TaxTMI 
TaxTMI 
2023 (6) TMI 1205
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.... Nova promoters & fin lease Pvt. Ltd. 252 CTR 187 (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) ....
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....Rs. 50,00,000/- from M/s AVT Homes Pvt. Ltd. and Rs. 50,00,000/- from M/s. RITS Jewelers 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 wer....
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....ing account no. 912020064615134 observed that the appellant company received funds of Rs. 1,00,00,000/- from Julania, Finance Private Limited, Rs. 50,00,000/- each from AVT Homes Pvt. Ltd and 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 t....
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....00/ is unexplained unsecured loans: Name of the party Amount (in Rs.) Juliana Finance Private Limited 1,00,00,000/- AVT Homes Private Limited 50,00,000/- HITS Jewellers Private Limited 50,00,000/- Total 2,00,00,000/- 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 deductin....
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.... the learned assessing officer was, aware of the fact that the lenders are also Private Limited. Companies and thus the incorporation details can be easily retrieved by the learned assessing officer in case of any doubts or suspicion. However, learned AO did not make any effort, to confirm the facts from the lenders, how the so called investment were made 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 rel....
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....at categorically pointed out that the said unsecured loan is unexplained. 1.24 It is well settled law that transaction with a person cannot be treated as unexplained, where the learned assessing officer has failed-to discharged his onus by issuing notice under section 133(6) / 131 of the Income tax Act, 1961. It is also well settled in law the-assessing officer should also consider all the details/documents / 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 ....
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.... against the principle of natural justice. 1.31 It is pertinent to note that all the acts done by the learned assessing officer are in gross violation of principle of natural justice and, any, order made in violation, of natural justice is void and null and the, principles of natural justice are so fundamental that it is not to be construed as a mere formality. The principle of natural justice embodied in the Latin dictum "audi alteram partem" only means that a person has right to be heard 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. ....
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....al hearing is to be held, the time and the place must be properly notified. If the charges are to be brought, they should be specified with particulars. 1.34 It is well settled law that any order made in violation of natural justice is null and void and the principles of natural justice are, so fundamental that it is not to be construed as a mere formality. It is also settled law that the right of natural justice is so fundamental that the failure to observe the principles of natural justice cannot be made good subsequently in appeal and lack of opportunity 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, 1....
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.... B. The learned AO erred both hi fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with hank account, being unexplained cash credit ids 68 without confirming the facts of receipts and payment of Rs. 2,00,00,600/- from the fenders by issuing notice under section 133(6) or summons under section 131 of the Income tax Act, 1961. C. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with, bank recount, being unexplained cash credit u/s 68 by adopting 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. 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 bo....
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....k Ltd has been perused and it was observed that the assessee company received funds of Rs. 1,00,00,000/- from Julinia 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 confirmation from the lender in original, Audited financial results of lenders, Bank statement of the lender explaining the source of funds, Income tax return filed by the lender, 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 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 ....
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....e 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 jewellery business has been reported during the year. An income of Rs. 22,52,038/- 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. 8,10,089/-. Hence, the capacity to lend a loan of Rs. 50,00,000/- is not proved in this case. 4.3 In the case of M/s AVT Homes Pvt. Ltd., it was seen that ITR was filed at Rs. 2,67,268/- for the AY 2014-15. The loan amount was squared up during the year. Interest on loan amount has been paid. But no complete bank statement was given, hence the return amount is not reflecting. No complete 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....
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....rred both in fact end in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit u/s 68 without, confirming the facts of receipts and payment of Rs. 2,00,00,000/- from the lenders by Issuing notice under section 133(6) or summons under section 131 of the Income tax Act, 1961. C. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit u/s 68 by adopting 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. D. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount 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....
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....e said unsecured loan of Rs. 2,00,00,000 as unexplained. Further, in view of above facts opportunity is afforded to us by your good self to justify the three main elements of section 68 of the income tax Act, 1961 i.e. the identity, creditworthiness and genuineness of the lenders from whom unsecured loan have been received which the appellant could not prove during the course of assessment proceedings due to shortage of time, in compliance of which the appellant has furnished Copy of income tax return, Company information as per official portal of (MCA), Relevant part of Bank statement of the Senders and Confirmed copy of account of lenders in the books of appellant in relation to all 3 lenders. Thereafter, on the basis of said documents and information requisitioned under section 133(6) of the income tax Act, 1961, the learned assessing officer has submitted his Remand report dated 04.07.2019. On perusal of same, it is submitted that 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 f....
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....iness. No income from business has been reported during the year. An income of Rs. 22,52,038/- 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. 8,10,089/-. Hence, the capacity to lend a loan of Rs. 50,00,000/- is not proved in this case. In the case of M/s AVT Homes Private Ltd., it was seen that ITR was fled at Rs. 2,67,268/- for the A.Y. 2014-15. The loan amount was squared up during the year. Interest on loan amount has been paid. But no complete bank statement was given, hence the return amount is not reflecting. No complete set 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 and loss account it is seen that the company is not engaged in any business. No income from 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 c....
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....as the lender companies themselves in their submission in response to notice under section 133(6) of the Income tax Act, 1961 have submitted all the required documents like bank statement, audited financial statements of the lenders, confirmation of loan and Interest from lender, Income tax return as per remand report of AO itself. So all the requirements of the AO have been fulfilled in the remand proceedings at appellate stage, deficiency of which are the main basis for making addition. So, keeping in view of the facts and circumstances: of the case of the appellant, reappraisal of the facts, the learned assessing officer erred both in facts and in law in framing an assessment under section 153A of the Income tax Act, 1,961 at an Total Income of Rs. 2,19,01,730/- against Returned Income of Rs. 19,01,730/- thereby making an addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being cash credit u/s 68 of the Income tax Act, 1961. Hence, the addition, of Rs. 2,00,00,000/- being unexplained cash credit is bad in law and liable to be deleted: We pray that the appeal be allowed." 9. Further, the ld. A.R. of the assessee filed other rejoin....
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....cumentary evidences to prove identity and creditworthiness and genuineness of the lenders and genuineness of transactions with the appellant: * Copy of income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of Juliana Finance Private Limited is enclosed herewith as Annexure -1. * Copy of Income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of HITS Jewellers Private Limited is enclosed herewith as Annexure - 2. * Copy of Income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of AVT Homes Private Limited is enclosed herewith as Annexure -3. Thus, the three main elements of section 68 of the Income tax Act, 1961 i.e. the identity, creditworthiness and genuineness will get proved beyond doubt In view of evidences enclosed as above: Identity of the lender....