TaxTMI 
TaxTMI 
2024 (7) TMI 1549
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.... 3. The addition made by Assessing officer and upheld by CIT (A) at Rs. 20 crores u/s 68 of I.T. Act 1961 is unjustified, unwarranted and bad in law. 4. The learned A.O. and CIT (A) ought to have held that assessee has discharged its onus to explain the loan in terms of provisions of section 68 of I.T. Act 1961 and consequently no addition ought to be made at the hands of assessee. 5. The assessee having repaid the loan in subsequent accounting year and same having been accepted by A.O. Addition made in the case of assessee is unjustified, unwarranted and bad in law Addition upheld by CIT (A) without considering the submission made by assessee in appellate proceedings is in violation of principles of natural justice and is unjustified and unsustainable. 7. Addition upheld by CIT (A) without allowing the opportunity, of physical hearing through video conferencing is in violation of principles of natural justice and is unjustified and unsustainable 8. The assessee denies liability to pay interest u/s 234A, 234B and 234C of I.T. Act 1961. Without prejudice, levy of interest under section 234A, 234B and 234C of I.T. Act 1961 is unjustifie....
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....ts of the lender creditor and called for the clarifications and same was complied. The AO was not satisfied with the information and explanations though the assessee has submitted the details of confirmation of lender, bank statement, and financial statements to substantiate genuineness, identity and creditworthiness of loan creditors. The assessee has obtained the unsecured loan/ inter corporate deposit and was repaid to the lender company in the financial year 2015-16 and was confirmed by the parties. Whereas the AO was not satisfied with the information and explanations and observed that the assessee has not satisfied the ingredients required u/sec 68 of the Act and made an addition of unsecured loan and assessed the total income of Rs. 20,00,00,000/- and passed the order u/sec 143(3) of the Act dated 30.12.2017. 3. Aggrieved by the order, the assessee has filed an appeal before the CIT(A). The CIT (A) has considered grounds of appeal, findings of scrutiny assessment. The assessee has filed the submissions on the disputed issue of unsecured loan/ inter corporate deposits on 24-12-2020 placed at page 293 to 325 of the paper book read as under: "1. In Ground No.&n....
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....Disclosure of General Information about the company M/s. Kriviera Impex Pvt. Ltd." A.O. has not found any fault in aforesaid legal evidences submitted in assessment proceedings. On above undisputed factual position addition made by A.O. by treating loan at Rs. 20 crores as unexplained credit at the hands of assessee is unjustified and unsustainable. C) It is respectfully submitted that the balance sheet of the lender company shows that it had opening loan & advances of Rs. 70.91 crores which has increased to Rs. 72.59 crores thereby there is increase in loan & advances given to the tune of Rs 1.67 crores. The above facts has been noted by A.O. at para 12 of the assessment order. The fact that the lender company has given loan & advances as on 31/03/2014 at Rs. 70.91 crores and there are outstanding loans & advances as on 31/03/2015 at Rs. 72.59 crores which includes Rs. 20 crores advance given to assessee sufficiently establishes the creditworthiness of the lender to give loan of Rs. 20 crores to the assessee company. In view of above, adverse observation in assessment order with regard to lender company does not deserve any cred....
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....el and repayment of loan is accepted by A.O. in the assessment framed. I) A.O. at para 21.1 has observed as to information obtained from A.O. of lender. It indicates that complete set of paper return along with audited financial statement of lender company was obtained from A.O. of the lender company. A.O. by referring to share capital, reserve & surplus and loans & advance received from the said company has observed that it has not much capital to advance Rs. 20 crores to assessee company. It is respectfully submitted that complete analysis of balance sheet of M/s. Kriviera Impex Pvt. Ltd. indicates that it is a company having substantial operation. The aforesaid company is having turnover to the tune of Rs. 181.18 cores as against turnover of immediately preceding year at Rs. 85.26 crores. Assessee has down loaded the details of ROC from the site of registrar of company to show that the aforesaid company is having status of active company. The aforesaid company is assessed by Dy. Commissioner of Income Tax, Central Circle-8(1), Mumbai. It is matter of common knowledge that majority of assessment at Central Circles are completed u/s 143(3) of I.T. Act 1961.....
