INCOME TAX OFFICER, MUMBAI vs. K K VENTURA, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘E’ BENCH
MUMBAI

BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
Mumbai – 400 077
PAN/GIR No.AAQFK4558H
(Appellant)
..
(Respondent)

Assessee by Shri Vinod Kumar Bindal
(Virtually)
Revenue by Shri Hemanshu Joshi, SR
DR
Date of Hearing
20/08/2025
Date of Pronouncement
25/09/2025

आदेश / O R D E R

PER AMIT SHUKLA (J.M):

The present appeal by the Revenue is directed against the order dated 12/08/2024 passed by the ld. Commissioner of Income Tax (Appeals), NFAC, Delhi, in relation to the assessment framed under section 143(3) read with section 260 of the Income-tax Act, 1961, for the assessment year
2018–19. 2. In substance, the Revenue has assailed the action of the ld. CIT(A) in deleting the addition of ₹8,43,50,000/– made
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towards unexplained unsecured loans, and the corresponding disallowance of interest of ₹29,95,111/–. It has been urged that the ld. CIT(A) not only erred in entertaining additional evidence, but also failed to appreciate that the lenders in question lacked the financial capacity to advance the impugned sums, and that the genuineness of the transactions stood unproven.
3. In support of the appeal, the ld.
Departmental
Representative drew our attention to the detailed remand report submitted by the Assessing Officer. That report, as pointed out, comprehensively sets forth the grounds on which the additions were made, and reiterates the adverse factual inferences drawn by the Assessing Officer in the course of assessment proceedings.
4. The brief factual matrix may be noted. The assessee, a Limited Liability Partnership engaged in the business of financing and trading, originally filed its return of income on 30/09/2018, which was subsequently revised on 25/01/2019 declaring total income of ₹18,91,800/–. The case was selected for limited scrutiny on the issues of (i) sharp increase in unsecured loans during the year, (ii) substantial squared-up loan transactions, and (iii) borrowings from persons who had not filed returns of income. The original assessment was completed under section 143(3) read with section 144B on 06/08/2021, wherein the Assessing Officer brought to tax unexplained loans aggregating to ₹8,43,50,000/– under section 68, together with disallowance of interest expenditure of ₹29,95,911/–.
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5. The assessee thereafter preferred a writ petition before the Hon’ble Bombay High Court, inter alia contending that the Assessing Officer had failed to provide a meaningful opportunity of hearing, despite its express request for video- conferencing. The Hon’ble High Court, by judgment dated
26/10/2023, quashed the assessment order and directed the Assessing Officer to pass a fresh order after affording adequate opportunity of being heard.
6. In the remand proceedings, the Assessing Officer observed that the assessee’s balance sheet reflected unsecured loans of ₹21,03,86,161/–
as on 31/03/2018, as against
₹6,25,64,646/– in the immediately preceding year, thereby revealing an increase of ₹14,78,28,515/–. On being called upon to explain, the assessee furnished details of the lenders, ledger extracts, confirmations, income-tax returns, and bank statements. Notices under section 133(6) were issued to the lenders, and though some responded, their replies were, in the view of the Assessing Officer, inadequate to establish either creditworthiness or genuineness. He accordingly identified twenty-one lenders, aggregating to ₹8,43,50,000/–, whose loans were treated as unexplained and brought to tax under section 68 of the Act.

Name of the Loan Lender
Amount of loan
(i) Arch Herbals P. Ltd.
25,00,000
(ii) Arch Impex P. Ltd.
1,20,00,000/-
(iii) Manish Damji Shah
70,50,000/-
(iv) Bhanumati Kalyan Shah
80,00,000/-
(v) Canopous Consultancy
Services P. Ltd.
10,00,000/-
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(VI)
Shantilal
Gala
(HUF)
Classic Enterprises
20,00,000/-
(VII)
Dipesh
Kannubhai
Khatadia
40,00,000/-
(VIII) EKTA GROUP (Girish
Ramnik Lal
26,00,000/-
(IX) HILL Crest Resorts AND SPA P. Ltd.
25,00,000/-
(X) H. Manubhai & Co.
(Hitesh Manhar Lal Bilakhia
20,00,000/-
(XI) Jayshri Ben Thakkar
8,00,000/-
(XII) Jewel Developers
25,00,000/-
(XIII) Kalyanji UmaRshi Shah
(represented by Ashwin
Kalyanji shah)
95,00,000/-
(XIV) Lilavati Damji Patel
20,00,000/-
(XV) Parask Botadara
17,50,000/-
(XVI) Rajani D Agarwal
5,00,000/-
(XVII)
Shailesh
Surender jasani
40,00,000/-
[XVIII) Seema Shailesh Jasani

36,50,000/-

(XIX) Rakesh Ramesh Chandra

10,00,000/-

(XX) PHB Relcon
60,00,000/-
(XXI) Pramod Kumar Jain
Securities P. Ltd.
90,00,000/-

8,43,50,000/-

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it forms the very foundation of the Department’s case, the same is incorporated hereinbelow as part of the record.

