AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 1491
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceedings the Assessing Officer observed that assessee has received unsecured loans from the following parties: - Sr. No Name of the lenders Amount of loan taken during the year 1 Gangour Infrabuild P Ltd Rs. 50,00,000 2. Proficient Merchandise P Ltd Rs. 20,00,000 3. Siddh Steel Rs. 25,00,000 4. Sepctrum Pop Corn P Ledger account Rs. 20,00,000 5. Uno Infratech P Ltd Rs. 30,00,000 6. Rajneesh H Bansal Rs. 27,79,547 4. In order to verify the genuineness of the transactions, Assessing Officer issued notices u/s. 133(6) of the Act dated 25.08.2016 to all the parties to confirm the loan transaction and also requested to furnish the requisite details viz., nature of transaction along with the confirmation, copy of return of income, copy of profit and loss account, balance sheet and bank statement from 01.04.2013 to 31.03.2014. In response four parties viz., M/s. Sidh Steel, M/s. Spectrum Pop Corn P. Ltd., M/s. Uno Infratech Pvt. Ltd., and Rajneesh H Bansal have responded to the notices issued by the Assessing Officer and submitted relevant information as called for. Rajneesh H Bansal has only forwarded the confirmation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otices u/s 133(6) to all the lenders to confirm the loan transactions and also requesting to furnish the requisite details viz. nature of transaction with the assessee along with confirmation, copy of return of income, copy of profit & loss account & balance sheet, copy of bank statement highlighting the transactions. Notice sent to Gangour Infrabuild P Ltd & Sepctrum Pop Corn P Ltd was returned back unserved with the remark 'no such company in the address' & 'not known. Notice to remaining parties Le. Proficient Merchandise P Ltd, Siddhi Steel, Uno Infratech P Ltd & Rajneesh Bansal was served, however no reply was filed. On receipt of show cause notice, appellant company has requested above parties to comply the notices. Assessing Officer in his order has mentioned the following details: Assessee had provided name, address, PAN Number, details of loan transaction, copy of ledger account along with assessee's own bank statement. Notice unserved was not upon the assessee. Assessee has discharged its onus by providing all details. Assessee has requested the party personally to send the confirmation account along with bank statement and retur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be addition in the hands of the assessee, because the assessee has satisfactorily explained the source of credit shown in his books as also the identity of the creditor has also been established (103 ITR 344 (Pat) and 49 ITR 723 (Bom). According to Section 68 of the IT Act, 1961, where any sum is found to be credited in the books of an assessee maintained for any previous year and the assessee offers no explanation about the nature & source of the same or the explanation offered by him is not satisfactory in the opinion of AO, the sum so credited may be charged to income tax as the income of the assessee of that previous year. The basic precondition for Section 68 is that the assessee should file a valid confirmation. In this case, assessee company has filed a valid confirmation of account duly signed by both parties which includes name, address, pan, signature and transactions. As far as the creditworthiness or financial strength of the lender is concerned, the same is proved by producing bank statement of the lenders showing it has sufficient balance in its accounts to lend loans. Once the document was submitted, the onus was casted upon the Ld. AO However, to d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ained. In the circumstances, the AO proceeded to hold that the said unsecured loan could not be treated as genuine borrowing of the assessee as the three essential ingredients, such as, identity, creditworthiness, genuineness of the loan lender is not proved. 6.1 The Appellant has stated that the loans have been received through banking channels. It was further stated that all the detail like account confirmation by parties, copy of ITR, bank statements of parties showing receipt and payment respectively. confirmation of receipt of repayment have been furnished. Hence the assessee has proved the identity of the lender, genuineness of the transaction and the capacity of the party who gave the loan amount. It is submitted that general and vague statement made by a third party cannot provide reason to believe that chargeable income has escaped assessment in the hand of the assessee. Appellant requested to withdraw addition on account of non-genuine unsecured loan in view of various judicial judgments/pronouncements in the same matter. 6.2 The AO has not referred to any adverse material in the case of loan creditor. Hence, it is to be inferred that the quality of evid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the transaction. 6.5 Hence, it is to be inferred that in a case where the assessee has supplied all possible information to the AO to explain the credit transaction, he has satisfactorily discharged the burden cast on him and it would be for the revenue to prove that the transaction is not satisfactorily explained and provisions of section 68 of the Act are applicable. 6.6 In the case before me, the record shows that to prove the genuineness of the impugned loan entries the appellant has furnished :- "Loan confirmation, copy of the Return of Income, copy of bank statement of the parties and confirmation of receipt of repayment, during the assessment proceedings as well during appellate proceedings." 6.7 As such, in so far as the appellant is concerned, it has provided all possible documentary evidence to prove identity of the creditors from whom the impugned loans were obtained. Thus, it has to be said that the appellant had done everything in its power to prove the three ingredients required to prove the satisfactory nature of the loan transactions. In these circumstances, the onus had shifted to the AO. If the AO was still not satisfied, he h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vide identity, creditworthiness and genuineness of the parties from whom he had received the said loans. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of Rs. 18,63,007/- on account of interest paid on bogus loans/ unexplained cash credit u/s.68 of the I.T. Act, without appreciating the fact that assessee had failed to establish the genuineness of unsecured loan transaction with corroborative evidences. 3. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 4. The appellant craves leave to amend, or alter any grounds or add a new ground, which may be necessary." 8. At the time of hearing, Ld. DR submitted that the issue involved in this appeal is Assessing Officer has disallowed the unsecured loans and the relevant interest thereon, after proper verification by issue of notices u/s. 133(6) of the Act that these unsecured loans are unexplained cash credits u/s. 68 of the Act wherein the assessee has not proved the identity, creditworthiness and genuineness of the parties from whom it had received the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) being the Higher Authority to conclude the assessment proceedings having coterminous power has considered the relevant information as submitted before him. It is also fact on record that all the above said parties have confirmed the payments of unsecured loans to the assessee and all these transactions were routed through proper banking channels. We also observe that Ld. CIT(A) has acknowledged that assessee has submitted following documents to prove the genuineness of the transactions. "8.6 .... "Loan confirmation, copy of the Return of Income, copy of bank statement of the parties and confirmation of receipt of repayment, during the assessment proceedings as well during appellate proceedings." 11. However, Ld. CIT(A) allowed the appeal of the assessee with the observation that assessee has proved the three ingredients engraved in section 68 of the Act and proved the satisfactory nature of the loan transactions and the onus of proving shifted to the Assessing Officer. Since Assessing Officer has not given opportunity to the assessee and also not brought on record any material to prove the nature of transactions other than unsecured loans. Further, he stated ....