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TMI Blog2023 (6) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... n paid and tax on payment of interest was also deducted as per law. Thus, it can be held that the requirement of law like identity, credit capacity and genuineness of transaction is satisfied by the assessee. Hence, the addition made by the Assessing Officer is deleted and the ground of appeal of the Revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the claims raised by assessee nor has not controverted this assertion of the AO in remand report, while admitting the addl. Evidence. 6. On facts & circumstances of the case and in law. the Ld. CIT(A) erred in admitting the additional evidence at appellate stage without appreciating that the purpose of rule 46A is to ensure that evidence is primarily led before the Income-tax Officer as held in Rajkumar Srimal 102 ITR 525 (Cal), Ganpatrai & Sons Ltd. 24 1TR 362 (Bom)." 3. Facts taken from the order of the ld. CIT(A). 4. A search and seizure operation u/s 132 was conducted on 30.09.2015 at the premises of the assessee. Accordingly, notice u/s 153A of the Act was issued on 25.10.2017. Further, in response to notice u/s 153A of the Act, the assessee filed return declaring income of Rs. 19,01,730/-. Subsequently, the Assessing Officer completed assessment by making addition of Rs. 2,00,00,000/- on account of unexplained unsecured loan. Aggrieved, the assessee is in appeal before the ld. CIT(A) who deleted the addition made by the AO. Hence, the appeal before us. Unexplained unsecured loans: 5. The assessee company has received an amount of Rs. 1,00,00,000/- from M/s Julian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from the following parties, which were also squared up during the financial year itself: Name of the company Date of Receipt Amount (Rs) Date of squared up Amount (Rs) Juliana Finance Private Limited 08/06/2013 1,00,00,000/- 26/03/2014 27/03/2014 50,00,000/- 50,00,000/- RITS Jewellers Private Limited 25/06/2013 50,00,000/- 24/03/2014 50,00,000/- A. V Homes Private Limited 25/06/2013 50,00,000/- 25/03/2014 50,00,000/- 1.5 During the course of assessment proceedings, the appellant has submitted the copy of complete bank statement for year under consideration along with the detailed bank narration dearly showing nature of debit and credit bank entries. 1.6 The appellant has also paid interest on above mentioned amounts received after deducting tax at source during the financial year under consideration, payment of which has also been made through same bank account and also shown in the hank narrations. 1.7 The learned assessing on perusal of die bank statement and bank narrations of bank account maintained with Axis Bank bearing account no. 912020064615134 observed that the appellant company received funds of Rs. 1,00,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to discharge his onus to prove the creditworthiness of the investors, genuineness of the transactions and existence of the lender(s) though the repayment of amount received and payment of interest thereon has been clearly shown in the same bank narrations submitted before the learned assessing office. 1.11 It is pertinent to note that the appellant has made satisfactory compliance in relation to various notices received and queries raised through order sheet entries. The appellant himself disclosed true and correct particulars of its income and also of various financial transaction undertaken by the appellant either through banking channel or otherwise during the year under consideration. (Pages 1 to 3 of the Paper Book) 1.12 However, the learned assessing officer failed to appreciate the details / documents / explanations furnished by the appellant in relation to unsecured loan received aggregating to Rs. 2,00,00,000/- -from the following parties during the year under consideration and alleged : the said unsecured loan of Rs. 2,00,00,000/ is unexplained unsecured loans: Name of the party Amount (in Rs.) Juliana Finance Private Limited 1,00,00,000/- AVT Homes P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f doubts, suspicion, conjectures and surmises is bad in law, as it is a well settled law that disallowance/ addition must be related to some evidence or material placed on record. We relied on following decisions rendered: * Commissioner of Income-tax vs. Greaves Cotton & Co. Ltd., 68 ITR 200, SUPREME COURT OF INDIA * Mehta Parikh & Co. vs. Commissioner of Income-tax, 30 ITR 181, SUPREME COURT OF INDIA * Omar Salay Mohatned Sait Commissioner of Income-tax, 37 ITR 151, SUPREME COURT OF INDIA * Assistant Commissioner of Income-tax, Central Circle-13, New Delhi vs. Vikrant Puri [2017] 82 taxmann.com 48 (Delhi-Trib.) * Mehul V. Vyas vs. Income-tax Officer, 23(2)(3), Mumbai, [2017] 80 taxmann.com 311 (Mumbai - Trib.) * Income-tax Officer, Ward-1 (2), Rajkot v. Smt. Jayshreeben Vallabhbhai Patel, [2012] 21 taxmann.com 46 (ITAT-Rajkot) 1.19 It is also pertinent to note that the learned assessing officer was, aware of the fact that the lenders are also Private Limited. Companies and thus the incorporation details can be easily retrieved by the learned assessing officer in case of any doubts or suspicion. However, learned AO did not make any effort, to confirm the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... validity of the claim of the appellant. However, in order to reduce his burden and in order to pass order in hurry the Id. assessing officer simply failed to acknowledge the details / documents produced by the appellant and alleged no details were submitted by the appellant as regard to said entities. 1.23 It is pertinent to note in a case where such information as required under the provisions of section 133(6)/131 of the Income Tax Act, 1961 has not been asked for from the person concerned, it is not open to the learned assessing officer to take an adverse view on the claims made by the appellant. The Income Tax Act, 1961 has provided many recourses to the learned assessing officer to extract such relevant information by other lawful means, whereas, the learned assessing officer has not brought on record any material evidence that categorically pointed out that the said unsecured loan is unexplained. 