TaxTMI 
TaxTMI 
2026 (5) TMI 1004
X X X X Extracts X X X X
X X X X Extracts X X X X
....eturn of income was e-filed on 30.10.2017 which was revised on 04.12.2017, declaring NIL income. The case of the assessee was selected for scrutiny under CASS and notice u/s 143(2) were issued on 19.09.2018 and duly served upon the assessee. Thereafter, the statutory notices u/s 142(1) alongwith questionnaire were issued from time to time. The assessee is a registered society u/s 12A/12AA r.w.s. 80G of the Act. The AO society is enjoying the benefit of sections 11 & 12 of the Act however, it is observed that there were unsecured loans outstanding at the end of the year of INR 3,62,71,337/- as on 31.03.2016 which were increased to INR 7,97,33,115/- as on 31.03.2017 i.e. previous year relevant to year under appeal. Accordingly, the AO examined the increase of unsecured loans to the extent of INR 4,36,61,778/-. The assessee filed details with respect to loan creditors however, AO has not satisfied with the details filed by the assessee and made the addition of the closing balance of unsecured loans appearing in the Balance Sheet as at 31.03.2017 of INR 7,97,33,115/- as unexplained credits u/s 68 r.w.s. 115BBE of the Act. 4. Aggrieved by the said order, assessee preferred appeal bef....
X X X X Extracts X X X X
X X X X Extracts X X X X
....33(6) of the Act and in arbitrary manner has made the addition of entire outstanding amount of loans. 9. Ld. CIT(A) confronted these evidences filed by the assessee to the AO obtained Remand Report from the AO and copy of the Remand Report dated 02.09.2025 received from the AO is reproduced at pages 66 to 70 of the appellate order wherein the AO has discussed the provisions of Rule 46A and requested not to accept the additional evidences. In the said report in para 6.1, AO though admitted that the assessee has filed ITR and bank statements of the lenders however, he observed that merely filing their ITRs and bank statements etc. does not prove the genuineness of the transaction. The AO further observed that source of funds in the hands of the creditors remained unverified. Accordingly, the AO prayed not to admit the additional evidences filed by the assessee. The said report was supplied to the assessee for comments and the assessee's in re-joinder as reproduced in para 6.1 at page 70 to 77 of the appellate order, reiterated the same facts which were submitted in the submissions filed alongwith the additional evidences and further submits that Ld. CIT(A) has co-terminus power u/....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (i) Shri Pankaj Nakra INR 10 lakhs (ii) Smt. Pravina Gupta INR 11 Lakhs (iii) M/s. Jyoti Installment Pvt. Ltd. INR 30 Lakhs (iv) M/s Venus India Asset Finance Pvt. Ltd. INR 5.00 crores 13. Ld. CIT(A) had deleted the addition towards the loan taken from M/s Venus India Asset Finance Pvt. Ltd. however, sustained the balance loans of INR 51 Lakhs taken from remaining 03 parties. 14. With respect to the deletion of the opening balances as per section 68, since no fresh funds were received during the year, no addition could be made for INR 3.62 crores which in fact is the opening balance of unsecured loans and this fact was appreciated by Ld. CIT(A) while deleting the addition. Before us, revenue has failed to give any justification as to why the opening balance of unsecured loans could be added as unexplained credit of the year under appeal u/s 68 of the Act, therefore, we find no error in the order of Ld. CIT(A) in deleting the addition to the extent of opening balances of unsecured loans brought forwards from the preceding year and included in closing balance of INR 7.97 crores of which addition was made by the Ao u/s 68 of the Act. Therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... further filed the copy of bank account and confirmed copy of ledger account therefore, prayed for the confirmation of order of Ld. CIT(A) deleting the addition of loan received from it. 16. With respect to other 03 loans creditors, Ld.AR submits that assessee has filed the copy of ITRs wherein they have shown sufficient income and further filed the confirmed copy of account and copy of their bank statements wherein all the lenders have sufficient funds prior to transfer of funds to the assessee. Ld.AR further submits that in case of Shri Pankaj Nakra, Smt. Pravina Gupta and M/s. Jyoti Installment Pvt. Ltd, the assessee has taken further loans in subsequent AYs where the same have been accepted even in the proceedings u/s 143(3)/147 of the Act. He further submits that these loans were repaid in subsequent AYs where no doubts were raised at the time of repayment. Ld.AR submits that assessee has established the identity and creditworthiness by filing their ITRs and PAN. Further their bank statement was filed to prove the creditworthiness and genuineness of the transaction. Ld.AR thus, submits that the addition made by AO be deleted. He placed reliance on the various judicial prono....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ear as genuine transaction. It is further observed that during the course of assessment proceedings, assessee had not furnished details to establish the genuineness and creditworthiness of lender however, before Ld. CIT(A), assessee has been able to demonstrate that the loan taken from M/s Venus India Asset Finance Pvt. Ltd. is genuine transaction and further established the creditworthiness of the lender company by filing copy of its ITR wherein total income of INR 21,58,25,297/- was declared by the lender company as against which loan of INR 5.00 crores were given to the assessee. Further copy of bank statement of the lender and confirmed copy of account are also filed. All these documents are placed at pages 673 to 680 of the Paper Book. Besides this, loan agreement was also filed. 20. All these documents established that the company is having sufficient creditworthiness to advance the loan to the assessee and once the ITR filed, its identity is established and since the transactions is caried out through banking channel and necessary copy of the bank account of the lender is submitted, the creditworthiness has also been established. Ld. CIT(A) considered these facts and in p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nkaj Nakra of INR 10.00 Lakhs; Smt. Pravina Gupta of INR 11.00 Lakhs and M/s. Jyoti Installment Pvt. Ltd. of INR 30.00 Lakhs. It is observed that during before Ld. CIT(A), assessee has filed additional evidences comprising of copy of ITR, bank statements and confirmations. These documents are placed at pages 597 to 672 of the Paper Book. It is further observed that assessee has taken loans from these entities in subsequent AYs where they have been accepted without raising any doubts. By filing these documents, identity of the lenders has been established. Further, genuineness of the transaction cannot be doubted as all the loans were taken through banking channel and copy of their bank statements were filed where at the time of making advances to the assessee, sufficient balances were available and this fact has been verified by us. Once the creditor has sufficient credit balance in the bank account, their creditworthiness cannot be doubted. 24. Once the loans taken in subsequent assessment years have been accepted wherein assessments were completed u/s 143(3) of the Act, the same should not be doubted in the year also, more particularly, when the assessee has discharged the bur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct, 2022 wherein second proviso to section 68 is added, so as to provide that the nature and source of any sum, whether in the form of loan or borrowing, or any other liability credited in the books of an assessee shall be treated as explained only if the source of funds is also explained in the hands of the creditor or entry provider. However, this additional onus of proof of satisfactorily explaining the source in the hands of the creditor, would not apply if the creditor is a well-regulated entity, i.e., it is a Venture Capital Fund, Venture Capital Company registered with SEBI. This amendment has taken effect from 1st April, 2023 and accordingly applies in relation to the assessment year 2023-24 and subsequent assessment years. The year before us is AY 2021-22 thus this amendment is not applicable and as has been held by the hon'ble Delhi High court in the case of Vrindavan farms (supra), when the assessee had filed all the details, the burden of proving the genuineness and creditworthiness of the creditor stood discharged by the assessee. 29. As observed above, the requirement of explaining 'Source' of 'Source' in respect of loans is applicable from A.Y. 2023-24 and subsequ....