AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (7) TMI 368
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the additions in the capital account of the assessee by holding the same as unexplained additions as his finding in Para 7.6.7 of the appellate order. 2.(b) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in upholding the addition made by the AO in respect of capital addition made by the assessee ignoring the fact that the complete sources of addition were duly furnished by the appellant being transfer of funds from M/s Euro Steels. 2.(c) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has factually erred in holding that there were any cash deposits in the bank account of M/s Euro Steels as per his finding in Para 7.6.5 of his order. 2.(d) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in concluding that the assessee was liable to explain the source of deposits in the hands of M/s Euro Steels as per his findings in Para 7.6.5 of his order. 3. That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in confirming an addition to the tune of Rs. 1,62,50,000/- on account of alleged unexplained unsecured loans taken by the appellant during the assessment year as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es and called for remand report from the Assessing Officer in respect of the various evidences / explanation given by the assessee. After considering the remand report, counter objections of the assessee on the said remand report and also after considering the submissions of the assessee, the Ld. CIT(A) partly allowed the appeal of the assessee. He, however, has confirmed the additions as contested vide above noted grounds of appeal. 5. We have heard the rival contentions of the Ld. Authorized Representatives of both the parties and have gone through the record. Our findings in respect of the matter are as under: 6. Ground No.1 : Ground No.1 is general in nature. The assessee, in this ground has contested the total addition amounting to Rs. 2,66,60,000/- . However the assessee vide subsequent grounds has contested specifically the each part of the aforesaid total addition . Hence this ground will be automatically taken care in our adjudication on the subsequent grounds. 7. Ground No.2 : The assessee vide this ground has contested the addition of Rs. 1,03,10,000/- on account of introduction of the said amount in the capital account of the assessee treating the same as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear ending 31.03.2013. (iii) Copy of death certificate of Sh. Ramesh Jain as copy of ITR is not traceable 7. Since the assessee has not furnished the copy of ITR filed by M/s. Euro Steels for the A.Y.2013-14. In order to verify the creditworthiness and genuineness of the unsecured loan given by Sh. Rohit Jain, partner of M/s. Euro Steels, the copy of ITRs for the A.Ys.2012-13 and 2013-14 and audited balance-sheet were called for from the ITO, Ward-1, Patiala where the PAN of the firm was lying. After verification of documents supplied by the assessee and documents called for from ITO, Ward-1, Patiala, the following discrepancies have been noticed: (b) During the year under consideration, the assessee has introduced capital of Rs. 1. 031 crores and out of this amount, Rs. 90,75,000/- have been given by the firm M/s. Euro Steels, Mandi Gobindgarh. Further the firm M/s Euro Steels has also given Rs. 57,55,000/- in the shape of unsecured loans. But on perusal of ITR of the firm, it has been noticed that the firm has filed ITR for the A.Y.2013-14 declaring an income of Rs. 99,057/- only. Hence the creditworthiness and genuineness of the loans revised from the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that the submissions already given by the assessee may kindly be considered. f. In Point f. the Ld. AO has alleged that the assessee has not filed any documentary evidence with regard to Rs. 260000 transferred from the savings bank account of the karta of the assessee, however, this allegation of the Ld. AO is not at all correct as we have duly filed the copy of the savings bank statement of the Karta of the assessee on Page 32-33 of the paperbook and from a perusal of the same it is clear that the Karta has received the said amount from the banking channels and no adverse remarks against the same has been given by the Ld. AO in the remand proceedings, therefore, the explanation given by the assessee may kindly be considered and the addition with regard to the same may please be deleted. 9. However, the Ld CIT(A) has given his findings in respect of each of the above additions as under:- "7.6.4 On careful consideration of the rival contentions, it has been noticed that although the learned AR of the assessee HUF has tried to explain the source of addition to capital account to the extent of Rs. 98,35,000/- [Rs. 90,75,000/- + Rs. 2,60,000/- + Rs. 5,00,000/-] ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransfer of equal amount of Rs. 2,60,000/- in the same bank account, the sources of which remained unexplained even during appellate proceedings. As the deposits in the same bank account to the extent of Rs. 2,60,000/- have not been explained and as the onus lies upon the assessee HUF has not been discharged, the source of capital contribution to the extent of Rs. 2,60,000/- in the books of assessee HUF cannot be treated as explained. So, the addition to the extent of Rs. 2,60,000/- made by the Assessing Officer on account of unexplained addition to capital account of the assessee HUF out of total addition of Rs. 1,03,10,000/- is upheld too. 7.6.7 In nutshell, whole of the addition of Rs. 1,03,10,000/- made by the Assessing Officer in this on account of unexplained addition to capital account of the assessee HUF is, therefore, upheld." 10. We have considered the rival contentions of the Ld. Representatives of the parties and have also gone through the record. So far as the addition of Rs. 90,75,000/- and further a sum of Rs. 5,00,000/- claimed to have been received from M/s Euro Steels is concerned, the AO in his remand report, as noted above, has rejected the contention....
