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TMI Blog2016 (5) TMI 1471X X X X Extracts X X X X X X X X Extracts X X X X ..... credit entry of a corresponding amount immediately preceding the advancement of loan especially when loan obtained through banking channel does not make the transaction sacrosanct and the assessee failed to discharge the onus of burden of proof". 2. The main issue involved in the appeal is addition on account of unsecured loan aggregating to Rs. 2,02,50,000/- (disputed before us, Rs. 1,55,10,000) received by the proprietorship entities of the assessee from 29 persons. The background of the addition as been discussed by the AO is that a search and seizure action under section 132(1) was conducted in the case of Haresh Majethia. During the course of which, it has revealed that Majethia Brothers, that is, Haresh Majethia and Liladhar Majethia (assessee) through their various proprietorship concerns, partnership firms and companies were engaged in the real estate business as brokercum-investor and also in purchase and sales of land in Navi Mumbai. The assessee has two proprietary concerns, M/s Ekta Trading Co. and M/s K M Developers. During the search, certain loose papers were found which revealed that, several loans were taken and given by the assessee and their family concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has not been discussed in detail in the assessment order. The AO observed that, assessee has failed to produce single party for cross verification and many lenders filed their E-returns and sources of their income have been stated from 'income from other sources' and did not had Balance-sheet along with the return. From the perusal of their Bank Statement, he held that there is no regular or periodical income credited to the bank accounts. Thus, he concluded these are bogus transactions taken by the assessee in the form of loan before the purchase of a property by any of the group concern. His detailed conclusion has been discussed in para 5.4 to 5.7 of the assessment order. Thereafter, he discussed the concept of law of section 68 and various case authorities. Accordingly, he confirmed the unsecured loans which has been taken at Rs. 2,04,83,832/-, though the correct figure was Rs. 2,02,50,000/-. 3. Before the CIT(A), the break-up of loan taken by the two Proprietorship concerns from various persons were as under:- Sr.No. Name of the Party Amount(Rs.) Entities 1 M/s Ekta Trading Co. 1,22,60,000 17 2 M/s K M Deveopers 79,90,000 12 TOTAL 2,02,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified by the assessee that, first of all, the unsecured loans raised was Rs. 2,02,50,000/- and not Rs. 2,04,83,832/- as added by the AO; Secondly, it was pointed out that M/s Ekta Trading Co has taken loan of Rs. 61.50 lakhs from M/s K M Developers, (which is evident from above) both of which are proprietorship concerns of the assessee, that is, it has transferred the money from one pocket to another; Lastly, it was clarified that, some of the persons/entities are the sister concerns of the assessee and they were being assessed in the same charge and in their cases this issue of loan given to assessee has been discussed and analysed by the AO. 4. Apart from that, on merits, it was submitted that in order to prove the identity, creditworthiness of the 29 lenders and the genuineness of the transaction, following documents were placed on record before the AO:- "a. Copies of confirmation from the lenders; b. Copies of PAN card of the lenders; c. Copies of Ration Card of the lender; d. Copies of Return of Income for AY 2010-11 of the lender e. Copies of Balance Sheet for AY 2010-11 of the lender; f. Copies of Bank statement of the lender highlighting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 Kishor V Kawa YES YES -- YES YES YES 12 Laxmichand V.Rambhia (HUF) YES YES -- YES YES YES 13 Lilaben R Shah YES YES -- YES YES YES 14 R N Enterprises YES YES YES YES YES YES 15 Sakarbhai Nanji Satra YES YES -- YES YES YES 16 Vasant Morarji Karani (HUF) YES YES -- YES YES YES 17 Vinod Tukaram Patekar (HUF) YES YES -- YES YES YES It was submitted that despite all these evidences and without any contrary material, AO has treated the said amount as unexplained cash credit. Regarding other observations of the AO, assessee gave point-wise rebuttal which has been discussed by the Ld. CIT(A) from pages 9 to 13 of the impugned order. It was also clarified that amount aggregating to Rs. 46,95,000/- received from three entities belonging to the family group have already been added in their assessments, therefore, to this extent the amount should be deleted. This amount of Rs. 46,95,000/- were from following persons /entities, which have not been disputed before us also: Sr. No. Name of the Party Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Balance sheet on the closing date of 31st March, 2010. That apart, the documents and evidences like income-tax returns, PAN cards, Bank statements have been furnished which shows that the entire onus cast upon the assessee has been discharged. (iv) As regards the AO's observation that the lenders have advanced the loan to M/s Ekta Trading Co out of cash deposits in the account of its lender is not correct and the entire charge in this regard is baseless. From the perusal of the bank statements, she concluded that, it is clearly evident that loans have been advanced with the funds available with the lenders, either of their own or through funds received of the other parties through banking channels. Hence, there is no case for raising any suspicion. (v) As regards the five parties, which have not appeared for cross examination, ld, CIT(A) observed that when the lenders have forwarded their confirmation, PAN card, return of income, bank statement etc. and when the assessee requested the AO to make further enquiries from the respective AOs of the lenders, then AO should have enquired from the AOs of the lenders when their assessment particulars were available. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Ld. Counsel have been separately filed before us. 6. We have considered the rival submissions, perused the relevant finding given in the impugned order as well as material placed on records. Here in this case, addition has been made under section 68 on account of unsecured loans received by the assessee in his two proprietorship concerns from various persons as mentioned above. In order to prove the nature and source of the credits, as stipulated under the law, the assessee first of all has given the copy of confirmation/ letters from the lenders; PAN card; return of income along with the Balance sheet for the relevant AY 2010-11; bank statements of the lenders as well as bank statements of two proprietorships showing receipts as well as repayment entries. The summary of the documents/evidences furnished with regard to each and every persons/entities has been already incorporated above in the foregoing paragraphs. At the face of the law, initial burden casts upon the assessee to prove the source of the loan has been stated to be discharged. The revenue's case has been that, the capacity of the lenders has not been proved because these lenders were 'men of little me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of assessee's brother Haresh Majethia has deleted the addition on the ground that if the receipts and repayment of loan is corroborated by the ledger account and bank entries. Here also exactly the same fact is permeating, therefore, following the Tribunal order this amount of Rs. 79,90,000 has to be deleted. On other amount of Rs. 61.50 lakhs also, it is undisputed fact that it has been received from one proprietorship concern of the assessee to another, therefore, it cannot be added as income of the assessee. Thus, on these amounts of loans no adverse inference can be drawn and has rightly been deleted by the Ld. CIT(A). As noted above, already an amount of Rs. 46,95,000/- which has been added in the hands of the lenders has already been directed to be deleted by CIT(A) for which there is no dispute by the revenue. Thus, out of Rs. 1,55,10,000/-, sum of Rs. 79,90,000/- and Rs. 61,50,000/- (aggregating Rs. 1,41,40,000) could not have been added in wake of the aforesaid facts. Regarding other small loans also, we agree with the finding of the CIT(A) that the entire onus cast upon the assessee in wake of evidences filed have been fully discharged and accordingly, no additi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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