TaxTMI 
TaxTMI 
2026 (2) TMI 69
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....ever when they have appointed counsel to represent the case, it has come to their knowledge that the cross objections need to be filed. In support of this, he filed an affidavit which is placed on record. Accordingly, he prayed that the delay in filing the appeal be condoned. 3. We have heard both the counsels on the issue of condonation of delay. In our considered opinion, there was a reasonable cause for the delay in filing the appeal. Therefore, we condone the delay in filing the appeal before the Tribunal. 4. Brief facts of the case are, return of Income was filed on 30.09.2015 declaring income of Rs. 13,65,640/- The case was taken up for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (for short 'the Act') was issued on 29.07.2016. The assessment u/s 143(3) of the Act was completed by AO at an income of Rs. 3,01,36,357/- after making addition of Rs. 2,86,97,100/- u/s 68 of the Act in respect of the following parties: - i. M/s Shree Laxmi Enterprises of Rs. 15,45,000/- ii. Sarthak Enterprises of Rs. 2,20,52,100/- iii. Shree Ram Traders of Rs. 51,00,000/- 4. Aggrieved with the above order, the assessee preferred an appeal ....
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....n the hands of loan creditor was not satisfactorily explained, and has brushed aside the plethora of documentary evidence furnished by the appellant. However, AO on his part has not made any independent enquiry viz. by way of issue of summons to the Directors, or calling for information from Banks, etc. to verify the genuineness of loan transactions. AO has not reverted any factual finding in the assessment order that there are cash deposits reflected in the bank statements of the loan creditor entities, immediately prior to the transfer entry therein by way of RTGS in favour of the appellant. AO has only made certain general observations regarding overall circumstances, and on that basis has drawn adverse inference as to genuineness of transactions and creditworthiness of loan creditors. It is pertinent to note that AO has not alleged that the source of funds in the hands of the lender entities was doubtful. In view of the specific, relevant and material evidence adduced by the appellant to substantiate the loan transaction, I am not inclined to agree with the adverse findings of the AO regarding creditworthiness of the loan creditor, or genuineness of loan transaction. 7....
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.... principles regarding taxation of cash credits under section 68 as under :- "(i) Section 68 can be invoked when following three conditions are satisfied -(a) when there is credit of amounts in the books maintained by the assessee, (b) such credit has to be a sum of money during the previous year, (c) either the assessee offers no explanation about the nature and source of such credits found in the books or the explanation offered by the assessee, in the opinion of the AO, is not satisfactory. It is only then that the sum so credited may be charged to income-tax as the income of the assessee of that previous year. (ii) The expression the assessee offers no explanation means the assessee offers no proper, reasonable and acceptable explanation as regards the sums found credited in the books maintained by the assessee. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be based on proper appreciation of material and other attending circumstances available on the record. The opinion of the AO is required to be formed objectively with reference to the material on record file. Once the explanation of the ass....
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.... Act. The appellant has furnished name, address and PAN of loan creditor, loan confirmation duly signed, relevant bank statements of the appellant and the loan creditors etc. The loan transactions are duly reflected in the books of accounts, Tax Audit Report and bank statement of the appellant for the relevant period. The outstanding loan amounts have subsequently been repaid to the respective lenders through proper banking channel during the succeeding Financial Year. There is no finding that any sum by way of cash was deposited in the bank account of loan creditor immediately prior to the issue of Cheque. In such circumstances, I find that the appellant has discharged the initial onus cast upon it to establish the identity and creditworthiness of the loan creditor as well as genuineness of the loan transactions. Thereafter, the onus shifted to the AO to bring further facts on record, which could prove the contrary. If the AO was not satisfied, he had the option of making inquiries from the loan creditor by summoning them. It is a fact that no independent verification has been carried out by the AO with loan creditor, by way of issue of summons under section 131, or in any other m....
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....g Officer had power to reopen the assessment provided there was some tangible material on the basis of which he has reason to believe that income chargeable to tax had escaped assessment." 7.8 On similar facts, Hon'ble Gujrat High Court in the case of Pr. CIT Vs Ojas Tarmake (P.) Ltd. (2023) (156 taxmann.com 75) (Gujarat) has held that where assessee showed unsecured loans received during relevant assessment year and AO made addition on ground that assessee failed to discharge onus of liability as laid down under section 68, since amount of loan received by assessee was returned to loan party during year itself, and all transactions were carried out through banking channels, impugned addition was to be deleted. 7.9 On similar facts, Hon'ble Gujrat High Court in the case of Pr. CIT (Central) Vs Naresh Nemchand Shah (2023) (156 taxmann.com 346) (Gujarat) has held that where pursuant to a survey, unsecured loans taken by assessee from a body corporate were deemed non-genuine by Assessing Officer on basis of statement of director of that company; since apart from said statement, there was no other evidence against assessee and moreover, assessee had filed evid....
