INCOME TAX OFFICER NON CORPORATE WARD-9(1), WANAPARTHY BLOCK CHENNAI vs. PRIDE ENTERPRISES, PURASAWALKAM, CHENNAI

2.3 From assessee’s reply, Ld. AO noted that the assessee made total payment in this year for Rs.869.97 Lacs which was sourced out of unsecured loans. The assessee furnished details of payment made during the year along with the sources of investments along with copies of relevant bank statements. It was stated that the payments were sourced out of unsecured loan and amounts received from the partners. To substantiate the same, the assessee furnished confirmation of ledger statements, Income Tax Return copies and bank statements of respective parties / lenders / loan creditors duly highlighting the transactions. All the loans were stated to be received through banking channels. By furnishing the same, the assessee submitted that it had duly established the identity, creditworthiness and genuineness of the loan creditors. The assessee obtained loans of Rs.1309.59 Lacs from various parties, the details whereof has been extracted in para-9 of the assessment order. 2.4 However, Ld. AO made following observations with respect to these parties: - 9.1 The assessee has not submitted evidences regarding unsecured loans in respect of parties mentioned at Sr.Nos.2,3,6,7,12,17,20,35,36,38,40 and 41. Therefore, source of investments has not been proved to the extent loans taken from these parties. 9.2 In respect of serial no. 1, 4, 5, 8, 9, 10, 11, 15, 18, 19, 21, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 34 and 37 although the assessee has filed confirmation copy of ITRV (Acknowledgment) and copy of bank statement in respect of these unsecured loans. The assessee has filed only copy of acknowledgement of ITR. No P&L Balance Sheet, Audit Report nature of business and a note on the capacity of the lender have been filed. From the acknowledgement showing return income it is seen that the return income do not commensurate with the loan given by these parties. Therefore, these loans are also not acceptable. 9.3 In respect of serial no. 13,14,15,22,23,39 the assessee has filed confirmation copy of ITRV (Acknowledgment) and copy of bank statement in respect of these unsecured loans. From the return income it appears that they have capacity to advance loan. The total loan amount from these lenders have been shown at Rs.1,09,17,000/-.

The Ld. AR thus held that the assessee could not fully substantiate the loan creditors. 2.5 The assessee refuted the allegations of Ld. AO and submitted that it has duly filed date-wise details of payments along with the source of funds on that date. Further, names and full address of the parties from whom the funds were received were also furnished along with statement of confirmation and their respective Income Tax Returns (ITR-V) as well as relevant bank statements highlighting the transactions. The quantum of investment made by the assessee during this year was tabulated as under: - Total value of transaction entered by the assessee as stated Rs.14,97,69,500 by your good self on page no. 16 of the show-cause notice Less: Transaction relating to agreement to sale and which were Rs.7,39,65,000 subsequently cancelled. Value of sale deed executed Rs.7,58,04,500 Value of amount paid by the assessee during A.Y 2016-17. Rs.8,69,97,338 2.6 However, rejecting the submissions of the assessee, Ld. AO held that out of investment of Rs.1497.69 Lacs, the assessee could prove sources to the extent of Rs.109.17 Lacs only. Therefore, the balance amount of Rs.1388.52 Lacs was treated as unexplained credit and added to its income u/s 69. Appellate Proceedings 3.1 The assessee assailed the impugned addition by way of elaborate written submissions which have already been extracted in the impugned order. The assessee, inter-alia, submitted that only part consideration was paid in most of the cases. The assessee also pointed out glaring discrepancies in the observations made by Ld. AO by submitting that the names of the lenders were repeated in the list whereas Ld. AO accepted part of the amount and did not accept the other part which was wholly unjustified. It was also submitted that requisite documents were furnished for all the lenders and Ld. AO erred in noting that no documents were furnished for all the cases. It was also submitted that no notice u/s 133(6) was issued by Ld. AO to confirm these loans and therefore, the impugned addition would be unsustainable in law as per various judicial pronouncements. 3.2 The submissions of the assessee were subjected to remand proceedings on 18-05-2023. But despite reminders, the same was not forthcoming and accordingly, Ld. CIT(A) proceeded to examine the claim of the assessee. 3.3 The Ld. CIT(A) noted that the assessee entered into various agreements with Mr. Rose through his Power of Attorney holder Mr. Prem Kumar. However, only part amount was paid as Token Advance. During the year, the assessee paid amount of Rs.325 Lacs towards purchase of property and also paid advance of Rs.544.97 Lacs towards purchase of property to be registered during next AY 2017-18. The total amount thus paid during this AY was Rs.869.97 Lacs only. The assessee already submitted date-wise details of payments. The properly transaction with Mr. Rose and Mr. Prem Kumar took place over a period of three years from F.Y. 2014-15 to F.Y. 2016-17. All the payments except for an amount of Rs.18.75 Lacs were paid through banking channels only. During the course of assessment proceedings, the assessee had furnished copies of all documents, i.e., sale deeds and agreements to sale entered into by the assessee during the year. Almost all the agreements to sale entered by it during the year were cancelled during the next year due to various reasons. The same was evident from encumbrance certificates. 3.4 It was further noted that the assessee had furnished the details of sources of funds so paid for purchase of property. In respect of the loan creditors, the assessee had furnished their full address and their respective PAN and also their Income Tax Returns and Bank Statements. The AO rejected the same merely on the ground that the assessee was unable to furnish the Balance Sheet and Profit and Loss account of the Loan Creditors. However, the assessee had submitted all the evidences such as confirmations from the lenders, their PAN and complete address, their ITR Copies and the bank statement towards evidence for the loan received. The onus was duly discharged by the assessee. Considering the same, the impugned addition was deleted against which the revenue is in further appeal before us. Our findings and Adjudication 4. Upon due consideration of material facts, it could be gathered that the assessee has purchased certain properties which have been registered during this year and also paid advance for various properties which were to be registered in subsequent years. The transactions were spread over FYs 2014-15 to 2016-17. In this year, it is a factual finding of Ld. CIT(A) that the assessee has made aggregate investments of Rs.869.97 Lacs only.