TaxTMI 
TaxTMI 
2014 (4) TMI 671
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.... declaring net loss of Rs. 5,553 on 27th November 2003. As against the returned income, the assessment was completed at an income of Rs. 1,89,28,640 and he major addition was on account of profit worked out in respect of construction activity of Rs. 1,60,96,185 and the addition on account of bogus loan made under section 68 for sums aggregating to Rs. 27,50,000. In the quantum proceedings, the matter had reached up to the stage of Tribunal from where the addition in respect of profit of construction was deleted. However, with regard to the addition under section 68 in respect of loan taken from two parties viz. Mr. D.A. Sawant and M/s. G.R. Industries, was confirmed. Insofar as the issue of loan taken from M/s. G.S. Sachdeva, the same was remanded back to the file of the Assessing Officer for fresh consideration, which is not the subject matter of the penalty in the present appeal. 3. The facts, leading to the addition made under section 68 with regard to two parties are that during the course of the assessment proceedings, the Assessing Officer noted that the assessee has borrowed loans for sums aggregating to Rs. 50,15,000 from different parties. To verify the genuineness and cr....
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....y, in the case of M/s. G.R. Industries, from whom the assessee had borrowed sum of Rs. 2,50,000, the assessee could not produce the said party to verify the genuineness of the loan. Accordingly, the same was also added under section 68. The said additions now have been confirmed by the Tribunal in quantum proceedings mainly on the ground that Mr. D.A. Sawant, did not had the capacity and creditworthiness to give a loan amounting to Rs. 20,00,000 and he was a mere salaried employee of Rs. 8,000 per month. Further, the assessee also could not explain as to why Rs. 20,00,000 was given by Mr. Kawaljeet Singh Sachdeva to the assessee through the bank account of Mr. D.A. Sawant. Thus, the genuineness and the creditworthiness could not be substantiated by the assessee. Similarly, the loan amount of Rs. 2,50,000 received from M/s. G.R. Industries was also confirmed on the ground that the assessee did not discharge its onus cast upon him. 5. In the penalty proceedings, the assessee, vide letter dated 30th November 2009, was required to show cause, as to why the penalty should not be levied on these circumstances. However, it appears that in respect to the said notice, the assessee could no....
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....see's letter dated 18th January 2010, which it was stated to have been filed before the Assessing Officer, wherein it was explained by the assessee that the assessee had received the loan through cheques from Mr. D.A. Sawant, and the person who had deposited the cheque in his bank account is not a known person to the assessee. There is no nexus between the assessee and the lender. There is no requirement under the law to prove the source of the source and once the identity of the creditor has been proved and the loan has been received through cheque, then no penalty should be levied. Similarly, in case of M/s. G.R. Industries, the loan was taken through cheque and the same has been repaid. In case of loan taken from Mr. D.A. Sawant also, the same has been repaid. However, the learned Commissioner (Appeals) again referred to the decision of the Hon'ble Delhi High Court in CIT v/s Oasis Hospitalities Pvt. Ltd. & Ors., ITA no.2093 of 2010, judgment dated 31st January 2011, and without discussing the issue on the explanation given by the assessee and on merits, has dismissed the assessee's appeal. 8. Before us, the learned Counsel, Mr. K. Gopal, on behalf of the assessee, reiterated t....
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....ough he confirmed the giving of loan to the assessee and has also given the particulars of the cheques, date of issuance and the bank details, but at the same time had stated that the source of Rs. 20,00,000 in his bank account was from Mr. Kawaljeet Singh Sachdeva, who has managed to get all the cheques deposited in his bank account and he has merely issued the cheques to the assessee. He does not have his own money in his bank account. He was further asked as to what was the benefit he received in doing so, he stated that he has done so as he was working under Mr. Kawaljeet Singh Sachdeva. The Tribunal, after taking into consideration all these vital facts, has confirmed the addition on the ground that the genuineness of the transactions of the loan and the creditworthiness could not be established in this case. The assessee's explanation before us as well as before the learned Commissioner (Appeals) is that the identity of the person has been established and the genuineness of the transaction is borne out from the fact that the assessee has received the loan through account payee cheques which has originated from the bank account of the lender and insofar as the assessee is conc....