TaxTMI 
TaxTMI 
2020 (12) TMI 175
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....nless the person in whose name such credit is recorded also offers an explanation about nature and source of sum so credited and such explanation is found to be satisfactory. However, this proviso is applicable only from AY 2013-14 and the same is not retrospective in nature as held by Hon'ble Bombay High Court in the case of CIT Vs. Gagandeep Infrastructure Private Limited [80 Taxmann.com 272]. The said position has also been reiterated by Hon'ble Bombay High Court in its recent decision tilted as Gaurav Triyugi Singh V/s ITO (ITA No.1750 of 207, dated 22/01/2020) which also consider its earlier decision of Pr.CIT V/s Veedhata Towers Pvt. Ltd. (2018 403 ITR 415). More pertinently, the said proviso is not, at all, applicable in case of unsecured loans or deposits. 1.2 It is settled position of law that to avoid the rigors of Section 68, the assessee must prove the identity, creditworthiness of the lenders / investors to advance such monies and genuineness of the transactions. Once these three ingredients are shown to be fulfilled by the assessee, the primary onus casted upon him, in this regard, could be said to have been discharged and accordingly, the onus would shift upon ....
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....n the basis of mere doubts, conjectures or surmises. Once the primary onus to substantiate the transactions is discharged by the assessee, it would be incumbent upon revenue to dislodge the assessee's claim and substantiate the allegations with corroborative evidences. Until & unless this exercise is undertaken, the additions would not be sustainable in the eyes of law. Lastly, as a principle of natural justice, the adverse material being used against the assessee must be confronted to the assessee and an opportunity to rebut the same was to be provided to the assessee. The failure to do so would result into violation of assessee's substantive rights to defend his stand in the matter. 2.1 Keeping in mind the aforesaid legal position, we find that the present assessee is in appeal before us for Assessment Year [in short referred to as 'AY'] 2012-13 and contest the order of Ld. Commissioner of Income-Tax (Appeals)-16, Mumbai, [in short referred to as 'CIT(A)'], Appeal No.CIT(A)-16/ITO-9(1)(1)/IT-402/2015-16 dated 28/02/2018 in sustaining certain additions u/s 68. The grounds raised by the assessee along with Form No.36 has been revised vide letter dated 11/03/2020 which have been ....
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....00,000 3. Asan Investment & Finance Services Pvt.Ltd. 34,00,000 1,00,000 4. Khushi Industries Ltd. 9,00,000 1,00,000 5. Kings Merchants Pvt.Ltd. 29,00,000 1,00,000 6. Rishi Automation P.Ltd. 59,00,000 1,00,000 TOTAL 2,44,00,000 6,00,000 Accordingly, the assessee was asked to prove the identity of the parties, creditworthiness of loan creditors and genuineness of transactions in terms of the requirement of Sec.68 of the Act. In defense, the assessee submitted account confirmations of these parties, their relevant bank statement showing transfer of funds through banking channels and also copies of return of income as well as financial statements of the investor / lender entities. However, summons issued u/s. 131 by Ld. AO to these entities were returned back by postal authorities with remarks like not known / incomplete address. The assessee was unable to produce any of these parties. In the above background, Ld. AO proceeded to examine the documents furnished by the assessee in support of the transactions. 3.2 After going through documents of M/s Asan Investment & Finance Services Private Limited, it was observ....
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....respect to all the investor /lender entities: - (i) Copy of confirmation of Accounts by lender / investor (ii) Copy of PAN Card of each of the lender / investor (iii) Copy of Bank Statement of lender / investor (iv) Copy of ITR Acknowledgement of each of lender / investor (v) Copy of financial statements of all investor / lender entities Upon perusal of documents pertaining to M/s Asan Investment & Finance Services Private Limited, we find that this entity is assessed to Income Tax vide PAN AAGCA6526N and has filed return of income for the year under consideration after paying taxes of Rs. 0.46 Lacs. It has duly confirmed the transactions carried out with the assessee. The perusal of its bank statement would show that all the funds have been transferred to the assessee through banking channels and there was no immediate cash deposit before transfer of funds to the assessee. The financial accounts of this entity have duly been audited as per The Companies Act. The transactions carried out with the assessee have duly been reflected in its financial statements. This entity has Reserves & Surplus of Rs. 632.39 Lacs which have been used to....
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....cs to make further investments. Upon perusal of above documents, we find that the primary onus of establishing the identity of the investor entities, proving their respective creditworthiness and to establish the genuineness of the transactions was duly been discharged by the assessee. The assessee was not required to prove the source of source for this year. Therefore, the onus was on revenue to rebut these evidences by bringing on record cogent material to dislodge assessee's evidences. However, except for the fact that summons remained un-served, there is nothing in the armory of revenue to unsettle the assessee's claim. The allegations are not supported by any corroborative evidences. Once the initial onus was discharged by the assessee, it was incumbent upon revenue to carry out further investigation to support the allegation that the credits were unexplained. However, nothing of that sort has been shown to have been carried out. So far as the information of DGIT (Inv.) is concerned, we find that these were merely third party statements which were never confronted to the assessee and those statements on standalone basis could not form the basis of making additions in the ha....