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Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI
Before: SHRI SHAMIM YAHYA & SHRI ANUBHAV SHARMA
ORDER PER SHAMIM YAHYA, AM,
This appeal by the assessee is directed against the order of Ld. CIT (Appeals), Meerut, dated 12.09.2017 for the Assessment Year 2013-14.
The grounds of appeal read as under:-
“1. That each ground of appeal is without prejudice to each other.
2. That the Commissioner of Income Tax (Appeals) was not correct and justify in sustaining the addition of Rs.1,50,60,135/- u/s 68 of the IT Act, 1961 on the basis of fact that the addition is based on the remand proceedings for A.Y. 2011-12 and also all basic requirements of section 68 have been complied with and the assessing officer was not justified in making the addition and also LD. Commissioner of Income Tax (Appeals) in sustaining the addition due to the fact that source of funds given by the lender is not furnished. In doing so the Ld. Commissioner of Income Tax (Appeals) has ignored the various judgments cited wherein has been held that the revenue has got no right to ask to prove source ki source.
3. That the Commissioner of Income Tax (Appeals) was not correct and justify in sustaining the addition of Rs.1,47,83,320/- u/s 68 of the IT Act, 1961 on the basis of fact that the addition is based on the remand proceedings for A.Y. 2011-12 and also all basic requirements of section 68 have been complied with and the assessing officer was not justified in making the addition and also LD. Commissioner of Income Tax (Appeals) in sustaining the addition due to the fact that source of funds given by the lender is not furnished. In doing so the LD. Commissioner of Income Tax (Appeals) has ignored the various judgments cited wherein has been held that the revenue has got no right to ask to prove source ki source.”
At the outset, we note that None appeared on behalf of the assessee for the past several occasions despite noticed being served.
Hence, we propose to dispose of the appeal by hearing the ld. DR and perusing the records.
Apropos addition of Rs.1,50,60,135/-
The assessee in this case has taken fresh loan amounting to Rs.1,50,60,135/-. During the assessment proceedings, the assessee has submitted copies of confirmation of loan creditors who are all family members except Snajiv Khatri from whom the assessee has taken loan of Rs.30,76,000/-. The AO was not satisfied with the assessee’s explanation and he made addition by observing as under:-
“The assessee has taken unsecured loan from his family members and he was required to produce them for statement and to prove their creditworthiness and genuineness of transaction, but the assessee has failed to produce them before the undersigned. Nor he had shown his inability to produce them so that summon w/s 131 of the IT. Act, 1961 could be issued to them. Every time, he did not produce the depositors, who were all family members, on one plea or the other. In absence of their personal production, their statements could not be recorded and genuineness of transaction and creditworthiness of the depositor remain unexplained. In view of these facts and circumstances, unsecured loan is treated as unexplained and added to the total income of the assessee. Moreover, no copy of IT and bank statement of Shri Sanjeev Khatri has been furnished. Only confirmation of account is furnished. Summon w/s 131 of the I.T.Act, 1961 dated 17.3.2016 was issued to Shri Sanjeev Khatri to appear personally before the undersigned for the verification of unsecured loan. But no compliance was made by him. Since neither the depositor has appeared nor copy of IT and bank statement of Shri Sanjeev Khatri has been submitted by the assessee, the unsecured loan of Rs.30,76,000/- could not be verified and proved, and accordingly, same is added to the total income of the assessee.”
