TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 96
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.... the course of assessment, the Assessing Officer observed that the assessee had made huge credit/debit transactions in his bank account. The total of such credit entries were to the tune of Rs. 18.55 crores and debit entries amounted to Rs. 18.63 crores. In response to notices issued, the assessee filed submission on various dates. The Assessing Officer observed that the assessee has shown unsecured loan of Rs. 8.13 crores as on 31-03-2011. The unsecured loan was received from more than 70 persons. The main submission of the assessee was that all unsecured loans are closing balance of last financial year i.e. F.Y. 2009-10. Further, during the year under consideration, the assessee received a loan of Rs. 50 lacs, the source of which stands fully explained and the assessee received another amount of Rs. 2.89 crores towards advance against land from Vinita Neshvi Infrastructure Pvt. Ltd., the details of which we are also fully verifiable. However, the Assessing Officer made an addition of Rs. 7, 63,88,871/- u/s. 68 of the Act on the ground that the assessee has not been able to establish the genuineness and creditworthiness of the parties. 4. In appeal before ld. CIT(A), the assessee....
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.... assessee with the following observations:- "Decision : 4. I have perused the facts of the case as enumerated by the AO and as submitted by the appellant. The AR highlighted the denial of all the evidences by the AO by highlighted certain portions of assessment order and the same reproduced as under: In this regard you have submitted copy of ITR, confirmation from your side in respect of unsecured loan obtained. Subsequently, notices u/s 133(6) have been issued to these persons but all the notices issued are returned to the department undelivered. Therefore identity, genuineness and creditworthiness of these persons are remained to be proved. The appellant vehemently argued that name / address / confirmation / ITR were provided to the AO but nothing was considered simply because the creditors could not be produced. It was argued that the appellant can't be punished for default, if any, of related party as it has been held in CIT Vs. CARBO IND HOLD LTD 244 ITR 0422 (Cal) such as "if share broker, even after issue of summons does not appear, for that reason, the claim of assessee should not be denied, especially in the cases when the existence of broker is not in dispu....
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....account position as tabulated above, it is clear that except for the above two credits received during the year there were no additional amounts received in respect of unsecured loans from various lenders. The amounts credited to the respective accounts only pertain to the credits in respect of interest payable Jo the respective parties and this does not constitute any fresh receipt during the year. On the contrary the appellant has repaid sizeable amount as against the opening balances during the year. The provisions of Section 68 of the IT Act, 1961 (relevant portion) is reproduced below: "Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year", (Emphasis provided). The first proviso to Section 68 further stipulates certain additional requirements in case of an assessee being a company where such sums so credited consist of share application money, share capital o....
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....received from M/s Binita Nesvi Infrastructure Pvt. Ltd. for which satisfactory explanation has been given by the appellant is also deleted. In effect the entire addition of Rs.76388871/- made by the AO cannot stand scrutiny of law, therefore, is hereby ordered to be deleted. It is hereby clarified that though the amounts appear to be from specified PAN holders and also through banking channel but genuineness or creditworthiness of the creditors has not been commented as the total addition has been deleted on Technical ground. The AO is directed to issue revised demand notice and challan. 4. In result, the appeal is allowed." 5. The Department is in appeal before us against the order passed by the ld. CIT(A) deleting the additions made by the ld. Assessing Officer u/s. 68 of the Act. The ld. Departmental Representative primarily relied upon the observations made by the ld. Assessing Officer in the assessment order. In response, the counsel for the assessee submitted that a total addition of Rs. 7,63,88,871/- was made by the ld. Assessing Officer u/s. 68 of the Act, the break-up of which is below:- On account of "opening balance" Rs. 4,74,88,871/- On account of "fresh re....
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....i ITAT in the case of Nuchem Ltd. vs. DCIT 87 TTJ (Delhi Trib) 166 held that since Revenue has failed to prove that the amounts were credited to the books of the assessee during the year and these amounts were brought forward from earlier years, therefore, it is a settled law that addition u/s. 68 could be made only if the amount was credited in the accounts of the assessee in the relevant financial year. Accordingly, the Delhi ITAT directed the addition to be deleted. Further, in the case of Shri Vardhman Overseas Ltd. vs. ACIT 24 SOT 393 (Delhi Trib.) held that since no new amount has been credited by the assessee in its account during the year under consideration, applicability of section 68 of the Act is ruled out. Therefore, in view of the above judgments, we observe that it is a settled law that opening balance of unsecured loans coming from previous financial years cannot be added u/s. 68 of the Act to the income of the assessee. We further observe that even the PAN numbers as well as addresses of all such parities were duly furnished by the assessee to the ld. Assessing Officer during the course of assessment proceedings. The copy of chart containing details of unsecured lo....