TMI Blog2023 (4) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax returns of the lenders. Also when the loan is repaid by the assessee in the subsequent assessment years, the Hon ble Jurisdictional High Court in the case of CIT vs. Ayachi Chandrashekhar Narsangiji [ 2013 (12) TMI 372 - GUJARAT HIGH COURT] held that where department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. Appeal of assessee allowed. - ITA No. 1294/Ahd/2018 - - - Dated:- 12-4-2023 - Shri Waseem Ahmed, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member For the Assessee : Shri S.N. soparkar, Sr. Adv. Shri Parin Shah, A.R. And Ms. Urvashi Sodhan, A.R. For the Revenue : Ms. Leena Lal, Sr. D.R. ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER: - This appeal is filed by the Revenue as against the Appellate order dated 20.03.2018 passed by the Commissioner of Income Tax (Appeals)-3, Ahmedabad, arising out of the Assessment order passed under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) relating to the Assessment Year (A.Y) 2015-16. 2. The brief facts of the case is that the assessee is a partnership firm engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to why the amount introduced under the head unsecured loan from various parties should not be added as unexplained income u/s. 68 of the Act. 3.2. In response, the assessee filed detailed reply producing copies of the ledger account, contra account, copy of Income Tax Return filed and Bank Statements of the creditors. The assessee also submitted that necessary TDS on payment of interest to these creditors as per the provisions of the I.T. Act. The assessee also claimed that the loans were repaid during the subsequent year namely Assessment Year 2016-17 and produced ledger account of the same and thereby requested not to make addition made u/s. 68 of the Act. 3.3. However the Assessing Officer is view that the financial strength of the respective creditors are not supporting to lend such sums of money to the assessee and without loan agreement and without any relationship with the assessee. Thus the creditworthiness of the respective parties and the genuineness of the transaction remains unproved and unexplained. Therefore the unsecured loan of Rs. 2.25 crores accepted from various creditors are considered as unexplained cash credit in the hands of the assessee u/s. 68 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LPM5494R 55,87,287 55,87,287 NIL 31-32 165 Confirmation /PAN/TDS /bank statement/ITR copy filed and on record. Creditor's Compliance u/s. 131 issued by AO is noticed. Mahesh Tax Fab Prop. Priyanka D. Maliwal PAN: BKPPB0378E 30,52,964 30,52,964 NIL 50-51 165 Confirmation /PAN/TDS /bank statement/ITR copy filed and on record. Creditor's Compliance u/s. 131 issued by AO is noticed. Radhe Corporation Prop. Deepak Madanlal Maliwal HUF PAN AAJHD3877L 30,50,006 30,50,006 NIL 65 165 Confirmation /PAN/TDS /bank statement/ITR copy filed and on record. Creditor's Compliance u/s. 131 issued by AO is noticed. Shree Ram Corporation Prop. Rajmal Nanlal Maliwal PAN: ACGPM2788M 25,28,849 25,28,849 NIL 81-82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r further explanation from the assessee to prove the genuineness of the transaction or creditworthiness of the same. However, without verifying such fact from the income tax return of the creditors, the action taken by the Assessing Officer in examining the lenders of the assessee was a wrong approach. Moreover, we find that those lenders have made inconsistent statement as pointed out by the Commissioner of Income Tax (Appeals) and in such circumstances, we find that both the Commissioner of Income Tax (Appeals) and the Tribunal were justified in setting aside the deletion as the Assessing Officer, without taking step for verification of the Income Tax Return of the creditors, took unnecessary step of further examining those creditors. If the Assessing Officers of those creditors are satisfied with the explanation given by the creditors as regards those transactions, the Assessing Officer in question has no justification to disbelieve the transactions reflected in the account of the creditors. In other words, the Assessing Officer had no authority to dispute the correctness of assessments of the creditors of the assessee when a co-ordinate Assessing Officer is satisfied with the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Co-op. Bank Ltd. 278 ITR 170 (Guj.) iii) CIT Vs. Orissa Corporation Pvt. Ltd. 159 ITR 78 (SC) iv) CIT vs. Sanjay K. Thakkar Tax Appeal Nos.524 of 2004, 525 and 526 of 2004 and 579 to 583 of 2003 dated 12-9-2005 (Guj. HC) v) ITO VS Kailpar Credit