Sai Telecom, CHENNAI V. ITO Non Corporate Ward 3(3), CHENNAI

ITA 2534/CHNY/2017

AI Insights

The case involves M/s. Sai Telecom appealing against the order of the Commissioner of Income Tax (Appeals)-4, Chennai, which sustained various additions made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The additions pertained to unexplained cash credits and certain transactions deemed as unexplained by the CIT(A). The Tribunal examined the evidence and arguments presented, including the creditworthiness of the loan creditors and the genuineness of the transactions. The Tribunal found that some of the additions were unjustified based on the evidence provided, leading to a partial allowance of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134731 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 19-10-2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Business income; Salary income; Assessment record
• Section: 131; 68; 40A(3); 139; 143(3); 133(6); 271D; 13; 272A; 22

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI ी महावीर सह, उपा य एवं ी मंजुनाथ. जी, लेखा सद य के सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANJUNATHA. G, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2534/Chny/2017 िनधा रण वष /Assessment Year: 2012-13 M/s. Sai Telecom, No.407, 4 th Floor, Kaveri Complex, Nungambakkam, Chennai – 600 034. [PAN: ABRFS-4178-F] Vs. The Income Tax Officer, Non Corporate Ward-3(3), Chennai. ( अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क! ओर से/ Appellant by : Shri N. Arjun Raj, C.A यथ क! ओर से /Respondent by : Shri ARV Sreenivasan, Addl. CIT सुनवाई क! तारीख/Date of Hearing : 24.07.2023 घोषणा क! तारीख /Date of Pronouncement : 15.09.2023 आदेश / O R D E R Per Mahavir Singh, Vice President : This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-4, Chennai [hereinafter “CIT(A)”] in ITA No.63/2015-16/A.Y.2012-13/CIT(A)-4 dated 18.09.2017. The Assessment was framed by Income Tax Officer, Non Corporate Ward-3(3), Chennai for the relevant A.Y. 2012-13 vide order dated 30.03.2015 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). ITA No.2534/Chny/2017 :- 2 -: 2. The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in sustaining the addition of Rs. 44,13,610/- being long term borrowings added as loan creditors u/s. 68 of the Act. The following are long term borrowings added by the A.O as loan creditors: Long Term Borrowings K.Nandhakumar 7,00,000.00 M.Mohana Krishnan 7,00,000.00 P. Pandian 5,00,000.00 T. Saravanak Kumar 6,13,610.00 D.Ganesan 7,00,000.00 Vignesh 5,00,000.00 S. Murali Mohan 7,00,000.00 Total 44,13,610.00 For this, the assessee has raised the following ground No.5: “5. The CIT(Appeals) erred in sustaining the addition of Rs. 44,13,610/- being loan credits in paras 13 & 14 of the impugned order without assigning proper reasons and justification.” 2.1 The A.O noticed that the assessee’s firm has received loans from the above mentioned seven persons ranging between Rs. 7 Lakhs to Rs.5 Lakhs as noted above. The A.O required the assessee to produce the particulars of these cash creditors i.e., details of their source of income, amount received through banking channel, their confirmation, etc. The A.O discussed each of the creditors and noted that either these are salaried employees with basic minimum income or they do not have source to explain the transaction and he held that these persons are of no means to advance these loans. Hence, he ITA No.2534/Chny/2017 :- 3 -: added these cash credit amounting to Rs. 44,13,610/- u/s. 68 of the Act. Aggrieved, the assessee preferred appeal before the CIT(A). 2.2 The CIT(A) after discussing the addition made by A.O of unexplained cash credits under the head “loan credits” amounting to Rs. 44,13,610/-, confirmed the addition vide para 13 of his order, discussing each of the creditors, who do not have source or creditworthiness to explain the unsecured loans and hence, the CIT(A) confirmed by observing in para 13 as under: 13. Addition on account of unexplained cash credits under the head of loan creditors:-ln this regard, the additions made by the AO in respect of each of the loan the creditors, is discussed as under: Sh. K. Nandakumar: The appellant has reflected a sum of Rs.7,00,000/-as loan received in cash from Sh. K. Nandakumar during the year under consideration. As noticed by the AO, the loan creditor has no PAN and his creditworthiness was also not proved before the AO. During the course of the appellate proceeding, the appellant furnished a confirmation letter dated 06/09/2016 claimed to have been obtained from the cash creditor. Vide this letter, the loan creditor has confirmed to have given loan of Rs. 7 lakhs in bits and pieces as loan to the appellant which he had further arranged from various individuals. He also submitted a copy of the ITRs for the F.Y. 2014 15 and 2015 - 16, however, there was no return of income filed for the relevant assessment year under consideration as he had not filed any return of income prior to the financial year 2014- 15 since there was no taxable income. On perusal of the ITR for the A Y. 2014- 15, it is noticed that the same was filed only on 28/12/2015 which was much after the date of passing of the impugned assessment order in the case of the appellant. The return of income was also filed beyond the due date u/s 139 (1). The income shown was Rs.2,30,000/-on which the said loan creditor had paid a tax of Rs. 1200/-as self assessment tax. Similarly, the return of income for the AY. 2015- 16 was also furnished on 28/12/2015 with a taxable income of Rs.2,80,000/-0on which a tax of Rs. 1070/-was paid by way of self assessment tax. These details were provided by the appellant to show that the loan creditor was an income tax assessee and had the creditworthiness. However, in the ITA No.2534/Chny/2017 :- 4 -: confirmation letter itself, the loan creditor has himself confessed that he had no taxable income prior to the F.Y. 