TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1806
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....cts of the case and submissions made by the appellant, which is against the principles of natural justice, which view is supported by the decision of the Hon'ble Supreme court in the case of M/Andaman timber Industries VS CCE Kolkata vide SLP 4228/2006. 4. The Ld. CIT(A) has erred in upholding the addition of Rs. 75,00,000/-without considering the information furnished by the appellant during the appellate proceedings. 5. The Ld. CIT(A) ought to have appreciated the fact that the amount of Rs. 75,00,000/-was received by the appellant from his daughter, who is an NRI, through proper banking channel and the addition of the same is not sustainable. 6. The Ld. CIT(A) erred in holding that "no confirmation or bank statements are furnished in respect of Sonali Gupta" whereas it is clearly evident that the appellant has filed bank statements for the assessment year under consideration vide paper book page no 70-71, and therefore, the addition would have been deleted. 7. The Ld. CIT (A) ought to have appreciated that the appellant has proved the identity, credit worthiness and genuineness of the transaction of Rs. 75,00,000/- and the invoking of provisions of sec 68 are bad-in-....
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.... M/s. Neelgagan Suppliers Ltd., M/s. Nirmal Kunj Trade Links Private Limited. The assessee had also filed ledger extract in the name of Cauvery Iron & Steel (India) Ltd., relevant bank account statement etc. The Assessing Officer, on perusal of the bank statement of the assessee noticed that, the assessee on 27.12.2023 has received a sum of Rs. 75 lakhs from MS. Sonali Gupta through bank account. The Assessing Officer further noted that, the assessee has received Rs. 1,00,00,000/- from M/s. Neelgagan Suppliers Ltd., and Rs. 1,00,00,000/- from Nightbird Barter Pvt. Ltd., on 10.03.2014 and Rs. 1,00,00,000/- on 13.03.2014 from M/s. Nirmal Kunj Trade Links Private Limited. Since, there was no compliance from the assessee with relevant details, the Assessing Officer issued one more show cause notice dated 29.11.2019 and called-upon the assessee to file relevant evidences, in support of loans taken from M/s. Neelgagan Suppliers Ltd., M/s. Nirmal Kunj Trade Links Private Limited. Further, in the meanwhile, it has come to the notice of the Assessing Officer that, during the course of search operation under section 132 of the Act, conducted in the case of Banka group, some incriminating doc....
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....pting loans and also failed to prove the genuine identity of the creditors, genuineness of transactions and creditworthiness of the creditors. Therefore, the Assessing Officer rejected the explanation of assessee and made addition of Rs. 75 lakhs claimed to have received from MS. Sonali Gupta as unexplained cash credit under section 68 of the Act. The Assessing Officer had also made addition of Rs. 3,00,00,096/- towards loan received from three companies controlled by Mr. Mukesh Banka as unexplained cash credit under section 68 of the Act. The relevant observations of the Assessing Officer are as under : "2.6. On verification of the assessee's explanation, the transaction between the assessee and his son Sri Bhupesh Gupta to the extent of Rs. 2,00,00,000/-is supported with necessary confirmation, bank statements and identity particulars of Sri Bhupesh Gupta. The assessee's claim in respect of receipt of Rs. 75,00,000/- from his daughter Smt. Sonali Gupta, no identity particulars, no confirmation are furnished by the assessee. In the absence of basic and reasonable particulars such as source for Smt. Sonali Gupta, cause necessitating transfer of funds, identity of the lend....
