TaxTMI 
TaxTMI 
2026 (5) TMI 543
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....s mutandis to the other appeal filed by the assessee before us. 3. In its appeal for the assessment year 2013-14, the assessee has raised the following grounds: - "1. THE ORDER IS BAD IN LAW, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the appellate order u/s. 250 of the Income tax Act, 1961 ['the Act'] framed and passed on 12.06.2025 by the Commissioner of Income tax (Appeals), National Faceless Appeal Centre ['Ld. CIT(A)'] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions of the Act and the scheme and as otherwise also is not in accordance with the law. 1.2 Without prejudice to the generality of the above, the appellate order so passed is bad in law, illegal and void as the same is arbitrary and perverse. 2. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 2.1 In the facts and the circumstances of the case, and in law, the appellate order so framed in bad in law and illegal, as the same is framed in breach of the principles of Natural Justice. 2.2 Without prejudice to the generality of the above ground, ....
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.... Total 4,51,45,000/- 5. Accordingly, the assessee was asked to submit the loan confirmation and was also required to prove the identity and creditworthiness of the loan lenders and the genuineness of the transaction. In order to verify the identity and creditworthiness of the loan lenders and the genuineness of the transaction, notice under section 133(6) of the Act was issued to the aforementioned parties. Upon perusal of the reply, inter alia, filed by M/s Raj Associates in response to notice issued under section 133(6) of the Act, it was observed that the assessee received unsecured loans to the tune of INR 1,55,45,000 during the year from M/s Raj Associates. On verification of the bank statement of M/s Raj Associates, it was noticed that cash was deposited to the tune of INR 90,50,000 during the year. From the financial statement of M/s Raj Associates, it was also noticed that M/s Raj Associates is engaged in the business of builders and developers. However, during the year under consideration, it has not received any advances towards flat booking from the customers. It was also noticed that the closing WIP as per the profit and loss account was shown at INR 72,44,947, ....
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....n this issue and upheld the addition made under section 68 of the Act, by observing as follows: - "5.1 The AO made the addition u/s. 68 of the Act by observing that the assessee could not establish the creditworthiness of creditor and genuineness of transaction as there was huge cash deposit to the bank account of creditor Raj associates before transmission of amount / issuance of cheque in favor of the appellant., therefore, the source of unsecured loan was cash deposit to the bank account of the loan creditor and the AO came to a conclusion as a final finding that the unsecured loan of Rs. 1,55,45,000/- was nothing but unaccounted cash of the assessee which was routed through banking account for camouflaging the funds as unsecured loan and ultimately accounted the same in the bank account. 5.2 These glaring facts had cumulatively established that the transaction of unsecured loan was bogus and the assessee failed to explain the source of such unsecured loan by way of establishing capacity & creditworthiness of creditor and genuineness of transaction. In view of foregoing discussions, this office had reached a logical conclusion it is a settled principle of tax j....
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....ame does not make any sense. The facts of the appellant case squarely fit in the above decision. In view of the above, the addition made u/s 68 by the AO to the tune of Rs 1,55,45,000/- is hereby upheld." Being aggrieved, the assessee is in appeal before us. 8. During the hearing, the learned Authorised Representative ("learned AR") submitted that the assessee filed copies of bank statements of the creditor, income Tax return and confirmation issued by M/s Raj Associates along with the assessee's bank account in which unsecured loan was received. The learned AR submitted that these facts have been duly recorded by the lower authorities. It was further submitted that the assessee is not required to prove the source of source, and the amendment in the provisions of section 68 of the Act, requiring the assessee to prove the source of source in respect of loans or borrowings, was brought into the statute with effect from 01/04/2023, and thus is not applicable to the year under consideration. The learned AR further submitted that the loan received by the assessee was utilised for the purpose of its business. 9. On the other hand, the learned Departmental Representative....
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....f M/s Raj Associates, and the onus has not been duly discharged by the assessee. Therefore, we are of the considered view that the aforesaid facts also raise questions on the genuineness of the assessee's transaction with M/s Raj Associates. The mere fact that the requirement of proving the source of source being brought into the statute from 01/04/2023, does not absolve the assessee from proving the creditworthiness of the loan lender, which is one of the primary requirements under section 68 of the Act, when cash was found deposited in the bank account of M/s Raj Associates, from which cheques were issued to the assessee as a loan. 12. During the hearing, the learned AR placed reliance upon various decisions. However, on perusal of these decisions, we find that they have been rendered on their own facts, in which the taxpayer could prove the source of the funds transferred by the loan lender. Therefore, we are of the considered view that these decisions have been rendered in a different factual matrix and are thus not applicable to the present case. 13. Accordingly, as the assessee failed to discharge the onus cast on it under section 68 of the Act in respect of the loan re....