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Facts
The Revenue appealed against the order of the CIT(A) who deleted the addition made by the AO of Rs. 6,38,03,000/- as unexplained cash credit under Section 68 of the Income Tax Act and disallowed interest of Rs. 1,35,43,168/-. The dispute concerned assessment year 2018-19, relating to unsecured loans taken by the assessee.
Held
The Tribunal held that the assessee was able to prove the identity, creditworthiness, and genuineness of the lenders and the transactions. The CIT(A) had rightly admitted the additional evidence and considered it on merits. Therefore, the addition made by the AO and the disallowance of interest were deleted.
Key Issues
Whether the CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without properly considering the remand report and various facts findings during the assessment proceeding. Whether the disallowance of interest on unexplained unsecured loan was justified.
Sections Cited
68, 143(3), 144B, 142(1)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 1352/JPR/2024
fu/kZkj.k o"kZ@Assessment Years : 2018-19 cuke Income Tax Officer, Goldendunes Heights LLP Vs. Jaipur. C-6, Vashisht Marg, Hamuman Nagar Vaishali Nagar, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAOFG4799C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Tarun Mittal, C.A. jktLo dh vksj ls@ Revenue by : Shri Rajesh Ojha, CIT-DR a lquokbZ dh rkjh[k@ Date of Hearing : 10/07/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 23/09/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM By way of present appeal, the Revenue challenges the order of the Learned Commissioner of Income Tax, Appeals, [ for short CIT(A)] dated 17.09.2024. The dispute relates to the assessment year 2018-19. Ld. CIT(A) passed that the order because the assessee challenged the order of assessment of income upon him passed u/s 143(3) read with section 144B of the Income Tax Act, 1961 (for short “Act”) dated 21.04.2021 passed by National e- Assessment Centre, Delhi [ for short AO] before him.
Revenue assailed order of the ld. CIT(A) on the following grounds :
1. Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act while during the assessment proceeding the genuineness creditworthiness of unsecured loan was not proved.
2. Whether on the fact and in the circumstances of the case the Ld. CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without waiting/receiving of Remand Report from JAO.
3. Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without verifying the veracity of transactions or creditworthiness of the transactions of 10 parties while remand proceeding, the creditworthiness of the above parties was not proved.
Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without properly considering the Remand Report and various facts finding during the assessment proceeding.
Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs. 1,35,43,168/- disallowed of interest on above unexplained unsecured loan and thereby the reducing the same from the total work in progress of the assessee.
Brief facts of the case are that the case was selected for Complete Scrutiny assessment under the E-assessment Scheme. 2019 on the following issues- S. No. Issues i. Income from Real Estate Business ii. Business Loss Goldendunes Heights LLP,Jaipur 3.1 The assessee filed its return of income on 09.01.2019 declaring Nil Income. The assessee declared current year loss of Rs.3,902/-. The return was processed on 29/09/2019 and Intimation u/s 143(1) of the Act was also issued. Statutory notices as required were issued from time to time and served upon the assessee. In response to said notices, the assessee filed details through e-proceedings. Record shows that the assessee engaged in the business of purchase of land and construction of flats and LLP's ongoing residential project named Symphonia in Vaishali Nagar, Jaipur- 302021. During the year, the assessee has declared business loss. During the assessment proceedings, the assessee was requested to explain /furnish its explanation for the issue/reason on which the case has been selected for scrutiny. The reason for scrutiny was furnished to the assessee which reads as follows:
Real estate business with high closing stock & Inflow of funds in an entity consistently showing loss before depreciation 3.2 Considering the reasons for selection ld. AO asked the assessee to submit confirmation from the party, copy of bank statement highlighting the loan transaction and copy of complete Goldendunes Heights LLP,Jaipur set of return of income filed by these parties to prove the creditworthiness of lender and genuineness of loan transaction. In response to the same, the assessee has submitted party wise details of loan received during the year. The assessee has also submitted copy of loan confirmation in respect of some parties and copy of acknowledgement of return of income of some lenders. In respect of three lenders, the assessee submitted bank statement. On verification of details filed by the assessee, ld. AO noticed that the assessee has received unsecured loan of Rs. 21,92,51,047/- from sixteen parties during the year under consideration. The assessee has not submitted any loan confirmation from six lenders. In respect of seven lenders copy of acknowledgment of return of income was filed by the assessee, however, not filed the complete set of return of income or any other financial statement of the lender. On verification of copy of acknowledgment of return, it was noticed that the parties, who had given huge loan to the assessee, have only minuscule income during the year. It is also noticed that the assessee has submitted bank statement of three lenders, however, not submitted this statement for entire period of loan transaction. Therefore, the assessee has failed to prove the identity & creditworthiness of lender and genuineness of loan Goldendunes Heights LLP,Jaipur transaction. In view of the above, the assessee vide notice under section 142(1) of the Act dated 13.02.2021 was asked to prove the identity, creditworthiness and genuineness of loan transactions. The assessee submitted details and on perusal of the same ld. AO noticed that it has failed to justify the unsecured loan from the following parties.
(i) Aventez Media Technology- The assessee has received loan of Rs. 40,00,000/-from this party during the year. However, it has not filed any loan confirmation, copy of return of income or financial statement or bank statement or any other details of this lender to prove identity and creditworthiness of lender and genuineness of loan transaction. The assessee has shown this loan as interest free. (ii) Tarana Advertising & Marketing Pvt. Ltd. The assessee has received loan of Rs. 10,00,000/- from this party, however, it has not filed any loan confirmation, copy of return of income or financial statement or bank statement or any other details of this lender to prove identity and creditworthiness of lender and genuineness of loan transaction. The assessee has shown this loan as interest free (iii) Yamini Investments Company Ltd. The assessee has received loan of Rs. 38,00,000/- from this company. In this regard the assessee filed copy of acknowledgement of return of income filed by the lender. However, the assessee has failed to file loan confirmation, copy of return of income and financial statement and bank statement of this lender or any other details to prove the creditworthiness of lender and genuineness of loan transaction. On verification of copy of acknowledgment it is noticed that the lender has offered total income for the year under consideration amounting to Rs.24,14,610/-. Therefore, the unsecured loan given by the lender not commensurate with the return of income filed by it. The assessee has failed to give any other details to prove the creditworthiness of lender. It is also noticed that the assessee has claimed this loan as interest free; hence genuineness of the transaction is also not proved. (iv) Premier Bars Pvt. Ltd. The assessee has taken received of Rs.1,25,00,000/-from this company and filed confirmation only from the party. However, it has not filed copy of return of income or other financial statement or bank statement of the lender. Therefore, creditworthiness of lender and genuineness of loan transaction is not proved. As claimed by the assessee, the loan is interest free.