1.24 It is well settled law that transaction with a person cannot be treated as unexplained, where the learned assessing officer has failed-to discharged his onus by issuing notice under section 133(6) / 131 of the Income tax Act, 1961. It is also well settled in law the-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6] 202ITR 748 (Calcutta) 1.29 Further, it is also pertinent to note that the learned assessing officer has also failed to afford an opportunity of being heard before making addition of Rs. 2,00,00,000/- as unexplained credit which is in gross violation of principle of natural justice. 1.30 It is also pertinent to note that the principle of natural justice states that before any action is taken on the basis of material / information gathered against the appellant, the affected party should be given a reasonable opportunity of being heard, to show, cause against the proposed action along with copies of material evidence which were relied upon by him. It is pertinent to note that any order passed without giving sufficient and reasonable opportunity is against the principle of natural justice. 1.31 It is pertinent to note that all the acts done by the learned assessing officer are in gross violation of principle of natural justice and, any, order made in violation, of natural justice is void and null and the, principles of natural justice are so fundamental that it is not to be construed as a mere formality. The principle of natural justice embodied in the Latin dictum "a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice is to give an opportunity to the individual concerned, to present his case. Moreover, the notice must give a reasonable opportunity to comply with the requirements mentioned therein natural justice, therefore, requires that the person adversely affected by the proposed acts, decisions or proceedings be given adequate notice of what is proposed, so that he may be in a position: a) to make representation on his own behalf, or b) to appear at the hearing or inquiry of if any), and c) to effectively to prepare his own case and to answer the case he has to meet. Accordingly, the notice should he served in sufficient time to enable these representations to be made effectively. If an oral hearing is to be held, the time and the place must be properly notified. If the charges are to be brought, they should be specified with particulars. 1.34 It is well settled law that any order made in violation of natural justice is null and void and the principles of natural justice are, so fundamental that it is not to be construed as a mere formality. It is also settled law that the right of natural justice is so fundamental that the failure to observe the principles of natural jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad) 1.37 Thus, it is pertinent to note that keeping in view the above mentioned facts and in the circumstances of the appellant's case, reappraisal of facts and ratio of cases cited, the learned assessing officer erred both in facts and in law as under: A. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit ids 68 only on the basis of conjectures and surmises without appreciating the details available before him. B. The learned AO erred both hi fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with hank account, being unexplained cash credit ids 68 without confirming the facts of receipts and payment of Rs. 2,00,00,600/- from the fenders by issuing notice under section 133(6) or summons under section 131 of the Income tax Act, 1961. C. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with, bank recount, being unexplained cash credit u/s 68 by adopting pick and choose method by relying on certain entries of bank narrations / statement which is beneficial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act, 1961 was conducted on 30/09/7015 on the premises of the assessee comprising Airwill Group of cases. Search action u/s 132(1) of the Act was carried out at the business premise of the Assessee company at B-20, 21-22, Sector16, Noida -- 201306 (U.P.). Various incriminating documents were found and seized/impounded during the course of search/survey operation. During the course of assessment proceedings, the bank book of Axis Bank Ltd has been perused and it was observed that the assessee company received funds of Rs. 1,00,00,000/- from Julinia Finance, Rs. 50,00,000/- each from AVT Homes Pvt. Ltd. and RITS Jewellers Pvt. Ltd. which were also squared up during the year. During the course of assessment proceedings, the assessee vide questionnaire dated 07/11/2017 has been asked to provide complete details of fresh unsecured loan taken or accepted by the assessee during the year under consideration. In order to verify the authenticity, creditworthiness and the genuineness of lender, the assessee has been further asked to provide, the confirmation from the lender in original, Audited financial results of lenders, Bank statement of the lender explaining the source of fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not proved in this case. 4.2 In the case of M/s RITS Jewelers Pvt. Ltd., it was seen that ITR was filed at Rs. 3,64,152/- for the AY 2014-15. The loan amounts was squared up during the year, interest on loan amount has been paid. But no complete bank statement was given, hence the return .amount is not reflecting. No complete sets of bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance sheet and profit & Loss account, it is seen that the company is not engaged in any business. No income from the jewellery business has been reported during the year. An income of Rs. 22,52,038/- was declared under the heads "income from other sources". In the previous year too, there was no income from business, it had only income from other sources of Rs. 8,10,089/-. Hence, the capacity to lend a loan of Rs. 50,00,000/- is not proved in this case. 4.3 In the case of M/s AVT Homes Pvt. Ltd., it was seen that ITR was filed at Rs. 2,67,268/- for the AY 2014-15. The loan amount was squared up during the year. Interest on loan amount has been paid. But no complete bank statement was gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions made earlier, wherein the main contentions tape as under: A. The learned AO erred both in facts and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account being unexplained cash credit u/s 68 only on the basis of conjectures and surmises without appreciating the details available before him. B. The learned AO erred both in fact end in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit u/s 68 without, confirming the facts of receipts and payment