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TMI Blog2024 (6) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... wledgement of return of income of three lenders were filed. Copies of scrutiny assessment orders under section 143(3) of M/s Deepak Sales Corporation and M/s Jagan Nath Enterprises were placed on record, where no adverse inference was drawn on these lendings. Thus genuineness of transaction and credit worthiness of the lender stands established. Therefore the appellant / assessee had proved identity, creditworthiness of lender and genuineness of transaction to show that the case comes within the purview of provisions of section 68 - Accordingly addition is not sustainable. Decided in favour of assessee. - Shri M Balaganesh, Accountant Member And Shri Vimal Kumar, Judicial Member For the Assessee : Shri Pulkit Saini, Advocate, Shri Jalaj Prakash Kant, Advocate For the Department : Shri Sandeep Kr. Mishra, Sr. DR ORDER PER VIMAL KUMAR, JM The appeal is against order dated 26.11.2018 of the Learned Commissioner of Income Tax (Appeals) [Learned CIT(A) ] through which assessment order dated 05.12.2016 by the Learned Assessing Officer (Learned AO ) for the assessment year 2014-15 through which additional evidence was admitted under Rule 46A of Income Tax Act, 1961 and deleted the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en of the appellant stood discharged and therefore, addition sustained on the ground that 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 for that previous year. 1.3 That various adverse findings and conclusions recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect and contrary to record, legally misconceived and untenable. 1.4 That further more the learned Commissioner of Income Tax (Appeals) has sustained the addition on mere speculation, generalized statements, theoretical assumptions and allegations and assertions, without there being any supporting evidence and is therefore not in accordance with law. 1.5 That low income of the creditors who have duly confirmed the loan and assessed to tax u/s 143(3) of the Act could not be a basis to make the addition. 1.6 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that non production of the bank statements of creditor also not be a ground to denominate a genuine transaction as an u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6A ITO-Ward-1, Sirsa 2,86,50,000 i) Copy of acknowledgement of return of income dated 28.11.2014 alongwith computation of income in the case of Shri Deepak Bansal for Assessment year 2014-15 (137- 139) ii) Copy of loan account showing the repaying of loans transaction (140) iii) Copy of bank statement of the appellant company (141-150) iv) Copy of conformation in shape of ledger account (131- 132) Alongwith rejoinder to remand report v.) Copy of acknowledgement of return of income alongwith computation of income, audited financial statement and tax audit report in the case of Sh. Deepak Bansal, proprietor, for the financial year 2013- 14 relevant to assessment year 2014-15 (314-329) vi) Copy of order of assessment dated 30.11.2016 u/s 143(3) of the Act in the case of Sh. Deepak Bansal for the Assessment year 2014-15 (330-331) ii) M/s Jagan Nath Enterprises PAN No. ATFPB852H TIN No. 03642097617 Address: Shop No. 29, New Grain Market, Budhladha 1,30,00,000 i) Copy of acknowledgement of return of income dated 27.11.2014 in the case of Shri Ankush Bansal for AY 2014-15 (151-153) ii) Copy of ledger account of M/s Jagan Nath Enterprises in the books of appellant company (154) iii) Copy o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 0 ---- ----- 9. Learned representative for appellant/assessee submitted that as per section 68 the onus was placed upon the assessee to explain the nature and source of the credit has been discharged by the assessee. The creditors are regularly assessed to tax and the assessee had furnished their ITR, scrutiny assessment order, audited balance sheet, profit and loss account, tax audit report and confirmation for the transaction. All the transactions of lending as well as repayment was by proper banking channels. The creditworthiness of the parties cannot be questioned only on account of low income reported in ITRs. The audited balance sheet, profit and loss account and tax audit report reflected that the parties had sufficient capital balance as well as high turnover to make advance to the assessee:- Sr. No. Particulars Capital 31/03/2014 Turnover for the Addition us AY 68 Addition u/s 68 1. M/s Deepak Corporation 1,49,05,622 11,05,23,280 2,86,50,000 2. M/s Jagan Enterprises 1,35,29,095 7,56,58,049 1,30,00,000 3. Krishan Traders 79,36,656 5,16,36,611 3,40,000 10. The turnover, capital balance and amount lent by the lenders is accepted by the department in scrutiny assessment orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction through account payee cheque has been established. 13. Learned representative for appellant/assessee submitted that as per proviso to section 68 the onus cannot be placed upon the assessee to explain the source of source unless the credit is of investment in share capital of a private company which is not the case. In the case of CIT vs. Shiv Dhooti Pearls Investment Ltd. reported in 237 Taxman 104 (Del) it was held as under:- If Section 106 and Section 68 are to stand together, which they must, then, the interpretation of Section 68 has to be in such a way that it does not make Section 106 redundant. Hence, the harmonious construction of Section 106 of the Evidence Act and Section 68 of the Income Tax Act will be that though apart from establishing the identity of the creditor, the Assessee must establish the genuineness of the transaction as well as the creditworthiness of his creditor, the burden of the Assessee to prove the genuineness of the transactions as well as the creditworthiness of the creditor must remain confined to the transactions, which have taken place between the Assessee and the creditor, What follows, as a corollary, is that it is not the burden of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly applies in relation to the assessment year 2023-24 and subsequent assessment years. Therefore appeal may be rejected. 16. From examination of record in light of aforesaid rival contention it is crystal clear that para No. 4.12 of the assessment order mentions:- 4.12 As explained above in the body of this order, the assessee has failed to discharge the onus which lay on him and has miserably failed to justify the identity of the investor parties, prove genuineness of transaction entered, as well as creditworthiness of the parties. Accordingly, the net amount of Rs. 4,19,90,000/- received in disguise of unsecured loans from three non related parties, on which even no interest has been paid is treated as unexplained. Accordingly, the amount of Rs. 4,19,90,000/-is hereby added to the income of assessee under the provisions of section 68 of the Income Tax Act, 1961...... 17. In appeal appellant / assessee submitted additional evidence. Learned CIT(A) after discussing the documents especially their ITR, scrutiny assessment order, audited balance sheet, profit and loss account, tax audit report and confirmation for the transaction concluded that three lenders had very low incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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