the order of the Commissioner (Appeals) dt. 27-2-1995 and involve consideration of common points. Hence, we find it convenient to dispose of these appeals by this common order.

2. The first ground of assessee's appeal is that the Commissioner (Appeals) has erred in confirming addition of Rs. 30,000 out of the original addition of Rs. 2,30,000 being loan from Mithan Lal made by the assessing officer.

2. The first ground of assessee's appeal is that the Commissioner (Appeals) has erred in confirming addition of Rs. 30,000 out of the original addition of Rs. 2,30,000 being loan from Mithan Lal made by the assessing officer.

2.1 The assessing officer has observed that Mithan Lal gave a loan of Rs. 30,000 to the assessee and it was explained that the said loan was advanced by Mithan Lal out of loan received from one Kanwar Sen. The assessee was required to state the source of Kanwar Sen of Rs. 30,000. It was explained on behalf of the assessee that Kanwar Sen had received this amount from one Hem Raj. The assessing officer required the assessee to produce Hem Raj as well as Kanwar Sen for verification of the said loans but the assessee failed to produce them. The assessing officer, therefore, made an addition of Rs. 30,000 under s. 68 of Income Tax Act, 1961.

2.1 The assessing officer has observed that Mithan Lal gave a loan of Rs. 30,000 to the assessee and it was explained that the said loan was advanced by Mithan Lal out of loan received from one Kanwar Sen. The assessee was required to state the source of Kanwar Sen of Rs. 30,000. It was explained on behalf of the assessee that Kanwar Sen had received this amount from one Hem Raj. The assessing officer required the assessee to produce Hem Raj as well as Kanwar Sen for verification of the said loans but the assessee failed to produce them. The assessing officer, therefore, made an addition of Rs. 30,000 under s. 68 of Income Tax Act, 1961.

2.2 The Commissioner (Appeals) has observed that Mithan Lal had given the said loan of Rs. 30,000 out of the loan of equivalent amount of Rs. 30,000 received from Kanwar Sen. It was stated that Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. Hem Raj had returned part of this loan and this amount was deposited in the account of Kanwar Sen. The assessee filed photocopy of the bank account of Kanwar Sen showing that he gave loan of Rs. 1,50,000 on 18th Feb., 1991 by cheque to Hem Raj. Out of the said loan given to Hem Raj, a sum of Rs. 30,000 was received back on 9-10-1991, and it was this amount which was given by Kanwar Sen by way of loan to Mithan Lal. The Commissioner (Appeals) observed that the creditworthiness of Kanwar Sen has not been proved as no information has been placed on record as to where from Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. The Commissioner (Appeals) also observed that Kanwar Sen had only declared income of Rs. 33,750 for the year under consideration. No further details in respect of this income has been filed by the assessee. He, therefore, confirmed the said addition of Rs. 30,000.

2.2 The Commissioner (Appeals) has observed that Mithan Lal had given the said loan of Rs. 30,000 out of the loan of equivalent amount of Rs. 30,000 received from Kanwar Sen. It was stated that Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. Hem Raj had returned part of this loan and this amount was deposited in the account of Kanwar Sen. The assessee filed photocopy of the bank account of Kanwar Sen showing that he gave loan of Rs. 1,50,000 on 18th Feb., 1991 by cheque to Hem Raj. Out of the said loan given to Hem Raj, a sum of Rs. 30,000 was received back on 9-10-1991, and it was this amount which was given by Kanwar Sen by way of loan to Mithan Lal. The Commissioner (Appeals) observed that the creditworthiness of Kanwar Sen has not been proved as no information has been placed on record as to where from Kanwar Sen had given loan of Rs. 1,50,000 to Hem Raj. The Commissioner (Appeals) also observed that Kanwar Sen had only declared income of Rs. 33,750 for the year under consideration. No further details in respect of this income has been filed by the assessee. He, therefore, confirmed the said addition of Rs. 30,000.

2.3 The learned counsel submitted that an affidavit of Mithan Lal was submitted before the assessing officer in which he has confirmed the fact of having given the total loan of Rs. 3,90,000 including the aforesaid amount of Rs. 30,000 advanced by cheque No. 667977, dt. 12-10-1991. Copy of pass book of Mithan Lal was also produced before the assessing officer which, inter alia, includes this entry of loan of Rs. 30,000 given to the assessee. The pass book also shows credit of Rs. 30,000 which represents the cheque received by Mithan Lal from Kanwar Sen. Copy of assessment order of Mithan Lal for assessment year 1991-92 was also furnished. The assessee also submitted copy of pass book of Kanwar Sen with Punjab National Bank. The said pass book clearly shows that a loan was given by Kanwar Sen to Mithan Lal by a cheque for Rs. 30,000. The learned counsel also submitted that a sum of Rs. 1,50,000 was received by Kanwar Sen by way of sale proceeds of plots. The Commissioner (Appeals) did not give any opportunity to the assessee to produce an additional evidence showing that the amount of Rs. 1,50,000 was received by Kanwar Sen by way of sale proceeds of two plots. The learned counsel drew our attention towards, letter dt. 13-2-1995, submitted to the Commissioner (Appeals). A copy of account of Kanwar Sen in the books of Hem Raj has also been submitted which shows that a sum of Rs. 30,000 was repaid by Hem Raj on 1-9- 1991 by a cheque of Kanwar Sen. Kanwar Sen is also an existing income-tax assessee. A copy of intimation under s. 143(1)(a) in the name of Kanwar Sen has also been submitted at p. 10 of the compilation. The learned counsel also pointed out that interest paid on loan by Mithan Lal has been allowed as deduction. To corroborate this contention he drew our attention towards details of interest submitted at p. 11 of the paper-book. The learned counsel submit" that the assessee has adequately discharged the burden of proving the genuineness of the aforesaid loan taken from Mithan Lal. His confirmation in the form of an affidavit were duly furnished. He has also explained the sources wherefrom the loans were given. All these documents submitted by the assessee before the assessing officer adequately proves that the assessee has discharged the burden of proving the aforesaid loan.