Upon assessee’s appeal, the Ld. CIT(A) analyzed the facts of the case and confirmed the addition by holding as under:-
“17. In these circumstances, the question referred is answered as above by holding that on the facts and circumstances of the present case, when the credits were received by the assessee from close relatives like his non- earning wife and minor son, the explanation to be furnished under section 68 in order to qualify as "satisfactory" would require to disclose the source of the depositor for establishing the "capacity" of the creditor as above. Commissioner of Income-tax v. MihirKantiHazra [20151 61 taxmann.com 315 (Calcutta) it has been held By Calcutta High Court:- Section 68 of the Income-tax Act, 1961 - Cash credit (Loans) - Assessment year 2006-07 - Assessee received unsecured loans from 39 persons - Assessing Officer was of opinion that creditworthiness of alleged creditors and genuineness of transactions were not proved by persons who responded to summons issued under section 131; and some of them did not turn up and assessee also failed to furnish any further explanation regarding same - Assessing Officer, accordingly, made addition under section 68 - Commissioner (Appeals) also concurred with views of Assessing Officer - Tribunal, however, deleted said addition - It was observed that Tribunal did not examine correctness of views expressed by Assessing Officer and Commissioner (Appeals) - Further, no reasons were disclosed why views expressed by them were wrong - Whether order passed by Tribunal was to be set aside - Held, yes[Paras 6, 7 and 13] [In favour of revenue) Under the above facts and case laws it is apparent that assessee has claimed that loan were taken from relatives and there is a clear collusion of both the parties ie the assessee and his relatives. They have thwarted the investigation of the AO and not allowed the conclusion of the inquiry that the A intended to do by examining the loan creditors. Thus, the primary onus has not been discharged by the assessee compelling the AO to make addition Ws section 68 of the IT Act. In appeal the entire effort of the Ld. AR has been to bye pass the provisions of section 68 of the Act on the pretext of having proved the identity only. The issues of proving the creditworthiness of loan creditors in whose account cash is being deposited just prior to the transfer of loan to the assessee. The entire conduct of the assessee and the loan creditor raises a big question with regard to the genuineness of the transactions between them. Under these circumstances and considering the facts and law I have no choice but confirm the addition of Rs. 1,50,61, 135/- w/s 68 of the Income Tax Act.” Apropos the addition of Rs.1,47,83,320/- u/s 68 of the Act.
On this issue the assessee has taken loan of Rs.1,47,83,320/- from M/s Avi Enterprises. The AO has issued following show cause notice:-
“4. You have taken loan from Ms Avi Enterprises amounting to Rs. 1,47,83,320/- which were outstanding as on 31.3.2013 but till date you have not furnish the audit report and other documentary evidence required. Please furnish the audit report for M/s. Avi Enterprises for last 04 years and provide the same copy of ledger with the party along with confirmation, IT, bank a/c details which prove their creditworthiness, genuineness of transaction and identity. Also provide bank transaction details where the amount was received by the assessee. In absence of these details you are required to show cause as to why the same amount may not be treated as unexplained and added income of the assessee as unexplained."
6.1. The assessee has responded as under:-
That as regard Avi Enterprises it is submitted that we have already filed the copy of capital account of the assessee for the year under consideration. The said firm is a partnership firm and assessed separately and assessee has taken the amount from the sai firm and not deposited in the said firm and therefore, if addition is warranted that may be in the hands of the firm and not in the hands of the assessee, as the assessee has not deposited the amount of Rs. 1,47,83,320/-.
However, the AO was not satisfied with the explanation of the assessee and confirmed the addition by observing as under:-
The submission of the assessee has been considered but found not convincing and justified. On perusal of IT for A. Y. 2012-13 and 2013-14 of M/s. Avi Enterprises, the total income shown by the firm as 'NIL' for both the A. Yrs. It is also to be mentioned here that despite specifically asked for, the assessee, did not file the audit report for last 4 years, bank account details etc. to prove the identity, genuineness of transaction and creditworthiness of the firm. In view of these facts and circumstances, the loan of Rs.1,47,83,320/- could not be verified and is accordingly treated as unexplained and added to the total income of the assessee.
Upon assessee’s appeal, the ld. CIT(A) confirmed the addition by holding that no stage has the assessee or his Authorized Representative discharged the primary onus of proving the creditworthiness of the loan creditor and genuineness of transaction between the assessee and the loan creditor. Hence, he confirmed the addition.
Against this order, the assessee is in appeal before us.
As noted earlier, nobody has appeared on behalf of the assessee despite several notices. Upon careful consideration, we find that the Ld. Commissioner of Income Tax (Appeals) has made a reasonable order which does not need any interference on our part. Hence, the appeal of the assessee is dismissed.
In the result, appeal of the assessee stands dismissed.
Order pronounced in the open court on 13th April, 2023.