JATIN GARG,CHANDIGARH V. ASSTT. COMMISSIONER OF INCOME TAX, CC-2, CHANDIGARH

ITA 1019/CHANDI/2024

AI Insights

The case revolves around an appeal by Shri Jatin Garg against the order of the CIT(A)-3, Gurgaon, which upheld the addition of Rs. 5,00,00,000 to his income for the Assessment Year 2018-19. The addition was initially made by the Assessing Officer (AO) on the grounds that the loan received from Shri Gurinder Singh was unexplained. The Tribunal examined the documents and evidence presented, including the loan agreement, bank statements, and the income tax return of the lender, and found that the assessee had adequately proved the genuineness of the loan transaction and the creditworthiness of the lender. The Tribunal criticized the lower authorities for not properly considering the substantial evidence provided and for relying on conjectures and surmises.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469823 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Other Referred Cases: Dhirajlal Girdharilal v. Commissioner of Income-tax, Lalchand Bhagat Ambica Ram v. Commissioner of Income-tax, Sagar Enterprises v. Assistant commissioner of Income Tax, Price Waterhouse Coopers Private Limited Vs. CIT, Anaikar Trade and Estates (P) Ltd (No.2) vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT SHARMA
• Assessee Lawyers: T.N. SINGLA; C.A
• Keywords: Additional evidence; Question of law; Unexplained cash credit; Unexplained investment; Documents seized; Principle of natural justice; Search and seizure; Application of stay
• Section: 142(1); 250; 139(1); 68; 131; 22; 69; 133(6)

Judgement Text

"आयकर अपील\tय अ\u000bधकरण,च\u000fडीगढ़ \u0013यायपीठ “ए” , च\u000fडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE \u0018ी \u0019व\u001bम \u001dसंह यादव, लेखा सद$य एवं \u0018ी परेश म. जोशी, , , , \u0013या(यक सद$य BEFORE: SHRI. VIKRAM SINGH YADAV, AM & & & & SHRI. PARESH M. JOSHI, JM आयकर अपील सं./ ITA NO. 1019/Chd/2024 & SA No. 25/Chd/2024 \u000bनधा\u000fरण वष\u000f / Assessment Year : 2018-19 Shri Jatin Garg SCO 80-81, 3rd Floor Sector 17-C Chandigarh बनाम The Asst. CIT Central Circle-2 Chandigarh \u0015थायी लेखा सं./PAN NO: BFGPG9490E अपीलाथ\u001a/Appellant \u001b\u001cयथ\u001a/Respondent \u000bनधा\u000f\u001dरती क\u001f ओर से/Assessee by : Shri T.N. Singla, C.A राज\u0015व क\u001f ओर से/ Revenue by : Shri Rohit Sharma, CIT DR सुनवाई क\u001f तार$ख/Date of Hearing : 03/12/2024 उदघोषणा क\u001f तार$ख/Date of Pronouncement : 12/02/2025 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)-3, Gurgaon dt. 27/09/2024 pertaining to Assessment Year 2018-19. 2. In the present appeal, the Assessee has challenged the action of the ld CIT(A) in upholding the additions made by the Assessing officer of Rs. 5,00,00,000/- received from Sh. Gurinder Singh as loan on surmises and conjectures. 3. Briefly the facts of the case are that the assessee filed his return of income under Section 139(1) on 18/07/2018 at the total income of Rs. 3,11,370/-. Consequent upon search under section 132(1) of the Act, notice under section 143(2) dt. 17/09/2019 was issued and served upon the assessee. Thereafter notice under section 142(1) alongwith questionnaire were issued and after considering the submissions filed by the Assessee but not finding the same 2 acceptable, the assessment proceedings were completed at an assessed income of Rs. 5,08,11,370/- interalia making an addition of Rs. 5,00,00,000/- which is subject matter of present appeal. 4. With regard to the addition of Rs 5,00,00,000/-, the AO observed that on perusal of bank account statement of the assessee maintained with HDFC bank, it reveals that the assessee has shown a loan of Rs. 5,00,00,000/- from Shri Gurinder Singh on 23.05.2017 who is stated to be the friend of assessee’s father Shri Harivansh Garg. The AO further observed that in support of this unsecured loan, photocopy of a loan agreement dated 23.05.2017 has been furnished, which has been entered into between Shri Gurinder Singh, Shri Jatin Garg and Shri Harivansh Kumar and perusal of the 1st para of the alleged loan agreement reveals that the assessee, Shri Jatin Garg is engaged in business in Punjab whereas, during the course of search and seizure operation as well as during assessment proceedings, the assessee has claimed himself a student and has shown no business activities or business interest or shareholding in any business concern and the veracity of the alleged loan agreement was doubted. Further, the AO observed that the assessee has failed to furnish the copy of ITR, Bank Account Statement, Balance Sheet etc. of Shri Gurinder Singh to substantiate the identity of the party, genuineness of the transaction and creditworthiness of the lender and the amount of Rs. 5,00,00,000/- credited in the bank account of the assessee on 23.05.2017 was held to be unexplained investment of the assessee within the meaning of Section 69 of the Act and the same was added to the income of the assessee and brought to tax. