TaxTMI 
TaxTMI 
2023 (8) TMI 428
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....sing the ground relating to initiation of penalty proceedings under section 271{l)(c) of the Income Tax Act, 1961 for the alleged concealment and/or furnishing of inaccurate particulars of income. 3.0 The learned Commissioner of Income Tax (Appeals) has erred in law and on facts in confirming charging of interest under section 234A, 234B, 234C and 234D of the Income Tax Act, 1961. 4.0 The appellant craves leave to add to, alter, delete or modify any of the grounds of appeal either before or at the time of hearing of this appeal. 3. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the addition by the AO of unsecured loan of Rs. 6,10,38,513/- as unexplained cash credit under section 68 of the Act. 4. The facts in brief are that the assessee is private company and engaged in the business of manufacturing and trading of Bitumen and its allied products. The case of the assessee was selected for scrutiny assessment under CASS. The AO during the assessment proceeding found that the assessee shown following unsecured loans/deposits: Sr. No. Name of the lender/depositor Address PAN Amount of loan taken/accepted Amount of loan outstanding ....
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....ited in the books of account. The assessee is liable to provide proof of the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties. These liabilities on the assessee were imposed to justify the credit entries under section 68 of the Act by the Hon'ble Calcutta High Court in the case of CIT Vs. Precision finance (p) Ltd reported in 208 ITR 465 wherein it was held as under: "It was for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. On the facts of this case, the Tribunal did not take into account all these ingredients which had to be satisfied by the assessee. Mere furnishing of the particulars was not enough. The enquiry of the ITO revealed that either the assessee was not traceable or there was no such file and, accordingly, the first ingredient as to the identity of the creditors 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 fa....
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.... other fund in the hand of creditor. It is required by the AO to find out the financial strength of the creditor to advance loan with judicious approach and in accordance with materials available on record but not in arbitrary and mechanical manner. 10.6 In the light of the above discussion, we proceed to adjudicate the issue in hand with regard to each loan creditor separately. (A) I-Ashmi Marketing Pvt Ltd i. The assessee in the books of account shown to have received loan of Rs. 10 lakhs from the captioned party on 1st August 2012 out of which an amount of Rs. 4,74,500/- and Rs. 1.7 Lakh was repaid through cheque dated 29th & 30Th March 2013 leaving outstanding balance of Rs. 3,55,500/-. The assessee in support of genuineness of the transaction furnished copy of ledger confirmation, PAN card of the party and its bank statement showing repayment of loan. Accordingly, the assessee before the lower authorities contended that loan amount received through banking channel and part of the loan was repaid through banking channel which also confirmed by the party. Therefore, genuineness of such credit cannot be doubted. Thus, prima facie, it appears that the assessee has discharged....
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.... then such credit can be held as income of the assessee. The relevant observation of the Hon'ble Supreme Court in aforementioned case is extracted as under: A bare reading of section 68 suggests that there has to be credit of amounts in the books maintained by assessees; that such credit has to be of a sum during the previous year; and that the assessees offer no explanation about the nature and source of such credit found in the books or the explanation offered by the assessees in the opinion of the Assessing Officer is not satisfactory. It is only then the sum so credited may be charged to income-tax as the income of the assessees of that previous year. The expression 'the assessees offer no explanation' means where the assessees offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessees. It is true that the opinion of the Assessing Officer for not accepting the explanation offered by the assessees as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectiv....
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...., we do not find any infirmity in the order of the learned CIT(A) to the extent of his finding with regard to credit of loan from the party namely Ashmi Marketing Pvt. Ltd. (B) II-Harish Ambika Prasad i. The assessee during the year from the captioned party received loan of Rs. 8 lakh dated 7th April 2012 which was repaid during the year dated 23rd May 2012. The party namely Shri Harish Ambika Prasad also confirmed the transaction in reply to notice issued under section 133(6) of the Act and also furnished the required documents such as ledger copy, bank statement and copy of ITR. However, the lower authorities treated such credit of loan as unexplained merely for the reason that the bank of account of the party was credited just before transferring the fund to the assessee bank. In our considered opinion the credit of loan cannot be held unexplained merely for the reason that bank account of the loan party was credited from unknown sources. As the obligation of the assessee under section 68 of the Act was to explain the nature and source of credit in its books only and not the sources of source. In the case on hand, the assessee's obligation has been duly discharged by furnis....
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....t the AO to delete the addition made on account of loan credit from the party namely Smt. Kaushalya Ben for Rs. 7 Lakh. (D) IV & V- M/s Pooja Garments P Ltd and M/s Parkash Fortan Softech Ltd 10.13 The assessee was having outstanding unsecured loan from past several years for Rs. 5,84,43,771/- and Rs. 94,742/- from the party namely M/s Pooja Garments P Ltd and M/s Parkash Fortan Softech Ltd respectively which was treated as unexplained cash credit under section 68 of the Act. However, the learned CIT(A) while confirming the addition made by the AO held that the assessee has not furnished any detail of the party except unsigned confirmation copy. The amount has been outstanding for last several years and there being no information that party is perusing the recovery of the amount. Accordingly, the learned CIT(A) held the liability of the assessee came to be ceased as provided under section 41(1) of the Act. Therefore, the same was liable to be taxed in the hands of the assessee. The learned CIT(A) in holding so made reference to the several judicial pronouncements. 10.14 In this regard, we note that the amount was not credited during the year under consideration, as such the sa....
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....in business" means,- (i) where there has been an amalgamation of a company with another company, the amalgamated company; (ii) where the first-mentioned person is succeeded by any other person in that business or profession, the other person; (iii) where a firm carrying on a business or profession is succeeded by another firm, the other firm; (iv) where there has been a demerger, the resulting company 10.16 From the perusal of the above provision, it is inferred that there should be two conditions required to be satisfied before any amount could be brought to tax under section 41(1) of the Act. These conditions are that that amount in question has been allowed as deduction in any past assessment year and there has been a receipt of any amount or benefit by way of a cessation or remission with regard to the above allowance in any subsequent year. The scheme of provision of section 41(1) are that if an expenditure or loss or trading liability is allowed for any assessment year and subsequently if the assessee recoups the loss or expenditure or gets some benefit by way of remission or cessation of the trading liability, then such amount or benefit is to be taxed in the y....