2014 - 15. ii. Further perusal of the information (ledger account of the loan creditor reflecting in the books of accounts of the assessee) provided by Sh. K. Nandakumar revealed that he had advanced Rs.20,000/- each on 09/04/2011, 14/04/2011, 01/05/2011, 07/05/2011, 01/06/2011 and 11/06/2011 by way of cash payment. Subsequent to that, he claimed to have advanced amounts through banking channels, as reflected in the relevant ledger account. iii. Since of the above confirmation letter was furnished by the appellant claimed to have been obtained from the loan creditor, in order to verify the authenticity of the same, a separate letter dated 25/11/2016 u/s 133 (6) of the Act was issued to Sh. K.Nandakumar for furnishing certain relevant details for confirmation of the cash loan. In reply, Sh. K.Nandakumar submitted a letter dated 10/01/2017 confirming the loan of Rs.7 lakhs advanced to the assessee on different dates. It was also stated that he had raised the funds from various individuals. Along with this, he also furnished copies of the ITR-V for the A.Y. 2014 - 15 and A.Y. 2015 -16 and copy of the ledger account of the appellant. On perusal of the ledger account, it was noticed that he had advanced loan of Rs. 7 lakhs in total on a number of occasions and the mode of payment was cash only. Whereas, on the other hand, the ledger account of Nandakumar furnished by the appellant earlier, as discussed above, revealed that except the amounts of 1,16,159-(Rs. 20,000/- each on different occasions), the entire remaining amounts were received through banking channels. iv. In view of the divergent information provided appellant and the loan creditor and also considering the credit worthiness of the loan creditor, a summons u/s 131 of the Act was issued to Sh.K.Nandakumar on 12/01/2017 and he was requested to produce the bank account statements and the documentary evidences regarding the sources of funds which was the genesis of cash loan given to the appellant. On 14/02/2017, Sh..Nandakumar attended the office and his statement was recorded. It was noticed that he was a man of very little means. He was a small employee with the appellant during the year under consideration and at present also. His monthly salary during the impugned year was Rs.12,000/-per month. In his statement, he also confessed that the loan of Rs. 7 lakhs was advanced by him without any interest and which was still pending for recovery from the appellant as on date. Regarding the source of Rs. 7 lakhs, he confessed to have raised cash loans from his family members which were still outstanding for repayment. It was also ascertained that he had only bike and no four wheeler. v. From the above facts, it is clearly noticed that Sh. K.Nandakumar was working as a small employee with the ITA No.2534/Chny/2017 :- 5 -: appellant and was earning nominal monthly salary of Rs. 12,000/- . It is very strange to note as how a person who could hardly meet his both ends would advance interest free loan of Rs. 7 lakhs to his employer who is financially much stronger than the loan lender. It is also surprising to note that the said the loan is still outstanding as on the date of recording his statement. The bank account maintained by him with IDBI had almost negligible credits. The loan creditor did not furnish any documentary evidence to substantiate the sources of cash advanced to him by his family members. vi. Therefore, it was evidently proved that the appellant had introduced its unexplained money in the shape of cash loan of Rs. 7 lakhs in the name of Sh.K. Nandakumar, its employee. The credit worthiness of the loan creditor is not established. Hence, the addition is confirmed. Even if the loan was found to be genuine, the same would have attracted the penal provisions of section 271D r w.s. 269 SS of the Act. vii. Sh.A.Mohanakrishnan:- The appellant has shown loan credit of Rs. 7 lakhs from Sh. Mohanakrishnan received in cash during the relevant year under consideration. There was no confirmation of the loan creditor furnished to the AO. The summons issued by the AO to him was also received unserved. However, in the course of the appellate proceeding, the appellant furnished a confirmation letter dated 06/09/2016 claimed to have been obtained from the loan creditor Sh. A.Mohan which confirmed to have advanced loan of Rs. 7 lakhs in bits and pieces. Regarding the source of this amount, it was stated that he had raised this funds from various individuals. He furnished the ITR-V for the A Y. 2015-16 and A.Y. 2016-17 showing a nominal incoi Rs.2,70,000/-on which no income tax was payable and Rs.2,76,000-on which a sum of Rs.620/-was shown as tax payable. Both of the returns of income were furnished on 30/08/2016 which were beyond the due date for filing the return of income u/s 139 (1) of the Act. An impression was being given that the assessee was a man of means who was filing return of income also. There was no return of income furnished by the loan creditor for the relevant year under consideration since he did not have taxable income. This is contrary to the fact that he had furnished ITR for the subsequent years when there was no taxable income or just on the threshold. Along with this confirmation letter, the ledger account of Sh. A.Mohan reflecting in the books of accounts of the appellant was furnished. On perusal of the ledger account, it is noticed that a sum of Rs.20,000/-each was advanced in cash on 05/04/2011, 13/04/2011,20/04/2011 and on 19/05/2011, Rs.22,107-in cash on 12/05/2011 and Rs.10,580/-in cash on 12/06/2011. The remaining payments were made w.e.f. 22/08/2011 to 30/03/2012 were shown to have been paid through banking channels. viii. Accordingly, in view of the above details furnished by the appellant, a letter u/s 133 (6) dated 25/11/2016 was issued to Sh. ITA No.2534/Chny/2017 :- 6 -: A.Mohan for furnishing the relevant details to establish the genuineness of the confirmation letter