TMI Blog2020 (7) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the assessee was partner and the same was duly assessed to the income tax. So far as the genuineness of the transactions was concerned, even in that respect no doubt has been raised by the AO. Admittedly, all the amounts by M/s Euro Steels has been transferred to the assessee through banking channels. CIT(A) has rejected the contentions of the assessee and upheld the additions made by the AO citing different reasons saying that the assessee could not prove the source of numerous deposits in the bank accounts of M/s Euro Steels. CIT(A) simply noted that there was a deposit into the said account, therefore, he doubted the genuineness of the transactions, whereas, the claim of the assessee has that all the details whatever were called for, were duly furnished and that the alleged deposits in the individual bank account of Shri Rohit Kumar Jindal were through banking channels. When the assessee has proved the source of deposit and genuineness of the transactions, therefore, the assessee without being called for to prove the source of source by the AO was not supposed to furnish the further details. No doubt has been raised either by the AO or by the CIT(A) regarding the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 1,03,10,000/- on account of the additions in the capital account of the assessee by holding the same as unexplained additions as his finding in Para 7.6.7 of the appellate order. 2.(b) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in upholding the addition made by the AO in respect of capital addition made by the assessee ignoring the fact that the complete sources of addition were duly furnished by the appellant being transfer of funds from M/s Euro Steels. 2.(c) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has factually erred in holding that there were any cash deposits in the bank account of M/s Euro Steels as per his finding in Para 7.6.5 of his order. 2.(d) That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in concluding that the assessee was liable to explain the source of deposits in the hands of M/s Euro Steels as per his findings in Para 7.6.5 of his order. 3. That the Worthy Commissioner of Income Tax (Appeals)-2, Ludhiana has erred in confirming an addition to the tune of ₹ 1,62,50,000/- on account of alleged unexplained unsecured loans taken by the appellant duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional evidences and called for remand report from the Assessing Officer in respect of the various evidences / explanation given by the assessee. After considering the remand report, counter objections of the assessee on the said remand report and also after considering the submissions of the assessee, the Ld. CIT(A) partly allowed the appeal of the assessee. He, however, has confirmed the additions as contested vide above noted grounds of appeal. 5. We have heard the rival contentions of the Ld. Authorized Representatives of both the parties and have gone through the record. Our findings in respect of the matter are as under: 6. Ground No.1 : Ground No.1 is general in nature. The assessee, in this ground has contested the total addition amounting to ₹ 2,66,60,000/- . However the assessee vide subsequent grounds has contested specifically the each part of the aforesaid total addition . Hence this ground will be automatically taken care in our adjudication on the subsequent grounds. 7. Ground No.2 : The assessee vide this ground has contested the addition of ₹ 1,03,10,000/- on account of introduction of the said amount in the capital account of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the year ending 31.03.2013. (iii) Copy of death certificate of Sh. Ramesh Jain as copy of ITR is not traceable 7. Since the assessee has not furnished the copy of ITR filed by M/s. Euro Steels for the A.Y.2013-14. In order to verify the creditworthiness and genuineness of the unsecured loan given by Sh. Rohit Jain, partner of M/s. Euro Steels, the copy of ITRs for the A.Ys.2012-13 and 2013-14 and audited balance-sheet were called for from the ITO, Ward-1, Patiala where the PAN of the firm was lying. After verification of documents supplied by the assessee and documents called for from ITO, Ward-1, Patiala, the following discrepancies have been noticed: (b) During the year under consideration, the assessee has introduced capital of ₹ 1. 031 crores and out of this amount, ₹ 90,75,000/- have been given by the firm M/s. Euro Steels, Mandi Gobindgarh. Further the firm M/s Euro Steels has also given ₹ 57,55,000/- in the shape of unsecured loans. But on perusal of ITR of the firm, it has been noticed that the firm has filed ITR for the A.Y.2013-14 declaring an income of ₹ 99,057/- only. Hence the creditworthiness and genuineness of the loans revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus, it is requested that the submissions already given by the assessee may kindly be considered. f. In Point f. the Ld. AO has alleged that the assessee has not filed any documentary evidence with regard to ₹ 260000 transferred from the savings bank account of the karta of the assessee, however, this allegation of the Ld. AO is not at all correct as we have duly filed the copy of the savings bank statement of the Karta of the assessee on Page 32-33 of the paperbook and from a perusal of the same it is clear that the Karta has received the said amount from the banking channels and no adverse remarks against the same has been given by the Ld. AO in the remand proceedings, therefore, the explanation given by the assessee may kindly be considered and the addition with regard to the same may please be deleted. 