TMI Blog2020 (2) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... e has discharged onus cast upon u/s 68 in respect of unsecured loans taken from Mr. Ajeet N. Barshikar. No contrary evidence has been borught on record to prove findings of facts recorded by the ld. CIT(A) are incorrect. Additions towards interest paid on unsecured loans as unexplained expenditure - Once loan transactions between the assessee and the creditor has been found to be genuine transactions, which satisfies the conditions prescribed u/s 68, then interest paid thereon cannot be considered as unexplained expenditure. Accordingly, we do not find any error the findings of the Ld.CIT(A). Additions made towards cash deposits in ICICI banks and amount received from Gartner India Research, we find that the ld.CIT(A) has recorded categorical findings, in light of evidences filed by the assessee that said information has been reconciled with reference to return of income filed for the year. Hence, we are inclined to uphold the findings of the Ld. AO and reject ground taken by the revenue. - ITA No.6064/Mum/2018 - - - Dated:- 10-1-2020 - Shri Saktijit Dey, Judicial Member And Shri G. Manjunatha, Accountant Member For the Assessee : Shri. Vijay Mehta, AR For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary evidences, including details of loans taken from the loan creditor. The Ld. AO after considering relevant submissions of the assesee and also taken note of details furnished during the course of assessment proceedings, came to the conclusion that the assessee has failed to prove identity of the persons, genuineness of transactions and creditworthiness of the parties and accordingly, made additions of ₹ 1.75 crores as unexplained cash credits u/s 68 of the Act, 1961. The relevant findings of the Ld. AO are as under:- Therefore, in the light of the various judicial pronouncements and the facts of the case, it is clear that the creditworthiness and genuineness of the said lender is not established. The assessee has not been able to prove the creditor was capable of giving loans. Enquiries conducted revealed that the lender has not filed even ITR even when received taxable income from assessee which is surprising, and it implies that the transaction is not genuine. Bank statement furnished by lender is also not showing receipt of foreign remittances. Therefore, it is held that the assessee could not prove the genuineness of transaction and creditworthiness Of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings. 6. Insofar as, the issue involved on merits regarding additions made by the Ld. AO towards unsecured loans taken from Mr. Ajeet N. Barshikar and consequent interest paid thereon, the Ld.CIT(A) has recorded categorical findings that the assessee has submitted complete details and evidences with regard to loan transactions of ₹ 1.75 crores, taken from Mr. Ajeet N. Barshikar. The assesee has also explained source of funds of Mr. Ajeet N. Barshikar. Further, although the Ld. AO has pointed out certain errors, mismatches and other details, in respect of evidences filed by the assessee, but such errors are relates to loan creditors, but not to the assessee. He, further, observed that the loan transactions have been routed through banking channels. Although, the Ld. AO in his remand report commented upon mismatch in confirmation letter and ledger extract, but such mismatch has been reconciled during the appellate proceedings. He further observed that out of a sum of ₹ 1.75 crores, a sum of Rs. ₹ 50 Lacs was received during the assessment year 2012-13 and accordingly, the same cannot be added u/s 68 of the I.T.Act, 1961, for the year under consideration. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principles which would be extremely useful in understanding the issue in hand. It has been stated in the said judgment that over the years, law regarding cash credits have evolved and has taken a definite shape. A few aspects of law u/s.68 can be enumerated. 1. Sec. 68 can be invoked when there is a credit of amounts in the books maintained by the assessee, such credit is a sum of money during the previous year and either the assessee offers no explanation about the nature and source of such credits or the explanation by the assessee in the opinion of the AO is not satisfactory. 2. The opinion of the AO for not accepting the explanation offered by the assessee as not satisfactory is required to be formed objectively with reference to the material on record. 3. Courts are of the firm view that the evidence produced by the assessee cannot be brushed aside in a casual manner, 4. The onus of proof is not static. The initial burden lies on the assessee to establish the identity and the credit worthiness of the creditor as well as the genuineness of transaction. 5. The identity of creditors and be established by either furnishing their PANs or assessment orders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entity and creditworthiness of the lender. The Ld. DR further submitted that the Ld.CIT(A) has failed to appreciate the fact that in the assessment order, as well as in remand report, the Ld. AO has clearly established the unexplained cash credit and accordingly, interest expenditure has been disallowed. The Ld.CIT(A) without considering the facts brought out by the Ld. AO, simply deleted additions only on the basis of additional evidences filed by the assessee, even though the ld. AO has rejected additional evidences filed during the course of remand proceedings. Insofar as, disallowances of interest expenditure and other additions regarding cash deposits found in AIR information, the ld. DR submitted that the Ld.CIT(A) without assigning any reasons simply deleted additions on one line finding that the assessee has reconciled difference. But, fact remains that no evidence has been placed on record before the Ld. AO to establish the transactions. The Ld. CIT(A) without appreciating those facts has deleted additions made by the Ld. AO and hence, his order should be reversed. 9. The Ld. AR, for the assesee, on the other hand, strongly supporting order of the Ld.CIT(A) submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, in respect of an amount of ₹ 20 Lacs transferred on 16/04/2012, the source has been explained from amount received from Saritha Barshikar wife of lender, for which necessary bank statement has been enclosed. The assessee has also filed income tax copy of loan creditors for the relevant financial year. From the above, it is very clear that the identity, genuineness of transactions and creditworthiness of the loan creditor has been explained with necessary evidences. The Ld.CIT(A) after considering relevant facts has rightly came to the conclusion that the assessee has discharged onus cast upon u/s 68 of the I.T.Act, 1961, in respect of unsecured loans taken from Mr. Ajeet N. Barshikar. No contrary evidence has been borught on record to prove findings of facts recorded by the ld. CIT(A) are incorerct. Hence, we are inclined to uphold the findings of the Ld.CIT(A) and reject ground taken by the revenue. 11. Insofar as, additions towards interest paid on unsecured loans as unexplained expenditure, once loan transactions between the assesee and the creditor has been found to be genuine transactions, which satisfies the conditions prescribed u/s 68, then interest paid thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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