and the loan given to the appellant. In reply, the loan creditor furnished a written submission dated 10/01/2017 confirming the loan of Rs. 7 lakhs given to the appellant. He also furnished copy of the ITR-V for the AY. 201516 and 2016 - 17. Along with these details, he also furnished a copy of the ledger account in the name of the appellant. On perusal of the ledger account, it is noticed that he had advanced the entire loan in cash except a sum of Rs. 17,000/-which was claimed to have been paid through cheque. This was contrary to the information provided by the appellant, as discussed above, wherein barring a few amounts, the entire loan amounts were received through banking channels. ix. Therefore, keeping in view the contradictory details furnished by the appellant and the loan creditor, a summons u/s 131 of the Act was issued to the loan creditor on 12/01/2017 and was requested to produce the bank account statement and the other documentary evidences to substantiate the source of Rs. 7 lakh advanced by him to the appellant as loan. However, the summons was received unserved with the remarks of the postman as "unclaimed". Subsequently, a show cause letter u/s 272A, dated 20/02/2017 was issued which was also received unserved as unclaimed. One more show cause notice u/s 272A was issued on 07/03/2017, the same was received unserved as unclaimed. Finally, a letter dated 10/07/2017 was issued u/s 133 (6) r.w.s. 272A of the Act. Again the letter was received unserved with the remarks of the postman as "unclaimed". x. Accordingly, in view of the above facts of the case, vide the letter dated 16/08/2017, the appellant was confronted with the above and was asked to provide the relevant documentary evidences to establish the genuineness and correctness of the loan credit in the name of Sh. A.Mohan. However, no reply has been furnished by the appellant till the finalisation of this appeal. Hence, it is evidently proved that the appellant had introduced its unaccounted money in the garb of loan credit in the name of Sh. A.Mohan who had no means to fund the same. Interestingly, the loan is still outstanding. Sh. A.Mohan is a man of no means as could be ascertained from confirmation letter and also from his income tax return filed for the subsequent years. Therefore, I do not find any infirmity in the finding of the AO that this was unexplained cash credit. Hence, the addition is confirmed. Even if the loan was found to be genuine, the same would have attracted the penal provisions of section 271D r.w.s. 269 SS of the Act. xi. Sh. K.Arun Pandian:- The appellant has reflected Rs.5,00,000/-received in cash as loan obtained from one Sh.Pandian. During the course of the assessment proceeding, his ITR was not provided to the AO. He too had raised the funds from his friends and family members. Since the credit worthiness of the lender was not proved, the amount of Rs. 5 lakhs was added back to the income of the appellant as unexplained cash credit. ITA No.2534/Chny/2017 :- 7 -: xii. During the course of the appellate proceeding, the appellant furnished a confirmation letter dated 05/08/2016 claimed to have been obtained from Sh.Pandian which confirmed to have advanced a loan of Rs. 5 lakhs in bits and pieces to the appellant. He too had filed return of income for the A Y. 2014-15 and 2015- 16 on 28/12/2015 with a small amount of Rs.2,80,000/-on which a tax of Rs.1070/-was paid through self assessment tax and Rs.2,30,000/-on which a tax of Rs. 1200/-was paid through self assessment tax, respectively. Along with this, the loan creditor also provided a copy of his ledger account reflecting in the books of accounts of the appellant which reflected the entire amount received by the appellant through banking channels accept a sum of Rs. 8, 208/-on 21/10/2011. xiii. Accordingly, in view of the above confirmation letter provided by the appellant, a letter uls 133 (6) of the Act was issued to the loan lender on 25/11/2016 requesting him to furnish the relevant documentary evidences to substantiate the above transaction and the credit worthiness. In reply, a letter dated 05/01/2017 was · received from Mr. Pandian confirming the loan of Rs. 5 lakhs advanced to the appellant. He also furnished copies of the ITR-V for the F.Y. 2013- 14 and 2014- 15. Along with this, he also furnished ledger account of the appellant to reflect the transactions with it. Contrary to the details mentioned in the ledger account of the loan lender reflecting in the books of accounts of the appellant, as discussed in detail above, the entire loan amount of Rs, lakhs was paid in cash on different occasions w.e.f.' 17/06/2016 till 09/03/2012. xiv. Therefore, keeping in view the above discrepancy in the information furnished by the appellant and the loan lender, a summons u/s 131 of the Act was issued to Mr Pandian on 12/01/2017 and was requested to produce all those relevant documentary evidences to substantiate the transactions held with the appellant and also to establish the credit worthiness. In response to the summons, Mr Pandian attended the office on 25/01/2017 and his statement was recorded. It was ascertained that he was an employee of the appellant drawing a monthly salary of Rs. 15,000/-per month during the relevant year under consideration. He was still in employment with the appellant and his present monthly salary was Rs. 25,000/-. In his statement he denied of having advanced any loan through cheque or banking channels. It was also found that the loan amount was still outstanding as on date. The amount was advanced by him without any interest. Mr Pandian had not advanced any loan to anyone else till date. He did not have any immovable property either in the name of self or in the name of his spouse and children. However, regarding the movable assets, he has only one motorcycle and no FDRs or other investments. Regarding the bank account statement, it was furnished by him that since he had