9. However, the Ld CIT(A) has given his findings in respect of each of the above additions as under:- 7.6.4 On careful consideration of the rival contentions, it has been noticed that although the learned AR of the assessee HUF has tried to explain the source of addition to capital account to the extent of ₹ 98,35,000/- [₹ 90,75,000/- + ₹ 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G Sh. Dev Krishn Gupta is concerned, it has been noticed that there is an transfer of equal amount of ₹ 2,60,000/- in the same bank account, the sources of which remained unexplained even during appellate proceedings. As the deposits in the same bank account to the extent of ₹ 2,60,000/- have not been explained and as the onus lies upon the assessee HUF has not been discharged, the source of capital contribution to the extent of ₹ 2,60,000/- in the books of assessee HUF cannot be treated as explained. So, the addition to the extent of ₹ 2,60,000/- made by the Assessing Officer on account of unexplained addition to capital account of the assessee HUF out of total addition of ₹ 1,03,10,000/- is upheld too. 7.6.7 In nutshell, whole of the addition of ₹ 1,03,10,000/- made by the Assessing Officer in this on account of unexplained addition to capital account of the assessee HUF is, therefore, upheld. 10. We have considered the rival contentions of the Ld. Representatives of the parties and have also gone through the record. So far as the addition of ₹ 90,75,000/- and further a sum of ₹ 5,00,000/- claimed to have been received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re was no doubt raised by the AO in this respect. M/s Euro Steels was as separate concern in which the assessee was partner and the same was duly assessed to the income tax. So far as the genuineness of the transactions was concerned, even in that respect no doubt has been raised by the AO. Admittedly, all the amounts by M/s Euro Steels has been transferred to the assessee through banking channels. However, the ld. CIT(A) has rejected the contentions of the assessee and upheld the additions made by the AO citing different reasons saying that the assessee could not prove the source of numerous deposits in the bank accounts of M/s Euro Steels. However, as observed above, the AO in his remand report has not pointed out any doubt about the source of numerous deposits in the bank accounts of M/s Euro Steels. Further, the assessee has been stating that the source of said deposits in the accounts of M/s Euro Steels was out of its business receipts in normal course. In the remand proceedings neither the AO asked the assessee to furnish further evidences in respect of the source of deposit into the accounts of M/s Euro Steels nor the AO himself called the M/s Euro Steels to prove the source ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the assessee without being called for to prove the source of source by the AO was not supposed to furnish the further details. No doubt has been raised either by the AO or by the CIT(A) regarding the transaction so far as the receipt of ₹ 2,60,000/- by the assessee from saving account of the individual is concerned. So far as the addition of ₹ 4,75,000/- was concerned, the assessee admittedly could not prove with reliable evidence the source of the said amount and the creditworthiness of the creditor and genuineness of the transaction. 11. In view of the above discussion, the addition to the extent of ₹ 4,75,000/- is upheld whereas, the remaining part of the additions out of the total additions ₹ 1,03,10,000/- is ordered to be deleted. This ground of the appeal is accordingly partly allowed. 12. Ground Nos. 3 4 : The assessee through these grounds of appeal has agitated the addition of ₹ 1,62,50,000/- on account of alleged unexplained unsecured loans. The assessee in this respect explained that the assessee HUF availed many short and long term loans from various banks as well as financial institutions. As the position of the business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al. To further substantiate we are enclosing in the paper book, the confirmed copies of account of Dev Krishan Jindal Sons (HUF) evidencing the transfer of the said amount on Page36. We are also filing before your goodself the Return of Income in the paper book at page-38 and the confirmed copy of account of Dev Krishan Jindal HUF to further substantiate the genuineness of the transaction. From Smiti Jindal - ₹ 20.00.000/- During the year under consideration the assessee HUF received ₹ 20 Lakhs as Unsecured Loan from Mrs. Smiti Jindal. Mrs. Smiti Jindal is wife of the karta of the assessee HUF. The said amount has actually been paid by M/s Euro Steels on the behalf of Smiti Jindal and the same is evident from the collective perusal of the copy of account of Mrs. Smiti Jindal in the books of M/s R.D Steels enclosed in the paperbook at Pages-42 and the copy of the bank statement enclosed at Pages 44-45. It is also for your information that Mrs. Smiti Jindal is the sister of Rohit Jain Partner in M/s Euro Steels. We are also filing before your goodself the Return of Income in the paperbook at pages- 43 and the confirmed copy of account of Smiti Jindal to furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s evident from the collective perusal of the copy of account of Mrs. Superna Jindal in the books of M/s R.D Steels enclosed in the paperbook at Pages-62 and the copy of the bank statement of M/s Euro Steels enclosed in the Paper Book at Pages 64-66. The said amount has been accumulated by the firm in the regular course of business and the same is evident from the bank statement attached herewith. Further, the copy of Income Tax Return along with the confirmed copy of account is duly attached herewith at Pg 63 of the Paper Book. From Rohit Kumar Jindal - ₹ 13,90.000/- Regarding the unsecured loan of ₹ 13,90,000/-, it is submitted that the said amount has been lent by Sh. Rohit Kumar Jindal himself i.e., the karta of the HUF. Out of the said amount, ₹ 11,00,000/- has been paid by M/s Euro Steels on the behalf of Rohit Jindal which is evident from the bank statement of M/s Euro Steels attached on Pg 59 of Paper Book. The said amount has been earned in the regular course of business of M/s Euro Steels. Further, the remaining amount of ₹ 2,90,000/- has been lent from the personal savings account of the Karta of the assessee HUF. The said amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .04.2012 was only ₹ 72,11,236/- which