X X X X Extracts X X X X
X X X X Extracts X X X X
....see was partner and the same was duly assessed to the income tax. So far as the genuineness of the transactions was concerned, even in that respect no doubt has been raised by the AO. Admittedly, all the amounts by M/s Euro Steels has been transferred to the assessee through banking channels. However, the ld. CIT(A) has rejected the contentions of the assessee and upheld the additions made by the AO citing different reasons saying that the assessee could not prove the source of numerous deposits in the bank accounts of M/s Euro Steels. However, as observed above, the AO in his remand report has not pointed out any doubt about the source of numerous deposits in the bank accounts of M/s Euro Steels. Further, the assessee has been stating that the source of said deposits in the accounts of M/s Euro Steels was out of its business receipts in normal course. In the remand proceedings neither the AO asked the assessee to furnish further evidences in respect of the source of deposit into the accounts of M/s Euro Steels nor the AO himself called the M/s Euro Steels to prove the source of deposits. Moreover, the AO himself called for the necessary details and documents from the concerned AO ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther details. No doubt has been raised either by the AO or by the CIT(A) regarding the transaction so far as the receipt of Rs. 2,60,000/- by the assessee from saving account of the individual is concerned. So far as the addition of Rs. 4,75,000/- was concerned, the assessee admittedly could not prove with reliable evidence the source of the said amount and the creditworthiness of the creditor and genuineness of the transaction. 11. In view of the above discussion, the addition to the extent of Rs. 4,75,000/- is upheld whereas, the remaining part of the additions out of the total additions Rs. 1,03,10,000/- is ordered to be deleted. This ground of the appeal is accordingly partly allowed. 12. Ground Nos. 3 & 4 : The assessee through these grounds of appeal has agitated the addition of Rs. 1,62,50,000/- on account of alleged unexplained unsecured loans. The assessee in this respect explained that the assessee HUF availed many short and long term loans from various banks as well as financial institutions. As the position of the business further declined, the assessee was in dire need of funds, therefore, the brother in law of the Karta of the assessee and other family member....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deration the assessee HUF received Rs. 20 Lakhs as Unsecured Loan from Mrs. Smiti Jindal. Mrs. Smiti Jindal is wife of the karta of the assessee HUF. The said amount has actually been paid by M/s Euro Steels on the behalf of Smiti Jindal and the same is evident from the collective perusal of the copy of account of Mrs. Smiti Jindal in the books of M/s R.D Steels enclosed in the paperbook at Pages-42 and the copy of the bank statement enclosed at Pages 44-45. It is also for your information that Mrs. Smiti Jindal is the sister of Rohit Jain Partner in M/s Euro Steels. We are also filing before your goodself the Return of Income in the paperbook at pages- 43 and the confirmed copy of account of Smiti Jindal to further substantiate the genuineness of the transaction. * From Ramesh Jain-Rs. 54.31.000/- For the addition amounting to Rs. 54,31,000/-, it is submitted before your goodself that the said amount was lent by Sh. Ramesh Jain who is the Father in Law of the Karta of the assessee HUF. We are enclosing herewith the bank statement of Ramesh Jain for the relevant assessment year which makes it amply clear that not only the sources of the loan are very much verifiab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is duly attached herewith at Pg 63 of the Paper Book. * From Rohit Kumar Jindal - Rs. 13,90.000/- Regarding the unsecured loan of Rs. 13,90,000/-, it is submitted that the said amount has been lent by Sh. Rohit Kumar Jindal himself i.e., the karta of the HUF. Out of the said amount, Rs. 11,00,000/- has been paid by M/s Euro Steels on the behalf of Rohit Jindal which is evident from the bank statement of M/s Euro Steels attached on Pg 59 of Paper Book. The said amount has been earned in the regular course of business of M/s Euro Steels. Further, the remaining amount of Rs. 2,90,000/- has been lent from the personal savings account of the Karta of the assessee HUF. The said amount of Rs. 2,90,000/- was received by the assessee from his father namely Sh. Dev Krishan Jindal. The same is being duly reflected in the attached bank statements at Pg 60-61 to of the Paper Book. In addition to the above, the Income Tax Return alongwith confirmed copy of account is attached herewith at Pg _to _ of Paper Book. 5.5 It is for your information here that the transfer of funds made from M/s Euro Steels has been reflected as unsecured loans from Mrs. Superna Jind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uine. (c) Further, the assessee has furnished documents with regard to unsecured loans raised of Rs. 54,31,000/-from Sh. Ramesh Jain, who has since been expired and copy of ITR has not been supplied. In this regard, it is submitted that Sh. Ramesh Jain having PAN ADVPJ2567M is also assessee of this ward, who has not filed any ITR for the A.Y.2013-14. Hence the person who is not an assessee has given an loan of Rs. 54,31,000/- cannot be accepted. Hence the source of giving loan i.e. creditworthiness of Sh. Ramesh Jain has also not been proved by the assessee and