9911796707
TMI Blog2024 (7) TMI 1549X X X X Extracts X X X X X X X X Extracts X X X X ..... antiate the genuineness and credit worthiness of loan creditors. AR demonstrated the bank statement of the Lender company having opening balance Rs. 23 Crores (appx) before granting Unsecured loan/ inter corporate deposit of Rs. 20 Crores in September 2014. Further the Ld.AR has filed the audited financial statements of the lender company for F.Y. 2014-15 F.Y. 2015-16 to substantiate the identity and Net worth of the company and at page 109 of the paper book, the lender company has disclosed the loan under Long Term Loans and Advances . AR demonstrated the copy of bank statements reflecting the repayment of unsecured loan/inter corporate deposit which is not disputed by the revenue. Further, the A.O has failed to make further enquiries and over looked the factual aspects that the assessee has discharged the initial burden placed by furnishing the details. The information submitted by the assessee satisfied the three ingredients of provisions of Sec. 68 of the Act. Further the A.O. dealt on the loan transactions and alleged as non genuine and treated as unexplained cash credit U/sec 68 of the Act. Whereas the unsecured loan was repaid through account payee / banking channels in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified, unwarranted and excessive. 9. Any other ground that shall be prayed at the time of hearing. 2. The brief facts of the case are that the assessee company is engaged in the business of trading investment in Shares /Securities. The assessee has filed the return of income for the A.Y 2015-16 on 28.09.2015 disclosing a total income of Rs. Nil and the return of income was processed u/s 143(1) of the Act. Subsequently the case was selected for scrutiny under CASS to examine / verify the large difference in the opening stock of current and closing stock of previous year shown in profit and loss account as per return of income . Subsequently the Assessing Officer (AO) has issued notice u/sec 143(2) and u/sec 142(1) of the Act along with questionnaire. In compliance, the Ld. AR of the assessee has appeared from time to time and submitted the details and information on various dates of hearing. The AO on perusal of the financial statements and the information submitted found that the assessee has obtained unsecured loan of Rs. 25,000/- from Mr. Kanayo Thakur and unsecured loan/ inter corporate deposits of Rs. 20 Crores from M/s Krivera Impex Pvt Ltd. The AO has called for the details/i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by A.O. at Rs. 20 crores u/s 68 of I.T. Act 1961. A.O. has made addition in respect to amount received from M/s. Kriviera Impex Pvt. Ltd. A.O. by referring to proviso to section 68 has made addition of Rs 20 crores in the assessment framed. 2. It is respectfully submitted that addition made by A.O. u/s 68 at Rs. 20 crores is unjustified, unwarranted and bad in law. Assessee requests to consider the following submissions in respect to same. A) Assessee company is Investment Company and has maintained regular books of account which are duly audited by Chartered Accountants. Assessee has submitted audited financial statement along with return of income and has made due compliances as required by A.O. from time to time B. Assessee has received during the previous year under consideration sum of Rs. 20 crores through proper banking channel from M/s. Kriviera Impex Pvt. Ltd. The aforesaid company is assessed to income tax by Dy. Commissioner of Income Tax, Central Circle-8(1), Mumbai. Assessee had submitted confirmation of loan obtained from the aforesaid company indicating PAN of the party along with bank statement of the creditor wherefrom money has flown to assessee company. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for almost 3 decades. The company has submitted balance sheet for 31/03/2018 and has also conducted its Annual General Meeting on 29/09/2018. This fully demonstrates the bonafides and genuineness of lender company. E) The A.O. in assessment order at para 13 has reproduced the submission of assessee dated 29/12/2017. The assessee has submitted before A.O. that lender company M/s. Kriviera Impex Pvt. Ltd. had bank balance of about Rs. 23 crores before advancing loan to assessee company. The copy of bank statement of M/s. Kriviera Impex Pvt. Ltd. was submitted in assessment proceedings. A.O. has not disputed aforesaid factual position as submitted in assessment proceedings as is evident from assessment order. The legal evidence on record clearly establishes creditworthiness of lender M/s. Kriviera Impex Pvt. Ltd. In view of above addition made by A.O. is unjustified and unsustainable. F) It is respectfully submitted that assessee has repaid the aforesaid amount by cheque through proper banking channel and repayment of the loan is also properly recorded in regular books of account maintained by assessee company. The repayment of loan has been made in subsequent accounting year. