TaxTMI 
TaxTMI 
2023 (2) TMI 806
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....e in making addition of Rs.36 lacs on account of unsecured loan u/s 68 of IT Act, 1961 inspite of furnishing confirmation of account, balance sheet and copy of return of income and addition made on account of non furnishing of bank statement whereas the said bank account of the cash creditor was seized by the same AO who is the AO of assessee company and was released subsequent to the framing of assessment order of the assessee company and the copy of bank statement and confirmation of account was submitted by the cash creditor in response to notice u/s 133(6) of IT Act, 1961 so the addition so made deserves to be deleted and the Ld. CIT(A) has erred in sustaining the same. 3. The Ld. AO has erred in law as well as the facts and circumstances of the case in disallowing interest expense of Rs.50,597/- u/s 36(1) of IT Act, 1961 and Ld. CIT(A) has erred in sustaining the same. 2.1 At the outset of the hearing, the ld. AR of the assessee has not pressed the Ground No.2. Hence, the same is dismissed being not pressed. 3.1 Apropos Ground No. 1 and 3 of the assessee, brief facts of the case are that The assessee filed its return of income on 19.07.2016 declaring total incom....
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....documents which were filed by Shri Divesh Goyal to the AO after completion of assessment proceedings. The Ld. CIT(A) called for remand report. The AO submitted his remand report dt. 05.02.2020 (PB 43-44) wherein he stated that since Shri Divesh Goyal has filed the return at loss of Rs.20,85,522/- therefore, his creditworthiness is not proved in view of the decision of Hon'ble Supreme Court in case of NRA Iron & Steels (P) Ltd. 412 ITR 161 where it was held that it was worth noting that how could investor companies having filed income tax returns with a meager or nil income invest such huge sum of money. The assessee filed rejoinder to the remand report. In the appellate proceedings, the Ld. CIT(A) held that from the date of issue of first notice u/s 142(1) by the AO on 23.08.2018 to the date of attachment of bank a/c i.e. 23.10.2018, the assessee and Shri Divesh Goyal had adequate time available with them to obtain the bank statement and file written submissions. However, the assessee filed his first written submission on 11.12.2018 and Sh. Divesh Goyal chose not to comply with the notice u/s 133(6) issued by the AO on 17.10.2018. These facts shows that bank statement of Shri Dives....
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....vide the bank statement inspite of opportunity given and adequate time available. -Notice u/s 133(6) was issued to Dinesh Goyal on 17.10.2018 calling or his bank statement on or before 25.10.2018. Bank a/c of Dinesh Goyal was attached on 23.10.2018. Thus, Dinesh Goyal had a week's available with him from 17.10.2018 to 23.10.2018 to get his bank statement and prepare his submission and file it before the AO on 25.10.2018. However, Sh. Dinesh Goyal did not comply with this notice for reasons best known to him. - Thus, from the date of issue of first notice u/s 142(1) by the AO on 23.08.2018 to the date of attachment of bank a/c i.e. 23.10.2018, the Appellant and Dinesh Goyal had adequate time available with them to obtain the bank statement and file written submissions. However, the Appellant filed his first written submission on 11.12.2018 and Sh. Dinesh Goyal chose not to comply with the notice u/s 133(6) issued by the AO on 17.10.2018. -These facts show that bank statement of Dinesh Goyal was not filed by the Appellant or Dinesh Goyal before the AO inspite of the fact that adequate time was available with them prior to attachment of bank a/c. Appella....
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....) to 7.4(c) of this order, the addition made by the AO of Rs.36,00,000/- u/s 68 is hereby upheld and confirmed. Ground of Appeal No. 2 is dismissed. 7.5 Ground of Appeal No. 3 Disallowance of Interest of Rs. 50,597/- Since the addition made by the AO of Rs. 36,00,000/- u/s 68 has been as unexplained cash credit, then the interest debited of Rs. 50,597/- also deserves to be disallowed. Ground of Appeal No. 3 is dismissed.'' 3.3 During the course of hearing, the ld. AR of the assessee prayed that the ld. CIT(A) has erred in confirming the action of the AO for which the ld. AR submitted that only reason for making the addition is that the bank statement of the creditor was not filed to the AO before completion of assessment though there was sufficient time to furnish the same and Sh. Divesh Goyal has declared business loss of Rs.20,85,522/- and therefore, genuineness of transaction and his creditworthiness is not established. It may be noted that the bank account of Shri Divesh Goyal was attached by the AO on 23.10.2018. After release of this bank account on 14.12.2018, the same was filed to the AO on 26.12.2018 and this bank account was before the Ld. CIT(A). Fro....
