TaxTMI 
TaxTMI 
2023 (7) TMI 397
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....ing invoking of Sec. 68 of the Act by the Assessing Officer. It is submitted that on facts of the case and provisions of Law and since all necessary conditions are satisfied Sec. 68 does not apply. 2. Your Appellant further submits that Mr. Salim Hamid Memon who deposited a sum of Rs. 2,38,76,291/- is a known person who has proved his Identity and Creditworthiness and Genuineness of the transaction and therefore the addition made by the Assessing Officer and confirmed by the CIT(A) is required to be deleted. 3. Without prejudice to above and in the alternative your Appellant submits that the amount of Rs. 2,38,76,291/- or part thereof if at all liable to be included as Appellants Income, then it should be taken as his gross Business Receipt and only N.P. thereof be included as his Income as held by various judicial authorities. II. On Section 40(a)(ia) of Rs. 7,55,750/- 1. The CIT(A) has erred both in Law and in fact in confirming applicability of Sec. 40(a)(ia) of the Act to the case which is not applicable and disallowance I addition is not called for. 2. Your Appellant submits that the recipient of money Shri Kanubhai Prajapati is assessed to Income Tax and the am....
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....portunity of being heard made addition under section 68 of the Act. The assessee further submitted that during the year under consideration, unsecured loan of Rs. 1,91,76,229/- only was received from Sri Salim Hamid Menon and the balance amount of Rs. 47,00,000/- was received from Sri Navjit Singh Anand but wrongly credited in the ledger of Sri Hamid Memon. The assessee in support of his contention furnished copy of PAN, Confirmation, Bank statement of Sri Navjit Singh Anand. 7. The assessee with regard to the identity, creditworthiness and genuineness of loan from Sri Hamid Memon further submitted that he is resident of Dubai- UAE and active director, holding 25% share in the firm namely Taj Mahal Purification of Portable Warter (LLC) and furnished audited financial statement of impugned firm along with bank statement of Sri Salim Hamid Memon maintained with NBD Bank Dubai. He also claimed thar Sri Salim Hamid Memon is also an income tax assessee in India and filing regular return of income. 8. However, the learned CIT(A) after considering the facts in totality confirmed the addition made by the AO for the amount credited from Sri Salim Hamid Memon by observing as under: "The ....
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....itial onus is discharged or not that has to be ascertained from the materials on record. Once the initial onus is discharged, the onus shifts on the Revenue. Then, it is for the Revenue to act on it and until it comes to a finding that the explanation is insufficient and unsatisfactory, it could either ask for further explanation or could come to a decision on the basis of such material." The appellant vide his submission dated 31.01.2018 has claimed that as per RBI regulation this transaction is covered by automatic route and part of current account transactions and hence no permission was required from RBI for accepting loan from Salim Memon. The claim of the appellant is not correct because as per Reserve Bank of India Regulation, the transaction is covered by automatic route only for investment in shares. Under the Foreign Direct Investments (FDI) Scheme, investments can be made in shares, mandatorily and fully convertible debentures and mandatorily and fully convertible preference shares of an Indian company by non-residents through two routes: Automatic Route: Under the Automatic Route, the foreign investor or the Indian company does not require any approval from the Re....
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....he assessee from various race Clubs on the basis of winning tickets presented by her. This Court based on the material available on record found that an inference about such a purchase has to be drawn on the basis of the circumstances available on record inasmuch as no direct evidence about such purchase be rarely available. This Court accordingly upheld the majority opinion of the Settlement Commission based on surrounding circumstances and applying the test of human probabilities." 4.6 Further, the Hon'ble Supreme Court in the case titled CIT Vs. P. Mohanakala 291 ITR 278 has held that the doubtful nature of the transaction and the manner in which the sums were found credited in the books of accounts maintained by the assessee have been duly taken into consideration by the authorities below. The transactions though apparent were held to be not real one. May be the money came by way of bank cheques and paid through the process of banking transaction but that itself is of no consequence. The appellant has failed to prove the purpose of receipt of such substantial amount without any business consideration. The person from whom this amount has been shown to have been receive....