Goldendunes Heights LLP,Jaipur (v) Premier Metcast Pvt. Ltd. - The assessee has taken received of Rs. 1,90,00,000/-from this company also and filed only confirmation from it. However, it has not filed copy of return of income or financial statement or bank statement of this lender. Therefore, creditworthiness of lender and genuineness of loan transaction is not proved. As claimed by the assessee, the loan is interest free. (vi) Shreeji Developers - The assessee has received loan of Rs.69,10,000/- from this lender and filed only confirmation from the party. However, it has not filed copy of return of income or any financial or bank statement of the lender. Therefore, creditworthiness of lender and genuineness of loan transaction is not proved. It is also noticed that the assessee paid interest of Rs.96,59,323/- to this lender. As the assessee has failed to justify the claim of loan transaction, the interest paid of Rs. 96,59,323/- to this lender also remained unproved. (viii) Ankur Taneja The assessee has received loan of Rs 41,80,000/- from this lender, and filed confirmation from this party. However, it has not filed copy of return of income or financial statement or bank statement of the lender. Therefore, creditworthiness of lender and genuineness of loan transaction is not proved. The lender is one of the partners of this assessee LLP, even though, the assessee has failed to submit any such details. Therefore, the assessee failed to justify the claim of this loan. It is also noticed that the assessee paid interest of Rs.36,45,489/- to this lender. As the assessee has failed to justify the claim of loan, the interest paid to this lender also remained unproved. (ix) Kanha Projects Pvt. Ltd. The assessee has received loan of Rs.70,00,000/-from this lender and filed only confirmation from it. However, it has not filed copy of return of income or orther financial statement or bank statement of this company. Therefore, creditworthiness of lender and genuineness of loan transaction not proved. As claimed by the assessee, the loan is interest free. (x) MP RAWAT & CO. The assessee has taken received of Rs. 60,00,000/- from this lender. In support of its claim, the assessee submitted copy of acknowledgment of return filed by Shri Mahavir Prasad Rawat as individual capacity, however, it has not filed any loan confirmation, copy of return of income or other financial statement or bank statement of the concerns to prove creditworthiness of lender and genuineness of loan transaction. On verification of acknowledgment of return, it is noticed that the lender has earned total income of Rs.86,900/- during the year however, it has advanced huge loan of Rs.60,00,000/- to the assessee. Therefore, creditworthiness of lender and genuineness of loan transaction is not proved. The assessee claimed that loan of this lender has been squared off during the year. In support of its claim, the assessee submitted copy of its bank statement, highlighting the transaction. On verification of the same, it is noticed that the assessee has received loan of Rs.50,00,000/- on 24/08/2017 and Rs. 10,00,000/- on 19/02/2021 and returned amount of Rs. 10,00,000/- on 27/02/2027. No details of repayment of loan of Rs.50,00,000/- has been submitted by the assessee. Hence, the Goldendunes Heights LLP,Jaipur assessee has failed to prove the creditworthiness of this lender and genuineness of loan transaction in respect of loan of Rs. 50,00,000/-, received on 24/08/2017. It is also noticed that the assessee paid interest of Rs 2.38.356/- to this lender. As the assessee has failed to justify the claim of loan, interest paid to this lender also remained unproved. (xi) Goldendunes Construction Pvt Ltd.- The assessee has claimed to have received loan of Rs. 4,13,000/- from this party. In support of its claim, the assessee submitted copy of confirmation and acknowledgment of return filed by the lender company. On verification of the confirmation it is noticed that the assessee has received rent of Rs.4,13,000/- from this company. However, the assessee has claimed this transaction of rent as loan from the company. The assessee has not filed any details to prove that the transaction is in the nature of loan. Further, on verification of return of income filed by the assessee it is noticed that the assessee has not offered any rent income for taxation. As the assessee has failed to give correct nature of the amount received from this party and also failed to prove why rent income has been claimed as loan, the entire amount received form this party is remained to be explained. Hence it is clear that Rs.4,13,000/- received from this party is undisclosed credit in the books of account of assessee.
The assessee claimed that the reason for not submitting the required details is that the same were not received from these lenders. But, this claim of the assessee was not considered because the onus of proving credits of loans in the book of accounts, lies squarely on the assessee and such proof consists of proving the identity of the subscriber or lender, capacity of such lender or subscriber to make payment and also to prove the genuineness of the transaction. Considering that facts the unsecured loan amounting to Rs. 6,38,03,000/- was treated as Goldendunes Heights LLP,Jaipur unexplained cash credit u/s. 68 of the Act, and added back to the total income of the assessee. 3.3 As the loan received from the above parties remained unexplained, therefore, the interest of Rs.1,35,43,168/- related to this unexplained loan also remained unexplained, therefore, the same was also not considered as allowable. The assessee has debited these expenses in profit & loss account and capitalized the same under the head work in progress. The assessee has not claimed these expenses during the year under consideration and carried forwarded this interest expenses under the head work in progress to claim the same in subsequent year. Hence, the only effect that will be given in the assessee's case is that the interest expense to the extent to Rs. 1,35,43,168/- which has been credited in loan account and taken under the head "Work in progress' was also considered to be not allowable to the assessee for appropriation in future in any manner. Aggrieved by the above order of the Assessing Officer the 4. assessee preferred an appeal before the ld. CIT(A). After perusing the submissions of the assessee, the ld. CIT(A) has allowed the appeal of the assessee. The relevant finding of the ld. CIT(A) is as under:-
Goldendunes Heights LLP,Jaipur “5. Findings and Decision: 5.1 I have perused and considered the assessment order and the written submissions of appellant made from time to time. 5.2.1 Before deciding the grounds of appeal raised by the appellant the issue of admissibility of additional evidences filed under rule 46A of IT Rules. 1962 to be decided. In the instant case the appellant has filed additional evidences vide its letter dated 11.02.2022. The said evidences are in the form of ITR, Bank statement and, ledger account from 01.04.2017 to 31.03.2021 of all the 10 parties from whom loan of Rs. 6,38,03,000 was taken and interest of Rs. 1,35,43,000 was paid after deducting the TDS. Above evidences were in addition to the evidences like confirmations duly signed by authorized person and other details to prove the tenets of sec 68 of the Act like identity and creditworthiness of the lender and genuineness of transactions. 5.2.2 While explaining the reason for furnishing the additional evidences the appellant has submitted that Copy of ITR, Bank statement and other details could not be filed at the time of assessment proceedings for the reason that lenders were not cooperating in providing the documents. Now, after lot of persuasion and continuous follow up the same were obtained and filed as additional evidence along with application under rule 46A of IT Rules, 1962. 5.2.3 Remand report was called for from the AO vide letter dated 28.08.2024 with a direction to submit the report after examining the additional evidence submitted by the appellant, by 02.09.2024. However, the AO has neither submitted the report nor made any request for additional time to submit the report. Again, the AO was directed to submit the report by 17.09.2024, 11.00 am. Again, the AO has not called for any comment from the appellant nor made any verification with the lenders and submitted the remand report objecting the admission of evidence without making any comment on merit of the evidence. 5.2.4 Here it is pertinent to note that this is not the case where the appellant has not complied with at all during the assessment proceedings. In fact, there was partial compliance by the appellant during the assessment proceedings and it had submitted the confirmation and, name and addresses of the lenders based on which necessary inquiry could have been triggered by the AO but the AO did not initiate any inquiry. Therefore, the additional evidences filed under rule 46A of IT Rule is required to be admitted and taken into account while adjudication of the appeal. In the case of Devine Media (India) Ltd Vs DCIT, Circle Goldendunes Heights LLP,Jaipur 1(1) Ahmedabad, dated 16.10.2023 hon'ble ITAT Ahmedabad, has taken the similar view while deciding the issue of additional evidence filed by the assessee. 5.2.5 Further, it is noticed that at the time of assessment proceedings the appellant had submitted before the AO that transactions with lenders were made 2-3 years back and currently there was no direct relation with the parties. However, they were trying to collect those details and would submit, once received. Moreover, it is noticed that the appellant had cooperated during the assessment proceedings and submitted all the details available to it which clearly suggest that the appellant has made genuine effort to collect that information. However, it could not collect the necessary details during the assessment proceedings and now submitted as additional evidence under rule 46A of I T Rules, 1962. Further, the said additional evidences are very crucial for fair disposal of appeal and in order to advance the cause of justice. 5.2.6 In view of abovementioned facts and circumstances the additional evidence submitted by the appellant is admitted and taken into account while disposing off the appeal. Decisions of Hon'ble Delhi High Court in the case of CIT vs Virgin Securities and Credits Pvt. Ltd (2011) 332 ITR 396 (Delhi) and CIT vs Chandrakant Chanubhai Patel 202 taxmann 262 (delhi) are also relied upon in this regard. 5.3.1 Now comes to the merit of the case. Since all the grounds are interconnected the same are adjudicated together. The main contention of AO is that the appellant could not prove the tenets of sec 68 of the Act in respect of loan taken from following 10 parties of Rs.6,38,03,000:- S.NO. Party Name Amount
1. Aventez Media Technology 40,00,000.00 2. Tarana Advertising & Marketing Pvt. Ltd. 10,00,000.00 3. Yamini Investments Company Ltd. 38,00,000.00 4. Premier Bars Pvt. Ltd. 1,25,00,000.00 5. Shreeji Developers 69,10,000.00 6. Ankur Taneja 41,80,000.00 7. Kanha Projects Pvt. Ltd. 70,00,000.00 8. MP Rawat & Co. 50,00,000.00 9. Premier Metacast Pvt. Ltd. 1,90,00,000.00
10. Golden Dunes Construction Pvt. Ltd. 4,13,000.00 Total 6,38,03,000.00 Goldendunes Heights LLP,Jaipur While treating the above loans as unexplained u/s 68 of the Act the AO has observed that 1) the assessee has failed to discharge his onus to prove the capacity of the loan creditor to advance such loan and the genuineness of these transactions entered into, 2) Most of the lenders are related parties and loan received is interest free. 3) Even though transactions are through banking channels, it does not prove that the lenders have capacity to pay such amount. 4) the assessee could not filed the confirmation from the creditors who had advanced huge amount of unsecured loans without any security. 5.3.2 With the above observations the AO has concluded that the loan received from 10 parties of Rs. 6,38,03,000 is not genuine and accordingly he has added the said amount as unexplained credit u/s 68 of the Act. Also, the AO has disallowed the interest of Rs. 1,35,43,168 paid on above loans and reduced the same from work in progress of Rs. 78,02,31,854. 5.3.3 The appellant, on the other hand, has submitted that it had filed confirmations of all the loans taken and also, filed ITR alongwith the bank statements of most of the creditors during the assessment proceedings vide letter dated 27.01.21, 01.02.21, 22.02.21 and 09.03.21. However the AO in the assessment order has wrongly mentioned that confirmation in respect of Aventez Media Technology, Tarana Advertising & Marketing Pvt. Ltd., Yamini Investments Company Ltd. and MP RAWAT & CO. has not filed. 5.3.4 On perusal of the submission made the claim of the appellant was found to be correct to extent that in respect of all the 10 parties confirmations were filed during the course of assessment proceedings. Further, the appellant had filed ITR of Parties found to be mentioned on sr. no. 3,6 and 10 of above chart, during the assessment proceedings. Therefore, it is wrong on the part of AO to say that 'confirmation in respect of Aventez Media Technology, Tarana Advertising & Marketing Pvt. Ltd., Yamini Investments Company Ltd. and M P RAWAT & CO. has not filed. 5.3.5 Further, the appellant has filed remaining details in the form of additional evidence vide its letter dated 11.02.2022 which includes ITRs of remaining parties, copy of bank statements and necessary explanation to prove the genuineness of transaction. Complete details in this regard along with necessary explanation have been tabulated in para 4.2. of the order.
