TMI Blog2018 (6) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Jasmine Kochar Kapoor. Quantum of addition - It is stated by the learned counsel that in assessment year 201314, the AO made the addition for unexplained unsecured loan but most of the credit is old credit in the assessee s books of account and fresh loan during the year under consideration was only to the tune of ₹ 26 lakhs. During the course of hearing before us, he referred to the balance sheet of the last year as well as this year so as to point out that there were huge unsecured loans in last year also. So far as the legal proposition is concerned, the addition for cash credit can be made only in respect of fresh credit during the accounting year relevant to the assessment year under consideration. However, what is the actual credit during the year under consideration is a factual thing which requires verification at the end of the AO.Therefore, set aside the issue of addition for unexplained loan to the file of the Assessing Officer and direct him to verify the quantum of fresh credit in the assessee s books of account during the accounting year relevant to the assessment year under consideration and make the addition only in respect of fresh credit and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chstone of the aforesaid provision, if the assessment order is examined: the following facts would emerge. (i) Sum credited in the books - only ₹ 26 lakh - well explained. (ii) The assessee offered explanation with sources in the confirmation of accounts along with copy of the bank statement and also copy of her passport and also the PAN number CRNPK6973N. It is pertinent to mention that Ms. Jasmine Kochar Kapoor is a Birmingham citizen. (iii) Because in the aforesaid facts and circumstances, if the Assessing officer had any doubt with regard to genuineness of creditor Ms. Jasmine Kochar Kapoor, he ought to have issued a notice under Section 133 (6) of the Income Tax, 1961 to find to veracity of the entry made in the Books of Accounts of the Assessee for the year 2013-14. (iv) Because the Assessee has discharged the primary onus by submitting the Confirmation of Accounts, Copy of the Passport, PAN Number and Bank statement indicating the source from which the cheques were issued. (v) Because in a similar situation, the IT AT of Mumbai in the matter of Shree Krishan Hindu Merchants Club versus ITO in reported in (2017) 53ITR he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agpur A/C No. 0265101012274 2 738674 23.10.2012 10,00,000 Canara Bank, Nagpur A/C No. 0265101012274 3 649338 23.10.2012 10,00,000 Yes Bank, Nagpur NRO A/c No. 002890400000072 The above cheques were drawn from by Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) and also an Overseas Citizen of India (OCI). Her Passport Number is A097004 dated 02.02.2007 issued at Birmingham. The assessee got their account audited u/s 44AB of the Income Tax Act, 1961. The assessee efiled Income Tax Return (ITR) for the Assessment Year 2013-14 attaching necessary audit report in form 3CD as prescribed by the Act. The tax audit u/s 44AB, the mandatory disclosure under Particulars of Loans Accepted during the Previous Year 2012-13 , Annexure to Form 3CD in respect to receipt of Unsecured Loan during the previous year as well as copy of said Audit Report in Form No. 3CB and Statement of Particulars in Form No. 3CD was filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,0250,370 3,321,368 (1,060,056) 19,286,680 On 22.03.2016, the Assessing Officer served Show Cause Notice to the AR proposing to treat the unexplained cash credit u/s 68 of the Act and added back to the income o f the assessee . The assessee explained that cash credit amount of ₹ 170,25,370/- was the closing balance of previous year i.e. 2011-12 as submitted above in the table. The Assessing Officer added an amount of ₹ 1,80,65,314/- to income. 4. Being aggrieved by the Assessment Order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the Assessing Officer without considering the factual matrix of the case, adjudicated the matter and arbitrarily decided to disallow unsecured loan amounting to ₹ 180,65,314/- which includes previous year closing balance of ₹ 17,025,370/-. The Assessing Officer, despite being explained about the factual position of unsecured loan amount with relevant records, made an observation that the Assessee was deliberately avoiding to attend the office a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Source, and credit worthiness of the lender during assessment proceeding. The Ld. AR submitted that to confirm the above transactions, documents and explanation submitted, the Assessing Officer has not issued requisition u/s 133(6) of the Income tax Act, 1961 and passed ex parte order disregarding the material facts. The Ld. AR submitted that the Assessing Officer initiated recovery proceeding by issuing Notice dated 12.02.2018 u/s 221 of the Income Tax Act, 1961 and also attached four Bank Accounts of the assessee and recovered ₹ 26,37,028/-. The Ld. AR submitted that the order of the CIT(A) and Assessment Order dated 28.03.2016 having been passed ex parte causing serious prejudice to the interest of justice and liable to be set aside being violative of principles of natural justice. Both the