TaxTMI 
TaxTMI 
2024 (5) TMI 740
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.... conditions u/s 143/ 144/263/151 as envisaged under the Income Tax Act. 1961 and merely on the basis of incorrect facts. 3. I hat having regard to the facts and circumstances of the case. Hon'ble CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making an addition of Rs. 51,01,811 u/s 68 of the Act on account of addition in capital account treated as unexplained credit, without considering the facts of the case and without observing the principles of natural justice. 4. That the appellant craves the leave to add. modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds arc without prejudice to each other." 3. The facts are that the appellant is an individual engaged in proprietorship business under trade name of "Nirvana Resort and Spa" Hoshiarpur, Punjab. The assessment u/s 143(3) of the Act 61, was completed on 17/12/2019, by accepting the returned income (returned Loss in this case) of Rs. 33,44,798/- without any variation. 1) Thereafter, the PCIT assumed jurisdiction u/s 263 of the Act 61, and passed order dated 17/12/2019, setting aside the assessment, back to the AO, with direction to verify the fres....
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.... a particular bank account, claiming it to be that of the loan creditor, in which the amount transferred to the assessee is recorded on 11th January, 2017 (debit entry 1,00,080 CAD) and just six days before on 5th. January, 2017, two credit entries are noted for CAD 1,50,000 and CAD 1,00,000. Except these three transaction, no other financial transaction is visible from the snap shot of the bank account submitted, and according to the CIT(A) the genuineness of the transaction and creditworthiness of the loan lender has not been proved by the assessee. Hence the addition u/s 68 was sustained. 6. In this instant appeal, before the Tribunal, it is the unsecured loan amount of Rs. 51,01,810/- which is the subject matter of dispute. In course of this appellate proceedings, the appellant has filed a short paper book containing the following: (i) Name and address of the Loan Lender with email id :Mr. Shailesh Patel, 2224953 Ontario inc of 3117 saddleworth Crescent, oakville, ON L6M0A8, Canada, email id [email protected], (ii) The snap shot of the loan lenders bank account , without the name of the account holder , account number , or address , on the bank account statement, or an....
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....t of funds are established to have taken place from a bank account in Canada ( through wire transfer ) to the bank account of the assessee in India , the credit worthiness of the foreign lender is not required to be proved , because the income of the Canadian Citizen cannot be brought to tax in India, and the lender is under no obligation to file his tax returns in India . He further argues that the assessee is not required to prove the source of source because the amendment in section 68 of the Act 61, is with effect from 1st April 2023 and the amendment is an illustration of application of "Mischief Rule" in interpretation of statues. In support of his contention, the Ld A/R relies upon the following judgments for support: (a) ITO vs Balwan Singh ITA No: 2869/ Delhi 2019 dated 07/08/2023, (b) Gaurav Triyugi Singh vs ITO 423 ITR 531 (Bombay), (c) Nemi Chand Kothari vs CIT 264 ITR 254 (Guwahati) As such he prays that the addition of Rs. 51,01,811/- made by the AO and sustained by the CIT(A) , u/s 68 of the Act 61, may please be deleted. 9. Argument of the Ld. DR: On the other hand, the Ld. DR, argued, that even if the identity of the lender is accepted on the basis of the p....
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.... the CIT(A), the credit worthiness of the loan lender , Mr. Patel , has not been established by submission of any documentary evidence , either by submission of copies of his tax returns filed before revenue authorities in Canada , or by submission of his bank statements for the full year with full name , address and identity of the banker, or any other papers showing any existence of his business , in fact it is also not declared as to whether the lender is a salaried person, or retired , or a business man . 13. Now coming to the argument of the Ld. AR, that credit worthiness of the foreign lender is not required to be proved, because the income of the Canadian Citizen cannot be brought to tax in India, this concept is not acceptable to us, because in the instant case the Canadian citizen is not being taxed in India on his income earned abroad. It is the fund that has been transferred from Canada to the bank account of the assessee in India, under the claim of un - secured, friendly, interest free loan, is the subject matter of enquiry. 14. In this context we would like to look into the observations of the Hon'ble jurisdictional High court in the case of: Tirath Ram Gupta Vs. ....
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....her Citation: [2007] 290 ITR 306, 205 CTR 624, 158 TAXMANN 306 Jaspal Singh Vs. Commissioner of Income Tax. Addition made on gifts received from various non-residents - creditworthiness and genuineness of the gifts - HELD THAT:- It is well-settled that mere identification of donor and showing the movement of gift amount through banking channel is not enough to prove genuineness of the gift. The assessee was required to establish that the donor had the means and the gift was genuine, for natural love and affection. We have dealt with this aspect of the matter at length in our judgment, in Subhash Chander Sekhri v. Deputy CIT [2006 (7) TMI 160 - PUNJAB AND HARYANA HIGH COURT]. We are of the view that the concurrent findings of fact recorded by the authorities that the gifts in question were not genuine, are pure findings of fact and no substantial question of law arises. The appeal is accordingly dismissed. No.- ITA No. 256 of 2006 16. Dated.- September 15, 2006 014 (5) TMI 968 - PUNJAB & HARYANA HIGH COURT Commissioner of Income Tax, Chandigarh-II vs. Kiran Bala Genuineness of foreign gifts - Financial capability, identity, relation and occasion not proved - Held that:- ....
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.... of facts. iii. Nemi Chand Kothari vs. Commissioner of Income Tax And Onrs. dated 02.09.2023 (2003) 264 ITR 254 (Gauhati); In this instant case, unsecured loans were taken from creditors and in course of proceedings the ld. AO has examined all the creditors u/s 131 of the Act and assessment records of all the sub-creditors were also examined and it was found that the creditors as well as the sub-creditors were income tax assessee's. In this case, the appellant had not only established identity of the creditors but also the genuineness of the loan taken by the appellant. As such the Hon'ble Court's decision was based on the above facts. 18. In the instant case, before us, considering the entire material on records and the arguments of both the parties, we are of the opinion that in the instant case the creditworthiness of the loan lender Mr. Patel has not been conclusively proved. Full enquiry could not be done by the AO regarding genuineness of the transactions and the creditworthiness of the lender, in absence of all documentary evidences before him. However, in view of the fact that the major part of the loan amount of Rs. 41,71,131/- has remained unpaid till date, approxima....