2.3 The learned counsel submitted that an affidavit of Mithan Lal was submitted before the assessing officer in which he has confirmed the fact of having given the total loan of Rs. 3,90,000 including the aforesaid amount of Rs. 30,000 advanced by cheque No. 667977, dt. 12-10-1991. Copy of pass book of Mithan Lal was also produced before the assessing officer which, inter alia, includes this entry of loan of Rs. 30,000 given to the assessee. The pass book also shows credit of Rs. 30,000 which represents the cheque received by Mithan Lal from Kanwar Sen. Copy of assessment order of Mithan Lal for assessment year 1991-92 was also furnished. The assessee also submitted copy of pass book of Kanwar Sen with Punjab National Bank. The said pass book clearly shows that a loan was given by Kanwar Sen to Mithan Lal by a cheque for Rs. 30,000. The learned counsel also submitted that a sum of Rs. 1,50,000 was received by Kanwar Sen by way of sale proceeds of plots. The Commissioner (Appeals) did not give any opportunity to the assessee to produce an additional evidence showing that the amount of Rs. 1,50,000 was received by Kanwar Sen by way of sale proceeds of two plots. The learned counsel drew our attention towards, letter dt. 13-2-1995, submitted to the Commissioner (Appeals). A copy of account of Kanwar Sen in the books of Hem Raj has also been submitted which shows that a sum of Rs. 30,000 was repaid by Hem Raj on 1-9- 1991 by a cheque of Kanwar Sen. Kanwar Sen is also an existing income-tax assessee. A copy of intimation under s. 143(1)(a) in the name of Kanwar Sen has also been submitted at p. 10 of the compilation. The learned counsel also pointed out that interest paid on loan by Mithan Lal has been allowed as deduction. To corroborate this contention he drew our attention towards details of interest submitted at p. 11 of the paper-book. The learned counsel submit" that the assessee has adequately discharged the burden of proving the genuineness of the aforesaid loan taken from Mithan Lal. His confirmation in the form of an affidavit were duly furnished. He has also explained the sources wherefrom the loans were given. All these documents submitted by the assessee before the assessing officer adequately proves that the assessee has discharged the burden of proving the aforesaid loan.

2.4 The learned departmental Representative relied upon the reasons mentioned in the assessment order.

2.4 The learned departmental Representative relied upon the reasons mentioned in the assessment order.

2.5 We have considered the submissions made by the learned representatives of the parties and have perused the orders of the learned departmental authorities. In our view, the assessee has adequately discharged the burden of proving the identity as well as capacity of Mithan Lal. The loan was received by the assessee by a cheque. Mithan Lal is an existing income-tax assessee, The assessee also produced evidence in the form of bank pass book of Mithan Lal of Kanwar Sen and copy of account from the books of Hem Raj Aggarwal & Sons. The aforesaid evidence brought on record by the assessee clearly indicates that the assessee has discharged the burden of proving the genuineness of the cash credit in question. The assessing officer is, therefore, directed to delete the addition of Rs.' 30,000.

2.5 We have considered the submissions made by the learned representatives of the parties and have perused the orders of the learned departmental authorities. In our view, the assessee has adequately discharged the burden of proving the identity as well as capacity of Mithan Lal. The loan was received by the assessee by a cheque. Mithan Lal is an existing income-tax assessee, The assessee also produced evidence in the form of bank pass book of Mithan Lal of Kanwar Sen and copy of account from the books of Hem Raj Aggarwal & Sons. The aforesaid evidence brought on record by the assessee clearly indicates that the assessee has discharged the burden of proving the genuineness of the cash credit in question. The assessing officer is, therefore, directed to delete the addition of Rs.' 30,000.

3. The next ground raised in assessee's appeal relate to confirmation of the addition of Rs. 25,000 out of share application/capital invested by Mrs. Sarita on the ground that the capacity of Smt. Saroj Gaba and Kiran Lata has not been proved.

