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TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 1475
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....e submitted that the AO has made an addition of INR 1,57,64,915/- whereas during the year under appeal, the total amount received was 1,21,22,000/- only and the remaining amount is accumulation of interest (net of TDS) on the loan amount. He referred page 28 of the Paper Book which contained the details of short-term borrowing submitted during the course of assessment proceedings before the AO. As per this chart, the opening balance as on 01.04.2015 of outstanding loan taken from M/s. SRS Real Estate Pvt. Ltd. was of INR 1,61,32,332/- and during the year, a sum of INR 1,21,22,000/- was further received through banking channel, besides INR 12,28,234/- was credited through general entries and total repayment of INR 2,40,500/- was made during the year. Besides this, interest of INR 29,50,202/- was credited and TDS of INR 29,50,202/- was debited. After considering these amounts, closing balance of INR 3,18,97,247/- remained as on 31.03.2016 which was taken to the Balance Sheet. Out of total credits of INR 1,57,64,915/-, a sum of INR 29,50,202/- represents the interest which was never doubted however, the AO as well as ld. CIT(A) considered this amount of interest as part of the loan re....
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....of the Act are not applicable to it as admittedly all the funds received were utilized for the purpose of charitable activities. He further submits that the loans taken in preceding AYs were never doubted which is evident from the confirmation that there is an opening balance of INR 1,61,32,332/-. More so, the interest paid has already been allowed as application, therefore, again making the addition of the same amount is not sustainable in the eyes of law. In the last, he placed reliance on the following judicial pronouncements and prayed for the deletion of the additions so made:- [i] Mangilal Agarwal (Late) vs ACIT 300 ITR 372 (Raj.); [ii] Labh Chand Bohra vs ITO (Raj.HC) 219 CTR 571; [iii] Aravali Trading Co. vs ITO 220 CTR 622 (Raj.); [iv] CIT vs Metachem Industries 245 ITR 160 (MP); [v] Tolaram Daga vs CIT 59 ITR 632 (Assam); [vi] CIT vs Shri Ram Narain Goel 224 ITR 180 (Pun. & Har.); and [vii] Nemi Chand Kothari vs CIT & another 264 ITR 254 (Gauhati). 4. On the other hand, Ld. Sr.DR for the Revenue vehemently supported the orders of the lower authorities and submits that the assessee has failed to discharge the burden casted upon it of proving the genuineness ....
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....eading of Section 68 suggests that there has to be credit of amounts in the books maintained by an assessee; such credit has to be of a sum received during the previous year; and the assessee offer no explanation about the nature and source of such credit found in the books; or the explanation offered by the assessee in the opinion of the Assessing Officer is not satisfactory, it is only then the sum so credited may be charged to income-tax as the income of the assessee of that previous year. The expression "the assessee offer no explanation" means where the assessee offer no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. It is true, the opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on record. The opinion of the Assessing Officer is required to be formed objectively with reference to the material available on record. Application of mind is the sine qua non for forming the opinion. 7. If we applied the above proposition of law to the facts of ....
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....tablished mode of payment through banking channel, and moreover existence of deposits made to assessee by creditors was not in dispute, impugned addition under section 68 with respect to loan could not be sustained. 12. The Co-ordinate Bench of ITAT, Delhi in the case of ITO Vs. Alpha Contech Pvt. Ltd. in ITA No.3351/Del/2016 vide order dt. 28.07.2023 has held as under: 7. On careful consideration of above rival submission, first of all, we note that the Assessing Officer made addition u/s. 68 of the Act, by observing that despite several opportunity the assessee failed to prove creditworthiness of lender and genuineness of transaction and thus could not discharge onus as per requirement of sec 68 of the Act. The assessee carried the matter before ld. CIT(A) and filed additional evidence under rule 46A of the Rules on which remand report was called wherein the Assessing Officer did not made any adverse comment on the additional documentary evidence of assessee and also admitted that the lender company received amount of Rs. 7,30,62,000/- as share premium reserve during immediately preceding assessment year and amount of loan of Rs. 3.60 crore advanced to the assessee during pres....
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....e said party has given the details of the share application money of Rs. 3.60 crores advanced by it to the appellant company and also produced the ledger account of the assessee company in its books for the relevant period, apart from the copy of the ITR-V in its case, copy of the Audit Report, Balance sheet, P & L Account and annexures. It is also seen from the annexures to the Audit Report that under the head "Loans & Advances (totaling Rs. 7,41,00,000/-), the name of the appellant company is appearing the List of Share application money given details wherein the sum of Rs. 3.60 crores has been shown against the name of the appellant company, amongst other entities to whom share application money had been advanced by this company. As regards the source of investment made by this company, it has been submitted that the same has been made out of its own sources. Further, the perusal of the Balance Sheet of this company shows that it has Share Premium Reserve of Rs. 7,30,62,000/-, which is the same as in the immediately preceding previous year, out of which funds have been invested in the appellant company and others. 6. However, it is also seen from the P & L Account filed in thi....
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....balance sheet. The appellant's name is also appearing in the loan and advances and has been shown as share application money of Rs. 3.60 crore in the name of appellant. AO has also verified the balance sheet of the lender company and it is seen that said company has shown share premium reserve in its balance sheet in A.Y. 2010-11 out of which the amount has been given to the appellant. All these facts establish the identity, creditworthiness and genuineness of the transactions. It is seen that the said party has confirmed the transactions with the appellant and source of the money is also explained. M/s Fennie Commercial Pvt. Ltd. is assessed to tax with Ward 9(1). New Delhi and filing its return of income. The appellant company has filed copies of their bank statement, balance sheets and profit & loss a/c of the lender company before me to prove the identity, creditworthiness and genuineness of the transaction. These facts have been verified by the AO in the remand proceedings and has submitted report in this regard. It is seen that name of the appellant company is appearing in the balance sheet of the lender company. In view of the documents filed by the above named lender ....