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....bove provisions of proviso to section 68 is inapplicable and has been wrongly invoked by A.O. while making addition of huge amount of Rs. 20 crores. It is respectfully submitted that A.O. has misapplied the proviso to section 68 on facts which do not warrant the application of proviso to section 68 of 1.T. Act 1961. The addition made by A.O. is thus unjustified and unsustainable. L The assessee places reliance on decision of Hon'ble ITAT Delhi Bench in the case of Smt. Prem Anand in ITA No. 3514/Del/2014 vide order dated 13/04/2017. The Hon'ble ITAT in aforesaid case has held that amendment to section 68 by inserting proviso does not give power to A.O. to examine the source of source in non- share capital cases u/s 68 of I.T. Act 1961. The ratio laid down by Hon'ble ITAT squarely applies to the facts in the case of assessee. In view of above addition made by A.O. is unjustified and unsustainable. 3. Considering the submission made hereinabove it is humbly submitted that addition made by A.O. is unjustified and unsustainable In view of above it is humbly prayed that addition made by A.O. be directed to be deleted The assessee respectf....
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....ion not of the explanation of the assessee, but of the explanation regarding the source of income of the depositors, cannot by itself lead to any inference regarding the non-genuine or fictitious character of the entries in the assessee's books of account. Nor, for that matter, is there any such finding recorded either by the ITO or the AAC. On the contrary, the AAC, whose appellate order in favour of the assessee forms part of the statement of the case, marked "B", clearly points out that the findings recorded by the ITO were no positive findings. The AAC, in my view, had rightly assessed the position in law by holding that, in order to rope in any amount as the income of the assessee from undisclosed sources, or as secreted profits, there must be some tangible materials". The ratio laid down by Hon'ble Patna High Court squarely applies to the facts in case of assessee and considering the same addition made by A.O. is unjustified and unsustainable. 3. The assessee places reliance on the decision of Hon'ble Bombay High Court in case of M/s Orient Trading Co. Ltd. Vs. CIT reported at 49 ITR 0723 (Bom.) wherein Hon'ble Bombay High Court has held as u....
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....es to the facts in the case of assessee. In view of above addition made by A.O. is unjustified and unsustainable. 5. The assessee places reliance on the decision of Hon'ble High Court of Gujarat in the case of DCIT Vs. M/s Rohini Builders reported at 256 ITR 360 (Guj.). In case of facts of aforesaid case the confirmation of creditors was given along with GIR/PAN and repayment of loan obtained by cheque was submitted. The Hon'ble ITAT has held that the onus to explain the credit stands discharged by assessee and addition made u/s 68 was unsustainable. The order of ITAT was upheld by Hon'ble High Court of Gujarat. The SLP filed by revenue against the said judgment before Apex Court is dismissed and reported at 254 ITR 275 (St.) 6. The assessee places reliance on the decision of Hon'ble Calcutta High Court in case of CIT Vs. M/s Chandela Trading Co. Pvt. Ltd. reported at 372 ITR 0232 (Cal.) wherein Hon'ble High Court has held that omission on part of creditors to subject themselves to enquiry will not lead to conclusion that creditors lacked identity, creditworthiness and genuineness on the face of sufficient legal evidences on record. The ratio l....
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....the respondent-assessee, could have sent the information to the AO, assessing the cash creditors for appropriate action in their cases but in so far as the respondent-assessee is concerned, in our view, the respondent-assessee has been able to discharge the burden which lay upon him. 11. The Hon'ble Apex Court in the case of Commissioner of Income-Tax, Orissa Vs. Orissa Corporation P. Ltd.: (1986) 159 ITR 78 held as under:- "In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assesses. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the assessee, did not pursue the matter further. The Revenue did not examine the source of Income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the alleged loans. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the assessee could not do anything further. In the premises, if the Tribunal came to the conclusion that the assessee has discharg....
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.... Central, Calcutta: (1978) 114 ITR 689 had observed that mere establishing identity of the creditor and nothing more is not sufficient and something more is to be proved by the assessee and in the aforesaid case, the assessee was unable to prove beyond identity and therefore, the Calcutta High Court upheld the findings of the Tribunal. However, in the present case, we notice that not only the identity of the creditor has been proved but from the facts which have been culled out, the assessee has been able to prove genuineness also. 15. This Court, in the case of KanhailalJangid Vs. Assistant Commissioner of Income Tax: (2008) 217 CTR 354, held that the burden does not go beyond to put the assessee under an obligation to further prove that where from the creditor has got or procured the money to be deposited or advanced to the assessee. The fact that the explanation furnished by the creditor about the source from where he procured the money to be deposited or advanced to the assessee is not relevant for the purposes of rejecting the explanation furnished by the assessee and make additions of such deposits as income of the assessee from undisclosed sources by invoking Sec. 6....
