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TMI Blog2024 (7) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Balances added u/s. 68 of the Act. Balance of unsecured loans taken/accepted during the year under consideration - We also restoring this issue to the file of AO for fresh consideration with a direction to examine/verify the identities of the parties more particularly having sent their reply u/s 133(6) of the Act from the same Address as that of the Assessee in respect of the transactions entered in the year under consideration, genuineness of the Transactions creditworthiness of the parties and to decide this issue in accordance with Law after giving reasonable opportunity of being heard. Appeal filed by the assessee is partly allowed for statistical purposes. - Shri Waseem Ahmed, Accountant Member And Shri Keshav Dubey, Judicial Member For the Appellant : Smt. Suman Lunkar, CA For the Respondent : Ms. Neha Sahay, JCIT-DR ORDER PER KESHAV DUBEY, JM : This appeal at the instance of the assessee is directed against the order of the CIT(A) / National Faceless Appeal Centre, Delhi dated 29.03.2024 vide DIN order No. ITBA/NFAC/S/250/2003-24/1063638650(1) passed u/s. 250 of the Income-tax Act, 1961 ( the Act ) for Assessment Year (AY) 2017-18. 2. The assessee has raised the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in his return of income. The assessee vide his online submission dated 09.11.2019 submitted that he is the proprietor of his business running under the name and style of M/s.Shree Chamunda Creation and is into the business of buying and selling of sarees. During the course of assessment proceedings, the assessee has also uploaded the financial statements for the assessment year 2016-2017 2017- 2018, bank account statement, VAT returns, etc. On going through the details submitted by the assessee, it was observed by the Assessing Officer (AO) that the assessee had shown an amount of Rs. 92,04,381/- in the balance sheet as on 31.03.2017 under the head Unsecured Loans . The assessee was required to furnish the name, address and PAN of the persons from whom unsecured loans had been availed during the financial year 2016-2017 and the ld.AO also observed that the assessee has furnished the relevant details as called for. The AO out of the total Unsecured Loans amounting to Rs. 92,04,381/- has mentioned the details of the Unsecured Loans amounting to Rs. 91,14,998/- in his Assessment Order as detailed below:- Sl. No. Name of the person Loan amount (Rs.) 1. Mana Ram 7,48,882 2. Manju Dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h PAN, opening balance and closing balance etc., and (iv) confirmation from loan creditors. Before us, the learned AR vehemently submitted that the ld.CIT(A) grossly erred in passing an unreasoned order. Further, the AR of the assessee submitted that when interest paid on unsecured loans are accepted by the AO on which tax has also been deducted at source, the question of not accepting Principal loan Amount does not arise. It was also submitted that the assessee possess all the documentary evidences in support of obtaining the unsecured loan for the purposes of business which were also furnished during the course of assessment proceedings, as observed by the ld.AO in his assessment order also. Further, the AR of the assessee vehemently submitted that most of the Unsecured loans were Taken/accepted during the earlier years and having opening balances as on 01/04/2016, and therefore, the addition made to the extent of opening balances c/f from earlier years are bad in law and such addition is liable to be deleted. In this context, the learned AR also relied on the order of the ITAT Ahmedabad Bench in ITA No.1707/Ahd/2019 in case of ITO v. Samir J. Shah as well as the order of the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation 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: [Provided that where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee company shall be deemed to be not satisfactory, unless (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer aforesaid has been found to be satisfactory: Provided further that nothing contained in the first proviso shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB)of section 10.] 8.2 Thus, from the plain reading of section 68 of the Act, it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of the Act. Again, the Delhi ITAT in the case of Mahaveer Prasad vs. ITO 40 taxman 35 (Del Trib) (Tax Magazine) held that amounts found in the books of accounts of the assessee were in existence much prior to the beginning of the accounting period and therefore the same cannot be treated as income of the assessee during the relevant previous year. Again, the Delhi ITAT in the case of Nuchem Ltd. vs. DCIT 87 TTJ (Delhi Trib) 166 held that since Revenue has failed to prove that the amounts were credited to the books of the assessee during the year and these amounts were brought forward from earlier years, therefore, it is a settled law that addition u/s. 68 could be made only if the amount was credited in the accounts of the assessee in the relevant financial year. Accordingly, the Delhi ITAT directed the addition to be deleted. Further, in the case of Shri Vardhman Overseas Ltd. vs. ACIT 24 SOT 393 (Delhi Trib.) held that since no new amount has been credited by the assessee in its account during the year under consideration, applicability of section 68 of the Act is ruled out. Therefore, in view of the above judgments, we observe that it is a settled law that opening balance o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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