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TMI Blog2022 (10) TMI 1258X X X X Extracts X X X X X X X X Extracts X X X X ..... to interfere in the decision of CIT(A). Accordingly, the grounds of appeal of the assessee stand dismissed. - SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For the Appellant : None For the Respondent : Mahita Nair ORDER PER AMARJIT SINGH, AM: The present appeal filed by the assessee is directed against the order passed by the ld .CIT(A)-33, Mumbai, which in turn arises from the order passed by the A.O u/s 143(3) of the Act. The assessee has raised the following grounds before us: 1. Unexplained Cash Credits The learned ACIT has erred in holding unsecured loans amounting to Rs. 373 lakhs taken by the assessee from 15 parties as unexplained cash credits and added the same to the income of the assessee u/s 68 of the Income Tax Act. On the facts circumstances of the case and in law, the learned CIT (A) erred in upholding Assessing Officer's order by completely ignoring the fact that unsecured loan taken by the appellant is genuine. On the facts circumstances of the case and in law, the learned CIT (A) erred in upholding Assessing Officer's order by completely ignoring the fact that interest (on which TDS was deducted) on unsecured loans taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th copies of the Income Tax return acknowledgment for assessment year 2011-12 to A.Y. 2013-14. Because of no compliance the A.O held that creditworthiness of the parties as per Sec. 68 of the Act could not be proved, therefore, the impugned unsecured loan of Rs. 3.73 crores was treated as unexplained and added to the total income of the assessee. 4. The assessee filed appeal before the ld. CIT(A). The ld. CIT(A) sustained the disallowance made by the AO. The relevant part of the decision of CIT(A) is reproduced as under: 13 I have carefully gone through the impugned assessment order, remand report of the AO and rejoinder filed by the appellant and the material available on record. My observations are as under: 13.1 The impugned addition has been made as the 15 parties did not respond to notices issued by the AO. During the remand proceedings, on the request of the Ld. AR, the appellant was given an opportunity to produce these parties before the AO to establish identity, creditworthiness and genuineness of transactions It is observed that in-spite of giving a no of opportunities, the appellant failed to produce the parties concerned for examination by the AO. Instead of that he has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12, a fund of Rs. 7,00,000/- was transferred in their account and the same fund was transferred to Mr Mukul Kakkar on 26.09.2012 by way of RTGS. The time duration between the transfers is just few moments (v) Regarding M/s Meghan Financial Services Pvt Ltd, it is reported by the AO that there is no existence of this company at the address provided during the appellate proceedings. 13.3 From the rejoinder of the remand report particularly on the aspect of enquiry being carried out by the AO, it is observed that the Ld. AR has not denied the factual aspects of the report, as discussed above. His only argument is that since the loan was retumed back TDS was deducted, the loan should be considered as genuine. Further, based on the documents produced during appellate proceedings, it is contended that three ingredients regarding establishing genuineness of loan are fulfilled. In the process, he has relied upon few judgments in this regard. 13.4 In my considered opinion, once a finding of the fact about bogus nature of the companies being involved is brought on record by the AO, which is not disputed by the appellant or his Ld. AR further argument justifying genuineness of shell loans giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment of genuineness of a transaction and this call is to be taken not only in the light of the face value of the documents sighted before the Tribunal but also in the light of all the surrounding circumstances, preponderance of human probabilities and ground realties Genuineness is a matter of perception but essentially a call on genuineness of transaction is to be taken in the light of well settled legal principles. There may be difference in subjective perception on such issues, on the same set of facts, but that cannot be a reason enough for the fact finding authorities to avoid taking subjective calls on these aspects, and remain confined to the findings on the basis of irrefutable evidences: The phenomenon of shell entities being subjected to deep scrutiny by tax and enforcement officials is rather recent, and that, till recently, little was known, outside the underbelly of financial world, about modus operendi of shell entities. There were, therefore, not many questions raised about genuineness of transactions in respect of shell entities. That is not the case any longer Just because these issues were not raised in the past does not mean that these issues cannot be raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision Finance (P) Ltd [1994] 208 ITR 465/1995] 82 Taxman 31 (Cal), it was observed that it is for the assessee to prove the identity of creditors, their creditworthiness and genuineness of transactions There is thus no escape from proving genuineness of a transaction. As regards learned counsel's contention that nothing can be added to the objections specifically taken by the Assessing Officer, I am unable to approve this plea for the simple reason that as long as subject matter of the disallowance or addition is the same, there is no bar on examination of any related aspect by the Tribunal, as has been specifically held by a full bench of Hon'ble Bombay High Court in the case of Ahmedabad Electricity Co Ltd v CIT [1993] 199 ITR 351/66 Taxman 27 and reiterated by a Special Bench of this Tribunal in the case of Tata Communications Ltd v. Jt CIT [2009] 121 ITD 384 (Mum). That is, of course, besides the fact that there is no attempt, direct or indirect, to enlarge the subject matter of appeal. The legal plea of the learned counsel proceeds on clearly fallacious assumptions 13.8 It is further held by the Hon'ble Tribunal that what is genuine and what is not genuine is a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y are genuine, If the lenders do not have the financial strength to lend such huge sums and if there is no explanation as to their relationship with the assessee, no collateral security and no agreement, the transactions have to be treated as bogus unexplained credits Hon'ble Court has further held that:- 41. An analysis of the above facts shows that none of these four individuals have the financial strength to lend such huge sums of money to the Assessee, that too without any collateral security, without interest and without a loan agreement. The mere establishing of their identity and the fact that the amounts have been transferred through cheque payments, does not by itself mean that the transactions are genuine. The AO and the CIT (A) have rightly held that the identity, creditworthiness and the genuineness are all in doubt. Moreover, the Court notes that that these amounts have been advanced to the Assessee without any explanation as to their relationship with the Assessee, the reason for the payment of such huge amounts, as also whether any repayments have, in fact, been made. There are contradictions in the explanation given by the Assessee and the statements recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inues to plague the legitimate economy of our country. As seen from the facts narrated above, the transactions herein clearly do not inspire confidence as being genuine and are shrouded in mystery, as to why the so-called creditors would lend such huge unsecured, interest free loans - that too without any agreement In the absence of the same, the creditors fail the test of creditworthiness and the transactions fail the test of genuineness. The findings of the CIT (A) are upheld and the order of the ITAT dated 19th July, 2016 is set aside to the extent of the deletion of four entries. The deletions made in respect of the transactions of the Assessee with Shri Amar Singh, Shri Chandan Singh, Shri Ram Charan/Ram Chander and Smt Sunita to the tune of Rs 50,00,000/- Rs. 1,10,00,000/- Rs. 10,00,000/- and Rs. 98,00,000/, respectively, are liable to be added back to the returned income of the Assessee for the relevant AY, under Section 68 of the Act. 14. Considering the totality of the fact and circumstances of the issue involved, in my considered opinion, the ratio of the judgments in the Pavankumar M Sanghvi Vs. ITO (supra) and Pr. CIT vs Bikran Singh (supra) are fully applicable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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