no ID card during the F.Y. 2011-12 to fulfil the KYC norms, the banks did not open his bank account. However, this ITA No.2534/Chny/2017 :- 8 -: statement was wrong. On perusal of the voter ID card produced before the undersigned, it was noticed that the same was issued to him on 10/01/2011 itself and he could have opened the account with any bank. xv. On perusal of.the above details, it is evidently established that Mr. Pandia was a man of no means to fund his employer with a sum of Rs.5 lakhs as interest-free loan for indefinite period. He failed to furnish any documentary evidences to substantiate the source of Rs. 5 lakhs in his hands. On perusal of his confirmation letter furnished through the appellant also establishes that he had no taxable income during the relevant year under consideration because of which he did not file the relevant return of income for A.Y. 2012 - 13. Even otherwise also the return of income furnished for the subsequent years had very nominal income which did not prove his credit worthiness. It could also be noticed from the information provided by the appellant and the loan creditor that in all the cases, the similar nature of information was being provided which lacked character of genuineness and bonafide. xvi. Hence, in view of the above facts and circumstances of the case, I do not find any infirmity in the finding of the AO that the cash credit in the name of Mr Pandian was unaccounted money of the appellant and the same should be taxed as unexplained cash credit. Therefore, the addition is confirmed. Even if the loan was found to genuine, the same would have attracted the provisions of section 271D r.w.s. 269 SS of the Act. xvii. Sh. T.Saravana Kumar:- In the relevant books of accounts of the appellant, Sh. Saravana was reflected as loan lender with a sum of Rs.6,13,610/-. During the course of the assessment proceeding, the appellant could not provide confirmation from the loan lender and also the summons issued by the AO to the loan lender was received back unserved. In this case also, the entire amount of Rs.6,13,610/-was received in cash only. xviii. Therefore, in order to verify the genuineness and credit worthiness of the cash credit, further investigation was warranted. In the course of the appellate proceeding, the appellant submitted a copy of the ledger account of Sh. Saravana reflecting in its books of accounts for the relevant year under consideration. On perusal of the same, it was noticed that the entire amount of Rs.6,13,610/-was received on a number of occasions through banking channels only. Not even a single amount was received in cash. xix. Accordingly, in order to verify the correctness of the ledger account, a letter u/s 133 (6) of the Act was issued by the undersigned on 11/07/2017 to the loan lender and he was requested to provide all the necessary documentary evidences to substantiate the transaction of loan and his credit worthiness. In reply, Sh.Saravana submitted a letter dated 24/07/2017 ITA No.2534/Chny/2017 :- 9 -: confirming that he had not extended any loans to the appellant during the F.Y. 2011-- 12. He also confirmed that since his income is below taxable limit, he did not file any return of income. From the above confirmation of Sh. Saravana, it was evidently proved that the cash credit of Rs.6,13,610standing in the name of Sh. Saravana was unexplained money of the assessee itself. Vide this office letter dated 12/07/2017 issued to the appellant, it was asked to highlight the credit entries reflecting in its books of accounts received from Sh. Saravana. However, no such compliance was made by the appellant. Subsequently, vide the office letter dated 16/08/2017 issued by the undersigned, the appellant was confronted with the fact that Sh. Saravana had denied to have extended any loan to the appellant and, accordingly, the assessee was asked to produce any documentary evidence to prove the genuineness of the cash credit in the name of Sh. Saravana. However, no such compliance was made by the appellant till the finalisation of the impugned appeal. xx. Therefore, keeping in view the above facts and circumstances of the case, it is evidently proved that the appellant had introduced its unexplained money in the name of Sh. Saravana as loan. Hence, I do not find any infirmity in the finding of the AO in treating the impugned cash credit as unexplained. Accordingly, the addition is confirmed. Even if the loan was found to be genuine, the same would have attracted the penal provisions of sect 271D r.w.s. 269 SS of the Act. xxi. Sh. D.Ganesh:- Sh. D. Ganesh was reflected as loan creditor with a sum of Rs. 7 lakhs which was received in cash only. During the course of the assessment proceeding, the return of income of the loan lender and the sources of loan amount were not provided by the appellant and the loan creditor. Since the credit worthiness of the lender and sources of the funds could not be proved by the loan lender, the cash credit was treated as unexplained. xxii. In the course of the appellate proceeding, the appellant furnished a letter of confirmation dated 27/08/2016 claimed to have been obtained from Sh. D. Ganesh vide Which the loan lender had confirmed the loan of Rs. 7 lakh advanced to the appellant. It was also submitted that he had no taxable income prior to the year 2013-14 and hence no return of income was filed. However, he filed a copy of the ITR-V for the A.Y. 2015-16 with a nominal income of Rs.2,82,000/-on which a sum of Rs. 670/- was paid as self-assessment tax. The return of income was furnished beyond the due date on 25/02/2016. Similarly, the return of income for the A.Y. 2014-15 was also furnished on 25/02/2016 with oh total income of Rs.2,28,000/-on which a tax of Rs.976/-was paid as self-assessment tax. On perusal of these details, it is noticed that an attempt has been made by the appellant and the loan lender to create an impression that the depositor was