Goldendunes Heights LLP,Jaipur On perusal of the above chart and necessary evidences attached along with party-wise analysis is as under:-
1.
1. Loan of Rs. 40,00,000/- from Aventez Media Technology. DE In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Aventez Media Technology has shown total income of Rs. 2,17,63,430 which proves the creditworthiness of the lender to provide loan to the appellant. Further, immediate source of the said loan is credit from MP Rawat of Rs. 52,00,000 via RTGS on 14.12.2018. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 10,00,000/- from Tarana 'Advertising & Marketing Pvt. Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Tarana Advertising & Marketing Pvt. Ltd has shown total income of Rs. 87,67,650 which proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. Further, the loan was repaid on 05.12.2019. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 38,00,000/- from Yamini Investments Company Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that immediate source of the said loan is credit from Jain Jewellers of Rs. 40,00,000 via RTGS on 23.03.2018. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged as loan was taken during the end of the year but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 1,00,00,000/- from Premier Bars Pvt. Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Premier Bars Pvt. Ltd has utilized overdraft limit and said loan Goldendunes Heights LLP,Jaipur was provided out of that only. This fact proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 69,10,000/- from Shreeji Developers In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that immediate source of the loan taken of Rs. 9,10,000 on 26.07.2017 is bank balance of Rs. 43,42,467 available on 26.07.2017. The immediate source of loan taken of Rs. 35,00,000 on 28.08.2017 credit from Narender Tayal and Krishan Mohan Sethi of Rs. 15,00,000 each and bank balance of Rs. 18,26,182 available on 28.08.2017. Further, immediate source of loan taken of Rs. 25,00,000 on 11.10.2017 is credit from Narender Tayal of Rs. 10,00,000 and bank balance of Rs. 29,56,151 available on 11.10.2017. All the transactions were carried out through banking channels only. Further, it was noticed that opening balance of loan taken from this party is 7,98,80,973. During the year the appellant repaid Rs. 2,21,00,000 and again taken loan of Rs. 69,10,100.Interest was also charged at Rs. 96,59,323 and TDS of Rs. 9,65,932 also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 41,80,000 from Ankur Taneja In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Ankur Taneja has shown total income of Rs. 56,51,880 which proves the creditworthiness of the lender to provide loan to the appellant. In addition to that the appellant has also explained the immediate source of loan taken. Further, it was noticed that opening balance of loan taken from this party is 2,04,99,471. During the year the appellant repaid Rs. 16,60,000 and again taken loan of Rs. 41,80, 100 Interest was also charged at Rs. 36,45,489 and TDS of Rs. 3,64,549 also deducted on the same All the transactions were carried out through banking channels only. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 70,00,000 from Kanha Projects Pvt. Ltd. Goldendunes Heights LLP,Jaipur In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Kanha Projects Pvt. Ltd. has shown total income of Rs. 1,17,879 and exempt income of Rs. 1,70,25,942 which proves the creditworthiness of the lender to provide loan to the appellant. Further, immediate source of the said loan is credit from Pinkcity Alliance of Rs. 1,75,00,000 on 01.03.2018. All the transactions were carried out through banking channels only. Entire loan was repaid in subsequent year i.e. F.Y.18-19 on 02.06.18 and 05.06.18. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 60,00,000 from M P Rawat and Company. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that the immediate source of loan taken of Rs. 50,00,000 is credit from RMB Media Ltd on 24.08.17 and Rs. 10,00,000 is bank balance of Rs. 11,21,662 on 15.02.18.Interest was also charged at Rs. 2,38,356 and TDS of Rs. 23,836 also deducted on the same. Further, it was noticed that out of total loan of Rs. 60,00,000 taken during the year Rs, 50,00,000 plus interest of Rs. 2,14,520 was repaid during the year itself on 13.02.2018. All the transactions were carried out through banking channels only. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs.1,90,00,000 from Premier Metcast pvt. Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Premier Metcast Pvt. Ltd has utilized overdraft limit of Rs. 14.50 crores and said loan was provided out of that only. This fact proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year le. F.Y.18-19 interest was charged and TDS is also deducted on the same. Further, it was noticed that total loan of Rs. 1,90,00,000 taken during the year was repaid in subsequent year i.e. F.Y.2018-19 along with interest of Rs. 1,91,145.In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan taken from Goldendunes Construction Pvt. Ltd of 4,13,000 In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that the credit in account is not a loan but rent due on premise taken by it. Infact, during the year the appellant paid rent to Golden dunes Construction Pvt. Ltd and also, deducted TDS on that.
Goldendunes Heights LLP,Jaipur In view of above discussion, it is concluded that the appellant has been able to prove the identity and creditworthiness of the lenders and genuineness of transaction with supporting proof and necessary explanation. Therefore, the addition made by the AO of Rs. 6,38,03,000 u/s 68 by treating the loan received from 10 parties as non genuine and disallowance of interest of Rs. 1,35,43,168 on the above loans are deleted. Grounds of appeal is allowed accordingly.
6. In result, appeal is allowed.”
5. Feeling dissatisfied with the above finding of the ld. CIT(A), revenue preferred the present appeal before this tribunal on the grounds five grounds as reiterated herein above. Ld. DR vehemently argued that the assessee has taken huge unsecured loans and the ld. AO added on those amount for the assessee could not produce the indemnity, genuineness and credit worthiness and thereby the ld. AO added those creditors. At the time of assessment, the assessee contended the details were not submitted as the same were not received from the unsecured creditors itself suggest the doubt about the existence of the loan creditors. The ld. CIT(A) vide para 5.2.3 noted that though the remand report was called for but since the same was not received after two reminder he proceeded to admit the additional evidence and thereby considering that evidence allowed the appeal of the assessee. So considering that aspect of the matter and considering the ground no. 4 raised by the revenue the matter be Goldendunes Heights LLP,Jaipur remanded back to the ld. AO to examine the evidence so filed by the assessee.