(1) M/s. Arch Herbals Pvt Ltd - Addition of Rs.25,00,000/-
Facts: During the course of assessment proceeding the ledger account provided by assessee show that during the FY 2017-
18 assessee has taken loan of Rs 60,00,000/-from Arch
Herbal Private Limited. The amount of Rs. 35,00,000/- was repaid during the F.Y 2017 18 and balance amount of Rs.
25,00,000/- is outstanding as on 31/03/2018 Further, interest of Rs. 1,94,918/- is accrued on this loan during the FY 2017-18. The TDS of Rs. 19,492/-has been deducted and balance amount of interest of Rs. 1,75,426/-is carried forward to the next year along with principal amount. During the course of assessment proceedings assessee firm was issued notices under section 142(1) of the Income Tax Act,
1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan.
The assessee had not furnished the details and stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries but no explanation was furnished regarding source of funds received in the bank account of the lender
Assessee has stated that the lender was having enough bank balance before at the time of granting of loan to assessee. It is pertinent to mentioned here that the lender was having bank account no.039102000005005 in IDBI Bank. The lender imparted loan of Rs.40,00,000/- on 18/08/2017 and Rs.
20,00,000/- on 23/08/2017. The lender received Rs.
40,00,000/-on the same day. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and bank statement of assessee.
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The examination of the ITR of the lender reveals following mentioned facts during the course of assessment proceedings:
1. The return of income has been filed at current year loss of Rs. 25,762/-only.
2. The share capital of the company is only Rs. 1,00,000/-.
3. The reserve and surplus as on 31/03/2017 is Rs.
66,62,174/-only. The company is not doing any business activity. The gross revenue of the company is only Rs.
1,94,918/ which is interest income accrued on the unsecured loan given to assessee firm.
4. On 18/08/2017 opening balance of bank account was Rs.4,53,072/-. On the same day, lender received RS,
40,00,000/- and same day loan given to assessee for which no explanation was furnished by the assessee regarding source of funds. This shows unaccounted money of assessee brought into legal channel through banking channel.
5. The assessee has taken plea that repayment of loan was considered as genuine but it is not true because repayment of loan was not considered for addition as it was not stood as balance at the end of year and assessee was not in possession of money at the end of year in books of accounts.
6 The A.O. concluded that the above facts clearly prove that the assessee brought its own unaccounted money into banking channel by way of unsecured loans.
7 The above facts show that lender does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee had completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961
and failed to establish the genuineness and credit worthiness of the fresh unsecured loan introduced during the year.
These circumstantial evidences and facts prove that the assessee brought its own unaccounted money into banking
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channel by way of unsecured loans. The A.O during the course of the assessment proceedings stated that lender does not have creditworthiness of advancing such a huge loan to assessee firm and the assessee had completely failed to discharge the onus of proof as required u/s 68 of the Income
Tax Act, 1961 and failed to establish the genuineness and credit worthiness of the fresh unsecured loan introduced during the year and source of funds utilized by lender for advancing such a huge loan accordingly addition of Rs
25,00,000/- had been made by the A.O. The assessee preferred appeal on the addition made.
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (i.e. share capital of the company is only
Rs. 1 lakh) are not such that it can provide the loan to the assessee. Also the gross revenue of the company is only Rs.
1,94,918/- which consist of interest income accrued on the unsecured loan given to assessee firm. This clearly shows that the company had been formulated just to provide the loans to the assessee. Thus, there are sufficient circumstantial evidences that the assessee had used the said company to get the entry from the said company. Therefore, the genuineness and the creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee during the course of the assessment proceeding Hence, the A.O. rightly made the addition in the total income of the assessee.
(ii) Arch Impex Pvt Ltd -Rs.1,20,00,000/-
Facts: It is seen that during the course of the assessment proceeding the ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Re.
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1,60,00,000/- from Arch Impex Private Limited. The amount of Rs. 40,00,000/- was repaid during the FY 2017-18 and balance amount of Rs 1,20,00,000/- is outstanding an on 31/03/2018. Further, interest of Rs.3,28,438/ is accrued on this loan during the FY 2017-18 The TDS of Rs. 32,844/- has been deducted and balance amount of interest of Rs.
2,95,594/- is carried forward to the next year along with principal. During the course of the assessment proceeding, the assessee firm was issued notices by the A.O. under section 142(1) of the Income Tax Act 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of lean. It is seen that assessee provided copy of confirmation, copy of acknowledgement of ITR, copy of bank statements on 22/12/2023. The examination of copy of acknowledgement of ITR shows that lender has filed its return of income at current year loss of Rs.72,31,753/-. The assessee during the course of the assessment proceeding stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
During the course of assessment proceedings, it is seen from the bank statement from the lender that it imparted loan of Rs
50,00,000/- on 13/11/2017,
Rs.20,00,000/- on 16/11/2017. Rs 20,00,000/- on 04/12/2017, Rs. 20,00,000/
on 05/12/2017 and Rs.50,00,000/- on 15/02/2018. The lender was having opening balance on 13/11/2017 - Rs.
1,96,688/- and received Rs. 1,00,00,000/- on the same day from others before imparting loans for which no explanation regarding source of funds was given by the assessee. Thus, the creditworthiness of the lenders could not be said to be proved.
The A.O. during the course of the assessment proceeding examined the financial statements which showed that M/s
Arch Impex Private Limited (Lender Company) is not doing
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any business activity. It filed its return of income of A.Y.
2018-19 at current year loss of Rs. 72,31,753/- The examination of profit and loss account of lender show that its only income credited to the profit and loss account is interest income of Rs. 3,74,720/-only. This interest income includes interest of Rs. 3,28,438/- accrued on the loan said to be given to the assessee firm. The lender company does not have fixed asset, office premises, employees and other office equipment to run normal office, which is evident from the fact that no salary expenses, no rent and depreciation has been debited to profit and loss account. Further, examination of balance sheet of Arch Impex Private Limited (lender) as on 31/03/2018 show increase in long term borrowings of Rs.44,81,24,565/-under head current liabilities and increase in long term loans and advances of Rs. 23,22,781/- only, increase in non-current investment by an amount of Rs.
50,00,00,000/- (50.00 crore) under the head non-current assets and decrease in short term loan and advances by an amount of Rs.5,34,50,357/-under the head current assets.
The above data clearly shows that increase in long term borrowings and decrease in short loans and advances have been utilized for making current investment of Rs.50.00 crore.
The increase in long term loan and advances is only for an amount of Rs 23,22,781/- However, the loan outstanding as on 31/03/2018 with respect to assessee firm alone is Rs.
1,20,00,000/- plus interest. This show that this loan transaction has not been recorded in books of accounts of lender. Therefore, the balance sheet of the lender does not prove that loans were given to assessee firm. Further examination of profit and loss reveals that M/s Arch Impex
Private Limited has not reported any revenue either in form of interest or otherwise from the long term loans and advances given except the interest accrued on the loan given to assessee firm. It has also not reported any expenditure either in form of interest paid or otherwise on the long-term borrowings. Further the ledger account of assessee firm shows that interest is accrued but not paid, therefore, it K K Ventura

