TaxTMI 
TaxTMI 
2009 (11) TMI 337
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....04,100 from Ms. Urvashi Jain. Though confirmation of these loans, aggregating to Rs. 5,12,87,200 were filed they were not accompanied by income-tax acknowledgments and bank statements. The Assessing Officer (AO) treated this as income of the appellant from undisclosed sources and made additions under section 68 of the Income-tax Act, 1961 (for short, "the Act"). Assessment order was passed on March 1, 2004, making the assessment at Rs. 5,12,72,884. The assessee preferred appeal against this assessment order before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) recorded the statement of Mr. P. N. Jain under section 131 of the Act, who inter alia stated that: (a) The amounts advanced to the appellant did....
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....ons with income-tax acknowledgment were filed wherein he confirmed that during the period April 1, 2000 to March 31, 2001, he has given interest free loan of Rs. 2,03,23,000 to Mr. P. N. Jain and Rs. 1,24,30,000 to Ms. Urvashi Jain. (iv) Ownership of the appellant company has been taken over by the Vaidya family. 3. The Commissioner of Income-tax (Appeals) taking into consideration all these facts, upheld the order passed by the Assessing Officer. His reasons in support of the order were as under: (a) Statement of Mr. P. N. Jain was contrary to the facts because ATP had advanced Rs. 1,86,44,000 whereas in his statement Mr. Jain has stated that ATP had advanced Rs. 5,13,87,000. (b) In the remand proceedings, the appellant has tak....
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....r. Jain revealed that the amount was in fact received from ATP. The case, therefore, sought to be put up was that the real person who advanced the loan was ATP and it was routed through the accounts of Mr. P. N. Jain and Ms. Urvashi Jain. After detailed discussion, the Commissioner of Income-tax (Appeals) as well as the Income-tax Appellate Tribunal has held the transaction to be not genuine and bogus. 5. The submission of learned counsel for the appellant assessee was that once the source was explained, there was no occasion for making any-additions under section 68 of the Act. On the other hand, learned counsel for the Revenue argued that as far as the assessee company is concerned, the entries of loan are shown to have been made by Mr....
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....the amounts as loan in their own names to the assessee. Further, M/s. ATP and Shri Y. C. Vaidya had been able to demonstrate before us that they had sufficient sources for advancing the amount as loan to Shri P. N. Jain and Ms. Urvashi Jain, for investments in their names in the assessee company, without charging any interest. 20. The question that arises before us is that despite the assessee having established the abovementioned facts whether we can still look into the genuineness of the transaction or the same should be taken to be implied stand established and the assessee is still required to independently prove the genuineness for the entire transaction i.e. from the day of the proposal for taking the loan from the creditor till th....
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....ce to be considered is that no written agreement has been executed or any other material has been brought on record to indicate the period for which the loan amount was advanced/taken because even on the date of hearing before us it has been admitted by the learned authorised representative for the assessee that the loan amount has not been paid by the assessee to the creditors and the loan is still standing to the credit of these erstwhile directors (as later on they resigned from the directorship of the assessee company), in the books of the assessee. The other relevant circumstance required to be considered is that why the creditors, being directors of the assessee company at that time chose to advance loan in their names, when admittedl....
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....bove, the surrounding circumstances and applying the test of human probabilities, as laid down by the apex court in the case of Sumati Dayal (supra) while discussing the provisions of section 68, we are of the opinion it is highly improbable that Shri P. N. Jain and Ms. Urvashi Jain entered into such a loan transaction with the assessee that too after taking such a huge amount on loan from M/s. ATP and Shri Y. C. Vaidya where from such a loan transaction neither these two creditors nor the sub-creditors would have benefited in any manner. Similarly, it is highly improbable for M/s. ATP and Shri Y. C. Vaidya to advance loan to Shri P. N. Jain and his college going daughter Ms. Urvashi Jain without charging any interest merely for the purpose....