Mercantile Pvt. Ltd. in ITA No.421/Ahd/2008 (ITAT, Ahd.) I am not inclined to accept the findings of the A.O. Appellant can't be punished for default, if any, of related party as it has been held in CIT VS. CARBO IND HOLD LTD 244 ITR 0422 (Cal) such as if share broker, even after issue of summons does not appear, for that reason, the claim of assessee should not be denied, especially in the cases when the existence of broker is not in dispute, nor the payment is in dispute. Merely because some broker failed to appear, assessee should not be punished for the default of a broker and on mere suspicion the claim of assessee should not be denied. The plethora of evidences on record cannot be ignored. In view of facts of the case and the ratio laid down by case laws (Supra), the addition made by the AO of Rs.2,25,00,000/- u/s. 68 of the I. T. Act, 1961 is hereby deleted. As regards interest claim of Rs.3,10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its arguments namely: (i) CIT vs. Ranchhod Jivabhai Nakhava [2012] 21 taxmann.com 159 held as follows: Section 68 of the Income-tax Act, 1961 Cash credits - Assessment year 2006-07 - Whether once assessee has established that he has taken money by way of account payee cheques from lenders who are all income tax assessees whose PAN have been disclosed, initial burden under section 68 is discharged and then, it is Assessing Officer's duty to ascertain from Assessing Officer of those lenders, whether in their respective returns they have shown existence of such amount of money and have further shown that those amount of money had been lent to assessee Held, yes Whether if Assessing Officers of those creditors are satisfied with explanation given by creditors as regards those transactions, Assessing Officer in question has no justification to disbelive transactions reflected in account of creditors - Held, yes Whether if before verifying such fact from Assessing Officer of lenders of assessee, Assessing Officer decides to examine lenders and asks assessee to further prove genuineness and creditworthiness of transactions, it would be against principles laid down under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in favour of the assessee. We do not find that any substantial question of law would arise for consideration in the present appeals, as canvassed. 8. Hence, the appeals are meritless and therefore, dismissed. (iii) In the case of CIT vs. Himatsu Bimet Ltd. [2011] 12 taxmann.com 87 held as follows: Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1997-98 - Assessee was a company, engaged in manufacturing of beamless strips and bearings at its factory - In assessment proceedings, assessee was asked to give details of unexplained share application money Since assessee was avoiding giving details without reasonable cause, Assessing Officer made addition to assessee's income by way of unexplained share application money - On appeal, Commissioner (Appeals) upheld order of Assessing Officer - On second appeal, Tribunal noticed that assessee had filed confirmations from all share applicants with details of share capital paid which contained details such as full addresses, permanent account numbers and tax jurisdiction of depositors Tribunal further noted that all payments were received by cheques and were credited in bank account of assessee; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , read with section 143, of the Income-tax Act, 1961 - Cash credit [Loans] - Assessment year 2006-07 Assessing Officer framed assessment under section 143(3) wherein he made addition of Rs. 1.45 crore under section 68 on ground that loan taken from one 'IA' was not explained satisfactorily - On appeal, Commissioner (Appeals) was satisfied with respect to genuineness of transaction and creditworthiness of 'IA' and, therefore, deleted addition - It was found that total loan of Rs. 1.60 crore was advanced to assessee, out of which Rs.15 lakh was repaid Therefore, an amount of Rs.1.45 crore remained outstanding to be paid to 'IA' - Balance loan amount was repaid by assessee in immediately next financial year Whether when Department had accepted same, addition made by Assessing Officer was to be deleted - Held, yes [Para 6] [In favour of assessee] 6.1. Thus Ld. Senior Counsel submitted the additions made by the A.O. u/s. 68 is not sustainable in law and the assessee has repaid the entire unsecured loan during the assessment year 2016-17 and also paid interest thereon with appropriate TDS, then the question of disallowance does not arise. Therefore the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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