an existing income tax assessee, therefore, he had credit worthiness to advance the loan. Along with these details, ITA No.2534/Chny/2017 :- 10 -: the appellant also provided ledger account of Sh. D. Ganesh reflecting in its books of accounts which revealed that the entire amount of Rs. 7 lakhs was received on different dates w.e.f. 05/05/2011 to 24/03/2012 through banking channels only accept the cash of Rs. 9, 814/which was received on 23/08/2011. xxiii. Accordingly, in order to verify the correctness of the above information, a letter u/s 133 (G) of the Act was issued to the loan lender on 25/11/2016 requesting him to furnish the relevant documentary evidences to prove the correctness of the transaction and credit worthiness. In reply, Sh. D. Ganesh furnished the written submission dated 09/01/2017 confirming the loan of Rs. 7 lakh advanced to the assessee. He also furnished copies of the ITR-V for the F.Y. 2013-- 14 and 2014- 15. He also furnished copy of the ledger account of the appellant which revealed that he had advanced loan of Rs. 7 lakhs in cash only starting from 05/05/2011 till 24/03/2012 on different occasions. However, on the other hand, as per the ledger account of the loan lender reflecting in the books of course of the assessee, as discussed above, the entire loan amount of Rs. 7 lakhs was received through banking channels except the sum of Rs. 9, 814/- . Hence, there was serious discrepancy in the information provided by the parties. xxiv. On further enquiry from the loan lender, it was subjected vide letter dated 27/02/2017 that he was a salaried person during the F.Y. 2011- 12 and the amount of loan advanced from his savings. He also confirmed that th loan was still outstanding as on date. On perusal of the . ledger account, it is also noticed that no interest was charged on the above loan.' Subsequently, in order to verify the above submissions of the loan lender, a letter dated 06/03/2017 was issued under section 133 (6) to Sh. D. Ganesh for furnishing address of the employer, the salary statement, list of movable and immovable assets held by him as on 31/03/2012 and his bank account statements for the period 01/04/2011 to 31/03/2012. In reply, he furnished a written submission (which was wrongly dated as 27/02/2017) received by this office on 22/03/2017. Vide this letter, the loan lender requested for further time of two weeks to furnish the details and sought for the adjournment till 20/04/2017. However, there was no compliance from the party as promised by him. xxv. Accordingly, a summons dated 10/07/2017 was issued to Sh.D.Ganesh to produce the relevant bank account statements of all accounts for the period 01/04/2011 to 31/03/2012 and the salary statement with monthly breakup for the F.Y. 2011-12. However, there has been no compliance from Sh. D. Ganesh till the finalisation of the present appeal. These facts were brought to the notice of the appellant vide this office letter dated 12/07/2017 and 16/08/2017 and the appellant, was requested to highlight the credit entries received from Sh. D. Ganesh in its bank account statement. However, there has been no compliance from the appellant till date. ITA No.2534/Chny/2017 :- 11 -: xxvi. Therefore, the analysis of the entire gamut of facts and circumstances clearly established that the loan lender Sh. D. Ganesh had no sources of income to fund the loan advanced to the appellant. His credit worthiness was not proved. The loan lender had failed to provide his bank account statement to prove his financial worth. He also failed to provide the salary statement and name and address of the employer with which he was working during the relevant year under consideration. Further, as confirmed by the loan lender in his confirmation letter dated 16/08/2016, he had no taxable income for which he could furnish the return of income. The return of income furnished for the A.Y. 2014- 15 and A.Y. 2015 - 16 also revealed that he had very nominal income on which a nominal sum was paid as tax. The returns were furnished much beyond the due date. The genuineness of salary income reflected in these returns of income are also highly doubtful. In fact, it was an attempt on the part of the appellant and the loan lender to give an impression that the loan lender was a man of means who could have advanced the loan to the appellant. xxvii. Hence, in view of the above facts and circumstances of case, I am of the firm opinion that the addition of Rs. 7,00,000- made by the AO as unexplained cash credit was fully justified. Accordingly, the addition is co Even otherwise, if the loan was found to be genuine same would have attracted the penal provisions of sect. 271D r.w.s. 269 SS of the Act. xxviii. Sh. Vignesh:-There is cash credit of Rs.5,00,000/-in the name of Sh. A. Vignesh in the books of accounts of the appellant during the relevant year under consideration. During the assessment proceeding before the AO, the appellant failed to provide address of the loan lender. The entire amount of Rs. 5 lakhs was received in cash by the appellant. During the course of the appellate proceeding, vide this office letter dated 08/09/2016, the appellant was requested to furnish complete address of Sh. A. Vignesh. However, the appellant failed to furnish the same. In the written submission dated 25/11/2016, the appellant stated that Sh. A. Vignesh was not willing to furnish the address. xxix. On perusal of the ledger account of Sh. A. Vignesh reflecting in the books of accounts of the appellant for the relevant year under consideration, it is noticed that the entire amount of Rs. 5 lakhs was received through banking channels on different dates starting from 23/08/2011 to 12/03/2012. On the other hand, as noticed by the AO, the entire amount was received in cash only. I have verified the relevant assessment record of the appellant and the bank account statement of the appellant to verify whether these amounts were received