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should be appearing in balance sheet of lender as interest receivable, but it is not appearing in the balance sheet of lender. Further, the examination of schedule off fixed asset of lender company shows that it was not having any fixed asset as on 31/03/2017 and during the F.Y 2017-18 it has purchased a computer software only which is the only asset appearing in balance sheet. The lender does not have any office as not rent expenses has been claimed in profit and loss account and no building is appearing in balance sheet. This shows that it is only a non-existent paper company (shell company). Further lender claimed that the loan was given and shown in short terms loans and advances. It was only an after-thought.
The A.O. during the course of the assessment proceeding held that the lender did not have creditworthiness of advancing such a huge loan to assessee firm, accordingly, an amount of Rs.
1,20,00,000/-outstanding as on 31/03/2018
as unsecured loan was brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. The assessee preferred appeal before the Ld. CIT(A).
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (i.e.
ITR shows that lender has filed its return of income at current year loss of Rs. 72,31,753/-) are not such that it can provide the loan to the assessee. The lender company does not have fixed asset, office premises, employees and other office equipment to run normal office which is evident from the fact that no salary expenses, no rent and depreciation has been debited to profit and loss account. Also the gross revenue of the company is only Rs. 3,74,720/-which consist of interest income accrued on the unsecured loan given to assessee firm.
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This clearly shows that the company had been formulated just to provide the loans to the assessee. Thus, there are sufficient circumstantial evidences that the assessee had used the said company to get the loan entry from the said company. Therefore, the genuineness and creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee. Hence, the A.O. rightly made the addition in the total income of the assessee.
(iii) Manish Damji Shah- Rs.70,50,000
Facts: It is seen that during the course of the assessment proceeding, the ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.81,00,000/- from Manish Damji Shah. The amount of Rs.
10,50,000/- was repaid during the F.Y 2017-18 and balance amount of RS. 70,50,000/- is outstanding as on 31/03/2018. Further, interest of Rs. 4,82,770/- is accrued on this loan during the FY 2017-18. The TDS of Rs. 48,277/- has been deducted and balance interest amount of Rs. 4,34,493/- is carried forward to the next year along with principal amount.
During the course of the assessment proceeding, assessee firm was issued notices under section 142(1) of the Income
Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of lean.
The assessee furnished copy of ack. of ITR and confirmation and stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely by submitting copy of acknowledgement ITR and ledger account of the lenders in the books of account of the assessee. Accordingly Notice under section 133(6) of the Income Tax Act, 1961 was issued
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to lender to provide the copy of ITR, confirmation statement and copy of bank statement. The lender has provided the above requisite details. The examination of the e-filed ITR of the lender reveals following mentioned facts:
(i) The return of income has been filed at current year loss of Rs. 7,81,550/-only.
(ii) The capital of the company is only Rs. 38,769/- only.
(iii) The loan given to assessee firm is not reported in e-filed return of income of lender The Loans and advances given as on 31/03/2017 is Rs. 78,760/-only.
iv) The manual balance sheet provided by the assessee is not authenticated by auditor. The data appearing in the manual balance sheet does not match with the data reported in e-filed return of income. In fact the data of manual balance sheet is not reported in thee-filed return of income. Therefore, manual balance sheet cannot be accepted.
v) The lender did not confirm about repayment of loan by assessee in response to notice issued u/s 133(6) of IT Act.
vi) Bank accounts were credited just before the imparting of loan to assessee. First credit and then debit to assess but no explanation is given by the assessee regarding source of funds.
The abovementioned facts show that lender does not have creditworthiness of advancing such a huge loan to assessee firm The lender has not explained the sources of funds utilized for advancing such a huge loan to assessee firm. The onus is on assessee to provide the documentary evidences to prove the identity, creditworthiness of lender and genuineness of loan. Accordingly, as amount of Rs. 70,50,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 of the Income Tax Act, 1961. K K Ventura

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Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the funds immediately in the said account just before providing the loan entry to the assessee and also the company's financial are not such that it can provide the huge loans to the assessee.
However, the Ld. CIT(A) observed that the lender person has earned around 31 lakhs of income and due to losses in derivative, the total income adjusted and reported. Therefore, on the facts and circumstances, the genuineness and creditworthiness of the lender company cannot be proved as per the documents submitted by the assessee during the course of the assessment Therefore, the A.O. had rightly made the addition in the total income of the assessee.
(iv) Bhanumati Kalyan Shah Rs.80,00,000/-
Facts: 1) The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs.
80,00,000/- from Bhanumati Kalyan Shah. Further, interest of Rs. 5,09,315/- is accrued on this loan during the FY 2017-
18. The TDS of Rs 50,932/-has been deducted, Rs.2,42,383/- paid during the FY and balance amount of interest of Rs.
2,16,000/- is carried forward to the next year along with principal.
2) Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation and copy of acknowledgement of ITR. However, assessee had not provided the copy of bank statement of the lender.
Assessee stated that loan were taken and repaid through
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banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
3) Accordingly, a show cause notice along with Draft
Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 80,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.ws 115BBE of the Income Tax Act,
1961. The details provided by assessee in response to show cause notice issued earlier and reply furnished during this proceeding and by lender in response to notice under section 133/6) of the Income Tax Act, 1961 has been examined. The examination of the copy of ITR of the lender shows that return of income has been filed at total income of Rs. 5,60,480/- only. The lender stated in reply that source of funds utilized for advancing loan is from accumulated fund. However, lender has not provided any documentary evidence to prove that she was having accumulated funds and loan was given from accumulated funds. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine Unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. This show that the lender does not have creditworthiness to advance such a huge loan of Rs.80,00,000/- The creditworthiness of the lender and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lender in the books of account of the assessee and that the transactions have been made through banking channel. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Further, assessee declared
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lender as uncontrolled party. As the time of imparting loan, party was in controlled later become uncontrolled. The assessee has not furnished any documentary evidence that how lender became uncontrolled. It is only an afterthought of assessee. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year
Therefore, amount of Rs. 80,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 of the Income Tax Act, 1961
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ie. The examination of the copy of ITR of the lender shows that return of income has been filed at total income of Rs.5,68,480/-only) are not such that it can provide the loan to the assessee.
Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received from some Jayantilal B. Gangar before providing the loan entry to the assessee and the lender was not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry. Therefore, the creditworthiness and genuineness of the lender cannot be proved as per the documents submitted by the assessee.
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Hence, the A.O. rightly made the addition in the total income of the assessee.
(v) Canopous Consultancy Services P. Ltd- Rs. 10,00,000/-
Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.
10,00,000/- from Canopous Consultancy Service Private
Limited. Further, interest of Rs 3,59,260/- is accrued on this loan during the FY 2017-18. The TDS of Rs 35,926/- and balance amount of interest of Rs.3,23,334/-is carried forward to the next year along with principal.
2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation and copy of acknowledgement of ITR. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries. Accordingly, as show cause notice with Draft Assessment order was issued to assessee to show cause why the amount of RS. 10,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r. w s115BBE of the Income Tax Act,
1961
3. The examination of copy of IT'R acknowledgement of the ledger provided by assessee shows that return of income has been filed at current year loss of Rs. 81,71,474/ This show that lender does not have creditworthiness to advance such a huge loan of Rs. 10,00,000/- Accordingly, notice under section 133(6) of the Income Tax Act, 1961 was issued to Canopus Consultancy Services Private Limited (lender) to provide the copy of ITR Form, confirmation statement, copy of bank statement and financial statement to prove the source of K K Ventura