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....ssee from undisclosed source but if there is no direct evidence in this regard, then the indirect or circumstantial evidence has to be conclusive in nature and should point to the assessee as the person from whom the money has actually flown to the hands of the creditor and then from the hands of the creditor to the hands of the creditor. 20. When we peruse the facts herein above, it is an admitted position that all the cash creditors have affirmed in their examination that they had advanced money to the assessee from their own respective bank accounts. Therefore, when there is categorical finding even by the AO that the money came from the respective bank accounts of the creditors, which did not flow in the shape of the money, then, in our view, such an addition cannot be sustained and has been rightly deleted by both the two appellate authorities. There is no clinching evidence in the present case nor the AO has been able to prove that the money actually belonged to none but the assessee himself. The action of the AO appears to be based on mere suspicion." The ratio laid down by the decision of Hon'ble Rajasthan High Court squarely applies to the facts in the case of....
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....above addition made by AO is unjustified and unsustainable. 9. The assessee places reliance on decision of Hon'ble Delhi High Court in the case of Shiv Dhooti Pearls & Investment Ltd reported at 64 taxmann.com 329 wherein Hon'ble Delhi High Court has held that assessee is liable to disclose only sources from where he has himself received credit and it is not burden of assessee to show sources of his creditor. The ratio laid down by Hon'ble Delhi High Court supports the submission of assessee. In view of above addition made by AO is unjustified & unsustainable. 10. Considering the judicial precedents discussed hereinabove it is humbly submitted that loan credit of assessee is not unexplained credit considering evidence on record. In view of above it is humbly prayed that addition made u/s 68 be directed to be deleted 1. It is respectfully submitted that A.O. in assessment order at para 22 has referred to various decisions for the purpose of making addition in assessment framed. All the decisions relied upon are distinguishable on facts and ratio laid down therein is inapplicable to the facts in case of assessee. Assessee gives hereunder submission ....
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....t explained. Under such peculiar circumstances it was concluded that the capacity of creditors is not explained. The facts narrated hereinabove are clearly distinguishable from the facts in case of assessee, Ratio laid down therein is thus inapplicable to the facts in case of assessee. D) In decision of Dharamavet Provision Stores vs. CIT reported at 139 ITR 700 (Bom.) it has been held that credit in capital account and also in the name of third party is required to be explained u/s 68 of I.T. Act 1961. There is no quarrel to above proposition and nothing adverse can be drawn there from in case of assessee in as much as assessee has satisfactorily explained the identity, creditworthiness and genuineness of loan transaction. E) The A.O. has placed reliance on decision of Hon'ble Punjab Haryana High Court in case of Shantadevi vs. CIT reported at 171 ITR 532 (P & H) and decision of Hon'ble Gauhati High Court in case of Anandram Raitani reported at 223 ITR 544 (Gauhati) wherein it has been held that the entry in books of account of assessee is required to be considered u/s 68 of I.T. Act 1961, The aforesaid decision do not support the case of revenue where ca....
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....he aforesaid para is reproduced hereunder. We would like to refer to another judgment of the Division Bench of this Court in the case of CIT vs. Value Capital Services (P) Ltd. (2009) 221 CTR (Del) 511: (2008) 307 ITR 334 (Del). The Court in that case held that the additional burden was on the Department to show that even if share applicants did not have the means to make investment, the investment made by them actually emanated from the coffers of the assessee so as to enable it to be treated as the undisclosed income of the assessee. In the absence of such findings, addition could not be made in the income of the assessee under s. 68 of the Act." In terms of ratio laid down by Hon'ble Delhi High Court discussed hereinabove it is for the department to show that it is money belonging to assessee which has flown for receipt of loan by assessee. A.O. has not brought any evidence on record to show that money has flown from assessee to receive back loan. The decision of Hon'ble Delhi High Court in fact supports the submission of assessee and considering the same the addition made by A.O. is unjustified and unsustainable. In the consolidated judgment in ITA No.....