3. The next ground raised in assessee's appeal relate to confirmation of the addition of Rs. 25,000 out of share application/capital invested by Mrs. Sarita on the ground that the capacity of Smt. Saroj Gaba and Kiran Lata has not been proved.

3.1 The assessing officer observed that Smt. Sarita Jain has invested in purchase of shares of the assessee- company a sum of Rs. 2,89,000. The assessing officer required the assessee to prove the sources of investment of Srnt. Sarita Jain. The assessing officer observed that Smt. Sarita Jain has been able to prove the source of investment to the extent of Rs. 2,14,000. However, the explanation regarding loan taken from Neeraj Jam Rs. 30,000, Anoop Jam Rs. 20,000, Smt. Saroj Gaba Rs. 15,000 and Smt. Kiran Lata Rs. 10,000 aggregating to Rs. 75,000 has not been proved. He, therefore, made an addition of Rs. 75,000.

3.1 The assessing officer observed that Smt. Sarita Jain has invested in purchase of shares of the assessee- company a sum of Rs. 2,89,000. The assessing officer required the assessee to prove the sources of investment of Srnt. Sarita Jain. The assessing officer observed that Smt. Sarita Jain has been able to prove the source of investment to the extent of Rs. 2,14,000. However, the explanation regarding loan taken from Neeraj Jam Rs. 30,000, Anoop Jam Rs. 20,000, Smt. Saroj Gaba Rs. 15,000 and Smt. Kiran Lata Rs. 10,000 aggregating to Rs. 75,000 has not been proved. He, therefore, made an addition of Rs. 75,000.

3.2 The Commissioner (Appeals) deleted the addition of Rs. 50,000 out of the investment in share application money made by Smt. Sarita Jain on the ground that loan received from Anoop Jain and Neeraj Jam have been properly explained. The Commissioner (Appeals), however, confirmed the addition of Rs. 25,00,0 in respect of the loan taken by Snit. Sarita Jain from Smt. Sarol Gaba and Snit. Kiran Lata.

3.2 The Commissioner (Appeals) deleted the addition of Rs. 50,000 out of the investment in share application money made by Smt. Sarita Jain on the ground that loan received from Anoop Jain and Neeraj Jam have been properly explained. The Commissioner (Appeals), however, confirmed the addition of Rs. 25,00,0 in respect of the loan taken by Snit. Sarita Jain from Smt. Sarol Gaba and Snit. Kiran Lata.

3.3 The learned counsel for the assessee submitted that Snit. Sarita Jain is an existing income-tax assessee. She had duly confirmed the fact of having invested the total sum of Rs. 2,89,000 for investment in shares of the appellant company. Her statement was also recorded by the assessing officer on 17-3-1994. She has duly confirmed the aforesaid facts. A copy of assessment order of Smt. Sarita Jain for assessment year 1992-93 completed under s. 143(3) has also been submitted in the compilation at p. 18 and 19 of the 'paper-book. Her balance sheet has also been placed on record which, inter alia, shows that she invested a sum of Rs. 2,89,000 in shares of the appellant company. Statements of Smt. Saroj Gaba and Snit. Kiran Lata, the two creditors of Snit. Sarita Jain was also recorded by the assessing officer. He, therefore, urged that the addition of Rs, 25,000 sustained by the Commissioner (Appeals) should be deleted.

3.3 The learned counsel for the assessee submitted that Snit. Sarita Jain is an existing income-tax assessee. She had duly confirmed the fact of having invested the total sum of Rs. 2,89,000 for investment in shares of the appellant company. Her statement was also recorded by the assessing officer on 17-3-1994. She has duly confirmed the aforesaid facts. A copy of assessment order of Smt. Sarita Jain for assessment year 1992-93 completed under s. 143(3) has also been submitted in the compilation at p. 18 and 19 of the 'paper-book. Her balance sheet has also been placed on record which, inter alia, shows that she invested a sum of Rs. 2,89,000 in shares of the appellant company. Statements of Smt. Saroj Gaba and Snit. Kiran Lata, the two creditors of Snit. Sarita Jain was also recorded by the assessing officer. He, therefore, urged that the addition of Rs, 25,000 sustained by the Commissioner (Appeals) should be deleted.

3.4 The learned counsel also invited our attention towards the judgments of the Hon'ble Delhi High Court in the case of CIT v. Sophiya Finance Co. (P) Ltd. (1993) 113 CTR (Del) (FB) 4 72 .. (1994) 205 1TR 98 (Del)(FB), in which it has been held that once the identity of the shareholders is proved, no addition in respect of share money can be made under s. 68 of the Act.

3.4 The learned counsel also invited our attention towards the judgments of the Hon'ble Delhi High Court in the case of CIT v. Sophiya Finance Co. (P) Ltd. (1993) 113 CTR (Del) (FB) 4 72 .. (1994) 205 1TR 98 (Del)(FB), in which it has been held that once the identity of the shareholders is proved, no addition in respect of share money can be made under s. 68 of the Act.

