AI Drafter 
TaxTMI 
TaxTMI 
2023 (7) TMI 928
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.... "1. learned AO has erred in treating the unsecured loans appearing in the books of the assessee as unexplained cash credit u/s 68, concluding that the assessee has not filed relevant information to proved genuineness of the loan taken by the assessee. The assessee company is a sick industrial company and the case of the assessee is with Board of Industrial & Financial Reconstruction (BIFR) Also, the Accounts & Finance Department (A&F) Deptt. of the assessee was located at Sikanderabad at Uttar Pradesh and subsequently due to financial problems and to have better control these functions of the assessee were centralized at it corporate office at Murnbai. Moreover, there were frequent changes in A&F Deptt. of the assessee company. Due to combined effects of these facts, the assessee has not been able to gather all the required information. 2. The assessee has preferred appeal against the assessment order u/s 143(3) before the Hon CIT(Appeals)-2 and pleaded to the CIT(Appeals) 2 to allow the assessee to submit additional evidence which the assessee could not submit at the time of scrutiny The said appeal was partially allowed by admitting the additional evidence in ca....
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.... 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any grounds of appeal at any time before or during the hearing of this appeal." 3. As identical issues are involved in both these appeals and hence, they are taken up together and disposed off by this common order for the sake of convenience. 4. The only effective issue to be decided in this appeal is as to whether the addition u/s 68 of the Act in respect of unsecured loans received by the assessee could be made in the facts and circumstances of the instant case. 5. We have heard the rival submissions and perused the materials available on record. The assessee company is engaged in the business of Manufacturing of Machine made Plain & Design Carpets & Woolen Yarn. The assessee company filed its return of income on 30/09/2008 declaring total income Nil. Later, the assessee filed its revised return of income on 24/12/2008 declaring a loss of Rs. 1,18,54,341/-. This revised return filed by the assessee was taken due cognizance by the Ld. AO while framing the assessment. The assessee has received unsecured loan from following parties:- Sr. No. Parties Name Unsecured Loan ....
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..... Loan from Birla Cotsyan (I) Ltd.:- The Ld. AO submitted that assessee had filed a copy of Annual Report which is unsigned of the lender company and other documents were furnished. 6. With regard to all three parties, the Ld. AO also sought for details of year wise balances of ledger account in respect of unsecured loan received and interest paid thereon. The assessee submitted year wise ledger account balances of unsecured loan for all the three parties but no details regarding interest paid was filed. Based on all these documents, the Ld. AO reiterated the stand taken by him in the assessment. A copy of the remand report was submitted to the assessee for its rejoinder. The assessee submitted in its rejoinder that it is a sick industrial company and reference was registered with erstwhile Board for Industrial and Financial Reconstruction (BIFR). The assessee submitted that due to financial problems and to have better control, the Accounts & Finance Department of the assessee company was centralized and was shifted to its Corporate Office at Mumbai. Accordingly, the assessee was not able to gather all the requisite details and furnish before the ld. AO. The assessee ve....
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....he dispute. Accordingly, the Ld. CIT(A) gave a categorical finding that the additional evidences furnished by the assessee are admitted. The Ld. CIT(A) in respect of loan from M/s Godavari Pvt. Ltd. observed that the assessee had not furnished the confirmation of balance and the said lender company had reported income of Rs. 12.23 lacs only and hence, creditworthiness and genuineness of the transactions were not proved by the assessee. Aggrieved, the assessee is in appeal before us. 9. In respect of loan received from M/s Birla Cotsyan (I) Ltd., the Ld. CIT(A) reiterated the findings given by the Ld. AO in his remand report and confirmed the addition. Aggrieved, the assessee is in appeal before us. 10. In respect of loan received from M/s Shearson Investment & Trading Co. Pvt. Ltd., the Ld. CIT(A) observed that the assessee had filed confirmation and ITR of the said lender company and said lender company has reported income of Rs. 3.00 Crores which would prove the creditworthiness of the parties. Accordingly, the Ld. CIT(A) deleted the addition in respect of unsecured loan of Rs. 1,68,25,236/- received from M/s Shearson Investment & Trading Co. Pvt. Ltd. Aggrieved, the Revenu....
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....he said party to the tune of Rs. 9,38,031.60 vide bill dated 20.09.2007. This fact is evident from the ledger account of the assessee as appearing in the books of the lender company. Apart from this, the said lender company had also incurred expenses to Rs. 2,670/- on behalf of the assessee company. Accordingly, assessee company owes Rs. 9,40,701/- (938031+2670) on account of trading liability which has been converted into loan payable to the lender company. This fact is also evident from the confirmation filed by the lender company which is enclosed in page 219 of the PB. The assessee has also furnished ITR of the lender company. This company is also a group company of the assessee company. The assessee company has also furnished the annual report of the lender company, on perusal of which, it is seen that the lender company has own funds of Rs 75.13 crores in its kitty which proves the sufficient creditworthiness of the lender company. Moreover, it is a fact that the lender company had supplied Carpets and Wools to the assessee company and the said trading liability together with sundry expenses of Rs. 2670 has been converted into loan by the assessee company. These facts are dul....