TaxTMI 
TaxTMI 
2023 (6) TMI 1205
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....(Delhi), Seema Jain 406 1TR 411 (Delhi). 2. On facts and circumstances of the case and in law, the Ld. CIT(A) in law, while deleting the addition of Rs. 2,00,00,000/- made by A.O. in respect of unexplained cash credit, failed to appreciate that no evidence was given during asst proceedings and that during remand proceedings also the bank statement of creditors could not be furnished to establish the source and genuineness of the money received from creditors. The Ld CIT(A) further failed to appreciate the findings of the AO in remand report that the creditors were not carrying any regular business but showing trade payables in balance sheet even though there were no purchases or change in stock position in the P&L a/c and there were NIL or negative tangible fixed assets with the creditors. 3. On facts and circumstances of the case and in law the Ld. CIT(A) failed to allude to the relevant facts & circumstances and misread the legal provisions and ignored relevant observations of AO in the remand report to arrive at the conclusion. 4. On facts and circumstances of the case and in law, the Ld. CIT(A) even before calling the remand/enquiry report u/s 250(4) from the AO ....
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....s Pvt. Ltd. 6. The Assessment Order reads as under: "5. During the course of assessment proceedings, the bank book of Axis Bank Ltd has been perused and it was observed that the assessee company received funds of Rs. 1,00,00,000/- front Julonia Finance, Rs. 50,00,000/- each from AVT Homes Pvt. Ltd. and RITS Jewellers Pvt. Ltd. which were also squared up during the year. During the course of, assessment proceedings, the assessee vide questionnaire dated 07.11.2017 has been asked to provide complete details of fresh unsecured loan taken or accepted by the assessee during the year under consideration, in order to verify the authenticity, creditworthiness and the genuineness of lender, the assessee has been further asked to provide the following details:- a) Confirmation from the lender in original b) Audited financial results of lenders c) Bank statement of the lender explaining the source of funds d) Income tax return filed by the lender e) Agreement of Loan and details of interest paid, if any In response to the same, no details were furnished by the assessee regarding these entities, in fact, the assessee in his reply didn't even discuss about these entities wh....
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....nd RITS Jewellers Pvt. Ltd. which were also squared up during the year under consideration itself. The learned AO asked the appellant to furnish certain documents to verify the authenticity, creditworthiness and the genuineness of the lenders. 1.8 The appellant was not able to furnish all the requisite details and source regarding the amount received from above mentioned persons as the appellant got utmost 38 - 40 days time to furnish all the details for 7 AYs. 1.9 The learned assessing officer acknowledged the fact that the amount of Rs. 2,00,00,000/- received by the appellant have been squared up during the FY itself and arbitrarily and prejudicially made addition of Rs. 2,00,00,000/- being cash credit into bank account as unexplained cash credit under section 68 only on the basis of doubt, suspicion, conjectures and surmises that, the assessee company failed to discharge its onus. The learned assessing officer alleged in the impugned order as under: "In response to the same, no details were furnished by the assessee regarding these entities. In fact, the assessee in his reply didn't even discuss about these entities which were reflected in the bank book of the asses....
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....000/- 1.13 It is pertinent to note that during the course of assessment proceedings the appellant has submitted complete bank statement and the bank transactions for all debit and credit entries appearing in bank statement with no intention of concealing any facts / details. 1.14 It is pertinent to note that, appellant is a Private Limited Company incorporated under: "the Companies Act, 1956 and its books of account has been statutorily audited by the Chartered Accountant as per the provisions of the Companies Act as well as Income tax Act, 1961." 1.15 It is pertinent to note that on perusal of the bank statement and bank narrations of Axis Bank Limited bearing account no. 912020064615134 it is evident that the transaction of receipt and repayments of loan are through banking channel and appearing on the same bank statement. Moreover, the appellant has also paid interest on such amounts received after deducting tax at source during the financial year under consideration. The payment of same has been made through same bank account and reflecting in the bank narrations. 1.16 It is pertinent to note that the learned assessing officer despite of comprehensive information....
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....de and also what1 tire source of credits in their bank accounts. The learned assessing officer failed to discharge his onus to show the amount given by the lenders were emanated from the coffers of appellant company as laid down by the Hon'ble High Court of Delhi in the case of Commissioner of Income tax v Value Capital Private Limited. 1.20 It is well settled law that where the learned assessing officer raised doubt as1 regard to the genuineness of the transaction and creditworthiness of the person, then there is an additional burden on the assessing officer to show that the amount given by the lenders has actually emanated from coffers of the appellant, and if the revenue has not discharged this burden, the amount received cannot be treated as unexplained even if the lender does not have the means to lend funds. We relied on the following pronouncements by jurisdictional High Court of Delhi: * Commissioner of Income tax v Value Capital Services Private Limited (2008) 207 ITR 224 (HC - Delhi) * Income-tax Officer v. Neelkanth Finbuild Ltd., [2015] 61 taxmann.com 132 (ITAT - Delhi.) * Assistant Commissioner of Income-tax v. AMR Hospitality Services Ltd. [2013] 40 taxm....