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and written submissions were filed in support of his appeal challenging th addition so made by the AO. The Ld. CIT(A) taking into consideration the written submission, the remand report from the AO and rejoinder to the remand report 3 filed by the assessee, dismissed the appeal of the assessee and the relevant findings of the ld CIT(A) read as under: “10. Grounds of appeal no. 4 & 8 and Additional ground of appeal no. 1 The appellant received Rs. 5,00,00,000/- on 23.05.2017 from Sh. Gurinder Singh as loan during the year. The assessing officer has mentioned that the appellant had failed to submit ITR, Balance Sheet & bank account of the lender and hence, the appellant failed to substantiate the identity of the party, genuineness of the transaction and creditworthiness the lender and therefore, the amount of Rs.5,00,00,000/- credited in the bank account of the appellant on 23.05.2017 was held to be the unexplained investment of the appellant within the meaning of section 69 of the Act and the same was added to the income of the appellant. The appellant in his reply has claimed that copy of agreement of loan executed with Sh Gurinder Singh, copy of receipt his bank account and copies of draft showing return of said loan with interest to Shri Gurinder Singh during the year were submitted with the assessing officer during the assessment proceedings. The additional evidence filed by the appellant cannot be entertained as it has no relevant w.r.t Rule 46A provisions and the appellant was moreover, not prevented by any sufficient cause to produce the same before the AO. The addition was made based on documentary evidence unearthed during search regarding unexplained investment. The father of the appellant Shri Harivansh Kumar Garg, himself admitted during statement recorded u/s 132(4] that his son was studying Btech, abroad and had no business interest or shareholding in any business concern and therefore, the said loan agreement with Shri Gurinder Singh was doubtful. Ultimately this unaccounted money was also channelised in the sand mining business through M/s Rajbir Enterprises (Prop.. Shri Sanjit Singh Randhawa) which was returned back and the appellant, then transferred the same to his father's proprietary firm M/s Raman & Co., which further gave it to Shri Sahil Singla. During search, on physical verification on 16.02.2018, the above said firm was not found functional at the given address. It is pertinent to mention here that three firms, namely, M/s Rajbir Enterprises, M/s Rajbir Enterprises, Mohali and M/s New Rajbir Enterprises were paper entities incorporated in April, 2017 by Shri Sanjit Singh Randhawa along with others having registered office at 763A, Phase-2, Mohali. That the appellant tried to return the money back to Shri Gurinder Singh, appears to be an after thought and the entire events hints towards non genuine nature of transaction. Thus, it is held that the appellant has failed to prove genuineness of said loan of Rs. 5 crores and has not submitted any cogent evidence to prove genuineness of said loan. Further, the purpose and nature of said loan is also not proved beyond doubt as this arrangement appears to be a colorable device. Thus, the addition of aforesaid loan of Rs. 5 crores made by the assessing officer u/s 69 of the Act is upheld, and ground of appeal no. 4& 8 are hereby dismissed.” 6. Against the said findings and order of the ld CIT(A), the assessee is in appeal before us. 4 7. During the course of hearing, the Ld. AR taken us through the submissions made before the ld. CIT(A) which are contained at pages 22 to 35 of the impugned order and contents thereof read as under: “It is submitted that the appellant took loan of Rs. 5,00,00,000/- from Sh. Gurinder Singh by executing agreement of loan before the notary public on 23.05.2017 @ 12% rate of interest during the year under consideration. The loan agreement and other documents in this regard were found by the search party during the search proceedings from the residence of the appellant. (Copy of loan agreement with other documents seized are enclosed) The appellant completed his Civil Engineering in March 2017 and was providing consultancy services as an engineer. Then he came to know that his cousin, Sh. Sahil Singla is planning to invest in sand mining business, so the appellant approached him seeking for business opportunity which the appellant was eagerly looking for. Sh. Sahil Singla told him that the documentation and funds regarding the partnership business in which he was investing was complete but advised him to keep the money ready for investment and specifically advised to electronically transfer the same into particular bank account when asked to do so. The appellant took loan of Rs. 5,00,00,000/- from his father’s friend, Sh. Gurinder Singh (via agreement of loan), and when he did not receive any call from Sh. Sahil Singla then in over excitement for becoming the partner in the firm transferred the money to the bank account of M/s Rajbir Enterprises (proprietorship concern of one of the persons Sh. Saniit Singh Randhawal on 23.05.2017. However, the said amount was returned to the appellant on 25.05.2017 by RTGS by the partner of the firms, Sh. Sanjit Singh Randhawa. Thereafter, the appellant and his father, Sh. Harivansh Garg tried to return the money to Sh. Gurinder Singh as it was of no use to the appellant. However, Sh. Gurinder Singh was reluctant to take the money back as he was in no need for money at that time, so the appellant transferred the funds to M/s Raman & Co., proprietorship of his father (Sh. Harivansh Garg), who further gave loan to Sh. Sahil Singla @ 15% rate of interest. Further interest was paid by Sh. Sahil Singla to Raman & Co., proprietorship concern of Sh. Harivansh Garg on 12-02-2018 i.e. before the date of search, who further paid the same to the appellant and the appellant paid the interest of Rs. 30,00,000/- to Sh. Gurinder Singh on 12.02.2018 vide DD No. 075876, i.e., before the date of search. The total principal amount of loan of Rs 5.00 crore was returned by Sh. Sahil Singla to M/s Raman & Co. vide transfer of funds of Rs 3.00 crore on 26-02-2018 and Rs 2.00 crore on 27-02-2018 through Banking Channel to the Bank Account of M/s Raman & Co who then transferred the aforesaid amount of Rs 3.00 crore and Rs 2.00 crore to the Bank Account No. 50100091716612 of appellant with HDFC Panchkula along with interest accrued upto 26.02.2018. The appellant then returned the principal amount of loan taken from