TaxTMI 
TaxTMI 
2023 (10) TMI 1274
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.... well as the law on the subject, the learned CIT(a), Surat has erred in partly confirming the action of ld. Assessing Office by sustaining the addition to the tune of Rs. 26,42,30,416/- made u/s 68 of the I.T. Act, 1961. 2. On the facts and circumstances of the case as well as the law on the subject, the learned CIT(A), Surat has erred in sustaining the addition as above although assessee has filed complete documentary evidences of all the lenders & clearly discharged the burden cast on it u/s 68 of the I.T. Act, 1961. 3. Appellant craves leave to add, alter or delete ground(s) either before or in the course of hearing of appeal." 2. The Revenue in its cross-appeal in ITA No.375/SRT/2023 has raised the following grounds of appeal "1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs. 27,72,98,000/- without appreciating the facts that the assessee failed to furnish the cogent evidences in respect of advances given to Rameshwar Developers for purchase of land in the course of assessment proceedings. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition ev....
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.... The Assessing Officer recorded that assessee failed to prove "genuineness and creditworthiness" and amount of Rs. 27.72 crores was also treated as unexplained credit under section 68, in the assessment order passed under section 143(3) r.w.s 144B of the Act on 22.04.2021. 4. Aggrieved by the addition made in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A) the assessee filed detailed statement of fact as well as written submission. To substantiate the transaction of loan, the assessee furnished particulars of identity of lenders, creditworthiness and genuineness of such transaction. Against the addition of advance, the assessee submitted that Assessing Office not appreciated the fact and despite furnishing documentary evidence in support of advance given for purchase of land, the Assessing Officer simply jump on the conclusion and made addition under section 68 by holding that "appellant-assessee has failed to prove genuineness and creditworthiness" but such addition treated under section 68 is absolutely incorrect. On the addition against advance to Rameshwaram Developers, the assessee submitted that assessee has made payment for purchasing of....
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....ssessing Officer accepted that their ITRs and bank statements were furnished. With respect to lenders, namely, Rajgreen Infrastructure, who has given loan of Rs. 24.04 crores, the Assessing Officer commented that various entries routed through concerned group. For Sai developers, who has given loan of Rs. 1.00 crores, the Assessing Officer remarked that there were credit entries in the bank account of lender doubt before lending money. For Srushti Developers, who was given loan of Rs. 60.00 lakh, the Assessing Officer commented that ITR, confirmation and bank statement have been verified. With regard to remaining other 41 lenders, from whom the amount of loans ranges from Rs. 5.00 lakh to Rs. 10.00 lakh, the Assessing Officer reported that either their contra-conformations were not furnished, confirmation was furnished from assessee's own account / or credit entry in their bank accounts within week or the same day before lend the money to the assessee. 7. The copy of remand report was furnished to the assessee for its comment. The assessee vide its reply / rejoinder filed on 13.03.2023 filed their detailed reply. In the reply, the assessee submitted that on the submission of asses....
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....d in profit and loss account but shown in the liability side of balance sheet. The assessee availed that total loan of Rs. 28.12 crores out of which Rs. 24.04 crores were obtained from Rajgreen Infrastructure which is associate concern of assessee. Both the firms have many common partners. The assessee filed copy of ITR, audited financial statements, with bank statement and showing income approximately Rs. 21 crores and paid tax almost of Rs. 8.00 crores. The Assessing Officer has not made any adverse inference no discrepancy was pointed out by Assessing Officer against such transaction. For other two major lenders, i.e., M/s Sai Developers of Rs. 1.00 crores and MS Shrushti Developers of Rs. 60 lakhs. The assessee has already filed their ITR, bank statements highlighting the transactions and contra-confirmation all the funds were obtained through banking channel. Moreover, for Shrusti Developers, the Assessing Officer in his remand report accepted that he has verified ITR confirmation, bank statement. The major component of loan received from 3 lenders of Rs. 25.64 crores which has not been appreciated by the Assessing Officer. The assessee stated that there is no evidence that de....
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....sheet. Consequently, neither section 68 nor section 69 is not applicable on such transaction. The assessee also given the details of advance with date, amount and the bank account from which such amount was paid to Rameshwaram Developers. The assessee further stated that in assessment year 2019-20 purchases was completed and two sale deeds for land were executed on 02.07.2018 vide document No.11863 respectively. Copy of such sale deed was also furnished. The assessee in its without prejudice submissions submitted that Assessing Officer added source of fund being unsecured loan as income under section 68. And once again, the Assessing Officer added application of said source as advance for land of Rs. 27.73 crores by turning as unexplained cash credit for the reasons known. The assessee also objected the manner in which assessment order was drafted "in violation of principle of natural justice" and making double addition of the same amount. On the basis of such submission, assessee prayed for deleting both the additions. 9. The NFAC/Ld. CIT(A) after considering the submission of assessee, remand report furnished by the assessing officer and the rejoinder objections of the assessee,....