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funds utilized to advance loan and recording of the loan transactions in books of accounts. It is pertinent to mention here prudent business person will not give loan to any one if business is in loss. He will use his capital/money available with him to recover business. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year.
4. The credit worthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on assessee to prove the credit worthiness of lender and genuineness of loan. It is crystal clear from the facts mentioned above that lender does not have credit worthiness of advancing such a huge loan to assessee. Therefore, amount of Rs. 10,00,000/- outstanding as on 31/03/2018 unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lending entity is not creditworthy to advance such loan as the entity reported its income in loss of Rs.81,71,474/- and no prudent entity will be advancing the loan who is in loss.
The Ld. CIT(A) stated that during the Financial Year 2016-17
the Lender Company did earn the Profit of Rs. 40,28,397/- and just because in the Financial Year 2017-18, the Lender
Company has incurred a loss, it does not mean that the company does not have creditworthiness to grant loan of Rs.
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10,00,000/- Further, considering the new worth of the company prima facie the creditworthiness of the lender entity appears to be genuine.
(vi) Shantilal Gala (HUF) -Classic Enterprises-Rs.20,00,000
Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.20,00,000/- from Classic Enterprises. Further, interest of Rs.7,397/ is accrued on this loan during the FY 2017-18 The TDS of Rs.740/-and balance amount of interest of Rs.6,657/- is carried forward to the next year along with principal
2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. A show cause notice along with Draft
Assessment Order was issued to assessee to show cause why the amount of Rs.20,00,000/-outstanding as on 31/03/2018
in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Reliance is placed on CIT v. N.R. Portfolio (P.) Ltd. 2014 42 taxmann.com 339/22. taxman 157 held that the concept of "shifting onus" does not mean that once certain facts are provided, the assessee's duties are over. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income
Tax Act. 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year
3. It is crystal clear from the facts mentioned above that lender do not have creditworthiness of advancing such a huge loan and the same is not recorded in the books of accounts.
Therefore, the creditworthiness of lender and genuineness of K K Ventura

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loan could not be proved. Therefore, amount of Rs.
20,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the credit worthiness of the lender is in question as the lender party showing only Rs. 5,39,760/-as the return of income during the year which show that the lender doesn't have the creditworthiness to provide the loan to the assessee.
Further, as the assessee had not furnished the copy of the bank statement therefore it is not possible to see whether the money was received just before providing the loan entry to the assessee Therefore, in the absence of the bank statement the creditworthiness of the lender cannot be proved merely by providing return of income and the A.O. rightly made the addition in the total income of the assessee.
(vii) Dinesh Kannubhai Khatadia
Facts: 1. The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.52,00,000/- from Dipesh Kannubhai Khatadia. The amount of Rs. 12,00,000/-was repaid during the FY 2017-18
and balance amount of Rs. 40,00,000/- is outstanding as on 31/03/2018. Further, interest of Rs 2,16,000/-is accrued on this loan during the FY 2017-18 The TDS of Rs 21,600/- is deducted and balance amount of interest of Rs. 1,94,000/-is carried forward to the next year along with principal
2 Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation
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only Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
3. Accordingly, a show cause notice with Draft Assessment
Order was issued to assessee to show cause why the amount of Rs. 40,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
rw.s 115BBE of the Income Tax Act, 1961. 4. Notice under section 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation statement, copy of bank Statement and financial statements.
However, no response has been received till date to the notice u/s 133(6) of the I.T. Act, 1961. 5. The detail provided by assessee in response to show cause notice has been examined. The examination of copy of Acknowledgement of ITR of lender provided by the assessee show that lender has filed his return of income declaring total income of . 5,45,370/-only. The total income declared by lender show that he does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee has not provided the copies of financial statements of lender or any other documentary evidence to prove the source of funds utilised by lender for advancing such a huge loan and also to prove that the loan transaction was recorded in books of account of the lender. Therefore, the genuineness of loan transaction is also not proved. The onus is on the assessee to prove creditworthiness of lender and genuineness of loan, but failed to do so and assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine unsecured loans can be routed through banking channel also which are prevalent now days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the K K Ventura

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same days or just before the imparting of loan. The same is true here also. In draft assessment order, it is not mentioned that repayment of loan is genuine. Only balance amount was taken for addition. In the earlier order dated 06/08/2021, the AO took those amounts for addition which was stand at the end of financial year does not imply to treat paid loan as genuine but it was not present in books of accounts. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68
of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income
Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year
6. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of Rs. 40,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ITR of lender provided by the assessee show that lender has filed his return of income declaring total income of Rs.5,45,370/-only) are not such that it can provide the loan to the assessee.
Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received just before providing the loan entry to the assessee and the assessee were not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is K K Ventura

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in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry.
Therefore, the genuineness and the creditworthiness of the lender cannot be proved as per the documents submitted by the assessee. Hence, the A.O. rightly made the addition in the total income of the assessee.
(viii) Ekta Group (Girish Ramnik Lal)- Rs.26,00,000/-
Facts: The ledger account provided by assessee show that during the F.Y. 2017-18 assessee has taken loan of Rs.36,00,000/-from Ekta Group (Girish Ramnik Lal). The amount of Rs. 10,00,000/-was repaid during the FY 2017-18
and balance amount of Rs.26,00,000/- is outstanding as on 31/03/2018. 2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR of the lender. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
3. Accordingly, a show cause notice with Draft Assessment
Order was issued to assess to show cause why the amount of Rs. 26,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
r.w.s 115BBE of the Income Tax Act, 1961
4. Notice under section 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation
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statement, copy of bank statement and financial statements.
However, no response has been received till date to the notice u/s 133(6) of the 1.T. Act, 1961. The lender has not furnished any confirmation of repayment of loan in subsequent years.
The Hon'ble Supreme court in NRA IRON & Steel P. Ltd.
arising out of SLP (CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type and nature of enquiry is purely dependent on Assessing officer and differ from case to case
5. Assessee has not provided the documentary evidences to prove the identity and creditworthiness of the lender and genuineness of loan. The identity, creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income
Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year.
6. It is crystal clear from the facts mentioned above that assessee failed to Prove the credit worthiness of the lender and genuineness of loan and identity of the lender. Therefore, amount of Rs. 26,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the assessed had merely submitted the ledger
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account and the confirmation but failed to furnish the copy of the bank statement therefore the identity, creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee.
Therefore, the credit worthiness of the lender is in question.
Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the loan entry.
Therefore, the genuineness and the creditworthiness of the lender cannot be proved as per the documents submitted.
Hence, the A.O. rightly made the addition in the total income of the assessee.
(ix) Hill Crest Resorts and SPA P. Ltd
Facts: 1. The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs.
25,00,000/- from Hill Crest Resort and Spa Pvt. Ltd. Assessee was issued notices under section 142(1) of the Income Tax
Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan. Assessee provided copy of confirmation only Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
2. Accordingly, a show cause notice with Draft Assessment
Order was issued to assessee to show cause why the amount of Rs. 25,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
r.w.s 115 BBE of the Income Tax Act, 1961. 3. Notice under section 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation statement, copy of bank Statement and financial statement
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recording the loan transactions. The details provided by the assessee and lender have been examined.
4. Assessee in response to show cause notice stated that loan has been repaid in full in F.Y 2018-19 and that the balance sheet of company show total borrowings of Rs.
123,24,63,107/-out of which amount of Rs. 25,00,000/-is advanced to us. The examination of ack of ITR of lender company show that that return of income has been fled current year loss of Rs. 4,73,98,327/- This show that lender company don't have creditworthiness of advancing such a huge loan to assessee firm, Further, the loan transactions must appear in the balance sheet of the lender as on 31/03/2018 on Asset side. However, examination of balance sheet of lender shows that this loan transaction is not appearing in balance sheet of company. This shows that Lender Company has not given any loan to assessee firm. The name of assessee firm is not appearing in balance sheet of Lender Company In fact, Lender Company has not given loan to any person. The Auditor has not reported such lean transactions in audit report of lender. The above-mentioned facts and documents show that no loan was given by lender to assessee firm. The lender has not furnished any confirmation of repayment of loan in subsequent years.
Assessee claimed that no cash was deposited before imparting the loan
The cash deposit is not precondition for non-genuineness of unsecured loans. Non-genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. It is pertinent to mention here prudent business person will not give loan to any one if business is in loss. He will use his capital/money available with him to recover business. The assessee has brought its K K Ventura