3.5 The learned departmental Representative simply relied upon the reasons mentioned in the assessment order.

3.5 The learned departmental Representative simply relied upon the reasons mentioned in the assessment order.

3.6 We have considered the submissions made by the learned representatives of the parties and have perused the orders of the learned departmental authorities. In our view, the assessee has discharged the burden of proving the identity and capacity of Smt. Sarita Jain. The assessee has also produced adequate material to prove that Snit. Sarita Jain was a man of means. Her creditworthiness has also been fully established. Even assuming that two petty loans taken by Smt. Sarita Jam from Snit. Saroj Gaba and Snit. Kiran Lata have not been fully established, any addition of that amount can be considered only in the hands of Smt. Sarita Jain, who is an existing income-tax assessee. The assessee cannot be required to prove the source of source, particularly in a case where the person who gave the loan is an existing income-tax assessee. The Hon'ble Delhi High Court in the case of Sophiya Finance Co. Ltd. (supra) has, inter alia, held that where the shareholders in fact exist, then, possibly, no further enquiry need be made. But where the Income Tax Officer finds that the alleged shareholders do not exist, then, in fact, it was meant that there is no valid issuance of share capital as no share can be issued in the name of non-existing persons. It is clear from the aforesaid judgment of the Hon'ble Delhi High Court that where the assessee proves the identity of the shareholders, no addition in respect of share application money can be validly made in the hands of the assessee- company. In the present case, the assessee has not only proved the' identity of Smt. Sarita Jain but has submitted further evidence to prove sources of share capital. She is an existing assessee and the explanation submitted by her in support of the investment of Rs. 2,89,000 made by her in the shares of the assessee-company has been substantially accepted by the assessing officer himself.

3.6 We have considered the submissions made by the learned representatives of the parties and have perused the orders of the learned departmental authorities. In our view, the assessee has discharged the burden of proving the identity and capacity of Smt. Sarita Jain. The assessee has also produced adequate material to prove that Snit. Sarita Jain was a man of means. Her creditworthiness has also been fully established. Even assuming that two petty loans taken by Smt. Sarita Jam from Snit. Saroj Gaba and Snit. Kiran Lata have not been fully established, any addition of that amount can be considered only in the hands of Smt. Sarita Jain, who is an existing income-tax assessee. The assessee cannot be required to prove the source of source, particularly in a case where the person who gave the loan is an existing income-tax assessee. The Hon'ble Delhi High Court in the case of Sophiya Finance Co. Ltd. (supra) has, inter alia, held that where the shareholders in fact exist, then, possibly, no further enquiry need be made. But where the Income Tax Officer finds that the alleged shareholders do not exist, then, in fact, it was meant that there is no valid issuance of share capital as no share can be issued in the name of non-existing persons. It is clear from the aforesaid judgment of the Hon'ble Delhi High Court that where the assessee proves the identity of the shareholders, no addition in respect of share application money can be validly made in the hands of the assessee- company. In the present case, the assessee has not only proved the' identity of Smt. Sarita Jain but has submitted further evidence to prove sources of share capital. She is an existing assessee and the explanation submitted by her in support of the investment of Rs. 2,89,000 made by her in the shares of the assessee-company has been substantially accepted by the assessing officer himself.

Considering all the aforesaid facts and evidence existing on record, we are of the view that the addition of Rs. 25,000 in the name of Srnt. Sarita Jam cannot be sustained. The assessing officer is directed to delete the same.

4. Now we will deal with the Revenue's appeal.

4. Now we will deal with the Revenue's appeal.

5. The Revenue has raised the following grounds in their appeal:

5. The Revenue has raised the following grounds in their appeal:

"On the facts, and in the circumstances of the case, the learned Commissioner (Appeals) was not justified in deleting the following additions in view of the provision of r. 46A of the IT Rules, 1962 :

(i) addition of Rs. 2,50,000 out of total addition of Rs. 2,80,000 made by the assessing officer on account of income from undisclosed sources.

(ii) addition of Rs. 50,000 out of a total addition of Rs. 75,000 made on account of unexplained cash credit."

5.1 The learned departmental Representative submitted that the Commissioner (Appeals) has erred in deleting the aforesaid additions by relying upon the addition evidence submitted before him. He submitted that the Commissioner (Appeals) has erred in entertaining such additional evidence in violation of r. 46A of IT Rules, 1962. He also relied upon the reasons mentioned in the assessment order.

5.1 The learned departmental Representative submitted that the Commissioner (Appeals) has erred in deleting the aforesaid additions by relying upon the addition evidence submitted before him. He submitted that the Commissioner (Appeals) has erred in entertaining such additional evidence in violation of r. 46A of IT Rules, 1962. He also relied upon the reasons mentioned in the assessment order.