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....ack subsequently with interest after deducting TDS thereon, impugned reopening notice issued against assessee after four years from relevant assessment year on ground that such loan transaction was bogus was unjustified. 7.14 On similar facts, Hon'ble Gujrat High Court in the case of Pr. CIT Vs Ambe Tradecorp (P.) Ltd. (2022) (145 taxmann.com 27) (Gujarat) has held that where assessee took loan from two parties and assessee had furnished requisite material showing identity of loan givers and that assessee was not beneficiary as loan was repaid in subsequent year, no addition under section 68 could be made on account of such loan. 7.15 On similar facts, Hon'ble Gujrat High Court in the case of Pr. CIT Vs Haresh kumar Manilal Somaiya (2023) (154 taxmann.com 432) (Gujarat) has held that where assessee received unsecured loans and produced confirmation of lenders and other relevant documents such as copy of PAN, ledger account, bank statement and audited books so as to establish creditworthiness, genuineness and identities of lenders in transactions, impugned addition made under section 68 on account of said unsecured loan by AO without considering such docume....
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....80) (2018) (Bombay), has relied on the Apex Court decision in case of CIT Vs Lovely Exports (supra) and held as under,- "In any view of the matter the three essential tests while confirming the pre proviso Section 68 of the Act laid down by the Courts namely the genuineness of the transaction, identity and the capacity of the investor have all been examined by the impugned order of the Tribunal and on facts it was found satisfied. Further it was a submission on behalf of the Revenue that such large amount of share premium gives rise to suspicion on the genuineness (identity) of the shareholders i.e. they are bogus. The Apex Court in Lovely Exports (P.) Ltd. (supra) in the context to the pre-amended Section 68 of the Act has held that where the Revenue urges that the amount of share application money has been received from bogus shareholders then it is for the Income Tax Officer to proceed by reopening the assessment of such shareholders and assessing them to tax in accordance with law. It does not entitle the Revenue to add the same to the assessee's income as unexplained cash credit." 7.18 It is pertinent to mention that the facts of present case are complete....
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....the assessee failed to produce. 3. On facts and in the circumstances of the case the Ld. CIT, NFAC erred in law and facts by not considering the Remand report submitted by the AO based on proper verification and enquiry of the parties with whom transactions of Rs. 2,86,97,100/- made by the assessee." 6. At the time of hearing, ld. DR of the Revenue submitted that Ld. CIT (A) deleted the addition of Rs. 2,86,97,100/- made by the AO on account of unexplained unsecured loans without considering the basic facts of the case. He further submitted that ld. CIT (A) erred in law and facts by admitting the additional evidence as supporting documents in respect of receipt/payments of Rs. 2,86,97,100/- under Rule-46A of the Act which were sought by the AO during the assessment proceedings but the assessee failed to produce. Further submitted that ld. CIT (A) has not rightly appreciated the Remand Report submitted by the AO based on proper verification and enquiry of the parties with whom transactions of Rs. 2,86,97,100/- made by the assessee. Accordingly, he heavily relied on the findings of the AO. 7. On the other hand, ld. AR of the assessee submitted that addition made by the....
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....le or perverse or based on no evidence. If the conclusion is based on some evidence on which a conclusion could be arrived at, no question of law as such arises." 10. Further we observed that the coordinate Bench in the case of ITO Delhi v. RMP Holdings Pvt. Ltd. (supra) has decided the similar issue in favour of the assessee and held as under: - "8. ................................................ Merely because the AO could not trace the company as per the address available on ROC records and non-filing of return of income for the assessment year under consideration, the transactions carried on by the assessee through banking channel cannot be nullified. It is a fact on record that the transactions are taken place through the banking channel and the same was repaid within three months also through banking channel. 9. We observed that on the similar facts on record, coordinate Bench in the case of Signature Global India Pvt. Ltd. (supra) held as under :- "18. With regard to ground no.ii(a), we observed that the Assessing Officer observed that the assessee has taken unsecured loan from 9 parties and assessee has submitted copies of ITR acknowl....
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.... 5900000 1346065 3 BaseraRealtech Private Limited 5200000 NIL 4 Multiplex Fincap Limited 163456456 NIL 5 Radhay Portfolio Limited 2950000 4361540 6 SRK TradelinksPvt. Limited 15500000 NIL 7 Syala Buildwell Private Limited 2500000 2590369 8 Tia Enterprise Private Limited 4000000 NIL 9 Umang Leasing and Credit Co. Ltd. 11750000 NIL 19. Based on the above finding, ld. CIT (A) came to the conclusion that assessee has proved the conditions imposed u/s 68 of the Act that assessee has found identity, creditworthiness and genuineness of the transactions. Further, he observed that the Assessing Officer has merely rejected the submissions of the assessee on the basis of doubt without bringing any material to discredit the document or information on record. Further he observed that the provisions of section 68 of the Act as existed at that point out time there is no requirement of proving the source of source in the case of loan transactions. Accordingly, he deleted the addition made by the Assessing Officer. 20. At the time of hearing, ld. DR relied on several decisions in his arguments. ....