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own unaccounted money through banking channel. It is circulation of money.
5. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transactions are made through banking channel. The onus is on the assessee to prove the genuineness and the creditworthiness of lender and genuineness of loan, in which assessee is failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender had received the said amount immediately in the said account just before providing the loan entry to the assessee and also the company's financial (ITR of lender provided by the assessee show that lender has filed his return of income declaring current year loss of Rs.
4,73,98,327/-) are not such that it can provide the loan to the assessee. Further, on perusal of the bank statement submitted by the assessee it is seen that the money had been received just before providing the loan entry to the assessee and the assessee was not having the enough funds to give the loan to the assessee. Therefore, the credit worthiness of the lender is in question. It had been established that the account of lender was credited on the same days or just before the imparting of loan. Thus, there are sufficient circumstantial evidences that the assessee had used the said entity to get the lean entry. Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness on the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessed and hence, the K K Ventura

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A.O. rightly made the addition in the total income of the assessee.
(x) H. Manubhal & Co. (Hitesh Manhar Lal Bilakhia) -
Rs.20,00,000/-
Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.
20,00,000/- from H. Manubhai & Co. An assessee was issued notices under section 142(1) of the Income Tax Act, 1961
requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan.
Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR and confirmation of the lender.
2. Accordingly, a show cause notice with Draft Assessment
Order was issued to assess to show-cause why the amount of Rs 20,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
rws115BBE of the Income Tax Act, 1961
3. Notice under section. 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation statement, copy of bank statement and financial statement.
However, no response has been received till date to the notice u/s 133(6) of the I.T. Act, 1961. 4. Assessee stated in response to show cause notice that lender has passed away due to COVID-19 and family members are not aware of the transactions. However, assessee provided the copy of ack. of ITR of lender. The examination of ITR ack show that return of income has been filed at total income of Rs. NIL. The assessee did not furnished complete copy of ITR of lender. This show that lender does not have credit worthiness of advancing such a K K Ventura

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huge loan to assessee firm. Assessee has not provided any other documentary evidence to prove the source of funds of lender utilized to advance such a huge amount of loan and has also not provided financial statement of lender recording the loan transactions to prove the genuineness of loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the credit worthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non- genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also.
The assessee has brought its own unaccounted money through banking channel.
It is circulation of money. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act
1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act,
1961 and failed to establish the genuineness and credit worthiness of the unsecured loan introduced during the year
5. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan and identity of the lender Therefore, amount of Rs 20,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68
of the Income Tax Act, 1961
Comments: The Ld CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be K K Ventura

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termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding the ledger confirmation and the bank statements of the lender. Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. Nil. As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. The assessee had submitted before the Ld CIT(A) that the at the time of granting loan to assessee lender had Bank Balance of Rs.50,27,945/-. However, the same was not verifiable as the bank statement had not provided by the assessee. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee
(xi) Jayshri Ben Thakkar- Rs.8,00,000/-
Facts: The ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs.8,00,000/- from Jayshriben Thakkar. Assessee was issued notices undersection142(1) of the Income Tax Act, 1961
requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan.
However, assessee has not provided confirmation statement, copy of bank statement and copy of ITR of the lender.
Assessee stated that loan were taken and repaid through
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banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
2. Accordingly, a show cause notice with Draft Assessment
Order was issued to assessee to show cause why the amount of Rs. 8,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
r.w.s 115 BBE of the Income Tax Act, 1961. 3. Notice under section 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation statement, financial statement recording the loan transactions and copy of bank statement. Assessee, in response to show cause notice provided the copy of computation of income, copy of ack of ITR and ledger account of lender. The examination of these documents shows that lender has filed her return of income at total income of Rs.
2,29,600/- only for AY 2018-19, Rs. 2,51,200/- for AY 2017-
18 and Rs. 1,80,400/- for AY 2016-17 Fund infused in bank accounts just one day before of imparting of loans. It shows that lender does not have creditworthiness of advancing such a huge loan to assessee firm. Assessee has not provided any other documentary evidence to prove the source of funds of lender utilized to advance such a huge amount of loan and has also not provided the financial statement of lender recording the loan transactions to prove the genuineness loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been K K Ventura

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established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON &
Steel P. Ltd.
Arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type and nature of enquiry purely depends upon Assessing officer. The assessee has brought its own unaccounted money through banking channel. It is circulation of money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act.
1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act,
1961
and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year.
4. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of 8,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax an income of the assessee from undisclosed sources as per the provisions of section 68
Comments: The Ld. CIT(A) had deleted the and addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus.
However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding the ledger confirmation, financial of the company and the bank statements of the lender Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. of Rs. 2,29,600/-only for AY 2018-19,
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Rs.2,51,200/- for AY 2017-18 and Rs. 180400 for AY 2016-17
As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee.
(xii) Jewel Developers Rs.25,00,000/-
Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.
25,00,000/- from Jewel Developers. Assessee was issued notices under section142(1) of the Income Tax Act, 1961
requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan.
Assessee provided copy of confirmation and ITR. However, assessee has not provided the copy of bank statement of the lender. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
1. Accordingly, a show cause notice with Draft Assessment
Order was issued to assessee to show cause why the amount of Rs. 25,00,000/- outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68
r.w.s 115BBE of the Income Tax Act, 1961. K K Ventura

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2. Notice under section 133(6) of the Income Tax Act, 1961
was issued to lender to provide the copy of ITR, confirmation statement, financial statements recording the loan transaction and copy of bank statement.
3. The details provided by assessee in response to show cause notice and by lender in response to notice under section 133(6) have been examined. The examination of ack. of ITR show that lender filed return of income at total income of Rs.
3,06,310/- only. This show that lender does not have creditworthiness to advance such huge amount of loan. The lender stated that loan given to assessee firm has been reported in schedule B10 of balance sheet under the schedule
Loans and Advances (Assets). However, examination of profit and loss account and balance sheet provided by lender show that books of account of lender are auditable. But, profit and loss account and balance sheet provided by lender are not audited and signed by auditor. Therefore, these financial statements cannot be relied upon. The assessee and lender had not provided the complete copy of ITR to show whether the data in unaudited profit and loss account and balance sheet provided by assessee has been reported in e-filed return of income. Therefore, cognizance of balance sheet provided by lender cannot be taken. The assessee and the lender had not provided any other documentary evidence of source of funds utilized by lender to advance such a huge loan to assessee firm to prove the creditworthiness and also has not provided any other documentary evidence regarding reporting of loan transactions in books of account to prove the genuineness of loan transaction
The credit worthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transactions were made through banking channel. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. Assessee claimed that no cash was K K Ventura

