2023 (5) TMI 1050 - ITAT AHMEDABAD

Assessment u/s 153C - Addition u/s 68 - addition of corresponding expenses u/s 69C - HELD THAT:- The revenue has to follow the procedures laid down under the provisions of section 153C in a situation where the documents were found from the premises of the 3rd party irrespective of the fact that the other party was also subject to the search. The process as provided u/s 153C has to be followed by the revenue for the purpose of making the addition based on the documents found in the course of search from the premises of the 3rd party.

Coming to the facts of the case on hand, we note that the AO while making the addition in the hands of the assessee u/s 68 nowhere mentioned about any material found from the premises of the assessee. The entire thrust of the AO to treat the credit of share capitals, premiums and loans as bogus and unexplained was based on materials and information collected during the search at third parties being Shri Shrish Chandrakant Shah, Shri Parveen Kumar Jain and Shri Partik R Shah and the premises of Shri Ashit Vohra and office of Shri Anil Hiralal Shah & others B-406, Wall Street-II Ellisbridge Ahmedabad.

Therefore materials could only have been made basis for making addition after following the procedure laid down under the provisions of section 153C which has not been followed. Thus, we do not find any infirmity in the finding of the learned CIT (A). Grounds of appeals raised by the Revenue are hereby dismissed.

Addition u/s 68 - bogus credit of loan - expenses incurred for taking such bogus entry - AO doubted the creditworthiness merely on the basis that the loan party was showing meagre income in income tax return - HELD THAT:- As far as creditworthiness of the loan party is concerned, the same can be viewed from a different angle i.e. there may be funds in the form of capitals, reserve & surplus and loans. Undoubtedly, the learned CIT-A has given finding that huge additions were made in the assessment framed with respect to the loan party under the provisions of section 68 - If these additions are deleted by the higher forum, then it becomes evident that there was sufficient fund available with the loan creditors. Likewise, if these additions are confirmed by the higher forum, then also it becomes evident that there was sufficient fund available with the loan creditor. In our considered view, in either of the case, the creditworthiness of the parties cannot be doubted.

We find that in the case on hand, the credit of unsecured loan, the assessee is only liable to explain the source of credit in its books not in the books loan creditor. In the case on hand, the assessee has duly explained the source of credit in its books by providing the details of identity of the creditor, genuineness of transaction and creditworthiness was also established by furnishing details. The assessee cannot be expected to explain the source of funds in the books of the creditor and if the AO have any doubt with regard genuineness of fund in the books of creditor, then the same should be verified at the creditor end and not from the assessee.

We hereby hold that the assessee on merits discharged the onus cast under section 68 of the Act. Once the loan amount credited in the books of the assessee found to be genuine and addition under section 68 of the Act is deleted, in our considered view the corresponding estimated expenses against such loan cannot be sustained. Decided against revenue.

Treating the credit of share application money and unsecured loan as unexplained cash credit under section 68 - HELD THAT:- Once the repayment of the loan received is established, then the genuineness cannot be doubted. In this respect we find support and guidance from the judgment of Hon’ble Gujarat High Court in the case of the CIT Vs. Rohini builders [2001 (3) TMI 9 - GUJARAT HIGH COURT] Appeal of assessee allowed.