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TMI Blog2024 (5) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the loan creditor by obtaining and furnishing all necessary documents , like copies of the creditors tax returns in the country of his residence, bank statement containing full particulars with names. bank name, bank code, or any other papers and documents thought fit to establish the capacity of the loan creditor to advance the loan. Respectfully, enlightened by the observation of the Hon ble jurisdictional High Court,in Tirath Ram Gupta [ 2006 (9) TMI 166 - PUNJAB AND HARYANA HIGH COURT] Jaspal Singh [ 2006 (9) TMI 143 - PUNJAB AND HARYANA HIGH COURT] and Kiran Bala [ 2014 (5) TMI 968 - PUNJAB HARYANA HIGH COURT] we deem it fit and proper, that principles of natural justice would be served , if the matter is set aside to the file of the AO for examining the credit worthiness of the unsecured loan amount and the assessee shall furnish all necessary documents and evidences, as per provisions of law before the AO to establish the authenticity and creditworthiness of the loan creditor. Needless to say, the assessee should be allowed reasonable and proper opportunity in set aside proceedings, of being heard and for submission of all supporting documentary evidences required for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source of capital introduction was from three sources: (a) withdrawal from savings bank account Rs. 49,16,350/- (b) agricultural income Rs. 12,22,359/- and (c) un secured loan amounting to Rs. 51,01,810/-, from a NRI friend of Indian Origin (holding Canadian Passport), Mr. Sailesh Joitabhai Patel, PP No: HM055198 (Canadian). 3) In course of proceedings u/s 143(3) / 263 of the Act 61, the assessee satisfactorily explained the amount of Rs. 49,16,350 /- from bank withdrawals and the agricultural income of Rs. 12,22,359/-, to the satisfaction of the AO, but regarding the friendly loan of Rs. 51,01,810/- from Mr. Patel, the identity, genuiness and creditworthiness of the lender, remained unproved, and the order u/s 143 / 263, dated 20/03/2023 was passed making an addition of Rs. 51,01,811/-, u/s 68 of the Act 61, on account of cash credit, to be taxed at rates prescribed u/s 115BBE of the Act 61. As seen from the observation of the AO ( in para 3.4 of the assessment order dated 20/03/2023 ) the assessee disclosed the name and address of the lender , 2224953 Ontario inc of 3117 saddleworth Crescent, oakville, ON L6M0A8, Canada, email id [email protected], but failed to furnish any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day , the 11th January, 2017 , sending customer being 2224953 Ontario inc , Oakville City, Canada , and receiving customer being NIRVANA RESORTS and SPA , Hoshiarpur, Jaijon State, India , including the customer code number . The settlement banker in this case was Punjab National Bank, Hoshiarpur, Punjab. (iv) The debit Memo value was 100,080 CAD converted to INR 51,02,040/- (v) HDFC bank certificate (Xerox) A/c No: 14351000027958, issued on request to the assessee Mr. Ajmer Singh, which certifies that a total amount of 16,000 CAD ( on three occassions ) has been transferred to one Nita Patel , (vi) Nita Patel is stated to be the wife of the loan lender Mr. Sailesh Patel, and as ID a Canadian driving license, photo copy, is enclosed. (vii) It is further submitted in writing by the A/R of the appellant, that the following amount has been repaid to the wife of the loan lender Nita Patel, being part repayment of the loan amount (till date): 4th February, 2020 Rs. 2,17,200/- (4000 CAD), 15th December, 2020 Rs. 4,69,680 /- (8000 CAD), 13th October, 2022 Rs. 2,43,800/- (4000 CAD) (viii) HDFC Bank Statement (photo copy) of the appellant Mr Ajmer Singh, which reflects the part loan repayme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins in doubt. The full bank account statement of the loan creditor with full name , account number and bank id is not available, and the regular tax returns of the lender in his respective country of residence has not been filed to prove the credit worthiness of the lender , more so , when the Ld. CIT ( A ) has made a keen observation in his appeal order, that funds has being transferred to the lender bank account just six days before remittance of the loan to the assessee bank account in India , and absence of any other financial transaction in the said bank account, screen shot , is adequate proof that it is not a regular business bank account of the lender and it raises suspicion of its genuineness and authenticity of the loan . The credit worthiness of the lender, of course has never been established at any stage, neither before the AO nor before the CIT(A), and not even before the Ld. PCIT in 263 proceedings. He prays for sustaining the addition of Rs. 51,01,811/-, for lack of credit worthiness. 10. We have gone through the materials available on record and have duly heard the Ld council appearing on behalf of the appellant and the Ld. D/R on behalf of the revenue at length. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to explain the foreign gift and relationship with the donor. On being asked, the assessee stated that he was not aware about the business of the donor. The statement of the father of the donor, Shri Mukhtiar Singh was recorded and it was found that the gift was not genuine. On appeal, the Commissioner of Income-tax (Appeals) reversed this view taken by the Assessing Officer. On further appeal, the Tribunal set aside the order of the CIT(A) relying upon the judgment of this court in Lal Chand Kalra v. CIT [1981] 22 CTR P H 135 and the judgment of the Delhi High Court in Sajan Dass and Sons v. CIT [2003] 264 ITR 435, holding that: 'the mere identification of the donor and the receipt of gift amount through banking channel was not sufficient to prove the genuineness of the gift. Since the claim of the gift was made by the assessee, the onus lay on him not only to establish the identity of the person making the gift but also his capacity to make the gift and that it had only been received as gift from the donor. Reference was also made to the judgments of the hon'ble Supreme Court in CIT v. Durga Prasad More [1971] 82 ITR 540 and Sumati Dayal v. CIT [1995] 214 ITR 801. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hrough banking channel is not enough to prove genuineness of the gift - The assessee was required to establish that the donor had the means and the gift was genuine, for natural love and affection - there being neither any relationship nor there being any circumstance to show natural love and affection of the donor for the donee nor there being any occasion to make such gifts to the assessee - the assesse was unable to show that there was any occasion or relationship to make the gift Decided in favour of Revenue. No.- Income Tax Appeal No. 602 of 2006 Dated.- April 3, 2014 17. Now in respect of the judgments cited by the Ld. AR of the assessee, stated above in paragraph - 8 and relied upon by the assessee, it is seen that all the above cases are distinguishable on facts: i. In the Case of ITO vs. Balwan Singh ITA No. 2869/Del/2019 dated 07/08/2023; This case of unsecured loan where a loan confirmation has been filed, full bank statements of all the lenders has been filed, copy of Income Tax Returns of lenders has been filed, and all lenders appeared personally u/s 131 and explained the source of the loans in remand proceedings before the AO, to be out of sale of property, and it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seek his cooperation, to establish the financial capacity of the loan creditor by obtaining and furnishing all necessary documents , like copies of the creditors tax returns in the country of his residence, bank statement containing full particulars with names , bank name , bank code, or any other papers and documents thought fit to establish the capacity of the loan creditor to advance the loan. Respectfully, enlightened by the observation of the Hon ble jurisdictional High Court, (referred to in paragraph 14 to 16 above), we deem it fit and proper, that principles of natural justice would be served , if the matter is set aside to the file of the AO for examining the credit worthiness of the unsecured loan amount of Rs. 51,01,811/- and the assessee shall furnish all necessary documents and evidences, as per provisions of law before the AO to establish the authenticity and creditworthiness of the loan creditor. Needless to say, the assessee should be allowed reasonable and proper opportunity in set aside proceedings, of being heard and for submission of all supporting documentary evidences required for establishing his case. 19. In the result, the appeal of the assessee bearing IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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