TaxTMI 
TaxTMI 
2026 (7) TMI 1717
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....ned outstanding at the end of the year and assessee had failed to establish their creditworthiness and genuineness of the transactions. Accordingly, the AO made the addition of the same u/s 68 of the Act and charged special rate of tax u/s 115BBE of the Act. Besides this, expenditure of INR 1,96,800/- claimed towards ROC fee for increase in authorized capital was held as capital in nature and disallowance was made. Likewise, donation of INR 1,10,000/- was paid which was added as it is not pertained to the business activity. Moreover, interest of income tax of INR 65824/- claimed as expenditure was also disallowed. Accordingly, total income was assessed at INR 2,45,30,230/-. 3. Aggrieved by the order of AO, the assessee is in appeal before the ld. CIT(A) wherein the assessee has filed all the evidences to establish the genuineness of transactions and creditworthiness of the lenders as additional evidences under Rule 46A of Income Tax Rules, 1962 ("the Rules"). After obtaining Remand Report from the AO, the ld. CIT(A) confirmed the additions made by the AO and dismissed the appeal of the assessee on other issues as well. 4. Aggrieved by the order of ld. CIT(A), assessee is in a....
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....e made in the hands of the assessee company. Ld.AR further submits that vide Finance Act, 2022, a duty was casted upon the assessee to prove the source of source of the funds received however, the year under appeal is Assessment Year 2017-18 thus such amendment is not applicable. Ld.AR further drew our attention to the facts that out of the total addition made of INR 2,13,29,429/-, a sum of INR 16,09,463/- was on account of interest paid/credited during the year to the accounts of the respective lenders. He further stated that in the case of ST construction P. Ltd., a sum of INR 1.67 crores was received during the year under appeal, out of which a sum of INR 1,34,55,034/- were repaid and closing balance alongwith interest was of INR 43,54,966/- which was added u/s 68 as unexplained credit. Ld.AR stated that the AO has not doubted the total credits of INR 1.67 crores nor has doubted the repayments made and had made the addition for the closing balance only. He further submits that in case of some of the parties, loans were repaid in subsequent years for which necessary confirmations alongwith bank statements were filed. Therefore, no addition is required to be made for the loans tak....
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....iness of the lenders and further submits details with respect to the transactions being carried out through banking channel so as to establish the genuineness of the transactions. It is further observed that all such documents were sent to the AO for Remand Report who had submitted the Remand Report on 01.09.2025 wherein primarily AO was of the view that once the assessee was provided sufficient opportunity and no case was made out to admit such details under Rule 46A of the Rules to hold that the assessee was prevented with sufficient reasons for not filing these details before the AO. It is further observed that in the Remand Report, AO has not stated whether any inquiries were carried out from the lenders in order to examine their creditworthiness to advance the loans to the assessee. It is further observed that AO has alleged that assessee has failed to file loan agreements and ITRs of the lenders however, he has not commented upon the documents filed such as financial statements, bank statements, confirmations and GST Returns, ROC certificates filed by the assessee to establish the identity as well as creditworthiness of the lenders. It is also a matter of fact that out of loa....
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....arty to hold what is the apparent is not real who alleges so. In the instant case, as observed above, the assessee has discharged the burden casted upon it to prove all the three ingredients of section 68 of the Act such as identity of lender, genuineness of the transaction and creditworthiness of the lenders. Once the assessee has discharged the burden casted upon it, the AO should have made independent inquiries to hold that the details filed by the assessee are not acceptable by placing on record any contrary material which has not been done in the instant case. 13. The Hon'ble Jurisdictional High Court in the case of PCIT vs KRBL Infrastructure Ltd. reported in [2025] 180 taxmann.com 506 (Del.) has held that "once the assessee has discharged the burden of proving the genuineness of the transaction and creditworthiness of the lenders, the assessee could not be burdened with the requirement of expenditure as source of source. The assessee has filed the financial statement according to which all the loans creditors have sufficient net worth to give the loans to the assessee and it is a matter of fact that the loans were repaid in subsequent years. Once the assessee has establis....