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....pancy has been pointed out by the lower authorities in the bank statement and other documents available before them. Hence, the addition confirmed by Ld. CIT(A) is unjustified and uncalled for. The Ld. CIT(A) at Pg 16, Para (c) of his order by relying on certain decisions has observed that initial onus of proving the creditworthiness of the creditor was not discharged by the assessee. This is factually incorrect. The assessee has established the creditworthiness of creditors by filing his return and balance sheet for the preceding 2 years. Once the assessee has discharged the initial onus, the burden shifts on the departmental authorities to disprove the fact brought on record. Nothing has been done by the lower authorities after the assessee furnished ample evidences to prove the creditworthiness of the creditor. Hence, once the assessee has discharged the onus laid on him u/s 68 of the Act, the addition confirmed by the Ld. CIT(A) should be deleted. To this effect, reliance is placed on the following decisions of the jurisdictional High Court:- Aravali Trading Co. Vs. ITO 187 Taxman 338 (Raj.) (HC) The jurisdictional HC while deleting the addition u/s 68 of the ....
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....ever, the explanation of the assessee about the receipt of Rs. 16,000 from Devendra Sankhla was rejected on the ground that on inquiry from Devendra Sankhla the creditor could not satisfactorily explain source wherefrom whether he could have advanced Rs. 16,000, looking to his income and family expenditures. In other words, the cash credit in the name of Devendra Sankhla was rejected on the ground that the assessee has failed to prove source wherefrom deposit or advance by Sri Devendra Sankhla could be made. This finding has been consistently affirmed by CIT(A) as well as by Tribunal. We are of the opinion that in rejecting the explanation of the assessee on the undisputed facts is founded on erroneous application of law in the matter. While it was the assessee's burden to furnish explanation relating to such cash credits, the assessee's burden does not extend beyond proving the existence of the creditor and further proving that such creditor owns to have advanced the amount credited in the account of assessee to him. However, the burden does not go beyond to put the assessee under an obligation to further prove that wherefrom the creditor has got or procured the money to be deposi....
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....and that satisfies the 2nd requirement also, about the discharge of burden on the part of the assessee to prove identity and genuineness of the transaction. So far as capacity of the lender is concerned, in our view, on the face of the judgment of Hon'ble Supreme Court, in Daulat Ram's case (supra), and other judgments, capacity of the lender to advance money to the assessee, was not a matter which could be required of the assessee to be established, as that would amount to calling upon him to establish source of the source. In that view of the matter, since this part of the judgment runs contrary to the judgment of the Hon'ble Supreme Court, in Daulat Ram's case (supra), while this Court in a subsequent judgment in Mangilal's case (supra) relying upon Daulat Ram's case (supra), has taken a contrary view, we stand better advised to follow the view, which has been taken in Mangilal's case (supra). 9. The net result is that all the three questions are answered in favour of the assessee and against the Revenue." CIT Vs. Jai Kumar Bakliwal (2014) 366 ITR 217/ 101 DTR 377 (Raj.) (HC) The jurisdictional HC while deleting the addition u/s 68 of the Act held as f....
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....ivesh Goyal is genuine, therefore, the disallowance of interest confirmed by CIT(A) be directed to be deleted. Hence, addition/ disallowance confirmed by CIT(A) should be directed to be deleted. 3.4 On the other hand, the ld. DR relied upon the orders of the lower authorities. 3.5 We have heard both the parties and perused the materials available on record. The crux of the issue is that the assessee had obtained unsecured loan of Rs.36 lakhs from Shri Divesh Goyal for which the AO vide issuance of notice u/s 133(6) dated 17-10-2018 to Shri Divesh Goyal desired to furnish the confirmation letter, proof of source of income and bank account through which loan was advanced, however, the Shri Divesh Goyal could not comply with the directions of the AO before the date of assessment order owing to attachment of bank account of Shri Divesh Goyal by the AO. It is pertinent to mention that the bank account of Shri Divesh Goyal was released by the AO on 14-12-2018 who vide reply dated 21-12-2018 filed the necessary documents including the bank statement and it was received by the AO on 26-12-2018 i.e. after the date of assessment order. It is also noted that the Assessee had furnished t....