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TMI Blog2024 (3) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors has denied the advancing of loan and the said loan was repaid fully later on with interest subject to TDS as applicable. But the A.O. made addition arbitrarily on the basis of assumption and presumption and without any adverse material on I-'" record and the learned CIT erred in confirming the same. 3. In the facts and in the circumstances of the case the Learned A.O. erred in making addition of Rs. 7944162/- U/s. 68 of the Income Tax Act, 1961 and Learned CIT erred in confirming the same without considering the details such as Confirmation Letter, PAN Card, Aadhar Card, Acknowledgement of Income Tax Return filed , Bank Statement, Financial Statement, Affidavit as received from the Loan creditors and there is no denial from loan creditors in response to the notice of A.O. 4. The Appellant prays the Hon'ble ITAT to set aside the order of A.O. and transfer the matter to physical A.O. since, the appellant was facing difficulty in explaining the facts and circumstances of the case and bringing the loan creditors before such authority for genuineness of the claim of the appellant." 2. The assessee is an individual carrying on the business as a manufacturer of alumini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PT2418G 1,00,000 1,00,000 Confirmation letter & bank statement of loan repayment 56,44,162 46,00,000 23,00,000 79,44,162 4. The Ld.CIT(A) called for a remand report from the Assessing Officer to examine the additional evidences submitted by the assessee. The Assessing Officer, in the remand report, had relied on the statement of oath under section 131 of the Act obtained from Shri.Ranjit K Yadav and Shri Umesh Bagwale to conclude that the amount reflected against their name are bogus entries and therefore not genuine. With regard to the rest of the creditors, the Assessing Officer held that the assessee has not furnished the balance sheet, bank statement, etc. of the creditors and, therefore, failed to prove the creditworthiness and the genuineness of the transactions. The assessee filed the response to the party wise observations made by the Assessing Officer as to why the addition cannot be sustained. The Ld.CIT(A) after perusing the details furnished by the assessee and the remand report upheld the disallowance by holding that - "I have considered the facts of the case, remand report and counter comments of the appellant on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty u/s 271(1)(c) is concerned, I find the AO has initiated the penalty based on the observations made during the assessment proceedings. Since the penalty has not been decided by the AO and the penal proceedings are separate proceedings, hence there cannot be grievance against the initiation of penalty proceedings the penalty proceedings are not decided by the AO. In view of the above discussions the grounds of appeal raised by the appellant are dismissed." 4. The assessee is in appeal before the Tribunal against the order of the CIT(A). The Ld.AR submitted that out of the loans borrowed, loan amount to the tune of Rs. 56,44,162/- is the opening balance and that the addition cannot be made to this extent since it is settled position that old loans not taken during the year under consideration cannot be treated as addition under section 68 of the Act. The Ld.AR further submitted that the assessee has furnished all the relevant details including PAN, loan confirmations, bank statements evidencing the subsequent repayments etc., thereby discharging the onus of proving the genuineness of the loans and that the entire loan transaction is through banking channel. With regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since the loan is not obtained during the year under consideration. In this regard we will look at the relevant provisions of section 68 which reads as follows - Cash credits. 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, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year:*** 8. From the plain reading of the provisions of Section 68 it is clear that the Assessing Officer is required to make addition of unexplained cash credit only in the previous year in which such cash credit has been made and the assessee is not in a position to offer satisfactory explanation relating thereto. The law is well settled in this regard that the addition under section 68 could be made only during the year in which such credit has been received and that if the credit balance appearing in the account of the assessee is not pertaining to the year under consideration, the Assessing Officer cannot make addition under section 68 in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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