TaxTMI 
TaxTMI 
2018 (2) TMI 1702
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..... 4. That the Ld.CIT(A) has not taken cognizance of the surrounding fact and circumstances governing the loan transaction and that by failing to do so, a serious infirmity has crept into his order which can be set right by the Hon'ble Tribunal. 5. That the Ld.CIT(A) has erroneously held that the test of prudence and test of human probabilities cannot be applied on the facts of the instant case. 6. Whether on facts of the case, Shri Mohit Gaur and Kanish Sharma be said to have proved their capacity to lend to the assessee. 7. That the Ld.CIT(A) has erred in holding that section 2(22)(e) is not attracted on the said to have satisfactorily proved their capability to lend to the assessee. 8. That the Ld.CIT(A) has erred in law and on facts by taking a view that since the assessee was not having a debit balance in the books of accounts of company, the applicability of deemed dividend is not warranted. 9. Whether payments, made by the company to the assessee on a mutual, open and current account be said to be covered by the ambit of deemed dividends. 10. That the Ld.CIT(A) had committed a grave error in not passing a speaking....
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.... ITR in respect of unsecured loans raised from each lender and also directed to establish their creditworthiness and genuineness as proposed under section 68 of the Act. In response to the same assessee vide letter dated 02/11/11 filed copy of ITRs, confirmation and bank statement of unsecured loans. Statement of Sh.Mohit Gaur, Sh.Kanishk Gaur, as well as assessee were recorded under section 131 of the Act. 2.5. Ld. AO from the details submitted in respect of Sh.Mohit Gaur and Sh.Kanishk Gaur and on the basis of their statements observed that these creditors were offering meager returned income whereas, had advanced loans of Rs. 50 Lacs each which is disproportionate to their known source of income. Ld. AO recorded that assessee could not satisfactorily explain the source of various credit entries appearing in the bank statements of the creditors well before the date of advancing the loans. He observed that the loan has been advanced on 14/01/09 vide cheque No. 12 7151 and 127101 respectively by these two parties of an amount of Rs. 50 Lacs from Allahabad bank. However these two creditors were not able to explain satisfactorily regarding the cash deposits appearing in the bank s....
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.... the Act. Ld. DR submitted that no doubt two parties appeared before Ld. AO and provided confirmation regarding amount given by them to assessee, however assessee has not been able to establish genuineness of transaction and creditworthiness of these two creditors. In so far as other creditors are concerned, assessee could not produce the parties before Ld.A.O. 4.1. Ld.DR placed reliance upon various decisions in the written submissions, which have been attempted by Ld. Counsel to be distinguishable on facts by way of a written rejoinder. 4.2. On the contrary, Ld.Counsel contended that, assessee received these funds from persons who have filed their return of income and has provided confirmation, and it was not open for revenue to now contest their credibility. He submitted that Department cannot enquire regarding the source of source of the creditors. He thus supported the order passed by Ld.CIT(A). 4.3. We have perused the submissions advanced by both the sides in the light of the records placed before us. 4.4. Under section 68 of the Act, the primary onus is upon assessee to offer explanation in regards to any sum credited in the books of accounts. Thereafter, Ld. AO....
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.... considered, of assessee having discharged the initial onus cast upon the assessee to identify the creditors and also prove creditworthiness and genuineness of the transaction. However that is not the case in the present facts before us. 4.6. On perusal of the order passed by Ld.CIT(A), it is observed that he has merely deleted additions by observing as under. "12. I have carefully considered the submissions of the appellant, the observations made by the A.O. in the Assessment Order and the facts of the case along with various judgments as discussed above. With respect to unsecured loans raised by the appellant during the year under consideration, the appellant filed confirmation from the lenders, copy of their bank account and copy of their income-tax returns. Sh. Mohit Gaur and Sh.Kanishk Sharma had advanced Rs. 50.00 Lacs each to the appellant during the year under consideration. Sh. Mohit Gaur received back an amount of Rs. 16.00 Lacs from the appellant and, therefore, outstanding loan from Sh. Mohit Gaur to the appellant at the close of the year as Rs. 34.00 Lacs. Sh. Mohit Gaur has also filed a copy of acknowledgment for having filed his Return of Income for the A....
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.... time. Similarly, Sh.Kanishk Sharma, in response to this query submitted before the A.O. that Sh. Sanjeev Gaur, the appellant, was his brother-in-law and was in need of money at that time. His (Kanishk's) loan had already been sanctioned and this is why being a relatives he helped the appellant. Already the appellant had returned an amount of Rs. 25.00 lacs in the month of Jan. 2010 and the remaining amount of Rs. 25.00 Lacs only was due from him. As he helped the appellant on his requirement, he (Kanishk) will also expect the same amount of help in the future. According to Sh. Kanishk it (advancing of loan to the appellant out of his overdraft amount on mortgaging his property) was a right decision. 14. With regard to unsecured loans raised by the appellant from his employees, the AO has observed that these persons were having meager income and there were cash deposits in their bank accounts before they advance loans to the appellant. The details filed by the appellant before the A.O. with respect to these creditors regarding their confirmation and copy of bank account were examined and it is seen that in all the cases the loan amount has been advanced to the appellan....
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....ed their statements also as discussed above. On the basis of copies of acknowledgement of Return of Income it is seen that both of them are assessed to tax. Copy of their bank account was filed which shows that the transactions are through banking channels. The source of advancing loan amount to the appellant in both the cases is the overdraft facility which they have availed against mortgage of their properties. Copy a letter from Manager, Allahabad Bank dated 13.01.2009 has been filed in both the cases showing sanction of overdraft amount of Rs. 50 lacs to each of them. No defect or falsity has been pointed out by the AO in the documentary evidence filed. The only reason for disallowance of the unsecured loans raised by the appellant is that the conduct of the creditors in advancing the loans to the appellant has been found by the AO to be against prudence and reasonableness. In their statements recorded by the AO both the creditors have admitted the fact of advancing loans to the appellant and filed documentary evidence before the AO. In their statement both of them submitted before the AO that reason why they advanced loans to the appellant out of their overdraft facility was t....