authorities failed to appreciate the materials on record, the cryptic and unreasoned orders passed are unsustainable and liable to be set- aside. The Ld. AR submitted that loans in question having been received from genuine sources and the lenders are identifiable, hence ex parte assessment made without causing any enquiry u/s 133 of the Income Tax Act, 1961 after 6 months of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 133 (6) of the Income Tax, 1961 to the creditor to find out the veracity of the entry made in the Books of Accounts of the Assessee for the financial year 2013-14. (d) Because the Assessee has discharged the primary onus by submitting the Confirmation of Accounts, Copy of the Passport, PAN and Bank A/c statement indicating the source from which the cheques were issued. (e) Because in a similar situation, the IT AT of Mumbai in the matter of Shree Krishan Hindu Merchants Club versus ITO in reported in (2017) 53 ITR held we restore the matter back to the file of the AO with a direction to the AO to issue 133 (6) to the concerned creditor to find out their genuineness and for obtaining their confirmation. Accordingly the AO is to decide the issue afresh after giving due opportunity to the assessee. (f) Because taxing provision being required to be strictly construed and there being no intendment in law or equity about taxation. The provisions of addition to income under Section 68 of the Income Tax Act, 1961 is not liable to be loosely interpreted, thus the addition made by the Ld. Assessing Officer is unjustified and unsustainable hence the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The assessee e-filed Income Tax Return (ITR) for the Assessment Year 2014-15 attaching necessary audit report in Form 3CD as prescribed by the Act. As per statutory requirement of tax audit u/s 44AB, the mandatory disclosure under Particulars of Loans Accepted during the Previous Year 2013-14 Annexure to Form 3CD such as receipt of Unsecured Loan issued during the previous year. Notice dated 09.11.2015 was issued by the Assessing Officer. On 27.12.2016, the office of Assessing Officer served Show Cause Notice dated 06.12.2016 to show cause why unsecured loan shall not be treated as unexplained credit u/s 68 of the Income Tax Act, 1961. On 29.12.2016, the assessee submitted written explanation. The Assessing Officer made an independent enquiry through e-mail and telephonic conversion with ITO - Ward 1(3), Nagpur on 12.12.2016 about ITR status of Jasmine Kochar Kapoor (PAN CRNPK6973N) and on 22.12.2016, ITO Nagpur replied through e-mail about non-filing of ITR. Thus, the Assessing Officer made an addition of ₹ 87,00,000/- as unsecured loan and other addition of ₹ 1,47,000/-. 9. Being aggrieved by the Assessment Order, the assessee filed appeal before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer during assessment proceeding u/s 143(3), the assessee filed copy of confirmation (dated 01.04.2014) from Ms. Jasmine Kochar Kapoor towards receipt of genuine unsecured loan of ₹ 26,00,000/- through following three cheques from Ms. Jasmin Kochar Kapoor, a citizen of GBR (United Kingdom) who is an Overseas Citizen (OCI) having Passport No. A 097004 dated 02.02.2007 issued at Birmingham; (i) Copy of Bank A/c Statement Yes Bank, Nagpur NRO A/c No. 002890400000072. (ii) Copy of Passport No. A 097004 dated 02.02.2007 and PAN - CRNPK6973N. The Ld. AR further submitted that an independent enquiry through e-mail dated 22.12.2016 was made by the Assessing Officer with ITO W (1)(3), Nagpur on specific issue i. e. Filing of ITR by Ms. Jasmine Kochar Kapoor (PAN - CRNPK6973N) for the assessment year 2013-14, 2014-15 . The Ld. AR submitted that the order of the CIT(A) and Assessment Order having been passed exparte causing serious prejudice to the interest of justice and liable to be set aside being violative of principles of natural justice. The Ld. AR submitted that both the authorities having failed to appreciate the materials on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. We, therefore, hold that the assessee could not discharge the onus of proving the cash credit in the name of Ms. Jasmine Kochar Kapoor. 13. Now, the second question that arises is with regard to the quantum of addition. It is stated by the learned counsel that in assessment year 201314, the Assessing Officer made the addition of ₹ 1,80,65,313/- for unexplained unsecured loan but most of the credit is old credit in the assessee s books of account and fresh loan during the year under consideration was only to the tune of ₹ 26 lakhs. During the course of hearing before us, he referred to the balance sheet of the last year as well as this year so as to point out that there were huge unsecured loans in last year also. So far as the legal proposition is concerned, the addition for cash credit can be made only in respect of fresh credit during the accounting year relevant to the assessment year under consideration. However, what is the actual credit during the year under consideration is a factual thing which requires verification at the end of the Assessing Officer. We, therefore, set aside the issue of addition for unexplained loan to the file of the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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