TaxTMI 
TaxTMI 
2026 (3) TMI 1415
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was to be considered as unexplained cash credit u/s 68 of the Act. 2. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the fact that the amount of Rs. 30,00,000/- has been added by the AO as unexplained investment and no double addition has been made for the same amount of credits. 3. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in allowing the appeal of the assessee by accepting identity and creditworthiness of the persons from whom the credit entries have been received and genuineness of the transactions despite the fact that no conclusive justification with regard to genuineness of the transactions with regard to the utilization of the funds generated through credit entries in its bank account have been provided by the assessee either at the assessment proceedings stage or during the appellate proceedings. Thus, all 3 essentials for establishing the transaction to be out of scope of Section 68 has not been fulfilled by the assessee. 1.3 The ground as raised by the assessee read as under: - 1. That the order of Ld. CIT(A) is bad in law and again....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s wrongly upheld addition made by the Ld. AO in the assessment order u/s 143(3) r.w.s. 153(1)(b) of the Act without applying his own mind and merely on the dictates of the third party. 10. That the Ld. CIT(A) has wrongly upheld the assessment u/s 153B of the Act framed in the undue haste, mechanical manner and without application of mind as is evidenced by the documentary evidence on record exchanged between the Assessing Officer as well as ADIT (Inv.), Mohali. 11. That the approval u/s 153D of the Act has been given in undue haste and mechanical manner. 12. That the Ld./ CIT(A) has wrongly upheld penalty proceedings initiated u/s 271AAB(1A)(b) of the Income Tax Act, 1961. 13. That the Ld. Assessing Officer has wrongly charged interest u/s 234A, 234B and 234C of the Act. 14. That the appellant craves leave to add, alter, amend or withdraw any grounds of appeal before the final hearing. 1.4 The Ld. AR as well as Ld. CIT-DR advanced respective arguments and referred to various documents as placed on record. The written submissions have also been filed which have duly been considered. Reference has been made to various judicial decisions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eedings, following inferences were drawn by Ld. AO in para-7 of the assessment order: - * That, Sh. Jagdish Rai Gupta has clearly admitted that his one of the director in M/s TJR Properties Pvt. Ltd. and M/s Evershine Resorts Pvt. Ltd. * He has also stated that these companies were incorporated in 2008. * That, Shri, Jagdish Rai Gupta has clearly stated that M/s TJR properties Pvt. Ltd. is not involved in any kind of business activity. Further, Sh. Jagdish Rai Gupta had denied any knowledge of any business transactions or bank transactions carried out by M/s TJR Properties Pvt. Ltd. * Similarly, in case of M/s Evershine Resorts Pvt. Ltd. also, Sh. Jagdish Rai Gupta had stated that any kind of business activity is not being carried out in this company from the date of its establishment. * That, Sh. Jagdish Rai Gupta has denied any knowledge of any bank transaction of this company also, * That, during the course of his statement, Sh. Jagdish Rai Gupta was specifically confronted with the account statement of (Maharashtra Bank Account No. 60086345369) of M/s TJR Properties Pvt. Ltd but in his reply Sh. Jagdish Rai Gupta stated that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ply dated 20-12- 2019 submitted various details of lenders. However, the assessee, in the opinion of Ld. AO, failed to establish the purposes of these credits and also utilization of the funds so received. Since the assessee was held to be a shell company, the credit so received were alleged to be unexplained cash credit u/s 68 and added to the income of the assessee. The addition thus made by Ld. AO aggregated to Rs. 647.72 Lacs after reducing addition of unexplained investment already made u/s 69 for Rs. 30 Lacs. This is third issue before us. Aggrieved by assessment thus framed by Ld. AO, the assessee preferred first appeal against the same. Appellate Proceedings 3. During appellate proceedings, the assessee's submissions and documentary evidences were subjected to remand proceedings. The Ld. AO furnished remand report on 15-07-2022 which has been extracted in the impugned order. In sum & substance, it was stated by Ld. AO that the assessment order was framed after due opportunity of hearing to the assessee and after considering material facts on record. The conclusion was based on detailed analysis and therefore, the assessment findings were to be upheld. The assessee fil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hed various documentary evidences in support of identity and creditworthiness of lender entities and also to establish genuineness of the transactions. These documents were duly furnished during the course of assessment proceedings also. In the remand report, Ld. AO did not record any adverse finding on identity and creditworthiness of the lenders and genuineness of the transactions except for alleging that the assessee was a shell entity and it was not having any profit-earning apparatus. No enquiry was made during remand proceedings also and Ld. AO merely relied upon the facts as discussed in the assessment order. Therefore, the assessee pleaded for deletion of impugned addition on merits. 