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TMI Blog2022 (12) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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. - ITA No. 92/AHD/2020 - - - Dated:- 23-11-2022 - MS SUCHITRA KAMBLE , JUDICIAL MEMBER And SHRI WASEEM AHMED , ACCOUNTANT MEMBER Assessee by : Shri Vipul Shah , with Shri Rajesh , Sharma , A. Rs Revenue by : Shri Leena Lal , Sr. D. R ORDER PER WASEEM AHMED , ACCOUNTANT MEMBER : The captioned appeal has been filed at the instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed copy of bank statement and stated that they have incurred huge losses in their business, therefore no return was filed by them. Consequently, the AO issued summons under section 131(1) of the Act to the loan parties to appear in person for verification of credit worthiness. 4.4. The proprietor of M/s. Akshar Trading namely Shri Sanjay Jashvantlal appeared before the AO dated 02-03-2015. In the statement recorded under section 131(1) he stated that due to loss in business of sand trading, he closed his business and now working as supervisor in a company namely Saint Gobain Pvt. Ltd. for last two years and drawing annual salary of Rs. 4 lakh. With regard to sources of providing interest free loan of Rs. 2,33,85,000/- to the appellant assessee, he stated that on the death of his father, he received an amount of 2.4 crore from his father bank as legal heir which utilized in making interest free loan to the assessee. The AO asked him to provide death certificate and bank statement of his father to which he stated that the same will be submitted on next day. However, Shri Sanjay Jashvantlal failed to furnish the same despite issuing several notices. 4.5. Likewise, the proprietor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 31-03-2012 issued in the name of Smt. Kanaklata P. Pandya but inadvertently the same was debited in the ledger of Shri Ashok Khurana. Subsequently, the cheque of Rs. 14 lakh issued in the name of Smt. Kanaklata P. Pnadya got cancelled, hence the same is not reflecting in the bank statement. The assessee further claimed that mistakes as discussed above got rectified in the subsequent year which can be verified from the ledger account of all these parties i.e. Shri Ashok Khurana, M/s. Ashka Construction Ltd. and Smt. Kanaklata P. Pandya. 6.1. With regard to the loan of Rs. 2,33,85,000/- and Rs. 1,16,50,000/- from Akshar Trading (Prop-Shri Sanjay Parmar) and M.S. Carting Contractor (Prop. Shri Vasant Chowdhry) respectively, the assessee submitted that during the assessment proceeding, she has furnished copy of confirmation, PAN, Bank statement along bank statement of the parties and copy of ITR acknowledgment. The AO on the basis of the same issued notices under section 133(6) of the Act to both these parties and in reply they confirmed to have given loan through banking channel. Thereafter, summons under section 131 of the Act were issued and they appeared before the AO and got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecifically asked. AR/appellant to produce all the lenders before him for examination/confirmation from lender, ITR and purpose of loan taken. I shall discuss each lender one by one as under: I) Ashok Khurana: Rs. 36,00,000/- AR argued that actually Rs. 50,00,000/- was received from Aashka Construction Ltd. (Later merged with Myraj Consultancy Ltd.) and later known as M/s. Madhav Infra Projects Ltd. Amount of Rs. 50,00,000/- was credited in appellant's books against the name of Ashok M. Khurana (lender). Ledger also contained Rs. 14,00,000/- repayment of loan. AR, however denied Rs. 14,00,000/- was repaid to Ashok M. Khurana and instead AR claimed that Rs. 14,00,000/- paid by appellant to Kanaklata Pandya. When I asked AR to show appellant's bank statement effecting debit entry of Rs. 14,00,000/- then he again took U turn and claimed that Rs. 14,00,000/- was issued by appellant but later on cancelled. Entry in books has been rectified as on 01-04-2012. In overall, AR tried to convince actual lender was Aashka Construction and not Ashok M Khurana, However. I find AR's argument not supported with facts. i) As per ledger, appellant received loan of Rs. 50 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the joint bank a/c. AR did not submit any document any evidence to show the sources of fund lent to appellant amounting to Rs. 2,33,85,000;-. I also find appellant did not pay any interest on such loan from Akshai Trading. AO