TMI Blog2023 (12) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... editworthiness of the loan creditors was not proved. We have also examined the documents filed before us and find that these companies had sources to advance the money to the assessee. We take note of the DR argument that no interest has been given on these loans, which has been controverted by the ld. A.R. by placing necessary evidences before the Bench, which showed that interest has been given and TDS has duly been deducted therefrom. We also observe that these loans were repaid in the subsequent years. We observe that the assessee had submitted the documents required to establish the genuineness of the transactions and in respect of creditworthiness submitted the copies of income tax return and their financial statements etc. AO has not brought any adverse finding based on such documents filed by the assessee. We are of the considered view that the order passed by the ld. CIT(Appeals) is well reasoned order which has been passed after taking into account all the aspects of the matter. Moreover, mere non-appearance by the lenders in response to summons would not make these transactions as non-genuine as has been held by the Hon ble Apex Court in the case of CIT Vs Orissa C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als before the Tribunal against the orders of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi even dated 16.03.2023 passed under section 250 of the Income Tax Act, 1961 for A.Y. 2016-17 2017-18. ITA No. 485/KOL/2023 (A.Y. 2016-17) 2. The only issue raised in the various grounds of appeal is against the deletion of addition of Rs. 3,95,00,000/- by the ld. CIT(Appeals) as made by the ld. Assessing Officer under section 68 of the Act in respect of unsecured loans raised by the assessee from nine different entities. 3. The facts in brief are that the assessee filed its return of income on 15.10.2016 declaring total income of Rs. 70,75,050/-, which was processed under section 143(1) of the Act. The case of the assessee was selected for compulsory scrutiny and accordingly statutory notices were duly issued and served upon the assessee. It is pertinent to state that survey under section 133A of the Act was conducted on the assessee on 20.11.2015. The ld. Assessing Officer accordingly called upon the assessee to furnish necessary evidences in support of unsecured loans taken by the assessee from different parties amounting to Rs. 3,95,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn, loan confirmation, bank statement, details of directors along with copy of their pan card, address, ledger extracts, financials of lenders. 5.3. The learned AO alleged that he could not serve the summon u/s 131 to 2 parties via his inspector and rest of 6 parties despite getting summon U/s 131, did not appear to record statement. Therefore, he treated the underlined loans as bogus and invoked section 68. 5.4. The appellant had submitted the documents required to establish the genuineness of the transaction and/ifi respect of the creditworthiness the appellant submitted the copies of Income Tax Return and their financial statements. The learned AO has not brought any finding of such documents filed by the appellant. Merely due to non-appearance of lenders the learned AO made addition to total income. 5.5. I have perused the records submitted by the appellant and find them in order. It is a settled position that due to non-appearance of third-party lender; the appellant cannot be responsible and punished by enhancing total income. In this regard reliance is placed on judicial pronouncement of Hon ble SC in case of DCIT.v. Rohini Builders (2002)- [SLP fe002] 254 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 68 are evaluated and reproduced here under - Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source there of or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year... 5.8. In order to invoke section 68, the most essential aspect is that the tax payer do not offer any explanation towards source and nature of such cash credit. 5.9. Any entry in books of account is regarded as genuine if the Identity, genuineness of transaction and Creditworthiness of the lender can be proven. The appellant has filed all the necessary documents of the lenders to prove the genuineness. 5.10. In view of the above findings and judicial pronouncements, I am of the considerate view that once the nature of transaction is established, provisions of section 68 shall not be invoked. In the underlined case the loans taken by appellant are repaid as well therefore, there is no net credit to the books of the appellant. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of ld. D.R. that no interest has been charged, submitted that interest has been given on the interest paid /provided on these loans after deduction of tax at source. Ld. A.R. also contended that even the loans have been repaid in the subsequent years. Ld. A.R. stated that even the summons issued to the parties under section 131 of the Act were replied, though no personal attendance was made before the ld. Assessing Officer by the loan creditors but mere non-attendance of the third party lenders before the ld. Assessing Officer would not render the transactions as non-genuine. In defence of his arguments ,the Ld. Counsel relied on the following decisions:- (i) CIT vs.- Dataware Private Limited [ITAT No. 263 of 2011, GA No. 2856 of 2011 dated 21.09.2011 (Calcutta High Court); (ii) DCIT vs.- Rohini Builders [2002] 256 ITR 360 (Guj.), order dated 19.03.2001; (iii) CIT vs.- Orissa Corporation Pvt. Limited [1986] 159 ITR 78 (SC), judgment dated 19.03.1986. The ld. A.R., therefore, prayed that the order passed by the ld. CIT(Appeals) after taking into consideration the evidences filed by the assessee as well as by these lenders is very reasoned and speaking one and, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra. 2 above. The Commissioner of Income-tax (Appeals) more or less confirmed the addition on the reasoning given by the Assessing Officer in the assessment order. A perusal of the chart given by us in para. 3 above indicates that out of 21 creditors the Assessing Officer has recorded the statements of only six creditors, viz., creditors at serial Nos. 1, 2, 3, 4, 6, and 7. However, in respect of all the 21 creditors the assessee has furnished their complete addresses along with GIR numbers/permanent account numbers as well as confirmations along with the copies of assessment orders passed in the cases of creditors at serial Nos. 1, 2, 4, 5, 6, 7, 9, 10, 11, 12 and 16. In the remaining cases where the assessment orders passed were not readily available, the assessee has furnished the copies of returns filed by the creditors with the Department along with their statement of income. All the loans were received by the assessee by account payee cheques and the repayments of loans have also been made by account payee cheques along with the interest in relation to those loans. It is rather strange that although the Assessing Officer has treated the cash credits as non-genuine, he has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be sufficient to draw an adverse inference against the assessee. In the case of six creditors who appeared before the Assessing Officer and whose statements were recorded by the Assessing Officer, they have admitted having advanced loans to the assessee by account payee cheques and in case the Assessing Officer was not satisfied with the cash amount deposited by those creditors in their bank accounts, the proper course would have been to make assessments in the cases of those creditors by treating the cash deposits in their bank accounts as unexplained investments of those creditors under section 69. 8. Further, we may point out that section 68 under which the addition has been made by the Assessing Officer reads as under : 68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year. 9. The phraseology of section 68 is clear. The Legislature has laid down th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany has been struck off by MCA and therefore the lender is non-existent and the liability has also ceased u/s 41(1) of the Act. The AO however made the addition u/s 68 of the Act of Rs. 35,90,876/-. 11. The ld. CIT(A) allowed the appeal of the assessee on this issue by giving a finding of fact that no loan was raised during the year but it was coming over from the preceding financial year and therefore provisions of section 68 of the Act are not applicable. The ld CIT further held that mere sticking off the lender s company name from MCA cannot be taken to mean that loan would be ceased and is not recoverable and thus held that section 41(1) invoked by the AO is wrong and not sustainable. 12. After hearing the rival contentions and perusing the materials on records , we find that loan taken from M/S Knavsukh Trading Pvt. Ltd in the earlier year has been added u/s 68 of the Act which was rightly deleted by the ld CIT(A) on the ground that loan was not taken in the current year. We also note that the said lender s name was struck off from MSC and AO simplicitor held that liability on account of loan has ceased but ld CIT(A) correctly adjudicated the issue by holding that mere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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