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3 of assessment order and in particular the trade payable observed in balance sheet of such company at Rs. 201.78 crores. A.O. by referring to expenditure in Profit Loss Account at Rs. 181.10 crores has observed that one fails to understand that as to how the trade payables are at Rs. 201.78 crores. It is respectfully submitted that the A.O. has omitted to consider trade payables on the opening day of accounting year at Rs. 86.26 crores as well as other current liabilities at Rs. 57.72 lacs. The aforesaid fact materially affects the adverse inference drawn by A.O. observed in assessment order. In view of above it is humbly prayed that the facts observed at para 21.3 wherefrom adverse inference is sought to be drawn deserves no credence as same is not based on complete facts of balance sheet of corporate shareholder K) It is respectfully submitted that A.O. while making addition has largely referred to proviso to section 68 introduced in the Income Tax Act 1961 w.e.f. Asstt. Year 2013-14. A.O. at para 15 has reproduced Section 68 of I.T. Act 1961 and at para 16 17 has discussed the applicability of proviso to section 68 of 1.T. Act 1961. A.O. while reproducing obligation under pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion places reliance on the following decisions discussed herein below: 2. The assessee places reliance on the decision of Hon'ble Patna High Court in the case of Sarogi Credit Corporation Vs. CIT reported at 103 ITR 0344 (Patna) wherein Hon'ble High Court has held as under; If the credit entry stands in the names of the assessee's wife and children, or in the name of any other near relation, or an employee of the assessee, the burden lies on the assessee, though the entry is not in his own name, to explain satisfactorily the nature and source of that entry. But, if the entry stands not in the name of any such person having a close relation or connection with the assessee, but in the name of an independent party, the burden will still lie upon him to establish the identity of that party and to satisfy the ITO that the entry is real and not fictitious. Once the identity of the third party is established before the ITO and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces the third party obtained money and how or why he came to make a deposit of the same with the assessee. The burden will then shift on to the Department to show why the assessee's case cannot be accepted and why it must be held that the entry, though purporting to be in the name of a third party, still represents the income of the assessee from a suppressed source. In order to arrive at such a conclusion, however, the Department has to be in possession of sufficient and adequate material , The ratio laid down by Hon'ble Jurisdictional High Court squarely applies to the facts in case of assessee. In view of above addition made by A.O. is unjustified 4. The assessee places reliance on the decision of Hon'ble Apex Court in case of M/s Orissa Corporation (P) Ltd. reported at 159 ITR 0078 (SC) wherein Hon'ble Apex Court has held as under: In this case, the assessee had given the names and addresses of the alleged creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity of the creditor to advance money and (3) genuineness of the transaction. From the facts emerging on the face of record, we notice that it is an admitted fact that all the above cash creditors (12 in number) are assessed to income tax and they provided confirmation as well as their permanent account number. They have their own respective bank accounts which they have been operating and it is not the claim of the AO that the respondent-assessee was operating their bank accounts rather they have categorically stated that they issued cheque to the respondent-assessee. It is also an admitted fact that most of the cash creditors appeared before the AO and their statements u/s 131 were also recorded on oath. The cash creditors appeared to be from small place and it is quite possible that they may not be in a position to pin pointedly or specifically say about everything but by and large stood to the testimony and were able to explain various issues as per the question and answer reproduced by the AO himself in the assessment order. It may be that most of the cash creditors are relatives of the respondent-assessee and heavy burden lay on the respondent-assessee to prove about the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount come from the coffers of the respondent-firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank, on November 15, 1944, on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the destination of the amount, the material on the record gives no support to the claim of the department. 13. The Gauhati High Court, in the case of Nemi Chand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee having discharged his burden by proving the existence of the depositors and the depositors owing their deposits, he was not further required to prove source of source. 17. As observed herein above, though u/s 68, AO is free to show with the help of the enquiry conducted by him into the transaction which has taken place between the creditor and the sub-creditor that the transaction between two were not genuine and that the sub-creditor had no creditworthiness, it will not necessarily mean that loan advanced by the sub-creditor to the creditors was income of the assessee from undisclosed sources unless there is evidence direct or circumstantial, to show that the amount which had been advanced by the sub-creditor to the creditor had actually been received by the sub creditor from the assessee. 