Per contra, ld. AR of the assessee supported the findings recorded in the order of ld. CIT(A). He in furtherance to that also filed the following written submission: “Brief facts of the case are that the assessee is a firm incorporated under Limited Liability Partnership Act, 2008 and engaged in the business of purchase of land and construction of flats and has filed Return of income on 09.01.2019 declaring a loss of Rs. 3,902/-(APB 01-04). Case was selected for scrutiny under CASS. During assessment proceedings, ld.AO observed that assessee has taken unsecured loan of Rs. 21,93,51,047/- from various parties and accordingly details were sought w.r.t. the same. Assessee furnished detailed submission alongwith supporting evidences, in the shape of ITR, Confirmation and Bank Statement of most of the parties. As, at the time of assessment proceedings, there was intermittent countrywide/statewide lockdown due to pandemic COVID 19 and due to which assessee (being in subdued position), though tried, yet could not insist the lenders to provide complete documentary evidences in support of loans taken from some of the parties. Ld. AO, after considering the submission of assessee, held that assessee failed to prove the genuineness of unsecured loan of Rs. 6,83,03,000/- received from 10 parties and thus made the addition of same u/s 68 of the Act. Apart from this, interest of Rs. 1,38,03,000/- paid on unsecured loans was also disallowed. Since, interest was not debited to profit and loss account and value of work in progress was increased by the amount of interest, such Work in Progress was reduced from Rs. 78,02,31,854/- to Rs. 76,66,88,686/-. Aggrieved of the additions so made, assessee preferred appeal. During the course of appellate proceedings, assessee could gather remaining documents also, which could not be furnished before ld.AO and the same were furnished as additional evidences. After considering the same, ld. CIT(A) decided the appeal vide order dated 17.09.2024 in appeal No. NFAC/2017-18/10013582, whereby appeal of assessee was allowed. Present appeal has been filed by the department against the order so passed by ld.CIT(A). With this background, detailed submission is made as under: Departmental Grounds of Appeal No. 1 to 5:
Goldendunes Heights LLP,Jaipur In these grounds of appeal
, department has challenged the action of ld. CIT(A) in deleting the addition of Rs. 6,38,03,000/- by treating the unsecured loan as genuine and consequently allowing the Interest of Rs. 1,35,43,168/-as part of Working in Progress. Also, department has challenged the finding of ld.CIT(A) by stating that appeal was allowed without waiting /considering the remand report. Since all the grounds are inter related, the same are collectively dealt with for the sake of convenience. To begin with, Departmental Ground of Appeal No. 2 & 4 are reproduced as under—
2. Whether on the fact and in the circumstances of the case the Ld. CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without waiting/receiving of Remand Report from JAO.
4. Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without properly considering the Remand Report and various facts finding during the assessment proceeding. From perusal of both the above grounds, it is evident that in ground no.2, it is stated that ld. CIT(A) allowed the appeal of assessee without waiting for/ receiving the remand report from the ld. JAO and on the other hand, in Ground No. 4 it is stated that ld. CIT(A) has not properly considered the remand report. It is thus submitted that grounds of appeal taken by department are self-contradictory and inconsistent. It is therefore requested before your honours that the appeal of department against the order of ld. CIT(A) is not maintainable being based on incorrect facts. At this juncture, kind attention of your goodself is invited to letter dated 29.8.2024 bearing DIN & Letter No. ITBA/COM/F/17/2024- 25/1068106729(1) issued by ld.AO (copy enclosed at WS 13), whereby ld.AO has sought written submission and documents from assessee in support of additional evidences furnished by assessee. In response to the same, assessee furnished all the details vide response dated 30.8.2024 (copy of acknowledgement enclosed at WS 14-15). Further in reference to remand report it is submitted that ld. CIT(A) has clearly stated that ld.AO was given two opportunities to furnish remand report, once through letter dated 28.08.2024 against which no response was received by ld. CIT(A) (copy enclosed at WS 16-19). Whereas, when another opportunity was given to submit report by 17.09.2024, ld. AO responded the same, though without making any comment/enquiry from the assessee, the admission of additional evidence was objected. Relevant para of ld. CIT(A) is reproduced as under— Goldendunes Heights LLP,Jaipur “5.2.3 Remand report was called for from the AO vide letter dated 28.08.2024 with a direction to submit the report after examining the additional evidence submitted by the appellant, by 02.09.2024. However, the AO has neither submitted the report nor made any request for additional time to submit the report. Again, the AO was directed to submit the report by 17.09.2024, 11.00 am. Again, the AO has not called for any comment from the appellant nor made any verification with the lenders and submitted the remand report objecting the admission of evidence without making any comment on merit of the evidence.” It is thus evident that adequate opportunity was afforded by ld. CIT(A) to ld.AO prior to deciding the appeal to furnish comments in respect of additional evidences furnished by assessee. Moreover, as ld.AO did not comment upon the merits of such evidences as to why the same was not acceptable, ld.CIT(A) took his own view in respect of such evidences, for which he is authorized to do so. It is therefore submitted that grounds of appeal no. 2 and 4 raised by the department are self- contradictory, contrary to the facts and not maintainable. Now coming to merits of the case, w.r.t. remaining grounds of appeal, it is submitted that during the course of assessment, ld. AO while concluding the assessment had made the addition of unsecured loan of Rs. 6,38,03,000/- taken from the following parties by considering it same as unexplained credit u/s 68 of the Act — S.NO. Party Name Amount
1. Aventez Media Technology 40,00,000.00 2. Tarana Advertising & Marketing Pvt. Ltd. 10,00,000.00 3. Yamini Investments Company Ltd. 38,00,000.00 4. Premier Bars Pvt. Ltd. 1,25,00,000.00 5. Shreeji Developers 69,10,000.00 6. Ankur Taneja 41,80,000.00 7. Kanha Projects Pvt. Ltd. 70,00,000.00 8. MP Rawat & Co. 50,00,000.00 9. Premier Metacast Pvt. Ltd. 1,90,00,000.00
10. Golden Dunes Construction Pvt. Ltd. 4,13,000.00 Total 6,38,03,000.00 In this regard, it is submitted that during the course of appellate proceedings before the ld. CIT(A), assessee duly furnished all the remaining documentary evidences, which could not be gathered during assessment proceedings, which proved the identity, creditworthiness and the genuineness of the transactions by furnishing the ITR’s, Audited Financial Statement, Bank Statement and confirmations of each of the lenders, on account of which additions have been made in the hands of assessee. For the sake of convenience, names of parties and nature of relevant documentary evidences as furnished, are tabulated as under for ready reference—
Documents Submitted before Ld. CIT(A) S. Return Financial Bank Name PAN Address Confirmat NO. of Statemen Stateme ion Income ts nt Office No. 407, floor no. Aventez 04 Cresant Royal, Block Media AAGCR04 (APB (APB 24- (APB 26- (APB 1 Sec, Off New Link Road, Technolog 70A 23) 25) 38) 39) Ambivali, Andheri West, y Mumbai, 400053 Tarana Swatantra Niwas, Advertisin AACCT75 Rohidas Nagar Kasam (APB (APB 41- (APB 43- 2 g & 09G Baug, Malad East, 40) 42) 49) Marketing Mumbai, 400097 Pvt. Ltd. Yamini Investment C-710, Crystal Plaza, AAACY15 (APB (APB 51- (APB 53- (APB 3 s New Link Road, Andheri 80G 50) 52) 84) 85-86) Company West, Mumbai, 400053 Ltd. Premier 402, Nidhi Kamal Tower, (APB AADCP22 (APB (APB 88- (APB 90- 4 Bars Pvt. Ajmer Road, Jaipur, 120- 40B 87) 89) 119) Ltd. 302006 121) Shreeji F-16 Arya Square, (APB (APB ACDFS03 (APB (APB 5 Developer Subhash Nagar, Jaipur, 122- 129- 18L 124-125) 126-128) s 302016 123) 133) 58, Cosmo Colony (APB Ankur ACRPT22 (APB (APB (APB138 6 Vaishali Nagar, Jaipur, 147- Taneja 93D 134) 135-137) -146) 302021 160) Room No. 12, 3rd Floor, Kanha AACCK70 Saha Court, 8, Ganesh (APB (APB (APB (APB 7 Projects 51L Chandra Avenue, 161) 162-163) 164-175) 176) Pvt. Ltd. Kolkata, 700013 (APB (APB MP Rawat AALPR14 181, Nemi Nagar, (APB (APB 8 177- 184- & Co. 78C Vaishali, Jaipur, 302021 180-181) 182-183) 179) 185) Premier Fourth Floor, Shiv Som (APB AADCP59 (APB (APB (APB 9 Metacast Tower, The Mall, Kanpur, 191- 53D 186) 187-188) 189-190) Pvt. Ltd. 208001 196) Golden C-6, Vashisht Marg, Dunes (APB AAECG11 Hanuman Nagar, (APB (APB 10 Constructi 200- 73H Vaishali Nagar, Jaipur, 197) 198-199) on Pvt. 201) 302021 Ltd. It is again reiterated that during the course of appellate proceedings, ld. CIT(A) provided opportunity to ld. AO to made necessary enquiries in respect of the details furnished by the assessee. However, ld. AO voluntary choose not to comment on the evidences on merits and objected the admission of additional evidences. It is also submitted that ld. CIT(A) after duly considering the all the evidences furnished for each of the