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....erring the decision of Delhi Tribunal in the case of Harsh W Chadda Vs DDIT [201] 9 taxmann.com 1, (Delhi), Hon'ble Apex Court Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC) and in the case of Sumathy Dayal Vs CIT 214 ITR 801 (SC) held that in such cases, principle was laid down that where entry of loan in a set of entities, mere furnishing certain details and payment made account payee cheque is not sacrosanct and held that loan are not explained, thereby upheld the addition. 10. However, on the addition of Rs. 27.72 crores on account of advance given to Rameshwaram Developers, the ld. CIT(A) noted that assessee has given details about advance given for purchase of land. The dates of advance correspond with the arrangement of loan from various entities, the Ld. CIT(A) was of the view that once the addition of loan has been confronted as unexplained loan, the application of that income cannot be sustained and deleted the entire addition. 11. Aggrieved by the order of Ld. CIT(A) both the parties have filed their respective appeal before the Tribunal. The assessee has challenged the correctness of impugned order in upholding the addition of unsecured loan whe....
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....at he has verified the evidence furnished by assessee. The Assessing Officer or Ld. CIT(A) nowhere disputed the identity of the lenders, genuineness of transactions merely disputed the creditworthiness of some of the lenders on their own presumption without bringing any adverse evidence on record. The Ld. AR for the assessee submits that he has duly discharged his primary onus as per the decision of Hon'ble jurisdictional High Court in the case of Ranchod Jivabhai Nakhava (supra), once the assessee has discharged their onus the burden shift on the assessing officer to prove otherwise or to bring adverse evidence on record or to make further investigation. In absence of adverse addition, the additions of loan under section 68 is not sustainable. The Ld. AR for the assessee in his other submission reiterated all the submission made before Ld. CIT(A) which we are not reproduced for the sake of brevity. At the end of submissions, the ld AR for the assessee submits that he has filed a list of all lenders, at page No. 324 of paper book, showing the name of lenders, PAN, amount of loan, interest paid, TDS made, closing balance, amount repaid till date, amount repaid and the bankers of len....
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..... CIT(A) on the additions of unsecured loan. 15. On the additions on account of loan and advance for investment in land, which is the subject matter in the appeal filed by revenue, the ld CIT-DR for the revenue submits that during the assessment the assessee failed to provide complete details of land and only ledger accounts of payment was furnished, which was not sufficient to prove the huge investment in the land. The ld CIT-DR for the revenue submits that he supports the order of assessing officer on this issue. 16. We have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. We have also deliberated on various case law relied by Ld. AR for the assessee and Ld. CIT-DR for the Revenue. First, we are dealing with the grounds of appeal raised by the revenue. The assessing officer made addition of advance paid to Rameshwaram developers by taking view that the assessee has not furnished any agreement with the parties and only copy of ledger was furnished, which do not justify the payment of huge amount without any registered document. The Assessing Officer recorded that assessee failed to prove genuineness and creditwo....
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....come, details of TDS made on payment of interest and details of the repayment of certain loan amount. The assessee in its submissions specifically contended that majority of the loan amount is received from three party namely; Rajgreen Infrastructure of Rs. 22.04 crores and Rs. 1.00 crores from Sai Developers and Rs. 60.00 lakhs from Srushti Developers. On the submissions of assessee, the ld CIT(A) directed the assessing officer to furnish his remand report. The assessing officer furnished his remand report on 21.02.2023. 19. We find that the assessing officer initially raised objection on the detail submissions of the assessee on the pretext that despite granting sufficient time the assessee has not furnished complete details. However, in his without prejudice contention, the assessing officer submitted that he has verified the issue of unsecured loan and prepared party-wise report. On perusal of such report, which is referred in the order of ld CIT(A), we find that assessing officer accepted that ITRs and bank statements of all the lenders were furnished. We find that in with regards to lenders, namely, Rajgreen Infrastructure (sister concern of assessee), who has given loan of ....
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....ty. 21. We find that the assessee has already furnished all details in the comprehensive sheet mentioned; the name of the lender, PAN, amount of loan, repayment of loan, interest paid and Tax Deducted at Source (TDS in short) and the closing balance as on 31.03.2018 and complete pdf folder consisting of duly signed of confirmation of ITR, relevant bank statement of the depositors was furnished, even on furnishing such details, the Assessing Officer has not made any enquiry of his own either issuing notice under section 133(6) or 131 of the Act. The assessee has discharged its onus. The Assessing Officer without making any independent verification or enquiry prepared to make huge addition in Crores of rupees, which he clearly tantamount to travesty of justice. While making submissions before us, the ld AR for the assessee vehemently argued that the assessee has already repaid the entire loan amount of 14 lenders, the details of whom were furnished by assessee in a chart, showing the amount, date of repayment and the details of banks of lenders. Such facts were not disputed before us. We also find that the assessee furnished all such details of the lenders/ depositors. There is no a....