18. The logical interpretation will be that while the assessee has to prove as special knowledge i.e. from where he has received the credit and once he disclosed the source from which he has received money, he must also establish that so far as his transaction with his creditor is concerned, the same is genuine and his creditor had the creditworthiness to advance the loan which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Evidence Act, that the said amounts had been received by him by way of cheques from the creditors aforementioned. In fact, the fact that the assessee had received the said amounts by way of cheques was not in dispute. Once the assessee had established that he had received the said amounts from the creditors aforementioned by way of cheques, the assessee must be taken to have proved that the creditor had the creditworthiness to advance the loans. Thereafter the burden had shifted to the AO to prove the contrary. On mere failure on the part of the creditors to show that their sub- creditors had creditworthiness to advance the said loan amounts to the assessee, such failure, as a corollary, could not have been and ought not to have been, under the law, treated as the income from the undisclosed sources of the assessee himself, when there was neither direct nor circumstantial evidence on record that the said loan amounts actually belonged to, or were owned by, the assessee. Viewed from this angle, we have no hesitation in holding that in the case at hand, the AO had failed to show that the amounts, which had come to the hands of the creditors from the hands of the sub-creditors, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he confirmation, bank statement, balance sheet and ROC record of lender was submitted in the course of assessment proceedings. A.O. has independently obtained information from A.O. of lender company. The financial statement of lender company independently obtained substantiates the loan received by assessee company from the lender company. In view of above, nothing adverse can be taken with reference to decision of Hon'ble Delhi High Court on the facts and circumstances in case of assessee. B) The decisions of Hon'ble Apex Court in case M/s. Govindarajulu Mudaliar vs. CIT reported at 34 ITR 807 (SC) was in respect to amount received in cash which assessee therein had failed to prove satisfactorily. In the aforesaid case gift and amount received from the party was held to be untrue. Finding of facts recorded by the tribunal was held to be based on evidence on record and have been upheld by Hon'ble Apex Court. Similarly in the decision of Apex Court in case of Shri M. Ganpthi Mudaliar reported at 53 ITR 623 (SC) the amount received was held to be in nature of income of assessee and therefore it was held that same is assessable to tax at the hands of assessee. The aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid decision in fact supports the submission of assessee and ratio laid down therein fully supports the contention of assessee that addition made by A.O. is unjustified and unsustainable. In respect to other two creditors it was found that they had no capacity to advance money and nor they were assessed to income tax. Considering the above factual position the addition in respect to aforesaid two creditors was upheld. Nothing adverse can be drawn from the aforesaid findings of Hon'ble High Court of Rajasthan in the case of G) The Hon'ble Rajasthan High Court in case of M/s Rajashree Synthetics Pvt. Ltd. had observed that ITAT had remitted the matter for fresh inquiry and it does not call for any interference. In view of above nothing adverse can be drawn from the aforesaid decision of Hon'ble High Court of Rajasthan in case of assessee. H) A.O. had placed reliance on the decision of Hon'ble Delhi High Court in case of CIT Vs. Oasis Hospital Pvt. Ltd. reported at 333 ITR 119 (Del.). Perusal of decision of Hon'ble Delhi High Court would indicate that the judgment was consolidated judgment of four assessee's as observed in reported judgment. The decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conclusion that the documents showing sale of jewellary were doubtful. In view of above, it was concluded that the cash credit entry is not satisfactorily explained. The Hon'ble High Court has observed that the finding of facts is based on cogent and material evidence on record and cannot be said to be perverse. The aforesaid facts in the said case are distinguishable from the facts in case of assessee and thus ratio laid down therein is inapplicable to the facts in case of assessee. 2. The assessee has given hereinabove brief summary of facts in each of the case relied upon by A.O.. Assessee has submitted that facts in each of the case relied upon by A.O. are distinguishable from the facts in case of assessee and thus nothing adverse can be drawn therefrom. The assessee has placed legal evidence on record to substantiate the identity, creditworthiness and genuineness of loan transaction. The facts placed on record is also verified by making independent inquiry from A.O. of lender company and no mistake or default has been found in independent inquiry made by A.O. In view of above loan credit from M/s. Kriveria Impex Pvt. Ltd. does not remain unexplained credit so as to warr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is unjustified and unsustainable. In view of above it is humbly prayed that addition made by A.O be directed to be deleted. 4. Whereas, the CIT (A) was not satisfied with the submissions and material information and has affirmed the action of A.O. and sustained the addition of unsecured loan and dismissed the assesses appeal. Aggrieved by the CIT (A) order, the assessee has filed an appeal with the Hon ble Tribunal. 