TMI Blog2009 (11) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... .- This appeal relates to assessment year 2001-02. The appellant company which carries on business of investments in securities had filed return for the previous year relevant to the assessment year 2001-02 on October 30, 2001, declaring loss of Rs. 26,50,670. In this return, the appellant had shown unsecured loans of Rs. 2,67,83,100 from its director Shri P. N. Jain and Rs. 2,45,04,100 from Ms. Urvashi Jain. Though confirmation of these loans, aggregating to Rs. 5,12,87,200 were filed they were not accompanied by income-tax acknowledgments and bank statements. The Assessing Officer (AO) treated this as income of the appellant from undisclosed sources and made additions under section 68 of the Income-tax Act, 1961 (for short, "the Act"). Assessment order was passed on March 1, 2004, making the assessment at Rs. 5,12,72,884. The assessee preferred appeal against this assessment order before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) recorded the statement of Mr. P. N. Jain under section 131 of the Act, who inter alia stated that: (a) The amounts advanced to the appellant did not belong to him and/or his daughter and that the same were rou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re transferred to the accounts of Mr. P. N. Jain and Ms. Urvashi Jain were not provided. (c) Mr. P. N. Jain was not aware of the source of deposits in his and in his daughter's account. It proves that they did not borrow any money either from ATP or from any other person. (d) Neither the appellant has returned the loan to Mr. P. N. Jain and Ms. Urvashi Jain nor the loan taken by Mr. P. N. Jain and his daughter has been returned to ATP and Mr. Y. C. Vaidya. All this show that amount of the Rs. 5,12,87,200 was the appellant's own money which has been routed through ATP and some other persons. 4. The assessee went in further appeal before the Income-tax Appellate Tribunal (ITAT). The Income-tax Appellate Tribunal, however, has dismissed the appeal holding that the genuineness of the transaction has not been established. It is clear from the order of the Commissioner of Income-tax (Appeals) as well as that of the Income-tax Appellate Tribunal that money in question, concededly did not belong to either Mr. P. N. Jain or his daughter Ms. Urvashi Jain. In the assessee company, this money was shown to have been invested by these two persons. Obviously, it was unaccounted money in so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. C. Vaidya had been able to demonstrate before us that they had sufficient sources for advancing the amount as loan to Shri P. N. Jain and Ms. Urvashi Jain, for investments in their names in the assessee company, without charging any interest. 20. The question that arises before us is that despite the assessee having established the abovementioned facts whether we can still look into the genuineness of the transaction or the same should be taken to be implied stand established and the assessee is still required to independently prove the genuineness for the entire transaction i.e. from the day of the proposal for taking the loan from the creditor till the completion of the loan transaction in the light of entire surrounding circumstances and human probabilities as laid down by the apex court in the case of Sumati Dayal (supra) while discussing the provisions of section 68 and genuineness of the credit in the books of account of the assessee. Which further means, that we are required to view the transaction as a whole and not as fragments in different stages. For such a view we would have to consider the persons amongst whom such transaction has been executed because the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... too in the name of Shri P. N. Jain and Ms. Urvashi Jain and not in their own names. We are of the opinion that it is humanly improbable that a person merely knowing another person for a long period, even though having very good relation, would advance such huge amount of loan free of interest for a indefinite period, merely for investing in a company, that too not in their name but in the name of that person, may be for any benefit and without securing that huge amount by executing an agreement of any sort more so, when the amount still finds credited in the books of the assessee in the names of Shri P. N. Jain and Ms. Urvashi Jain and they can legally claim the recovery of the same from the assessee company, as undisputedly the debt still remains undischarged. 21. On considering the facts, discussed above, the surrounding circumstances and applying the test of human probabilities, as laid down by the apex court in the case of Sumati Dayal (supra) while discussing the provisions of section 68, we are of the opinion it is highly improbable that Shri P. N. Jain and Ms. Urvashi Jain entered into such a loan transaction with the assessee that too after taking such a huge amount on lo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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