TMI Blog2018 (1) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... e loans have rightly been added as unexplained credit in the hands of the assessee. - Decided against assessee. - I.T.A. No. 4396/Mum/2017 - - - Dated:- 18-12-2017 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER For The Appellant : Ms. Ritika Agarwal For The Respondent : Ms. N. Hemalatha ORDER Per Shamim Yahya, A. M.: This appeal by the assessee is directed against order of the ld. Commissioner of Income Tax (Appeals)-47, Mumbai dated 28.02.2017 and pertains to the assessment year 2012-13. 2. The ground of appeal read as under: 1. Because, the ld. CIT(A) has erred in upholding the addition of unsecured loans from four parties amounting to ₹ 15,00,000/- as unexplained cash credit on the basis that the credit worthiness of the parties and genuineness of the transactions were not proved ignoring the plethora of evidences on record. 2. Because, the ld. CIT(A) has erred in holding that the case laws relied upon by the Appellant were not relevant, on insubstantial basis. 3. The assessee is the proprietor of two concerns. During the course of assessment proceedings, it was observed that the assessee had taken unsecured loans from various parties d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1000s. As regards the loan of ₹ 3,50,000/- from Shri Virendra Manilal Gandhi, notice issued u/s.133(6) was returned by the postal authorities with the remark not known'. Accordingly, the Assessing Officer found that the identity, capacity and genuineness of this loan remained to be proved. In response, the appellant submitted his reply vide letter filed on 30.3.2015 which is reproduced in para 4.2 of impugned order. The assessee submitted that he did not exercise any authority or control or even needed to question the lenders about their source of money. He stated that it was sufficient for him as a borrower that the lender had advanced him the money as per contractual term entered into by him. The appellant pointed out that he had paid them interest and deducted TDS wherever applicable. The appellant argued that the onus to prove source of source could not be put on him. It was submitted that the burden on the appellant got discharged if he proved the existence of lender, genuineness of transaction which stood confirmed in his case. 5. The Assessing Officer considered the submissions of the appellant, but found the same to be not acceptable. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and matter has to be considered by applying the test of human probabilities. On the basis of above discussion, the Assessing Officer held that the loans from above four parties aggregating to ₹ 15,00,000/- in the books of the appellant during the relevant period were not genuine. Therefore, the Assessing Officer added the sum of ₹ 15,00,000 to the total income of the appellant u/s.68 of the Act. 7. Upon the assessee s appeal the ld. Commissioner of Income Tax (Appeals) confirmed the Assessing Officer s order by holding as under: 4.3.1 I have considered the submissions of the appellant and perused the materials available on record. The question for adjudication is whether the AO was justified in making addition of ₹ 15,00,000/- u/s.68 of the Act by treating the unsecured loans from aforesaid four parties as non-genuine. The facts relating to this addition have been brought out in paras 4.1.1 to 4.1.4 above and need no repetition. It is noticed from the record that the AO made addition in respect of unsecured loans aggregating to ₹ 15,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holds good even in respect of bank accounts of the said four parties. On perusal of relevant bank statements, the AO has correctly observed that no regular or periodic income was credited to the bank accounts of the said four parties. Although there were no cash deposits in the said bank accounts, the AO has rightly pointed out that there were deposits of more or less equivalent amount in all four bank accounts just before issuing the cheques for unsecured loans. It is thus found that the evidences furnished by the appellant in support of creditworthiness of the parties and the genuineness of aforesaid unsecured loans aggregating to ₹ 15, 00,0007- do not inspire confidence. It is also found that in their IT returns, the said four parties had shown very low income in comparison to the unsecured loans given which is not worthy of credence at all. 4.3.3 An analysis of the case-laws cited by the appellant reveals that these are distinguishable on facts and none of these helps to advance the case of the appellant. For example, Orient Trading Co. Ltd. (supra) is a case decided under the 1922 Act having nothing in common with the facts of the resent case. In that case, certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . They have returned income below the taxable limits. These have been found to be barely meeting the basic needs, leave alone giving them the capability to grant the loans of the magnitude in this case. Further, it has been noted that there is no clear indication of the regular business or source of income. In such circumstances, the fact that just before giving the loan there is deposit of equivalent amount in the bank accounts is certainly a factor for which the revenue authorities cannot put upon blinkers. The facts of the case as noted by the authorities below clearly indicate that the creditworthiness of the lenders have not at all been established. In such circumstances, there is no infirmity in the order's of the authorities below wherein these have been added in the hands of the asseessee as unexplained credits. The case law from Hon ble Jurisdictional High Court in the case Orchid Industries relied upon by the counsel of the assessee is not at all applicable on the facts of the case. The said case dealt by the Hon ble High Court was with respect to share application money by corporate share applicants. Hence, this case doesn't support the case of the assessee. In f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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