TaxTMI 
TaxTMI 
2020 (3) TMI 714
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....rd to the impugned additions. 2.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the validity of proceedings as well as notice u/s.153A dated 19.11.2013 for A.Y.2011- 12, though the conditions precedents were not fulfilled. Therefore, the notice as well as proceedings u/s.153A(1) were wholly illegal and unlawful in view of no incriminating material found during the course of search for this year. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the validity of proceedings as well as notice u/s.153A dated 19.11.2013 for A.Y.2011-12. 3.1 The Ld.CIT(A) has grievously erred in law and on facts in confirming the disallowance of interest exp. to the extent ofRs. 24,30,617/-without considering the written submission and details produced. The Ld. CIT(A) has passed a cryptic and non-speaking order confirming the disallowance. 3.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT(A) ought not to have upheld the disallowance of interest exp. to the extent ofRs. 24,30,617/-without considering the written submission and details produced. 4.1....
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....it has interest-free loan of Rs. 7,80,00,000/-. The detail of such interest-free loan stands as under: Name of the Firm Interest free amount Master Developers 7, 45,00,000/- RJD Buildcon Ltd. 35,00,000/- Total 7,80,00,000/- 10. In view of the above the assessee claimed that the amount of tax was paid out of such interest-free loan. Accordingly the assessee claimed that there cannot be any disallowance on account of interest expenses. 11. However, the learned CIT (A) disagreed with the contention of the assessee and therefore confirmed the order of the AO by observing as under: 7.1 During assessment proceedings,-the A.O made the impugned disallowance holding that the appellant had used unsecured loans taken by him, on which interest had been paid and claimed as expenditure, to pay his income tax dues in respect of his block assessment demand, and that this was also recorded as such in his books of accounts. It is seen from a perusal of the assessment order and submissions made by the appellant that has not corroborated with documentary evidences his claim that interest bearing funds were not used to pay his income tax dues, and that the same we....
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....he 4th issue raised by the assessee in ground No. 4 is that the learned CIT (A) erred in treating the amount of loan received from M/s MD for Rs. 7,45,00,000/- as unexplained cash credit under section 68 of the Act. 19. The assessee during the year under consideration has received a sum of Rs. 7,45,00,000/- as loan from the firm namely MD in which he (the assessee) was one of the partner. The assessee in support of such loan transaction has filed the copy of the ledger account in the books of M/s Masters Developer. 20. However, the AO during the assessment proceedings observed certain facts as detailed under: i. M/s MD did not file its return of income after the assessment year 2002-03. Similarly, there was no balance sheet, profit and loss account, computation of income of M/s MD was filed during the assessment proceedings. ii. The assessee being partner in M/s MD was in a position to fabricate the ledger account furnished by him showing the amount of loan received from it. Therefore, the copy of such ledger account cannot be trusted without the authenticated documentary evidence i.e. balance sheet, profit and loss account of M/s Master Developers. ....
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....the assessment order and the submissions made by the appellant. It is seen from a perusal of the same that while a copy of bank statement of Master~Developers has been submitted, the copies of ledger accounts and accounts of the appellant from the books of Master Developers and Rajnibhai Desai, are .simple printouts without any signature. These cannot be accepted as having any evidentiary value. It is also seen that the appellant has given a very convoluted explanation for the-said unsecured loan (reproduced in Para 4.2 above), which is not backed by any documentary evidences. In view of these facts and the fact that no balance sheet or P & L A/c or bank statements of Master Developers, Rajnibhai Desai or the appellant have been produced to corroborate and explain the transactions between the* three parties have been produced, the addition of Rs. 7,45,00,000/- made by the A.O is confirmed. Ground of appeal No 2 is dismissed. 28. Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us. 29. The learned AR before us submitted that the amount of loan was taken from the partnership firm namely MD and the assessee has furnished necessary documentary e....
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....itworthiness. Mere payment by account payee cheque was not sacrosanct nor could it make a nongenuine transaction genuine." 33. Admittedly the assessee has discharged its onus by furnishing the necessary details such as a copy of ledgers, confirmation, bank details, etc. in support of identity of the parties. 34. There is also no doubt that the transaction for the loan received from M/s Master Developers was carried out through the banking channel as evident from the submission of the assessee before the ld. CIT-A which is reproduced as under: "Where as in present case the appellant produces bank statement as well as confirmation of firm hence facts of the case relied upon is not identical hence not applicable. The observation/conclusion of the Learned AO is not correct." 35. This fact was also admitted by the learned CIT (A) in his order as evident here in below: 6.2. I have carefully considered the assessment order and the submissions made by the appellant. It is seen from a perusal of the same that while a copy of bank statement of Master Developers has been submitted, the copies of ledger accounts and accounts of the appellant from the books of Master ....
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.... 3rd condition, i.e. creditworthiness of the parties, regarding this it is also pertinent to note that M/s Master Developers did not file the income tax returns for the assessment years 2008-09 to AY 2010-11 under section 139 (1) of the Act. But M/s Master Developers has filed the returns of income in response to the notice issued under section 148 of the Act, declaring the income which has been elaborated in the preceding paragraph. Indeed the returns were filed by the M/s Master Developers subsequent to the assessment order dated 30-03-2015 declaring the income which has been elaborated in the preceding paragraph. As such the income declared by the M/s Master Developers in its income tax returns were duly accepted by the Revenue. Though, these returns were filed by MD subsequent to the assessment in the hands of the assessee, but these returns in our considered view are crucial for determining the net worth of MD. These returns were filed before the learned CIT (A) and no doubt was raised on these returns. 38. Similarly, we also note that the assessee in respect of source of fund in the hands of the lender i.e. MD has furnished the sufficient documentary pieces of evidence suc....
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....lected the same from the office of the income tax Department. But he has not done so. 42. In our considered view once the assessee has discharged primary onus by proving the identity of lender, genuineness of transaction and capacity to advance the loan then it is the burden of the revenue to prove it otherwise. In this regards we draw guidance and support from decision of Hon'ble Madhya Pradesh High Court in the case of CIT vs. Metachen Industries reported in 116 Taxman 572 where it was held as under; "Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee-firm is over. The assessee-firm cannot ask that person who makes investment, whether the money invested is properly taxed or not. The assessee is only to explain that the investment has been made by the particular individual and it is the responsibility of that individual to account for the investment made by him. If that person owns that entry, then the burden of the assessee-firm is discharged. It is open for the Assessing Officer to undertake further investigation with regard to that individual who has deposited thi....