TaxTMI 
TaxTMI 
2025 (12) TMI 1096
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....essee has filed reply which were considered by the AO and the assessment order was passed u/s. 143(3) of the Act dated 27.12.2018 wherein the total income stood assessed at INR 1,12,94,400/- by making addition u/s. 68 of the Act towards unsecured loans of INR 1,05,00,000/- received during the year under appeal. Besides disallowance of Rs. 94,210/- out of various expenses claimed is also made. 3. Against the said order, assessee filed an appeal before Ld. CIT(A) who vide impugned order dated 06.12.2024, dismissed the appeal of the assessee. 4. Aggrieved by the order of Ld. CIT(A), assessee is in appeal before the Tribunal by taking following grounds of appeal:- A) "That Ld. CIT-A vide impugned order passed u/s 250 dated 06.12.2024 erred in not quashing the impugned assessment order passed u/s. 143(3) dated 27.12.2018 for want of valid/requisite SHOW CAUSE NOTICE (SCN) being issued during asst proceedings which is fatal to impugned asstt.; B) That Ld. CIT-A vide impugned order passed u/s 250 dated 06.12.2024 erred in not quashing the impugned assessment order passed u/s. 143(3) dated 27-12.2018 passed without application of mind and acting in most arbitrary/bi....
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.... u/s. 133(6) of the Act nor any field enquiry was made by deputing ward inspector and made the addition of unsecured loans received by holding the same as unexplained money. For this, he placed reliance on the judgment of Hon'ble Supreme Court in the case of Orissa Corporation reported in [1986] 159 ITR 78 (SC). Ld.AR also placed reliance on the judgment of Co-ordinate Bench of Delhi Tribunal in the case of ITO vs Balwan Singh in ITA No.2869/Del/2019 order dated 07.08.2023 and also in the case of ACIT vs Filatex India and Others in ITA No.4635/Del/2024 & Others order dated 30.06.2025. 7. Ld.AR also submits that AO has not issued any show cause notice before making he additions in the hands of the assessee which is contrary to the CBDT Instruction No.20/2015 where CBDT has given directions to the assessing officers that where any additions/disallowances is proposed, they should provide a fair and reasonable opportunity to the assessee to explain his position on the proposed addition/disallowance in accordance with the principal of natural justice which is violated in the present case. In this respect, reliance is placed on the judgement of Hon'ble Supreme Court in the case of Exc....
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....se and in order to sustain the addition the Revenue has to pursue the enquiry and to establish the lack of creditworthiness and mere non-compliance of summons issued by the Assessing Officer under section 131, by the alleged creditors will not be sufficient to draw an adverse inference against the assessee." 11. It is further seen that the assessee has discharged its burden of establishing the genuineness of loans by filing their bank statements. 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 provide that the nature and source of any sum, whether in the form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. However, this additional onus of proof of satisfactorily explaining the source in the hands of the creditor, would not apply if the creditor is a well-regulated entity, i.e., it is a Venture Capital Fund, Venture Capital Company registered with SEBI. This amendment has taken effect from 1st April, 2023 and accordingly applies in relation to t....
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....s 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]" ............ 27. Regarding surrounding circumstances, it is observed that while making addition u/s. 68 of the Act, the AO has doubted the financial capacity of loan creditors but such addition cannot be made on preponderance of probability and there has to be some evidence and substance in contention. The Assessing Officer has not brought anything on record to establish that the sources in....
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...., it would have had to discharge the onus which had shifted on to it. A bald assertion by the Assessing Officer that the credits were a circular route adopted by the Assessee to plough back its own undisclosed income into its accounts, can be of no avail. The revenue was required to prove this allegation. An allegation by itself which is based on assumption will not pass muster in law. The revenue would be required to bridge the gap between the suspicions and proof in order to bring home this allegation. The ITAT, in our view, without adverting to the aforementioned principle laid stress on the fact that despite opportunities, the Assessee and/or the creditors had not proved the genuineness of the transaction. Based on this the ITAT construed the intentions of the Assessee as being mala Ride. In our view the ITAT ought to have analyzed the material rather than be burdened by the fact that some of the creditors had chosen not to make a personal appearance before the A.O. If the A.0. had any doubt about the material placed on record, which was largely bank statements or the creditors and their income tax returns, it could gather the necessary information from the sources to which the....