Loading judgment…
Facts
The assessee preferred an appeal against an order confirming an addition of Rs. 59,25,000/- made by the Assessing Officer under Section 68 of the Income Tax Act, 1961, for unsecured loans. The assessee contended that the Ld. CIT(A) did not consider their submissions and relied on facts from another case. The assessee also wished to file additional evidence.
Held
The Tribunal noted that the Ld. CIT(A) had not considered the submissions and documentary evidence filed by the assessee. Therefore, the Tribunal felt it appropriate to set aside the finding of the Ld. CIT(A) and restore the matter back for deciding afresh.
Key Issues
Whether the Ld. CIT(A) erred in confirming the addition made by the AO without considering the assessee's submissions and evidence, and whether the matter should be remanded for fresh consideration.
Sections Cited
68, 250, 133(6)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI NARENDER KUMAR CHOUDHRY
This appeal has been preferred by the assessee against order dated 17.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2015-16, raising following grounds:
1. Order passed under section 250 of the Income tax Act, 1961 ("the Act") erred in dismissing the appeal of the Appellant and confirming the order of the Ld. Assessing officer ("AO") which is bad in law and liable order of the Ld. Assessing officer ("AO") which is bad in law and liable order of the Ld. Assessing officer ("AO") which is bad in law and liable to be quashed 2. On the facts and in the circ 2. On the facts and in the circumstances of the case and in law, the Ld. umstances of the case and in law, the Ld. NFAC erred in confirming the addition made by the Ld. AO under NFAC erred in confirming the addition made by the Ld. AO under NFAC erred in confirming the addition made by the Ld. AO under section 68 of the Act amounting to Rs. 59,25,000 with relation to section 68 of the Act amounting to Rs. 59,25,000 with relation to section 68 of the Act amounting to Rs. 59,25,000 with relation to unsecured loans taken by the Appellant which has been subsequently unsecured loans taken by the Appellant which has been subsequently unsecured loans taken by the Appellant which has been subsequently repaid by the Appe repaid by the Appellant 2. At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that At the outset, the Ld. counsel for the assessee submitted that the Ld. CIT(A) has not considered submissions and explanations of the Ld. CIT(A) has not considered submissions and explanations the Ld. CIT(A) has not considered submissions and explanations the assessee, which were furnished before him during the appellate which were furnished before him during the appellate which were furnished before him during the appellate proceedings and the Ld. CIT(A) relied on the facts proceedings and the Ld. CIT(A) relied on the facts of the other case of the other case as mentioned in para 7.4 of the impugned order as mentioned in para 7.4 of the impugned order and and upheld the addition made by the Assessing Officer addition made by the Assessing Officer ,therefore, the order of the therefore, the order of the Ld. CIT(A) need to be set aside for deciding afresh. Ld. CIT(A) need to be set aside for deciding afresh.
The Ld. Departmental Representative (DR) on the oth The Ld. Departmental Representative (DR) on the oth The Ld. Departmental Representative (DR) on the other hand, objected the proposal of the Ld. counsel for the assessee and objected the proposal of the Ld. counsel for the assessee and objected the proposal of the Ld. counsel for the assessee and submitted that the Ld. CIT(A) has passed a reasoned order. submitted that the Ld. CIT(A) has passed a reasoned order. submitted that the Ld. CIT(A) has passed a reasoned order.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. Before us, the Ld. counsel for the relevant material on record. Before us, the Ld. counsel for relevant material on record. Before us, the Ld. counsel for assessee submitted that documentary evidence assessee submitted that documentary evidences filed before the Ld. filed before the Ld. CIT(A) have not been considered by him and order has been passed CIT(A) have not been considered by him and order has been passed CIT(A) have not been considered by him and order has been passed on the basis of factually incorrect information. on the basis of factually incorrect information. The relevant finding The relevant finding of ld CIT(A) is reproduced below for ready of ld CIT(A) is reproduced below for ready reference:
“7. Ground No. 1 7. Ground No. 1 Sl. No. Section Section Issue Ground of appeal
68. Disallowance of Documentary Documentary evidence evidence unsecured loans submitted by the appellant was submitted by the appellant was not taken into account not taken into account 7.1 The facts emanating from the order of the AO is that during the 7.1 The facts emanating from the order of the AO is that during the 7.1 The facts emanating from the order of the AO is that during the course of assessment proceedings, the AO found that the appellant assessment proceedings, the AO found that the appellant assessment proceedings, the AO found that the appellant assessee has shown unsecured loans of Rs. 17,44,75,000/ assessee has shown unsecured loans of Rs. 17,44,75,000/ assessee has shown unsecured loans of Rs. 17,44,75,000/-. The assessee assessee assessee was was was required required required to to to prove prove prove the the the identity, identity, identity, genuineness genuineness genuineness & & & creditworthiness of the lenders. Notices u/s 133(6) of the I.T. Act, 1961 creditworthiness of the lenders. Notices u/s 133(6) of the I.T. Act, 1961 creditworthiness of the lenders. Notices u/s 133(6) of the I.T. Act, 1961 were issued to check the genuineness of the loans. The appellant issued to check the genuineness of the loans. The appellant issued to check the genuineness of the loans. The appellant assessee has submitted replies which have been thoroughly examined assessee has submitted replies which have been thoroughly examined assessee has submitted replies which have been thoroughly examined and