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deposited before imparting the loan. The cash deposit is not precondition for non-genuineness of unsecured loans. Non genuine unsecured loans can be routed through banking channel also which are prevalent now a days. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble Supreme court in NRA IRON &
Steel P. Ltd. arising out of SLP (CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type of enquiry purely depends upon Assessing officer. The lender did not furnish any confirmation regarding receiving of repayment of loans. The assessee had brought its own unaccounted money through banking channel. It is circulation of money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68
of IT Act. 1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income
Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year.
6. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender, genuineness of loan and source of funds utilized by lender for advancing loan.
Therefore, amount of RS.25,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus.
However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee
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failed to furnish the details regarding the ledger confirmation, financial of the company and the bank statements of the lender. Further, the A.O. during the course of the assessment proceeding stated on examination of ITR ack show that Return of income has been filed by the lender with the total income of Rs. 3,06,310/-only. As the assessee had not provided the bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee
(xiii) Kalyanji Umarshi Shah Rs.95,00,000/-
Facts: The ledger account provided by assesses how that during the F.Y 2017-18 assessee has taken loan of Rs.
95,00,000/- from Kalyanji Umarslu Shah (Represented by Ashwin Kalyanji Shah. Further, interest of Rs.6,04,810/-is accrued on this loan during the FY 2017-18. The TDS of Rs.60,481/ was deducted. Interest of Rs. 2,87,829/- is paid and balance interest of Rs.2,56,500/-along with principal amount is carried forward to the next year
2. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan. Assessee provided copy of confirmation
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and ITR. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries but failed to explain the source of funds in the bank account of lender.
Thereafter, a show cause notice along with Draft Assessment
Order was issued to assessee requiring to show cause why the amount of Rs. 95,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.ws 115 BBE of the Income Tax Act, 1961. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statements recording the lean transaction and copy of bank statement.
The reply received from assessee firm in response to show cause notice and reply received from lender in response to notice under section 133(6) was examined. The examination of ITR shows that ITR has been filed at total income of Rs.5,76,270/-and gross total income of Rs. 7,41,268/ which includes interest of Rs. 6,04,810/- received from the assessee firm on loan under consideration. This show that lender does not have any other source of income except this interest income Therefore, lender does not have creditworthiness to advance such a huge loan. The lender further stated in reply that he is senior citizen (D.O. B 15.03. 1936) and loan has been paid out of accumulated funds over the years. However, documentary evidence in support of accumulated funds has not been provided by the lender and assessee both The ITR has been verified by the representative Ashwani Kalyanji
Shah Further assessee firm and lender have not provided any other documentary evidence recording the loan transactions in books of accounts to prove the genuineness of loan creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee and that the transaction have been made
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through banking channel. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble
Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act but type of enquiry purely depends upon Assessing officer. The lender did not furnished any confirmation regarding receiving of repayment of loans. The assessee has brought its own unaccounted money through banking channel.
It is circulation money. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act
1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act,
1961
and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender, genuineness of loan and source of funds utilized by lender for advancing loan.
Therefore, amount of Rs.95,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the complete details. Further, the A.O. during the course of the assessment proceeding stated that ITR has been filed at total income of Rs
5,76,270/-and grass total income of Rs. 7,41,268/-which K K Ventura

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includes interest of Rs. 6,04,810/-received from the assessee firm on loan under consideration. This show that lender does not have any other source of income except this interest income. As the assessee had only provided the copy of the relevant transactions for the month of Sept, 2019 and thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence. the A.O. rightly made the addition in the total income of the assessee
(xiv) Lilavti Damji Patel - Rs. 20,00,000/-
Facts: The ledger account provided by assessee show that during the FY 2017-18 assessee has taken loan of Rs.
20,00,000/- from LILAVATI DAMJI PATEL Assessee was issued notices under section 142(1) of the Income Tax Act,
1961 requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, creditworthiness of lender and genuineness of loan.
Assessee provided copy of confirmation only However, assessee has not provided the copy of bank statement and ITR of the lender. Assessee stated that loan was taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
Thereafter, a show cause notice with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 20,00,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961 Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statement recording the loan transaction and copy of bank statement. However, no response has been received till date to the notice u/s133(6) of the IT. Act, 1961. K K Ventura

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The lender has filed her return of income at total income of Rs. 4,03,490/-only. This quantum of total income show that lender does not have creditworthiness of advancing such a huge loan The assessee firm and lender has not provided any documentary evidence to prove the source of funds utilized for advancing loan to prove creditworthiness of the lender. The creditworthiness and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The lender did not furnish any confirmation regarding receiving of repayment of loans. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act, 1961 and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year.
1. It is crystal clear from the facts mentioned above that assessee failed to prove the creditworthiness of the lender and genuineness of loan. Therefore, amount of Rs. 20,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee.
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the complete details. Further, the A.O during the course of the assessment proceeding stated that the lender has filed her return of income at total income of Rs.4,03,490/-only This quantum of total income show that lender does not have creditworthiness of advancing such a huge loan. It is seen from the bank statement of the lender that the cash has been deposited in the said account and no major activity in the said bank account. However, it is seen that the just before giving the K K Ventura

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loan to the assessee on 06/02/2018 the lender had received the amount one day before ie. 05/02/2018 an amount of Rs.
1,03,70,970/-had been credited in the said bank account and the same was utilized for providing the loans to the assessee and other entities.
As the genuineness and the creditworthiness of the lender cannot be proved by the assessee and hence, the A.Ο. rightly made the addition in the total income of the assessee.
(xv) Parask Botadara - Rs. 17,50,000/-
Facts: The assessee has taken loan of Rs 22,50,000/- from Paras K. Botarda. The amount of Rs.5,00,000, was repaid during the F.Y
2017-18
and balance amount of Rs. 17,50,000/- is outstanding as on 31/03/2018. No interest paid/accrued on the loan. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961
requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan.
Assessee provided copy of confirmation only. However, assessee has not provided the copy of bank statement and copy of ITR of the lender. Assessee stated that loan were taken and repaid through banking channel and provided the copy of its bank statement highlighting the credit and debit entries.
Thereafter, a show cause notice with Draft Assessment Order was issued to assessee requiring to show cause why the amount of Rs. 17,50,000/-outstanding as on 31/03/2018 in books of accounts under the head unsecured loan should not be assessed as unexplained loan as per provisions of section 68 r.w.s 115BBE of the Income Tax Act, 1961. Notice under section 133(6) of the Income Tax Act, 1961 was issued to lender to provide the copy of ITR, confirmation statement, financial statements and copy of bank statement. However, no response has been received till date to the notice u/s K K Ventura