6. The Ld. CIT(A), thereafter, went on to examine the documentary evidences as furnished by the assessee to establish each of the bank credits. The outcome of this exercise has been summarized at para 9.4 of the impugned order, as under: - No. Name Amount Documents Remarks 1. M/s. Ind Sphinx Precision Rs. 9,00,000/- Rs. 9,00,000/-, And Rs. 7,00,000/- Bank account statement, ledger, confirmation, ITR, Balance Sheet Upon perusal of the documents furnished by the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingh has not been established. Further, from the ledger account it is observed that the appellant has not paid any interest to Sh. Jatin Garg on such loan. From such facts, genuineness of transaction is not established it is beyond preponderance of probability that someone would give loan of Rs.29,00,000/- to the appellant without any explicit purpose without any interest without any business purpose. 5. State Geologist department Rs. 53,08,092/- Bank account statement of the appellant This amount has been received back from State Geologist department. Earlier the appellant has paid the said amount to the State Govt from its bank account on 12.04.2017. Once the AO has added all the credits in the bank account in the case of the appellant as unexplained, further addition in the hands of the appellant on account of payments received back from the State Govt from the payments made from the same bank account amounts to the double addition of the same transaction. 6. Cash Deposited Rs.1,00,000/- Each on 17.04.2017 and 18.08.2017 Cash book extract and copy of P&L account The cash deposits were explained as made on account of income generated during the year ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Further, from the ledger account it is observed that the appellant has not paid any interest to Sh. Sanbir Singh/Sh. Sanjit Randhawa on such loan. From such facts, genuineness of transaction is not established as it is beyond preponderance of probability that someone would give loan of Rs. 40,00,000/- to the appellant without any explicit purpose without any interest without any business purpose. 11. Sh. Gurvarinder Singh Rs. 20,00,000/- Bank account statement, Ledger, confirmation and ITR Upon perusal of the documents furnished by the appellant it is observed that the said amount has been received as unsecured loan. The transaction has been routed through the OD account of Sh. Gurvinder Singh. It is beyond preponderance of probability that a person with income of Rs. 3,53,790/- would give loan of Rs. 20,00,000/- from the OD account (interest bearing funds) to the appellant without any explicit purpose without any interest without any business purpose. Thus, the genuineness of transaction has not been established. Further, in his bank account he has undertaken transactions with M/s Rajbir Enterprises which is Prop. Of Sh. Sajit Singh Randhawa. Genuineness of transa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce of Rs. 40,00,000/-) and fresh loan of Rs. 20,00,000/-. IN respect of fresh loan of Rs. 20,00,000/-, from the ledger account it is observed that the appellant has not paid any interest to Sh. Sunil Taneja on such loan. From such facts, genuineness of transaction is not established as it is beyond preponderance of probability that someone would give loan of Rs. 20,00,000/- to the appellant without any explicit purpose without any interest without any business purpose. 15. Smt. Kiran Singla Rs.50,00,000/- Bank account statement, confirmation, ledger account, affidavit and ITR Upon perusal of the documents furnished by the appellant it is observed that the said amount has been received from Smt. Kiran Singla as repayment of earlier advance given on 10.07.2017 & 01.02.2018. The amounts have been sourced out of available credit balance in the bank account of Smt. Kiran Singla. Therefore, identity, creditworthiness and genuineness has been established. 16. Smt. Urmila Kaushal Rs.1,50,00,000/- on 23.01.2018 Agreement to purchase the property The appellant entered into an agreement to purchase the property vide agreement dated 28.06.2016 with late Sh. Baldev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f registered sale deed. The Ld. AO assessed capital gains in the hands of the assessee. Further, the assessee paid earnest money during FY 2016-17 for purchase of a plot to build flat / apartment and deducted TDS against the same. Thus, the assessee was indeed having income generating apparatus in past as well as in future years and it was undertaking business activities. In fact, Ld. CIT(A) as well as ITAT during AYs 2012-13 to 2017-18, in their respective orders, have held the assessee-entity to be a genuine entity which position stood accepted by the revenue in those years. Further, this finding of Ld. CIT(A) has also not been disputed by revenue in the present appeal in its grounds of appeal. This fact is further fortified by the fact that the assessee duly furnished its books of accounts before lower authorities during the course of assessment proceedings itself. Pertinently, the assessee was subjected to search action wherein books of accounts were found at the business premises and all such data was taken in the hard disk. In the statement on oath, Shri Jagdish Rai Gupta, clearly stated that he acted as a director in the assessee-entity and this entity was established to car....