TaxTMI 
TaxTMI 
2026 (6) TMI 859
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....the Income Tax Act, 1961 (in short "the Act") pertaining to A.Y. 2015-16. 2. The grounds raised in Revenue's appeal read as under:- 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 14,20,00,000/- on account of unexplained credits u/s. 68 of the Act? 2. Whether on the facts and circumstances of the case, the Ld.CIT(A) erred in deleting the addition of Rs. 14,20,00,000/- ignoring the fact that unsecured loans were received from companies in which the directors are accommodation entry providers Sh. Surender Jain and Sh. Virender Jain? 3. The brief facts of the case are that assessee filed return of income declaring loss of Rs. 1,57,97,650/- on 26.10.2....
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....uring the year amounting to Rs. 3,20,00,000/-. With respect to this transaction, the assessee stated that it has entered a purely genuine transactions and have duly paid the interest on the amount, have made the deduction of tax at source. The assessee stated that both these companies are NBFC and are therefore governed by the provisions of the RBI. During the course of assessment proceedings, the assessee company furnished confirmations, income tax particulars as well as bank statements of both the parties, copy of the audited financials and also explained that loans stood repaid during the instant year itself by account payee chequye which were also verifiable from the bank statements as well as confirmations. But the AO held that the amo....
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....he I.T. Act and therefore all are adjudicated together as under. In these grounds of appeal the appellant has contested against the addition made by the AO. The appellant claimed that the details regarding the source, identity, creditworthiness and genuineness of the transactions of having received loans were submitted before the AO alongwith the proof of repayment of the same. The appellant has also contested that the AO has failed to discharge its onus by not verifying the details submitted and arbitrarily rejecting all the documentary evidences only on the basis of suspicion, surmises and conjectures. Relevant portion of the appellant's submission in this regard is reproduced as under:- "...... 1. It is evident from the....
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.... possess a PAN or ITR is not sufficient to establish that the transactions was genuine. The contention that the net worth of both these companies is high which establishes the creditworthiness of these companies is not a valid contention. The whole modus operandi is to increase the surplus and reserves of these bogus companies by channeling unexplained cash credits through various layers of bogus companies. The mere fact that there is high surplus in these companies does not substantiate that the net worth of the companies is high. Most of the assets of these companies can be attributed to the loans and advances given out by these companies. However, it is precisely these loans and advances which have been routed to several benefic....
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....es must be given weightage and not merely selective circumstances. Therefore, in the context of the present case, the observation of the AO that section 68 talks only about unexplained credits and the subsequent fate of the credit received is inconsequential for invoking section 68, is not correct. In the context of the present case, the fact that the appellant has returned the loan assumes importance and ought to be taken into consideration. 7.5 The AO has expressed disbelief about the source of the repayment of the loan by observing that the source out of which the loans have been squared off appear to be mere book entries as the sale of land (from which money was sourced by the appellant to repay the loans) has been done by the ....
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....nstitution is to accept deposits on interest and use the deposits as a source to give loans to others at a higher rate of interest. The net income majorly arises from the differential in interest paid on deposits vis-à-vis interest received on loans given. Such income is minuscule compared to the principal amounts which are taken as deposits and given as loans. Therefore, the observation of the AO that "Most of the assets of these companies can be attributed to the loans and advances given out by these companies does contain anything adverse to the appellant, it is true for any NBFC. 7.8 The next issue is the source of the appellant's lenders. In the present context, considering that the AO has not brought forth any dire....