TMI Blog2019 (3) TMI 1400X X X X Extracts X X X X X X X X Extracts X X X X ..... R PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Assessee against the appellate order of the Commissioner of Income Tax(Appeals)-6, Ahmedabad [CIT(A) in short] dated 30/11/2016 arising in the assessment order passed under s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) dated 18/01/2016 relevant to Assessment Year (AY) 2013-14. 2. The assessee has agitated the action of the CIT(A) in confirming the addition of ₹ 5 lakhs originally made by the Assessing Officer under s.68 of the Act by way of its ground of appeal. 3. Briefly stated, the assessee filed its return of income for AY 2013-14 which was subjected to scrutiny assessment. In the course of scrutiny assessment, it was noticed that the assessee has taken loan of ₹ 5 lakhs from one Shri Vrajlal Chagnial Sorthiya. The aforesaid lender had not filed return of income for AY 2013-14. To verify the genuineness of the loan, the lender was examined on oath under s.131(1) of the Act on 08/12/2015. It transpired that lender is a retired government employee and drawing pension and claims to have 6.4 hectors agricultural land. However, on enqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order and in the statement recorded it is evident that that the lender did not have regular source of income and the cash deposit of ₹ 5,00,000/- was also an isolated transaction. Therefore the contention of the appellant that loan was given out of explained source of income cannot be accepted hence not tenable. Considering the above facts I am of the view that the apparent is not real and the cash was deposited to provide accommodation entry of unsecured loan. Thus, in view of the above, the appellant's plea of loan received through account payee cheque cannot justify the genuineness of the loan. 8.2 Transaction through account payee cheque is not conclusive/ sufficient to decide the genuineness of the transactions. The ratio has been laid down in various judgments/decisions as under: 8.2.1 The Hon'ble Supreme court in the case of Commissioner of Income-tax v. P. Mohanakaia [2007] 161 TAXMAN 169 (SC) held that We are unable to persuade ourselves to accept the submission. The findings of fact arrived at by the authorities below are based on proper appreciation of the facts and the material available on record and surrounding circumstances. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany is a legal personality entirely distinct from its members and the company is capable of enjoying rights and being subjected to duties which are not the same as those enjoyed or borne by its members. But in certain exceptional cases the Court is entitled to lift the veil of the corporate entity and to pay regard to the economic realities behind the legal facade. ... (p. 710) 8.2.4 In the case of Hindustan Tea Trio - 263 ITR 289 (Cal) the Hon'ble Calcutta High Court has held as under The power of the Assessing Officer under section 68 is not an absolute one. It is subject to his satisfaction where explanation is offered. The power is absolute where the assessee offers no explanation. The satisfaction with regard to explanation is in effect an in-built safeguard in section 68 protecting the interest of the assesses. It provides for an opportunity to the assessee to explain the nature and source of the fund. Once it is explained, it is incumbent on the Assessing Officer to consider the same and form an opinion whether the explanation is satisfactory or not. The expression used in the section clearly lays the burden on the assessee to explain the nature and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention. If further information or materials are furnished, the Assessing Officer is bound to examine the same and form its final opinion and pass an appropriate order . Such opinion is also subject to examination by the Commissioner (Appeals) or the Tribunal and if it involves a Question of law, it is also subject to scrutiny by the High Court under section 256. Findings of fact may also form a basis of a question of low if the inference drown from the facts found is not in consonance with the legal principles or the findings are perverse. In such a case, the High Court may interfere. If two views are possible, even if the High Court is of the other view, it cannot interfere with the view taken by the taxing authority. [Para 6]. 8.2.5 In the case of CIT vs. Indian Express News Papers 238 ITR 70 (Mad) the Hon'ble Madras High Court held as under The fact that the money was not paid directly but was shown as having been invested in the subsidiary company was not decisive of the true character of the transact/oh. The mere fact that the investment company was a distinct legal entity did not by itself establish that the purported investment was a genuine investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of the lender and submitted that the loan of ₹ 5 lakhs taken on 26/03/2013 was also repaid on 02/04/2013 and, therefore, there is no reason to doubt the bonafides of the lending. The Ld.AR also submitted that the lender himself attended the proceedings before the Assessing Officer and confirmed the act of giving loan to the assessee. Under these circumstances, it was contended, the ingredients of section 68 of the Act is not fulfilled. On a query from the Bench, however, that the lender has again entered into similar transaction in the subsequent period with some other person without any financial capacity (bank balance ordinarily less than ₹ 1,000/- on a continued basis), the Ld.AR for the assessee drew blank but however observed that it concerns state of affairs of the lender with which the assessee is not privy to. The Ld.AR for the assessee however submitted that a benign view should be taken and the assessee should be absolved from the additions made by the revenue authorities. 7. The Ld.DR, on the other hand, relied upon the orders of the authorities below and stridently opposed the contentions raised on behalf of the assessee. It was submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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