after detailed examination, the AO found that the assessee has not and after detailed examination, the AO found that the assessee has not and after detailed examination, the AO found that the assessee has not proved the creditworthiness of some of the lenders and wer proved the creditworthiness of some of the lenders and wer proved the creditworthiness of some of the lenders and were show caused as to why the loans amounting to Rs. 59,25,000/ caused as to why the loans amounting to Rs. 59,25,000/ caused as to why the loans amounting to Rs. 59,25,000/- may not be added u/s 68 of the I.T. Act, 1961. In this regard, no replies were added u/s 68 of the I.T. Act, 1961. In this regard, no replies were added u/s 68 of the I.T. Act, 1961. In this regard, no replies were furnished by the assessee and accordingly, in the absence of furnished by the assessee and accordingly, in the absence of furnished by the assessee and accordingly, in the absence of substantiating documentary evidences, the AO made the substantiating documentary evidences, the AO made the addition of Rs. addition of Rs. 59,25,000/- as unexplained credits by invoking the provisions of section as unexplained credits by invoking the provisions of section as unexplained credits by invoking the provisions of section 68 of the I.T. Act, 1961. 68 of the I.T. Act, 1961. Aggrieved for the same, the appellant assessee Aggrieved for the same, the appellant assessee has filed this appeal. has filed this appeal. 1.
During the course of appellate proceedings, the appellant assess 1. During the course of appellate proceedings, the appellant assessee 1. During the course of appellate proceedings, the appellant assess did not furnish any cogent explanation/ documentary evidences with did not furnish any cogent explanation/ documentary evidences with did not furnish any cogent explanation/ documentary evidences with regard to this ground of appeal
and not proved the creditworthiness of regard to this ground of appeal and not proved the creditworthiness of regard to this ground of appeal and not proved the creditworthiness of the enders, even after availing considerable time and opportunities. the enders, even after availing considerable time and opportunities. the enders, even after availing considerable time and opportunities.
2. So as to decide the issue in hand, the rele
2. So as to decide the issue in hand, the relevant provisions of section 68 vant provisions of section 68 are being quoted below: being quoted below: "Cash credits. "Cash credits.
68. Where any sum is found credited in the books of an assessee
68. Where any sum is found credited in the books of an assessee
68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no maintained for any previous year, and the assessee offers no maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation about the nature and source thereof or the explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing explanation offered by him is not, in the opinion of the Assessing explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to Officer, satisfactory, the sum so credited may be charged to Officer, satisfactory, the sum so credited may be charged to income- -tax as the income of the assessee of that previous year: tax as the income of the assessee of that previous year: [Provided that [Provided that] where the assessee is a company (not being a company (not being company in which the public are substantially interested), and ny in which the public are substantially interested), and ny in which the public are substantially interested), and the sum so credited consists of share application money, share the sum so credited consists of share application money, share the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name capital, share premium or any such amount by whatever name capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall company shall be deemed to be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an is recorded in the books of such company also offers an explanation about the nature and source of such sum so explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the Assessing Officer Assessing Officer aforesaid has been found to be satisfactory: [Provided further] that nothing contained in the first proviso for [Provided further] that nothing contained in the first proviso for [Provided further] that nothing contained in the first proviso for second proviso] shall apply if the person, in whose name the sum second proviso] shall apply if the person, in whose name the sum second proviso] shall apply if the person, in whose name the sum referred to therein is recorded, is a venture capital fund or referred to therein is recorded, is a venture capital fund or referred to therein is recorded, is a venture capital fund or a venture capital company as referred to in clause (23FB) of section venture capital company as referred to in clause (23FB) of section venture capital company as referred to in clause (23FB) of section 10." The Section is meant to curb generation of unaccounted money The Section is meant to curb generation of unaccounted money The Section is meant to curb generation of unaccounted money and it is in clarificatory nature. That means the assessing officer can add a lump in clarificatory nature. That means the assessing officer can add a lump in clarificatory nature. That means the assessing officer can add a lump sum as of income from undisclosed sou sum as of income from undisclosed sources. The Income Tax Act, subsequently, inserted two key provisions vide The Income Tax Act, subsequently, inserted two key provisions vide The Income Tax Act, subsequently, inserted two key provisions vide Finance Act, 2012 (which will be dealt in later part). Further, Section 68 Finance Act, 2012 (which will be dealt in later part). Further, Section 68 Finance Act, 2012 (which will be dealt in later part). Further, Section 68 of the present Act is statutorily authorized an Assessing Officer to assess of the present Act is statutorily authorized an Assessing Officer to assess of the present Act is statutorily authorized an Assessing Officer to assess