Sh. Gurinder Singh on 26-02-2018 and 27-02-2018 vide DD No. 075943 and DD No. 075951 of Rs 3.00 crore and Rs 2.00 crore from his Bank Account No. 50100091716612 with HDFC Panchkula. This fact was bought to the knowledge of the learned assessing officer in the reply dated 21.11.2019 and also at the time of hearing, which the learned assessing officer ignored while passing the impugned order as none of these facts are mentioned in the order passed by him. Also, the learned assessing officer was provided with the below mentioned documents in the reply dated 21.11.2019 as proof of the genunity of the transaction :- A. Loan agreement between Sh. Jatin Garg & Sh. Gurinder Singh executed before the Notary Public. B. Loan agreement between Sh. Sahil Singla & Sh. Harivansh Garg. 5 C. Copy of Bank Statement of Sh. Jatin Garg. D. Copy of Bank Statement of M/s Raman & Co. (Proprietorship of Sh. Harivansh Garg). E. Copy of Draft of Rs 30.00 Lakhs issued on 12-02-2018 in favour of Sh. Gurinder Singh of interest upto 30.11.2017. F. Copy of Draft of Rs 3.00 crore issued on 26-02-2018 in favour of Sh. Gurinder Singh for return of loan. G. Copy of Draft of Rs 2.00 crore issued on 27-02-2018in favour of Sh.Gurinder Singh for return of loan. H. Copy of Draft of Rs 15.00 Lakhs issued on 27-02-2018 in favour of Sh.Gurinder Singh of interest upto 26.02.2018. I. Copy of Affidavit submitted by Sh. Jatin Garg before Hon'ble Justice J.S Narang (Retd.) commission of inquiry on 20-07-2017. J. Copy of Bank Statement of Sh. Gurinder Singh of HDFC 02131000000311 The learned assessing officer did not bother to investigate any of the aforementioned documents submitted, as his mind was vitiated and with a predetermined mind set he followed the dictates of third party without even applying his own mind, thereby passed the order stating that credits received in the bank account of appellant are unexplained investment. The part of the reply dated 21.11.2019 is reproduced as under :- \"Sh. Jatin Garg completed his B.E (civil) in March/April 2017 and was looking for some business opportunity. His father Sh. Harivansh Garg is Contractor and his father's friend Sh. Gurinder Singh also a Civil Contractor wanted to invest some money on interest etc. Sh. Jatin Garg came to know during mid of May 2017 that his cousin Sh. Sahil Singla is planning to start business of sand mining in Punjab. Mr. Jatin Garg contacted his father's friend Sh. Gurinder Singh through his father Sh. Harivansh Garg to get loan for investment in this proposed sand mining business with his cousin Sahil Singla. Sahil Singla told him that his partner Sh. Sanjit Singh Randhawa had already entered into Memorandum of Understanding with prospective partners/investors and also told to Jatin Garg that in case there would be any possibility to admit him as partner in the mining business then Sahil Singla would inform him to transfer the funds into Bank Account of M/s Rajbir Enterprises (Proprietorship of Sh. Sanjit Singh Randhawa) and suggested him to keep the funds ready to avail any such opportunity. Sh. Jatin Garg arranged loan of Rs 5.00 crore from Sh. Gurinder Singh by executing agreement of loan before the Notary Public on 23-05-2017 @ 12% p.a Interest through RTGS in his HDFC Account No. 50100091716612, Panchkula on 23- 05-2017 and without waiting for message of Sahil Singla transferred the funds of Rs 5.00 crore in over enthusiasm, to the Bank Account of M/s Rajbir Enterprises (Proprietorship of Sh. Sanjit Singh Randhawa) through RTGS on 23-05-2017. However when it came to the knowledge of Sh. Sahil Singla and Sh. Sanjit Singh Randhawa then the said amount of Rs 5.00 crore was returned to Jatin Garg by them through RTGS on 25-05-2017. Thereafter, ShJatin Garg & his father Sh. Harivansh Garg approached Sh. Gurinder Singh for returning his loan of Rs 5.00 crore but Sh. Gurinder Singh requested his father Sh. Harivansh Garg to invest the said loan of Rs 5.00 crore somewhere else as Sh. Gurinder Singh was not requiring the said amount immediately. Sh. Jatin Garg transferred these funds of Rs 5.00 crore to OBC Bank Account No. 51631131002256, Panchkula of proprietorship of his father (M/s Raman & Co.) through RTGS on 29-05-2017. Thereafter, Sh. Harivansh Garg gave further loan ofRs 5.00 crore to Sahil Singla vide RTGS of Rs 4,50,00,000/- on 30-05-2017 and Rs 50,00,000/- on 01-06-2017 into bank account of Sh. Sahil Singla as per loan agreement executed between Sh. Harivansh Garg & Sh. Sahil Singla on 30-05-2017. (Copy of agreement enclosed) Sh. Sahil Singla paid interest of Rs 35,87,000/- upto 30-11-2017 to Sh. Harivansh Garg and Sh. Jatin Garg paid the interest of Rs 30,00,000/- to Sh. Gurinder Singh vide DD No. 075876 dated 12-02-2018 of HDFC Bank from Bank Account ofSh. Jatin Garg. This interest was paid by Sahil Singla to Sh. Harivansh Garg on 12-02-2018 i.e. before the date of search who paid the same to Sh. Jatin Garg and he further paid to Sh. Gurinder 6 Singh before the date of search. Thereafter, total principal amount of loan of Rs 5.00 crore was returned by Sh. Sahil Singla to Sh. Harivansh Garg vide transfer of funds of Rs 3.00 crore on 26-02-2018 and Rs 2.00 crore on 27-02-2018 through Banking Channel to the Bank Account of M/s Raman & Co. (Proprietorship of Sh. Harivansh Garg) in its HDFC Account No. 50200012501135, Panchkula. (Copy of Bank Statement of Raman & Co. enclosed). Then Sh. Harivansh Garg transferred the aforesaid amount ofRs 3.00 crore and Rs 2.00 crore to the Bank Account No. 50100091716612 of Sh. Jatin Garg with HDFC Panchkula and Jatin Garg returned the principal amount of loan taken from Sh. Gurinder Singh on 26-02-2018 and 27-02-2018 vide DD No. 075943 and DD No. 075951 of Rs 3.00 crore and Rs 2.00 crore from his Bank Account No. 50100091716612 with HDFC Panchkula. Sh. Sahil Singla also paid interest on the above stated loan for 3 months from 01-12-2017 to 26-02-2018 amounting to Rs 15.00 Lakhs to Sh. Harivansh Garg on 27-02-2018 through Banking transaction in HDFC Bank Account No. 50200012501135 of M/s Raman & Co. (Proprietorship of Sh. Harivansh Garg) who transferred these funds to the account of Sh. Jatin Garg on 27-02-2018 and Jatin Garg paid interest on loan to Sh. Gurinder Singh upto 26-02-2018 amounting to Rs 15.00 Lakhs vide DD No. 075953 from his HDFC Bank Account No. 50100091716612 at Panchkula. \" The learned assessing officer has made the following averments in his impugned assessment order passed on 31.12.2019 :- 1. The learned assessing officer alleged that \"the first para of the loan agreement states that the appellant is engaged in business in Punjab.