TaxTMI 
TaxTMI 
2020 (12) TMI 70
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....uding the addition of Rs. 2,20,00,000/- as unexplained cash credit u/s 68 of the Act. The assessee challenged the assessment order before the Ld. CIT (A) inter alia on the ground that the Ld. AO has erred in law and on facts in making addition of Rs. 2,20,00,000/- treating unsecured loans as unexplained cash credit u/s 68 of the Act. The Ld. CIT (A) after hearing the assessee partly allowed the appeal of the assessee and deleted the addition of Rs. 2,20,00,000/- made by the AO u/s 68 of the Act. Against the said findings of the Ld. CIT (A), the revenue is in appeal before this Tribunal. 3. The revenue has challenged the impugned order passed by the Ld. CIT (A) on the following effective grounds:- 1. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in deleting the addition of unsecured loans from Individuals, HUF and Companies amounting to Rs. 2,20,00,000/- made u/s 68 of the I.T. Act, holding that the appellant has proved the genuineness of the transaction in the form of confirmation, PAN, return of income, bank statement etc., thereby ignoring the recent decision of the Hon'ble Supreme Court of India in the case of Navodaya Castle (P) Ltd. [2....
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....cordance with the judgment of the Hon'ble Bombay High Court in the case of Major Metal Ltd. vs. UOI & Ors. 251 CTR (Bombay), wherein the Hon'ble High Court has upheld the findings of the Settlement Commission in respect of addition made u/s 68 of the Act where the nature of source and receipt could not be satisfactorily explained by the assessee. The Ld. DR further submitted that the findings of the Ld. CIT (A) are also contrary to the judgment of the Hon'ble Calcutta High Court in the case of Precision Finance Pvt. Ltd. 208 ITR 465, wherein the Hon'ble Court has held that mere payment by account payee cheque is not sufficient to establish the genuineness of transaction. The Ld. DR further relied on the judgment of the Hon'ble Supreme Court in the case of Pr. CIT vs. NRA Iron & Steel Pvt. Ltd. 412 ITR 616 (SC) to substantiate the contention of the department. 5. On the other hand, the Ld. counsel for the assessee vehemently supporting the decision of the Ld. CIT (A) submitted that since the assessee has discharged the onus of establishing the identities and creditworthiness of the parties from whom, the assessee had taken loans in question and further established genuineness of th....
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....he case of the appellant and the submissions filed in respect of the same. I have also perused the assessment order passed by the AO in details. The AO has mentioned that substantial amount was deposited in the bank account and subsequently cheques were issued to the beneficiary before its being routed out through the circuitous entities. The Id A 0 has discussed in detail in the order the modus operandi followed for issuing accommodation entries by the loan lending concerns. The said modus operandi which has been minutely elaborated in the assessment order. Based on such discussion, the Id AO has come to the conclusion that the appellant's own money has been brought into the books by way of accommodation entries and assessed the same as unexplained credits under section 68 of the IT Act, 1961. During the appellate proceedings, the Id AR has filed detailed submissions and other relevant documents in a paper book. He has also refereed to several case laws on which they rely in support of the ground of appeal. I have carefully considered the facts of the case and submissions of the Id AR. I have also gone through the decisions relied on by the AO and Id AR. It is observed tha....
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....ertain principles with regard to section 68 which the AO is bound to follow. It has observed as under: "(i) section 68 can be invoked when following three conditions are satisfied - (a) when there is credit of amounts in the books maintained by the assessee (b) suc1redit has to be a sum of money during the previous year (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the Assessing Officer, is not satisfactory. It is only then that the sum so credited may be charged to income tax as the income of the assessee of that previous year. (ii) The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the Assessing Officer is required to be formed objectively with reference to....
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....nder onus of proof shifts to the revenue." 2.4.8 The Hon'ble Apex Court in the case of Lovely Exports Pvt Ltd. 216 CTR 195(SC) 2008 held that the AO is at liberty to bring to tax the amounts in their respective hands of the investors if their identity, genuineness and creditworthiness is not proved. The AO should have made efforts to assess the amounts in the hands of the investors at least on protective basis. Even in case, the creditworthiness of the investors is not proved it will not automatically give license to-the-assessing authority to make additions in the hands of the recipient u/s 68 unless it is proved that it is the unexplained and unaccounted money of the appellant which has been introduced in its books of account in the name of bogus/non-existent entities. As it is observed that, in the instant case, the AO has not made any dent on these line. On the other hand the appellant has filed all the details and supporting documentary evidence to prove the identity, genuineness and creditworthiness of all the loan creditors. As seen from the above, the appellant has furnished all the documents and details proving conclusively the three ingredients of identity, creditwo....