5.2 The learned counsel for the assessee submitted that even if the material given to the Commissioner (Appeals) pursuant to the requirements made by him are ignored, there is no basis for sustaining the aforesaid additions. He submitted that the additions which have been deleted by the Commissioner (Appeals) which are the subject-matter of Revenue's ground of appeal relate to the following persons:

5.2 The learned counsel for the assessee submitted that even if the material given to the Commissioner (Appeals) pursuant to the requirements made by him are ignored, there is no basis for sustaining the aforesaid additions. He submitted that the additions which have been deleted by the Commissioner (Appeals) which are the subject-matter of Revenue's ground of appeal relate to the following persons:

(a) Rs. 50,000 added by the assessing officer out of the loan of Rs. 1 lakh received by the assessee from one Rameshwar Das.

(b) Rs. 2 lakhs out of loan given by Mithan Lal aggregating to Rs. 3,89,000.

(c) Addition of Rs. 60,000 deleted out of the addition of Rs. 75,000 made by the assessing officer in respect of investment in shares made by Smt. Sarita Jain.

5.3 We have considered the submissions made by the learned representative of the parties and have perused the orders of the learned departmental authorities as well as the various documents submitted in the compilation with regard to cash credits/investment in share money made by the aforesaid three depositors,

5.3 We have considered the submissions made by the learned representative of the parties and have perused the orders of the learned departmental authorities as well as the various documents submitted in the compilation with regard to cash credits/investment in share money made by the aforesaid three depositors,

5.4 The Commissioner (Appeals) has deleted the addition of Rs. 2 lakhs given by Mithan Lal which Mithan Lal had explained having given out of loan of Rs. 2 lakhs taken from HUF of N. C. Jain. The Commissioner (Appeals) has observed that the Karta of the HUF had deposed that he had received loan from Anoop Jain and Sh. Neeraj Jam and it was stated that both these persons were income-tax assessees and their computation sheets had been filed before the assessing officer during the course of assessment proceedings. Both Neeraj Jain and Anoop Jain had shown income from lottery winning to the extent of Rs. 47,600. A certificate in respect of payment of lottery prize as well as the letter issued by the SBI showing the issue of demand draft in respect of prize money in favour of Neeraj Jain and Anoop Jam was also filed. Both of them were assessed to income-tax with Income Tax Officer, Faridabad. Copies of their assessment orders were also filed before the assessing officer. The Commissioner (Appeals) after considering the aforesaid documents existing on record, deleted the said addition of Rs. 2 lakhs.

5.4 The Commissioner (Appeals) has deleted the addition of Rs. 2 lakhs given by Mithan Lal which Mithan Lal had explained having given out of loan of Rs. 2 lakhs taken from HUF of N. C. Jain. The Commissioner (Appeals) has observed that the Karta of the HUF had deposed that he had received loan from Anoop Jain and Sh. Neeraj Jam and it was stated that both these persons were income-tax assessees and their computation sheets had been filed before the assessing officer during the course of assessment proceedings. Both Neeraj Jain and Anoop Jain had shown income from lottery winning to the extent of Rs. 47,600. A certificate in respect of payment of lottery prize as well as the letter issued by the SBI showing the issue of demand draft in respect of prize money in favour of Neeraj Jain and Anoop Jam was also filed. Both of them were assessed to income-tax with Income Tax Officer, Faridabad. Copies of their assessment orders were also filed before the assessing officer. The Commissioner (Appeals) after considering the aforesaid documents existing on record, deleted the said addition of Rs. 2 lakhs.

5.5 We have also gone through the relevant documents submitted in the compilation before us. Mithan Lal had given a total sum of Rs. 3,90,000 by four different cheques in the month of October and November, 1991. Rs. 1000 was towards the purchase of share and balance amount of Rs. 3,89,000 was unsecured loan given by Mithan Lal to the assessee- company. It was explained before the assessing officer that Mithan Lal gave the said loan out of the following sources:

5.5 We have also gone through the relevant documents submitted in the compilation before us. Mithan Lal had given a total sum of Rs. 3,90,000 by four different cheques in the month of October and November, 1991. Rs. 1000 was towards the purchase of share and balance amount of Rs. 3,89,000 was unsecured loan given by Mithan Lal to the assessee- company. It was explained before the assessing officer that Mithan Lal gave the said loan out of the following sources:

(a) Rs. 1,75,000 withdrawn from G.G. Trading Co., Confirmation of G.G. Trading Co. was submitted and the source to this extent was accepted by the assessing officer. It was further explained that Rs. 2 lakhs was received by Mithan Lal from N.C. Jain, HUF and Rs. 30,000 was received as loan from Kanwar Sen. So far as source of Rs. 30,000 from Kanwar Sen is concerned we have already decided the issue while dealing with the assessee's appeal. The Revenue's appeal relate to the addition of Rs. 2 lakhs made in respect of unexplained cash credit in the name of Mithan Lal which was said to have been advanced out of the loan of Rs. 2 lakhs taken from N.C. Jam, HUF. The assessee submitted following evidence to prove the fact that N.C. Jain HUF had given loan of Rs. 2 lakhs to Mithan Lal, who in turn gave the said amount as loan to the assessee.

