Manoj Kumar Aggarwal ORDER
Manoj Kumar Aggarwal, Member (A)
1. Aforesaid appeals by assessee for Assessment Years (AY) 1997-98 & 2001-02 arises out of the separate orders of learned first appellate authority. The appeal for AY 1997-98 arises out of the order of Ld. Commissioner of Income Tax (Appeals)-18, Chennai [CIT(A)] dated 27-12-2017 in the matter of an assessment framed by Ld. Assessing Officer (AO) u/s 143(3) on 27.03.2000. The sole substantive ground that falls for our consideration is addition of Rs.16.47 Lacs u/s 68 of the Act. The assessee is stated to be a partnership firm. The registry has noted delay of 3 days in both the appeals which stand condoned.
2. The impugned issue stem from the fact that the assessee admitted loan of Rs.16.47 lacs from Mr. Ramachandran. The assessee filed address of the lender along with confirmation letter dated 27.02.2000 from M/s. H.M.C. Fabrics Private Ltd. The loan was stated to be received through Indian Bank DD No.787070 dated 19.03.1997. The sworn statement of the lender was recorded wherein lender assured the authorities to furnish copies of account for M/s. H.M.C. Fabrics Pvt, Ltd. as proof of sources for the remittances. However, he failed to do so. It was further found that M/s. H.M.C. fabrics Pvt. Ltd. had not commended the production for the year ended 31.03.1994. The copies of final accounts for AYs 1995-96 to 1997-98 were not filed. The perusal of Bank account no. 1563 held by M/s. H.M.C. Fabrics Pvt. Ltd. revealed that there was cash deposit of Rs.7.75 Lacs on 17.03.1997 and Rs.11.25 Lacs on 19.03.1997. Immediately thereafter, a cheque was issued and demand draft was taken in favor of the assessee. It was not possible for a company with a turnover of Rs.3.95 Lacs to advance huge loan of Rs.16.47 Lacs. Accordingly, it was held by Ld. AO that the assessee's own undisclosed cash was brought in the guise of loan from Mr. Ramachandran / M/s. H.M.C. Fabrics Pvt. Ltd. and the same was not genuine and hence, added to the income of the assessee.
3. Before Ld. CIT(A), the assessee assailed the addition, inter-alia, on the ground that the lender had confirmed the fact of advancing the loan to the assessee. It was an admitted fact that Mr. Ravichandran was assessed to Income Tax and drew money from M/s. H.M.C. Fabrics Pvt Ltd. The assessee discharged the onus of proving the identity of the lender, the capacity of the creditor and the genuineness of the transaction. The assessee was not expected to prove the source of source as held by Hon'ble Supreme Court in the case of M/s. Lovely Exports (P.) Ltd. (MANU/SC/8539/2008 : 216 CTR 195) and in other case laws. During appellate proceedings, remand report was sought from Ld. AO wherein Ld. AO stated that the assessee did not discharge the duties to prove the capacity of the creditor and genuineness of the transaction. Considering the same, Ld. CIT(A) upheld the addition against which the assessee is in further appeal before us.
4. From the stated facts, it could be seen that the assessee has admitted loan of Rs.16.47 lacs from Mr. Ramachandran. In terms of requirement of Sec.68, the assessee was obligated to prove the identity of the lender, their respective creditworthiness and the genuineness of the transaction. During the course of assessment proceedings, the assessee filed address of the lender along with confirmation letter dated 27.02.2000 from M/s. H.M.C. Fabrics Private Ltd. in support of the transaction. Undisputedly, the loan has been received through banking channels. Before DDIT (Inv.), the lender appeared and his sworn statement was recorded wherein the fact of loan was confirmed by the lender. However, the lender could not furnish the copies of account of M/s. H.M.C. Fabrics Pvt. Ltd. as proof of sources for the remittances. The Ld. AO, upon perusal of bank statements, made factual recording that there was cash deposit in the account of M/s. H.M.C. Fabrics Pvt. Ltd. which was used to issue bank draft in favor of the assessee. The Ld. AO also n........