AFTAB CONSTRUCTIONS,MUMBAI vs. INCOME TAX OFFICER WARD 41(4)(1), MUMBAI

The assessee is a partnership firm and filed the return of income for AY 2018-19 on 19.10.2018 declaring a total income of Nil. The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the course of hearing, the Assessing Officer (AO) called on the assessee to furnish details pertaining to the unsecured loans. The AO completed the assessment by adding the entire amount of unsecured loan amounting to Rs. 44,56,500/- as addition u/s. 68 for the reason that the assessee has not furnished the entire details pertaining to the unsecured loans. Aggrieved the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee responded to only one of the four notices issued by the CIT(A). The CIT(A) after considering the submissions of the assessee held that “7.1.2 On careful perusal of the submission of the appellant with respect to loan creditors made during the appeal proceedings copy placed below for ready reference, it is noticed that the appellant has simply filed copy of ITR V-acknowledgment of the ROI filed by the respective loan creditor and the stereotype loan account confirmation from the loan creditor along with the table prepared by the appellant indicating the amount of loan received / paid with opening and closing balance for the relevant year. These details it has already filed before the AO and AO after examining them made the addition of loan creditors as unexplained cash credit because the appellant failed to furnish the copy of agreement or document indicating the purpose of loan, or the document establishing the genuineness of the loan transaction as stated in the para 4 of the assessment order.

1.3 Even now the appellant filed the same set of documents i.e. loan account confirmation and copy of ITR V- acknowledgment of the roi filed by the respective loan creditor and has not filed the bank account copy, copy of the loan agreement or any other relevant document which could substantiate the genuineness of the impugned loan transaction. In fact it has not furnished the detail of having the loan repaid or not as on date with evidence. Further on perusal of the ITR V acknowledgement it is noticed it shows in most of the persons a very low income of Rs. nil as against the claim of lending loan amount of manifold. The income of loan creditors as shown in ITR V and the amount claimed to have been lent to the appellant is given below: Sl.no. Loan creditor Total income as per ITR V Rs. Loan claimed to have been lent to the Appellant Rs.

1.4 From the above table it is clear that without the substantive proof, mere ITR V acknowledgement copy and loan confirmation from creditor failed to prove the genuineness of the loan transaction. Therefore, the amount of Rs. 44,56,500/-claimed to be the genuine loan by the appellant remains unexplained even during the appeal proceedings. Therefore, the addition made by the AO u/s 68 is upheld and the ground 2 of the appellant is dismissed.”

We heard the parties and perused the material on record. During the course of hearing the ld. AR submitted the bank statement of the assessee reflecting the loan transactions to submit that one of the reasons for the CIT(A) to confirm the addition is that the assessee has not furnished the bank statements. The ld. AR submitted that the other allegations for sustaining the addition u/s. 68 can be countered by the assessee, if given one more opportunity. The ld. DR on the other hand argued that the assessee has not proved the creditworthiness or the genuineness of the loan and therefore the order of the CIT(A) should be upheld. From the perusal of the orders of the lower authorities, we notice that before the AO and the CIT(A) the assessee has not furnished the full details to substantiate the creditworthiness and the genuineness of the loan. Therefore there is merit in the contention that the assessee has not fully discharged the onus. However, the assessee has furnished the details such as the ITR, loan confirmation etc. of the loan creditors and the lower authorities have not examined the said details and have not recorded any adverse finding with regard to the documents filed. The bank statements now filed before us reflecting the loan transactions also needs factual verification. Considering the facts and circumstances peculiar to the assessee's case and in the interest of natural justice and fair play, we are inclined to give one more opportunity to the assessee to represent the case properly before the lower authorities. Accordingly, we are remitting the appeal back to the AO for considering the impugned issue afresh by calling for relevant details to decide the issue in accordance with law. The assessee is directed to submit the details as may be called for to substantiate the creditworthiness and the genuineness of the loan and co-operate with the assessment proceedings. It is ordered accordingly.

In result, the appeal of the assessee is allowed for statistical purposes.