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

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.

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.

1. K K Ventura 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.

1. 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 10,00,000/- Services P. Ltd.

K K Ventura (VI) Shantilal Gala (HUF) 20,00,000/- Classic Enterprises (VII) Dipesh Kannubhai 40,00,000/- Khatadia (VIII) EKTA GROUP (Girish 26,00,000/- Ramnik Lal (IX) HILL Crest Resorts AND 25,00,000/- SPA P. Ltd. (X) H. Manubhai & Co. 20,00,000/- (Hitesh Manhar Lal Bilakhia (XI) Jayshri Ben Thakkar 8,00,000/- (XII) Jewel Developers 25,00,000/- (XIII) Kalyanji UmaRshi Shah 95,00,000/- (represented by Ashwin Kalyanji shah) (XIV) Lilavati Damji Patel 20,00,000/- (XV) Parask Botadara 17,50,000/- (XVI) Rajani D Agarwal 5,00,000/- (XVII) Shailesh Surender 40,00,000/- jasani [XVIII) Seema Shailesh Jasani 36,50,000/- (XIX) Rakesh Ramesh Chandra 10,00,000/- (XX) PHB Relcon 60,00,000/- (XXI) Pramod Kumar Jain 90,00,000/- Securities P. Ltd. 8,43,50,000/- 6.1. The Assessing Officer has thereafter discussed each of these lenders in detail, setting out why the explanation of the assessee could not be accepted. The report filed by him, which was placed before the ld. CIT(A) and has also been relied upon by the ld. DR before us, is in fact nothing but a reiteration of the findings contained in the impugned assessment order. For the sake of ready reference, and since (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.

K K Ventura The examination of the ITR of the lender reveals following mentioned facts during the course of assessment proceedings:

1. 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 K K Ventura 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.

K K Ventura 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 K K Ventura 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 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.

K K Ventura 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 K K Ventura 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 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 K K Ventura 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 K K Ventura 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.

K K Ventura 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. 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 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.

K K Ventura 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 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 K K Ventura 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.

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 K K Ventura 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 K K Ventura 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.

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 K K Ventura 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 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 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 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 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 K K Ventura banking channel and provided the copy of its bank statement highlighting the credit and debit entries.

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 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, K K Ventura 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.

K K Ventura 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.

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 K K Ventura 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 K K Ventura 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 K K Ventura 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 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 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 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 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 K K Ventura 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 K K Ventura 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, K K Ventura 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 K K Ventura 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 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 K K Ventura 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/- K K Ventura 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 K K Ventura 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 K K Ventura 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.

K K Ventura 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.

K K Ventura 17. We have carefully considered the above findings, and on the strength of the documents placed on record, we find ourselves in full agreement with the reasoning of the ld. CIT(A). His analysis is not only factually well-grounded but also legally unimpeachable. The deletion of the addition of ₹1,20,00,000/–, therefore, warrants affirmation. (iii) Manish Damji Shah – Rs.70,50,000 18. Turning now to the loan from Shri Manish Damji Shah, the assessee had obtained a sum of ₹81,00,000/– during the year. Out of this, an amount of ₹10,50,000/– was repaid within the year, leaving an outstanding balance of ₹70,50,000/– as on the year-end. The assessee had also paid interest of ₹3,28,438/– on this loan after deduction of TDS, which evidences the subsistence of the borrowing on commercial terms. The assessee produced confirmations, income-tax returns of the lender, bank statements, and ledger extracts, thereby discharging the initial burden placed upon him under section 68 of the Act. 18.1. The ld. CIT(A), after a meticulous appraisal of these records, has observed that the identity of the lender was fully established, as he was a regular assessee under the Act and had disclosed his financials and return of income. The genuineness of the transaction stood fortified by the fact that the loan was advanced and repaid through regular banking channels, with interest being paid after TDS. The only residual issue raised by the AO was one of creditworthiness, but even this objection was found to be unsustainable in light of the lender’s bank balances, his returned income, and the K K Ventura consistency of the entries in the assessee’s and lender’s books. The ld. CIT(A) also noted that the AO, while doubting creditworthiness, did not bring any contrary evidence on record, nor did he controvert the specific evidences filed.

