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TMI Blog2020 (3) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... n the addition on account cash deposit in Bank of India. Undisclosed bank account maintained with ICICI bank we note that the assessee has not filed any satisfactory explanation or documentary evidence either before authorities below neither before us. Accordingly in absence of any submission from the assessee we sustained the addition of ₹ 49,500/- made by the AO on account of deposit made there under. In the result the ground of the assessee partly allowed. Addition of cessation of liability - HELD THAT:- Assessee at the time of hearing before us admitted to the impugned addition. Thus the ground of appeal of the assessee is dismissed. Disallowances of bad-debt - assessee during the year under consideration has written off its debtor balance but failed to produce the information about the year in which such bad debts were shown as income - AO in absence of any evidence with repect to the fact that impugned bad debt were offered to tax previously, disallowed the claim of the assessee and added the same to the total income of the assessee - HELD THAT:- Provisions of section 36 (2) of the Act allow the assesse to claim the dedution of bad debt written off during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal. 1. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Nilesh N Panchal amounting to ₹ 50,00,000/- as unexplained loan. 2. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Aayush J Patel amounting to ₹ 16,07,178/- as unexplained loan. 3. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Vasantbhai S Patel amounting to ₹ 12,00,000/- as unexplained loan. 4. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of loan amount from Sh Jignesh Vasantbhai Patel amounting to ₹ 57,50,000/- as unexplained loan. 5. On the facts and circumstances of the case as well as law on the subject, the Learned Commissioner of Income Tax (Appeals) h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lender. 4. In response to the notice the assessee submitted that, during the year it has taken fresh interest free unsecured loan from 4 different persons namely Shri Nilesh N Panchal, Shri Ayush J Patel, Shri Vasanthbhai S Patel and Shri Jignesh Vasanthbhai Patel. 4.1 With regard to the taken loan from Shri Nilesh N Panchal: The assessee claimed that it has taken unsecured loan of ₹ 50 lakh but failed to furnish confirmation or any other documentary evidence in order to substantiate genuineness of the transaction. Accordingly the AO added the same to the total income of the assessee as unexplained cash credit u/s 68 of the Act. 4.2 With regard to loan form Shri Aayush J Patel a. The assessee during the year accepted unsecured loan of ₹ 16,07,178/- from Shri Aayush J Patel. The assessee in support of its claim furnished confirmation letter and ITR acknowledgment copy of the lender. b. However the AO on perusal of ITR, observed that the lender has not sufficient creditworthiness to advance loan. Therefore the AO purposed for treating the same as unexplained cash credit under section 68 of the Act. But the assessee failed to reply to the show cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as under: 5.1 With regard to loan from Shri Nilesh N Panchal: The assessee submitted the Shri Nilesh N Panchal advanced impugned loan of ₹ 50lakh out of amount received from Shri Vasantbhai Patel. The assessee in support of its contention furnished a confirmation of contra account from Shri Vasantbhai Patel, bank statement of both Shri Vasanthbhai and Shri Nilesh N Panchal along with copy of PAN and address detail of Shri Nilesh. The assessee further submitted that Shri Nilesh N Panchal is absconding due to ongoing criminal proceeding against him. Hence it is unable to submit any other evidence or confirmation from Shri Nilesh N Panchal. 5.2 With regard to loan from Shri Aaysush J Patel: The assessee submitted that the loan amount of ₹ 16,07,178/- represent amount credited during the year on account of its liability paid by Shri Aayush J Patel on its behalf. The assessee in its support furnished copy of ledger confirmation, and ITR of the lender. 5.3 With regard to loan from Shri Vasantbhai S Patel: With regard to the loan amount of ₹ 12Lakh, the assessee before the ld. CIT (A) filed copy of ledger confirmation, bank statement of Shri Vas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in the balance sheet. As such the loan taken by the assessee does not give rise to the make the addition as unexplained cash credit under section 68 of the Act. All the conditions as specified under section 68 of the Act regarding the identity, creditworthiness and genuineness of the transactions were duly complied/fulfilled. Therefore there cannot be any addition to the total income of the assessee. 