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....ission on merits of addition. S-2 Reliance on Judicial Precedents. S-3 Explanation on Judicial Precedents referred in Assessment Order. Compilation of Judicial Precedents. 2. The assessee has obtained loan from M/s. Kriviera Impex Pvt. Ltd at Rs. 20 Crores through proper banking channel. Assessee has submitted confirmation, acknowledgment of return of income, balance sheet and bank statement of lender before A.O. The aforesaid legal evidence placed on record has not been faulted or found to be incorrect. Assessee is not required to prove source of source in respect to loan obtained by assessee. Assessee has discharged its onus to explain the credit in terms of provisions of section 68 of 1.T. Act 1961 by placing legal evidence on record. In view of above it is humbly submitted that there is no justification for addition u/s 68 of I.T Act 1961. The submission made by assessee company is in terms of law laid down by Hon'ble Jurisdictional High Court in the following cases. i) (2020) 107 CCH 0294 (Mum.) Pr. CIT vs. AMI Industries (India) Ltd. ii) Hon'ble Bombay High Court decision in case of Mr. Gaurav Triyugi Singh in ITA No.&....
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.... allowing the appeal. Per Contra, the Ld. DR supported the order of the CIT(A). 6. We have heard the rival submissions and perused the material on record. The Ld. AR submitted that the CIT (A) has erred in sustaining the addition u/sec 68 of the Act of unsecured loan/inter corporate deposit though the assesses has filed the requisite details before the lower authorities. We find that before the Assessing Officer, the assessee has submitted information in respect of unsecured loan creditors and the A.O. has issued notice u/s 133(6) of the Act. On perusal of the assessment order, the assessee has submitted the documentary evidences but the A.O has over looked the vital documents in respect of the sources filed by the assessee. The assessee has submitted the written submissions before the CIT (A) and the confirmation of loan creditor, PAN, Bank account details and the Income Tax returns. We find that the assessee has to satisfy the 3 ingredients with respect to identity, creditworthiness and genuineness of the transaction. The CIT (A) has discussed on the provisions of the Act but has confirmed the action of the A.O. We are of the opinion that the assessee has discharged the burden....
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.... of those lenders, whether in their respective return they had shown existence of such amount of money and had further shown that those amounts of money had been lent to the assessee-Position, however, would have been different if those creditors were not income tax assessees or if they had not disclosed those transactions in their income tax returns or if such returns were not accepted by their Assessing Officers-Revenue's appeal dismissed." 9. The Hon'ble Tribunal Indore Bench in the case of DCIT Vs Shri Kanwarjeet Singh Nanda in ITA No. 361/Ind/2022 dated 20.11.2023 has considered the provisions and facts on the submissions of the assessee and has upheld the order of the CIT (A) dismissing the revenue appeal observing at Page 13 Para 5.3 to 7 of the order read as under: "5.3 Thus, in all these cases the assessee has produced supporting evidence in the shape of PAN, Bank account statement, confirmation of the loan creditors to prove identity and creditworthiness of the loan creditors. Further all the transactions of loan were through banking channels and the assessee has received loan amount through account payee cheques and the AO has not brought any contrar....
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....- tax as the income of the assessee of that previous year. Therefore, according to Section 68, the first burden is on the assessee to satisfactorily explain the credit entry in the books of account of the previous year. If the explanation given by the assessee is satisfactory, then that entry will not be charged with the income of the previous year of the assessee. In case the explanation offered by the assessee is not satisfactory or the source offered by the assessee- firm is not satisfactory, then in that case, the amount should be taken to be the income of the assessee. In the present case, the Assessing Officer did not feel satisfied with the explanation given by the assessee and accordingly assessed all the three credit entries to the account of the assessee as the income. 5. On appeal, the Commissioner of Income-tax (Appeals) examined the matter in detail and found that Shri S. K. Gupta was the real owner of the business. The explanation given by the assessee was found to be satisfactory and he deleted the aforesaid three entries. The same finding of fact has been affirmed by the Tribunal. Once it is established that the amount has been invested by a particular pers....
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.... and Shri Sharda, for the applicant, and Shri D.D. Vyas, learned counsel for the non-applicant. 4. Shri Chaphekar submitted that the amount was borrowed from stated persons through cheques and as such, the Tribunal was not justified to treat the same as unproved cash credit or undisclosed source. He submitted that the assessee was not required to show to from which source the creditor acquired the money to make the us. CIT (1963) 49 ITR 723 (Bom): TC 42R. 1039. 5. Shri Vyas, on the other hand, submitted that the proposed questions out of four questions are also the questions of facts and are not referable questions of law. 6. In (1963) 49 ITR 723 (supra), it is held as under : however, in a case where the end as to the identic of "When, however assessee satisfies the IT evidence which it of the third party the also supplies such other evidential which will show, third party, that the entry is not fictitious the initial burden which lies primul can be said to be discharged by him. It will not there after for the assessee to explain further how or in what circumstances the for the arty obtained money and how or why he came to make a deposit of the money wit....
