AI Drafter 
TaxTMI 
TaxTMI 
2025 (12) TMI 494
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....ccordingly statutory notice u/s 143(2) of the Act was issued and served on the assessee. Subsequently the Assessing Officer issued notice u/s 142(1) of the Act along with a questionnaire in response to which the AR of the assessee filed the various details from time to time. 4. During the course of assessment proceedings the Assessing Officer noted that the assessee has purchased a land at Baner for Rs. 1.62 crore for which he has taken interest free loan of Rs. 1.62 crore from Shri Manilal M. Gada, a person covered u/s 40A(2)(b) of the Act. The land was purchased from Smt. Nenshi L. Shah, Shri Lalji K. Shah, Shri Shantilal Shah, who are the vendors and are residing in Mumbai. The Assessing Officer issued a notice u/s 133(6) of the Act to Shri Manilal M. Gada on 02.03.2016 to submit copy of bank account and other details from which he had advanced interest free loan of Rs. 1.62 crore to the assessee. Shri Manilal M. Gada, in response to the said notice submitted his reply on 10.03.2016 in TAPAL. On perusal of the bank account of Mr. Manilal M. Gada, the Assessing Officer noted that Shri Manilal M. Gada has accepted an amount of Rs. 1.62 crore as loan from his wife Smt. Neeta Man....
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....d. CIT(A) / NFAC, relying on the decision of Hon'ble Supreme Court in the case of PCIT vs. M/s. NRA Iron and Steel Pvt. Ltd. reported in 103 taxmann.com 4, upheld the addition made by the Assessing Officer by observing as under: 6. Aggrieved with such order of the Ld. CIT(A) / NFAC the assessee is in appeal before the Tribunal. 7. The Ld. Counsel for the assessee strongly challenged the order of the Ld. CIT(A) / NFAC in sustaining the addition made by the Assessing Officer. He submitted that there is no dispute to the fact that the assessee has availed loan of Rs. 1.62 crores from Shri Manilal Gada. Shri Manilal M. Gada, in his response to the notice issued by the Assessing Officer u/s 133(6) of the Act has confirmed to have given the said loan of Rs. 1.62 crore being loan obtained from his wife Mrs. Neeta M. Gada. His bank statements were also given. Further the brother of the assessee has also availed identical loan amount from Shri Manilal Gada. However, no addition in the hands of his brother has been made by the Assessing Officer nor any action u/s 147 or 263 has been taken. He submitted that the addition u/s 68 of the Act in the instant case cannot be made since the ass....
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.... entries of loan. We find the Ld. CIT(A) / NFAC while sustaining the addition has relied on the decision of the Hon'ble Supreme Court in the case of PCIT vs. M/s. NRA Iron and Steel Pvt. Ltd. (supra). It is the submission of the Ld. Counsel for the assessee that the decision of Hon'ble Supreme Court in the case of PCIT vs. M/s. NRA Iron and Steel Pvt. Ltd. (supra) is not applicable to the facts of the present case. Further the assessee in the instant case has explained the source of source. It is his submission that in view of the decision of Hon'ble Delhi High Court in the case of Sheela Overseas Pvt. Ltd vs. PCIT (supra) where it has been held that amendment to section 68 of the Act introduced by virtue of the Finance Act, 2022 makes it abundantly clear that section 68 of the Act, as was in force prior to 01.04.2023, did not require the assessee to explain the source of the source of funds other than share capital money, share capital, share premium or any amount of such nature, therefore, no addition u/s 68 can be made. 12. We find some force in the above arguments of the Ld. Counsel for the assessee. It is an undisputed fact that the assessee during the course of assessment ....
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....DS thereon cannot by itself discharge the burden cast upon the assessee u/s 68 of the Act. According to him, in terms of section 68 of the Act, the assessee has to prove the identity and creditworthiness of loan creditors and the genuineness of the transaction. According to him, in the instant case the true identity of the loan creditor Risa International Ltd is not proved and its creditworthiness was also is doubtful since Risa International is just a paper company used by the beneficiaries of Risa International Ltd to provide accommodation entries. We find the Ld. CIT(A) sustained the addition made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that the assessee has filed all the relevant details such as PAN, copies of ITRs, account confirmations, repayment with interest and TDS thereon, bank statement etc to prove the identity and creditworthiness of the loan creditor and genuineness of the transaction. The director of Risa International Ltd, lender company has appeared before the Assessing Officer in response to the summons u/s 131 of the Act and has confirmed to have extended the loan of Rs. 1,15,00,000/- out of collections from sundry debto....
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....ready been repaid by 08.06.2017, therefore, in our opinion, the assessee has fully discharged its onus cast upon it by proving the three ingredients of section 68 i.e. identity, creditworthiness of lenders and genuineness of the transaction. We, therefore, set aside the order of the Ld. CIT(A) and direct the Assessing Officer to delete the addition. Grounds raised by the assessee are accordingly allowed." 15. Since in the instant case the assessee has filed the requisite details explaining the source of Rs. 1.62 crores being the loan obtained from Shri Manilal M. Gada and Shri Manilal M. Gada in response to notice u/s 133(6) of the Act has also confirmed to have given the said loan and has filed his bank statement explaining the source, therefore, in our opinion, the assessee has fully discharged the onus cast upon him in terms of section 68 by proving the three ingredients i.e. identity and creditworthiness of Shri Manilal M. Gada and the genuineness of the transaction. We, therefore, set aside the order of the Ld. CIT(A) / NFAC and allow the grounds raised by the assessee. 16. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court ....
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....y. . The practice of conversion of unaccounted money though the cloak of share capital / premium must be subjected to careful scrutiny. This would be particularly so in the case of private placement of shares where a higher onus is required to be placed on the assessce since the Information is within the personal knowledge of the assessee. The assessee is under a legal obligation to prove the receipt of share capital / premium to the satisfaction of the Assessing Officer, failure of which, would justify addition of the said amount to the income of the assessee. 4.3.1 It is a fact that the appellant has not established Creditworthiness as per the rigors of Section 68 to the satisfaction of the Assessing Officer and subsequently also in the appellate proceedings. It is further noted that the lender has to establish the source of funds from which the astronomical loan was given. The mere mention of the PAN of an investor was not sufficient to discharge the onus u/s.68 of the Income Tax Act. Hence, the onus to establish the creditworthiness of the investor was not discharged and the entire transaction was bogus and lacked credibility. The practice of conversion of unaccounted mon....
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....e furnish the reasons for advancing loan? Ans- M/s. Prem Grain Industries Pvt. Ltd. is company in which my father-in-law is Director. This is the reason of giving the loan to M/s. Prem Grain Industries Pvt. Ltd. 4. In the Summons u/s 131 of the Act, it was requested to furnish the sources of credit In Bank account of M/s. Risa International Ltd. Immediately before the lending loan to M/s. Prem Grain Industries Pvt. Ltd. as under- Amt. paid to Risa International. Date of loan Amt. credit in Risa International. Date of credit 5500000/- 06-10-2015 5778536/- 06-10-2015 5025000/- 07-10-2015 4924903/- 07-10-2015 1075000/- 19-10-2015 1628652/- 19-10-2015 Inda (19/0200) Please explain the sources of such credits. Grain otem 17.12.18 Document 4 Ans- The amount of credits in the bank account of M/s. Risa International Ltd. is amount recovered from debtors. The Company has not taken unsecured loans and whatever amount is given is out of our own funds of Company. 5. Can you give the details of debtors. Ans- I will send the details of debtors or the source of credit on email . 6. As per your statement recorded u/s 132(4) on 20-10-2016, a specific qu....