of Rs. 2,00,00,000/- from the lenders by Issuing notice under section 133(6) or summons under section 131 of the Income tax Act, 1961. C. The learned AO erred both in fact and in law in making addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being unexplained cash credit u/s 68 by adopting pick, and choose method by relying on certain entries of bank narrations / statement which is beneficial to revenue and detrimental to the appellant and ignored other relevant entries of the said statement which is detrimental to the revenue. D. The learned AO erred both in fact and in law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant only on the basis of conjectures and surmises and alleged that it is duty of the assessee to provide the corroborative evidences to establish the loan is genuine and sources from the person / entities having capacity to lend such amount, in the absence of such documentary evidences treated the said unsecured loan of Rs. 2,00,00,000 as unexplained. Further, in view of above facts opportunity is afforded to us by your good self to justify the three main elements of section 68 of the income tax Act, 1961 i.e. the identity, creditworthiness and genuineness of the lenders from whom unsecured loan have been received which the appellant could not prove during the course of assessment proceedings due to shortage of time, in compliance of which the appellant has furnished Copy of income tax return, Company information as per official portal of (MCA), Relevant part of Bank statement of the Senders and Confirmed copy of account of lenders in the books of appellant in relation to all 3 lenders. Thereafter, on the basis of said documents and information requisitioned under section 133(6) of the income tax Act, 1961, the learned assessing officer has submitted his Remand report date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance sheet and Profit and loss account it is seen that the company is not engaged in any business. No income from business has been reported during the year. An income of Rs. 22,52,038/- was declared under the heads "income from other sources". In the previous year too, there was no income from business, it had only income from other sources of Rs. 8,10,089/-. Hence, the capacity to lend a loan of Rs. 50,00,000/- is not proved in this case. In the case of M/s AVT Homes Private Ltd., it was seen that ITR was fled at Rs. 2,67,268/- for the A.Y. 2014-15. The loan amount was squared up during the year. Interest on loan amount has been paid. But no complete bank statement was given, hence the return amount is not reflecting. No complete set of bank account were submitted. Hence, nature and sources of the credit in the bank accounts are not amenable to verification. From the perusal of the Audited balance sheet and Profit and loss account it is seen that the company is not engaged in any business. No income from business has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the books of account during the year under consideration. We would further like to submit that the main contentions of the AO for making addition has been duly satisfied as the lender companies themselves in their submission in response to notice under section 133(6) of the Income tax Act, 1961 have submitted all the required documents like bank statement, audited financial statements of the lenders, confirmation of loan and Interest from lender, Income tax return as per remand report of AO itself. So all the requirements of the AO have been fulfilled in the remand proceedings at appellate stage, deficiency of which are the main basis for making addition. So, keeping in view of the facts and circumstances: of the case of the appellant, reappraisal of the facts, the learned assessing officer erred both in facts and in law in framing an assessment under section 153A of the Income tax Act, 1,961 at an Total Income of Rs. 2,19,01,730/- against Returned Income of Rs. 19,01,730/- thereby making an addition of Rs. 2,00,00,000/- on account of amount deposited with bank account, being cash credit u/s 68 of the Income tax Act, 1961. Hence, the addition, of Rs. 2,00,00,000/- being un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of assessment proceedings due to shortage of time, we would like to furnish following documentary evidences to prove identity and creditworthiness and genuineness of the lenders and genuineness of transactions with the appellant: • Copy of income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of Juliana Finance Private Limited is enclosed herewith as Annexure -1. • Copy of Income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of HITS Jewellers Private Limited is enclosed herewith as Annexure - 2. • Copy of Income tax return, Company Information as per official portal of (MCA), Relevant part of Bank statement of the lenders and Confirmed copy of account of lenders in the books of appellant of AVT Homes Private Limited is enclosed herewith as Annexure -3. Thus, the three main elements of section 68 of the Income tax Act, 1961 i.e. the identity, creditworthiness and genuineness will get prove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has filed all the bank statements and ledger account of creditors, evidencing receipts and refund of unsecured loans. The factual matrix of the case indicates that the assessee has discharged its initial onus to prove the identity, creditworthiness and the genuineness of transaction by filing necessary details as an additional evidences which have been duly accepted by the ld. CIT(A) and necessary remand reports have been called for in accordance with the laid down procedure of law. No incriminating material was brought on record by the AO during the opportunity provided to him to examine and investigate based on the additional evidences. Admittedly, loans were repaid, during this relevant assessment year itself. The date of receipt of the loan was 06/2013 and the date of repayment was 03/2014 which is much before the date of search i.e. 13.09.2015. Due interest has been paid and tax on payment of interest was also deducted as per law. Thus, it can be held that the requirement of law like identity, credit capacity and genuineness of transaction is satisfied by the assessee. Hence, the addition made by the Assessing Officer is deleted and the ground of appeal of the Revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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