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TMI Blog2020 (4) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact that the unsecured loans amounting to Rs. 3,21,33,538/- remained unexplained even after assessment & remand proceedings. 3. That on the facts & in the circumstances of the case, the Id. CIT (Appeals) has erred in law in deleting the addition amounting to Rs. 5,89,04,300/- of unexplained corpus fund relying on the Hon'ble ITAT order in assessee's own case for A.Y. 2010-11 in ITA No. 436/Chd./2015 even when the factual position of the present case is different in respect of corpus fund as the AO provided enough opportunity to every donor for verification of donations in present case. 4. That on the facts & in the circumstances of the case, the Id. CIT (Appeals) has erred in law in accepting the plea of the assessee that even if the corpus donation is treated as normal donation and the unsecured loans are disallowed, the application towards the objects remain more than 85% of the total receipts, thereby not affecting the taxability of the assessee trust. 5. That the appellant craves to leave, add or amend any grounds of appeal on or before the appeal is heard or disposed of. 3. Ground No. 1 Ground No.1 is general in nature as through this ground the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. The relevant part of the order of the Tribunal for the sake of convenience is reproduced as under:- "8. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The undisputed facts of the case are that a list containing name, address and amount of 78 persons claimed to have given corpus donation was provided by the assessee to the Assessing Officer. However, the Assessing Officer chose to call only 18 persons out of these 78 persons. On the basis of interpretation of statements of these persons, the Assessing Officer has drawn inference against all the 78 persons and made addition under section 68 of the Act, which got confirmed by the learned CIT (Appeals). Without getting into the merits of the interpretation of statements of these persons, first of all, we do not appreciate the way Assessing Officer has made addition of the whole amount of corpus donation received by the assessee. As per section 68 of the Act, the addition can be made by the Assessing Officer if he is not satisfied as to the identity and creditworthiness of the person giving money as well as the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stifying our inference in respect of the above findings of the Ld. CIT(A). In view of this, there is no merit in ground No.3 of the appeal and the same is accordingly dismissed. 8. Ground Nos. 2 & 4: Now coming to ground No.2 of the appeal. So far as the action of the CIT(A) in deleting the addition amounting to Rs. 3,21,33,538/- on account of unexplained unsecured loans is concerned, we find that the Ld. CIT(A) has discussed this issue in para 7 of the impugned order. The Assessing Officer noted that assessee has raised unexplained loans amounting to Rs. 6,76,12,313/- from many people. On being asking to explain the source, the assessee provided identity, ITRs and bank account statements of some of the lenders. However, the Assessing Officer did not get satisfied in respect of the details submitted of 17 persons. He, therefore, made the addition of Rs. 6,76,12,313/- in respect of the unexplained loans received from 17 persons treating the same as income if the assessee from undisclosed sources. 8.1 Before the CIT(A), the assessee furnished additional evidences, where upon remand report was called from the Assessing Officer. After considering the remand report as well as submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income as he was working in UAE. No other evidence to prove the credit worthiness of the creditor has been produced by the appellant. No explanation has been given for not being able to produce the bank statement of the creditor to prove the genuineness of the transaction. Therefore, the genuineness of the transaction as well as the credit worthiness of the creditor remains unexplained. 2. Sh. Inder Pal Singh - Rs.l,66,50,000/-. Allegedly the amount advanced by the aforesaid person to the assessee was received and withdrawn on the same day. It is respectfully submitted that the aforesaid person had received the above amount through banking channel and advanced. The above person did not deposit cash and advanced to the assessee. One can't expect such huge funds to be lying idle. The funds were transferred from the Company AVJ lnfradeveloper (P) Ltd., Delhi; a Company indulging in the activity of Mining and presently the father and brother of aforesaid Sh. Inder Pal Singh are Directors therein. A copy of Balance Sheet of the aforesaid Company for the year ended on 31.03.2012 is submitted alongwith. Hence, the comment of Ld. DCIT that the aforesaid amount is not verifiable h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f bank statement, that there are credit entries in the bank account of the creditor immediately prior to the above mentioned debit entries. The appellant has failed to provide the confirmation from the creditor and has also not provided any explanation for the cash deposits made in the account of the creditor just before the loan was advanced to the appellant. Therefore, the genuineness of the transaction as well as the credit worthiness of the creditor remains unexplained. 