TaxTMI 
TaxTMI 
2020 (3) TMI 1190
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.... Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Aayush J Patel amounting to Rs. 16,07,178/- as unexplained loan. 3. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Vasantbhai S Patel amounting to Rs. 12,00,000/- as unexplained loan. 4. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Jignesh Vasantbhai Patel amounting to Rs. 57,50,000/- as unexplained loan. 5. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of entire deposits in the two bank accounts totalling to Rs. 1,27,39,300/-. 6. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of Rs. 1,12,49,155/- treating the liability towards creditors as cessation of liabilities u/s 41(1) of the Act.....
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....mation or any other documentary evidence in order to substantiate genuineness of the transaction. Accordingly the AO added the same to the total income of the assessee as unexplained cash credit u/s 68 of the Act. 4.2 With regard to loan form Shri Aayush J Patel a. The assessee during the year accepted unsecured loan of Rs. 16,07,178/- from Shri Aayush J Patel. The assessee in support of its claim furnished confirmation letter and ITR acknowledgment copy of the lender. b. However the AO on perusal of ITR, observed that the lender has not sufficient creditworthiness to advance loan. Therefore the AO purposed for treating the same as unexplained cash credit under section 68 of the Act. But the assessee failed to reply to the show cause notice issued by the AO. Accordingly the AO added the unsecured loan of 16,07,178/- to the total income of the assessee under section 68 of the Act. 4.3 With regard to loan from Shri Vasantbhai S Patel: a. The assessee during the year has taken fresh loan of Rs. 12Lakh only from the party and furnished the confirmation and copy of ITR in support of such loan. b. But the AO found that the lender has declared income of Rs. 3,61,800/- only. Hence he....
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.... criminal proceeding against him. Hence it is unable to submit any other evidence or confirmation from Shri Nilesh N Panchal. 5.2 With regard to loan from Shri Aaysush J Patel: The assessee submitted that the loan amount of Rs. 16,07,178/- represent amount credited during the year on account of its liability paid by Shri Aayush J Patel on its behalf. The assessee in its support furnished copy of ledger confirmation, and ITR of the lender. 5.3 With regard to loan from Shri Vasantbhai S Patel: With regard to the loan amount of Rs. 12Lakh, the assessee before the ld. CIT (A) filed copy of ledger confirmation, bank statement of Shri Vasantbhai S Patel and copy of ITR for the current year and preceding year. 5.4 With regard to loan from Shri Jignesh Vasantbhai Patel: With regard to the loan from Shri Jignesh Vasantbhai Patel, the assessee submitted that it has received loan of Rs. 29.5 lakh only and filed the confirmation from Shri Jignesh vasantbhai Patel, his ITR and bank statement. However the learned CIT (A) confirmed the addition made by the AO by observing as under: 5.5 With regard to loan from Shri Nilesh N Panchaal: The learned CIT held that in the absence of bank state....
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....e instant case relates to the unsecured loan received by the assessee in the year under consideration from certain parties which was treated as unexplained cash credit under section 68 of the Act by the AO. The learned CIT (A) subsequently confirmed the addition made by the AO. 8.1 The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties/lenders. These liabilities on the assessee were imposed to justify the cash credit entries under section 68 of the Act by the Hon'ble Calcutta High Court in the case of CIT Vs. Precision Finance (P) Ltd reported in 208 ITR 465 wherein it was held as under: "It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to t....
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....s transferred a sum of Rs. 26.50 lakhs only through cheques and Rs. 5 lakhs only through NEFT to the bank of India account and the SBI account respectively. These facts can be verified from the bank statements of the respective parties. Accordingly, we are of the view that the assessee has explained and satisfied the condition specified under section 68 of the Act to the tune of Rs. 31.50 lakhs only. 8.5 Taking up the matter further for the balance amount of loan of Rs. 18.50 lakh, we find that there was no banking transaction between the assessee and Shri Nilesh N Panchal. As such, the assessee failed to justify the receipt of loan from Shri Nilesh N Panchal based on any documentary evidence to the tune of Rs. 18.50 lakhs. Accordingly, we sustain the addition of the amount of Rs. 18.50 lakhs. 8.6 Now coming to the loan accepted from Shri Aayush J Patel for Rs. 16,07,178.00 we note that the assessee has not taken any loan either through banking channel or cash . As such Shri Aayush J Patel has paid certain liabilities on behalf of the assessee as evident from the ledger account of Shri Aayush J Patel maintained in the books of the assessee which is placed on page 73 of the pape....
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....heque no.917906 1,00,000 03-03-2011 Cheque no.919911 1,00,000 TOTAL 28,00,000 In view of the above, the AO treated the entire sum of Rs. 57.50 lakhs ( 29.50 lakhs and 28 lakhs ) as unexplained cash credit under section 68 of the Act. The view was subsequently upheld by the learned CIT (A). 9.1 However, on perusal of the bank statement of Shri Jignesh V Patel, we note that he has advanced loan to the assessee for Rs. 28 lakhs which was deposited in the bank account of the assessee namely Bank of India in the manner as discussed above. 9.2 The assessee subsequently transferred a sum of Rs. 25 lakhs from the bank of India account to its SBI account and Rs. 3 lakh to Aayush J Patel in the manner as detailed under: S.No Book date Bank date Cheque No Amount Note 1 13-11-2010 19-11-2010 41477 Rs. 15Lakh Shown as receipt 2 21-12-2010 21-12-2010 41494 Rs. 10Lakh Shown as receipt 3 15-02-2011 15-2-2010 41596 Rs. 3Lakh Adjusted with amount payable to Shri Aayush J Patel 4 Total Rs. 28lakh 9.3 We further note that the assessee in its books of accounts has made the entries for the rec....
