TaxTMI 
TaxTMI 
2026 (2) TMI 1307
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....t Ltd and M/s Sirsa Deposits and Advances Ltd as the Assessee company failed to prove the ingredient of Section 68 of the act of the lender companies as well as without considering the facts of the case? 2. Whether upon the facts and circumstances of the case and in law, the Ld. CIT(A) was justified to delete the addition made by the A.O. on account of interest payments made to Highrise Securities & Trading Pvt Ltd and M/s Sirsa Deposits & Advances Ltd? 3. Whether upon the facts and circumstances of the case and in law, the Ld. CIT(A) was justified to delete the addition made by the AO on account of interest payments made to Highrise Securities & Trading Pvt Ltd and M/s Sirsa Deposits & Advances Ltd? 4. Whether upon facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting addition of Rs. 1.50 Crore by holding that there is no material to prove that M/s. High Rise Securities and Trading Pvt. Ltd. and M/s Sirsa Deposits and Advances Ltd., were controlled by Sh. Deepak Aggarwal and Sh. Himanshu Verma and disregarding the electronic evidence seized from residence of Sh. Himanshu Verma and his statements recorded during search u....
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....ved that M/s SDAL had returned loss of Rs. 941.31 Lacs. It was regular loss making entity. Though the business was money lending, there was no justifiable explanation for claiming huge 'other expenses' in the audited financial statements. The lender received credit entry of Rs. 50 Lacs each on 04-07-2018 & 16-07-2018 which was immediately advanced to the assessee. The circular nature of transactions cast serious doubt on genuineness of the lenders as well as on the transactions. Similar observations were made with respect to HSTPL. Finally, the unsecured loans of Rs. 150 Lacs were added u/s 68. Consequently, interest paid on these loans for Rs. 8,66,710/- was also disallowed u/s 37(1). Appellate Proceedings 3. The Ld. CIT(A), after due consideration of detailed written submissions of the assessee and in terms of ratio of various judicial decisions, rendered its observations and findings from para 5.2.3 onwards as under: - During the assessment proceedings, the A.O. noticed that the assessee had received unsecured loans of Rs. 1,50,00,000/- from two non-descript companies which was no genuine business and has no creditworthiness. Therefore, the amount of Rs. 1,50,00,0....
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....ncing of loan by them along with confirmation date, cheque No. and other relevant information along with PAN of companies - Accordingly, he deleted additions - Whether since question of genuineness of investors who introduced share capital and capacity of persons from whom loan was borrowed and genuineness of transactions, had been considered at length by first appellate authority and revenue had failed to point out any infirmity in fact or law, no question of law arose for consideration - Held, yes [Para 8] [in favour of assessee]" Further, the Hon'ble High Court of Delhi in the case of CIT vs. Dwarkadhish Investment Pvt. Ltd. reported at [2010] 194 Taxman 43 (Delhi) has held as under: "Section 68 of the Income-tax Act, 1961 - Cash Credits - Assessment year 2001-02 - Whether though in section 68 proceedings, initial burden of proof lies on assessee, yet once he proves identity of creditors/share applicants by either furnishing their PAN numbers or income-tax assessment numbers and shows genuineness of transaction by showing money in his books either by account payee cheque or by draft or by any other mode, then onus of proof would shift to revenue and just be....
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....re legal onus has been created. What is relevant is the identity, creditworthiness of the depositors and genuineness of the transaction. All these three conditions have been established and onus of the assessee/appellant has been discharged u/s 68 of the Act. In my considered view, the appellant has proved and discharged its burden. The AO has to be bridge the gap between suspicion and proof to bring home the allegation. There were neither direct nor circumstantial evidence on record to show that the said loan amount actually belonged to or were owned by the appellant. (On identity) The Hon'ble High Court of Mumbai in the case of Orient Trading Company Ltd. vs. CIT 49 ITR 723 held as under: "when the entry stands in the name of the third party and the assessee establishes the identity of the creditor and produces evidence showing that the entry is not fictitious, initial burden lying on the assessee stands discharged; the burden shifts on to the Revenue to show that the entry represented assessee's suppressed income." (On Capacity) It has been held by the Ld. Mumbai Tribunal Bench in the case of ACIT vs. Krishna Sheet Proces....
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....araj Singh [2011] 15 taxmann.com 70 (Punj. & Har.) wherein, it has been held as under: Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment Year 1992-93 - Assessee filed return for relevant assessment year declaring certain income - On a complaint, matter was investigated, and it was found that assessee had introduced his own secret funds to tune of Rs. 1.50 lakhs through one 'N' who first deposited that money in his account and later on got prepared a bank draft in name of assessee on pretext of foreign remittance and same was given to assessee - On that basis, Assessing Officer made addition of Rs. 1.50 lakhs to assessee's income by invoking provisions of Section 68 - On appeal, Commissioner (Appeals) sustained addition - However, on second appeal, Tribunal, on basis of material on record, came to conclusion that amount in question had been repaid to 'N' through banking channel within period of 15 days and said transaction was a bona fide transaction and provisions of Section 68 were not attracted - Whether on facts, Tribunal was justified in deleting addition made by Assessing Officer - Held, yes [In favour of assessee]" Further, the jurisdictiona....
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....ssessee received unsecured loan from several parties - Assessing Officer, conducted inquiry upon parties from whom loans were taken - However, nothing was heard from such parties - Assessing Officer found that there was no business activity conducted by lenders and turnover of one of parties was equal to amount given as unsecured loans to assessee - Thus, he made addition under Section 68 - Commissioner (Appeals) deleted such addition holding that creditworthiness of parties and genuineness of transactions were proved - However, Tribunal remanded matter back to Assessing Officer to verify identity of parties - It was noted that Tribunal had observed that assessee had furnished bank accounts of all lenders wherein loans claimed were duly reflected - Creditors were assessed to tax and their confirmations were filed - Further, loans were returned through banking channels before close of subsequent financial year - Whether, on facts, an opportunity was rightly allowed by Tribunal to assessee to prove identity of lenders when their creditworthiness and genuineness of transactions as was held by Commissioner (Appeals), were already proved - Held, yes" Hence, in view of the findi....