lender, held that identity and creditworthiness of Goldendunes Heights LLP,Jaipur lender and genuineness of transaction are proved. It is not the case that ld. CIT(A) has given general comment for all the lenders, instead ld. CIT(A) has specifically provided the reason for accepting the creditworthiness of each of the lender. It is thus submitted that ld.CIT(A), after duly considering all the additional evidences, has formed a view and held that assessee has duly discharged onus by proving identity, creditworthiness and genuineness of all the parties from whom loans were taken by assessee and has thus deleted the addition made by ld.AO. In this regard, reliance is placed on the following judicial pronouncements— Aravali Trading Co. vs. Income-tax Officer [2010] 187 Taxman 338 (Rajasthan)/[2008] 220 CTR 622 (Rajasthan)[25-01-2007] Section 68 of the Income-tax Act, 1961 - Cash credits - Assessment year 1993-94 - Whether once existence of persons in whose names credits are found in books of assessee is proved and such persons own such credits with assessee, assessee is not required to prove sources from which creditors could have acquired money to be deposited with it - Held, yes - Whether merely because depositors' explanation about sources wherefrom they acquired money is not acceptable to Assessing Officer, it cannot be presumed that deposits made by such creditors are moneys of assessee itself - Held, yes - Whether in order to fasten liability on assessee by including such credits as its incomes from unexplained sources, a nexus has to be established by revenue that sources of creditors' deposit flow from assessee - Held, yes Commissioner of Income Tax vs. Deen Dayal Choudhary [2017] 88 taxmann.com 475 (Rajasthan)/[2017] 293 CTR 468 (Rajasthan)[15-07-2016] Section 68 of the Income-tax Act, 1961 - Cash credit (Loan) - Assessment year 2008-09 - Where all cash creditors had not only placed on record entire material but had also affirmed in their examination that they had advanced money to assessee from their own respective bank accounts, no question of law arose from Tribunal's order holding that genuineness and creditworthiness of creditors were well proved [In favour of assessee] [2014] 45 taxmann.com 203 (Rajasthan) Commissioner of Income-tax, Ajmer v. Jai Kumar Bakliwal Section 68 of the Income-tax Act, 1961 - Cash credit (Unsecured loan from relatives) -Assessment year 2006-07 - Unsecured loan raised by assessee from relatives was added in income of assessee on ground that none of creditors were able to prove source of amount advanced to assessee and immediately before grant of loan by them cash was deposited in their accounts - However, it was admitted by Assessing Officer that all creditors were assessed to Income tax and they had provided confirmation as well as their PAN - Moreover, all payments were through account payee cheques and most of cash creditors appeared before Assessing Officer and were examined on oath - Whether since there was no clinching evidence nor Assessing Goldendunes Heights LLP,Jaipur Officer had been able to prove that money actually belonged to none but to assessee himself, action of Assessing Officer appeared to be based on mere suspicion and, thus, addition required to be deleted - Held, yes [Paras 9 & 10] [In favour of assessee] Labh Chand Bohra vs. Income-tax Officer [2010] 189 Taxman 141 (Rajasthan)/[2008] 219 CTR 571 (Rajasthan)[28-04-2008] Section 68 of the Income-tax Act, 1961 - Cash credits - Whether where amounts found as cash credits in assessee's account books had been advanced by lenders by account payee cheques; identity of creditors had been established; their confirmations were available and they had also confirmed credits by making statements on oath, it could be said that assessee had discharged burden of proving identity and genuineness of transaction; so far as creditors' capacity to advance money to assessee was concerned, it was not a matter which would require assessee to establish, as that would amount to calling upon him to establish source of source - Held, yes [2021] 133 taxmann.com 173 (Gujarat) Principal Commissioner of Income- tax. v. Gopal Heritage (P.) Ltd Section 68 of the Income-tax Act, 1961 - Cash credit (Unsecured loans) - Assessee-company had taken unsecured loans from some persons - As assessee was not in a position to establish capacity and creditworthiness of depositor, Assessing Officer made an addition under section 68 - On appeal, Commissioner (Appeals) thread bare examined entire material in case of each of these persons and entities and eventually held that identities of depositors had been proved and moreover, loans had been granted through banking channels and copy of bank statements also had been provided and deleted addition under section 68 – Tribunal confirmed said order - Whether since all ingredients contemplated under section 68 had been duly satisfied on aspect of identity of creditors, genuineness of transactions and their creditworthiness, concurrent findings of both authorities deserved no interference - Held, yes [Para 5] [In favour of assessee] Kumar Nirman & Nivesh (P.) Ltd. vs. Assistant Commissioner of Income Tax, Bangalore [2020] 121 taxmann.com 174 (Karnataka)/[2020] 425 ITR 486 (Karnataka)[31-01-2020] Section 68 of the Income-tax Act, 1961 - Cash credit (Burden of proof) - Assessment year 2005-06 - Assessee received a sum of Rs. 55 lakh by way of cash from B on various dates against a proposed contract for sale - But, sale could not be finalized on account of some reasons and amounts were paid back to B and accounts of B also showed repayment of said amount - However, Assessing Officer treated sum of Rs. 55 lakh as unexplained cash credits in hands of assessee and added it to income of assessee and Tribunal mainatained order passed by Assessing Officer - However, it was found that assessee in support of identity, genuineness of transaction and creditworthiness of B had supplied a copy of balance sheet and profit and loss Goldendunes Heights LLP,Jaipur account to Assessing Officer - Assessee had also filed copy of return of income of B - Whether, therefore, assessee having proved identity and creditworthiness of party B, as well as genuineness of transaction had discharged its burden and it was for revenue to conduct an enquiry and to prove that transaction in question was not genuine and identity of creditor was not established and that it had no creditworthiness - Held, yes - Whether since revenue had not conducted any enquiry and had failed to discharge its burden, addition under section 68 was not justified - Held, yes [Para 7] [In favour of assessee] Cornerstone Property Investments (P.) Ltd. vs. Income-tax Officer [2023] 152 taxmann.com 256 (Karnataka)[19-04-2023] INCOME TAX : Where assessee allotted shares at premium to a company, since assessee produced various documents including copies of investor's bank statements, copies of share certificates, copy of its annual return filed before Registrar, balance sheet of investor which showed that it had huge funds, and further, transfer of funds, was made through bank, assessee had proved identity and creditworthiness of investor and genuineness of transactions and, thus, no addition under section 68 could be made on account of share premium received by assesse Ratan Lal Agarwal vs ACIT in (Jaipur ITAT) “5.8. On perusal of the assessment order………………………………………….. “5.2 During the A.Y. 2014-15, ………………………...............................” The basis of this finding has been on subsequent pages namely page 3 and 4 of the order. On perusing the details it is seen that letter u/s 133(6) so sent by the AO was returned unserved and considering this alongwith two more points, the AO has observed the company to be ‘shell company’. The other two things are namely that there are no tangible or intangible assets of the company and profit of the company as seen from the profit & loss account (submitted by the ld. AR of the appellant) is very meager, though AO has herself mentioned in same para 6.6 of the order that company has got reserves and surplus to the extent of Rs. 36,36,90,414/-. It is thus seen that only on the basis of aforesaid observations the AO tried to infer that the lender company is ‘shell company’. As against it, ld. AR has furnished the details and evidences firstly by way of PAN details and confirmation of the account from the lender company in order to prove the genuineness of the loan taken from the lender company. Moreover as notice u/s 133(6) sent by AO was returned unserved and AO wanted the director of lender company to appear before her which was not materialized as director being located from Jaipur and reluctant to appear before AO, the ld. AR furnished various further details and evidences before the AO in order to substantiate his claim. The balance sheet and profit & loss account of the lender company for AY 2014-15 and copy of the ITR was furnished before the AO. Moreover the copy of bank account of the lender company was also furnished to further substantiate about loan Goldendunes Heights LLP,Jaipur being genuine. Moreover, the ld. AR has submitted that this company is not the defunct company and is active as it has been filing its financial statements on the online portal of Ministry of Corporate Affairs. Moreover, the company has never been declared a ‘shell company’ by the MCA. Other argument of the AO of profit being so meager is not of much relevance considering that she has herself rightly mentioned about reserve and surplus to the tune of Rs. 36,36,39,628/-. Other argument of no any tangible asset of the company is also not so relevant so as to treat the company as ‘shell company’, as there are many companies which have been accepting deposits and giving loans and these companies do not generally have physical assets in their balance sheet. Thus it is clear that the finding of the AO of the lender company namely M/s Inner Mercantile (P) Ltd. as ‘shell company’ on the basis of the aforesaid observations does not stand to merit in view of the discussion made as above regarding the observations of the AO and accordingly this finding of the AO of treating the company as ‘shell company’ is rejected and deserves to be ignored. It is seen that AR has brought to our notice that as on today no amount is outstanding and the loan was gradually repaid in various years and was completely repaid as of 31.03.2020. This also supports the aforesaid finding of existence of the company not being in doubt.” 