TaxTMI 
TaxTMI 
2022 (9) TMI 292
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....d filed its return of income for AY 2010-11 on 06.10.2010, declaring an income of Rs.4,19,610/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. Assessment was thereafter framed by the A.O vide his order passed u/s.143(3), dated 26.03.2013, wherein, after inter-alia treating the unsecured loans of Rs.12 lacs claimed by the assessee to have been received from 5 parties as unexplained cash credits u/s.68 of the Act the income of the assessee was determined at Rs.19,45,060/-. 4. Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals) who upheld the addition made by the A.O u/s.68 of the Act, observing as under: "Ground No.2- that Ld. AO erred in making addition u/s.68 of Rs.1200000/- on suspicious basis and without any concrete evidence. The learned AO had discussed the issue in his assessment order from page 4 of his assessment order. The assessee had received unsecured loan from various persons. As per table below: S. No. Name ( Shri/Smt.) Unsecured loan 1. Anil Gidwani 1,00,000/- 2. Shaiyad Abdul Mazid 2,00,000/- 3. Rajkumari Gidwani 3,00,000/- 4. Shashikala Duvey 2,00,000/- 5. Shudhak....
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....ement was recorded by the AO and lender agreed to have advanced the loan to the assessee. The AO had observed that the bank statement shown that Rs. 2,00,000/- cash had been deposited on 22.03.2010 and on the very next day the loan had been advanced. She had been showing income u/s 44AE without mentioning the turn over, however per vehicle the earning had been stated to be between 100,000/- to 1,10,000/- The AO analyzing the facts and concluded that the depositor can not be stated to be able to deposit Rs. 2,00,000/- cash on one day and on one e and he did not find it as a natural phenomenon. The learned AR had reiterated in his written submission the arguments as he did in case of Anil Gidwani. In case of Shri Sudhakar Bankhede the AO had mentioned that he deposited cash on 20.03.2010 of Rs. 2,00,000/- and on 23.03.2010 he issued the cheque in favour of the assessee. He had further deposited cash Rs. 2,00,000/- on 31.03.2010 and on the same day he had issued the cheque. The lender is a petty contractor had shown gross receipt of 15,00,000/- and had shown income u/s 44AD of Rs. 159780/- . After analyzing the savings of the lender the AO concluded that in absence of books of accou....
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....assessee and this is not comprehendible. The person of means can make such advance and person not bound with office procedures can also do the same. Thus I do not find any infirmity in the conclusion made by the AO. The addition made by the AO amounting Rs. 12,00,000/- in total is hereby confirmed and the ground of appeal is dismissed." 5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 6. On a perusal of the orders of the lower authorities, it transpires that the assessee had claimed to have received unsecured loans aggregating to Rs.12 lacs from the following 5 parties : S. No. Name Unsecured loan amount 1. Shri Anil Gidwani 1,00,000/- 2. Shri Shaiyad Abdul Mazid 2,00,000/- 3. Smt. Rajkumari Gidwani 3,00,000/- 4. Smt. Shashikala Dubey 2,00,000/- 5. Shri Sudhakar Wankhede 4,00,000/- However, as the A.O not finding favor with the claim of the assessee of having raised genuineloans from the aforementioned parties re-characterized the same as unexplained cash credits u/s.68 of the Act. 7. Controversy involved in the present appeal lies in a narrow compass i.e. sustainability of the view taken by the low....
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....s to advance the impugned loan to the assessee. Also, the A.O was of the view that considering the availability of bank facilities/ATM in the urban area where the assessee was residing it was beyond comprehension that he would have kept the impugned funds with him in his house. On the basis of his aforesaid observations the A.O held the loan transaction in question as bogus and added the amount of Rs.1 lac as an unexplained cash credit u/s 68 in the hands of the assessee firm. 10. We have given a thoughtful consideration to the observations of the A.O in the backdrop of the contentions advanced by the Ld. Authorized Representatives of both the parties. Admittedly, it is a matter of fact borne from record that Shri Anil Gidwani, a government employee who is being assessed to income-tax since F.Y.2011-12, had in his statement that was recorded on oath by the AO in the course of the assessment proceedings categorically admitted of having advanced a loan of Rs.1 lac vide cheque No.391016 dated 02.12.2009 drawn on his bank account with SBI Bank, Indore. In fact, a perusal of his statement reveals that not only he had admitted the factum of having advanced the aforesaid loan to the asse....
