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2015 (11) TMI 854 - ITAT PUNE

2015 (11) TMI 854 - ITAT PUNE - [2015] 43 ITR (Trib) 166 (ITAT [Pune]) - Addition as unsecured loan received from one of its directors - Held that:- Before us the assessee has filed loan account of the director in the books of the assessee-company. However, the question raised by the Commissioner of Income-tax (Appeals) regarding the source of funding the assessee-company remained unanswered. The Commissioner of Income-tax (Appeals) had raised a very valid doubt, that is, if the director has ret .....

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genuineness of transaction and creditworthiness of the person extending loan has to be satisfied. If any of the aforesaid conditions are absent the loan transaction comes under cloud. In the present case the assessee has not been able to establish the creditworthiness of the director of the company who has purportedly extended loan. We concur with the findings of the Commissioner of Income-tax (Appeals) on this issue. - Decided against assessee.

Ad hoc disallowance under the head "Ot .....

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15 - R. K. PANDA (Accountant Member) and VIKAS AWASTHY (Judicial Member) Pramod Shingte for the Appellant Santosh Kumar for the Respondent ORDER The order of the Bench was delivered by 1. Vikas Awasthy (Judicial Member).-These are cross-appeals filed by both the assessee and the Revenue assailing the order of the Commissioner of Income-tax (Appeals)-III, Pune dated October 21, 2013 for the assessment year 2008-09. 2. The assessee in its appeal has raised two grounds : (i) Confirmation of the add .....

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development. The assessee filed its return of income for the impugned assessment year on January 29, 2009 declaring total income of ₹ 9,58,520. During the course of scrutiny assessment the Assessing Officer made certain additions/disallowance in the income returned by the assessee. 5. Aggrieved by the assessment order dated December 30, 2010, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). Before the first appellate authority the assessee furnished certain .....

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ssee and documents placed on record, the Commissioner of Income-tax (Appeals) partly accepted the appeals of the assessee and deleted the addition with respect to-(i) Disallowance of consultancy charges, (ii) Disallowance of depreciation, (iii) Treating of unsecured creditors as income under section 41(1) of the Act, and (iv) Restricted disallowance of other expenses to ₹ 2,00,000. The Commissioner of Income-tax (Appeals) confirmed the disallowance of unsecured loans of ₹ 40,00,702 a .....

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sessee. From the said bank account cheques were issued on behalf of the assessee-company. The learned authorised representative further submitted that balance outstanding represents accumulated balance on account of series of transactions. The learned authorised representative in support of his submissions placed on record ledger loan account of director Shri Xerces Mullan in the books of the assessee. The learned authorised representative contended that the director of the company had furnished .....

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eal of the Revenue the learned authorised representative contended that the documents furnished by the assessee before the Commissioner of Income-tax (Appeals) were forwarded to the Assessing Officer. The Commissioner of Income-tax (Appeals) after considering remand report deleted the additions. 8. On the other hand Shri Santosh Kumar representing the Department vehemently supported the findings of the Commissioner of Income-tax (Appeals) with respect to disallowance of unsecured loans and confi .....

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nded by him to the assessee is more than ₹ 40,00,000. The source for funding loan amount was not established. 9. In respect of appeal by the Revenue the learned Departmental representative submitted that the assessee had furnished certain documents for the first time before the Commissioner of Income-tax (Appeals). The Assessing Officer had given sufficient opportunity to the assessee to submit the documents in support of its contentions. However, the assessee deliberately withheld the inf .....

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tional evidence produced by the assessee was accepted without recording the reasons and in violation of rule 46A of the Income-tax Rules. 11. It is an undisputed fact that the assessee for the first time had furnished certain documents before the Commissioner of Income-tax (Appeals) in support of its claim. The assessee ought to have furnished the said documents at the first instance before the Assessing Officer. However, the Commissioner of Income-tax (Appeals) forwarded the entire set of docum .....

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id of merit. 12. Now, we proceed to decide the issue raised in appeal of the assessee. The first ground of appeal is with respect to disallowance of ₹ 40,00,702 in respect of unsecured loan from the director of the company. The Commissioner of Income-tax (Appeals) rejected the contentions of the assessee with the following observations : "It is settled position of law that to accept a credit as genuine, the assessee has to necessarily establish the identity of the person, genuineness .....

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of ₹ 1,50,820 for the assessment year 2008-09 while the credit balance shown to be outstanding in his name is ₹ 40,00,702. As per the ledger account extract furnished, the entire expenditure is incurred during the year itself. The appellant has also not furnished the bank account extract of the said person from whom the expenditure is claimed to be incurred nor the capital account or balance-sheet to show his financial capacity to lend money to the extent being claimed. Thus, even th .....

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ion Finance Pvt. Ltd. [1994] 208 ITR 465 (Cal) (head note) : It is for the assessee to prove the identity of the creditors, their creditworthiness and the genuineness of the transactions. Mere furnishing of the particulars is not enough. Mere payment by account payee cheque is not sacrosanct not can it make a non-genuine trans action genuine." 13. Before us the assessee has filed loan account of the director in the books of the assessee-company. However, the question raised by the Commissio .....

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