159 ITR 78 (SC) Orissa Corpn. (P) Ltd When the assessee furnishes names and addresses of the alleged creditors, the burden shifts to the department to establish the Revenue’s case and in order to sustain the addition the Revenue has to pursue the inquiry and to establish the lack of creditworthiness and the mere issue of notice u/s 131 is not sufficient. Thus, the Appellant has discharged the primary burden of establishing the identity and genuineness of the creditor. 152 ITR 507(Delhi HC) Sona Electric Co. “As soon as the assessee discharged the initial burden of proof, the Assessing Officer is not entitled to reject the assessee’s case. In other words, the explanation offered by the assessee can be rejected by the Income Tax Officer on cogent grounds. When such grounds are themselves based on no evidence the question of presumption does not arise.” 82 ITR 542 (SC) Durga Prasad More “The discharge of onus is dependent on the facts and circumstances of each case. Whether the initial onus is discharged or not that has to be ascertained from the materials on record. Once the initial onus is discharged, the onus shifts on the revenue. Then, it is for the revenue to act on it and until it comes to a finding that the explanation is insufficient and unsatisfactory, it could either ask for further explanation or could come to a decision on the basis of such material, but it is also a necessity or incumbent on the taxing authority to discharge their duty before fastening liability on the assessee. As far as credit worthiness or financial strength of the creditor/ subscriber is concerned, that is proved once the bank statement of the creditors is produced showing that it had sufficient balance in its accounts, once these documents are produced, Goldendunes Heights LLP,Jaipur the assessee would have satisfactorily discharged it’s onus cast upon him. Thereafter, it is for the AO to scrutinize the same and in case he nurtures any doubt about the veracity of these documents to probe the matter further. However, to discredit the documents produced by the assessee on the aforesaid aspects, there has to be some cogent reasons and materials for the AO and he cannot go into the realm of suspicion. The loan creditor had sufficient net worth of their own so as to advance loan to the assessee company.” Balbir Sing Tomar (Dr.) V/s ACIT (Raj. HC) 20 TW 546 Where the creditors are regular assessees and have also filed their affidavits no addition of such cash credits can be made unless there is sufficient material to disprove the genuineness. CIT Vs. Heerala Chagan Lal 257 ITR 281 (Raj.) Cash Credits- Finding by Tribunal that identity of creditor had been established- Amount representing cash credits not includible in total income of assessee- Income Tax Act, 1961. Sheon Narain Moharilal Vs ACIT 24 TW 318 (ITAT, Jaipur) No addition of cash credit can be made simply on the basis of presumption in the absence of any contrary evidence. Sideway Investment Pvt. Ltd. V/s DCIT 24 TW 146 (ITAT, Jaipur) Establishing the identity of the creditor, proving the genuineness of the transaction and the source of the credit appearing in the books of creditor is sufficient to discharge the onus for explaining the genuineness of the cash credit. Pradeep Kumar Himmatramka Vs ITO 27 TW 393 (ITAT, Jaipur) Whether filing of confirmations and disclosure of the amounts of advance in the income tax returns by the depositors can be treated as sufficient compliance of the provisions of section 68 for explaining the genuineness of cash credits? Held yes. 128 TTJ 708 Shanti Kumar Chordia Vs. Asstt. CIT (JP ‘A’) Income – Cash credit – Genuineness – Amounts having been received through account payee cheques, creditors being assessed to tax and their confirmations also having been filed through belatedly, no addition under section 68 was called for. CIT Vs. Kishori Lal Construction Ltd. [2010] 5 taxmann.com 60 (Delhi) The onus cast on the assessee stands discharged where the assessee is able to establish the three ingredients of section 68 i.e. (a) the identity of the Goldendunes Heights LLP,Jaipur creditor, (b) the genuineness of the transaction, and (c) creditworthiness of the creditor. 43 DTR 449 Tulip Hotels (P) Ltd. Vs. Dy. CIT (Mumbai ‘E’) (TM) Burden of proof and genuineness – Assessee having duly established the identity of the creditor, his creditworthiness and also genuineness of the transaction, the addition under s. 68 towards unexplained credit is liable to be deleted. In view of the above submission, it is clear that: - the assessee has discharged onus caste upon it by section 68 by furnishing all the documentary evidences in the shape of ITR, confirmations, Financial statements and copies of bank statements of lenders; - Most of the loans were paid off in same or subsequent year, which fact has not been appreciated by ld.AO; - ld.AO failed to establish as to how loan taken from the lenders are non- genuine without bringing any evidences on record and thus allegation of ld.AO is merely a presumption; - That ld. CIT(A), after duly examining the evidences in support of genuineness of transactions and to prove identity and creditworthiness of the lenders has deleted the additions made by the ld. AO. It is therefore prayed that the addition of Rs.6,38,03,000/- and consequent disallowance of interest of Rs. 1,35,43,168/- from the Work in Progress made by ld.AO, is rightly deleted by ld. CIT(A) and order passed by ld. CIT(A) deserves to be upheld.”
To support the contention ld. AR of the assessee filed a detailed paper book in support of the contention and the index of the document submitted reads as under:-
S. PAGE PARTICULARS No. NOS. Copy of Acknowledgement of Return of Income and computation filed u/s 1. 01 - 04 139(1) 2. Copy of Audited Financial Statements 05 - 17 3. Copy of replies filed during the course of assessment. 18 - 22 4. Copy of relevant Documents of Aventez Media Technology a) Copy of Return of Income 23 b) Copy of Confirmation and ledger of the Lender 24 – 25 S. PAGE PARTICULARS No. NOS. c) Copy of Financial Statements of :Lender 26 – 38 d) Copy of Bank Statement of Lender 39 5. Copy of relevant Documents of Tarana Advertising & Marketing Pvt. Ltd. a) Copy of Return of Income 40 b) Copy of Confirmation and ledger of the Lender 41 – 42 c) Copy of Financial Statements of Lender 43 – 49 6. Copy of relevant Documents of Yamini Investments Company Ltd. a) Copy of Return of Income 50 b) Copy of Confirmation and ledger of the Lender 51 – 52 c) Copy of Financial Statements of Lender 53 – 84 d) Copy of Bank Statement of Lender 85 – 86 7. Copy of relevant Documents of Premier Bars Pvt. Ltd. a) Copy of Return of Income 87 b) Copy of Confirmation and ledger of the Lender 88 – 89 c) Copy of Financial Statements of Lender 90 – 119 d) Copy of Bank Statement of Lender 120 – 121 8. Copy of relevant Documents of Shreeji Developers a) Copy of Return of Income along with Computation of Income 122 – 123 b) Copy of Confirmation and ledger of the Lender 124 – 125 c) Copy of Financial Statements of Lender 126 – 128 d) Copy of Bank Statement of Lender 129 – 133 9. Copy of relevant Documents of Ankur Taneja a) Copy of Return of Income 134 b) Copy of Confirmation and ledger of the Lender 135 – 137 c) Copy of Financial Statements of Lender 138 – 146 d) Copy of Bank Statement of Lender 147 – 160 10. Copy of relevant Documents of Kanha Projects Pvt. Ltd. a) Copy of Return of Income 161 b) Copy of Confirmation and ledger of the Lender 162 – 163 c) Copy of Financial Statements of Lender 164 – 175 d) Copy of Bank Statement of Lender 176 11. Copy of relevant Documents of MP Rawat & Co. a) Copy of Return of Income & Computation of Income, 177 – 179 b) Copy of Confirmation and ledger of the Lender 180 – 181 c) Copy of Financial Statements of Lender 182 – 183 d) Copy of Bank Statement of Lender 184 – 185 12. Copy of relevant Documents of Premier Metacast Pvt. Ltd. a) Copy of Return of Income 186 b) Copy of Confirmation and ledger of the Lender 187 – 188 c) Copy of Financial Statements of Lender 189 – 190 d) Copy of Bank Statement of Lender 191 – 196 13. Copy of relevant Documents of Golden Dunes Construction Pvt. Ltd. a) Copy of Return of Income 197 b) Copy of Confirmation and ledger of the Lender 198 – 199 c) Copy of Bank Statement of Lender 200 – 201 14. Copy of Application u/r 46A and Written Submission filed on 12.05.2022 202 – 218 S. PAGE PARTICULARS No. NOS.
