TaxTMI 
TaxTMI 
2024 (5) TMI 740
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....the income tax Act and without complying with the mandatory 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 17/12/201....
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.... loan creditor, tax return copies of the creditor, details of interest payable, and he further observed that the assessee filed a snap shot of 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....
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....ant, and has not been repaid till date of hearing of this appeal. 8. According to him, since the identity of the lender is established by the passport (NRI of Indian Origin ) now a Canadian passport holder, and the movement 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 o....
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....oan or otherwise, and if on loan whether the same is free of interest or not , and the tenure of such loan and as to how the repayment is to be made , and through which NRO account. 12. We are of the opinion that in this case , as rightly pointed out by 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 ass....
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....hiness, relationship with the donee and the occasion is proved. Unless the recipient proves the genuineness thereof, the same can very well be treated to be an accommodation entry of the assessee's own money, which is not disclosed for the purpose of taxation. 15. Punjab And Haryana High Court Other 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....
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....r as gifts from her brother Sh. Rajendra Bahadur and sister Smt. Sarojini Thakur and the gifted amount received by Smt. Savitri Thakur has been transferred to the appellant's unsecured loans and thereafter this matter has been examined by the Department and the remarks of the Department are on the records. So, the decision of the Hon'ble Court was based on the above set 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 cas....