was raised in the A.Y.2013-14 at ₹ 1,31,08,241/- i.e. as on 31.03.2013. It is pertinent to mention here that during the year, Sh. Rohit Jain, partner has withdrawn only ₹ 23,20,000/- from his capital, whereas as per assessee's books of accounts, ₹ 85 lacs have been received from Sh. Rohit Jain from his capital account. In view of these facts, the unsecured loans raised from Sh. Rohit Jain, partner of M/s. Euro Steels are not genuine. (c) Further, the assessee has furnished documents with regard to unsecured loans raised of ₹ 54,31,000/-from Sh. Ramesh Jain, who has since been expired and copy of ITR has not been supplied. In this regard, it is submitted that Sh. Ramesh Jain having PAN ADVPJ2567M is also assessee of this ward, who has not filed any ITR for the A.Y.2013-14. Hence the person who is not an assessee has given an loan of ₹ 54,31,000/- cannot be accepted. Hence the source of giving loan i.e. creditworthiness of Sh. Ramesh Jain has also not been proved by the assessee and deserves to be rejected. (d) Further the assessee has submitted in his written submissions that Sh. Dev Krishan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r making addition in the hands of the Assessee. c. In Point c the Ld. AO has alleged that Ramesh jain who is also one of the unsecured loan creditor has not filed the return of income for the relevant assessment year, with regard to the same at the outset it is submitted that Ramesh Jain had passed away on 24.09.2014 and it is also for your information that till the date of the lender's death there was still time left to file the belated return and due to the unfortunate death of the lender the same could not have been filed. Thus, the same cannot be any way said to be assessee's fault. Moreover, from a perusal of the bank statement of Sh. Ramesh Jain it can be seen that ₹ 34,34,213/- has been brought forward from the earlier years. Further, as evident from the bank statement the lender had availed loan from PNB on 48-49 amounting to ₹ 33.60 Lakhs out of which funds has been advanced to assessee. The Ld. AO in her remand proceedings have not given any adverse remarks against the same and therefore, merely because the return of income has not been filed of a dead person, it cannot be held that the creditworthiness of the said lender cannot be proved when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rous deposits in the bank account of M/s Euro Steels during the year, under consideration, the sources of which could not be explained and remained unexplained even during appellate proceedings. The confirmations filed by M/s Euro Steels of family members or relatives of the Karta of assessee HUF will have no evidentiary value unless and until the sources of various deposits in the bank account of M/s Euro Steels are explained. The contention of the learned AR of the assessee HUF that the source in the hands of the assessee HUF stand explained and action if any may be taken in the hands of M/s Euro Steels cannot be accepted as the onus cast upon the assessee HUF to explain the source of deposits in the bank account of M/s Euro Steels has not been discharged. As the deposits in the bank account of M/s Euro Steels have not been explained and as the onus lies upon the assessee HUF has not been discharged, the source of unsecured loans in the name of different family members and relatives to the extent of ₹ 1,42,55,000/- in the books of assessee HUF cannot be treated as explained. So, the addition to the extent of ₹ 1,42,55,000/- made by the Assessing Officer on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a proprietary concern of the mother of the Karta of the assessee HUF. As the sources of deposits in the bank account of M/s Kiran Industries remained unexplained even during appellate proceedings, it cannot be said that the assessee HUF has discharged its onus to explain the source of unsecured loan from M/s Dev Krishan Jindal Sons (HUF). As the deposits in the bank account of M/s Krishna Industries from where the funds have been transferred to the bank account of M/s Dev Krishan Jindal Sons (HUF) have remained unexplained even during appellate proceedings and as the onus lies upon the assessee HUF has not been discharged, the source of unsecured loan to the extent of ₹ 19,95,000/- from M/s Dev Krishan Jindal Sons (HUF) cannot be treated from explained sources. So, the addition to the extent of ₹ 19,95,000/- made by the Assessing Officer in this case on account of unexplained unsecured loan from M/s Dev Krishan Jindal Sons out of total addition of ₹ 2,19,71,000/- is also upheld. It has also been noticed that the amount shown in the balance sheet of M/s Euro Steels in the name of M/s R.D. Steels, a proprietary concern of the assessee HUF, is only at ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med to have been received from M/s Euro Steels. The Ld AO and the Ld CIT(A) have rejected the above transactions on the basis of identical reason, as discussed above. However, in view of our observations made above regarding the issue of creditworthiness of M/s Euro Steels, the addition made by the lower authorities in respect of the loans from the above stated parties amounting to ₹ 1,42,55,000/- is ordered to be deleted. The transaction relating to the remaining amount of ₹ 2,90,000/- from Shri Rohit Kumar Jindal stands accepted by the CIT(A). So far as the unsecured loan raised of ₹ 54,31,000/- from Shri Ramesh Jain is concerned, the Ld CIT(A) has already deleted the addition in this respect. Since the parties are not in appeal in respect of the above transaction, hence, no adjudication is required in this respect. So far as the unsecured loans received from Shri Dev Krishan Jindal (HUF) of ₹ 19,95,000/- is concerned, the AO in his remand report has observed that the said amount was received by the said concern from M/s Kiran Industries and that the assessee had failed to prove the source of the said concern M/s Kiran Industries. However, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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