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...., who were not even routinely engage in business of giving loans and advances, gave him unsecured loans on 12 per cent per annum interest and assessee had maintained stoic silence on being told about these lenders being alleged to be shell entities, therefore, alleged loan transactions of lessee had been rightly brought to tax by lower authorities holding them not genuine. Facts of the present case are also identical so far as onus upon the appellant is concerned and he has not been able to satisfactorily prove the genuineness of these unsecured loans from a NRI. Keeping in view the facts narrated above and failure of the appellant to produce basic documents viz. the loan agreement and genuineness of the transactions and in view of the judicial decisions cited supra including jurisdictional Tribunal in the case of Pavankumar M Sanghvi (Supra), I confirm the addition of Rs. 2,38,76,291/- (5,03,54,471- 2,64,78,242) made by the AO under section 68 of the I.T. Act. Balance addition of Rs. 2,647,8,242/- is deleted. Thus, grounds No. 1, 2 & 3 are partly allowed." 9. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 10. The learned AR before us fil....
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....had not been established. If the identity of the creditors had not been established, consequently, the question of establishment of the genuineness of the transactions or the creditworthiness of the creditors did not and could not arise. The Tribunal did not apply its mind to the facts of this particular case and proceeded on the footing that since the transactions were through the bank account, it was to be presumed that the transactions were genuine. It was not for the ITO to find out by making investigation from the bank accounts unless the assessee proved the identity of the creditors and their creditworthiness. Mere payment by account payee cheque was not sacrosanct nor could it make a non-genuine transaction genuine." 12.1 Now, first we proceed to understand the identity of the party. The identity of the party refers to the existence of such party which can be proven based on the evidence. As such, the identity of a party can be established by furnishing the name, address and PAN detail, bank details, passport and other details of the Government agencies. 12.2 The next stage comes to verify the genuineness of the transaction. Genuineness of transaction refers what has been....
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...., no finding was given by the AO in the remand report. The learned CIT(A) also without assigning any reason confirmed the addition made by the AO. In our considered opinion, the assessee discharged primary onus cast upon him by furnishing copy of PAN, confirmation and Bank statement of Sri Navjit Singh Anand and onus shifted on the revenue to bring contrary material. However, the Revenue failed to discharge its onus before treating the credit of loan from Sri Navjit Singh Anand as unexplained cash credit as per section 68 of the Act which needs to be set aside/deleted. 12.7 Likewise, the assessee with regard to the credit of loan from Sri Salim Hamid Memon furnished copy of PAN, copy of return filed in India and residence detail in Dubai-UAE and copy of bank statement held with NBD Emirates bank along the detail of firm where he has been director and shareholder. The amount was directly remitted by party from the bank account held NBD Emirates bank which can be verified from copy of bank statement placed on record. Thus, the assessee discharged primary onus with regard to identity, genuineness as well as creditworthiness of creditor. The revenue authority without bringing contrary....
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....d leveling which was in the nature of work contract and liable to tax deduction at source under section 194C of the Act. However, the assessee failed to deduct tax at source. Hence the AO invoked the provision of section 40(a)(ia) of the Act and disallowed the impugned expenses. 15. The aggrieved assessee preferred an appeal before the learned CIT(A) who confirmed the order of the AO by observing as under: "5. Ground No. 4 pertains to addition u/s 40(a)(ia) of Rs. 7,55,750/- for non-deduction of TDS against payment for land development / land leveling charges. Payment of Rs. 7,55,750/- made to Kanubhai Prajapati is not in dispute. Work of land labeling undertaken is also not in dispute. AR argued before me that Section 194C r.w.s. Sec. 40(a)(ia) does not apply because amount of Rs. 7,55,750/- is not outstanding at the end of accounting year. AR further argued that Kanubhai Prajapati is assessed to tax also. However, AR did not produce copy of return, computation of income to show expenses of Rs. 7,55,750/- claimed by appellant has been shown in the books of Kanubhai Prajapati. Further, logic behind outstanding payment for TDS is also misplaced. Alternatively, AR did not submit c....
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....ssee to furnish necessary documentary evidence and confirmation of the party, but the assessee failed to furnish required details. Hence, the AO disallowed the impugned labour expenses of Rs. 6.2 Lakh and added to the total income of the assessee. 22. On appeal by the assessee the learned CIT(A) confirmed the disallowances made by the AO by observing as under: "Ground No. 5 relates to addition of Rs. 6,20,000/- as unpaid expenses of creditor Shri Gavarsinh Mavi being labour charges. AR argued that such expenses claimed has been settled in next FY. However, I am unconvinced with AR as there is no evidence before me to conclude that payment has been made to the creditors. Ledger A/c of creditor duly confirmed by him has not been placed before me. AR's argument being hollow and is therefore rejected. Ground No. 5 is dismissed." 23. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 24. The learned AR before us did not advance any argument but left the issue at the discretion of the bench. 25. On the other hand, the learned DR before us vehemently supported the order of the lower authorities. 26. We have heard the rival contentions of both t....