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133(6) of the IT. Act, 1961. The assessee firm has also not provided any documentary evidence to prove the source of funds utilized by the lender to advance loan to prove creditworthiness and documentary evidence of recording the loan transaction in book of accounts to prove genuineness of loan. The creditworthiness of the lenders and the genuineness of the loan could not be said to be proved merely on the strength of copy of ledger account of the lenders in the books of account of the assessee. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. The assessee furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. The same is true here also. The Hon'ble
Supreme court in NRA IRON & Steel P. Ltd. arising out of SLP(CIVIL) No. 29855 of 2018 held that assessing officer is duty bound to make enquiry after submission of assessee to check all three parameters of section 68 of IT Act and entrusted to assessing officer to decide type of enquiry The lender did not furnished any confirmation regarding receiving of repayment of loans. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act.
1961 Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act,
1961
and failed to establish the genuineness and creditworthiness of the fresh unsecured loan introduced during the year
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the during the course of the assessment proceedings the assessee failed to furnish the details regarding source of funds utilized by the lender to advance loan to prove creditworthiness and documentary evidence of recording the loan transaction in book of accounts to prove
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genuineness of loan as no details regarding the ITR,
Confirmation and other details. The assessee had furnished only part copy of bank statement. It has been established that the account of lender was credited on the same days or just before the imparting of loan. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O.
rightly made the addition in the total income of the assessee.
xvi) Rajani D Agarwal - Rs.5,00,000/-
Facts: As per the ledger account provided by assessee show that during the F.Y 2017-18 assessee has taken loan of Rs.
5,00,000/- from Rajani D Agarwal. Assessee was issued notices under section 142(1) of the Income Tax Act, 1961
requiring to furnish the confirmation statement duly confirmed by the lender, copy of bank statement of lender evidencing the payment and copy of ITR of lender to prove the identity, credit worthiness of lender and genuineness of loan.
The assessee firm could not provide any documentary evidence regarding the source of funds utilized by the lender to prove the credit worthiness of the lender, PAN, copy of ITR form and financial statement to prove the identity of the lender and genuineness of loan. The lender does not have any PAN. The assessee brought its own unaccounted money into banking channel. Assessee failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act
1961. Thus, the assessee has completely failed to discharge the onus of proof as required u/s 68 of the Income Tax Act,
1961 and failed to establish the genuineness and credit
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worthiness of the fresh unsecured loan introduced during the year It is crystal clear from the facts mentioned above that assessee failed to prove the identity, credit worthiness of the lender and genuineness of loan. Therefore, amount of Rs.
5,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee The A.O during the course of the assessment proceedings had been stated the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
Comments: The Ld CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the assessee had not furnished the source of funds utilized by the lender to prove the credit worthiness of the lender, PAN, copy of ITR form and financial statement to prove the identity of the lender and genuineness of loan. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O.
rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the loan had been repaid in the subsequent year. Therefore, the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O.
rightly made the addition in the total income of the assessee.
(xvii) Shailesh Surender Jasani - Rs.40,00,000/-
Facts: The ledger account provided show that during the FY2017-18, assessee has taken loan of Ra 1,27,00,000/- from Shailesh Surendra Jasani. The amount of Rs. 87,00,000/- was repaid during the FY2017-18 and balance amount of Rs.
40,00,000/-is outstanding as on 31/03/2018 Further,
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interest of Rs.3,12,953/-is accrued on this loan during the FY
2017-18. The TDS of Rs.31,295/-was deducted and balance amount of interest of Rs.2,81,658/ is carried forward to the next year along with principal amount of Rs.40,00,000/- The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 6.91.810/-only, which proves that lender does not have creditworthiness of advancing such a huge loan The examination of e-filed ITR show that loan transaction has not been reported in the balance sheet schedule of e-filed ITR This proves that loan transaction is not genuine. Assessee firm and lender could not provide any documentary evidence regarding the source of funds utilized by lender to advance such a huge loan to assessee firm to prove creditworthiness of lender and documentary evidence regarding reporting of loan transactions in books of accounts of lender to prove the genuineness of loan. Therefore, the assessee failed to prove credit worthiness of the lender and genuineness of loan.
Thus, amount of Rs. 40,00,000/- outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income for A.Y
2018-19 at total income of Rs. 6,91,810/-only, which proves that lender does not have creditworthiness of advancing such a huge loan and the assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee
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and hence, the A.O. rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the part loan had been repaid during the year. However, if the amount had been repaid that doesn't make the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
(xviii) Seema Shailesh Jasani - Rs.36,50,000/-
Facts: The ledger account provided show that during the F.Y2017-18, assessee has taken loan of Rs.46,50,000/-from Seema Shailesh Jasani. The amount of Rs. 10,00,000/-was repaid during the FY2017- and balance amount of RS.
36,50,000/-is outstanding as on 31/03/2018. Further, interest of Rs. 2,03,930/- is accrued on this loan during the FY 2017-18. The TDS of Rs.20,393/- was deducted and balance amount of interest of Rs. 1,83,537/- is carried forward to the next year along with principal amount of Rs.36,50,000/- The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 7,17,510/- only, which proves that lender does not have creditworthiness of advancing such a huge loan.
Therefore, amount of Rs. 36,50,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115 BBE of the Income Tax Act, 1961
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income of Rs.7,17,510/-only, which proven that lender does not have K K Ventura