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....was not filed by Hari builders that itself cannot be ground to treat this amount as unexplained in the hands of the respondent. With regard to sum of Rs. 1,77,86,645/-, CIT(Appeals) satisfied itself noting that confirmation of depositors is received from the assessee. 6. The Tribunal chose to confirm such stand by holding thus: "8. We have heard both the parties and perused the records. We have also gone through various decisions referred to by the learned counsel of the assessee. We find that the addition of Rs. 3,54,70,163/- was made by the AO on account of cash credits in respect of deposits in the names of 52 different persons in the books of the assessee. We further find that the assessee has furnished copies of account of his personal books, bank accounts, etc. We further find that in the course of remand proceedings, the AO was provided copy of the accounts of these parties, their names, and addresses, and their confirmation of the accounts. The assessee also provided PAN numbers of these persons along with the copy of bank statements. The amounts were received by account payee cheques. The AO in his remand proceedings was of the view that amount ....
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....f Satya Developers and Rakesh Thakkar individual, as the transactions are between those two entities. The assessing officer has made the presumption that the loose paper was found from the office premises of Dharamdev Finance Pvt. Ltd and hence it was finance transactions of this concern. As against this the appellant has clearly shown that the transactions are between Rakesh Thakkar individual and his proprietary concern Satya Developers. Copies of account are also furnished. This fact is also explained by Rakesh Thakar in is individual case. The AO was, therefore, not justified in making the addition in the case of the appellant on the basis of these loose papers. The issues raised herein are discussed in the appellate order in the case of Rakesh Thakkar for AY 2005-06 where the AO had made additions of Rs. 50 lakh on the basis of the same loose paper and I have deleted such addition in that case. As discussed in the said order, as the transactions are duly recorded in the books of Satya Developers an Rakesh Thakkar and that the books are audited under the provisions of section 44AB, the AO was not justified in charging the explanation of the appellant. Keeping in view the e....
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....ightly deleted the addition based on appreciation of evidence on record and after taking into consideration the ratio of the Apex Court decision in case of C.I.T. v. Orissa Corporation Pvt. Ltd., 159 ITR 78 as well as this High Court in case of D.C.I.T. v. Rohini Builders, 256 ITR 360. It is found from the record that the creditors have advanced the monies through bank and placed evidence in this regard on record, are assessed to income tax. In the circumstances, the position in law is well settled that the assessing officer is not satisfied about the capacity or the creditworthiness of the party in question or as to the source from which the creditor has deposited the amount, it is open to the assessing officer to make the addition in hands of the respective creditors after making appropriate inquiry." 5.7 Thus following the ratio of Hon'ble Supreme Court in case of CIT vs. Orissa Corporation P. ltd. (supra) it was held that once the loan was taken through banking channel and assessee placed evidence to prove identity and creditworthiness of the loan creditor who is assessed to income tax then if the AO is not satisfied about capacity or creditworthiness of the credit....
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....e identity of the creditor. There is also no dispute about the genuineness of the transaction. That apart, the creditor has explained as to how the credit was given to the assessee. Thus assessee had discharged the onus which was on him as per the requirement of section 68 of the Act. What the Assessing Officer held was that sources of the source were suspect i.e., he suspected the two sources Shri Rajendra Bahadur Singh and Smt. Sarojini Thakur of the source Smt. Savitri Thakur. 15 In view of discharge of burden by the assessee, burden shifted to the revenue; but revenue could not prove or bring any material to impeach the source of the credit. Though Mr. Walve, learned standing counsel, has pointed out that the creditor had no regular source of income to justify the advancement of the credit to the assessee, we are of the view that the assessee had discharged the onus which was on him to explain the three requirements, as noted above. It was not required for the assessee to explain the sources of the source. In other words, he Borey 8/9 spb/ 15itxa1750-17.doc was not required to explain the sources of the money provided by the creditor Smt. Savitri Thakur i.e. Shri Rajen....
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....the same cannot be treated as an income in their hands. In cases where the explanation offered by the assessee about the nature and source of sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, viz., the receipt of money, the burden is on the assessee to rebut the same and if he fails to rebut it can be held against the assessee that it was a receipt of an income nature. The alternative submission made by Shri Iyer before us would not help the assessees in this case in hand. 17. In CIT vs. Orissa Corporation (P) Ltd. (1986) 52 CTR (SC) 138. (1986) 159 ITR 78 (SC), the ITO did not accept the assessee's accounts showing cash credits which were shown to have been received by way of loans from three individual creditors. The ITO treated the entire amount as unproved cash credit and added the same to the income of the assessee. On appeal the Tribunal took the view that the assessee could not produce those persons alleged to be creditors, but it did not follow automatically and an adverse inference should be drawn that the amount represented undisclosed income of the assessee. The creditors were themselves income-tax ass....