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....s / evidences filed by die appellant before treating any transaction as bogus. 1.25 It is pertinent to note, that in the present case the learned assessing officer despite of knowing the fact that the said credit, entries under consideration has been squared up during the year itself, further proceeded to make addition on account of unexplained cash credit under section 68 of the Income Tax Act, 1961 only by relying upon credit entries and completely ignoring the debit entries appearing on the same bank statement. 1.26 Hence, the learned assessing officer has adopted pick and choose method by relying on certain entries of bank narrations / statement which is beneficial to revenue and detrimental to the appellant and ignored other relevant entries of the said statement which is detrimental to the revenue, thus erred in law in reading /considering the statement in parts instead of the entire statement which is bad in law. 1.27 It is settled law that when document is being relied by an income tax authority to draw an inference, such reliance is to be placed on the whole document. It cannot be open for the assessing officer to pick and choose that part of the document, which h....
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....ard by way of opportunity, which should be adequate and reasonable, so as to enable the person affected to meet the case against him. In all such cases, it is clear 'that a fair opportunity means not only hearing the assessee on the inference drawn, but also giving a further opportunity, when the explanation given is not satisfactory. It is only such opportunity, which meets the requirements of basic principles. 1.32 It is pertinent to note, that the principles of natural justice have been elevated to the status of fundamental rights guaranteed in the Constitution of India as it is evident from the decision of the Full Bench of the Supreme Court in the case of Union of India v. Tulsiram Patel AIR 1985 SC 1416, that the principles of natural justice have, thus, come to be recognized as being a part of the guarantee contained in Article 14 of the Constitution of India because of the new and dynamic interpretation given by the Supreme Court to the concept of equality which is the subject matter of that article and that violation of principles of natural justice by a Slate action is a violation of Article 14. In fact, the principles of natural justice, in the realm of life and l....
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....ortunity before the Assessing, Officer cannot be rectified by the appellate authority by giving such opportunity. We relied on the following decisions rendered by, Hon'ble Supreme Court: * Shreeram Durga Prasad [RB vs. Settlement Commission (1989) 176 ITR 169 (SC)] * Nawaabkhan vs. State of Gujarat AIR ID74 SC 1471 * Appropriate Authority vs. Vijay Kumar Sharma (2001) 249 ITR 554 (SC) * Tin Box Co. vs. CIT (2001) 249 ITR 216 (SC) 1.35 It is also pertinent, to note that assessments are to be framed by the Assessing Officer under section 153A of the Income Tax Act, 1961 which would have bearing on the determination of total income in view of the existence of incriminating materials found and impounded at the time of search, whereas in, the present case of the appellant no incriminating materials found and impounded at the time of search in relation to impugned addition of Rs. 2,00, 00,000/- on account of unsecured loan received during the year under consideration. 1.36 It is a well settled law that assessment under section 153A in the absence of any incriminating material found in the course of search from the premises of the assessee is bad in law. Reliance is plac....
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....relevant entries of the said statement which is detrimental to the revenue. D. The learned AO erred both fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cam credit ids 68 without affording an opportunity of being heard before making addition of Rs. 2,00,00,000/- as unexplained credit which is in gross violation of principle of natural justice. E. The learned AO erred both in fact and in low m framing assessment under section 153A of the Income tax Act, 1961 by making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit ids 68 in the absence of any incriminating material found in this regard during the course of search at the premises of the appellant. So, keeping in view of the facts and circumstances of the case of the appellant, reappraisal of the facts and ratio of above cited cases, the learned assessing officer erred both in facts and in law in framing an assessment under section 153A of the Income Tax Act, 1961 at an Total Income of Rs. 2,19,01,730/- against Returned Income of Rs. 19,01,730/- thereby making an addition of Rs. 2,00,00,00....
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....details of interest paid, if any. In response to the same, no details were furnished by the assessee regarding these entities, In fact, the assessee in his reply didn't even discuss about these entities which were reflected in the bank book of the assessee since they are squared up during the same year. On perusal of the submissions filed by the assessee, it is observed that the assessee has failed to provide bank statement of lenders from whom unsecured loan was raised by the assessee during the year, In the absence of such information, the source of funds could not be substantiated. Further, the assessee is also failed to prove the creditworthiness of the lenders as they have been shown any income in their financial results. In view of the above, the assessee has failed to discharge his onus to prove the creditworthiness of the investors, genuineness of the transactions and existence of the lender(s). Therefore, the entire sum of Rs. 2,00,00,000/- was treated as unexplained and added to the total income as unexplained unsecured loans u/s 68 of the Income Tax Act. 4. At the remand stage the AR. of the Assessee submitted tire Additional evidence which were admitted ....
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....e sets of bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance sheet and profit & Loss account it is seen that the company is not engaged in any business. No income from the real estate business has been reported during the year. An income of Rs. 21,01,785/- was declared under the heads "income from other sources". In the previous year too, there was no income from business, it had only income from other sources of Rs. 9,14,669/-. Hence, the capacity to lend n loan of Rs. 50,00,000/- is not proved in this case. From the above, it can be safely held that merely filing of confirmation, copy of ITR etc., is not enough to prove the genuineness & creditworthiness of the transaction, as the creditworthiness must also be proved and the transactions should invite confidence of normal, business principles of profit. When the account of the assesses company and the transaction are doubted by the A.O. then to prove the genuineness of such transactions; the assessee has to go some steps further of its own to prove the genuineness of the transactions by direct and corroborative evid....
