TMI Blog2017 (4) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... the name of M/s. AR.Com to be considered as unexplained credit in the hands of the assessee, the addition sustained by the Ld.CIT(A) is justified. Hence, this ground raised by the assessee stands rejected. Coming to the credit in the name of M/s. MSG Associates for 50 lakhs and of Mr. Bharat Chandan for 25 lakhs, it was stated by the AO in his Remand Report that the identity of these two parties are proved by filing confirmation letters. The contention of the ld.D.R is that the assessee has not repaid the loan, but repayment by the third party - when the AO himself given in the remand report that assessee had produced the confirmation letters and credit worthiness of these parties, were also proved through bank accounts, it is not appropriate on the part of the Departmental Representative to argue contrary to the Remand Report submitted by the AO before the Ld.CIT(A) which is produced by the Ld.CIT(A) of his order. Being so, we are not in a position to interfere with the above findings of the Ld.CIT(A) in deleting these two additions. Accordingly, deletion is justified and confirmed the order of Ld.CIT(A) on this issue. - ITA No. 3051/Mds/2016, ITA No. 2989/Mds/2016 - - - Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY 2009-10; by way of sale of the shares purchased by him in M/s. Sanguine Media Limited in the month of September 2008, and so, did not enter into any written agreements with any of his lenders either for the loans borrowed or on the terms of repayment, as the tenure of the loan was intended only for a short period of 7 months. However, the share markets crashed, the share prices of M/s. Sanguine Media Limited fell drastically and the assessee was not in a position to repay the money he had borrowed. As the assessee had conveyed to his lenders that he would repay the loans within a short period of time, he had taken assistance from his friend, Mr. Kalyanaraman, who had, through his associate companies; M/s. Aurobindo Finance Hire Purchase Pvt. Limited and M/s. Forsee Financial Consultancy Services; arranged to repay the loans, borrowed by the assessee. Thus, the repayment of the loans by Associate Companies of Mr. Kalyanaraman commenced in the month of October 2008, and the outstanding amounts due to M/s. MSG Associates and Mr. Bharat Chandan amounting to a sum of 75,00,000/- was repaid by M/s. Aurobindo Finance Hire Purchase Pvt. Ltd. an associate company of Mr. Kalyanarama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted before the AO that he was served with a notice u/s.148 of the Act, purely on this incorrect presumption adopted by the AO that the loans are incomes, meant to be reflected in the return of income. The assessee further submitted that he had admitted all the incomes earned by him during the AY 2009- 10 vide his tax returns filed on 28.7.2009. 2.4 The assessee had put forth his repeated pleas during the course of the assessment proceedings u/s.148 of the Act, that he had availed genuine loans, through his trusted agents and friends in the months of August 2008 and September 2008, only for the purpose of subscribing to the Rights issue and the various details and documents regarding the fact that the loans were fully repaid as on 26.04.2011 were furnished for the perusal and consideration of the AO. The assessee further reiterates that there was no income generated by him from out of the money borrowed during the AY 2009-10. According to ld.A.R, AO did not consider the facts in connection with the unsecured loans availed by the assessee, which are as under : a) The loans were availed from genuine persons b) The amount of loan was credited into the bank accounts of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing only the Federal Bank statement of one of the lenders, M/s. AR.Com. The assessee had provided the details of other bank statements of M/s. AR.Com, which were completely ignored by the AO. 2.7 Further, the AO had also concluded in the remand report that the books of accounts of all the other entities who had agreed to repay the loans availed by the assessee, were not reflecting the amounts of repayments being made by them. The assessee submitted that as the assessee under assessment, he has authority only over the transactions entered into by him and the necessary details regarding his assessment proceedings can be furnished by him to the fullest satisfaction of the AO. The assessee further submitted that he will have no knowledge over the books of account or the entries adopted by his debtors and creditors and it will be unjustified to make additions to his declared income merely on the basis of accounting entries adopted by third parties. 2.8 The assessee further submitted that he has clearly laid out all the facts relating to the loans borrowed by him and the method of repayment of the same. These details were ignored by the AO, who had concluded the remand report on er ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresses, GIR numbers/permanent account numbers and the copies of assessment orders wherever readily available, that it had also proved the capacity of the creditors by showing that the amounts were received by the assessee by account payee cheques drawn from bank accounts of the creditors and the assessee was not expected to prove the genuineness of the cash deposited in the bank accounts of those creditors because under law the assessee can be asked to prove the source of the credits in its books of account but not the source of the source. 3.1 On the contrary, the ld.D.R relied on the judgment of CIT vs. P. MOHANAKALA in [2007] 291 ITR 278 (SC) wherein held that: Reversing the decision of the High Court, that the findings of the Assessing Officer, the Commissioner (Appeals) and the Tribunal were based on the material on record and not on any conjectures and surmises. That the money came by way of bank cheques and was paid through the process of banking transaction was not by itself of any consequence. The High Court misdirected itself and erred in distu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive assessment years. As far as this assessment year is concerned, repayment of loan to the extent of 2.55 crores stands unexplained since Ravi is not figuring as debtor in the books of Forsee Financial Services Ltd. to the extent of 2.55 crores. Remaining amount of loan i..e, 1.25 crores which were repaid by way of sale of shares by the assessee which was only during the financial years relevant to Asst Years 2010-11 and 2011-12. 3.3 Thus, as far as this year is concerned, the repayment of loan of ₹ 2.55 crores stands unexplained since the said sum is stated to be repaid in the same year. On the remaining amount of 1.25 crores, the said amount is not figuring as loan in the books of C V Ravi as he had stated that he did not maintain books of accounts. Further it was also clearly proved that the assessee was also not in a position to prove the source for the said loan viz., M/s. A R. Com. It is also pertinent to mention that a separate OD account was opened with Oriental Bank of Commerce by M/s. Sri Aurobindo Finance Hire Purchase Ltd. to settle the loan amount of 2. 15 crores during the financial year 2008-09 and the entire amount of 2.15 crores given by Oriental Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount was borrowed by cheque and paid by cheque. However, it is to be noted that repayment was not by the assessee, but by the third party. By appreciating all the material on record, the AO came to the conclusion that the assessee s explanation regarding this cash credit could not be accepted in the case of M/s. AR.Com. In such circumstances, we are not in a position to disturb the findings of the lower authorities in respect of credit in the name of M/s. AR.Com. Accordingly, the addition of 3.05 crores in the name of M/s. AR.Com to be considered as unexplained credit in the hands of the assessee, the addition sustained by the Ld.CIT(A) is justified. Hence, this ground raised by the assessee stands rejected. 3.6 Coming to the credit in the name of M/s. MSG Associates for 50 lakhs and of Mr. Bharat Chandan for 25 lakhs, it was stated by the AO in his Remand Report that the identity of these two parties are proved by filing confirmation letters. The contention of the ld.D.R is that the assessee has not repaid the loan, but repayment by the third party. In our opinion, when the AO himself given in the remand report that assessee had produced the confirmation letters and credit wort ..... X X X X Extracts X X X X X X X X Extracts X X X X
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