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....r and genuineness of the loan transaction are all not conclusively established by the assessee beyond doubt. The unsecured loan transaction between the assessee and the three entities i.e. Neelgagan, Nirmalkunj and Nightbird to the extent of Rs. 3,00,00,096/- is considered to be a bogus transaction. The identity of these three lenders was found to be as shell entities. The purpose of the transaction was nowhere spelt out by either of the parties to the transaction. Further, when the identity of the lender itself is found to be a paper company, the question of creditworthiness of such lender does not arise. Accordingly, the assessee's claim of unsecured loan is liable to be rejected and the impugned loan funds from the three shell companies are treated as unexplained cash credits and brought to tax in terms of provisions of Sec.68 of the I.T. Act. Add : Rs. 3,00,00,096/-" 5. Being aggrieved by the assessment order passed by the Assessing Officer, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has reiterated his arguments taken before the Assessing Officer and submitted that, he has discharged his onus caste upon him in terms of section 68 of th....
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.... credit under section 68 the Act. 7. Aggrieved by the Order of the learned CIT(A), the assessee is now, in appeal before the Tribunal. 8. CA, P. Murali Mohan Rao, Learned Counsel for the Assessee submitted that, the learned CIT(A) has erred in confirming the additions made by the Assessing Officer towards loan received from MS. Sonali Gupta for Rs. 75 lakhs, even though, the assessee has filed bank statement and confirmation from the creditor, where she has confirmed loan given to the assessee on 27.12.2013 through bank account. Learned Counsel for the Assessee, further referring to various evidences including financial statements of M/s. Neelgagan Suppliers Ltd., M/s. Nightbird Barter Pvt. Ltd., and M/s. Nirmal Kunj Trade Links Private Limited submitted that, the assessee has filed all possible evidences including 2 years financial statements of the creditors, their bank statements and also confirmation letters to prove the identity of the parties, genuineness of the transactions and creditworthiness of the parties. Further, once the assessee has discharged his onus by filing relevant evidences, it is for the Department to disprove the claim of the assessee by bringing on record....
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....ness of the parties. Although, the assessee claims to have received loans through bank account, but, mere transfer of funds through bank account, would not sufficient to establish genuineness of transactions. Since the assessee could not explain genuineness of the transactions, the Assessing Officer has made the addition towards loans received from above parties as unexplained cash credit under section 68 of the Act. The learned CIT(A) after considering all the relevant facts, has rightly sustained the addition made by the Assessing Officer and thus, the order of the CIT(A) should be upheld. 10. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We have also carefully considered the relevant reasons given by the Assessing Officer and the learned CIT(A) to make the impugned additions towards unsecured loans under section 68 of the Act as unexplained cash credit. The sole basis for the Assessing Officer to arrive at a conclusion that, loans received from three companies as unexplained cash credit on the basis of statement recorded from Mr. Mukesh Banka under section 132(4) of the Act at the time of search, where he ha....
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.... Assessing Officer to prove otherwise. In the present case, the Assessing Officer without even considering the relevant evidences filed by the assessee, made addition towards loans received from three companies, only on the basis of statement recorded from Mr. Mukesh Banka during the course of search in his case under section 132(4) of the Act on the ground that, in the statement he has admitted to have provided the accommodation entries to various parties for commission through multi-layer transactions with his shell/paper Companies. The Learned Counsel for the Assessee has brought on record the retraction statement filed by Mr Mukesh Banka and withdrawn his statement given during the course of search and from the above, it is very clear that, the Assessing Officer made addition on the basis of non-existing statement of Mr. Mukesh Banka. Therefore, in our considered view, when the Assessing Officer has made addition towards the loans on the basis of non-existing statement, he should have consider the other evidences filed by the assessee including confirmation from parties to prove loan transactions. Since the assessee has filed relevant evidences and discharged his initial onus a....