K K Ventura 21. On our own appraisal, we find that the assessee has satisfactorily demonstrated the three vital ingredients — identity, genuineness, and creditworthiness. The AO’s conclusions rest only on suspicion and not on any cogent evidence. In these circumstances, the deletion of the addition of ₹80,00,000/– by the CIT(A) calls for no interference, and we confirm the same. 21.1. It is trite law that once the assessee discharges the initial burden under section 68, the onus shifts upon the Department. In the present case, the Department has done precious little to rebut the documentary record. On the contrary, the AO’s order reveals an approach of assumption and presumption, which cannot be sustained in judicial scrutiny. (v) Canopous Consultancy Services P. Ltd – Rs.10,00,000/- 22. Coming then to the loan of ₹10,00,000/– from Canopus Consultancy Services Pvt. Ltd., it is noted that the assessee received the loan during the year through banking channels, and the same was repaid on 5th April 2019. The assessee filed confirmations, ITR, bank statements, and audited accounts of the lender. The AO doubted the transaction on the sole ground that the lender company had reported a loss in that year, thereby questioning its ability to advance the loan. 22.1. Here again, the objection of the AO was founded more on surmise than on analysis. The ld. CIT(A) scrutinised the K K Ventura audited accounts of the lender and observed that notwithstanding a loss in one year, the company’s balance sheet revealed a positive net worth of over ₹4.8 crores, besides profits in the preceding years. The very fact that the assessee repaid the loan in full within a short span of time further reinforced the genuineness of the borrowing. 22.2. The ld. CIT(A), therefore, correctly held that the availability of reserves, positive net worth, and demonstrated repayment by the assessee together established that the loan was not only genuine but also supported by adequate credit capacity. The Assessing Officer, in ignoring these crucial facts and treating the loan as unexplained, had adopted a narrow and unsustainable approach.

K K Ventura 23.2. In our view, the AO’s reliance on the temporary loss was a myopic approach, disregarding the overall financial health of the company. Judicial pronouncements have time and again emphasised that the test of creditworthiness is not confined to the profitability of a single year, but to the lender’s overall financial position, including reserves, capital, and banking evidence. On these parameters, the loan from Canopus Consultancy stands fully explained. (vi) Shantilal Gala (HUF) – Classic Enterprises – ₹20,00,000 24. In respect of the loan from Shantilal Gala (HUF), Classic Enterprises, amounting to ₹20,00,000/–, the learned CIT(A) noted that the assessee had furnished confirmations, ledger accounts, bank statements, and ITR acknowledgments of both the assessee and the lender. The entire transaction was routed through regular banking channels and was duly reflected in the books of account. The Assessing Officer, despite being in possession of these documents, did not bring any adverse material on record and brushed aside the explanation on mere suspicion. 24.1. The learned CIT(A), in para 6.7 of his order, specifically observed that the AO had not produced any specific evidence to disprove the claim of the assessee. He underscored that ―simply denying the claim of the appellant mere on suspicion is not a good and fair practice in the eye of the law,‖ particularly when the transaction was supported by documentary evidence such as ledger accounts, bank K K Ventura statements, and ITRs of the lender. The CIT(A) further held that there was no infirmity in the explanation of the assessee and, fortified by judicial pronouncements of the Hon’ble Bombay and Gujarat High Courts on identical issues, concluded that the transaction was genuine. Accordingly, the addition of ₹20,00,000/– was deleted.

K K Ventura 30.1. The ld. CIT(A) laid particular emphasis on the fact that the lender’s audited statements disclosed sufficient reserves and liquidity, which demonstrated its capacity to extend the advance. The fact of repayment, duly substantiated by bank entries, was also considered to be a strong pointer towards genuineness. 30.2. Despite this cogent evidence, the Assessing Officer chose to disregard the material and proceeded to treat the loan as unexplained. The ld. CIT(A) rightly pointed out that such an approach, which involves ignoring confirmations, audited financial statements, and repayment records while clinging to mere suspicion, cannot be sustained in law. Once the transaction is reflected in the books of both the assessee and the lender, duly supported by banking evidence, there is no occasion to brand it as a mere accommodation entry.

