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TMI Blog2024 (7) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The assessee has discharged the basic onus and that the onus was shifted to the AO has been totally ignored. Loan from Laxmipat Dudheria - No adverse inference can be drawn on the assessee in this regard. The assessee has produced the standard details as is required to establish the genuinity of the transaction. The very edifice and the substratum based on which the addition is made does not exist and appears to be a wild imagination. There is no effort by the AO except summarily and erroneously causing a wrong addition. Any clarification could have been submitted by the assessee and examined by the AO had the same been brought to the knowledge of the assessee. The transaction is genuine, verifiable and can no stretch be called unexplained. Lack of understanding/inability to understand the explanation cannot be equated as unexplained. Loan from Dinesh Kumar Singhi - A bare verification of the ledger copies of Sagar Cements in Dinesh Kumar Singhi books and the confirmation of accounts given by Sagar Cements indicates that the closing balance of Rs. 1.57 crore matches with each other and indicates no discrepancy, Evidently the AO has misguided herself for the reason best known. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER For the Appellant : Shri K.R. Pradeep Ms. Giriji G.P., A.Rs For the Respondent : Shri Senthil Kumar N., D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of NFAC for the assessment year 2016-17 dated 20.3.2023 passed u/s 250 of the Income Tax Act, 1961 (in short The Act ). The assessee has raised following grounds of appeal: 1. That the orders of the authorities below in so far as it is against the assessee is against the law, facts, circumstances, natural justice, equity, without jurisdiction, bad in law and all other known principles of law. 2. That the total income computed and the total tax computed is hereby disputed. 3. The AO erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled. 4. On the facts and circumstances of the case as well as in law, the learned CIT(A) has erred in confirming the action of learned Assessing Officer in making addition of Rs. 150,13,10,676/- as unaccounted cash credit u/s 68 rws 115BBE of the Act. 5. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se was selected for making a reference to the Transfer pricing officer in respect of certain Specified Domestic Transactions vide reference dt.18.09.2018. After elaborate hearing the learned TPO determined that no adjustment was required u/s 92CA rws 92C to the arm s length price determined by the assessee vide order u/s 92CA of the Act dt.22.10.2019. For the impugned year several hearings were scheduled, however no effective hearing took place for a long period of time in view of change in jurisdiction of the AO. Finally, and penultimately a notice dt. 28.11.2019 was issued u/s 142(1) of the Act with the compliance date of 10.12.2019 calling for several details many of which are very basic like seeking copy of the Balance Sheet, Profit Loss etc. Thereafter another notice dt. 16.12.2019 was issued seeking several details fixing the compliance and also hearing fixed on 20.12.2019 at 11.47 am. On going through the details, the ld. AO did not seek any further details nor expressed any adverse view about the details filled or raised any issue of contention. From the assessment order in para 3.6, it is seen that the AO has caused certain enquiry and collected information on 25.12.2019 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of loans from directors/related parties are as under: SI No Name of the party Opening Balance Loan received Loan repaid Balance as on 31.03.2016 1 Dinesh Kumar Singhi 120,99,84,555 145,01,50,000 19,50,00,000 2,46,51,34,555 2 Snehalata Singhi 12,82,00,000 34,06,64,732 46,88,64,732 3 Singhi Holdings Private Limited 8,23,00,000 - - 8,23,00,000 4 Singhi Finlease Private Limited 6,40,00,000 - - 6,40,00,000 All the transactions have been transacted through banking channels by way of account payee cheques/RTGS. The copies of the ledger accounts, confirmation statements, bank statements, Income Tax returns and Financial statements are enclosed as Annexure 3. It may be seen that the above parties are having sources for advancing the loans and have been reflected in their respective Income Tax returns and assessments. There is no case to hold that there is any element of any type of adverse finding. Hence it is requested that no recourse be made to section 68 or section 115BBE of the Act. If you need any further information we are more than happy to furnish the same even at a short notice and oblige. 4.3 The ld. A.R. submitted that a perusal of the query in show cause notice shows that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure unknown to law and not supported by any rules or procedure and has followed its own whims and fancies to draw conclusion. While the assessee had submitted the account statement and confirmation, instead of verifying the source for each entry, the AO has chosen to draw up a summary and did not even do the rudimentary work of verification. He submitted that a perusal of section 68 of the Act applies to tiny sum found credited in the books i.e., each credit and not some vague verification. The assessee's source of credit was from the lenders whose names have been furnished. Thus, any enquiry about the source ought to have been to the lenders who have already confirmed the lending. He submitted