\" In this regard it is submitted that the learned assessing officer has misinterpreted the line and presumed that the appellant was already engaged in business in Punjab. However, the fact is that the appellant completed his B.E.(civil) in March/April 2017 and was doing consultancy business in Punjab, Haryana and Chandigarh. It is very important to bring on record that the learned assessing officer has completed the assessment with a vitiated and predetermined mind set, simply on the appraisal report of ADIT, Investigation, without considering the facts / information / documents submitted by the appellant regarding the genuinity of the transaction and the evidences submitted to substantiate his claim during the assessment proceedings. The learned assessing officer tried to justify the addition made against the provisions of the Act and also against the principles of natural justice and started finding faults in the submissions / agreement of loan and the evidences submitted by the appellant at the time of hearing by picking stray threads from here and there and purposely assigning wrong meanings to such words and also by hiding certain vital parts of the submissions to weave and fortify his false and concocted story. It is an established law of the land that - • An agreement has to be read in totality and cannot be dissected. • The term of agreement must go whole hog, as it were, on the point at issue. These are to be taken as a whole. • Conjectures, surmises and suspicion cannot substitute legal proof. • The term of agreement depends on circumstances in which it was made. It is further submitted that the first para of the agreement is not the substantive part of the agreement. The learned assessing officer cannot judge the veracity of the agreement relying on the part of first para of the agreement, whereas an agreement should be read in totality and cannot be anatomized. This Proves that the whole Assessment Order was written by the Learned Assessing Officer with closed eyes and without application of his own mind whereas Application of Mind is 7 one of the most important prerequisites of framing a fair Assessment as per the law and principles of natural justice. 2. The learned assessing officer has further alleged that \"the appellant has claimed himself a student.\" First of all the learned assessing officer in para 4 of the assessment order has himself admitted that the appellant is an engineer and has shown his income from business / profession as consultancy fees received from various persons and on the other hand he has is alleging that the appellant is a student, thereby contradicting his own statement. Further, it is submitted that the appellant has never claimed himself to be a student in any of the replies submitted before the learned assessing officer. The appellant is an Engineer and completed his Civil Engineering in April/March 2017 and after completion of engineering, he was providing consultancy services as an engineer. (We are enclosing copy of all the replies submitted before the learned assessing officer for your honour's kind perusal) 3. Further the learned assessing officer has alleged that \"the appellant has shown no business activities or business interest or shareholding in any business concern\" This shows that the learned assessing officer is intentionally misinterpreting the submission of the appellant and is just picking stray threads from here and there and purposely assigning wrong meanings to words and also hiding certain vital parts of the submissions to weave and fortify his false and fabricated story just to prove his false allegations. Further, the very first question in the questionnaire issued by the learned assessing officer on 28.09.2019 was - \"Please furnish the details of nature of work and details of all business concerns/firms/companies in which you have some business interest or shareholding in the prescribed tabular format asking the name, address, PAN, co-owners, nature of business and the date from which it is operational.\" The learned assessing officer with biased and vitiated mind and in haste of adherence to the appraisal report, misinterpreted the submission of the appellant. The appellant was neither a partner in any firm nor a share holder in any company, therefore the appellant denied the same in response to the question in the questionnaire issued by the learned assessing officer. Also, it was clearly mentioned in the reply dated 21.11.2019 that the appellant tried to become a partner in mining business but since all the arrangements of the said partnership firms were already complete and hence he lost the opportunity to become the partner in the mining business. When the appellant failed to become a partner or was not partner in any firm how can he falsely state that he was a partner in any business concern or having business interest in any company or firm. 4. The learned assessing officer has alleged that \"the veracity of the loan agreement is doubted void ab initio.