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2017 (8) TMI 919 - AT - Income TaxUnsecured Loan - addition u/s 68 - Held that - The assessee has submitted bank account details of Shri Rakesh Kumar which is available at page no.29 of the paper book. After going through the bank statement of Shri Rakesh Kumar it was noticed that the assessee has submitted only bank statement from the month of 1st March, 2011. On that day there is a huge balance of ₹ 50,70,000/- is appearing as opening balance. On 22nd March, 2011 Shri Rakesh Kumar transferred ₹ 50 lakhs through RTGS into the account of the assessee. The A.O. as well as the CIT(A) had given opportunity to the assessee for proving the credit worthiness of the lenders. The Ld. CIT(A) has observed that merely filing one month extract of the bank account shows funds parked in the bank just before making RTGS does not indicate that the creditor had the capacity to advance loan of ₹ 50 lakhs. The Ld. AR for the assessee requested to grant him opportunity for filing of complete bank account details of lenders and credit worthiness so that onus cast upon the assessee to prove credit worthiness u/s 68 can be discharged. Therefore, the matter is remanded back to the file of the A.O. for examination of credit worthiness of lenders. - Appeal of the assessee allowed for statistical purposes.
Issues Involved:
1. Sustaining the addition of ?50,00,000/- as unexplained unsecured loan. 2. Cash introduction in the bank account of the depositor before the deposit. 3. Erroneous addition of ?50,00,000/- despite the refund of the amount through RTGS. 4. Incorrect invocation of Section 68 in the absence of incriminating documents during the search. 5. Deletion of addition to the returned income sustained by the CIT(A). Detailed Analysis: 1. Sustaining the Addition of ?50,00,000/- as Unexplained Unsecured Loan: The assessee contended that the loan of ?50,00,000/- from Shri Rakesh Kumar was genuine, supported by RTGS transactions and confirmations. The Assessing Officer (A.O.) and the CIT(A) sustained the addition due to the failure of the assessee to prove the creditworthiness of the lender. The Tribunal noted that the assessee provided a bank statement showing an opening balance of ?50,70,000/- and the RTGS transfer. However, the Tribunal observed that merely showing a one-month bank statement was insufficient to prove the lender's capacity to advance the loan. The case was remanded back to the A.O. to allow the assessee to provide complete bank statements and further evidence of creditworthiness. 2. Cash Introduction in the Bank Account of the Depositor Before the Deposit: The CIT(A) noted that the cash was introduced in the depositor's bank account before the deposit to the assessee. The Tribunal did not find sufficient evidence to support this claim and remanded the matter back to the A.O. for further verification of the depositor’s bank account details and the source of funds. 3. Erroneous Addition of ?50,00,000/- Despite the Refund of the Amount Through RTGS: The assessee argued that the loan amount was refunded through RTGS within 23 days, prior to the filing of the return. The Tribunal acknowledged the RTGS transactions but emphasized the need for the assessee to prove the lender's creditworthiness. The case was remanded to allow the assessee to provide comprehensive evidence of the lender’s financial capacity. 4. Incorrect Invocation of Section 68 in the Absence of Incriminating Documents During the Search: The assessee highlighted that no incriminating documents were found during the search. The Tribunal referenced the case law where it was established that additions under Section 68 could not be made without incriminating evidence. The Tribunal directed the A.O. to reassess the case, considering the absence of such documents. 5. Deletion of Addition to the Returned Income Sustained by the CIT(A): The assessee requested the deletion of the addition sustained by the CIT(A). The Tribunal, after reviewing the submissions and the remand report, found that the A.O. did not adequately verify the transactions and the creditworthiness of the lender. The Tribunal remanded the case to the A.O. for a thorough examination, allowing the assessee to present additional evidence. Conclusion: The Tribunal remanded the case back to the A.O. to provide the assessee an opportunity to furnish complete bank statements and evidence of the lender's creditworthiness. The appeal was allowed for statistical purposes, and the A.O. was directed to reassess the matter in light of the new evidence. Pronouncement: The judgment was pronounced in the Open Court on 17th August, 2017.
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