RIGHT CHANNEL CONSTRUCTIONS PVT LTD,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-13(3)(1), MUMBAI

Brief facts of the case are that the assessee is engaged in the business of builders & developers and has shown income from business and profession during the year under consideration. The assessee filed its return declaring income of Rs. 64,32,020/- for AY 2015-16 on 31.03.2016. The case was selected for scrutiny and assessment was finalized at an income of Rs. 1,75,56,017/- after making additions on account of three unsecured loans which were treated as unexplained and added u/s 68 of the Act. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). After examining the details in respect of each of the unsecured loans, Ld. CIT(A) gave part relief to the assessee by accepting the following two loans as genuine: i. Ashapura Enterprises 50,00,000/- ii. Pankaj D. Patel

However, the third loan of Rs. 7,00,000/- taken from Rajesh J. Paun was treated as unexplained by Ld. CIT(A) as the creditworthiness of the lender and the genuineness of the transaction was not proved. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before us. 6. It has been submitted by the Ld. AR that the assessee had given all the requisite details and documents to establish the identity, the creditworthiness of the lender and the genuineness of the transactions. However, the addition was made simply on account of the fact that the lender Shri Rajesh J. Paun had not filed its return of income. It was explained that as far as the assessee was concerned it had discharged its onus by furnishing confirmation from the lender, copies of his bank account as well as that of the assessee reflecting the impugned transaction. Further, PAN/AO details of the lender were also filed. It was contended by the Ld. AR that in case the lender had not filed its return of income, then the assessee could not be penalised for the same. The assessee had fully discharged its onus by furnishing the identity of the lender and his creditworthiness by submitting the PAN details, confirmation and copy of the bank account. In view of these facts, the addition made u/s 68 in respect of unsecured loans of Rs. 7,00,000/- deserved to be deleted. Moreover, the other two loans of 50,00,000/- each have been held to be genuine by the Ld. CIT(A) against which the department has also not preferred any appeal.

Ld. DR, on the other hand, relied on the orders of lower authorities and strongly argued that since the creditworthiness of the lender could not be established as he was a non-filer, the addition has been rightly upheld by the Ld. CIT(A). 8. We have heard the rival submissions and perused the material placed before us. The assessee has submitted the name, address, PAN details and confirmation of the lender in question. He has, further, provided copies of the bank statements of the lender as well as its own bank account from which the transaction of Rs. 7,00,000/- has taken place. 9. Accordingly, we are of the view that the assessee has duly discharged the primary onus to establish the identity, the creditworthiness of the lender and the genuineness of the transaction. We, therefore, hold the addition of Rs. 7,00,000/- made u/s 68 by the AO in the hands of the assessee is not justified. Hence, the order of Ld. CIT(A) on this issue is set aside. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14.02.2025. RAHUL CHAUDHARY RENU JAUHRI (न्यातयक सदस्य/JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER