TaxTMI 
TaxTMI 
2025 (9) TMI 655
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....credit under section 68 of the Income-tax Act, 1961. 2. The assessee is an individual, proprietor of Sunrise Enterprises, engaged in the business of trading, commission and investment. He filed his return of income on 30.09.2011 declaring total income of Rs.2,08,97,440. Subsequently, the assessment was reopened under section 147 and notice under section 148 was issued on 30.03.2018. The recorded reasons proceeded on an information note dated 26.03.2018 from the DDIT (Inv.) Unit 2(2), Mumbai, stating that enquiries in the case of Shri Rajendra Drolia, proprietor of M/s Sai Traders, revealed him to be a "hawala operator" without genuine business and allegedly providing accommodation entries. The note annexed an analysis of the said party's....
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....under section 271(1)(c) separately. "In view of the above facts, I have come to conclusion that the assessee had routed his own money in the form of unsecured loan from the Havala operator Shri Rajendra Drolia. Hence, I conclude that an amount of Rs. 1,00,00,000/- was accounted in the books of accounts of the assessee through fictitious transaction in the name of above bogus Hawala operator. Therefore an amount of Rs. 1,00,00,000/- is hereby disallowed u/s 68 of the Income-Tax Act, 1961 and added back to the total income of the assessee. Penalty proceedings u/s 271(1)(c) are hereby initiated separately for furnishing inaccurate particular of income." 5. In first appeal, the learned CIT(A) affirmed the addition primarily on the f....
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....uineness of the transaction and has arrived at the conclusion that Shri Rajendra Drolia is a Hawala operator having no genuine business and only providing accommodation entries in form of sale-purchase to beneficiary parties. The TIN of Messrs Sai Trader which is proprietary concern of Shri Rajendra Drolia is also cancelled because of irregularities. Therefore, the assessing officer has arrived at the conclusion of amount of Rs. 1,00,00,000/-being fictitious transaction and adding the same under section 68 of the IT Act. In light of assessing officer's findings and assessee's submission before me, I find no reason to disturb the findings in assessment order. Therefore, addition of Rs. 1,00,00,000/- is confirmed and appeal of the assessee is....
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....preceding each disbursement. The record shows that the loan was advanced in three tranches between 12.03.2011 and 15.03.2011. Immediately prior to each transfer, the lender's account carried adequate cleared funds. No material has been brought to show that such balances were artificially created by cash deposits or by circular layering traceable to the assessee. (c) Genuineness is borne out by an unimpeached banking trail. The loan was received through account-payee instruments. Interest was regularly paid at a commercial rate of 18% with TDS duly deducted and reflected in quarterly statements. The entire principal stood repaid on 20.04.2012 and 26.04.2012, nearly six years before the notice under section 148 was issued. These are ....
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....ts that could reasonably sustain the inference of a colourable device. In the absence of such connecting tissue, the general label of "hawala" does not, by itself, rebut the assessee's documentary case. 10. It is equally significant that the assessment order does not grapple with, let alone dislodge, the assessee's primary materials: the lender's tax returns, bank statements establishing pre-existing funds, the ledger confirmation, the contractual rate of interest (18%) with TDS deduction, and proof of full repayment. These are not peripheral or formalistic documents; they go to the heart of identity, capacity, and genuineness. Once placed on record, the evidentiary burden moved to the Revenue to undertake independent verification and br....