TaxTMI 
TaxTMI 
2023 (2) TMI 223
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....reciate the fact that the assessee failed to establish the genuineness of transaction and creditworthiness of the lender parties from whom partners of the firm have received unsecured loan. On perusal of ITR, confirmation and bank account of lenders it is evident that they had no creditworthiness and no balance for providing the unsecured loan. The cash had been found deposited in bank account of these parties immediately before providing the unsecured loan. The source of the cash deposits was not explained by the assessee, its partners or by the lenders and remained unexplained. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A), Surat ought to have upheld the order of the Assessing Officer. It is therefore, prayed that the order of the Ld. CIT(A) maybe set aside and that of the Assessing Officer's order may be restored." 3. Succinct facts are that during the assessment proceedings the assessing officer noted that two partners of the assessee firm namely Sh. Jignesh J. Vaghani and Nilesh A. Patel, had introduced Rs.2,74,86,097/- and Rs.1,83,78,648/- respectively as capital in the firm. During the scrutiny proceedings, the assessee explained the assessing o....
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....cation of these details, the assessing officer was partly satisfied with the explanation of the assessee. However, the assessing officer was not satisfied with regard to the details filed for the amount of Rs. 94,75,000/- in the hands of Jignesh Vaghani and Rs. 53,50,000/- in the hands of Nilesh Patel. The ld Counsel has submitted that assessee has filed necessary details of capital introduced by the partners in the firm and their respective source of investment. The ld Counsel by discussing the relevant provisions of section 68 and various case-laws, contended that assessee had duly discharged its duty by establishing identity, creditworthiness of the lenders and genuineness of the transactions and assessee cannot be asked to prove the source of the source. This way, ld Counsel defended the order passed by ld CIT(A). 8. We have heard both the parties and perused the materials available on record. We note that out of the total capital introduced of Rs.2,74,86,097/- and Rs.1,83,78,648/- by Sh. Jignesh J. Vaghani and Sh. Nilesh A Patel respectively, the assessing officer doubted the source of Rs.94,75,000/- and Rs.53,50,000/-. It means that the assessing officer was satisfied with t....
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.... the onus shifts to the revenue to prove that what assessee has furnished is not correct. Now, coming to the facts of the instant case, let us examine whether the above three essential ingredients for treating a cash credit as genuine are established in the case of the assessee. (i)Identity of the creditors:- The assessee has not only furnished the names, full addresses, PANs and confirmations of two partners who introduced their capital in the firm but also names, full addresses, PANs and confirmations of all the persons from whom them obtained unsecured loans. Thus, the identity of the creditors has been established. (ii)Capacity of the creditors to advance the money: The assessee has furnished the copies of Income Tax Return (ITR) returns filed by the partners as well as their lenders for the past years. The assessee has also filed computations of income and balance-sheets of these partners/ creditors, thus their capacity to introduce capital and advance loans to the partners has been established with sufficient documentary evidences. (iii).Genuineness of Transactions:- The assessee has filed copies of bank accounts of these partners as well as their loan creditors wherein th....
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....rlying circumstances under which the assessee is not able to discharge the onus. Hon'ble Supreme Court in CIT v. Smt. P.K. Noorjahan [1999] 103 Taxman 382 held that word "shall" was substituted by the word 'may' on the recommendation of the Select Committee. "This clearly indicates that the intention of the Parliament in enacting section 69 was to confer a discretion on the ITO in the matter of treating the source of investment which has not been satisfactorily explained by the assessee as the income of the assessee and the ITO is not obliged to treat such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory". Same principle applies to section 68. For taxing loan creditors u/s 68, the assessee is required to prove: (a) Identity of creditor (b) Genuineness of transaction; and (c) Creditworthiness of creditor. Once an assessee has submitted the documents such as (i) PAN, (ii) income-tax returns of creditors, (iii) the details of bank accounts through and to which the loan amount has passed, (vi) confirmations of creditors etc., then initial onus lying on the assessee-company would stand discharged. It ....