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.... the source of the source i.e. source of the credits in the accounts of the creditors. Also, our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of CIT Vs. Orissa Corporation Ltd. (1986) 159 ITR 78 (SC) and that of the Hon'ble High Court of Gujarat in the case of Dy. CIT Vs. Rohini Builders (2002) 256 ITR 360 (Guj.), wherein it was observed that the assessee cannot be expected to prove the genuineness of the cash deposits in the bank accounts of the creditors because under law it was only required to prove the source of the credits in his books of account. 11. Considering the aforesaid facts involved in the case before us, wherein the lender had categorically admitted of having advanced a loan of Rs.1 lac to the assessee a/w. brief description as to from where it was sourced i.e. accumulated savings, we are of the considered view that there was no justification on the part of the A.O in holding the loan transaction in question as a bogus transaction. (B). Shri Shaiyad Abdul Mazid : Rs. 2 lac 12. Statement of the aforementioned person was recorded on oath by the A.O in the course of the assessment proceedings. On being queried, it was categori....
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....3.2010 in his bank account i.e. 3 days prior to advancing of the loan on 23.03.2010, the A.O had serious doubts in his mind as regards the authenticity of the loan transaction in question. Also, it was observed by the A.O that the scale of business of the alleged lender who was a petty contractor did not inspire much of confidence as regards his financial creditworthiness. Considering the fact that the alleged lender was residing in an urban area which was well catered with banking facilities, the AO was of the view that it was beyond comprehension that he would have kept an amount of Rs. 2 lac in his house. Considering the aforesaid facts the A.O held the loan of Rs.2 lac that was claimed by the assessee to have been received from the aforementioned person as bogus and dubbed the same as an unexplained cash credit u/s.68 in the hands of the assessee firm. 14. After deliberating at length on the aforesaid facts attending to the loan transaction in question, we are unable to persuade ourselves to subscribe to the view taken by the lower authorities. Admittedly, it is a matter of fact borne from record that the aforementioned lender, viz. Shri Shaiyad Abdul Mazid had in his statemen....
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....she would have kept the substantial amount of the impugned cash savings in her house. It was observed by the A.O that in the totality of the facts the loan transaction of Rs.3 lac that was claimed by the assessee to have received from the aforementioned person could safely be held to be bogus. Accordingly, the AO dubbed the loan transaction as bogus and added the amount of Rs.3 lac as an unexplained cash credit u/s.68 in the hands of the assessee firm. 16. Having given a thoughtful consideration to the aforesaid loan transaction in question, we are unable to comprehend the facts as have been narrated by the A.O in the assessment order. On the one hand it is stated by the AO that the loan amount of Rs.3 lac that was advanced by the aforementioned person was sourced out of the KCC proceeds of Rs.2,22,086/- while for, on the other hand contradicting his own observation he had drawn adverse inferences qua the credit worthiness of the lender and, had, inter alia, held that she could not have been in possession of a substantial amount of cash savings. As the facts narrated by the AO leading to the addition of Rs. 3 lac under Sec. 68 in the hands of the assessee are in clear contradictio....
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....f the lender i.e. plying of a vehicle on hiring basis. Considering the funds that would be available with the lender after incurring the household expenses etc., the A.O was of the view that she would not have been left with sufficient funds which would justify the cash deposit of Rs.2 lac in her bank account during the year under consideration. Accordingly, the A.O held the loan transaction in question as bogus and made an addition of Rs.2 lac as an unexplained cash credit u/s. 68 of the Act in the hands of the assessee firm. 18. After having given a thoughtful consideration to the aforesaid loan transaction in question, we are of the considered view that the aforementioned lender, an existing income-tax assessee, had categorically admitted of having advanced a loan of Rs. 2 lac vide A/c payee cheque No.528769 dated 23.03.2010 to the assessee firm. Not only the said lender on being queried by the A.O had stated that the cash deposit in her bank account from where the loan was advanced was out of her accumulated savings, but had also referred to the source from where the cash deposit in her bank account was made. In our considered view, now when the lender had categorically admitt....
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.....15,45,120/- . Once again on being queried by the A.O about the cash deposits of Rs.2 lacs each prior to advancing of the loan to the assessee firm, it was stated by him that as Dr. Vishal Upadhaya, partner of M/s. Krishna Hospital who was also his family doctor and an old acquaintance had approached him for financial assistance, therefore, he had advanced an interest free loan of Rs. 4 lac to him. It was stated by him that as he was advised by his tax consultant that a loan transaction is not permissible in cash, therefore, for the said reason he had advanced the loan vide an A/c payee cheque after depositing the cash available with him in his bank account. On being queried as to why the aforesaid amount of cash was kept by him in his house, it was categorically stated by the lender that as cash would be required by him in the normal course of his business as that of petty contractor, therefore, he had kept the same with him. On being queried as to how he was able to carry on his business after parting with an amount of Rs.4 lac to the assessee firm, it was submitted by him that he had managed to do so out of the balance funds that were available with him a/w the substantial contr....