5.6 Confirmation of N.C. Jain, HUF, dt. 12th Sept., 1993 was submitted before the assessing officer. In this confirmation N.C. Jain, HUF has confirmed that they gave loan of Rs. 2 lakhs vide two cheques, dt. 31-10-1991, for Rs. 80,000 and cheque, dt. 4-11-1991 for Rs. 1,20,000 drawn on Allahabad Bank, NIT, Faridabad. Copy of balance sheet of N.C. Jain, HUF was also submitted showing that loan of Rs. 2, lakhs was given to Mithan Lal. This balance sheet of N.C. Jain, HUF, inter alia, shows on the liability side loan taken from Neeraj Jain Rs. 1,20,000 and loan from Anoop Jain Rs. 80,000. Master Neeraj Jain and Master Anoop Jain received lottery prize of Rs. 80,000. Both of them had submitted their IT return for assessment year 1992-93 showing their income from lottery winning. The copies of certificate issued by the SBI confirming that lottery prize money was given to the aforesaid two persons have also been submitted in the compilation. Copies of intimation under s. 143(1)(a) in the case of Neeraj Jain and Anoop Jain for assessment year 1992-93 has also been placed in the compilation. Copies of bank pass book of Neeraj Jain and Anoop Jain have also been submitted which show that loans were given by them by cheque to N.C. Jain, HUF.

5.6 Confirmation of N.C. Jain, HUF, dt. 12th Sept., 1993 was submitted before the assessing officer. In this confirmation N.C. Jain, HUF has confirmed that they gave loan of Rs. 2 lakhs vide two cheques, dt. 31-10-1991, for Rs. 80,000 and cheque, dt. 4-11-1991 for Rs. 1,20,000 drawn on Allahabad Bank, NIT, Faridabad. Copy of balance sheet of N.C. Jain, HUF was also submitted showing that loan of Rs. 2, lakhs was given to Mithan Lal. This balance sheet of N.C. Jain, HUF, inter alia, shows on the liability side loan taken from Neeraj Jain Rs. 1,20,000 and loan from Anoop Jain Rs. 80,000. Master Neeraj Jain and Master Anoop Jain received lottery prize of Rs. 80,000. Both of them had submitted their IT return for assessment year 1992-93 showing their income from lottery winning. The copies of certificate issued by the SBI confirming that lottery prize money was given to the aforesaid two persons have also been submitted in the compilation. Copies of intimation under s. 143(1)(a) in the case of Neeraj Jain and Anoop Jain for assessment year 1992-93 has also been placed in the compilation. Copies of bank pass book of Neeraj Jain and Anoop Jain have also been submitted which show that loans were given by them by cheque to N.C. Jain, HUF.

5.7 The aforesaid facts and evidence existing on record prove that Mithan Lal had duly confirmed the fact of advancing the entire amount of loan to the assessee. Mithan Lal had also explained the sources, inter alia, the source of loan of Rs. 2 lakhs taken from N. C. Jain, HUF. Thus Mithan Lal had also proved the source of source. The assessee also further proved the source wherefrom N.C. Jain, HUF gave loan to Mithan Lal by producing the details relating to funds and income of Neeraj Jain and Anoop Jam. We are, therefore, of the considered opinion that the Commissioner (Appeals) after carefully considering all the entire relevant facts and material has rightly deleted the addition of Rs. 2 lakhs in respect of amount given by Mithan Lal. Further supporting evidence was submitted on behalf of the assessee before the Commissioner (Appeals) pursuant to the requirement made by the Commissioner (Appeals). This does not fall within the purview of r. 46A of IT Rules. The provisions of r. 46A can be invoked only when the assessee suo motu wants to produce further material before the Commissioner (Appeals) and would not apply in a case where further material is produced at the instances of the Commissioner (Appeals). Even if the supporting material submitted before the Commissioner (Appeals) is ignored, the documents already submitted before the assessing officer clearly prove that the assessee has proved the identity and capacity of Mithan Lal. The assessee has also proved that Mithan Lal is an existing income-tax assessee and his creditworthiness stands proved by various documents submitted before the assessing officer. We, therefore, do not find any justification in interfering with the view taken by the Commissioner (Appeals) in relation to the deletion of the said addition of Rs. 2 lakhs.

5.7 The aforesaid facts and evidence existing on record prove that Mithan Lal had duly confirmed the fact of advancing the entire amount of loan to the assessee. Mithan Lal had also explained the sources, inter alia, the source of loan of Rs. 2 lakhs taken from N. C. Jain, HUF. Thus Mithan Lal had also proved the source of source. The assessee also further proved the source wherefrom N.C. Jain, HUF gave loan to Mithan Lal by producing the details relating to funds and income of Neeraj Jain and Anoop Jam. We are, therefore, of the considered opinion that the Commissioner (Appeals) after carefully considering all the entire relevant facts and material has rightly deleted the addition of Rs. 2 lakhs in respect of amount given by Mithan Lal. Further supporting evidence was submitted on behalf of the assessee before the Commissioner (Appeals) pursuant to the requirement made by the Commissioner (Appeals). This does not fall within the purview of r. 46A of IT Rules. The provisions of r. 46A can be invoked only when the assessee suo motu wants to produce further material before the Commissioner (Appeals) and would not apply in a case where further material is produced at the instances of the Commissioner (Appeals). Even if the supporting material submitted before the Commissioner (Appeals) is ignored, the documents already submitted before the assessing officer clearly prove that the assessee has proved the identity and capacity of Mithan Lal. The assessee has also proved that Mithan Lal is an existing income-tax assessee and his creditworthiness stands proved by various documents submitted before the assessing officer. We, therefore, do not find any justification in interfering with the view taken by the Commissioner (Appeals) in relation to the deletion of the said addition of Rs. 2 lakhs.