\" In this regard it is submitted that inspite of being satisfied with the documents / information submitted, the learned assessing officer simply on the information of the third party and without application of his own mind has simply challenged the veracity of the agreement and completed the assessment on surmises and conjectures without adhering to the principles of natural justice. The learned assessing officer has wrongly challenged the veracity of the agreement on account of the appellant claiming himself to be a student and alleging that the appellant has no business activities or business or shareholding in any business concern. However, 8 these facts neither form part of the agreement nor it has any relevance with regard to the said agreement of loan. It is further submitted that the agreement of loan along with the following documents were found during the search proceeding by the search party :- i. Copy of blank cheque given to Sh. Gurinder Singh ii. Receipt of loan issued to Sh. Gurinder Singh iii. Bank statement of Sh. Gurinder Singh iv. Proof of payment of interest of two quarter to Sh. Gurinder Singh by the appellant. The aforementioned documents were submitted before the learned assessing officer, who was impliedly satisfied with the nature, genuinity and the veracity of the evidences as no doubts /queries were raised by the learned assessing officer thereafter butwrongly made addition without application of his own mind and just for the sake of justifying his addition, by levying false allegations on the appellant The learned assessing officer did not even mention about any of the aforementioned documents submitted during assessment proceedings in his assessment order dated 31.12.2019. 5. The learned assessing officer has wrongly alleged that the appellant has failed to submit the bank account statement, PAN etc. of Sh. Gurinder Singh to substantiate the identity of the lender, genuiness of the transaction and creditworthiness of the lender due to which the credit of Rs. 5,00,00,000/- in the bank accounts of the appellant is added to the income of the appellant as unexplained investment. It is submitted that copy of agreement of loan with Sh. Gurinder Singh, his bank account statement along with his PAN No. of Sh. Gurinder Singh were submitted before the learned assessing officer during the assessment proceedings, which were however not taken into consideration while passing the assessment order and the amount of credit in the bank account of the appellant is assessed as unexplained investment of the appellant u/s 69 of the Act just for the sake of making addition. Since the amount of loan along with 12% interest was returned within same year. therefore Income Tax Return ofSh. Gurinder Singh was not required to be submitted. However, we are enclosing ITR of Sh. Gurinder Singh as additional evidence now. (Copy of ITR ofSh. Gurinder Singh along with the bank account statement are enclosed) The Learned Assessing Officer has wrongly doubted the credibility and capacity of Sh. Gurinder Singh (Lender). Sh. Gurinder Singh is \"A\" Class Government contractor and has submitted Income Tax Return for A.Y. 2017-18 by declaring taxable income at Rs.51,20,33,100/- i.e. more than Rs. 51.00 crores (copy of acknowledgment of return enclosed). Further Sh. Gurinder Singh had bank balance of Rs. 30,96,42,345/- as on 01.04.2017, from which he had made payments on various dates during the period from 01.04.2017 to 23.05.2017 out of the opening bank balance as on 01.04.2017, without introducing any fresh deposits/ credits during 01.04.2017 to 23.05.2017 in the said Bank account. The aforesaid facts clearly establish that the lender (Sh. Gurinder Singh) was having capacity and credibility to advance Rs. 5.00 Crores to the appellant. Further, the Learned Assessing Officer was fully convinced with proofs submitted by the appellant; hence he neither issued a notice u/s 133(6) nor u/s 131 of the Act to Sh. Gurinder Singh. This shows that the Learned Assessing Officer did not apply his mind in assessing the income and blindly followed the views of ADIT (Inv.) Mohali without application of his own mind. No further inquiries were made by the Learned Assessing Officer from Sh. Gurinder Singh. Further. No Query or Show cause notice was issued to the appellant in this regard. Also, the Learned Assessing Officer has not questioned even a single proof submitted by us before him in this regard during the course of the Assessment Proceedings. 9 Further, it is submitted that interest of two quarter of interest on loan was paid before the date of search. Also a post dated cheque as security and a receipt was given by the appellant to Sh. Gurinder Singh at the time of execution of loan agreement as security. In the loan agreement it was stated that an amount of Rs. 5,00,00,000/- was given to the appellant as per the terms and conditions of the agreement in the presence of the witnesses. All the documents were found and seized during the search from the residence of the appellant. The total loan of Rs. 5,00,00,000/- with interest at the rate 12% was repaid by the appellant on 28.02.2018. (Copy of the said receipt and bank account statement of Sh. Jatin Garg are enclosed] Furthermore, it is submitted that the learned assessing officer has wrongly made addition u/s 69 of the Income Tax Act, 1961 amounting to Rs. 5,00,00,000/- on account of unexplained investment in the form of deposit in his bank account during the year under consideration. The Income Tax Act, 1961 explains section 69 as under :- \"Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. Maintenance of Books of Accounts is Not Compulsory as the word \"if any\" is used\" The Learned