AI Drafter 
TaxTMI 
TaxTMI 
2024 (2) TMI 486
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.... the above the CIT (A) was not justified in confirming the addition of Rs.30,00,000/- under a different section as compared to the addition made in the assessment order without issuing a notice for enhancement of income as contemplated u/s 251(1)(a) of the Act. 2.2 That without prejudice to the above the action of the CIT (A) in confirming the addition of Rs.30,00,000/- under a different section of the Act amounts to enhancement of income by introducing the new source of income which is contrary to the settled proposition of law laid down by Delhi High Court in the case of CIT Vs. Union Tyres 107 Taxmann 447. 3. That on the facts and circumstances of the case and in law the CIT (A) was not justified in confirming the addition of Rs.30,00,000/- on account of unsecured loan received from M/s Influence Software Architect and M/s Ezeebe Travel Solutions by treating the same as unexplained money of the appellant. 3.1 That without prejudice to the above the CIT (A) erred in confirming the addition of Rs.30,00,000/- pertaining to the amount of unsecured loans received from the above referred parties u/s 69A of the Act in the absence of any finding that the asses....
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.... send to Mr. Ajay. The above referred email mentions about cash transaction of Rs. 30 lac on 01.07.2015 for the purpose of receiving entry in the accounts of Sh. Prashant Pitti. It has also been reported by the investigation wing that on examination of bank statement of Sh. Prashant Pitti reveals that Rs. 30,00,000/- has been received through RTGS collectively from two entities Le. M/s Influence Software Architects (AEFPJ8047P) (Rs. 8 lac each on 07.07.2015 & 09.07.2015) and M/s Ezeeibe Travel Solution (ACZPJ8799G) (Rs. 7 lac each on 07.07.2015 & 09.07.2015). The date of receipt of such fund is immediately after i.e. within few days only, of the email message for transfer of cash. As per the information available on public domain, both these entities are operated from Pitampura and run by Mr. Ajay Jain. It is reasonably concluded that the funds of Rs. 30,00,000/- received by the assessee are merely entry through Mr. Ajay Jain in lieu of cash provided to him. It is further seen from the bank statement of the assessee that the said amount has been transferred to M/s Ultimate Infracity Pvt. Ltd. which is a related entity of ETPPL group where the assessee is one of the directors." 4....
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....itti which is hereinafter being axxexed as Annexure-C Hence, loan of Rs. 15,00,000/- taken from M/s Influence Software Architect and Rs 15,00,000/- taken from M/s Ezbeeibe Travel Solutions cannot be treated as unexplained cash credit u/s 68." 5. The explanation of the assessee was not acceptable to the Ld. AO for the following reasons: "During the course of assessment proceedings, the assessee only filed copy of confirmation of loan alongwith copy of ITR of Sh. Ajay Kumar Jain and Smt. Malini Jain. The assessee stated in his submission that the during the year under consideration he has taken unsecured loan of Rs. 30,00,000/- from M/s Influence Software Architect and M/s Ezbeeibe Travel Solution where Sh. Ajay Kumar Jain and Smt. Malini Jain are the proprietor and proprietress of the aforesaid concern. The assessee only filed acknowledgment copy of ITR of the aforesaid two individuals from whom the assessee has taken loan as claimed by him. During the assessment proceedings, the assessee has failed to file the copy of bank statements and financial statements of Sh. Ajay Kumar Jain and Smt. Malini Jain. The purpose of alleged unsecured loans was taken by the ass....
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....overed by section 68 and therefore, and made the addition u/s 68 of the Act. 30. In my opinion the correct section should be 69Aof the Act. In section 69A, emphasis is on "or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory". It has been held in para 6.3 of the order of the Assessing Officer that explanation given by the appellant is not acceptable, therefore, Section 69A of the Act is squarely applicable on the appellant 31. In this respect, it is relevant to mention here that the CIT (Appeal) has concurrent jurisdiction with the AO. It is mandatory to examine the facts of the case properly and to tax the income under the correct provision of the Act. For this purpose the reliance is hereby placed upon the decision of the Hon'ble Supreme Court in the case of Kanpur Coal Syndicate, 53 ITR 225 (SC). The relevant part of the judgment is reproduced as under: "If an appeal lies, section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, ....
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....pute. The impugned addition is made on the basis of the contents of email (reproduced earlier), which according to the Ld. AO reveals that funds of Rs. 30,00,000/- received by the assessee are merely entry through Mr. Ajay Jain in lieu of cash provided to him, and that the said amount has been transferred by the assessee to M/s Ultimate Infracity Pvt. Ltd., related entity of ETPPL Group where the assessee is one of the Director. The assessee was asked to explain the source of the said cash. The explanation of the assessee before the Ld. AO was that he took loan of Rs. 15,00,000/- from M/s Influence Software Architect, a proprietary concern of Mr. Anil Jain and M/s Ezbeeibe Travel Solution, a proprietary concern of Mrs. Malini Jain. Confirmations from both the entities were submitted. IT Return of the proprietor of the said entities was filed. It was submitted that the assessee has established the identity, creditworthiness and genuineness of the loan transaction. It was also stated by the assessee that no cash has been exchanged. Loan has been taken through banking channel which is evidenced by the bank statement of the assessee. Therefore, the aforesaid loan taken by the assessee ....
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....mounts to enhancement of income as contemplated u/s 251(1)(a) of the Act by introducing new source of income, cannot be done without issuing notice for enhancement. 14.1 The Ld. AR also submitted that the Ld. CIT(A) while applying section 69A of the Act has not recorded any finding that the assessee was the owner of any unexplained asset as the amount towards unsecured loan is reflected as a liability of the assessee. On this count also the order of the Ld. CIT(A) is not sustainable. 15. Record shows that Ld. AO made the impugned addition u/s 68 of the Act after requiring the assessee to explain the source of cash of Rs. 30,00,000/- which the assessee explained to be unsecured loans obtained from two creditor entities and produced evidence to establish their identity, creditworthiness and genuineness of the transaction. However, the Ld. AO did not consider the explanation offered by the assessee satisfactory for lack of creditor's bank and financial statements, which the assessee could have furnished if the Ld. AO has asked for during the course of assessment proceedings. Ld. AO did not do so. 15.1 The Ld. CIT(A) confirmed the addition but u/s 69A of the Act. It is this ch....
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.... notice that it was so that he [Ld. CIT(A)] could entertain issues which had not been examined by the Ld. AO. In the case before us, Ld. AO examined the issue thoroughly and thereafter applied the provisions of section 68 of the Act for making the impugned addition. In our humble opinion, the Ld. CIT(A) misdirected himself in relying on the decision (supra) of the Hon'ble Supreme Court. 20. The issue whether the Ld.CIT(A) has power to enhanced the income from a source which was not before him in appeal is shrouded in controversy. In CIT vs. Union Tyres (1999) 240 ITR 556 (Del), the Hon'ble Delhi High Court considered the relevant decisions including the decision of Hon'ble Supreme Court in CIT vs. Nirbheram Daluram (1997) 224 ITR 610 (SC) where the Hon'ble Supreme Court reiterated the powers of Ld. CIT(A) "co-terminus with that that of the Ld. AO" so that "the Ld. CIT(A) can do what the Ld. AO can do and can also direct him to do what he failed to do", a proposition laid down by the Hon'ble Supreme Court in the case of Kanpur Coal Syndicate (supra) which was followed in Jute Corporation of India Ltd. vs. CIT (1991) 187 ITR 688 (SC) and applied the principles of Law laid down by ....