deserves to be rejected. (d) Further the assessee has submitted in his written submissions that Sh. Dev Krishan Jindal HUF has given unsecured loans of Rs. 19,95,000/-, which were raised from M/s. Kiran Industries, which is the proprietorship of Sh. Dev Krishan Jindal. But on checking the PAN of M/s. Kiran Industries (AAQPR1921D), it has been found that the proprietor of the concern is Smt. Santosh Rani. But the assessee has not produced the documentary evidence with regard to the source of the concern M/s Kiran Industries, who has given such loans of Rs.l9,95,000/-. Hence the creditworthiness has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eath of the lender the same could not have been filed. Thus, the same cannot be any way said to be assessee's fault. Moreover, from a perusal of the bank statement of Sh. Ramesh Jain it can be seen that Rs. 34,34,213/- has been brought forward from the earlier years. Further, as evident from the bank statement the lender had availed loan from PNB on 48-49 amounting to Rs. 33.60 Lakhs out of which funds has been advanced to assessee. The Ld. AO in her remand proceedings have not given any adverse remarks against the same and therefore, merely because the return of income has not been filed of a dead person, it cannot be held that the creditworthiness of the said lender cannot be proved when the sources of the loan are genuine and bona fide. d. In Point d the Ld. AO with regard to the loan received from Dev Krishan Jindal has alleged that the source of the source of the said loan, which was from M/s Kiran Industries is not the Proprietorship concern of Dev Krishan Jindal, (as stated by the assessee in the detailed submissions) but of Santosh Rani (Wife of Dev Krishan Jindal). In this regard, it is stated that although due to some miscommunication it has been inadvertentl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....UF that the source in the hands of the assessee HUF stand explained and action if any may be taken in the hands of M/s Euro Steels cannot be accepted as the onus cast upon the assessee HUF to explain the source of deposits in the bank account of M/s Euro Steels has not been discharged. As the deposits in the bank account of M/s Euro Steels have not been explained and as the onus lies upon the assessee HUF has not been discharged, the source of unsecured loans in the name of different family members and relatives to the extent of Rs. 1,42,55,000/- in the books of assessee HUF cannot be treated as explained. So, the addition to the extent of Rs. 1,42,55,000/- made by the Assessing Officer on account of unexplained unsecured loans out of total addition of Rs. 2,19,71,000/- is, therefore, upheld. 7.7.6 As regards the transfer of funds to the extent of Rs. 2,90,000/- from the bank account of Sh. Rohit Kumar Jindal, Karta of assessee HUF, is concerned, it has been noticed that the amount has been transferred from receipts on account of EPF transfer. It means, the source of Rs. 2,90,000/- taken by way of unsecured loan to the extent of Rs. 2,90,000/- (out of total loan amount of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oceedings and as the onus lies upon the assessee HUF has not been discharged, the source of unsecured loan to the extent of Rs. 19,95,000/- from M/s Dev Krishan Jindal & Sons (HUF) cannot be treated from explained sources. So, the addition to the extent of Rs. 19,95,000/- made by the Assessing Officer in this case on account of unexplained unsecured loan from M/s Dev Krishan Jindal & Sons out of total addition of Rs. 2,19,71,000/- is also upheld. It has also been noticed that the amount shown in the balance sheet of M/s Euro Steels in the name of M/s R.D. Steels, a proprietary concern of the assessee HUF, is only at Rs. 1,18,63,037/-. Apart from this an amount of Rs. 5,00,000/- has been shown as recoverable from Sh. Rohit Kumar Jindal (HUF) but no amount has been shown as recoverable from any other person of the assessee HUF group. This also gives indication that the amount received by the assessee HUF from M/s Euro Steels is unexplained as the source of receipts in the bank account of this concern remained unexplained even during appellate proceedings. 7.7.9 In nutshell, the addition of Rs. 1,62,50,000/- [Rs. 1,42,55,000/- + Rs. 19,95,000/-] made by the Assessing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....concerned, the Ld CIT(A) has already deleted the addition in this respect. Since the parties are not in appeal in respect of the above transaction, hence, no adjudication is required in this respect. So far as the unsecured loans received from Shri Dev Krishan Jindal (HUF) of Rs. 19,95,000/- is concerned, the AO in his remand report has observed that the said amount was received by the said concern from M/s Kiran Industries and that the assessee had failed to prove the source of the said concern M/s Kiran Industries. However, the assessee in his counter objections has submitted that the said M/s Kiran Industries was the proprietorship concern of Smt. Santosh Rani and that even the income declared by Smt. Santosh Rani was sufficient enough to justify her creditworthiness. The Ld CIT(A) in this respect has observed that there were some transfer entries of equal amount of Rs. 19,95,000/- in the bank account of M/s Kiran Industries. That since the source of deposit in the bank account of M/s Kiran Industries remained unexplained, he, therefore, held that the genuineness of the transaction is not proved. However, in our view, the fact that there was sufficient income declared by S....