5. At the time of hearing, the Ld.AR submitted that the CIT (A) has erred in confirming the addition u/sec 68 of the Act irrespective of the fact that the assessee has filed the details in respect of the loans/inter corporate deposits and submitted the confirmation of the loan creditors along with other supporting details. Further, the Ld. AR submitted that the assessee maintains the regular books of accounts and has obtained unsecured loan from genuine creditor company. Whereas, the assessee has furnished before the CIT(A), the confirmation of loan/inter corporate deposit, bank statement of both the assessee and loan creditors, audited financial statements to substantiate the genuineness, identity and creditworthiness of the loan creditors. The assessee has obtained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of CIT Vs. Orissa Corporation Pvt Ltd, 159 ITR 0078 (SC) has held as under: Income-Cash credit-Burden of proof-Assessee had given the names and addresses of the creditors-It was in the knowledge of the Revenue that the said creditors were income-tax assessees-Their index number was in the file of the Revenue, apart from issuing notices under s. 131 at the instance of the assessee, did not pursue the matter further Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy or were such who could advance the allowed loans-Tribunal came to the conclusion that the assessee has discharged the burden that lay on him then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence-High Court was, therefore, right in refusing to refer the questions sought for 8. The Honble High Court of Gujarat in the case of CIT Vs. Ranchhod jivanbhai Nakhava, 208 Taxman 0035 (Guj) held as under: Cash Credits-Unexplained Income-Burden of verification-AO, without verifying whether creditors, in their respective ITRs, had shown the loan transactions, decided to examine them u/s 131-Assessee had fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of non-filing of balance sheet and in two cases deposited of cash in the bank account the AO has not disputed the evidence produced by the assessee. Even if it is considered as a serious aspect where the cash is found deposited in the bank account the AO ought to have conducted inquiry to find out the correct facts. In the absence of any inquiry the cash deposit in bank account of two creditors would not epso facto lead to the conclusion that the transactions of all the unsecured loans are not genuine or the creditworthiness of the creditors in all cases is not proved. The evidence produced by the assessee prima facie satisfied the conditions u/s 68 to explain the source, identity and genuineness of the transactions. The Hon'ble jurisdictional High Court in case of CIT vs. Metachem Industries (supra) has considered the issue of addition made u/s 68 in para 4 to 7 as under: 4. We have heard learned counsel for the parties. Section 68 of the Act of 1961 says that where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to the Assessing Officer to take appropriate action under Section 69 of the Act, against the person who has not been able to explain the investment. In the present case, there is the concurrent finding of both the Commissioner of Income-tax (Appeals) as well as of the Tribunal that the firm has satisfactorily explained the aforesaid entries, 7. We are, therefore, of the opinion that the view taken by the Tribunal is correct and the aforesaid question is answered against the Revenue and in favour of the assessee. 5.4 Thus, the Hon'ble High Court has observed that once it is established that the amount has been invested by a particular person then the responsibility of the assessee is over. The assessee cannot be asked that person who made investment whether the money invested is properly taxed or not. The assessee is under the obligation only to explain that this investment has been made by the particular individual and it is responsibility of the individual to account for the investment made by him, Similarly in case of Ashok Pal Daga vs. CIT (supra) the Hon'ble jurisdictional High Court has considered this issue in para 3 to 7 as under: 3. We have heard Shri G.M. Chaphek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee s case cannot be accepted and why it must be held that entry, though purporting in the name of the third party still represent income of the assessee from suppressed source. The Hon'ble Gujarat High Court in case of CIT vs. Dharamdev Finance P. Ltd. (supra) has considered the issue of addition made u/s 68 in para 5 to 9 as under: *5. Question (B) and (C) require consideration together. On account of certain cash credits, the Assessing Officer had made addition of Rs. 3,54,70,163/-. Out of this total amount, aggregate amount of cash credit in respect of 10 persons of Rs. 1,76,83,518/-, according to the Assessing Officer had remained unexplained. This amount included a sum of Rs. 17,0,11,830/- from Hari builders, where one Shri Raju Vaghela was the proprietor of Hari builders. When this addition was made, challenge was taken to the CIT(Appeals) and CIT(Appeals) had called for a remand report and on receipt of the same it noticed that Hari builders had given the confirmation and his PAN number also came on record and his bank statement clearly reflected that person had capacity to lend the money. The CIT(Appeals) therefore, noted that if the return was not filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, as also in the most of the cases way numbers, couple accouter fact that amounts were received by way of account payee cheque, chose not to question then before the authorisation essential chosen matrix presented before the authority and as they based on fact appreciated both these aspects, no question of law arises. 