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....e-tax Act, 1961 - Cash credit (Burden of proof - Assessment year 2006-07 - Assessee had obtained unsecured loans from agriculturists and submitted their names and addresses, but did not provide their PAN cards - Assessing Officer made addition under section 68 - It was found that loans were given to assessee through cheques and all creditors had confirmed that they had advanced loans mentioned against their names to assessee and, thus, identity of creditors could not be disputed - Further, all creditors were agriculturists and therefore, they did not have PAN card - Whether, on facts, no addition could be made - Held, yes [Para 6] [In favour of assessee]" c. ITO Vs. Neelkanth Finbuild Ltd., [2015] 61 taxmann.com 132 (Delhi - Trib.), held that "6. Keeping in view the findings given so the Assessing Officer as well as the learned first appellate authority and the documentary finding by the assessee before us, we are of the considered view that the learned first appellate authority has deleted the addition in dispute on the basis of various documentary evidence filed by the assessee before the Assessing Officer as well as before him. The hon'ble Supreme Court of India (sic.) in ....
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....o the facts of the present case and has rightly deleted the addition in dispute. We find no infirmity in the impugned order and uphold the impugned order by dismissing the appeal filed by the Revenue." d. Honourable Supreme Court of India in the case of CIT v. Kamdhenu Steel & Alloys Ltd., SLP (CC) no. 15640 of 2012, dated 17-09-2012 (Supreme Court), wherein the Hon'ble Supreme Court has dismissed the Special Leave Petition filed by the Revenue against the decision of Hon'ble Delhi High Court in the case CIT v. Kamdhenu Steel & Alloys Ltd. in which it has been held by Hon'ble Court that once adequate evidence/material given by the assessee, which would prima facie discharge the burden of the assessee in proving the identity of shareholders, genuineness of the transaction and creditworthiness of the shareholders, thereafter, in case such evidence is to be discarded or it is proved that the assessee has "created" evidence, the Revenue is supposed to make thorough probe before it could nail the assessee and fasten the assessee with such a liability under Section 68 and 69 of the Act." e. COMMISSIONER OF INCOME TAX-9 ERSTWHILE CIT-VI versus VRINDAVAN FARMS (P) LTD, ITA ....
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.... added us 68 of the I.T. Act. Therefore, the addition of Rs. 3,60,00,000/- is deleted. 13. On the issue of discharging the onus, the Hon'ble Jurisdictional High Court in the case of Mod. Creations (P.) Ltd. v. ITO reported in [2013] 354 ITR 282, has held as under: "It will have to be kept in mind that Section 68 of the I.T. Act only sets up a presumption against the Assessee whenever unexplained credits are found in the books of accounts of the Assessee. It cannot but be gainsaid that the presumption is rebuttable. In refuting the presumption raised, the initial burden is on the Assessee. This burden, which is placed on the Assessee, shifts as soon as the Assessee establishes the authenticity of transactions as executed between the Assessee and its creditors. It is no part of the Assessee's burden to prove either the genuineness of the transactions executed between the creditors and the sub-creditors nor is it the burden of the Assessee to prove the creditworthiness of the sub-creditors. 14. It was further observed by the Hon'ble Court that: 14. With this material on record in our view as far as the Assessee was concerned, it had discharged initial onus placed on it. ....
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....ppeal was dismissed by the Hon'ble High court." 16. Further the Hon'ble Delhi High Court in the case of PCIT vs. Agson Global Pvt. Ltd reported in [2022]134 Taxmann.com 256 (Delhi) while allowing the appeal in favour of the assessee towards the additions made u/s 68 of the Act has held as under : Section 68 of the Income-tax Act, 1961 - Cash credits (Share capital money) - Assessment years 2012-13 to 2017-18 - Assessee-company received share capital and share premium money from several investors - Assessing Officer made addition in respect of same on account of unaccounted income under section 68 on basis of recorded statement of managing director of assessee-company - Whether since assessee placed sufficient documentary evidence to establish that money which assessee had paid to investors was routed back to it in form of share capital/share premium and identity, creditworthiness and genuineness of investors was proved, there was no justification to make addition under section 68 - Held, yes [Paras 11.4, 11.5 and 14.4] [In favour of assessee] 17. It is also relevant to state an amendment is made vide Finance Act, 2022 wherein second proviso to section 68 is added, so as to ....
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.... how strong suspicion is, it cannot take place of the evidence. Therefore, in the absence of any evidence showing that in fact, appellant has given cash in lieu of unsecured loan taken, merely on the basis of suspicion, no addition can be made, for this reliance is placed on decision of Hon'ble Supreme court in the case of Daulatram Rawatmull, (1964) 53 ITR 574. 20. Based on above discussion and after analyzing the facts of the case and further by respectfully following the decisions of Hon'ble Supreme Court, various High Courts including jurisdictional High Court and Co-ordinate Bench of Tribunal as referred herein above, it is apparent that the AO has failed to bring on record sufficient and reasonable material and evidence to support the conclusion that the loan received by the appellant is bogus, least that it is appellant's own cash re-routed through lender company, and, therefore, the addition of INR 1,57,64,915/- made is not sustainable. We hold accordingly. This ground is accordingly allowed. 21. Ground Nos. 3 & 4, the assessee has challenged the addition of INR 74,072/- confirmed by the Ld.CIT(A) on account of sundry creditors held as bogus by the AO. 22. Brief ....