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.... deposited with bank account, being, unexplained cash credit u/s 68 without affording an opportunity of being heard before making addition of Rs. 2,00,00,000/- as unexplained credit which is in gross violation of principle of natural justice. E. The learned AO erred both in fact and in law in framing assessment under section 153A of the income tax Act, 1961 by making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit u/s 68 in the absence of any incriminating material found in this regard during the course of search at the premises of me appellant. it is further submitted that the learned assessing officer in assessment framed under section 153A of the Income tax Act, 1961 consequent upon search & seizure operation carried out under section 132 of the Income Tax Act, 1961 on 30/09/2015 at the business premises of the appellant company at B-20, 21-22, Sector16, Noida-201306 has made addition of Rs. 2,00,00,000/- being amount received by the appellant during the year under consideration by treating the same as unexplained Unsecured loan under section 68 of the income tax Act. The appellant company has received cheque....
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....the learned assessing officer only raised general issues in his remand report, which are also not sustainable keeping in view of the explanation along with documentary evidences furnished by the said lenders confirming the facts that they have given loan to the appellant which are also squared up during the same financial year. The contentions of the learned assessing officer are as under: 1. That the lenders have weak financials and thus, don't have any creditworthiness to give loan to non-listed companies. In case of all three companies, the credit worthiness is not proved. 2. The assessee has to prove of its own the genuineness of the transactions by direct and corroborative evidence and must establish the capacity to lend such funds by such persons. The learned assessing officer in the remand report has mentioned general comments in relation to all 3 lenders after verifying the details / documents submitted by the appellant and directly by the lenders in compliance of notice issued under section 133(6) of the Income tax Act, 1961. The same is extracted as under: In the case of M/s Juliana Finance Private Limited, it was seen that ITR was filed at Rs. 6,98,851....
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....clared under the heads "income from other sources". In the previous year too, there was no income from business, it had only income from other sources of Rs. 9,14,669/-. Hence, the capacity to lend a loan of Rs. 50,00,000/- is not proved in this case. In this regard we would like to submit that the appellant has already discharged its onus to prove the identity creditworthiness of the persons and genuineness of the transaction by furnishing the necessary documents, which proves that the said amount received and squared up were disclosed and is genuine in nature. It is also a well settled law that addition of unexplained cash credit under the Income tax Act, 1961 cannot be made when the assessee discharged his onus by furnishing necessary documents to prove identity, creditworthiness and genuineness of transactions. Further, it is submitted that after perusal of Remand report it is evincible that lenders has also confirmed payment and receipt of loan amounts along with receipt of Interest payments and also submitted their Financials, Bank statement and Returns for verification of same. However, the learned assessing officer arbitrarily and prejudicially rejecting the submissio....
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.... deleted: We pray that the appeal be allowed." 9. Further, the ld. A.R. of the assessee filed other rejoinder/comments on 30.07.2019, which is as under: "This is with reference to oar hearing at your office in case of above mentioned appeal, wherein we would like to submit the following details /documents / explanations as required by your good Self under section 250(4) of the Income Tax Act, 1961. In the present case, the appellant company has received cheques/ RTGS of Rs. 2,00,00,000/- deposited with the bank account of the company received from the following parties, which were also squared up during the financial year itself: Name of the company Date of Receipt Amount (Rs.) Date of squared up Amount (Rs.) Juliana Finance Private Limited 08/06/2013 1,00,00,000/- 27/03/2014 26/03/2014 50,00,000/- 50,00,000/- RITS Jewellers Private Limited 28/06/2013 50,00,000/- 24/03/2014 50,00,000/- AVT Homes Private Limited 25/06/2013 50,00,000/- 25/03/2014 50,00,000/- Since the appellant was not able to furnish all the requisite details / documents regarding the amount received from above mentioned persons as the appellant got almost ....
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....dentity of the lenders * Income tax return of the lenders for the year under consideration which shows complete Income tax jurisdiction particulars of the lenders. * Company Information as per Master Database as available on the official portal of Ministry of Corporate affairs (MCA). Creditworthiness of the lenders * Income tax return, of the lenders for the year under consideration. * Bank statement of the lenders. Genuineness of transaction * Bank statement of appellant and lenders showing relevant credit and arid debit entries. * Confirmed copy of ledger account in the books of the appellant. Further, it is also pertinent to note that from the perusal of confirmed copy of accounts of the relevant parties it is also quite evident that the appellant has also paid interest on such amounts during the financial year under consideration and tax at source has also been deducted thereupon. It is pertinent to note that now the appellant had duly discharged its onus to prove the identity, creditworthiness of the persons and genuineness of the transaction by furnishing the documents, required by your goodself, which proves that the said amount received and square....