8. With respect to questions (D) and (E), addition of Rs. 1.45 crores (rounded off) on the basis of some newspapers found where the (rounded of hat Dharamdev Finance Pvt. Ltd received total sum of Rs. 1.44 crores and cash transaction as per this noting had taken place between the proprietary concern Satya Developers and the present respondents. The Assessing Officer when added the entire amount, CIT(Appeals) deleted the addition by noting this: 8.2 I have considered the assessment order and the above submissions. From the submissions made before the A.O. and also before me it is found that the appellant has explained that the notings in these loose papers pertain to Satya Developers, the proprietary concern of Rakesh Thakkar and that transactions are recorded in the books of Satya Developers and Rakesh Thakkar individual, as the transactions are between those two ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the transactions are verified from the bank account of the creditors as well as of the assessee then the genuineness of the transactions is also established in absence of any contrary material having brought on record by the AO. The Hon'ble Gujarat High Court has taken a consistent view in case of CIT vs. Sanjay J. Thakkar (supra) in para 2 to 3 as under: 2. Mr Tanvish U. Bhatt, the learned standing counsel for the appellant revenue has submitted that the two parties in whose case deposits are found in the books of each of the respondent assessees do not appear to be genuine. The said parties have filed returns for a couple of years and thereafter, no returns of income have been filed, the genuineness of the transactions are not found to be satisfactory by the assessing officer. That the assessee failed to present the creditors. He, therefore, urged that the order of the Tribunal requires to be set aside and for this purpose, the appeals may be admitted. 3. The impugned order of Tribunal specifically records that the CIT (Appeals) had rightly deleted the addition based on appreciation of evidence on record and after taking into consideration the ratio of the Apex Court de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee of the relevant previous year. 13 Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results in a cash credit in his bocks of account. Such proof would include proof of identity of the creditor, capacity of such creditor to advance the money and lastly, genuineness of the transaction. Thus, in order to establish receipt of credit in cash, as per requirement of section 68, the assessee has to explain or satisfy three conditions, namely: (i) identity of the creditor; (ii) genuineness of the transaction; and (iii) credit-worthiness of the creditor. 14 In Principal Commissioner of Income Tax vs. Veedhata Tower Pvt. Ltd., (2018) 403 ITR 415 (Вот), this court has held that assessee is only required to explain the source of the credit. There is no requirement under the law to explain the source of the source. In the instant case, there is no dispute as to the identity of the creditor. There is also no dispute about the genuineness of the transaction. That apart, the creditor has explained as to how the credit was given to the assessee. Thus assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 as under: *14. In CIT vs. Smt. P.K. Noorjahan (1999) 155.0TR (SC) 509 : (1999) 14. In CT570 (SC), this Court while con in enacting s. the Ad 237 ITR 570, the intention of Parliament of treating the way to Obser a discretion on the ITO in the matter of treating the source of confer a discotic has not been satisfactorily planned by the investments the income of the assessee and the ITO is not obliged to as at such source of investment as income in every case where the explanation offered by the assessee is found to be not satisfactory The question whether the source of the investment should be treated as income or not under s. 69 has to be considered in the light of the facts of each case. The contention of Shri Iyer was that the ratio of the decision would equally be applicable to interpret s. 68 of the Act. There is no dispute about the same but the assessees in no manner raised any plea that even if their explanation is not acceptable the same cannot be treated as an income in their hands. In cases where the explanation offered by the assessee about the nature and source of sums found credited in the books is not satisfactory there is, prima facie, evidence against the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Books of account are not rejected and income from business as shown in the return has been accepted without inviting any adverse observation. It has not been alleged that assessee has earned income over and above from any activity and such money is brought in the name of loan creditors. Considering evidence on record no addition u/s 68 can be made in the case of appellant. Onus to explain cash credits in terms of decision of Hon'ble Apex Court in the case of Orissa Corporation (P) Ltd. is discharged by placing legal evidence on record. Provisions of section 68 are not mandatory. Ratio laid down by Hon'ble Jurisdictional High Court and Supreme Court reproduced hereinabove fully supports the case of appellant. Explanation and evidence cannot be rejected on mere suspicion. It is settled position of law that appellant has no obligation to prove source of source. Onus to explain cash credits has been satisfactory discharged by proving identity genuineness and creditworthiness of loan creditor. In view of facts of the case and the ratio laid down by case laws (Supra), the addition made by the AO of Rs. 5,46,00,000/-u/s. 68 of the I. T. Act, 1961 is hereby deleted. The ground No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh Vs Income Tax Officer (423 ITR 531 (Bombay) has dealt and observed as under: 12. At this stage, it would be