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2022 (12) TMI 576 - AT - Income TaxUnexplained Cash credit u/s. 68 - AO treating the unsecured loans received from the depositors as unexplained - HELD THAT - On perusal of ledger account of assessee, in the books of Madhav Infra Project Ltd. we found that the Madhav Infra as on 1st April 2012 has debited the ledger of the assessee by the account of one Shri Mahendra Solanki. The link in all these adjustment entry was not properly explained. The provision of section 68 requires the assessee to establish the identity of creditor, genuineness of transaction and credit worthiness of the parties. Merely the fact that the amount received through banking channel does not make the transaction as genuine. The assessee needs to explain the transaction properly based on the documents within the parameters of section 68. Coming to the loan amount credited from other two parties namely Akshar Trading Co. and M.S. Carting Contractor - We note that the assessee before us filed a fresh evidences regarding repayment of loan to the above mentioned two parties. Evidences of the repayment of the loans by the assessee is very crucial for deciding the genuineness of the loan entries. These fresh evidences were not available before the lower authorities and therefore, the same needs to be verified at the level of the AO. Considering the ambiguity in the evidences field by the assessee with regard to the addition of Rs. 36 lakh on account alleged loan from Shir Ashok Khurana and fresh material furnished with respect to other two parties, we hereby set aside the issue to file of the AO for de-novo assessment in the light of above discussion as per the provisions of law - AO is directed to provide proper opportunity to the assessee to represent her case and needless to say the assessee will furnish required details and explanation necessary for deciding the issue. Ground of appeal of the assessee is hereby allowed for statistical purposes.
Issues Involved:
1. Treatment of unsecured loans as unexplained cash credit under Section 68 of the Income Tax Act. 2. Creditworthiness and genuineness of the unsecured loans from three parties: Akshar Trading Co., Ashok Khurana, and M.S. Carting Contractor. 3. Verification of fresh evidence regarding the repayment of loans. Detailed Analysis: Issue 1: Treatment of Unsecured Loans as Unexplained Cash Credit under Section 68 of the Income Tax Act The primary issue raised by the assessee is the treatment of unsecured loans totaling Rs. 3,86,35,000/- as unexplained cash credit under Section 68 of the Income Tax Act by the Assessing Officer (AO). The AO found discrepancies and inadequacies in the explanations provided by the assessee regarding the sources and genuineness of these loans. The AO's decision was based on the lack of satisfactory evidence to establish the creditworthiness and genuineness of the transactions. Issue 2: Creditworthiness and Genuineness of the Unsecured Loans The AO scrutinized the loans from three parties: Akshar Trading Co., Ashok Khurana, and M.S. Carting Contractor. Loan from Ashok Khurana: - The assessee showed a loan of Rs. 36 lakh from Ashok Khurana. However, upon verification, it was found that Ashok Khurana had not extended this loan. The assessee later claimed that the amount was mistakenly credited to Ashok Khurana's account instead of M/s. Aashka Construction Ltd. The AO found inconsistencies in the ledger entries and bank statements, leading to the conclusion that the loan was unexplained. Loan from Akshar Trading Co.: - The assessee showed a loan of Rs. 2,33,85,000/- from Akshar Trading Co. The proprietor, Sanjay Jashvantlal, claimed the funds were inherited from his father. However, he failed to provide the necessary documents to substantiate this claim. The AO concluded that the creditworthiness and genuineness of this loan were not established. Loan from M.S. Carting Contractor: - The assessee showed a loan of Rs. 1,16,50,000/- from M.S. Carting Contractor. The proprietor, Vasant Chowdhry, failed to explain the source of the funds adequately. The AO found that the proprietor's financial situation did not support the ability to extend such a substantial loan, leading to the conclusion that the loan was unexplained. Issue 3: Verification of Fresh Evidence Regarding Repayment of Loans During the appellate proceedings, the assessee submitted additional evidence to justify the repayment of loans to Akshar Trading Co. and M.S. Carting Contractor. The Tribunal found these evidences crucial for deciding the genuineness of the loan entries. However, these evidences were not available before the lower authorities, necessitating a de-novo assessment by the AO. Tribunal's Decision: The Tribunal set aside the issue to the AO for a de-novo assessment, considering the ambiguities in the evidence related to the loan from Ashok Khurana and the fresh evidence regarding the repayment of loans to Akshar Trading Co. and M.S. Carting Contractor. The AO is directed to provide the assessee with a proper opportunity to present her case and furnish the necessary details and explanations. Conclusion: The appeal filed by the assessee is allowed for statistical purposes, and the matter is remanded back to the AO for a fresh assessment in light of the Tribunal's observations and the provisions of the law.
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