that the AO himself recorded that the assessee received the funds from Dinesh Kumar Singhi who in turn received the money from Laxmipat Dudheria. Hence, even according to the ld. AO, Dinesh Kumar Singhi source is from Laxmipat Dudheria. On the basis of this finding, addition both on account of Dinesh Kumar Singhi and Laxmipat Dudheria indicates a clear case of double addition to say the least and also clearly explains the source. He submitted that the Hon ble Supreme Court has rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no discrepancy. The transactions entered during the year is through Karur Vysya Bank, State Bank of Hyderabad and Kotak Mahindra Bank (erstwhile Vysya Bank) and copies of the bank statement has been submitted. The AO also has made enquiries from Karur Vysya Bank and collected the information as can be seen from the discussion in para 5.5.2 of the assessment order. The confirmation of credit has been given along with the PAN number and the Income Tax Return filed. Dinesh Kumar Singhi has been one of the largest taxpayer for past several decades and this fact is known to the department. The opening balance is well supported by the financial statement for the year ended 31.03.2015. Thus looking from any angle the credit and the transactions stands proved beyond any shade of doubt. The assessee has produced the standard details as is required to establish the genuinity of the transaction. Without calling for any further detail/explanation from the assessee, the AO has alleged that Dinesh Kumar Singhi did not have source to advance loan to the assessee. The discussion by the AO on the issue of transaction between said Dinesh Kumar Singhi and Sagar Cements (erstwhile BMM Cements) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the knowledge of the assessee. The transaction is genuine, verifiable and can no stretch be called unexplained. Lack of understanding/inability to understand the explanation cannot be equated as unexplained. The fact that all the parties being Laxmipat Dudheria, Dinesh Kumar Singhi Snehalatha Singhi are assessed to tax for long period of time and the resources are adequate and reflected in the financial statements and that the transaction were through account payee cheques/ RTGS has been ignored. The assessee has discharged the basic onus and the onus was shifted to the AO and that the AO has failed to discharge the onus. There is not even an iota of evidence brought on record which is adverse to the assessee. Without doing so the AO has made massive addition in a very cavalier manner. In view of the above, the ld. A.R. submitted that the arbitrary addition of Rs. 150,13,10,676/- requires to be deleted in the interest of justice. 4.8 Thus, the ld. A.R. submitted that the assessee has proved the identity and capacity of parties and thus, the transactions are genuine since it was routed through the banking channels. The ld. AO without calling any details or making any further enqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prove all the ingredients of section 68 of the Act, which is not discharged by the assessee and same to be sustained. 6. We have heard the rival submissions and perused the materials available on record. The argument of ld. D.R. is that there is a grave doubt about the capacity of the lenders and genuineness of the transactions. The documents produced by the assessee are self-serving document as not enough to justify the claim of the assessee. It was submitted that banking documents are mere self- serving recitals and these documents cannot be relied upon. It is to be noted that Hon ble Supreme Court in the case of CIT Vs. P. Mohanakala (291 ITR 278), wherein held that the money came by way of bank cheque and was paid through the process of banking transactions was not by itself of any consequences. The burden of proof is on the assessee in the matter of justification of receipts, which are of suspicious and dubious nature. 6.1 In the case of CIT Vs. Durga Prasad More (82 ITR 540) (SC), wherein their Lordship laying down the significance of human probabilities held as under: In the case where a party relied on self-serving recitals in documents, it was for that party establishing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit shown in the books of accounts in the assessment year under consideration is open to the lower authorities to hold that it is the income of the assessee and there would be no burden on the revenue to show that the income is from any particular sources. It is to be noted that once the assessee has produced the documents relating to identity, genuineness of transactions and creditworthiness of the lender, then the lower authority is duty bound to conduct an independent enquiry to verify the same. However, in the present case, the lower authorities has not made any independent enquiry to verify the capacity of lenders of genuineness of the transactions, though the lower authorities has pointed out the discrepancy and insufficiency in the documents furnished by the assessee before him. As seen from the facts of present case, the lower authorities concerned has to examine the evidences furnished by conducting independent enquiry and there after to state whether he is satisfied with the details of evidences produced by the assessee and conducting of enquiry made by him. If he is not satisfied with the details of evidence and enquiry made by him after confronting the same to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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