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....lonizers Pvt. Ltd., (supra). The Coordinate Bench of ITAT, Jaipur Bench of the Tribunal under identical set of facts, has deleted the addition made by the Assessing Officer towards loan received from companies as an explained cash credit under section 68 of the Act. The relevant findings of the Tribunal are as under. "43. We have heard the rival contentions and perused the material placed on record. In this appeal revenue challenges the finding of the ld. CIT(A) raising two ground effectively dealing with the deletion of addition of Rs. 1,75,00,364/-. The revenue state that ld. CIT(A) ignored the fact that various beneficiary companies have routed their unaccounted income through M/s Bhagwat Marcom Pvt. Ltd, M/s Coolhut Marketing Pvt. Ltd, M/s Gabarial Tieup Pvt Ltd, M/s Neelgagan suppliers Pvt ltd, M/s Outlook Vintrade Pvt Ltd, M/s Subhrashi Enclave Pvt ltd and M/s Viewmore Developers Pvt. Ltd, in the form of loans and advances during the F.Y. 2013-14 and Bank Account of these companies was used for layering of unaccounted fund in the form of loans and the assessee was one of such beneficiary and thereby ld. CIT(A) was not justified in deleting the additions made by AO without a....
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.... 46. So far as to the merits of the case the bench noted that revenue challenges directing the ld. AO to delete the addition of Rs. 1,75,00,364/- being the amount of unsecured loan accounted by the assessee in the name of the following parties ; S. No. Name of person from whom loan was received Amount Rs. 1 M/s Bhagwat Marcom Private Limited 25,00,056/- 2 M/s Coolhut Marketing Private Limited 25,00,028/- 3 M/s Gabarial Tieup Private Limited 25,00,056/- 4 M/s Neelgagan Suppliers Private Limited 25,00,056/- 5 M/s Outlook Vintrade Private Limited 25,00,056/- 6. M/s. Subharashi Enclave Private Limited 25,00,056/- 7. M/s. Viewmore Developers Private Limited 25,00,056/- 47. In support of contention of having accepted the unsecured loans from the above parties the assessee vide paper book page 117 to 237 placed on record the copy of Bank statement, Copy of ITR and copy of audited accounts of those depositors. The assessee has also placed on record the copy of loan confirmation of all those depositors vide page no. 238 to 251 which includes even confirmation for repayment of those loans by the assessee. 48. The bench noted that the case of the assessee was re-op....
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.... and it have been filed its Balance Sheet in MCA Website and complying with legal requirements under the companies Act. The appellant has also enclosed copy of Assessment orders of all loan creditors whereby the department has accepted the accounts of those companies and there also no adverse view of the loan given were taken by the revenue. Thus, what the provision of section 68 mandates to the assessee-appellant that any sum credited in the books of accounts of a taxpayer that cannot be explained by the taxpayer's income or other sources is deemed to be the taxpayer's income for that year. The burden of proof lies with the taxpayer to prove that the cash credit is genuine and not an undisclosed income. The appellant has provided identify of the Loan Creditors by giving their complete Address, PAN, Loan Confirmation, Copy of Acknowledgement for filing of I.T. Return for the A.Y. 2014-15, copy of Assessment Orders, Bank Statement and Audited Statement of Accounts and that it had also provided evidences of genuineness of transaction as all the transactions are through Banking Channels and the loan creditors has categorically confirmed by furnishing supporting documents and e....
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.... ITR 360 (Gujarat), wherein the court held that "The genuineness of the transaction is proved by the fact that the payment to the assessee as well as repayment of the loan by the assessee to the depositors is made by account payee cheques and the interest is also paid by the assessee to the creditors by account payee cheques." 50. Importantly we note that the revenue challenges the only deletion of loan amount but not the deletion of so-called Commission Paid by the assessee of Rs. 4,37,509/- & Interest paid of Rs. 44,958/- by the ld. CIT(A). Thus, the appeal of the revenue itself is contradictory accepted that the fact interest paid by the assessee is genuine than how can the loan cannot. 51. As regards the enquiry with third parties made by the ld. AO by issuing notices u/s 133(6) and by making field inquiries (by sending Inspector) in the name of such companies, however as no reply was received from such parties, adverse inference was drawn. Also, it is mentioned that summons was issued to directors of above entities u/s 131 & 131(d). We note that on this issue the assessee - appellant was not confronted with regard to nonservice or non-compliance of summon nor the Inspector....