TaxTMI 
TaxTMI 
2024 (11) TMI 768
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.... grounds of appeal raised by the assessee are as under: "(1) On the facts and circumstances of the case, the learned CIT(A) was not justified in confirming addition in respect of unsecured loans received of Rs. 25,00,000 particularly when the appellant satisfied all the ingredients viz. identity, genuineness and creditworthiness. (2) The learned CIT(A) ought to have appreciated the bona fide of the creditor, given the circumstantial past reference. (3) The learned CIT(A) was not justified in confirming disallowance of interest paid to the credit of Rs. 1,25,000. (4) The appellant craves leave to add, alter or vary any of the grounds of appeal." 3. Brief facts of the case are that assessee filed its ret....
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....as loan from Mr. Rafique Peer Mohammad in FY.2009-10 by account payee cheque which was repaid in FY.2012- 13. Again, assessee received loan from the above party on 01.10.2015. The lender expired on 08.07.2016 and his legal heir and wife migrated to London. Hence, no reply was submitted by the lender. The AO was not convinced about the reply of the assessee. He observed that the creditworthiness of the person has not been established. On the request of assessee, another notice was issued before deciding the issue. The assessee further stated that Mr. Rafique Peer Mohammad had received back the loan given by him to M/s Pranjal Star on 01.10.2015 and the loan of Rs. 25,00,000/- was given out of the fund received from M/s Pranjal Star. Subseque....
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....in cases of CIT vs. P. K. Nurjahan, 237 ITR 570 (SC), Kishanchand Chellaram, 125 ITR 713 (SC) and various other decisions as noted in page 19 of the appellate order. The appellant further stated that the liability was discharged in the next financial year by sale of diamonds of 90.72 carats, equivalent to Rs. 25,06,140/- by Shri Samir I. Mehta, partner of the assessee firm. The same has also been added to the capital account of the said partner. The CIT(A) was, however, not satisfied with the reply of the assessee. He observed that the past transaction with reference to the alleged lender was not tested by AO in any assessment proceedings. The entries in the bank account also do not constitute conclusive evidence to prove the creditworthine....
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....hrough the chain of loan transactions. He further submitted that the loan was repaid in kind by sale of equivalent amount of polished diamonds by one of the partners of the firm and the same was later credited to the partners. It was also submitted that in the scrutiny assessment for AY.2010-11, there was no addition of the unsecured loan. Regarding the AO's contention, disputing claim of repayment which is not disclosed in clause 31c of Form 3CD, it was submitted that non-disclosure is regrettable but the audit report with detailed notes uploaded as an attachment to Form 3CB - 3CD for AY.2016-17 and 2017-18 clearly shows repayment of loan in the books of the assessee. Thus, repayment is disclosed in Form 3CB - 3CD, although it is missing i....
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.... other hand, the Ld. AR submitted that all three limbs of section 68, i.e., identity, genuineness of transaction and creditworthiness of lender have been satisfied. The contention/submissions of the parties have already been discussed in the preceding paragraph and hence not repeated here. Mr. Rafique Peer Mohammad had earlier given loan of Rs. 25,00,000/- through banking channel to the appellant on 21.01.2010. The said loan was repaid to the lender on 31.05.2012. This amount was subsequently given to one M/s Pranjal Star by the said lender on 01.06.2012. M/s Pranjal Star repaid the loan to Mr. Rafique Peer Mohammad on 01.10.2015. Mr. Rafique Peer Mohammad again advanced loan to assessee on 01.10.2015, which was claimed to have been repaid ....