TaxTMI 
TaxTMI 
2021 (10) TMI 565
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....Officer in the manner in which he did. (ii) The learned CIT(A) erred in upholding the addition of Rs. 14,00,000 being unsecured loan creditors under section 41(1) of the Income Tax Act, 1961. (iii) The learned CIT(A) erred in enhancing the addition made under section 41(1) of the Act from Rs. 14,00,000 to Rs. 14,75,000 without issuing notice of enhancement as required under the Act. (iv) The learned CIT(A) as well as the below authorities failed to appreciate that the assessee was not required to satisfy the conditions as per section 68 of the Act, as the additions were made under section 41(1) of the Act. (v) For these and such other grounds that may arise at the time of hearing the appellant prays that ....
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....at out of the total amount of unsecured loans of Rs. 33,25,000, the details of the creditors to the extent of Rs. 18,50,000 is available on record. According to the CIT(A), the balance credits of Rs. 14,75,000 is unexplained and he added the same u/s 68 of the I.T.Act. The CIT(A) held that the assessee has failed to satisfy the three conditions as per the provisions of section 68 of the I.T.Act, namely, the identity of the creditors, capacity of the creditors and the genuineness of the transaction. Therefore, it was concluded by the CIT(A) that the addition of Rs. 14,75,000 is to be made u/s 68 of the I.T.Act. In doing so, the CIT(A) enhanced the addition to Rs. 14,75,000 in place of the A.O.'s addition of Rs. 14,00,000. 5. Aggrieved by ....
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....on u/s 68 of the I.T.Act is perfectly justified since the amount was found credited in the books of account during the relevant assessment year. In this context, the learned Standing Counsel relied on the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Orissa Steel Corporation Pvt. Ltd. reported in (1983) 144 ITR 662 (Cal). 7. I have heard rival submissions and perused the material on record. The CIT(A) has confirmed the addition u/s 68 of the I.T.Act in respect of loan received by the assessee from four persons. The details of loans and addition made u/s 68 of the I.T.Act are as follows:- (i) Loan taken from Ms.Shamala Rs. 1,50,000 (ii) Loan taken from Mr.Ramrathana Rs. 1,25,000 (iii) Loan taken....
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....for Rs. 1,50,000 has been repaid. The assessee has also produced the confirmation, wherein it is clearly stated that the loan of Rs. 1,50,000 was received by cheque and amount was repaid vide cheque along with interest of Rs. 34,000 totaling to Rs. 1,84,000 on 14.03.2014. If these facts narrated in the confirmation are true, the addition of Rs. 1,50,000 is to be deleted by the A.O. It is ordered accordingly. (ii) Loan taken from Mr.Ramrathana Rs. 1,25,000 7.2 The assessee claims the loan received from Mr.Ramrathana has been repaid subsequently on 10.04.2014 vide cheque No.5593. However, the assessee has not submitted any evidence even before the Tribunal as regards the PAN and the mode of repayment of the loan. Hence, I confirm the ad....
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....09-10, the same cannot be brought to tax u/s 68 of the Act. The proper course in such cases for the Revenue would be to find out the year in which the credits in question were credited in the books of account and thereafter make an enquiry in that year and make an addition in that year, if other conditions for applicability of section 68 are satisfied." 7.3.1 The order of the Tribunal was also confirmed by the Hon'ble Karnataka High Court in the case of CIT v. Alvares & Thomas (supra). Moreover, in this case, the assessee has contended that the amount of loan taken from both Sri.Manu K.P. and Smt.Roopa Manu has been paid in the subsequent year. I am of the view that the matter needs to be examined afresh by the A.O. The A.O. is directed ....