Assessing Officer was blindly and with a vitiated and predetermined mindset just to follow the views of a third party i.e. ADIT (investigation), Mohali, did not even bother to conduct a detailed investigation while completing the assessment as he failed to differentiate whether the said amount was taken as loan or made investment, as the purpose and source of credits were explained by submitting copy of loan agreement, bank statement and PAN No. of the lender along with his address in the reply dated 21.10.2019. The Learned Assessing Officer with closed eyes and without application of his own mind completed the entire assessment in the case of the appellant whereas Application of Mind is one of the most important prerequisites of framing a fair and true Assessment. We may like to submit that if for the sake of argument though not admitted, if it was an investment, then also the investment was made from the declared bank account and for the credit entries bank statement along with the explanation to the debit and credit entries were submitted to the satisfaction of the learned assessing officer and impliedly accepted by the learned assessing officer as he did not raise any querry in this regard after we filed the relevant documents and evidences. That is the reason he has not made any addition u/s 68 of the Act on account of unexplained cash credits. Further any investment made out of explained credits from regular bank account cannot be added under section 69 of the Income Tax Act, 1961. Therefore the learned Assessing Officer without application of his own mind and in haste of adherence to the instructions of third party by throwing all laws of the land to the winds in the case of this appellant, made the additions against the principles of natural justice. 10 The inferences drawn by the learned Assessing Officer are wrong and are a result of vitiated and biased mindset of the Assessing Officer. These inferences are self-serving in nature and tailor-made by the Assessing Officer. It is pertinent to mention that the additions made in the hands of the appellant on the basis of its bank entries, regarding which credible information including the source by way of required evidences had been placed during the assessment proceedings for discharging burden by the appellant, are not sustainable in law as the onus was shifted on the assessing officer but no inquiry has been undertaken by the Assessing Officer and / or any material brought on record establishing the amount of bank entries as unexplained investment thereby inviting the application of provisions of the Section 69 of the Act. It is necessary, however, that every fact for and against the assessee must have been considered with due care and the assessing officer must have given its finding in a manner which would clearly indicate what were the questions which arose for determination, what was the evidence pro and contra in regard to each one of them and what were the finding reached on the evidence on record before it The conclusions reached by the assessing officer should not be coloured by any irrelevant consideration or matters of prejudice and if there are any circumstances which are required to be explained by the assessee. the assessee should be given an opportunity of doing so. On no account should the assessing officer base its findings on suspicions, conjectures or surmises nor should it act on no evidence at all or on improper rejection of material and relevant evidence or partly on evidence and partly on suspicions, conjectures or surmises and if it does anything of the sort, its findings should he liable to he set, aside. Hence, it is clear that all the facts, evidences or documents were placed on record before the learned assessing officer and the addition is made on surmises and conjectures without considering these evidences or documents. Therefore, your honour is requested to delete the impugned addition, wrongly made by the learned assessing officer as unexplained investment u/s 69 of the Act. 8. Thereafter, our reference was drawn to the remand report submitted by the AO during the appellate proceedings and the contents thereof read as under: “4.1 The plea of the appellant that the AO has wrongly made addition of Rs.5,00,00,000/- received from Sh. Gurinder Singh as loan merely on surmises and conjectures, does not have any merit. The addition made in this case is based on the documentary evidence unearthed during search regarding unexplained investment of the appellant. The assessee has been given ample opportunities to substantiate the genuineness of the transaction. However, the assessee has failed to do so. During assessment proceedings was observed that the assessee had received a loan of Rs. 5,00,00,000/- from Shri Gurinder Singh was cariying out business activities. Whereas during course of search & seizure operation, Sh. Harivansh Kumar father of the assessee stated during statement taken u/s 132(4) of the Act that the assessee was studying for higher education in Moscow (Russia) and had no business interest or shareholding in any business concern. Thus, the loan agreement made with Sh Gurinder Singh was doubtfull. The relevant part of the statement is reproduced as under:- 11 4.2 Further, the assessee submitted in his additional ground that 'the appellant completed his civil engineering in March 2017 and was providing consultancy services as an engineer. Then he came to know that his cousin, sh. Sahil Singla is planning to invest in sand mining business, so the appellant approached him seeking for business opportunity which the appellant was eagerly looking for Sh. Sahil Singla told him that the documentation and funds regarding the partnership business in which he was investing was complete but advised him