apposite to advert to section 68 of the Act, relevant portion of which reads as under: 68. Where any sum is found credited in the books of an assessee maintained from any previous year, and 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 of that previous year... 12.1. From a reading of section 68, as extracted above, it is seen that if an amount is credited in the books of an assessee maintained from any previous year and 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 of the relevant previous year. 13. Section 68 of the Act has received considerable attention of the courts. It has been held that it is necessary for an assessee to prove prima facie the transaction which results ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er as to cost. 12. The Honble Hight of Delhi in the case of (CIT Vs. Shiv Dhooti Pearls Investment Ltd., 2015) 64 taxmann.com 329 (Delhi) has observed as under: The assessee filed its return declaring certain taxable income. In the course of scrutiny assessment, the Assessing Officer noticed that the balance sheet of the assessee showed the receipt of unsecured loans. The assessee was asked to furnish the evidence regarding identity, creditability and genuineness of the source of its income. Pursuant thereto, the assessee disclosed that the amount was borrowed from TIL. The acknowledgement of the return filed by TIL showed that it had returned an income of Rs. 2,904 in the assessment year in question and a loss of Rs. 18,677 in the assessment year 1996- 97 which created doubts about the TIL's creditworthiness. Accordingly, TIL was asked to furnish the source of its lending. The TIL intimated that the amount lent to the assessee had in turn been borrowed from 'TCL', the address of which was the same as TIL. The letter containing the summons sent by registered post (speed post) to TCL was received back unserved with the remarks 'not available.' The AO then conclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he responsibility the individual who has this amouischarged. Whether that person is income-tax payer or not or from where he has brought this money is not the responsibility of the firm. The moment the has gives satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be income of the firm for the purposes of income-tax. It is open for the AO to take appropriate action under s. 69 against the person who has not been able to explain the investment. In the present case, there is the concurrent finding of both the CIT (A) as well as of the Tribunal that the firm has satisfactorily explained the aforesaid entries. Therefore, the view taken by the Tribunal is correct 14. The Hon ble Hight of Madhya Pradesh :Indore Bench in the case of Ashok Pal Daga Vs. CIT(1996) 136 CTR 0235 held : 3. We have heard Shri G.M. Chaphekar, learned Senior counsel, with Shri Subhash Samvatsar and Shri Sharda, for the applicant, and Shri D.D. Vyas, learned counsel for the non-applicant. 4. Shri Chaphekar submitted that the amount was borrowed from stated persons through cheques and as such, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,45,00,000 under section 68 on ground that loan taken from one person i.e., 'IA', was not explained satisfactorily. On appeal, the Commissioner (Appeals) deleted the addition after considering the identity of the donors, creditworthiness and the genuineness of loan transaction. On revenue's appeal, the Tribunal confirmed the order passed by the Commissioner (Appeals). 16. The Hon ble High Court of Gujarat in the case of Pr. CIT Vs. Ambe Tradecorp Pvt Ltd, (2022) 114 CCH 0601 Guj HC held : 5. As discussed above, since the requisite material was furnished by assessee showing the identity and since the assessee was not beneficiary when the loan was repaid in the subsequent year, even the ingredients of creditworthiness and genuineness of transaction were well satisfied. 6. The Tribunal rightly recorded in para 29 of the judgment: Once repayment of the loan has been established based on the documentary evidence, the credit entries cannot be looked into isolation after ignoring the debit entries despite the debit entries were carried out in the later years. Thus, in the given facts and circumstances, were hold that there is no infirmity in the order of the Ld.CIT-A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 292 of the paper book which is not disputed by the revenue. Further, the A.O has failed to make further enquiries and over looked the factual aspects that the assessee has discharged the initial burden placed by furnishing the details. The information submitted by the assessee satisfied the three ingredients of provisions of Sec. 68 of the Act. Further the A.O. dealt on the loan transactions and alleged as non genuine and treated as unexplained cash credit U/sec 68 of the Act. Whereas the unsecured loan was repaid through account payee / banking channels in the subsequent financial year which is not disputed by the revenue and in the year of repayment of loan, the revenue has accepted returned income of the assessee and passed the order u/sec 143(1)of the Act on 17-10- 2016. The Ld.AR submitted that the assessee has substantiated the stand by submitting the details before the A.O. and CIT (A) and discharged the burden. We considering the facts, circumstances, evidences and the ratio of the judicial decisions referred in the above paragraphs set-aside the order of the CIT (A) and direct the Assessing officer to delete the addition of unsecured loan and allow the grounds of appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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