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2017 (4) TMI 1525 - AT - Income TaxAddition u/s.68 on account of loan availed - HELD THAT - The burden cast on assessee would shift to assessee only when assessee proved the identity of the creditors. Then only the AO could probe the matter further and investigate the material available before him to come to an independent conclusion before rejecting the explanation offered by the assessee. In the present case, the assessee has not proved all the above ingredients stated above and the assessee being failed to discharge primarily burden cast upon it, the assessee cannot say catch me if you can . The only contention of the assessee is that the amount was borrowed by cheque and paid by cheque. Repayment was not by the assessee, but by the third party. By appreciating all the material on record, the AO came to the conclusion that the assessee s explanation regarding this cash credit could not be accepted in the case of M/s. AR.Com. We are not in a position to disturb the findings of the lower authorities in respect of credit in the name of M/s. AR.Com. Accordingly, the addition of 3.05 crores in the name of M/s. AR.Com to be considered as unexplained credit in the hands of the assessee, the addition sustained by the Ld.CIT(A) is justified. Hence, this ground raised by the assessee stands rejected. Coming to the credit in the name of M/s. MSG Associates for 50 lakhs and of Mr. Bharat Chandan for 25 lakhs, it was stated by the AO in his Remand Report that the identity of these two parties are proved by filing confirmation letters. The contention of the ld.D.R is that the assessee has not repaid the loan, but repayment by the third party - when the AO himself given in the remand report that assessee had produced the confirmation letters and credit worthiness of these parties, were also proved through bank accounts, it is not appropriate on the part of the Departmental Representative to argue contrary to the Remand Report submitted by the AO before the Ld.CIT(A) which is produced by the Ld.CIT(A) of his order. Being so, we are not in a position to interfere with the above findings of the Ld.CIT(A) in deleting these two additions. Accordingly, deletion is justified and confirmed the order of Ld.CIT(A) on this issue.
Issues Involved:
1. Whether the unsecured loans availed by the assessee were genuine. 2. Whether the addition of ?3.80 crores as unexplained cash credit under Section 68 of the Income Tax Act was justified. 3. Validity of the assessment proceedings under Section 143(3) read with Section 147 of the Income Tax Act. 4. Whether the repayment of loans by third parties on behalf of the assessee affects the genuineness of the loan transactions. Issue-wise Detailed Analysis: 1. Whether the unsecured loans availed by the assessee were genuine: The assessee, a Promoter Director of M/s. Sanguine Media Limited, availed unsecured loans amounting to ?3.80 crores from M/s. A.R.Com, M/s. MSG Associates, and Mr. Bharat Chandan to subscribe to a Rights issue. The assessee claimed that the loans were genuine and provided details of the transactions, including the credit of the loan amounts into his bank accounts and subsequent repayments. However, the Assessing Officer (AO) found discrepancies, particularly with M/s. A.R.Com, whose partners were not traceable at the given addresses, leading to the conclusion that the loans were not genuine. 2. Whether the addition of ?3.80 crores as unexplained cash credit under Section 68 of the Income Tax Act was justified: The AO added ?3.80 crores to the assessee's income as unexplained cash credit under Section 68, citing the inability to verify the genuineness of the loans from M/s. A.R.Com. The CIT(A) partially upheld this addition, confirming ?3.05 crores pertaining to M/s. A.R.Com while deleting the addition of ?75 lakhs related to M/s. MSG Associates and Mr. Bharat Chandan. The Tribunal agreed with the CIT(A) regarding the ?3.05 crores from M/s. A.R.Com, emphasizing the failure to prove the identity and genuineness of the transactions. 3. Validity of the assessment proceedings under Section 143(3) read with Section 147 of the Income Tax Act: The assessee argued that the AO's initiation of assessment proceedings under Section 147 was based on an incorrect presumption that loans are income. The assessee maintained that loans are capital receipts and not taxable. Despite these arguments, the AO proceeded with the assessment, leading to the addition under Section 68. The Tribunal found that the AO's actions were justified given the lack of evidence supporting the genuineness of the loans from M/s. A.R.Com. 4. Whether the repayment of loans by third parties on behalf of the assessee affects the genuineness of the loan transactions: The assessee contended that the loans were repaid through third parties, specifically M/s. Aurobindo Finance & Hire Purchase Pvt. Ltd. and M/s. Forsee Financial & Consultancy Services. The Tribunal noted that the repayment by third parties did not establish the genuineness of the original loan transactions, particularly when the identity and existence of M/s. A.R.Com were in question. The Tribunal upheld the AO's conclusion that the loan from M/s. A.R.Com was not genuine. Conclusion: The Tribunal dismissed the assessee's appeal regarding the addition of ?3.05 crores from M/s. A.R.Com as unexplained cash credit and upheld the CIT(A)'s decision. The Tribunal also dismissed the Revenue's appeal, affirming the deletion of ?75 lakhs related to M/s. MSG Associates and Mr. Bharat Chandan, as their identities and creditworthiness were satisfactorily proven. The cross appeals filed by both the assessee and the Revenue were dismissed.
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