7. On the other hand the learned DR vehemently supported the order of the authorities 8. We have heard the rival contentions of both the parties and perused the materials available on record. The dispute in the instant case relates to the unsecured loan received by the assessee in the year under consideration from certain parties which was treated as unexplained cash credit under section 68 of the Act by the AO. The learned CIT (A) subsequently confirmed the addition made by the AO. 8.1 The provision of section 68 of the Act fastens the liability on the assessee to provide the identity of the lenders, establish the genuineness of the transactions and creditworthiness of the parties/lenders. These liabilities on the assessee were imposed to justify the cash credit entries un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and remaining ₹ 5 lakh in state bank of India account of it. Subsequently ₹ 45 lakhs were also transferred from Bank of India to SBI bank account of the assessee. The assessee in support of its claim has filed the copy of the bank statement of Shri Vasantbhai Patel, Shri Nilesh N. Panchal and own bank statement maintained with Bank of India and State Bank of India along with other detail which are placed on pages 59 to 72 of paper book. Accordingly, the assessee was of the view that the impugned amount of loan cannot be treated as unexplained cash credit under section 68 of the Act. 8.4 We do not find any ambiguity in the contention of the assessee about the receipt of money by Shri Nilesh N Panchal from Shri Vasantbhai Patel. However, on perusal of the bank statement of Shri Nilesh N Panchal and the bank statement of the assessee maintained with Bank of India, we find that Shri Nilesh N Panchal has transferred a sum of ₹ 26.50 lakhs only through cheques and ₹ 5 lakhs only through NEFT to the bank of India account and the SBI account respectively. These facts can be verified from the bank statements of the respective parties. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, by proving identity of party, Genuineness of transaction and credit worthiness of the party. 8.8 Now, coming to the amounts of unexplained loans for ₹ 57,50,000/- from Shri Jignesh V Patel as alleged by the AO. In this connection we note that the assessee in its books of accounts has shown receipt of ₹ 29.50 lakhs as loan from the impugned person in the manner as detailed below: Date Mode Amount 13-11-2010 Bank 15,00,000 21-12-2010 Bank 10,00,000 15-02-2011 Aayush J Patel 3,00,000 23-01-2011 Aayush J Patel 1,50,000 TOTAL 29,50,000 9. However, the AO found that the above mention loan was not appearing in the bank statement of Shri Jignesh V Patel. But the AO on perusal of the bank statement further found that Shri Jignesh V Patel has advanced loan to the assessee for ₹ 28 lakhs in the manner a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank of India. Thus it is transpired that, that the assessee has received a loan of ₹ 28 lakhs only through the banking channel and not ₹ 57.50 lakhs as alleged by the authorities below. For the balance amount of ₹ 1.50 lakhs, we note that the loan account of shri Aayush J Patel was adjusted by crediting the loan account of Shri jignesh as evident from the confirmation placed on page 73-74 of the paper book. The adjustment of the loan amount was not doubted by the authorities below. Thus in effect, there was the actual loan liability from Shri Jignesh V Patel standing only for ₹ 29.50 lakhs and not for ₹ 57.5 lakhs as alleged by the authorities below. Accordingly, we hold that there cannot be any addition on account of loan of ₹ 28 lakhs as made by the authorities below. 9.4 Now, coming to the fact whether the amount of loan of ₹ 29.5 lakhs received from shri Jignesh represents unexplained cash credit under section 68 of the Act. From the preceding discussion, we note that there is no ambiguity about the identity and the genuineness of the transaction as the assessee has filed the copy of the income tax return and the transaction was ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue to the file of the AO as all the informations are available on record. Accordingly, instead of setting aside the file to the AO, we preferred to decide the issue involved in the case on hand. In view of the above, we hold that the assessee has explained the amount of loan received by it in the year under consideration to the extent as discussed above. Accordingly, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him to the extent discussed above. Hence the ground of appeal of the assessee is partly allowed. 10. The second issued raised by the assessee vide ground no-5 is that learned CIT (A) erred in confirming the addition on account of bank deposit of ₹ 1,27,39,300/-. 