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creditworthiness of advancing such a huge loan and even the lender did not furnished any confirmation regarding receiving of repayment of loans.
The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
Further, as the Ld. CIT(A) had stated that the part of the loan had been repaid during the year. However, if the amount had been repaid that doesn't make the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
(xix) Rakesh Ramesh Chandra Rs.60,00,000/-
Facts: The ledger account provided show that during the FY
2017-18, assessee has taken loan of Rs. 1,40,00,000/- from Rakesh Ramesh Chandra. The amount of Rs. 80,00,000/-was repaid during the FY 2017-18 and balance amount of Rs.
60,00,000/-is outstanding as on 31/03/2018. Further, interest of Rs 88,273/-is accrued on this loan during the FY
2017-18. The TDS of Rs 8,827/-was deducted and balance amount of interest of Rs. 79,446/- is carried forward to the next year along with principal amount of Rs.60,00,000/-. The lender has filed his return of income for A.Y 2018-19 at total income of Rs. 14,21,020/-only. The onus is on assessee to prove creditworthiness of lender and genuineness of loan, but assessee failed to do. It is crystal clear from the facts
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mentioned above that assessee failed to prove the identity, creditworthiness of the lender and genuineness of loan.
Therefore, amount of Rs.60,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115BBE of the Income Tax
Act, 1961. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income of Rs.
14,21,020/- only, which proves that lender does not have creditworthiness of advancing such a huge loan and even the lender did not furnished any confirmation regarding receiving of repayment of loans.
The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O rightly made the addition in the total income of the assessee
Further, as the Ld. CIT(A) had stated that the part of the loan had been repaid during the year. However, if the amount had been repaid that doesn't made the loan genuine, also the credit worthiness of the loan provided by the lender could not be verified. As the genuineness and the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
(xx) PHB Relcon Rs. 10,00,000/-
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Facts: The ledger account provided by assessee show that during the F.Y 2017-18, assessee has taken loan of Rs.
10,00,000/-from PHB Relcon The examination of ack of ITR of lender provided by assessee firm show that lender has filed its return of income at current year loss of Rs. 1,92,353/ This show that lender does not have creditworthiness of advancing such a huge loan to assessee firm. The assessee firm and the lender has not provided any documentary evidence regarding the source of funds utilized to advance such a huge loan to prove credit worthiness and documentary evidence regarding the recording of transaction of loan in books of accounts to prove the genuineness of loan.
Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his current year loss of Rs.1,92,353/-, which proves that lender does not have creditworthiness of advancing such a huge loan. The assessee firm had not provided any documentary evidence regarding the source of funds utilized to advance such a huge loan to prove credit worthiness of the lender As the creditworthiness of the lender cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee. As the assessee had not even submitted the bank statement to verify the creditworthiness of the lender to advance loan to the assessee, hence, the A.O.
rightly made the addition in the total income of the assessee.
(xxi)
Pramod
Kumar
Jain
Securities
P
Ltd
-
Rs.90,00,000/-
Facts: The ledger account provided show that during the FY
2017-18, assessee has taken loan of Rs. 1,60,00,00,000/- from Pramod Kumar Jain Securities Private Limited The amount of Rs 70,00,000/-was repaid during the F. Y 2017-18
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and balance amount Rs. 90,00,000/-is outstanding as on 31/03/2018. No interest accrued on this loan during the FY
2017-18. The Balance amount of Rs. 90,00,000/- is carried forward to the next year. The examination of ITR of lender show that it has filed its return of income at total income of Rs. 1,55,930/ Further, the examination of manual audited balance sheet of lender as on 31/03/2018 and e-filed ITR of assessment year 2018-19 show that above mentioned loan transactions has not been recorded in balance sheet and e- filed ITR. Therefore, amount of Rs.90,00,000/-outstanding as on 31/03/2018 as unsecured loan is brought to tax as income of the assessee from undisclosed sources as per the provisions of section 68 read with section 115BBE of the income Tax Act, 1961. Comments: The Ld. CIT(A) had deleted the said addition stating that the assessee had proved the identity and creditworthiness of the lender therefore the loan cannot be termed as bogus. However, the Ld. CIT(A) failed to appreciate the fact that the lender has filed his return of income at total income of Rs. 1,55,930/-, Further the examination of manual audited balance sheet of lender as on 31/03/2018 and e-filed
ITR of assessment year 2018-19 show that above mentioned loan transactions has not been recorded in balance sheet and e-filed
ITR.
Therefore, the creditworthiness and the genuineness of the loan cannot be established. The assessee furnished only part copy of bank statement during the course of the assessment proceedings thus it is not verifiable that the assessee had fund infused in bank accounts just one day before of imparting of loans. It is seen that the assessee has not provided the documentary evidences to prove all the above lenders, its identity and creditworthiness of the lender and genuineness of loan. The onus is on the assessee to prove the creditworthiness of lender and genuineness of loan, but failed to do so. It failed to satisfy the essential ingredients of satisfaction as enumerated u/s 68 of IT Act 1961. Therefore, the genuineness and the creditworthiness of the lender
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cannot be proved during the course of the assessment proceedings as per the documents submitted by the assessee and hence, the A.O. rightly made the addition in the total income of the assessee.
8. It is seen that the party-wise comments were submitted on the order passed by the Ld. CIT(A) as above, however to sum up as under:
a. It was seen that the genuineness and the creditworthiness of the lender could not be proved as per the bank statements and the ITR of the lender submitted by the assessee during the course of the assessment proceedings.
b. Even if the identity had been proved of the lender but the credit worthiness and the genuineness of the transactions of the lender was not proved in all the case wherein the lender had given the ledger confirmation, the ITR showing meagre income.
C Further, in most of the cases on perusal of the bank statement, it was seen that the funds were coming in the bank account of the lender just before the money was given to the assessee, therefore the credit worthiness of the lender is not proved.
d Therefore, based on the above facts it was clear that either or both the identity, genuineness and the credit worthiness of the lender had not been proved and the AO concluded the assessment by making addition of Rs. 8,43,50,000/- on account of unsecured loan along with interest amounting to Rs. 29,95,911/- received during the year by pointing out that the transaction of loan did not pass the criteria to be considered as genuine.
7. The ld. AR had strongly relied upon the aforesaid report of the ld. AO. The same reasons which has been given by the ld.
AO in the assessment order.
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8. Before us ld. Counsel for the assessee submitted that even in the grounds, the Revenue has not disputed the identity or genuineness of the transaction, albeit have questioned that these parties confirmed in the statement that the loans have been advanced to the assessee and ld. CIT(A) has erred in adding the additional evidence which was not produced during the course of the hearing before the ld. AO. Nowhere, the Revenue has challenged or stated about the genuineness and creditworthiness of the lenders. He submitted that during the course of the appellate proceedings on credit from the banks, the department filed a report as an email dated
08/04/2025 from the AO to the Sr. DR where he admitted that the entire information submitted by the assessee before the CIT(A) were the copies of the information obtained by the AO directly from the lenders u/s 133(6) of the Act, except in the case of M/s Canopous Consultancy Service (P) Ltd where annual accounts filed by the assessee before the CIT(A) was not on the record of the AO. Thus, the contention of the AO that additional evidence was submitted before the CIT(A) without confronting u/r 46A is rejected as merely filing a copy of annual accounts only in one case, does not make filing of any additional evidence requiring rejection of the claim.
9. A copy of the annual accounts is not a primary evidence u/s.68 where the bank account, confirmation, PAN, nature of transaction needs to be proved in the light of those documents. Annual accounts are corroborative evidence particularly when on perusal of the bank account of the K K Ventura

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lender, it is clear that no corresponding amount in cash was deposited by the lender in his bank account to advance loan to the assessee. In case of any doubt, the AO was very much entitled to make more enquiries from the bank to ascertain the source of amount lent to the assessee as loan. The assessee is not supposed to prove source of source in respect of loans borrowed, particularly when from the bank accounts of all the lenders, it did not transpire that any cash was deposit therein to advance loan to the assessee and where the lender is an income-tax assessee.
10. The audited annual accounts of a company are in public domain as are mandatorily filed by every company with the