TaxTMI 
TaxTMI 
2020 (9) TMI 150
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....rarily added the amount of Rs. 29,00,000/-U/S 68 of the Income Tax Act as income from undisclosed source without accepting the fact of creditworthiness of the persons giving loans and the genuineness of the transactions. 4. Rs. 29,00,000/- received as unsecured loan wrongly and arbitrarily included in total income should be deleted and reduced from the total income of the assessee basing on the facts & circumstances of the case. 5. Unsecured Loan taken during FY 2006-07 has been repaid during the FY 2009-10 by cash amounting to Rs. 5,72,200/- and during the FY 2010-11 (in the month of June 2010) an amount of Rs. 2,66,600/- was refunded towards unsecured loan through cheque and during the FY 2010-11 (in the month of October 2010) an amount of Rs. 1,37,500/- was refunded towards unsecured loan through cheque. All the details were submitted to Ld. CIT (Appeals) in the course of hearing. 6. Loan confirmation from 98 (Ninety Eight) persons were submitted to Ld. CIT (Appeals) in the course of hearing to prove the genuineness of the transactions. 7. That the Ld. CIT(APPEALS) has erred in law and facts in confirming the additions made by the A.O. amounti....
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....e AO added the entire Rs. 29 lakhs u/s.68 of the Act to the total income of the assessee. 4. Feeling aggrieved from the above order, the assessee appealed before the CIT(A). The CIT(A) after considering the order of AO and documents produced before him has sustained the addition made by the AO after observing as under :- "9. Due to the insistent notices for hearing from the office of the undersigned, the appellant has submitted ledger account of unsecured loan received by him from 98 persons in cash each being less than Rs. 20,000/- in denomination. From the ledger account, it is also evident that almost every day, the appellant was receiving unsecured loan in cash amounting to less than Rs. 20,000/- from some persons and recorded the same in his accounts. The appellant submitted that the unsecured loan in cash were accepted from friends, relatives and staff because of constraints of funds and the amount was taken in cash as and when required for running and survival of the business. Needless to mention - that the amount was taken as interest free deposits. It is a matter of utter surprise that the appellant could gather 93 friends, relatives and staff who have given hi....
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....ated as unexplained cash credit u/s. 68 of the Act. The action of the AO is therefore sustained." 5. Ld.AR filed the paper book containing page Nos.1 to 102 and also filed the written submissions, which read as under :- That the instant appeal has been preferred "against the impugned and erroneous order passed by the learned Commissioner of Income Tax (Appeals), Cuttack, Odisha dt. 22.01.2016 passed in IT Appeal No.152/2014-15 only by relying the order of assessment passed by the Assessing Officer dt. 28.03.2014 U/s. 144/254 of the Income Tax Act, 1961 for the assessment year 2007-08 determining the total assessment at Rs. 80,53,670/- on the pretext that the loan to the tune of Rs. 29,00,000/- which is the subject matter of assessment received by the assessee for the financial year 2006-07 be treated as undisclosed cash credit U/s. 68 of the Income Tax and added to the total income. BACKGROUND OF THE CASE IN BRIEF 1. That the appellant is the proprietor of M/s Chaitanya Minerals and deals with processing and selling of Chrome Ore. During the assessment year 2007-08, due to the business need and to get rid of financial-crisis, the appelant approached hi....
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....ith the creditors and the creditworthiness of his creditors vis-a vis the transactions which he had with the creditors ,the burden stands discharged and the burden then shifts to the revenue to show that the amounts in question actually belonged to or was owned by the assessee himself. The identities of the creditors are on record and are accepted, the genuineness of the loan transactions is well proved ,these being made through cash of very small amounts within-the provisions of the Law and lastly the potentials or capabilities of the so-called loan creditors had merely been doubted or disbelieved by the Assessing Officer without any sum and substance and without any basis whatsoever. Onus of proving the transactions had been discharged by the assessee as the circumstantial evidence adduced showed the genuineness of the loans and the identity of the creditors had also been established. 4. Addl. CIT vs Hanuman Agarwal (1985) 151-ITR-150(Patna): It can never be within the exclusive knowledge of the debtor to know the sources of income of the creditor. Once he is supplied the credit that he-wants, he is satisfied. Once he has furnished the true identity, the correct....
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....ties to the tune of Rs. 29,00,000/-and the enforceable liability is treated as income while passing the assessment order. The observation arrived at by the learned assessing officer is nothing but perverse in as much as based on absolute -surmises, conjectures, presumptions, suspicions, etc. and far away from the legal position of law. "Presumption"/ "Suspicion", however strong, cannot take the. form of "Evidence''. The assessee has come out with necessary supporting materials, documentary evidences and* individual confirmations. Neither any contradiction, nor any in-genuineness could - be substantiated by the CIT(A) except merely disbelieving the assessee's submissions and evidences. Principle of preponderance of probability has no. role to play in assessment matters which are only to be decided on "evidences". 2. It is quite relevant to mention here that the learned Commissioner while dealing with the appeal preferred at the instance of the appellant has not discussed the entire factual matrix of the case as well as the settled legal propositions and passed the impugned and erroneous order which is under challenge in this appeal. The loan which is re....
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....sessee and all the loans were taken in cash, therefore, the genuineness of transactions are completely in doubt. The refund of loan by way of cheque will not effect to the loan taken, both are separate and distinct in nature. Therefore, it should not be correlated that there was a genuineness of the loan taken. The assessee has not discharged his liability as per the provisions of Section 68 of the I.T.Act, 1961. 7. Considering the submissions of both the sides and perusing the entire material available on record as well as the orders of authorities below, we noticed that the assessee did not appear before the AO on the opportunity provided by the AO in the second round of proceedings, therefore, the AO added the entire loan was taken from cash below Rs. 20,000/- or less received from his friends and relatives and staffs for non-compliance of the provisions of Section 68 of the Act as decided by various courts. In the original assessment proceedings also, the assessee could not substantiate the identity, creditworthiness and genuineness of the transactions. Before the CIT(A) the assessee submitted a ledger copy of loan confirmations, bank statements for repayments of loan but th....