11. During the year under consider there were 3 bank accounts operating in the name of the assessee namely, SBI, Bank of India and ICICI Bank. But the assessee disclosed only SBI bank in return as well in reply in response to the notice issued u/s 142(1) of the Act. However the AO on independent examination observed that the assessee during the year has made total deposit of ₹ 1,26,90,800/- in Bank of India out which ₹ 60,40,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn in cash and then redeposited in these bank accounts by way of cash and cheque. It has been claimed that the sources of these amounts are either received from Mr . Vasan Patel and Mr. Jignesh patel or received against MOU. But again no details of this had been submitted. Only in/ rejoinder to the remand report, the appellant has claimed that these? amounts were paid to Bina Agro Tech and Bina Agro Herb Pvt Ltd, both companies being owned by Mr Nilesh. Such amount has been claimed to be\ ₹ 36,04,000/-. But no supporting evidence in relation to even this amount has been submitted. So far as the balance amounts are concerned, copies of bank accounts and confirmations from Mr. Jignesh Patel and Mr. Vasant Patel have been submitted. But no explanation has been submitted as to why such details were not made part of the original submission filed during the course of the appellant proceedings on which the remand report from the AO was obtained. Besides no details of the alleged bank account of Mr Nilesh is available to establish the relation between payments made to him which had been deposited in his bank accounts, the withdrawal of the same and redepositing of the same in these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 16.3 On perusal of the impugned bank statement, we find that the details of the cheques deposits by the parties stand as under: Date Received from Amount Rs. Cheque No. Remarks 12/11/10 Nilesh Panchal 1000000 RTGS/17111 Received from Vasant Patel deposited the same in company account 18/11/10 Nilesh Panchal 1500000 RTGS Received from Vasant Patel deposited the same in company account. 08/12/10 Jignesh Patel 1250000 917902 Received against MOU 20/12/10 Jignesh Patel 12500000 917903 Received against MOU 22/12/10 Jignesh Patel 100000 917906 Received against MOU 03/03/10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 010 41493 10 Lakhs Loan from Vsanthbhai Patel 21-12-2010 41494 10 Lakhs Laon from Jighnesh V Patel 08-01-2011 41495 10 Lakhs Loan from Nilesh Panchal 12-03-2011 41496 10 Lakhs Loan from Nilesh Panchal 23-03-2011 41498 10 Lakhs Loan from Nilesh Panchal 15-02-2011 41596 3 Lakhs Loan from Jignesh v Patel adjusted with loan repaid to Aayush J Patel 17-02-2011 41598 2 Lakhs Loan from Vasantbhai Patel adjusted with loan repaid to Aayush J patel Total 85 Lakhs 16.7 It is pertinent to note that the assessee claimed to have accepted loan of ₹ 85 lakhs from the parties as discussed above thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the AO in absence of any evidence with repect to the fact that impugned bad debt were offered to tax previously, disallowed the claim of the assesee and added the same to the total income of the assessee. 21. Aggrived assessee prefered an appeal before the learned CIT (A) who confirmed the addition made by the AO by observong that the assessee failed to fulfill the conditions prescribed under section 36(2) of the Act for claiming the baddebts. Beingaggrived by the order of the learned CIT (A) the assessee is in appeal before us. 22. The learned AR for assessee before us submitted the impugned debtors were classified under the current assessee and this fact was admitted by the authorities below for the year under consideration as well as in the earlier years. Therefore, the assessee is entitled for claiming the deduction is bad debts. 23. On the contrary the learned DR vehemently supported the order of the authorities below 24. We have heard the rival contentions of both the parties and perused the materials available on record before us. Admitedly the assessee written offthe debtor balance to the tune of ₹ 19,16,749 and claimed the deduction for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding the same during the assessment proceedings. Accordingly the AO added the same to the total income of the assessee. The assessee preferred an appeal before learned CIT (A). 29. The assessee before the learned CIT (A) submitted that the impugned amount represent interest income but the same was received after finalization of books. Therefore the same was not included in the return. 29.1 However the AO in remand report contended that the assessee is following mercantile system of accounting. Hence the amount should have been offered in the current year only. 29.2 However, the learned CIT-A confirmed the order of the AO by sustaining the the addition. Being aggrived by the order of the learned CIT (A) the assessee is in appeal before us. 30. The learned AR before us submitted that the impugned income has already been offered to tax. Therefore, any further addition shall lead to the double addition to the total income of the assessee which is contrary to the provisions of law. 31. On the contararay the learned DR vehemently supported the order of the assessee below. 32. We have heared the rival contention of both the parties and perused the materialsavai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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