TaxTMI 
TaxTMI 
2026 (9) TMI 369
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....9,050/-. The case was selected for complete scrutiny under CASS for examination of High liabilities as compared to low income/receipts and large increase in unsecured loans during the year. Accordingly, the notice u/s 143(2) and 142(1) of the Act along with questionnaire were issued, which were complied with by assessee by filing evidences and details as called for. During the assessment proceedings, the AO noted that assessee has taken unsecured loans of Rs. 65,13,55,947/- from various parties during the year. Accordingly, the assessee was issued notice u/s 142(1) of the Act calling for the various details qua the loan creditors to prove their identity, creditworthiness and genuineness of the transactions, which was replied by assessee. The AO noted that the assessee has not furnished the information, which is called for and, again issued a show cause notice on 11.03.2024, asking as to why the said loan creditors should not be treated as unexplained cash credits u/s 68 of the Act. The assessee replied show cause by submitting the complete details of the loan creditors taken by the assessee with the respective PANs of the parties and confirmations certificates etc. It was also subm....
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....and owners and the financial transactions were made within the relationship only. We also note that in the some cases during the year, assessee has taken unsecured loans have turned into advances by assessee in the subsequent years when repaid more amount in order to render financial assistance as these all were related parties. The documents filed by the assessee before the ld. CIT(A) and AO are available from page nos.3 to 24 of the paper books, which include the loan confirmations, names, addresses, PANs, bank statements etc. We are inclined to discuss the cases on sample basis in the case of Deb Kumar Saha and Susanta Kumar Saha, who were the assessee's father and uncle. The closing balances of loans as turned into advances in the subsequent year. Similarly, in the case of S.A. Polybag, a sister concern of the assessee, closing balance of loan was of Rs. 5,05,26,770/- as on 31.03.2022 with total debits entries of Rs. 22.99 crores and credits entries of Rs. 28.04 crores, reflecting the running current account and movement of funds into the family members. The evidences qua these loan creditors are available at pages 69 to 73 of the paper book. Similarly, in case of Greasco, a co....
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....ficer of the assessee is bound to accept the same asgenuine when the identity of the creditor and the genuineness of transaction through account payee cheque has been established. We find that both the Commissioner of Income Tax (Appeal) and the Tribunal below followed the well-accepted principle which are required to be followed in considering the effect of Section 68 of the Act and we thus find no reason to interfere with the concurrent findings of fact recorded by both the authorities. The appeal is thus devoid of any substance and is summarily dismissed. In view of dismissal of the appeal, the connected application has become infructuous and the same is disposed of accordingly. Urgent photostat certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities." 6. So far as the re-payment of the loans are concerned, we also note that a substantial part of the loans were discharged during the year itself as amounting to Rs. 50,75,03,090/-. It is a settled position that where the assessee furnished all the evidences qua the loan creditors and the loans were repaid either in current ....
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....e duly recognized and shown in balance sheet and its books of account as payable to both the parties under the head of sundry creditors. Therefore, these liabilities remained live, subsisting and payable by the assessee The provisions of section 41(1) apply where a deduction or allowance has been in the earlier year in respect of trading liability and subsequently the assessee obtains some benefit in respect of that liability way of remission or cessation, the value of such benefit is to be taxed as deemed income of the relevant previous year. In our opinion there is no such remission or cessation of liability during the year and the assessee has also not got any benefit, therefore the provisions of section 41(1) were wrongly invoked by the AO and thereafter confirmed by ld. CIT(A). Hence the order passed by the ld. CIT(A) is unsustainable under the Act. The assessee's case is squarely covered by the decision of Hon'ble Supreme Court in case of CIT vs. Sugauli Sugar Works (P.) Ltd. (199) 236 ITR 518 (SC) wherein it has held that the obtaining by the assessee of a benefit by virtue of remission or cessation is sine qua non for the application of this section. The ratio laid down....