to keep the money ready for investment and specifically advised to electronically transfer the same into particular bank account when asked to do so. The appellant took loan of Rs. 5,00,00,000/- from his father's friend, Sh. Gurinder Singh (via agreement of loan), and when he did not receive any call from Sh. Sahil Singla then in over extitement for becoming the partner in the firm transferred the moneu to the bank account of M/s Rajbir Enterprises (proprietorship concern of one o f the persons Sh. Sanjil Singh Randhawa on 23.05.2017. However, the said amount was returned to the appellant on 25.05.2017.by RTGS by the partner of the firm, Sh. Sanjit Singh Randawa. Thereafter, the appellant and his father, Sh. Harivansh Garg tried to return the money to Sh Gurinder Singh as it was of no use to the appellant. However, Sh. Gurinder Singh was reluctant to take the money back as he was in no need, for money at that time, so the appellant transferred the fund to M/s Raman & Co., Proprietorship of his father (Sh. Harivansh Garg), who further gave loan to Sh. Sahil Singla @ 15% rate of interest' 12 4.2.1 On perusal of submission of the assessee, it is observed that the assessee had transferred the loan of Rs. 5,00,00,000/- to the bank account of M/s Rajbir Enterprises (proprietorship concern of Sh. Sanjit Singh Randhawa) and after that it had been transferred to Sh. Sahil Singla. During assessment proceedings and search operation in the cases of Sh. Sanjit Singh Randhawa and Sh. Sahil Singla, it was held that Sh. Sanjit Singh Randhawa and Sh. Sahil Singla invested the money taken from different person, into Sand Mining business. The entire modus operandi was designed in a such away so that Sh. Sahil Singla and Sh. Sanjith Singh Randhawa could channelise and invest the unaccounted money belonging to different persons in the Sand Mining Business. The very fact that the assessee has been part of such a gamut of masked transactions raises a big question mark on the genuineness of the transaction undertaken by the assessee. Further, regarding the said investment made in the sand mining business, it was observed that the said investment had been made by the partnership firms namely M/s Rajbir Enterprises, M/s Rajbir Enterprises Mohali and M/s New Rajbir Enterprises which were incorporated on 10.04.2017, 11.04.2017 and 10.04.2017 respectively in the names of their working partners namely Sh. Amit Bahadur, Sh. Kulwinder Paul Singh and Sh. Ajitpal Singh respectively. It has been claimed that these firms have been formed by these three working partners with Shri Sahil Singla and Shri Sanjit Singh Randhawa, who are common partners in all the three alleged partnership firms. Further, some other partners were added in these firms vide partnership deed 10.06.2017. Though, the story of alleged partnership firms has been put forth by the assessee, however, the genuineness of this alleged partnership firms has not been substantiated. No amount has been routed through the bank account of any alleged partnership firm. Even, the bank accounts of alleged partnership firms have not yet been opened. Further, the registered address of all the three alleged partnership firms have been shown at H.No. 763A, Phase-2, Mohali. However, on physical verification during the course of search and seizure operation on 16.02.2018, the said firm registered at H.No. 763A, Phase-2, Mohali was not found functional at the said address. Further, no books of accounts of alleged partnership firms have been found to be maintained and the same has never been produced by the alleged partnership firms for verification. Therefore, in the facts and circumstances of the case, it is observed that the alleged partnership firms have nothing do with the investment made in the sand mining auction in the names of Sh. Amit Bahadur, Sh. Kulwinder Paul Singh and Sh. Ajitpal Singh respectively. Therefore, these firms shown incorporated in the month of April, 2017, as far as business of sand mining is concerned, are paper entities only having no genuine business or transaction in the relevant FY-2017-18 i.e. AY-2018-19. 4.3 The assessee has submitted that he and his father, Sh. Harivansh Garg tried to return the money to Sh. Gurinder Singh as it was of no use to the appellant. However, Sh. Gurinder Singh was reluctant to take the money back as he was in no need for money at that time. In this regard, the assessee has not furnished any corroborative evidence to establish that Sh. Gurinder Singh was reluctant to take the money back. The genuineness of the transaction undertaken by the assessee is repeatedly being put to question. Thus considering the above facts, it establishes that the assessee is failed to substantiate the genuineness of the transaction and AO was rightfully held Rs. 5,00,00,000/- to be the unexplained investment of the assessee and added to the income of the assessee.” 13 9. Further, our reference was drawn to the rejoinder filed by the Assessee to the remand report which is contained at page 14 to 17 of the impugned order and the contents thereof read as under: “Kindly refer to remand report dated 07.09.2022 of the assessing officer received by the appellant on 24.11.2022. The Ld. A.O. has levelled frivolous and unwarranted allegation based on false ^ information received from the DOIT (Inv.), Mohali, which have no relevance to the provisions of Income Tax Act, 1961. Sh. Jatin Garg is neither beneficial owner nor beneficiary in the alleged benami transaction case. He gave the money on 23.05.2017 through banking channels to proprietorship concern of Sh. Sanjit Singh Randhawa and the same was received back by the appellant on 25.05.2017, meaning thereby no investment is made by the appellant in any of the said three partnership firms or sand