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ertain the genuineness of these loans from any of the lenders. It is trite law that no addition could be made merely on the basis of presumption, assumption, conjectures or surmises. 9. It could further be seen that as against the allegation of Ld. AO, the assessee furnished detailed documents for each of the lender entity. The documents as furnished by the assessee with respect to ten lender entities which has not been accepted by Ld. CIT(A) are tabulated as under: - No. Name Amount Document furnished CIT Remarks Appellant Remarks 1. Ind. Sphinx Precision Ltd. Rs.9,00,000 Rs.9,00,000 and Rs.7,00,000 on 10.04.2017 out of this Rs.20,00,000/- repaid on 19.09.2018 and Rs. 5,00,000/- On28.09.2018. Ledger Accounts, Confirmation, Balance Sheet, ITR and Bank Statements. Upon perusal of the documents furnished by the appellant it is observed that the said amount has been received as loan from M/S Ind Sphinx Precision Ltd. From the ledger account it is observed that the appellant has not paid any interest to M/S Ind Sphinx Precision Ltd. on such loan. From such facts, genuineness of transaction is not established as it is beyond the principle of preponder....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Garg in books of Appellant company are attached vide PB pg. no. 41-47 and pg 49 respectively. The Assessment of Sh. Jatin Garg was completed simultaneously u/s 153A read with Section 143(3) for Assessment Year 2018-19 by the same Assessing Officer and all credits in his account were examined/assessed. The Assessment order and ITAT order in his case are attached at PB Page No. 50-80. Further, this amount was received as loan by the Appellant and said sum has no link to Sanjit Singh, Rajbir Enterprises, Punjab Sand Mining, Amit Bahadur, Ajit Paul Singh, Kulwinder Singh etc., and the CIT(A) has wrongly mentioned these facts to mislead the Hon'ble ITAT or Higher Courts. 3. Cash deposited Rs.1,00,000/-each on 17.04.2017 and 18.08.2017 Cash book extract and copy of account The cash deposits were explained as made on account of income generated during the year under consideration which was duly reflected in P&L account. However, no evidence/details giving the particulars of person from whom such cash was received, nature of transaction with them have been furnished. Therefore, source and nature of cash deposits of Rs.2,00,000/-remain unexplained. The Cash deposited....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ellate order of Sh. Tirloki Nath Singla is attached as per point 4 of this submission. 6. Sh. Sanbir Singh Received Rs.49,00,000/- on 10.05.2017andreturned on06.06.2017 Affidavit, Bank Statements, Ledger accounts, ITR, Assessment order, CIT order and ITAT order for the AY 18-19 Upon perusal of the documents furnished by the appellant it is observed that the said amount has been received by the appellant from Sh. Sanbir Singh on behalf of Sh. Sanjit Singh Randhava. Genuineness of transactions undertaken by Sh. Sanjit Singh Randhawa during the Punjab Sand Mining Auction in the Benami names of Sh. Amit Bahadur, Sh. Ajit Paul Singh and Sh. Kulwinder Paul Singh has not been established. Further, from the ledger account it is observed that the appellant has not paid any interest to Sh. Sanbir Singh / Sh. Sanjit Randhawa on such loan. From such facts, genuineness of transaction is not established as it is beyond preponderance of probability that someone would give loan of Rs.49,00,000/- to the appellant without any explicit purpose without any interest without any business purpose. The amount was received as unsecured loan on10.05.2017 and was repaid on 06.06.2017. Le....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ingh, is beyond preponderance of probability that a person with income of ?3,53,790/-would give loan of ?20,00,00()/- from the OD account (interest bearing funds) to the appellant without any explicit purpose without any interest without any business purpose. Thus, the genuineness of transaction has not been established. Further, in his bank account he has undertaken transactions with M/S Rajbir Enterprises which is prop, of Sh. Sanjit Singh Randhawa Genuineness of transactions undertaken by Sh. Sanjit Singh Randhawa during the Punjab Sand Mining Auction in the Benami names of Sh. Amit Bahadur, Sh. Ajit Paul Singh and Sh. Kulwinder Paul Singh has not been established. The amount was received as unsecured loan on 16.05.2017 and was repaid on 06.06.2017. Ledger Account of Sh. Gurvarinder Singh in the books of Appellant Company are attached vide PB pg. no.238. Further the Bank Statement of Sh. Gurvarinder