6. As regards deletion of Rs. 50,000 in the name of Rameshwar Das is concerned, the Commissioner (Appeals) has observed that Rameshwar Das gave a loan of Rs. 1 lakh to the appellant concern on 26th Jan., 1991 by issuing a cheque drawn on his bank account with PNB, Sector 15, Faridabad. The assessing officer accepted only 50 per cent of the loan as genuine and made addition in respect of the balance amount of Rs. 50,000. It was stated before the assessing officer that Rameshwar Das had made investment of Rs. 1 lakh by obtaining a loan from Vilayati Ram & Co. Rameshwar Das had invested a total sum of Rs. 2,63,000 with the appellant concern. It was, inter alia, explained before the assessing officer that Rs. 50,000 was withdrawn by Rameshwar Das from the personal cash book and deposited in his bank account. This was in addition to the amount taken from Walayati Ram & Co. The deposit in instalments in the bank. account were made in the previous year relevant to assessment year 1991-92 and not during the assessment year under consideration. Rameshwar Das is being assessed to tax with Income Tax Officer, Ward9, Patiala. His PA No. 28-057-PF-784 was also given. Photocopy of the account of Walayati Ram & Co. showing that a sum of Rs. 1 lakh was given by them to Rameshwar Das, was also filed. In view of the aforesaid material existing on record, the Commissioner (Appeals) observed that there is no justification for making an addition of Rs. 50,000.

6. As regards deletion of Rs. 50,000 in the name of Rameshwar Das is concerned, the Commissioner (Appeals) has observed that Rameshwar Das gave a loan of Rs. 1 lakh to the appellant concern on 26th Jan., 1991 by issuing a cheque drawn on his bank account with PNB, Sector 15, Faridabad. The assessing officer accepted only 50 per cent of the loan as genuine and made addition in respect of the balance amount of Rs. 50,000. It was stated before the assessing officer that Rameshwar Das had made investment of Rs. 1 lakh by obtaining a loan from Vilayati Ram & Co. Rameshwar Das had invested a total sum of Rs. 2,63,000 with the appellant concern. It was, inter alia, explained before the assessing officer that Rs. 50,000 was withdrawn by Rameshwar Das from the personal cash book and deposited in his bank account. This was in addition to the amount taken from Walayati Ram & Co. The deposit in instalments in the bank. account were made in the previous year relevant to assessment year 1991-92 and not during the assessment year under consideration. Rameshwar Das is being assessed to tax with Income Tax Officer, Ward9, Patiala. His PA No. 28-057-PF-784 was also given. Photocopy of the account of Walayati Ram & Co. showing that a sum of Rs. 1 lakh was given by them to Rameshwar Das, was also filed. In view of the aforesaid material existing on record, the Commissioner (Appeals) observed that there is no justification for making an addition of Rs. 50,000.

6.1 The learned counsel submitted that the entire material in relation to the credit in the name of Rameshwar Das were submitted before the assessing officer and no additional evidence was submitted before the Commissioner (Appeals). We have perused the documents placed at pp. 1 to 7 of the paper-book in relation to the deposit in the account off Rameshwar Das, Rameshwar Das has given his. affidavit confirming the fact of having invested a total sum of Rs. 2,63,000 with the assessee- company. It was also mentioned in the affidavit that he is a regular income-tax assessee. The GIR number was also mentioned in the said affidavit. Photocopies of bank pass book of Rameshwar Das was also produced before the assessing officer. Copies thereof have been submitted in the compilation at pp. 2 to 4. Copy of account of Rameshwar Das, partner in the books of Walayati Ram & Co. has also been submitted at pp. 5 & 6 of the compilation. The said copy of account shows that Walayati Ram & Co, had given a cheque on 17th June, 1991, bearing cheque No. 31288 for Rs. 1 lakh for United Cores (assessee). Copy of intimation under s. 143(1)(a) of Rameshwar Das for assessment year 1992-93 has also been submitted in the compilation to show that he is an existing income-tax assessee.

