TaxTMI 
TaxTMI 
2021 (6) TMI 211
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....t the Assessing Officer observed in the assessment order that the assessee has shown unsecured loans from various parties totalling to Rs. 16,54,00,000/-. He had asked the assessee to furnish the details of the unsecured loans alongwith loan confirmations and interest paid. According to him, the assessee submitted a list of 22 parties from whom loans of Rs. 13,87,50,000/- have been taken by the assessee during the year. The loans received by the assessee party-wise are as under: S. No. Name of The Parties Loan Amount Interest 1 Akt Consultancy Services P Ltd 1,000,000 52,603 2 Apnapan Mercantile Pvt Ltd 6,200,000 188,438 3 Bolero Commotrade Pvt Ltd 2,500,000 18,274 4 CMM Infra Projects Ltd 3,000,000 468,109 5 Confident Vinmay Pvt Ltd 13,200,000 247,671 6 Crest Vanjiya Pvt Ltd 1,500,000 61,644 7 East west Finwest India Ltd 14,000,000 105,891 8 Essar India Ltd 2,700,000 894,685 9 Gielle Investment Ltd 3,500,000 176,439 10 Improve Vintrade Pvt Ltd 1,000,000 72,877 11 Jayant Security & Finance Ltd 14,750,000 2,254,339 12 Jay Jyoti India Pvt Ltd 24,900,000 1,419,557 13 Shardha Buildcon Pvt Ltd ....
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....e has not been proved. Therefore, AO made an addition of Rs. 13,10,50,000/- which is the amount pertaining to 19 out of 22 parties. There is no discussion regarding the remaining three parties nor any disallowance with regard to the loans received from these three parties was made. 5. The AO also made disallowances of interest paid on these loans holding them to be not for business purpose. 6. Upon assessee's appeal learned CIT(A) noted that the assessee interalia made following submission : "Your Honour, at the outset we wish to submit that there is no dispute that the appellant has borrowed money for the purpose of business in the course of construction of residential project at Indore. The details as required in order to justify and explain the unsecured loans are filed on record with the AO. The same comprises of the following: a) Ledger account confirmation of lenders b) Bank statement of lenders reflecting loans given to Appellant company by account payee cheques c) Financial statement of lenders including audit reports, balance sheet and Profit and Loss Account d) Copy of acknowledgement of Return of Income. All the above clearly evidences the identity of lend....
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..../low tax is incorrect, but the creditworthiness is adjudged from the Balance Sheet reflecting Net Worth, sources and application of Funds available with the entity. 5) The Bank Statement of Lenders reflects substantial peak Balance at the time of granting loans to appellant company. 6) The A. O.'s remark of Lender Company revealing Security Premium/share application in Balance Sheet and Source of same is not proved is an attempt to make an assessee do the impossible. The requirements to explain Source of Source as per Proviso to Section 68 is not applicable to the credits from Unsecured Loans/ Borrowings. 7) Most of the loans have been repaid in the next year within a short period of time by the Appellant. Loan from one party of Rs. 2.50 Crores has been squared off during the year itself. In view of the above, we submit the additions made U/s. 68 is highly unjustified and may be deleted." 8. It was also submitted that the total of loans received during the year is Rs. 13,72,50,000/- and not Rs. 13,87,50,000/- as mentioned by the Assessing Officer. The difference is arising because the loan received from M/s. Oxygen Media Metrics Pvt. Ltd. has been mentioned as Rs. 35 l....
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....g anything contrary on record and without assigning any reason has rejected the submissions made by the assessee and the creditors. 5.7 The Assessing Officer placed his reliance on the decision of the Hon'ble Apex Court in the case of Navodaya Castle Pvt. Ltd. vs. CIT [(2015) 230 taxmann 268], wherein the Hon'ble court held that certificate of incorporation, PAN etc, will not be sufficient for purpose of identification of subscriber company when there was material to show that subscriber was a paper company and not a genuine investor. In this case, the Assessing Officer has not discussed what is the material with him to show that the creditor was a paper company. Further, in cases where there was high securities premium in the balance-sheets of the creditor parties, the Assessing Officer stated that the source of the same was not proved. However, this is a case where the assessee has received loans from the said parties and not share capital and, therefore, the burden of proving the source of source is not required. This is a case where loans have been obtained by the assessee and have been subsequently repaid after payment of interest and deduction of tax at source. If....
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.... 2.Hon'ble Delhi High Court in CIT vs Navodaya Castles(P.) Ltd: [2014] 50 taxmann.com 110(Delhi) 3. Hon'ble Kerala High Court in E.Ummer Bava vs CIT, Kozhikode: [2016] 72 taxmann.com 123(Kerala) 4.Hon'ble Supreme Court of India in PCIT(Central)-1 vs NRA Iron & Steel(P.) Ltd:[2019] 103 taxmann.com 48(SC) 5. Hon'ble ITAT Chennai Bench 'C' in Shantananda Steels(P.) Ltd. vs ITO, Corporate Ward 6(2), Chennai : [2020] 116 taxmann.com 335 (Chennai-Trib.) 6.Hon'ble ITAT Delhi Bench 'G' in ITO(Exemptions) Ward-7(4), New Delhi vs Synergy Finlease(P.) Ltd. :[2019] 105 taxmann.com 208 (Delhi-Trib.) 7. Hon'ble ITAT Kolkata Bench 'C' in ITO, Ward-5(3), Kol vs Blessings Commercial(p.) Ltd. :[2018] 91 taxmann.com 176 (Kolkata-Trib.) 13. On the other hand, Ld. Counsel of the assessee submitted that assesee has discharged its onus. That assessee has duly proved the identity, creditworthiness and genuineness of the transaction. He referred to the paper book submitted in this case, wherein the financials of the lending companies, the income tax returns and other necessary documents were attached. He also submitted documents, from the website of registrar of companies showing that all the le....
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.... loans. He has also expressed doubt about the position of reserves and fund position without brining on record any cogent material from any further enquiry made by bench. We find that the funds position of the companies as noted by the ld.CIT(A) is quite capable of granting loans. The adverse inference drawn from the financial statement of lending companies is only a surmise by the assessing officer without making any enquiry. In this regard, we note that honorable jurisdictional High Court in the case of Pr.CIT vs Veedhata Tower Pvt.Ltd, order dated 21.04.2018 has held that when all the necessary details of the fund provider was available with the assessing officer, he was free to make the necessary enquiry and addition under section 68 in the hands of the recipient were unjustified. Furthermore, assessee has also paid interest to the lenders. It has also deducted tax at source. Loan have been duly repaid, some part has been repaid even in the present assessment year. In these circumstances, in our considered opinion assessee has discharged the onus. The assessing officer has not brought on record any cogent material to make the addition as unproved cash credit. Hence, the additi....