has rightly doubted capacity and genuineness of unsecured loan. Addition u/s. 68 of Rs. 2,33,85,000/- is upheld, III) Ms. Carting Contractor: Loan of Rs. 1,16,50,000/-. AO has categorically asked AR to prove capacity and genuineness of unsecured loan. AR did not submit purpose of loan taken. I also find that no interest has been paid against such loan. AR could rut explain the reason for non-payment of unsecured loan or its interest even rill date. Against summon u/s. 133(1) issued to M/s. Carting Contractor, Shri Vasant Kumar Chaudhari appeared before AO. As per ITR, his income is Rs. 3,92,383/- in AY 2012-13. Upon inquiring about immediate credit in his bank account prior to lending the money during the month of March 2012 he stated that sources were out of collection from debtors. He submitted list of seven debtors without complete identity, address, contacts. However. AR could not explain as to when lenders himself is/living hands to mouth then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, AR was requested to produce audited books of account of next AY 2013-14 so as to see the status of unsecured loan. AR stated that appellant has closed its business. Upon this when asked AR as to how the appellant would repay a huge unsecured loan. At this. AR remained silent. One peculiar facts I have observed is that all the unsecured loan was credited in bank account offenders between 10 to 20 March 2012 and soon thereafter similar amount was transferred to appellant's bank account. Transaction in bank account confirms unusual as also not explained by the lenders themselves. Clearly, appellant own money has been route through banking channel giving a colour of genuineness of transaction. I also find appellant did not pay interest to any lender on unsecured loan of Rs. 3,86,35,000/. Appellant proved sources from where she could pay the unsecured loan. Appellants books does not show any provision to this effect as well. As discussed above, lenders capacity is in deep doubt. Case laws relied upon by AR duly been considered and found not applicable on facts involved in this case. Given these setting of facts. I am inclined to support AOs findings. Thus, A.Rs. argument ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en asserted is true and authentic. A genuine transaction must be proved to be genuine in all respect not merely on a piece of a paper. The documentary evidences should not be a mask to cover the actual transaction or designed in way to present the transaction as true but same is not. Genuineness of transaction can be proved by submitting confirmation of the parties along the details of mode of transaction but merely showing transaction carried out through banking channel is not sufficient to prove the genuineness. As such the same should also be proved by circumstantial surrounding evidences as held by the Hon'ble Supreme court in the case of Shri Durga Prasad More reported in 82 ITR 540 and in case of Smt. Sumati Dayal reported in 214 ITR 801. 11.3. The last stage comes to verify the creditworthiness of the parties. The term creditworthiness as per Black Law Dictionary refers as: creditworthy, adj. (1924) (Of a borrower) financially sound enough that a lender will extend credit in the belief default is unlikely; fiscally healthy-creditworthiness. 11.4. Similarly in The New Lexicon Webster's Dictionary, the word creditworthy has been defined as under:- c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of an amount for Rs. 50 lakh in the name of the assessee proprietary concern namely AR Chem Industries dated 28-04-2011. However on perusal of ledger accounts we find certain ambiguity. On perusal of ledger account of M/s. Aashka Construction Ltd. placed at page 69 of paper book we find that the assessee as on 1st April 2012 has credited the ledger account of M/s. Aashka Construction Ltd. by debiting the account of Shri Ashok Khurana. However on perusal ledger account of Shri Ashok Khurana for F.Y. 2012-12 placed at page 46 of paper book no such entry found though there was another ledger account of Shri Khurana placed at page 73 of paper book, the same entry found recorded. Likewise, in the ledger of M/s. Aashka Construction another journal entry as on 1st April was made in which ledger account was set off by transferring the loan to the account of Madhav Infra Project Ltd. However, 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. Further th ..... 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