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....e has received the amount from his aunt namely Madhuben Kanubai which he claimed to have received as of gifts from his aunt as per above table. Thus, from the above it is clear that the assessee has discharged his primary onus by furnishing the details about the creditworthiness of the party or availability of fund in the hand of party which have not been doubted by the authorities below. 9.6 It is also pertinent to note that, at the time of hearing we express from the bench to restore the matter to the file of the AO for fresh adjudication. However at the time of dictation of the order, we do not find any reasons to set aside the issue to the file of the AO as all the informations are available on record. Accordingly, instead of setting aside the file to the AO, we preferred to decide the issue involved in the case on hand. In view of the above, we hold that the assessee has explained the amount of loan received by it in the year under consideration to the extent as discussed above. Accordingly, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him to the extent discussed above. Hence the ground of appeal of the assessee is partly....
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....dmission of additional evidences. However the AO without prejudice also submitted that assessee in remand proceeding also failed to submit any concrete documentary evidence in order to substantiate the source of credit in the bank. 13. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the addition made by the AO by observing as under: It has been claimed that such deposits had been made by Mr. Nilesh out of the payments received from incoming promoters on different dates and the said amount after crediting in company books, were withdrawn in cash and then redeposited in these bank accounts by way of cash and cheque. It has been claimed that the sources of these amounts are either received from Mr . Vasan Patel and Mr. Jignesh patel or received against MOU. But again no details of this had been submitted. Only in/ rejoinder to the remand report, the appellant has claimed that these? amounts were paid to Bina Agro Tech and Bina Agro Herb Pvt Ltd, both companies being owned by Mr Nilesh. Such amount has been claimed to be\ Rs. 36,04,000/-. But no supporting evidence in relation to even this amount has been submitted. So far as the balance amounts ....
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....ion on account of the deposit of cash of Rs. 41,90,800.00 (60,40,800- 18,50,000.00) in the account maintained with bank of India. For our detailed finding, please refer the paragraph numbers 16.6 to 16.9 of this order. 16.2 Regarding the deposits of cheques amounting to Rs. 66.5 lakhs, we are of the view that such deposits cannot be added to the total income of the assessee merely on the reasoning that such bank account was not disclosed in the books of accounts. As such, the deposits in the bank account should represent the income of the assessee. 16.3 On perusal of the impugned bank statement, we find that the details of the cheques deposits by the parties stand as under: Date Received from Amount Rs. Cheque No. Remarks 12/11/10 Nilesh Panchal 1000000 RTGS/17111 Received from Vasant Patel & deposited the same in company account 18/11/10 Nilesh Panchal 1500000 RTGS Received from Vasant Patel & deposited the same in company account. 08/12/10 Jignesh Patel 1250000 917902 Received against MOU 20/12/10 Jignesh Patel 12500000 917903 Received against MOU 22/12/10 Jignesh Patel 100000 917906 Received against MOU 03/03/10 Jignesh ....
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....of Rs. 85 lakhs from the parties as discussed above through the involvement of the undisclosed bank account namely Bank of India. However, the assessee has shown receipt of cheques amounting to Rs. 66.5 lakhs from the parties as detailed in table shown somewhere in the preceding paragraph of this order. The difference amount of Rs. 18.5 lakhs transferred out of cash deposit were held as unexplained cash credit under section 68 of the Act by us while deciding the loan amount of Rs. 50 lakh from Shri Nilesh N Panchal in vide paragraph no 8.5 of this order. For detailed discussion please refer paragraph no 8.3 to 8.5 of this order. 16.8 Therefore in our considered view treating entire cash deposit of Rs. 60,40,800/- and making the addition of same to the income of the assessee will lead to double addition to tune of Rs. 18.5 lkah in the hand of the assessee. As the same was already confirmed by us while deciding the genuineness of the loan received. 16.9 As far as, the remaining amount of cash deposit of Rs. 41,90,800/- is concerned. We note that the learned AR before us agreed to addition with regard to cash deposit. Accordingly we sustain the addition of Rs. 41,90,800 on account c....
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....O disallowed the claimof the assessee for the reasons as discussed above and the view of the AO was also subsequently confirmd by the learned CIT (A). 25. At the oustset we not that the provisions of section 36 (2) of the Act allow the assesse to claim the dedution of bad debt written off during the year under consideration subject to the condition specified therein. The provision of secton 36 (2) of the Act read as under: Other deductions. 36. (1) ********* 2) In making any deduction for a bad debt or part thereof, the following provisions shall apply- (i) no such deduction shall be allowed unless such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt or part thereof is written off or of an earlier previous year, or represents money lent in the ordinary course of the business of banking or money-lending which is carried on by the assessee; 26. On perusal of the provision of the sction 36(2)(i) we note that the legislature has used the word "shall" i.e. it is mandatory. Hence to avail the benefit of the bad debt written off the impugned amount should have been recognised as inco....