6.1 The learned counsel submitted that the entire material in relation to the credit in the name of Rameshwar Das were submitted before the assessing officer and no additional evidence was submitted before the Commissioner (Appeals). We have perused the documents placed at pp. 1 to 7 of the paper-book in relation to the deposit in the account off Rameshwar Das, Rameshwar Das has given his. affidavit confirming the fact of having invested a total sum of Rs. 2,63,000 with the assessee- company. It was also mentioned in the affidavit that he is a regular income-tax assessee. The GIR number was also mentioned in the said affidavit. Photocopies of bank pass book of Rameshwar Das was also produced before the assessing officer. Copies thereof have been submitted in the compilation at pp. 2 to 4. Copy of account of Rameshwar Das, partner in the books of Walayati Ram & Co. has also been submitted at pp. 5 & 6 of the compilation. The said copy of account shows that Walayati Ram & Co, had given a cheque on 17th June, 1991, bearing cheque No. 31288 for Rs. 1 lakh for United Cores (assessee). Copy of intimation under s. 143(1)(a) of Rameshwar Das for assessment year 1992-93 has also been submitted in the compilation to show that he is an existing income-tax assessee.

6.2 On a careful consideration of the entire facts, material and evidence existing on record, we are of the view that the Commissioner (Appeals) has rightly deleted the addition of Rs. 50,000 made in respect of credit in the name of Rameshwar Das.

6.2 On a careful consideration of the entire facts, material and evidence existing on record, we are of the view that the Commissioner (Appeals) has rightly deleted the addition of Rs. 50,000 made in respect of credit in the name of Rameshwar Das.

6.3 As regards deletion of Rs. 50,000 in respect of investment made by Srnt. Sarita Jam, the Commissioner (Appeals) has discussed the facts in para 4 of the appellate order passed by him. Smt. Sarita Jain had invested a total sum of Rs. 2.,89,000 for purchase of shares of the assessee- company. It was, inter alia, explained by her that she received loan of Rs. 30,000 from Neeraj Jain and loan of Rs. 20,000 from Anoop Jain. Statement of Smt. Sarita Jain was also recorded by the assessing officer in which, she has confirmed the fact of having made the aforesaid investment. As already discussed hereinbefore, both Neeraj Jain and Anoop Jain are existing income-tax assessee. Copies of their balance sheets submitted in the compilation at pp. 11 & 13 respectively show that Master Neeraj Jain had given a loan of Rs. 30,000 to Smt. Sarita Jain. Master Anoop Jain had given a loan of Rs. 20,000 to Snit. Sarita Jain. Both Anoop Jain and Neeraj Jain are existing income-tax assessees. Smt. Sarita Jain gave this amount by way of investment for purchase of shares. The assessee has proved the identity and capacity of Smt. Sarita Jain. The assessee has also furnished evidence about the sources of Smt. Sarita Jain wherefrom such investments were made. In view of the aforesaid facts and documents already existing on record, we are of the view that the Commissioner (Appeals) has rightly deleted the addition of Rs. 50,000 made in relation to investment made by Smt. Sarita Jain. The view taken by the Commissioner (Appeals) is also fortified by the Hon'ble Delhi High Court in the case of Sophiya Finance (P) Ltd. (supra). We, therefore, do not find any justification in interfering with the view taken by the Commissioner (Appeals) in relation to this ground also.

6.3 As regards deletion of Rs. 50,000 in respect of investment made by Srnt. Sarita Jam, the Commissioner (Appeals) has discussed the facts in para 4 of the appellate order passed by him. Smt. Sarita Jain had invested a total sum of Rs. 2.,89,000 for purchase of shares of the assessee- company. It was, inter alia, explained by her that she received loan of Rs. 30,000 from Neeraj Jain and loan of Rs. 20,000 from Anoop Jain. Statement of Smt. Sarita Jain was also recorded by the assessing officer in which, she has confirmed the fact of having made the aforesaid investment. As already discussed hereinbefore, both Neeraj Jain and Anoop Jain are existing income-tax assessee. Copies of their balance sheets submitted in the compilation at pp. 11 & 13 respectively show that Master Neeraj Jain had given a loan of Rs. 30,000 to Smt. Sarita Jain. Master Anoop Jain had given a loan of Rs. 20,000 to Snit. Sarita Jain. Both Anoop Jain and Neeraj Jain are existing income-tax assessees. Smt. Sarita Jain gave this amount by way of investment for purchase of shares. The assessee has proved the identity and capacity of Smt. Sarita Jain. The assessee has also furnished evidence about the sources of Smt. Sarita Jain wherefrom such investments were made. In view of the aforesaid facts and documents already existing on record, we are of the view that the Commissioner (Appeals) has rightly deleted the addition of Rs. 50,000 made in relation to investment made by Smt. Sarita Jain. The view taken by the Commissioner (Appeals) is also fortified by the Hon'ble Delhi High Court in the case of Sophiya Finance (P) Ltd. (supra). We, therefore, do not find any justification in interfering with the view taken by the Commissioner (Appeals) in relation to this ground also.

7. In the result, assessee's appeal is allowed and the Revenue's appeal is dismissed.

7. In the result, assessee's appeal is allowed and the Revenue's appeal is dismissed.