(x) H. Manubhai & Co. (Hitesh Manhar Lal Bilakhia) – Rs.20,00,000/- K K Ventura 32. The next issue in this cluster pertains to the loan of ₹20,00,000/– from H. Manubhai & Co. (Hitesh Manhar Lal Bilakhia). The assessee placed on record confirmations, ledger accounts, and bank statements evidencing the loan. The ld. CIT(A) found that the transaction was conducted entirely through banking channels, that the lender was an income-tax assessee, and that the financial strength to advance the loan was established. Notwithstanding these evidences, the AO dismissed the explanation and treated the loan as unexplained, relying on conjecture. 32.1. Here too, the CIT(A) highlighted that the assessee had met all three statutory tests under section 68, identity, genuineness, and creditworthiness. The lender’s tax records and bank statements spoke for themselves. The AO’s dismissal of the claim, bereft of any counter-evidence, was unsustainable. 32.2. The ld. CIT(A), on a judicious appreciation of the record, held that the assessee had fulfilled all three statutory ingredients, namely, identity of the lender, genuineness of the transaction, and creditworthiness. The Assessing Officer had failed to bring any material on record to the contrary. The finding was thus firmly anchored in evidence rather than inference. 32.3. By holding that the addition could not be justified in the absence of any rebuttal material, the ld.CIT(A) underscored an important principle: suspicion, however strong, cannot substitute for proof. The AO’s rejection of the loan was not K K Ventura predicated on any tangible inquiry but only on assumptions, which cannot override verified records such as bank statements and confirmations.

35.1. Having considered the record, we agree with the ld. CIT(A). The lender was a regular taxpayer, the loan was routed through banking channels, and repayment stood evidenced. Once the assessee discharged the onus, the AO was required to bring on record some contrary material, which he has failed to do. In these circumstances, the deletion of the addition of ₹8,00,000/– was fully justified and is hereby confirmed. 35.2. We may also observe that the jurisprudence in this area has consistently held that when a loan transaction is K K Ventura backed by confirmations, repayment through account payee cheques, and declaration of interest income by the creditor, the AO cannot discredit it merely because the creditor had deposited funds shortly before advancing the loan. Such a coincidence of timing cannot by itself vitiate the genuineness of the transaction unless there is evidence of cash circulation or bogus accommodation entries none of which is forthcoming here. (xii) Jewel Developers Rs.25,00,000/- 36. The next issue pertains to the addition of ₹25,00,000/– relating to Jewel Developers. The assessee had obtained the loan through banking channels and repaid the same by 21st March 2021. Confirmations, ledger extracts, and bank statements were filed. The AO nevertheless treated the amount as unexplained, citing doubts over creditworthiness. 36.1. The ld. CIT(A), however, after considering the evidences, found that the loan had not only been received through verifiable banking channels but was also duly repaid within the specified period. The bank statements and confirmation of the lender corroborated the assessee’s explanation. Importantly, the AO did not dispute the existence of repayment. The ld. CIT(A) also drew strength from judicial pronouncements holding that once the identity of the lender is established, the transaction is genuine, and the loan is repaid, there is no justification to invoke section 68 on bare suspicion.

K K Ventura 36.2. The ld. CIT(A), therefore, emphasised that the AO’s reasoning was contrary to both fact and law. When repayment is on record, along with confirmation and banking trail, the presumption of accommodation entry falls to the ground. Moreover, the AO had failed to carry out any independent verification or to bring even a shred of contrary material to demonstrate that the loan was bogus. His order thus rested entirely upon conjectural doubts.

K K Ventura 40.2. The ld. CIT(A) further emphasised that it is neither fair nor legally permissible to assess the creditworthiness of a lender by analysing the return of income for a single year in isolation. A lender’s capacity must be considered in the light of accumulated resources and contemporaneous bank balances. He also found force in the assessee’s contention that letters of confirmation, acknowledgments of income, and copies of bank statements were available on record to substantiate the advance. The Assessing Officer, on the other hand, failed to bring any adverse material to controvert these evidences. 40.3. On these findings, the ld. CIT(A) concluded that the addition of ₹20,00,000/– was not justified, and he accordingly deleted it. He also drew support from binding precedents of the Hon’ble Bombay High Court and Hon’ble Gujarat High Court, which have consistently held that once identity, genuineness, and creditworthiness are established, an addition under section 68 cannot rest upon suspicion.