Copy of Application u/r 46A and Written Submission filed on 26.06.2024 219 – 229 16. Copy of Written Submission filed on 03.08.2024 230 – 236
We have heard the rival contentions and perused the material placed on record. Before discussing the issue of merits of the dispute we would like to examine the grievance of the revenue so far as it relates to the remand report of the AO which is the apple of discord in the matter for that we refer the Ground no. No. 2 & 4;
1. Whether on the fact and in the circumstances of the case the Ld. CIT(A) was justified in deleting the addition of Rs. 6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without waiting/receiving of Remand Report from JAO.
2. Whether on the fact and in the circumstances of the case the ld. CIT(A) was justified in deleting the addition of Rs.6,38,03,000/- made on account of unexplained cash credit u/s 68 of the Act without properly considering the Remand Report and various facts finding during the assessment proceeding. 9. As already mentioned, the ld. DR has objected for deciding the appeal by ld. CIT(A) without waiting for the remand report from the ld. AO. On the other hand, the ld. AR has pointed out that on perusal of above grounds, it is seen that at ground No. 2, revenue challenged that ld. CIT(A) has deleted the addition without waiting / receiving of remand report from the AO. Whereas vide ground No. 4, it is mentioned that ld. CIT(A) has not properly considered the remand report. Therefore, this refer the contradictory stand of the revenue and is not maintainable.
Goldendunes Heights LLP,Jaipur 10. Be that it may so having considered that grievance and proceeding further in the matter we would like to reiterate the brief facts of the case on hand are that the assessee filed additional evidences in the form of ITR, bank statement, financial statement of all the ten parties from whom impugned loan of Rs. 6,38,03,000/- was taken by the assessee and was in dispute. These evidences were in addition to the evidences like confirmation and other details furnished before the ld. AO in support of considering the loan to be genuine. Record reveals that ld. CIT(A) consider the reasons as to why that was not produced and that being in furtherance to the supporting evidence already on record. The reasons for non-co-operation has already been placed on record. It is a matter of fact that some of the lenders were not cooperative in providing documents like their ITR, financial statements, etc. and also because of non-smooth activity on account of Covid-19 that was submitted before the ld. CIT(A) in the interest of justice and on account of Covid-19 pandemic.
As is evident from the record that the assessee after persuasion and bringing into their knowledge about the adverse inference so taken by the ld. AO, the documents were obtained and were filed as additional evidence. The ld. CIT(A) in his order has mentioned that remand report was called for from ld.AO vide letter dated 28/08/2024 with a direction to However, the AO has neither submitted the report nor made any request to the ld. CIT(A) for giving additional time to submit the report. Thereby that being fact he again directed the ld. AO to submit the report by 17/09/2024. The ld. CIT(A) noticed that the instant case of the assessee is not the case where the assessee has not at all complied with to the notice in the assessment proceedings. In fact assessee has submitted confirmation and name and address of the lenders to support its case about genuineness of the loan, however, as regards filing of further supporting evidence there was partial compliance in as much as that in respect of impugned ten parties further supporting evidences could not be filed before ld. AO but these have been filed before ld. CIT(A) which were forwarded to ld. AO for his comment and with the direction to submit his report on the merits of additional evidence.
The issue having similar facts has already been decided by the co-ordinate bench of Ahemdabad in the case of Devine Media (India) Ltd. Vs. DCIT in ITA No. 805/Ahd./2016 and also considering the decision of Hon’ble Delhi High Court in the case of CIT Vs. Virgin Securities & Credits Pvt. Ltd. (2011) 332 ITR 396 and CIT Vs. Chandrakant Challu Bhai Patel 202 Taxman 262, the ld. CIT(A) admitted the additional evidences. On perusal of these facts, action of Goldendunes Heights LLP,Jaipur ld. CIT(A) in admitting these additional evidence and considering them while deciding appeal is justified and no interference is called for based on the judicial precedent cited before us.
Now coming to the issue that ld. CIT(A) has passed the order without waiting for the remand report. It is noticed by us that ld. CIT(A) vide letter dated 28/08/2024 directed the ld. AO to submit the report on the additional evidence so filed by the assessee after examining that evidence. The ld. DR has filed the copy of letter dated 29/08/2024 issued by ITO, Ward 1(1), Jaipur to assessee to furnish written submission in connection with remand proceedings, to show that ld. AO has acted promptly. On the other hand, ld. AR has submitted before us that immediately on receiving the letter from ld. AO, the assessee has filed written submission before the ld. AO vide letter dated 30/08/2024 through online portal. Accordingly, as per the ld. AR, there was no delay from their side too. However, it is seen by us that ld. AO has neither submitted the remand report to the ld. CIT(A) nor sought an adjournment, as clearly mentioned by ld. CIT(A) in his order which has not been controverted by revenue. We further noticed that ld. CIT(A) has issued another letter to ld. AO to submit the remand report by 17/09/2024. The ld. AO has submitted the report but has only objected to the admission of additional evidences and has not commented on merits of the evidences [Paper book page 16 Para 5.2.3 of ld. CIT(A)
Goldendunes Heights LLP,Jaipur order]. Whereas, as it is evident from the earlier communication, he was required to submit the remand report to ld. CIT(A) after examining the additional evidence submitted by the assessee. It is thus clear that though the ld. AO submitted his report to the ld. CIT(A) but he has only objected to the admission of additional evidence and chose to remain silent on the merits of the additional evidences. The ld. CIT(A) has considered the objection of the ld. AO of not admitting the additional evidence and rejected the same considering the facts of the case and the legal position on the issue under consideration as mentioned by him in his order. We see no reason to differ from the finding of the ld. CIT(A) of admitting the additional evidence. Moreover, the ld. CIT(A) cannot be faulted for passing the order in the instant case of appeal, if the ld. AO chose for not to furnish his comments on the merits of the additional evidence in the remand report. Without prejudice to above, we have further noticed from perusal of order of ld. CIT(A) that ld. CIT(A) has considered each of the evidence critically on merits and only thereafter has given his finding. Considering these facts the contention so taken by the revenue in these grounds is rejected and we see no reason to interfere with the order of ld. CIT(A) on this issue.
Now coming to the grounds taken by the revenue on merits of the issue of addition of unsecured loans so deleted by ld. CIT(A), it is seen from the details that apart from the confirmation along with PAN and Goldendunes Heights LLP,Jaipur name and complete address of the parties, the copies of return of income as well as copies of financial statement of these parties (except in one case namely Golden Dunes Construction P. Ltd.) and also the copy of bank statement of these parties (except in another one case namely Tarana Advertising & Marketing Pvt. Ltd.) were provided before the ld. CIT(A) and now also before us. The ld. CIT(A) has perused all these details and given his comment / observation separately in respect of each of these parties. The relevant observation of ld. CIT(A) as seen from para 5.3.5 of his order are reproduced below for the sake of clarity and easy reference :-
5.3.5 Further, the appellant has filed remaining details in the form of additional evidence vide its letter dated 11.02.2022 which includes ITRs of remaining parties, copy of bank statements and necessary explanation to prove the genuineness of transaction. Complete details in this regard along with necessary explanation have been tabulated in para 4.2 of the order. On perusal of the above chart and necessary evidences attached along with party-wise analysis is as under:-
1.
1. Loan of Rs. 40,00,000/- from Aventez Media Technology. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Aventez Media Technology has shown total income of Rs. 2,17,63,430 which proves the creditworthiness of the lender to provide loan to the appellant. Further, immediate source of the said loan is credit from M P Rawat of Rs. 52,00,000 via RTGS on 14.12.2018. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 10,00,000/- from Tarana Advertising & Marketing Pvt. Ltd.
