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TMI Blog2022 (9) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... t the CIT(A)-2, Thane s order dated 23/03/2018 passed in case No. 10759/2016-17, involving proceeding u/s. 143 of the Income Tax Act, 1961; in short the Act . Case called twice. None appears at assessee s behest. It is accordingly proceeded ex-parte 2. Coming to the assessee s sole substantive grievance that both the lower authorities erred in law and on facts in making section 68 unexplained cash credit addition of Rs.12.10 crores, we note that the CIT(A) s detailed discussion affirming the assessment finding to this effect reads as under:- 6. I have carefully considered the facts of the case, findings of the AO in the assessment order as well as remand report, submission of the appellant and material placed on record. From the facts of the case it is noticed that during the year the appellant had introduced unsecured loans of Rs 12,10,00,000/- from Aum Impex (Rs 5.00 Crores) and Pioneer Exim (Rs 7.10 Crores). The perusal of ledger accounts of these creditors reveals that the appellant had not paid any interest on these loans. In order to ascertain the genuineness of lhe.se loans, the appellant was required to establish three essential ingredients of provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the remand report, the AO reported that in-spite of being specifically required and giving reasonable opportunities of being heard, the appellant neither submitted the current addresses and other contact details of these loan creditors nor produced them for verification in person. The AO further reported that the appellant has reiterated the submission/arguments that the transactions are routed through banking channels, therefore these are genuine transactions. The AO reported that in-spite of giving reasonable opportunity of being heard, the appellant has squarely failed to establish the three essential ingredients of Sec 68 of the Act, i.e. identity of creditors (by furnishing current mailing addresses), creditworthiness of the creditors (as these creditors are declaring meager income and indulging in the business of providing entries) and genuineness / nature of transactions (as the appellant had failed to establish the source of credits in the bank accounts, just before issue of cheques in favour of the appellant). The AO, therefore, inferred that the appellant has squarely failed to establish the genuineness of these loans. 6.3 On receipt of the remand report from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrowed. It is surprise to note that in-spite of having no business / goodwill / reputation in the market, the appellant could manage to borrow the huge unsecured loan of Rs 12 Crores, through above shell entities, that to free of interest. It is further noticed that the appellant had squarely failed to furnish above required credible documents, to establish the three essential ingredients, as provided in the provisions of Sec 68 of the Act, to prove that the unsecured loans of Rs 12.10 Crores, were genuinely borrowed and repaid to the above shell entities. 6.6 In my considered view, so far as the legal foundation of the addition is concerned, it consists of appellant s inability to satisfy the AO about three essential ingredients, as has been provided in the provisions of Sec 68 of the Act, which provides that where any sum is found to be credited in the books of accounts maintained for any previous year and the appellant offer no explanation about nature and source thereof or the explanation offered by appellant is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income tax as income of that previous year. It is also settled legal position t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical amounts were found to have been deposited in accounts of half a dozen lenders prior to lending, and assessee could only produce one lender for examination, 'addition is to be made as assessee failed to prove genuineness of loans 2. PCIT V/s Bikram Singh (ITA No.55/2017] (Delhi ) - where Hon'ble Delhi High Court held that even if a transaction of loan is made through cheque, it cannot be presumed to be genuine in the absence of any agreement, security and interest payment. Mere submission of PAN Card of creditor does not establish the authenticity of a huge loan transaction particularly when the ITR does not inspire such confidence. Mere submission of ID proof and the fact that the loan transactions were through the banking channel, does not establish the genuineness of transactions. Loan entries are generally masked to pump in black money into banking channels and such practices continue to plague Indian economy. 3. Toby Consultants (P.) Ltd. Vs CIT (2010) 324 ITR 338 (Delhi ) -where Hon'ble Delhi High Court held that where assessee-company had shown in books unsecured loans of Rs. 2.58 crores and Rs. 2.45 crores from its two directors and it was ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely furnishing PAN Numbers in routine way, does not explain the source or the creditworthiness of the party. The basis on which premium has been charged for the shares has not been explained. A perusal of the financial statements do not justify the quantum of share premium charged. 10. CIT Vs D.K. Garg ((2017) 84 laxmann.com 257 (Delhi)) - Where assessee, an accommodation entry provider, was unable to explain all sources of deposits and corresponding payments, he would not be entitled to benefit of peak credit. 11. Mangilal Jain Vs ITO (Mad) 315 ITR 105, CIT Vs Precision Finance P Ltd. (Cal) 208 ITR- Assessee failed to prove the genuineness of credit - Mere proof of identity of creditor or that transaction was by cheque, is not sufficient - Addition u/s 68 upheld 12. Blowell Auto (P) Ltd. Vs ACIT (P H) 11 DTR 91 -Since creditworthiness and genuineness of transaction not established, addition u/s 68 justified 13. Prakashchandra Singhvi (HUF) Vs ITO (ITAT, Ahd) 134 ITD 283 - Mere filing of PAN cards, I. T. returns etc. did not by itself discharge assessee from preliminary burden to establish genuineness of gifts where donors were not found at the address give ..... X X X X Extracts X X X X X X X X Extracts X X X X
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