5. Sh. Satpal Singh - Rs. 56,00,000/-. We fail to understand as to how the Ld. DCIT failed to accept the entry amounting to Rs. 56,00.000/- which amount was deposited by the aforesaid person out of the proceeds of the flat at Mumhai. In fact we had submitted a copy of notice issued by ITO, Ward-3, Yamuna Nagar u/s 133(6) to the aforesaid person seeking information about the sale of flat at Mumbai; the proceeds of which were deposited by Sh. Sat Pal Singh with the assessee Trust. To disbelieve the documents of the Department by the Ld. DCIT is beyond our understanding. We are submitting alongwith a copy of sales deed as well for your kind consideration. Moreover, the aforesaid person has passed the three step ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant which has been confirmed by the lender, it is also observed that an amount of Rs. 2,00,000/- has been transferred vide RTGS on 20.03.2012 and another amount of Rs. 2,00,000/- has been transferred vide RTGS on 22.03.2012. The creditor has also stated in the confirmation that the said transfers have been made from his Savings Bank Account No.5138065229 maintained with CITI Bank Ltd. Therefore, the genuineness of the transaction as well as the credit worthiness of the creditor has been sufficiently explained. Therefore, the addition of Rs. 4,00,000/- is not required to be made on this account. 7. Sh. Subhash Chand - Rs. 6,47,484/-. The aforesaid person had advanced a sum of Rs. 6.00 Lakhs in earlier years and as on 01.04.2011; the opening balance was Credit Rs. 5,99,200/- which was returned to him alongwith interest on 31.05.2011 and was received back on 15.06.2011. The interest was being paid to him as per terms after deduction of TDS and the above balance was outstanding as on 31.03.2012. Hence to classify the same under unverified is again not fair and addition made on this account is also wrong and illegal. The same is verifiable from the copy of account of the aforesaid as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the transaction as well as the credit worthiness of the creditor remains unexplained. 7.1 Thus, to sum up, I consider that the appellant has explained with sufficient documentary evidences in the form of Name, Address, ITR and Bank details to prove the genuineness of unsecured loans in respect of following six out of ten creditors in respect of whom unsecured loans had been held to be unexplained by the Assessing Officer in the remand report dated 15.06.2018. The detail of these six creditors is as under: Serial No at para 4 of the Assessment Order Name of lender Amount of unsecured loan 3 Sh. Inder Pal Singh Rs. 1,66,50,000/- 5 Sh. Sandeep Jain Rs. 10,00,000/- 7 Sh. Satpal Singh Rs. 1,32,39,000/- 8 Sh. Smartypal Singh Rs. 4,00,000/- 12 Sh. Tejinder Pal Singh Rs. 20,25,447/- 14 Smt. Sunita mangla Rs. 15,19,475/- Total Rs. 3,48,33,922/- The genuineness of unsecured loans from these persons totaling Rs. 3,48,33,922/- are considered to be explained satisfactorily and no addition is called for in their respect. 7.2 However, the appellant has been unable to satisfactorily explain the unsecured loans given to the remaining lenders as given below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es would far exceed 85% of the revenue receipts of the assessee even if all the above unsecured loans are disallowed and treated as income for the year because the AO has neither denied the appellant the exemption u/s 11 of the IT Act nor cast any doubts on the application of funds for charitable purposes. The ground of appeal No.3 is allowed.", 11. However, we do not agree with the above findings of the CIT (A). The observations made by the Tribunal in the circumstances of the case of the assessee in respect of some of the unexplained corpus donations can not be applied in respect of unexplained loans. In a loan case, the assessee has to establish beyond reasonable doubt the identity and creditworthiness of the creditor and genuineness of the transaction. Application of income does not change the character of receipt. If the receipt is not from the property held for charitable purposes, the same will not be eligible for exemption u/s 11, irrespective of its application for charitable purposes or otherwise. In view of this, the addition made by the Assessing Officer in respect of alleged loans received from remaining four persons at Serial No. 2, 6, 10 and 16 as given on the char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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