by the appellant in cash or through banking channels. However, it is found that none of the entries were received through banking channels. For example, in the ledger account of Sh. A. Vignesh, a sum of Rs. 1 0,000/-was received by the appellant on 30/08/2011. On perusal ITA No.2534/Chny/2017 :- 12 -: of the relevant bank account number 67102922423 held with State Bank of Travancore, it shows that this amount of Rs. 10,000/-was deposited in the bank in cash by the assessee itself. Similarly, on 05/09/2011, a sum of Rs.34,940/-was deposited in the above said bank account in cash by the assesses itself which, on the other hand, in the ledger account of Sh. A. Vignesh, is shown as through banking channels. Similar is the position with regard to the remaining entries. xxx. Since the appellant has failed to discharge the initial onus cast upon it to provide the address of the loan lender, no further verification could be carried out by the undersigned. The appellant was apprised of this fact vide the written submission dated 12/07/2017 and 16/08/2017 and was requested to provide the relevant details to establish the genuineness of the cash credit of Rs. 5 lakhs in the name of Sh. A Vignesh. However, there was no compliance from the appellant till the finalisation of the appeal. Hence, it is proved that there is no documentary evidence available with the assessee to prove the genuineness of existence of the loan creditor. In fact, the 'appellant had introduced its unexplained money in the name of non-existing loan lender. Hence, in view of the above facts of the case, the addition made by the AO is confirmed. Even otherwise also if the loan was be genuine, the same would have attracted the provisions of section 271D r.w.s. 269 SS of the Act. xxxi. Sh. A.Murali Mohan:- The assessee has shown the cash credit of Rs. 7 lakhs in the name of Sh.A.M. Mohan during the relevant year under consideration. It was noticed by the AO in the course of the assessment proceeding that this person had no PAN and the entire amount was paid in cash only out of ancestral savings. Since the credit worthiness of the loan lender could not be established, the AO treated the same as unexplained cash credit. xxxii. In the course of the appellate proceeding, the appellant submitted a confirmation letter dated 24/02/2015 claimed to have been issued by the loan lender Sh.A.M. Mohan vide which the loan transaction was confirmed. Along with this confirmation letter, a copy of the ledger account in the name of Sh.AM. Mohan in the hooks of accounts of the assessee for the ref evant year under consideration was furnished. On perusal of the same, it was noticed that the appellant had received a sum of Rs. 20,000/- each in cash on 05/04/2011, 13/04/2011, 04/05/2011, 09/05/2011 and 01/06/2011 respectively and Rs.22,520- in cash on 07/06/2011. Thereafter, with effect from 26/08/2011 till 28/03/2012, the remaining amounts were received on different occasions through banking channels. xxxiii. Therefore, in order to verify the authenticity of the confirmation letter, a fetter under section 133 (6) of the Act was issued to Sh.A.M. Mohan on 25/11/2016 requesting him to furnish the relevant documentary evidences to prove the genuineness of ITA No.2534/Chny/2017 :- 13 -: the transaction and his credit worthiness. In reply, Sh.A.M. Mohan furnished the written submission dated 28/02/2017 stating therein that he is not an existing assessee and his nature of source of income was partly from salary of Rs.15,000/-per month as a priest in a temple. He also confirmed that the interest free loan still existed as on date and the entire amount of loan was advanced in cash only. However, he did riot furnish his bank account statement as the impugned loans did not reflect in the bank account statement. He also furnished ledger account of the appellant which reflected the entire amount of loan advanced in cash only starting from 05/04/2011 till 28/03/2012. xxxiv. Since the loan lender Sh.AM. Mohan had not furnished his bank account statement to establish his credit worthiness, a reminder was issued to him vide the letter dated 06/03/2017. In reply, he furnished the written submission dated 21/03/2017 and stated that he had no bank account. xxxv. From the above details, it is noticed that the entire amount of loan was received in cash as against the contention of the appellant that these were received through banking channels. Secondly, it is noticed that the loan lender is a man of small means with a monthly salary of Rs. 15; He even does not have bank account which also his financial worth. It is also surprising to note that the man of such a weak financial worth has advanced a huge interest free amount for indefinite period to the appellant. xxxvi. Therefore, it is evidently established that the appellant had introduced its unaccounted money in the books of accounts during the relevant year under consideration in the name of Sh.A.M. Mohan whose credit worthiness has never been proved. Hence, I do not find any infirmity in the finding of the AO that this was unexplained cash credit which needed to be taxed u/s 68 of the Act. Accordingly, the addition is confirmed. Even otherwise also if the loan was found to be genuine, the same would have attracted the penal provisions of section 271D r.w.s. 269 SS of the Act.” 2.3 Before us also, the assessee filed the same details in his paper book consisting of Item Nos. 3 to 9 from pages 16 to 85. The assessee before us could not establish that these persons have creditworthiness or source of income to prove that the advances given to assessee firm or are out of explained sources. Even, we have gone through the details in entirety and noticed that these details have already been ITA No.2534/Chny/2017 :- 14 -: gone by CIT(A) and noted that the assessee is unable to prove the creditworthiness of these loan creditors or the immediate source of the transaction. Even, some of the loan creditors are not having any bank account or the transactions are in cash. Hence, we have no reason to interfere with the order of CIT(A) and hence, the same is confirmed, This issue of assessee’s appeal is dismissed. 