TaxTMI 
TaxTMI 
2026 (5) TMI 1710
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....l to the assessment proceedings." 2. "On the facts and in the circumstances of the case) the Ld. CIT(A) erred in deleting the addition of Rs. 3,00,00,000/- without appreciating the fact that the said sum was advanced to M/s. Hema Trading Company Ltd., (now known as M/s. Nakshtra Business Pvt. Ltd.) which is a bogus concern indulging in providing accommodation entries and even the source of such sums advanced are unexplained and therefore the money so advanced ought to be brought to tax as unexplained income of the assessee." The appellant craves to leave, to add, to amend and / or to alter any of the grounds of appeal, if need be. The assessee has raised the following grounds of appeal: 1 On the facts and in circumstances of the case and in law the reassessment proceedings in relation to the impugned assessment year shall stand abated consequent to the search & seizure proceedings initiated u/s 132 of the IT Act, 1961. 2 On the facts and in the circumstances of the case and in law the Hon'ble CIT(A) erred in upholding the addition made by the Ld AO of Rs. 40,00,000/- to the returned income u/s 68 of the IT Act 1961 as unexplained cash cred....
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....ai, wherein it was found that the assessee had advanced a loan to M/s Nakshatra Private Limited, and the said transaction was not genuine. The Ld. DR further submitted that the Ld. CIT(A) erred in deleting the addition of Rs. 3 crores made by the AO under Section 68 of the Act on the ground that the advance could not be taxed under Section 68 of the Act, without appreciating that mere mention of an incorrect provision would not invalidate the assessment proceedings. 7. It was further contended that the assessee had advanced a loan to M/s Hema Trading Pvt. Ltd. (now known as M/s Nakshatra Business Pvt. Ltd.), which is allegedly a bogus concern engaged in providing accommodation entries, and the source of such funds remained unexplained. Therefore, the amount advanced was rightly treated as unexplained income of the assessee. 8. On the contrary, the Ld. AR relied upon the order of the Ld. CIT(A) deleting the addition of Rs. 3 crores and also relied on the written submissions filed before us. 9. After meticulously examining the facts of the case and the documents placed on record, we find that it is an undisputed fact that the assessee advanced a loan of Rs. 3 crores to M/s N....
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....e public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section 10." 11. From a perusal of Section 68 of the Act, it is evident that the basic requirement for invoking this provision is that there must be a sum credited in the books of the assessee during the previous year. However, in the present case, the assessee had advanced a loan of Rs. 3 crores, i.e., the amount was debited in the assessee's books and not credited. Thus, ....
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....ereby explaining the delay. 16.1 On the other hand, ld. DR submitted that there is no sufficient cause for condoning the delay therefore the appeal be dismissed. 17. We have heard counsel for both the parties and perused the material placed on record and also the affidavit filed by the assessee explaining delay. Considering the entire factual position as explained before us and also keeping in view the principles laid down by Hon'ble Supreme Court in the case of Collector Land Acquisition, Anantnag & Anr. vs Mst. Katiji & Ors. 1987 AIR 1353 (SC) wherein it has been held that where substantial justice is pitted against the technicalities of non-deliberate delay then in that eventuality substantial justice is to be preferred. In our view, the principle of advancing substantial justice is of prime importance, hence, considering the explanation put forth by the assessee by justifiably and properly explaining the delay which occurred in filing the appeal and considering the expression "sufficient cause" liberally we are inclined to condone the delay in filing the appeal before us. Consequently, the delay is condoned and the appeal is admitted to be heard on ground of merits. 18....
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....1 CTR 241 (SC). The said legal position has also been reiterated in CIT vs. F.E. Patanwala Pvt. Ltd. (Bombay High Court) and Vinod Solanki vs. Union of India (SC). 22. Thus, reliance on a third-party statement without affording an opportunity for cross-examination renders the addition unsustainable. Moreover, the AO has not brought any material on record to establish that the assessee received any cash or that the funds had flown back to the assessee. 23. The addition in the present case appears to have been made merely on the basis of suspicion. It is pertinent to note that the transaction in question was duly disclosed by the assessee in its books of account and return of income, including the computation of capital loss. Therefore, the AO was fully aware of the transaction. Despite this, the addition has been made without any cogent evidence. In this regard, reliance is placed on the decision of the Hon'ble Supreme Court in Omar Salay Mohamed Sait vs. CIT (37 ITR 151), wherein it was held that suspicion, however strong, cannot take the place of evidence. 24. Further, various High Courts have consistently held that where transactions are carried out through banking chann....