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TMI Blog2017 (4) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans borrowed or on the terms of repayment, as the tenure of the loan was intended only for a short period of 7 months. However, the share markets crashed, the share prices of M/s. Sanguine Media Limited fell drastically and the assessee was not in a position to repay the money he had borrowed. As the assessee had conveyed to his lenders that he would repay the loans within a short period of time, he had taken assistance from his friend, Mr. Kalyanaraman, who had, through his associate companies; M/s. Aurobindo Finance & Hire Purchase Pvt. Limited and M/s. Forsee Financial & Consultancy Services; arranged to repay the loans, borrowed by the assessee. Thus, the repayment of the loans by Associate Companies of Mr. Kalyanaraman commenced in the month of October 2008, and the outstanding amounts due to M/s. MSG Associates and Mr. Bharat Chandan amounting to a sum of 75,00,000/- was repaid by M/s. Aurobindo Finance & Hire Purchase Pvt. Ltd. an associate company of Mr. Kalyanaraman, vide an RTGS transfer on 13.10.2008 & 15.10.2008. 2.2 The outstanding sum to M/s. A.R.Com amounting to 3.05 crores was repaid by the assessee in the following manner by associate companies of Mr. Kalyanara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of the assessment proceedings u/s.148 of the Act, that he had availed genuine loans, through his trusted agents and friends in the months of August 2008 and September 2008, only for the purpose of subscribing to the Rights issue and the various details and documents regarding the fact that the loans were fully repaid as on 26.04.2011 were furnished for the perusal and consideration of the AO. The assessee further reiterates that there was no income generated by him from out of the money borrowed during the AY 2009-10. According to ld.A.R, AO did not consider the facts in connection with the unsecured loans availed by the assessee, which are as under : a) The loans were availed from genuine persons b) The amount of loan was credited into the bank accounts of the assessee c)The entire loan was repaid by the appellant and the associates of the assessee into the bank accounts of the lenders namely; i) M/s. AR.Com ii) Mr. Bharat Chandan iii) M/s. MSG Associates d) That loans are capital receipts, and cannot be subjected to income tax f) The appellant had utilized the loans only for the purchase of Rights issue in M/s. Sanguine Media Ltd. 2.5 According to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee submitted that as the assessee under assessment, he has authority only over the transactions entered into by him and the necessary details regarding his assessment proceedings can be furnished by him to the fullest satisfaction of the AO. The assessee further submitted that he will have no knowledge over the books of account or the entries adopted by his debtors and creditors and it will be unjustified to make additions to his declared income merely on the basis of accounting entries adopted by third parties. 2.8 The assessee further submitted that he has clearly laid out all the facts relating to the loans borrowed by him and the method of repayment of the same. These details were ignored by the AO, who had concluded the remand report on erroneous assumptions and based on the accounting entries and journals in the books of third parties. On appeal, the CIT(Appeals), once again, placed reliance on the sworn statement, that was retracted by the assessee and on the remand report, which was concluded on the basis of the erroneous journals and accounting entries in the books of third parties; also was of the opinion that genuineness of the loan transaction was not establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source." 3.1 On the contrary, the ld.D.R relied on the judgment of CIT vs. P. MOHANAKALA in [2007] 291 ITR 278 (SC) wherein held that: "Reversing the decision of the High Court, that the findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in disturbing the concurrent findings of fact." The ld.D.R submitted that the assessee has not discharged the burden cast upon the assessee regarding identity of the parties, genuineness of the transactions and capacity of the lenders to advance the amount to the assessee. According to the ld.D.R the entire addition was made by the AO to be sustained. 3.2. The ld.A.R drew our attention to the loan confirmation letters from M/s. MSG Associates for 50 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as this year is concerned, the repayment of loan of ₹ 2.55 crores stands unexplained since the said sum is stated to be repaid in the same year. On the remaining amount of 1.25 crores, the said amount is not figuring as loan in the books of C V Ravi as he had stated that he did not maintain books of accounts. Further it was also clearly proved that the assessee was also not in a position to prove the source for the said loan viz., M/s. A R. Com. It is also pertinent to mention that a separate OD account was opened with Oriental Bank of Commerce by M/s. Sri Aurobindo Finance & Hire Purchase Ltd. to settle the loan amount of 2. 15 crores during the financial year 2008-09 and the entire amount of 2.15 crores given by Oriental Bank of Commerce was squared off by Sanguine Media Ltd. and Term Deposit Closure Proceeds of 2 crores in the same year. The OD account starts from 12.10.2008 and on 28.10.2008 there was closure proceeds of 2 crores. Other than this credit entry in the OD account all other credit entries were only from N/s. Sanguine Media Ltd., in which the assessee was a director. The payments in the OD accounts were, made only to N/s. AR. Corn and N/s. Forsee Financial S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3.6 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. In our opinion, 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) in para 8.2 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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