(xv) Parask Botadara – ₹17,50,000 42. We next consider the addition of ₹17,50,000/– in respect of the loan from Shri Parask Botadara. The record reveals that the assessee had obtained an unsecured loan of ₹22,50,000/– during the year, out of which ₹5,00,000/– was repaid before the year-end. Thus, the balance outstanding as on 31.03.2018 was ₹17,50,000/–. The assessee placed on record confirmations, bank statements, ledger extracts, and ITR acknowledgments of the lender. The AO, however, doubted the creditworthiness of the lender and treated the outstanding balance as unexplained. 42.1. The ld. CIT(A), after examining the material, found that there was no dispute regarding the fact that the transaction was routed through recognised banking channels. The lender’s identity was established and he was regularly assessed to tax. The assessee also demonstrated that the loan was subsequently repaid in full on 12th April 2021, which was corroborated by the ledger account and the lender’s bank statement. These facts, in the opinion of the CIT(A), clearly established the genuineness of the transaction. 42.2. The CIT(A) also noted that from the lender’s return of income and bank account, it was evident that he had sufficient balance to extend the loan. He rightly observed that it would be incorrect to assess the creditworthiness of a lender merely by looking at the return of income for a single year, without considering bank balances and accumulated K K Ventura funds. The assessee, moreover, had furnished confirmations, acknowledgments of income, and bank statements, all of which were consistent and verifiable. The AO, however, did not bring any documentary evidence to rebut these materials. 42.3. The CIT(A), fortified by judicial pronouncements of the Hon’ble Bombay and Gujarat High Courts, concluded that the AO was not justified in invoking section 68 in the face of such cogent evidences. He therefore, deleted the addition of ₹17,50,000/–.

48.3. In the face of such overwhelming evidence, the AO’s reasoning appears arbitrary and unsustainable. We, therefore, see no infirmity in the conclusion of the ld. CIT(A) and uphold his order deleting the addition of ₹36,50,000/–.

50.3. The reasoning of the ld. CIT(A), in our considered view, accords squarely with both factual reality and judicial principle. The bank trail, repayment of the majority portion of the loan, and the servicing of interest liability all point unmistakably to the genuineness of the borrowing.

K K Ventura 57.1. The ld. CIT(A), after analysing these facts, found that the Assessing Officer’s approach was wholly untenable. It is contradictory and illogical to accept a part of a transaction as genuine and reject the balance as non-genuine when both parts emanate from the same lender, through the same channel, and are supported by the same set of evidences. He further noticed that the assessee had been paying interest to the lender after deduction of TDS, which is further corroborative of the genuineness of the transaction.

57.2. On these facts, the CIT(A) found that the Assessing Officer’s approach was wholly untenable. It is contradictory and illogical to accept a part of a transaction as genuine and reject the balance as non-genuine when both parts emanate from the same lender, through the same channel, and are supported by the same set of evidences. The CIT(A) further noticed that the assessee had been paying interest to the lender after deduction of TDS, which is further corroborative of the genuineness of the transaction.

K K Ventura 58.1. Having independently appraised the material, we find ourselves in full agreement with the ld. CIT(A). The lender’s identity was beyond doubt, the genuineness of the loan was established through banking records, and the creditworthiness was supported by financial statements. The Assessing Officer has brought nothing on record to contradict these documents. Mere suspicion cannot substitute evidence. Accordingly, we affirm the order of the CIT(A) deleting the addition of ₹90,00,000/–. 58.2. In fact, the ld. CIT(A), while dealing with all the loan creditors in this case, has consistently adopted a reasoned approach scrutinising bank statements, confirmations, and ITRs of lenders, verifying repayments wherever made, and ensuring that the three classic tests under section 68 stood satisfied. Where repayments were substantiated, the same were duly verified. He has also rightly observed that once the assessee deducts tax at source on interest payments, it further fortifies the genuineness of the transaction. The AO, on the other hand, has relied largely on suspicion, conjecture, and surmise, without disproving the direct evidence placed before him.

58.3. Such a balanced and meticulous approach of the CIT(A) is entirely in consonance with the duty cast upon the first appellate authority to weigh all evidences and apply judicially settled tests. His order cannot be described as perfunctory; rather, it reflects a systematic appraisal of each creditor’s K K Ventura capacity, the genuineness of the lending, and the manner of repayment. 58.4. The grievance of the Revenue regarding alleged admission of additional evidences is also unfounded. The record demonstrates that confirmations, bank statements, and ledgers were largely before the Assessing Officer, and in a few cases, additional documents were filed only for corroboration. The CIT(A), in considering them, has followed the due process. We thus see no violation of Rule 46A. 58.5. In this context, it is also relevant to note that corroborative documents, such as updated ledgers or repayment schedules, when placed before the appellate authority, do not amount to fresh evidence but only reinforce what was already available on record. The CIT(A) was, therefore, fully justified in admitting and relying upon such documents.