3. The second issue in this appeal of assessee is against the order of CIT(A) sustaining the addition made by A.O of Rs. 10,00,000/- as unexplained sundry creditors on estimated basis. For this, the assessee has raised the following ground No.8: “8. The CIT(Appeals) erred in sustaining Rs. 10 Lakhs as unexplained sundry trade creditors on an estimated basis in the computation of taxable total income without assigning proper reasons and justification.” 3.1 The brief facts of the case are that the A.O required the assessee to file the details of sundry trade creditors amounting to Rs.40,26,800/-, but the assessee before A.O could not provide the confirmations, bills for vouchers or the amounts sold to these parties. The A.O noted that the assessee was engaged in telecom business and hence, likelihood of outstanding credits is acceptable and even names of creditors are closely related to the business undertaken by the assessee. But, in the absence of any evidence or any confirmation, ITA No.2534/Chny/2017 :- 15 -: he estimated the disallowance of sundry trade creditors at Rs.10 Lakhs and added to the returned income of the assessee. Aggrieved, the assessee preferred appeal before CIT(A). 3.2 The assessee before CIT(A) also could not produce the details and for example he issued notice u/s 133(6) of the Act to M/s. Alke Enterprises and the assessee submitted ledger account reflected in his books of accounts but details i.e., ITR return, balance sheet or profit and loss account, list of sundry creditors or debtors and relevant bank account statement was not furnished, despite notice u/s. 133(6) of the Act was issued. The notice u/s. 133(6) of the Act was received un- served and remark of the Postman as “left”. This means that these are not genuine trade creditors and he confirmed the addition made by A.O of Rs. 10 Lakhs. Even now before us, the assessee could not produce any evidence in regard to trade creditors like Alke Enterprises, Vedeocon Telecommunication and Bharath Business Channels etc. Since, the assessee failed to produce any evidence even now before us, we are left with no other alternative except to confirm the addition. Hence, we affirm the order of A.O and that of the CIT(A). This issue of assessee’s appeal is dismissed. ITA No.2534/Chny/2017 :- 16 -: 4. The third issue raised by the assessee is as regards to the order of CIT(A) enhancing the assessment on account of short term borrowings bringing to tax amounting to Rs. 38,98,000/-. For this, the assessee has raised the following Ground No.3: “3. The CIT (Appeals) erred in bringing to tax Rs.38,98,000/- accounted as short term borrowings in the computation of taxable total income without assigning proper reasons and justification and went wrong in recording the findings in this regard in paras 15 & 16 of the impugned order without assigning proper reasons and justification.” 4.1 The brief facts of the case are that the CIT(A) during the course of appellate proceedings noticed while examining books of accounts of the assessee with regard to loan creditors, the assessee has raised short term borrowings from the following six persons amounting to Rs. 38,98,000/-: Additions by Sundry Debtor Shreyaa Solvchem Pvt Ltd. 15,00,000.00 D. Sridhar 5,00,000.00 N.Balasubramanian 5,00,000.00 R. Sairam 5,00,000.00 S. Geetha 5,00,000.00 D. Dhandapani 3,98,000.00 Total 38,98,000.00 4.2 The CIT(A) required the assessee to explain the above creditors, which are short term borrowings raised by the assessee in his business purposes and the CIT(A) issued notice to the short term creditors namely Shri D. Dhandapani, Shri D. Sridhar, Shri N. Balasubramanian, Shri R. Sairam, Smt. S. Geeta & M/s. Shreyaa ITA No.2534/Chny/2017 :- 17 -: Solvchem Pvt. Ltd. and all confirmed the transaction in response to notice u/s. 133(6) of the Act and also filed details of source of source as discussed by CIT(A) in his order from page No.33 to 48. The details are already discussed by CIT(A) in his order, but the CIT(A) on the basis of conjunctures and surmises enhanced the assessment, whereas these credits were short term credits/short term borrowings raised by the assessee from various persons, who furnished their ITR details, bank copies and source of transactions as is evident from the order of CIT(A). We find that short term creditors has proved the source by filing the ITR details, confirmation and bank statements from where these amounts were advanced and the CIT(A) without any basis and which is merely on suspicion made these additions. We are convinced that the sources are explained by the assessee and all are genuine credits and hence, we delete the addition made by CIT(A) by enhancing the income and hence, this issue of assessee’s appeal is allowed. 5. The fourth issue in this appeal of assessee is as regards to the order of CIT(A) enhancing the assessment by bringing the tax Rs.37,94,993/- being transaction with Amaya Enterprises P. Ltd. For this, the assessee has raised the following ground No.6: “6. The CIT (Appeals) erred in bringing to tax Rs.37,94,993/- in paras 17& 18 of the impugned order pertaining to the transaction with M/s ITA No.2534/Chny/2017 :- 18 -: Amaya Enterprises P Ltd. in the computation of taxable total income without assigning proper reasons and justification and ought to have appreciated that the enhancement of the assessment in this regard was bad in law and wholly unjustified.” 