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TMI Blog2017 (4) TMI 1525X X X X Extracts X X X X X X X X Extracts X X X X ..... he nature of unsecured loans and received a sum of 3.80 crores, through credit in his bank accounts, from the following : a) M/s. A.R.Com 3,05,00,000/- credit in bank a/c on 04/09/2008 b) M/s. MSG Associates 50,00,000/- credit in bank a/c on 14/08/2008 c) Mr.Bharat Chandan 25,00,000/- credit in bank a/c on 02/09/2008 3,80,00.000/- The assessee sought the assistance of agents and his friends to arrange the above sums and such agents were paid necessary consultation charges for their services. 2.1 Towards the above mentioned loans availed by the assessee, he had also pledged 14,50,000 shares out of the 16,50,200 shares that were acquired him in favour of the above lenders, Mr. Bharat Chandan in October 2008, which is the subsequent month of availing the entire unsecured loans. The value of the 14,50,000 shares amounted to 3,20,00,000/- as on that date. The pledge was done in the name of one of the lender only as all the three lenders were referred to him by his closed circuit of friends and agents. Moreover, the assessee was under the intention of repaying the loans on or before March 31, 2009, i.e. before the close of the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sources to all of his lenders and had also completed them all on 26th April, 2011. All the repayments were made by the assessee through banking channels in the form of cheques, RTGS transfers and sale of shares. 2.3 However, the assessee was served a summon u/s.131 on 01.02.2010 by the Income-tax Officer (Inv.), Chennai and the assessee appeared and sworn statement was recorded regarding the details of the above mentioned loans and their repayments and as the assessee was in a disturbed frame of mind during the course of the investigation, he had later on retracted his sworn statement. The AO was of the opinion that this transaction of availing unsecured loans was not reflected in the return of income and the assessee was served with notice u/s.148 of the Act on 18.1.2010 to regularize the income escaping assessment. According to the assesse, the concept of income does not arise in a loan transaction and the view of the AO that this loan transaction had escaped assessment and is not reflected in the return of income is erroneous. The assessee 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences available regarding the loans availed in Sept., 2008, all of which presented before him during the course of the assessment proceedings. 2.6 The assessee submitted that as the entire loans were availed by him vide his bank accounts and the same was repaid by him during the period between October 2008 to 26th of April 2011, as per the bank details provided by M/s. AR.Com for repayment and remittance of money, the fact that the officials were not able to locate the addresses of M/s AR.Com ion the month of December 2011, should not have any impact in the assessment proceedings and cannot form the basis for the unjustified addition of 3.80 crores. Therefore, the assessee submitted that the additions made by the AO amounting to 3.80 crores was unjustified, biased and prejudiced and was not based on true facts of the case. Aggrieved by the order passed by the AO u/s.143(3) r.w.s. 147 of the Act, the assessee had preferred an appeal before the CIT(Appeals), who had remanded the file to the AO. The AO had concluded the report by verifying only the Federal Bank statement of one of the lenders, M/s. AR.Com. The assessee had provided the details of other bank statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors. It was in the knowledge of the Revenue that the said creditors were income-tax assessees. Their index numbers were in the file of the Revenue. The Revenue, apart from issuing notices under section 131 at the instance of the respondent, did not pursue the matter further. The Revenue did not examine the source of income of the said alleged creditors to find out whether they were creditworthy. There was no effort made to pursue the so-called alleged creditors. In those circumstances, the respondent could not do anything further. In the premises, if the Tribunal came to the conclusion that the respondent had discharged the burden that lay on it, then it could not be said that such a conclusion was unreasonable or perverse or based on no evidence. If the conclusion was based on some evidence on which the conclusion could be arrived at, no question of law as such arose. The High Court was right in refusing to state a case." b) in the case of DCIT v. Rohini Builders in [2002] 256 ITR 360 (Guj) "The Tribunal found that the assessee had discharged the initial onus which lay on it in terms of section 68 by proving the identity of the creditors by giving their complete addresse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Forsee Financial & Consultancy Services. The said repayments were made by these group concerns for the assesseee on different dates during the financial years 2008-09, 2009- 10 and 2010-11 by the firm which is not in existence. Out of the said amount of 3.80 crores in total, a sum of 2.55 crores was settled by these entities towards loan. But the fact remains that only a sum of 23,93,000 is shown as outstanding as against a sum of 2.55) crores paid by M/s. Forsee financial Services Ltd. The said figure of 23.93 lakhs is not tallying with any of the entries in the books or in the bank statement. Since the saId amount of 2.55 crores is not figuring in the name of Shri C V Ravi and it was also observed that mere book transfers by means of journal entries were made between the group concerns. From the ledger extract, it cannot be treated as a genuine repayment on behalf of Shri C V Ravi. The assessment year under consideration is Asst Year 2009-10. Hence the remaining payments made in the subsequent financial years might have an impact in the respective assessment years. As far as this assessment year is concerned, repayment of loan to the extent of 2.55 crores stands unexplained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also completely failed to show /establish the nexus between the loans stated to be repaid by M/s. Forsee and M/s. Aurobindo on behalf of the assessee, and the flow of funds, if any, from the hands of the assessee himself to the said entities, as clearly highlighted in the Remand Report. 3.5 Being so, the loan standing in the name of M/s. AR.Com cannot be considered, as a genuine loan. The assessee, even failed to prove the identity of the creditors and genuineness of the transactions. The burden cast on assessee would shift to assessee only when assessee proved the identity of the creditors. Then only the AO could probe the matter further and investigate the material available before him to come to an independent conclusion before rejecting the explanation offered by the assessee. In the present case, the assessee has not proved all the above ingredients stated above and the assessee being failed to discharge primarily burden cast upon it, the assessee cannot say "catch me if you can". The only contention of the assessee is that the amount 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 ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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