Singh highlighting all the transactions are attached vide PB pg. no. 234-235. The Assessment of Sh. Gurvarinder Singh was completed u/s 147 read with Section 144b for Assessment Year 2018-19 and all credits in his bank accounts was accepted as genuine. Copy of Assessment Order ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dger account it is observed that the appellant has not paid any interest to Sh. Sunil Taneja on such loan. From such facts, genuineness of transaction is not established as it is beyond preponderance of probability that someone would give loan of Rs.20,00,000/- to the appellant without any explicit purpose without any interest without any business purpose. An amount of Rs.40,00,000/- was given on 30.03.2016 to Sh. Sunil Taneja, which was received back on 06.07.2017. Later on Rs.20,00,000/- was received from him on 16.10.2017, which was repaid to him on 31.03.2019. Ledger Accounts of Sh. Sunil Taneja and Raunak Taneja in the books of Appellant Company are attached vide PB pg. no.358-360. Further the Bank Statement of Sh. Sunil Taneja highlighting all the transactions are attached vide PB pg. no.356-357. As per return of Sh. Sunil Taneja (PB. Pg. No. 361), he has declared taxable income of Rs. 55,05,867/-. Further, Sh. Sunil Taneja was given Rs. 40,00,000/during earlier years and said loan of Rs. 40,00,000/-wasp received backed during the year through banking transactions at PB pg. No. 356-357. From the above tabulation it could be seen that the loan of M/s Ind. Sphinx Precisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0 Lacs as received from Shri Sanbir Singh on 11-05-2017. Therefore, the ingredients of Sec.68 stood satisfied for this lender. The Ld. CIT(A) has not accepted the same merely on the ground that this amount has been received by the assessee on behalf of Shri Sanjit Singh Randhawa for whom genuineness of transactions have been doubted. The same is irrelevant consideration for the purpose of Sec.68. The ingredients of Sec.68 have duly been satisfied for this lender entity. The loan of Shri Guravinder Singh is evidenced by affidavit, bank statement, ledger extracts, copy of ITR and assessment & appellate orders wherein all credit ultimately stood accepted for this person. The Ld. CIT(A) has not accepted the same on the ground that the lender has undertaken transactions with Shri Sanjit Singh Randhawa for whom genuineness of transactions have been doubted. The same is irrelevant consideration for the purpose of Sec.68. The ingredients of Sec.68 have duly been satisfied for this lender entity. The credit of Rs. 110 Lacs by Shri Sanjit Singh Randhawa represent amount earlier transferred by the assessee to Shri T.N. Singla which was then transferred to this entity. The funds have sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and creditworthiness has also been established from the ITR details (income of Rs. 1,04,53,880/-) PB. Page No. 761-766 3. State Geologist Department Rs. 53,08,092/received back on cancellation of Tender Bank account statement of the appellant This amount has been received back from State Geologist department. Earlier the appellant has paid the said amount to the State Govt from its bank account on 12.04.2017. Once the AO has added all the credits in the bank account in the case of the appellant as unexplained, further addition in the hands of the appellant on account of payments received back from the State Govt from the payments made from the same bank account amounts to the double addition of the same transaction 4. M/s Evershine Resorts Received Rs. 12,00,000/- on 23.06.2017 Rs. 22,00,000/- on 19.01.2018 and Rs. 57,00,0000/-on 23.02.2018 Bank account statement, ledger, confirmation, ITR and Balance Sheet The credits in the bank account of M/s Evershine Resorts were independently examined by the AO and made additions on account of unexplained credits in the order passed u/s 143(3) of the Act for AY. 2018-19. The am....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... uncontroverted before us. Therefore, we see no reason to interfere in the findings of Ld. CIT(A) to that extent. 11. We find that as per the provisions of Section 68 of the Income Tax Act, 1961, where any sum is found credited in the assessee's books and assessee offers no explanation about the nature and source thereof or the explanation furnished is found to be unsatisfactory, the sum so credited may be charged to Income-Tax as the income of the assessee of that previous year. A proviso has been inserted to the said section by Finance Act, 2012 w.e.f. 01-04-2013 to provide that where the assessee is a company and the sum so credited consists of share application money, share capital, share premium etc., the explanation furnished by the assessee shall be deemed to be not satisfactory unless the person in whose name such credit is recorded also offers an explanation about nature and source of sum so credited and such explanation is found to be satisfactory. However, this proviso is not applicable to the facts of the present case since the we are dealing with case of unsecured loans and advances. Such additional onus / requirement for unsecured loans / advances has been intr....