TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1262
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....controverted. 2. Whether in the facts and circumstances of the case and in the law the Ld CIT(A) was in error in deleting the addition made by the AO on account of unsecured loan without appreciating the facts of the case and material brought on record which remain uncontroverted. 3. Whether in the facts and circumstances of the case and in the law the Ld CIT(A) was in error in deleting the addition made by the AO on account of disallowance of excess interest paid to bank without appreciating the facts of the case and material brought on record which remain uncontroverted. 4. Whether in the facts and circumstances of the case and in law the Ld. CIT(A) was in error in not appreciating the law laid down by the Hon'ble Supreme Court of India in the case of NRA Iron and Steel Pvt. Ltd., where the Apex Court while discussing genuineness of share capital laid down the general principles that would apply to judge the genuineness of a transaction, creditworthiness etc. 5. Whether in the facts and circumstances of the case and in law the Ld. CIT(A) was in error in establishing the source and genuineness of the addition in capital and unsecured loan. Appellant craves leave to amend....
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....s of the capital contributors, who were all then existing partners of the appellant firm. The AO's enquiry and analysis with regard to the aforesaid is extracted hereinbelow for the facility of ready reference: "The Assesses submitted that funds received from the partner of the firm during the year for the business. The capital was introduced out of their capital account. The summary of the partners,' capital amount provided are as under: 1. Name of partner Bal as on 01.04.2011 Addition Drawing Profit Bal as on 31.03.2012 SUBHASH SHROFF 8,76,024 1,37,00,000/- 15,305,834 55,10,415 1,26,66,605 2. NAWAL MAGAN 87,62,024 2,78,77,193 55,10,415 (1,36,04,754) 3. ASHUTOS H GUPTA (11,05,943) 35,00,000/- 25,00,000 36,73,610 35,67,667 4. TARUN DHINGRA 2,06,35,140 1,90,00,000 91,84,025 1,08,19,165 5. VIKASH GUPTA 61,54,057 15,00,000/- 75,00,000 36,73,610 38,27,667 6. RAJEEV KALRA 18,135,140 1,45,00,000 91,84,025 1,28,19,165 TOTAL 6,13,42,442 1,87,00,000 8,66,83,027 3,67,36,100 3,00,95,515 Genuineness of the credit in the accounts of the partners is sub....
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.... M/s KTMR Metals by Sh. Vikas Gupta. No further document has been provided." 8. view of the aforesaid, the impugned addition of Rs.l,87,00,000/-is also directed to be deleted. It is ordered accordingly. The ground of appeal pertaining to the aforesaid issue, thus, stands allowed. 9. The other two impugned additions of Rs.9,80,000/-and Rs.ll,98,567/-on account of unsecured loans and excess interest paid to bank, respectively, were also enquired and commented upon by the AO in the remand proceedings: "In this contest, the assessee has received unsecured loan of Rs.49,90,000/- from Neerja Megan and out of that Rs.40,10,000/- has been returned and the balance amount of Rs 9,80,000/- only is outstanding and payable as on 31.03.2012. The complete details of unsecured loan is also reflected in the Form no 3CD viz.- name, address and PAN of the lender. In support of the nature, mode, source and genuineness of the unsecured loan received from Neerja Megan, the following details/documents have been produced by the assessee:- (i) Copy of Neerja Megan account in the assessee's books of account. (ii) Copy of Neeraj Magan's ITR-V and Computation of income for the A.Y. 2012 ....
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....e Appellant has not provided further evidence. In this respect we respectfully submit that the first proviso was inserted by the Finance Act 2012 w.e.f 01/04/2013 i.e. A. Y. 2013-14. Prior to the insertion of first proviso to section 68 the duty of the Assesses was limited to establishing the identity of the Creditor/Lender/Investor, the creditworthiness and genuineness of transaction, and further the proviso is also applicable to the company (not being a company in which the public are substantially interested). The Appellant is as firm thus the proviso is also not applicable. The Assesses has duly discharged the duty cast under the provision of Income Tax Act. Thus, the assessing officer not justified in making an addition of Rs.9,80,000/- as an unexplained cash credit u/s 68 of the Income Tax Act, 1961 and the impugned addition deserves in be deleted. Regarding interest paid page no 8: The Assessing officer observed and confirmed the factual matrix that M/s Harlal Gupta & Sons was the debtor and as per arrangement with him that debit balance converted into loan in the earlier years and that time the Assessee did not have any OD limit/ loan facility from Bank. Our Submiss....
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.... would apply to judge the genuineness of a transaction, creditworthiness etc. in establishing the source and genuineness of the addition in capital and unsecured loan. 7. Per contra, the ld. counsel supported the impugned order contending that the ld. CIT(A) was justified in deleting the addition. He has filed a brief synopsis which reads as under: "1. KTMR is a partnership firm engaged in the business of manufacturing of Copper wires etc. in the state of Jammu and Kashmir. The KTMR had filed its original return of Income u/s 139 (1) for assessment year 2012-13 and declaring total Income of Rs. 4,88,570/- after claiming deduction u/s 80IB of the Income Tax Act, 196. The Assessment completed u/s 144 as best judgment assessment. "Ground no 1: Addition in partner capital account Rs 1,87,00,000 : KTMR received Rs 1,87,000 from the partners and partners have withdrawn Rs 8,66,83,027. The detail of the partners' capital account is as under: Name of partner Bal as on 01.04.2011 Addition Drawing Profit Bal as on 31.03.2012 SUBHASH SHROFF 8,76,024 1,37,00,000 15,305,834 55,10,415 1,26,66,605 NAWAL MAGAN 87,62,024 2,78,77,193 55,10,415 (1,36,04,754....
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....31.03.2012. The complete detail of unsecured loan is duly provided in the Form no 3CD including name, address PAN number of the lender. AO alleged that KTMR failed to furnish detail/ documentary evidence to prove the genuineness of and offered no explanation nature and source of these loans. KTMR filed Copy of Neerja Magan account in the Assessee book of account for period 01.04.2011 to 31.03.2012, Copy of Neerja Magan ITR-V and Computation of income for the AY 2012-13, Copy of Bank Statement of Neerja Magan in support of the nature, mode, source, genuineness of the unsecured loan received from Neeja Magan and submit that documentary evidence establishes the nature, mode, source and genuineness of unsecured loan from Neeja Magan. AO in remand report stated that no further document has been provided to explain the source of credit in the account as mentioned in respect of addition in capital account. KTMR submit that duly discharged the duty cast under the provision of Income Tax. CIT delate the addition and held that prove three essential ingredients to qualify as allowable loan viz the identity, credit worthiness and the genuineness of the transactions. Ground no. 3: d....