5.1 During the appellate proceedings, the CIT(A) noticed that there is a ledger account in the name of Amaya Enterprises P. Ltd. in the books of accounts of the assessee with a total debit of Rs.1,68,67,990/-. According to CIT(A), the balance credit outstanding was Rs. 9,45,239/-. The CIT(A) asked the assessee to furnish the details of Amaya Enterprises P. Ltd., because the assessee is making purchases from this party. The CIT(A) also issued notice u/s. 133(6) of the Act dated 01.12.2016 and made reply to the same. The CIT(A) furnished a letter confirming the balance of Rs. 16,71,389/- as on 31.03.2012. The party also filed copy of relevant ledger account, which revealed that total sales made by the assessee during the year was at Rs. 2,16,08,222/- and total payment from assessee was at Rs.1,99,36,833/-. According to CIT(A), balance payment receivable from assessee has been reflected at Rs. 16,71,389/-, but there is no opening balance as on 01.04.2011. Therefore, according to CIT(A), the assessee has made unaccounted purchases of Rs. 37,94,993/- i.e., sales made to the assessee at Rs. 2,16,08,222/- as against the purchases declared by the assessee from Amaya Enterprises P. Ltd., at Rs. 1,78,13,229/-. Hence, the differential amount was treated by ITA No.2534/Chny/2017 :- 19 -: CIT(A) as unaccounted purchases amounting to Rs. 37,94,993/-. Aggrieved, now the assessee is in appeal before the Tribunal. 5.2 We have heard the rival contentions, and gone through the facts and circumstances of the case. Before us, the Ld. counsel for the assessee filed copy of ledger account of CIT(A) in regard to Videocon ledger and also filed the account of Amaya Enterprises Pvt. Ltd.- Videocon D2h for the relevant year 01.04.2011 ton 31.03.2012. The Ld. counsel explained that the total debit and credit discussed in Videocon ledger account is as under: 1,68,67,660.00 1,78,13,229.00 Closing balance 9,45,239.00 --------------------- -------------------- 1,78,13,229.00 --------------------- 1,78,13,229.00 -------------------- 5.3 Similarly, in regard to Videocon D2h, the closing account is as under: 30,69,343.00 37,94,993.00 Closing balance 7,25,650.00 --------------------- -------------------- 37,94,993.00 --------------------- 34,94,993.00 -------------------- 5.4 The Ld. counsel then took us through group sundry creditors and the balance discussed in regard to Amaya Enterprises Pvt. Ltd. for the period 01.04.2011 to 31.03.2012 are as under: ITA No.2534/Chny/2017 :- 20 -: Amaya Enterprises Pvt. Ltd. 16,70,889.00 Amaya Enterprises – Videocon D2h 7,25,650.00 Amaya Enterprises – Videocon Recharge 9,45,239.00 5.5 The Ld. counsel for the assessee stated that the CIT(A) without going into these details made addition and he has not gone into reconciliation as pointed out by Ld. counsel before us. The Ld. counsel for the assessee stated that apart from this there is no account statement as noted by CIT(A). When these were pointed out to Ld. Sr. D.R, he could not controvert the above fact situation. 5.6 After going through the facts of the case, we find that the above reconciliation was never considered by CIT(A) and these are the exact details and ledger accounts which has to be considered by deciding the issue. Hence, we find that the transactions recorded in the ledger account of assessee’s books of accounts are properly discussed and there is no difference in the sale made by Amaya Enterprises Pvt. Ltd. and purchases recorded by the assessee. Hence, we delete this addition and allow this issue of assessee’s appeal. 6. The fifth issue raised by the assessee is as regards to the order of CIT(A) enhancing the assessment by adding cash sales at Rs. 7,67,294/-. For this, the assessee has raised the following ground No.7: ITA No.2534/Chny/2017 :- 21 -: “7. The CIT (Appeals) erred in bringing to tax Rs.7,67,294/- in para 25 of the impugned order representing certain cash sales in the computation of taxable total income without assigning proper reasons and justification and ought to have appreciated that the enhancement of the assessment in this regard was bad in law and wholly unjustified.” 6.1. The brief facts of the case are that the CIT(A) during the course of appellate proceedings noticed that there are cash sales made by the assessee to M/s. Krishna Electricals amounting to Rs. 4,85,500/-, M/s. Jain Electricals of Rs. 2,09,000/- and Shri Mahaveer Impex of Rs.99,390/- and thereby according to him, the assessee has claimed the same as sale which are not genuine and cash claimed to have been received from the above parties be treated as unexplained money introduced in the books of accounts under the grab of sales. Even, the CIT(A) noted that there is a violation of the provisions of Section 40A(3) of the Act and also notice issued to these three parties were not served u/s. 133(6) of the Act. Hence, the CIT(A) enhance the income to the extent of Rs. 7,67,294/- u/s. 251(1)(a) of the Act. Aggrieved, the assessee is in appeal before us. 6.2 Before us, the Ld. counsel for the assessee filed copies of ledger extracts of M/s. Krishna Electricals, M/s. Jain Electricals and Shri Mahaveer Impex along with invoices raised and filed paper book at pages 132 to 159. The Ld. counsel for the assessee stated that when complete details are produced, there is no question of treating the ITA No.2534/Chny/2017 :- 22 -: sales as unexplained rather, this sale is explained and no addition whatsoever can be made. We have gone through the ledger extract invoices raised in regard to these parties and find that there is no reason to treat the sales as unexplained, because the sales have already been recorded in the books of accounts and once, the same is recorded in the books of accounts no addition can be made again for the same sales. Hence, we delete the addition and allow this ground of assessee’s appeal. 7. In the result, the appeal of the assessee is partly allowed. Order pronounced on 15 th September, 2023. Sd/- Sd/- ( मंजुनाथ. जी) (Manjunatha. G) लेखा लेखालेखा लेखा सद य सद यसद य सद य /Accountant Member (महावीर िसंह) (Mahavir Singh) उपा / Vice President चे ई/Chennai, दनांक/Dated: 15 th September, 2023. EDN/- आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकर आयु /CIT 4. िवभागीय ितिनिध/DR 5. गाड फाईल/GF