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....factory discharged by proving identity genuineness and creditworthiness of loan creditor. In view of facts of the case and the ratio laid down by case laws (Supra), the addition made by the AO of Rs. 5,46,00,000/-u/s. 68 of the I. T. Act, 1961 is hereby deleted. The ground No. 2 & 3 of appeal are accordingly allowed." 6. In view of the facts and circumstances of the case as discussed above as well as binding precedence cited in forgoing part of this order, we do not find any error or illegality in the impugned order of Ld. CIT (A) the same is upheld. 7. In the result, the appeal of revenue is dismissed" 10. The Hon'ble Tribunal Ahmedabad Bench in the case of M/s Hit Iron & Steel Pvt Ltd Vs ITO in ITA No. 379/Ahd/2018 dated 29.08.2022 has considered the provisions and facts on the submissions of the assessee on the unsecured loans and granted relief observing at Page 11 Para 5.3 &5.4 of the order read as under: ""5.3 Accordingly, in our considered view, no addition is called for in the instant facts for the reasons that firstly, the assessee had furnished details of the lenders (name, address, PAN number, confirmation, proof that all tran....
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....nation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income tax, as the income of the assessee of the relevant previous year. 13. Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his books of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely: (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit- worthiness of the creditor. 14. In Principal Commissioner of Income Tax vs. Veedhata Tower Pvt. Ltd., (2018) 403 ITR 415 (Bom), this court has held that assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. In the instant case, there is no dispute as to the identity of the creditor. Ther....
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....,677 in the assessment year 1996- 97 which created doubts about the TIL's creditworthiness. Accordingly, TIL was asked to furnish the source of its lending. The TIL intimated that the amount lent to the assessee had in turn been borrowed from 'TCL', the address of which was the same as TIL. The letter containing the summons sent by registered post (speed post) to TCL was received back unserved with the remarks 'not available.' The AO then concluded that TCL was not a genuine party which could have lent the money to TIL, which in turn lent the said amount to the assessee. It was, therefore, concluded that 'the entire chain of lending and borrowing was bogus.' Accordingly, amount of unsecured loan was treated as unexplained income of the assessee under section 68. The Commissioner (Appeals) allowed the assessee's appeal and held that as long as TIL had confirmed the loan advanced by it to the assessee, the assessee had discharged the onus on it under section 68 to prove the identity, genuineness and creditworthiness of the creditor. The Commissioner (Appeals) also noted that from the chart in regard to encashment of cheques issued in ....
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.... firm has satisfactorily explained the aforesaid entries. Therefore, the view taken by the Tribunal is correct" 14. The Hon'ble Hight of Madhya Pradesh :Indore Bench in the case of Ashok Pal Daga Vs. CIT(1996) 136 CTR 0235 held : "3. We have heard Shri G.M. Chaphekar, learned Senior counsel, with Shri Subhash Samvatsar and Shri Sharda, for the applicant, and Shri D.D. Vyas, learned counsel for the non-applicant. 4. Shri Chaphekar submitted that the amount was borrowed from stated persons through cheques and as such, the Tribunal was not justified to treat the same as unproved cash credit or undisclosed source. He submitted that the assessee was not required to show as to from which source the creditor acquired the money to make the loan to the assessee. He placed reliance on Orient Trading Co. Ltd. vs. CIT (1963) 49 ITR 723 (Bom): TC 42R. 1039. . Shri Vyas, on the other hand, submitted that the proposed questions out of four questions are also the questions of facts and are not referable questions of law. 6. In (1963) 49 ITR 723 (supra), it is held as under: "When, however, in a case where the entry stands in the name of a third party the asse....
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....l was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment: "Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A." 7. For the reasons recorded above, no question of law much less substantial questions arises in this appeal. It stands meritless and accordingly dismissed" 17. The Hon Supreme Court in the case of CIT Vs. PK Noorjahan 237 ITR 570 (SC) held : Income from undisclosed sources-Addition under s. 69-Discretion of AO Intention of Parliament in enacting s. 69 was to confer a discretion on the ITO in the matter of treating the unexplained source of investment as income of assessee-ITO is not obliged to treat such source of inv....