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TMI Blog2023 (9) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... aseology used in section 69 has held that in creating the legal fiction the phraseology employs the word may and not shall . Thus the unsatisfactoriness of the explanation does not and need not automatically result in deeming the amount credited in the books as the income of the assessee as held by the Supreme Court in the case of CIT v. Smt. P. K. Noorjahan [ 1997 (1) TMI 6 - SUPREME COURT] X X X X Extracts X X X X X X X X Extracts X X X X ..... oan/deposits received during the year and outstanding at the end of year under consideration. During the assessment proceedings on verification of Audit Report and Balance Sheets, the assessee had shown particulars of unsecured loans/deposits received from 5 entities. The Assessing Officer issued letters u/s. 133(6) on the creditors of unsecured loans. According to Section 68, where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the Assessing Officer, the sum so credited may be charged to income tax as the income of the assessee of that previous year. In a case of liability of unsecured loan it is a matter entirely within the assessee's knowledge as to how same to be introduced. It is obligatory on the part of the assessee to prove the source of sum so credited with giving details such as identity of the creditor, the capacity of such creditor to advance the money and lastly the genuineness of the transaction. The assessee failed to establish the loan transactions by all sort of parameters as laid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no demand from the creditors, in the absence of confirmation, the same deemed to have been ceased. The appellant has not furnished any evidence to prove that these loan liabilities were utilized for capital investment and therefore, I treat the same to have been utilized for normal business transactions. In this regard, the following decisions which are in favour of revenue, are worth mentioning:-" 2.2 The ITAT for some of the lenders held as under: "(B) II-Harish Ambika Prasad I. The assessee during the year from the captioned party received loan of Rs. 8 lakh dated 7th April 2012 which was repaid during the year dated 23rd May 2012. The party namely Shri Harish Ambika Prasad also confirmed the transaction in reply to notice issued under Section 133(6) of the Act and also furnished the required documents such as ledger copy, bank statement and copy of ITR. However, the lower authorities treated such credit of loan as unexplained merely for the reason that the bank of account of the party was credited just before transferring the fund to the assessee bank. In our considered opinion, the credit of loan cannot be held unexplained merely for the reason that bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount gone to any third party. Therefore, in our considered view and applying the ratio laid down by the Hon'ble jurisdictional High Court in case of CIT Vs. Rohini Builders (supra) the action of the authorities below are not justified. Hence, we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made on account of loan credit from the party namely Smt. Kaushalya ben for Rs. 7 lakh. (D) IV & V- M/s. Pooja Garments P Ltd and M/s. Parkash Fortan Softech Ltd. 10.13 The assessee was having outstanding unsecured loan from past several years for Rs. 5,84,43,771/- and Rs. 94,742/- from the party namely M/s. Pooja Garments P Ltd and M/s Parkash Fortan Softech Ltd respectively which was treated as unexplained cash credit under Section 68 of the Act. However, the learned CIT(A) while confirming the addition made by the AO held that the assessee has not furnished any detail of the party except unsigned confirmation copy. The amount has been outstanding for last several years and there being no information that party is perusing the recovery of the amount. Accordingly, the learned CIT(A) held the liability of the assessee came to be ceased as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h credits as non-genuine, he has not made any addition on account of interest claimed/paid by the assessee in relation to those cash credits, which has been claimed as business expenditure and has been allowed by the Assessing Officer. It is also pertinent to note that in respect of some of the creditors the interest was credited to their accounts/paid to them after deduction of tax at source and information to this effect was given in the loan confirmation statements by those creditors filed by the assessee before the Assessing Officer. Thus it is clear that the assessee had discharged the initial onus which lays on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent accounts numbers and the copies of assessment orders wherever readily available. It has also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee is not expected to 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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