Goldendunes Heights LLP,Jaipur In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Tarana Advertising & Marketing Pvt. Ltd has shown total income of Rs. 87,67,650 which proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. Further, the loan was repaid on 05.12.2019. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 38,00,000/- from Yamini Investments Company Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that immediate source of the said loan is credit from Jain Jewellers of Rs. 40,00,000 via RTGS on 23.03.2018. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged as loan was taken during the end of the year but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 1,00,00,000/- from Premier Bars Pvt. Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Premier Bars Pvt. Ltd has utilized overdraft limit and said loan was provided out of that only. This fact proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 69,10,000/- from Shreeji Developers In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that immediate source of the loan taken of Rs. 9,10,000 on 26.07.2017 is bank balance of Rs. 43,42,467 available on 26.07.2017. The immediate source of loan taken of Rs. 35,00,000 on 28.08.2017 credit from Narender Tayal and Krishan Mohan Sethi of Rs. 15,00,000 each and bank balance of Rs. 18,26,182 available on 28.08.2017. Further, immediate source of loan taken of Rs. 25,00,000 on 11.10.2017 is credit from Narender Tayal of Rs. 10,00,000 and bank balance of Rs. 29,56,151 available on 11.10.2017. All the transactions were carried out through banking channels only. Further, it was noticed that opening balance of loan taken from this party is 7,98,80,973. During the year Goldendunes Heights LLP,Jaipur the appellant repaid Rs. 2,21,00,000 and again taken loan of Rs. 69,10,100.Interest was also charged at Rs. 96,59,323 and TDS of Rs. 9,65,932 also deducted on the same. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 41,80,000 from Ankur Taneja In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Ankur Taneja has shown total income of Rs. 56,51,880 which proves the creditworthiness of the lender to provide loan to the appellant. In addition to that the appellant has also explained the immediate source of loan taken. Further, it was noticed that opening balance of loan taken from this party is 2,04,99,471. During the year the appellant repaid Rs. 16,60,000 and again taken loan of Rs. 41,80, 100 Interest was also charged at Rs. 36,45,489 and TDS of Rs. 3,64,549 also deducted on the same All the transactions were carried out through banking channels only. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 70,00,000 from Kanha Projects Pvt. Ltd. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Kanha Projects Pvt. Ltd. has shown total income of Rs. 1,17,879 and exempt income of Rs. 1,70,25,942 which proves the creditworthiness of the lender to provide loan to the appellant. Further, immediate source of the said loan is credit from Pinkcity Alliance of Rs. 1,75,00,000 on 01.03.2018. All the transactions were carried out through banking channels only. Entire loan was repaid in subsequent year i.e. F.Y.18-19 on 02.06.18 and 05.06.18. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan of Rs. 60,00,000 from M P Rawat and Company. In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that the immediate source of loan taken of Rs. 50,00,000 is credit from RMB Media Ltd on 24.08.17 and Rs. 10,00,000 is bank balance of Rs. 11,21,662 on 15.02.18.Interest was also charged at Rs. 2,38,356 and TDS of Rs. 23,836 also deducted on the same. Further, it was noticed that out of total loan of Rs. 60,00,000 taken during the year Rs, 50,00,000 plus interest of Rs. 2,14,520 was repaid during the year itself on 13.02.2018. All the transactions were carried out through banking channels only. In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
Loan of Rs.1,90,00,000 from Premier Metcast pvt. Ltd. Goldendunes Heights LLP,Jaipur In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that during the year Premier Metcast Pvt. Ltd has utilized overdraft limit of Rs. 14.50 crores and said loan was provided out of that only. This fact proves the creditworthiness of the lender to provide loan to the appellant. All the transactions were carried out through banking channels only. It is also submitted that during the year no interest was charged but in subsequent year i.e. F.Y.18-19 interest was charged and TDS is also deducted on the same. Further, it was noticed that total loan of Rs. 1,90,00,000 taken during the year was repaid in subsequent year i.e. F.Y.2018-19 along with interest of Rs. 1,91,145.In view of the above, identity and creditworthiness of lender and genuineness of transaction are proved.
1. Loan taken from Goldendunes Construction Pvt. Ltd of 4,13,000 In this regard, the appellant has submitted Copy of confirmation, ITR and bank statement of lender. On perusal of the same it is noticed that the credit in account is not a loan but rent due on premise taken by it. Infact, during the year the appellant paid rent to Golden dunes Construction Pvt. Ltd and also, deducted TDS on that. In view of above discussion, it is concluded that the appellant has been able to prove the identity and creditworthiness of the lenders and genuineness of transaction with supporting proof and necessary explanation. Therefore, the addition made by the AO of Rs. 6,38,03,000 u/s 68 by treating the loan received from 10 parties as non genuine and disallowance of interest of Rs. 1,35,43,168 on the above loans are deleted. Grounds of appeal is allowed accordingly.
13. We have carefully perused the order of ld. CIT(A) and details / records filed before us. Record reveals that out of ten parties, the income of Aventez Media Technology, Tarana Advertising & Marketing, Yamini Investment Co. Ltd., Premier Bars Pvt. Ltd., Ankur Taneja and Premier Metacast Pvt. Ltd., as per the return of income so filed by them is substantially more than or commensurate with the amount of loan given to the assessee, as seen from the various supporting evidences In respect of Kanha Project Pvt. Ltd., the exempt income is Rs. 1,70,25,942/- apart from the taxable income of Rs. 1,17,880/- whereas the loan amount given to assessee is Rs. 70,00,000/-. Thus, the creditworthiness of the parties of giving loan to the assessee is well established and cannot disputed based on the record placed on record.
In respect of M/s Shreeji Developers, it is rightly noticed by the ld. CIT(A) that opening balance of loan taken from this party is Rs. 7,98,80,973/- and during the year assessee has repaid Rs. 2,21,00,000/- and again taken loan of Rs. 69,10,000/-. Thus, effectively there is reduction in the loan amount during the year. Moreover, ld. CIT(A) has also gone through the immediate source of loan received during the year and found them to be proper as mentioned in the order.
Now coming to loan taken from M.P. Rawat & Co., no defect is noticed by ld. CIT(A) in the immediate source of loan from perusal of the bank account of aforesaid party so furnished by assessee.
Accordingly same has been rightly treated as explained by the ld. CIT(A). As regards, Golden Dunes Construction Pvt. Ltd. is concerned, it was explained by the ld. AR that the credit shown is not on account of loan but same is on account of rent due on premises taken by the Goldendunes Heights LLP,Jaipur assessee. Accordingly, ld. CIT(A) has rightly considered that credit as explained. We note that the assessee has serviced the judicial precedent on the similar issue and in that submission ld. AR of the assessee relied upon the decision of PCIT Vs. Gopal Heritage Pvt. Ltd. reported in 133 taxmann.com 173 (Guj.) where in the Hon’ble Gujarat High Court held that “since all ingredients contemplated under section 68 had been duly satisfied on aspect of identity of creditors, genuineness of transactions and their creditworthiness, concurrent findings of both authorities deserved no interference” [ Para 5] Our Jurisdictional High Court has also dealt with a similar issue in the case of Aravali Trading Co. Vs. ITO 187 Taxman 338 (Raj.) wherein High Court observed that :-
This principle is fully applicable to the present case. The fact that the explanation furnished by the aforementioned four creditors about the sources wherefrom they acquired the money was not acceptable by the revenue could not provide necessary nexus for drawing inference that the amount admitted to be deposited by these four persons belonged to the assessee. The assessee having discharged his burden by proving the existence of the depositors and the depositors owing their deposits, he was not further required to prove source of source.” Considering the overall facts we note that the observation of ld. CIT(A) is respect of each of loan is specific, detailed and his finding is considering the evidence placed before him and that considering his power being co-terminus, we do not find any infirmity in the finding so recorded in the order of the ld. CIT(A) in respect of that impugned ten
Since, the loan credited in the books of account of the assessee have been considered as explained and thereby the addition in relation to disallowance of interest of Rs. 1,35,43,168/- on these loans by way of change in the value of work-in-progress also does not subsist. Based on these observations, Ground Nos. 5 raised by the revenue stands dismissed.
In the result, the appeal of the revenue is dismissed. Order pronounced in the open Court on 23/09/2025.