TaxTMI 
TaxTMI 
2025 (11) TMI 91
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....ddition made by the AO u/s. 36(1)(iii) of Rs. 1,47,99,790/-, when the entire process is treated as assessee's business and as per section, direct nexus of the amount taken by the assessee for the investment is also proven. The expenses claimed is also treated as business expenses. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition made u/s. 68 as unexplained cash credits of Rs. 3,61,16,600/- without apprecinting the fact that the assessee failed to prove the genuineness and creditworthiness of transactions of unsecured loans when the onus of proving the same is cast upon the assessee. 4. The appellant prays that the order of the National Faceless Appeal Centre (NFAC), Delhi on the above grounds be reversed and that of the AO be restored. 5. The appellant craves leave to amend or alter any ground or submit additional ground which may be necessary." 3. Basic facts of the case are that the assessee filed his return declaring income of Rs. 93,62,000/- for A.Y. 2020-21, on 29.12.2020. The assessee derives income from the proprietory business in the name of M/s. Viraj Highway Inn. The case ....
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.... from Loans from LIC and others. Thus the sources of funds are 'mixed funds'. The investment in Loans and advances is Rs. 53 19 Cr. It has been held by higher judiciary, that in cases of 'mixed funds', it is presumed that the appellant has first utilized his 'own' capital for advancing the Loans. If I confine myself to the examination carried out by Ld. AO, with respect to Loans and advances to Shivam megastructure private Limited, it can be said that source of Loan of Rs. 51.23 Cr to Shivam megastructure is sourced from appellant's own interest free capital account of Rs. 43.35 Cr. The balance amount of about Rs. 8 Cr can be said to be attributable to the interest-bearing sources fund. So, the only point of consideration with AO should have been the amount of Rs. 8 Crore, even if he had embarked on a journey under section 36(1)(iii). The AO has mentioned a rate of 5.52% on which loan has been advanced to Shivam megastructure. This would amount to Rs. 2.82 Cr, at the rate of 5.52 percent on Loans and advances of Rs. 51.23 Cr. While the interest outgo on interest bearing funds of Rs. 8 Cr, even at the rate of 15% adopted by the AO would be Rs. 1.20 Crores....
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....year, there is no case for making any disallowance under section 57, and to such extent, the assessment order is acceptable. The additions u/s 36(1) (iii) made by AO are not sustainable." 4.3 Before us, ld. DR has argued that the AO had not gone beyond the scope of limited scrutiny as the CBDT circular no. 20 of 2015 provides for examination of connected issues during limited scrutiny and the issue related to the claim of interest expenses was well within the scope of limited scrutiny which was on the grounds as under: ""Assessee has claimed substantial deduction under the head income from other sources, u/s 57 of the Act" and "As per tax audit report substantial amount of loans has been squared up by the assessee during the year. The genuineness of the transaction, identity of persons who has given the loans, whether the loans has been genuinely returned to the creditors and whether the amounts were returned as per the provisions of section 269SS"." Further on the issue of consistency, ld. DR reiterated the well settled principle that Res Judicata does not apply to tax proceedings. On the merits of the issue, ld. DR has requested that the matter may be remanded to t....
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.... 21/01/2021 7,09,27,600 7,09,27,600 Yes 3 2022-23 Complete scrutiny 143(3); 23/03/2024 19,69,440 19,69,440 Yes Further the year wise disclosure of interest was made as under: Asst. Year Interest Income Interest Expenses Difference of Interest 2017-18 5,69,25,020 67,67,745 5,01,57,275 2018-19 3,94,18,406 87,87,025 3,06,31,381 2019-20 6,13,74,408 2,70,84,802 3,42,89,606 2020-2021 2,83,74,866 2,23,23,670 60,51,196 2021-22 1,46,578 2,27,59,344 -2,26,12,766 (restricted to - 26,32,457/- i.e to Income) 2022-23 2,54,29,435 2,38,37,902 15,91,533 From the above, it is clear that the assessee has been declaring net interest as 'Income from other sources' in earlier as well as subsequent years and the revenue has also accepted the same after complete scrutiny. Hence, there was no justification for making the impugned addition in the year under consideration. We do not find any infirmity in the order of ld. CIT(A) in allowing relief to the assessee on this issue and accordingly the revenue's ground of appeal challenging allowance of interest paid u/s. 57 is hereby dismissed. ....
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....He has accordingly, requested for remanding this issue to the ld. AO for requisite verification of the additional evidences filed before ld. CIT(A). 5.4 Ld. AR, has however, opposed the contention of ld. DR and has pointed out that neither before the ld. CIT(A) nor in the grounds taken before the Tribunal, ld. AO has raised objection to the admission of additional evidences. He has also submitted the following documents in the form of a paper book before us: "Documentary Evidence to establish of Lender Identity, Creditworthiness and Genuineness of Transaction under Section 68: I. Asian Petroleum Centre i. Ledger Confirmation. ii. ITR Ack of 3 Years (AY 2019-20 to AY 2021-22). iii. Extract of Bank Statement of Asian Petroleum Centre for the period 01-04- 2019 to 30-04-2019. iv. Extract from Additional Written Submission dated 19.02.2025-Ledger of Asian Petroleum Centre in the Books of Viraj Highway Inn (Prop. Girish S. Chheda) [FY 2016-17 to FY 2020-21]. II. Rajen Petroleum i. Ledger Confirmation. ii. ITR Ack of 3 Years (AY 2019-20 to AY 2021-22). iii. Extract of Bank Statement of Rajen Petr....
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....n. ii. ITR Ack of 3 Years (AY 2018-19 to AY 2020-21). iii. Extract of Bank Statement of Tarachand S Shah for the period 01-08-2019 to 31-08-2019 and 01-11-2019 to 30-11-2019. iv. Extract from Additional Written Submission dated 19.02.2025-Ledger of Tarachand S Shah in the Books of Viraj Highway Inn (Prop. Girish S. Chheda) [FY 2016-17 to FY 2020-21]." In view of above, ld. AR has argued that the onus to establish the identity and creditworthiness of the lenders and to prove the genuineness of the transactions has been successfully discharged by the assessee and therefore ld. CIT(A) has rightly deleted the addition after detailed discussion in para 9 of the appellate order and his order deserves to be upheld. 5.4 We have heard the rival submissions and perused the material placed on record. Admittedly, the requisite evidences were not filed by the assessee during the assessment proceedings, resulting in the impugned addition u/s. 68 of the Act. However, before ld. CIT(A), the assessee duly filed an application for admission of additional evidences which was accepted. Accordingly, ld. CIT(A) after detailed examination of evidences furnished in respect....