2018 (6) TMI 1669 - AT - Income Tax

Addition u/s 68 - whether the assessee has discharged the onus by proving the identity and creditworthiness of the creditor and the genuineness of the transaction in respect of unsecured loan from Ms. Jasmine Kochar Kapoor - HELD THAT - Jasmine Kochar Kapoor has a permanent account number in India but has not filed any return of income in India on the ground that she is a non-resident during the year under consideration and therefore do not have any income chargeable to tax in India. No evidence is filed with regard to her income in the country where she is living. What is her source of income has also not been explained. The bank account of the assessee in India is filed in support of explaining the source of income. However from where the credit came in this bank account has also not been explained. In the above circumstances we are of the opinion that the assessee has miserably failed to prove the creditworthiness of the creditor as well as genuineness of the transaction. We therefore hold that the assessee could not discharge the onus of proving the cash credit in the name of Ms. Jasmine Kochar Kapoor. Quantum of addition - It is stated by the learned counsel that in assessment year 201314 the AO made the addition for unexplained unsecured loan but most of the credit is old credit in the assessee s books of account and fresh loan during the year under consideration was only to the tune of Rs. 26 lakhs. During the course of hearing before us he referred to the balance sheet of the last year as well as this year so as to point out that there were huge unsecured loans in last year also. So far as the legal proposition is concerned the addition for cash credit can be made only in respect of fresh credit during the accounting year relevant to the assessment year under consideration. However what is the actual credit during the year under consideration is a factual thing which requires verification at the end of the AO.Therefore set aside the issue of addition for unexplained loan to the file of the Assessing Officer and direct him to verify the quantum of fresh credit in the assessee s books of account during the accounting year relevant to the assessment year under consideration and make the addition only in respect of fresh credit and not in respect of opening balance. So far as assessment year 2014-15 is concerned the learned counsel fairly accepted that the addition made for unexplained cash credit is Rs. 87 lakhs and which is the fresh loan taken from Ms. Jasmine Kochar Kapoor. Therefore for the assessment year 2014-15 we sustain the orders of the lower authorities on this point and dismiss the assessee s appeal.

Summary

Issues Involved:
1. Assessment Year 2013-14: Unexplained unsecured loan addition of Rs. 1,80,65,313/-.
2. Assessment Year 2014-15: Unexplained unsecured loan addition of Rs. 87,00,000/-.

Issue-Wise Detailed Analysis:

1. Assessment Year 2013-14: Unexplained Unsecured Loan Addition of Rs. 1,80,65,313/-

Grounds of Appeal:
- The appellant argued that the receipt of Rs. 26 lakh from Ms. Jasmine Kochar Kapoor was well documented and supported by bank statements, passport, and PAN number.
- The appellant claimed that the Assessing Officer (AO) failed to appreciate the documented evidence and did not issue a notice under Section 133(6) to verify the genuineness of the creditor.
- The appellant contended that the AO wrongly considered the opening balance of unsecured loans as receipts for the financial year 2012-13.

Findings:
- The Tribunal noted that the appellant had provided confirmation from the creditor, passport, and bank account details but did not furnish evidence of the creditor's income in her country of residence or the source of funds in her Indian bank account.
- The Tribunal held that the appellant failed to prove the creditworthiness of the creditor and the genuineness of the transaction.
- The Tribunal acknowledged that the addition for cash credit should only be made for fresh credits during the accounting year and not for the opening balance.

Conclusion:
- The Tribunal set aside the issue of the addition for unexplained loans to the AO for verification of the quantum of fresh credit during the relevant accounting year and directed the AO to make additions only for fresh credits.
- The appeal for assessment year 2013-14 was deemed to be partly allowed for statistical purposes.

2. Assessment Year 2014-15: Unexplained Unsecured Loan Addition of Rs. 87,00,000/-

Grounds of Appeal:
- The appellant argued that the receipt of Rs. 87 lakh from Ms. Jasmine Kochar Kapoor was well documented and supported by bank statements, passport, and PAN number.
- The appellant claimed that the AO failed to appreciate the documented evidence and did not issue a notice under Section 133(6) to verify the genuineness of the creditor.
- The appellant contended that the creditor, being a non-resident, did not file an ITR in India, which was already explained to the AO.

Findings:
- The Tribunal noted that the appellant provided confirmation from the creditor, passport, and bank account details but did not furnish evidence of the creditor's income in her country of residence or the source of funds in her Indian bank account.
- The Tribunal held that the appellant failed to prove the creditworthiness of the creditor and the genuineness of the transaction.

Conclusion:
- The Tribunal sustained the orders of the lower authorities on this point and dismissed the appeal for assessment year 2014-15.

Final Judgment:
- For assessment year 2013-14, the appeal was partly allowed for statistical purposes, directing the AO to verify the quantum of fresh credit and make additions accordingly.
- For assessment year 2014-15, the appeal was dismissed, sustaining the addition of Rs. 87,00,000/- as unexplained cash credit.

Order pronounced in the Open Court on 26th June, 2018.