the unexplained cash credit as I the unexplained cash credit as Income and add back to the total income ncome and add back to the total income of an assessee accordingly'. of an assessee accordingly'. The third ingredient says that if the assessee offers no proper, The third ingredient says that if the assessee offers no proper, The third ingredient says that if the assessee offers no proper, reasonable and acceptable explanation as regards the sums found reasonable and acceptable explanation as regards the sums found reasonable and acceptable explanation as regards the sums found credited in Books of accounts maintained by him in the prev credited in Books of accounts maintained by him in the prev credited in Books of accounts maintained by him in the previous year. For instance, "Gift...By" as stated above, will be taken as absence of instance, "Gift...By" as stated above, will be taken as absence of instance, "Gift...By" as stated above, will be taken as absence of satisfactory explanation by the assessee. satisfactory explanation by the assessee. It is clear from the language of the section, it is the assessee, alone who It is clear from the language of the section, it is the assessee, alone who It is clear from the language of the section, it is the assessee, alone who is to offer the explanation, whether initially or subseq is to offer the explanation, whether initially or subsequently. uently. The section enacts a golden rule of evidence which is not in dispute, i.e. The section enacts a golden rule of evidence which is not in dispute, i.e. The section enacts a golden rule of evidence which is not in dispute, i.e. the onus is on the assessee to explain any sum found credited in his the onus is on the assessee to explain any sum found credited in his the onus is on the assessee to explain any sum found credited in his books of account. books of account. With respect of credits and investments, the Hon'ble Calcutta High Court With respect of credits and investments, the Hon'ble Calcutta High Court With respect of credits and investments, the Hon'ble Calcutta High Court in CIT vs. Precision Finance (P.) Ltd. [1994] 208 ITR 465/[1995]82 ecision Finance (P.) Ltd. [1994] 208 ITR 465/[1995]82 ecision Finance (P.) Ltd. [1994] 208 ITR 465/[1995]82 Taxman 31, laid down that an assessee is expected to establish Taxman 31, laid down that an assessee is expected to establish Taxman 31, laid down that an assessee is expected to establish- Identity of creditors Identity of creditors Capacity of creditors to advance money Capacity of creditors to advance money Genuineness of transaction Genuineness of transaction 7.4 From perusal of the provisions of section 68 o From perusal of the provisions of section 68 of the Act, quoted above f the Act, quoted above and the relevant observations made by the AO with respect to the and the relevant observations made by the AO with respect to the and the relevant observations made by the AO with respect to the impugned addition it is amply clear that the AO while making the impugned addition it is amply clear that the AO while making the impugned addition it is amply clear that the AO while making the addition amounting Rs. 7,34,55.700/ addition amounting Rs. 7,34,55.700/- on account of unexplained cash on account of unexplained cash credit by the appellant in the ban credit by the appellant in the bank account, the has not committed any k account, the has not committed any illegality.” 4.1 The ld Counsel has filed a copy of detailed submission filed The ld Counsel has filed a copy of detailed submission filed The ld Counsel has filed a copy of detailed submission filed before lower authorities. We find that ld CIT(A) has not mentioned before lower authorities. We find that ld CIT(A) has not mentioned before lower authorities. We find that ld CIT(A) has not mentioned any of submission of the assessee, rather noted that no any of submission of the assessee, rather noted that no any of submission of the assessee, rather noted that no submissions were filed by the assessee, therefore, iled by the assessee, therefore, iled by the assessee, therefore, we are of the opinion that detailed submission filed by the assessee before the opinion that detailed submission filed by the assessee before the opinion that detailed submission filed by the assessee before the lower authorities have not been considered by the Ld. CIT(A). The have not been considered by the Ld. CIT(A). The have not been considered by the Ld. CIT(A). The Ld. counsel for the assessee further submitted that assessee wish the assessee further submitted that assessee wishes the assessee further submitted that assessee wish to file further additional evidence to file further additional evidence in support of its contention that its contention that addition made u/s 68 of the Act is not justified. In view of the facts addition made u/s 68 of the Act is not justified. In view of the facts addition made u/s 68 of the Act is not justified. In view of the facts and circumstances of the case and circumstances of the case and in the interest of substantial and in the interest of substantial justice, we feel it appropriate to set aside the , we feel it appropriate to set aside the finding of the Ld. finding of the Ld. CIT(A) on the issue in dispute and restore he issue in dispute and restore the matter back to him the matter back to him for deciding afresh after taking into consideration submission of the for deciding afresh after taking into consideration submission for deciding afresh after taking into consideration submission . It is needless to mention that both the parties i.e. the assessee. It is needless to mention that both the parties i.e. the . It is needless to mention that both the parties i.e. the assessee and the Assessing Officer assessee and the Assessing Officer shall be afforded adequate shall be afforded adequate opportunity of being heard. The grounds raised in appeal are opportunity of being heard. The grounds raised opportunity of being heard. The grounds raised accordingly allowed for statistical purposes. accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.