TaxTMI 
TaxTMI 
2024 (12) TMI 497
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....essment proceedings. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in not appreciating the fact that creditworthiness of the lenders of the unsecured loans amounting to Rs. 3,73,00,000/- has not been established properly for want of ITR, complete bank accounts and other details during the course of assessment proceedings. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3, Noida has erred in deleting the addition of Rs. 43,73,000/- made by the AO u/s 56(2)(vi)(b)(ii) of the Act, as the assessee had filed no documents with respect to the land sold being in the nature of agricultural land or otherwise during the course of entire assessment proceedings. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A)-3 Noida is justified in pronouncing its decision only based upon the judgements in favor of the appellants by not considering the decision of Hon'ble Supreme Court in the case of Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 wherein it has been held that "If an assessee fails to prove satisfactorily the source and nature of certain amount received during the a....
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....and credit worthiness of the transaction, the confirmed copy of account of both the lenders, copy of bank statements and the copies of respective ITR's and copy of balance sheet of M/s Sunder Singh HUF, with an application under Rule 46A of the I.T. Act, 1962, has been submitted by the assessee along with submission." During the year under consideration, the assessee had received an amount of Rs. 23,00,000/- from Mahendra Dairy Pvt. Ltd. and Rs. 3,50,00,000/- from Sunder Singh HUF as unsecured loan. The AO treated the outstanding amount of Rs. 3,73,00,000/- as income of the assessee u/s 68 of the Income Tax Act, 1961. During the course of appellate proceedings, the submissions of the appellant were forwarded to the AO. The AO in her remand report sent vide letter dated 05.10.2023 filed detailed report. The AO has reported that the assessee has filed documents in support of identity genuineness and creditworthiness of the transactions. The AR during the appellate proceedings submitted various documents in support of the Identity, genuineness and creditworthiness of the Investors which has been acknowledged by the AO. The confirmed copies of accounts are scanned below for ready....
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....unt payee cheque or by draft or by any other mode, then onus of proof would shift to revenue and just because creditors/share applicants could not be found at address given, it would not give revenue right to invoke section 68-Held, yes" Analysis The addition made by the AO u/s 68 requires the assessee to discharge its onus on the following three issues: a. The Identity of the lender b. The creditworthiness of the lender c. The genuineness of the transactions The onus to prove the three ingredients u/s 68 was discharged. In the recent judgment Hon'ble Apex Court in the matter of Commissioner of the Income Tax Vs. Orchid Industries (P.) Ltd. [2020] 116 taxmann.com 113(SC) dismissed the SLP filed by the department against the judgment of Hon'ble Bombay High court in the matter of Commissioner of Income Tax Vs. Orchid Industries (P.) Ltd [2017] 88 taxmann.com 502 (Bombay), where it was held as under: "The assessee had produced on record the documents to establish the genuineness of the party such as PAN of all the creditors along with the confirmation, their bank statements showing payment of share application money only because those persons had not appeared before the ....
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....nt of said amount received by assessee was unjustified and same was to be deleted - Held, yes [Paras 9 and 11] [In favour of assessee)" Further, the Hon'ble High Court of Bombay in the case of Principal Commissioner of Income-tax-1 vs. Aml Industries (India) (P.) Ltd. reported at [2020] 116 taxmann.com 34 (Bombay) has held as under: Section 68 of the Income-tax Act, 1901- Cash credit (Share application money) Assessment year 2010-11-Assessing Officer noted that assessee had disclosed funds from three Kolkata based companies as share application money - But, since whereabout of above companies were doubtful and their Identity could not be authenticated, Assessing Officer treated aforesaid funds as money from unexplained sources and added same to income of assessee as unexplained cash credit under section 68 - However, it was found that assessee-company bank furnished PAN, copies of income tax returns of creditors as well as copy of bank accounts of three creditors through which share application money was deposited in order to prove genuineness of transactions - Further, insofar as creditworthiness of creditors were concerned, Tribunal recorded that bank accounts of creditor....
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....on and revenue failed to bring on record anything adverse to these evidences, impugned addition made Under section 68 in respect of such share capital amount was unjustified. The facts outlined in paras above show that the appellant has duly discharged the onus cast on it to prove the identity, creditworthiness and genuineness of transactions in respect of the lenders. Discharge of burden The intention of law is that unaccounted money should be brought to tax. As per provisions of section 68 of the Act onus is on the person in whose books of account such money has surfaced. If an amount has surfaced in the books of an assessee either in the shape of share application money or a deposit/loan; it is presumed that such money belongs to the person in whose name it has been shown. However, as per provisions of section 68 of the Act, deeming provisions postulate that it is possible that the assessee may circulate its own unaccounted money in the shape of bogus persons and therefore legal onus has been created. What is relevant is the identity, creditworthiness of the depositor and genuineness of the transaction. All these three conditions have been established and onus of the ass....
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....r: "Amounts of loan were received by cheques and repayment also made by cheques through assessee's bankers. The creditors gave confirmation letters mentioning therein their Income-tax file numbers. ITO without making any further enquiry disbelieving the evidence of the assessee made addition. ITAT held the addition not justified as the assessee discharged the onus. High Court held that the Tribunal was justified in deleting the addition. Similar view was expressed in the case of ACIT vs. Divine (India) Infrastructure (P) Ltd. reported at [2014] 42 CCH 0022 (Del Trib.) In view of above, there appears to be no reason to consider the said credits in the books of accounts of the assessee on account of unsecured loans as unexplained income u/s 68 of the Income Tax Act, 1961, the said addition is liable to be deleted." 5. This leaves the department aggrieved. 6. We have given our thoughtful consideration to the vehement rival stands against and in support of the impugned CIT(A)'s foregoing findings deleting the impugned addition. The first and foremost aspect noticed during the course of hearing is that the assessee had filed her additional evidence under Rule 46A of the Income....