mines. We may like to reiterate that the assessment completed by the Ld. A.O. and the remand report sent by the assessing officer in this case are based on irrelevant material and appraisal report prepared by DDIT (Inv.), Mohali by distorting the statements recorded during the search and as per PBPT Act, 2016 instead of provisions of Income Tax Act, 1961. This clearly shows that the mind of Assessing officer was vitiated by reason of it's having relied on conjuctures, surmises and suspicions not supported by any cogent material or evidence on record. It is also submitted that the Ld. A.O. has passed the assessment order by acting as investigation officer, Benami prohibition unit instead of Income tax officer Both the acts are altogether different with different jurisdictions having different authorities. Hence, any assessment order not passed as per the provisions of Income Tax Act, 1961 is void and illegal. In this regard we rely on following judgments: - [1954) 26 ITR 736(SC) SUPREME COURT OF INDIA Dhirajlal Girdharilal v. Commissioner of Income-tax CRUX: \"Whether when Tribunal acts on material, partly relevant and partly Irrelevant, it is Impossible to say to what extent its mind was affected by irrelevant material used by it In arriving at Its finding, and such a finding Is vitiated because of use of inadmissible material and thereby an Issue of law arises - Held, yes - In Instant case, Tribunal relied upon suspicions and surmises not supported by any evidence on record or upon partly inadmissible material - Whether matter was to be remanded to High Court for directing Tribunal to state a case and refer to question as to whether finding of Tribunal was not vitiated by reason of Its having relied upon sold material - Held, yes\" [19S9] 37 ITR 288(SC) SUPREME COURT OF INDIA Lalchand Bhagat Ambica Ram v. Commissioner of Income-tax 14 CRUX: - \"When a court of fact arrives at Its decision by considering material which is irrelevant to the enquiry, or acts on material, partly relevant and partly irrelevant, where it is Impossible to say to what extent the rnind of the court was affected by the irrelevant material used by It in arriving at Its decision, a question of law arises: Whether the finding of the court of fact is not vitiated by reason of Its having relied upon conjectures surmises and suspicions not supported by any evidence on record or partly upon evidence and portly upon Inadmissible material. The conclusions reached by the Tribunal should not be coloured by any irrelevant considerations or matters of prejudice and if there are any circumstances which revealed to be explained by the assessee, the assessee should be given on opportunity of doing so. The tribunal did not apply its mind to the situation or it arrived at the conclusion it did merely by applying the rule of thumb in which event the finding of fact reached by It was such as could not reasonably be entertained or the facts found were such as no person PC ting Judicially and properly Instructed as to the relevant law could hove found, or the tribunal in arriving at Its findings was Influenced by irrelevant considerations or indulged in conjectures, surmises or suspicions In which event also Its finding could not be sustained.\" [2002] 257ITR 33S (HC) GUJRAT HIGH COURT Sagar Enterprises v. Assistant commissioner of Income Tax Held that the settled legal position Is that in such circumstances. It would not be possible to soy with certainty as to which factor would have weighed with the officer concerned and once it is shown that an irrelevant fact has been taken into consideration, to what extent the decision is vitiated would be difficult to say. On this count alone, the petition requires to be accepted. Sh. Jatin Garg completed civil engineering in march, 2017 and started his own consultancy services as an engineer. He wanted to start business in India and tried to join partnership with Sh. Sahil Singla and Sh. Sanjit Singh Randhawa, however they returned his money back and did not admit him in the partnership. Further, the purpose of investment is immaterial u/s 68 or section 69 of the Income Tax Act, 1961, except that the sources and genuity of the loans and the lender are to be proved by the recipient. The sources and other evidences of loan received from the lender Sh. Gurinder Singh were submitted during the Assessment proceedings and the Ld. A.O. instead of verifying or examining the s a i d documents preferred to make addition of Rs. 5,00,00,000 on surmises and conjuctures with a vitiated mindset without any justification. We have submitted copy of relevant bank statement of Sh. Gurinder Singh from 01.04.2017 to 23.05.2017 as additional evidence, of which bank statement was submitted for few days of May, 2017 along with copy of ITR of Sh. Gurinder Singh for AY 2017-18. The income tax return was submitted by Sh. Gurinder Singh on 27.11.2019 and hence the appellant could not submit the copy of income tax 15 return of Sh. Gurinder Singh with computation chart earlier. The ITR and computation chart of Sh. Gurinder Singh is as per official record of the income tax department and this additional evidence needs to be considered and perused by the first appellate authority for want of justice and also the CIT (A) is having powers co-terminus with the assessing officer to admit any such relevant evidence. Further, the Ld. A.O. has tried to justify his illegal and wrong acts by writing frivolous and unwarranted allegations to vitiate the mind of appellate authority against the provisions of Income Tax Act, 1961 and principle of natural justice, It is pertinent to mention that the Ld. A.O. called information u/s 133(6) directly from Sh. Gurinder Singh after the receipt of your letter no. 552 dated 06.12.2021 by the assessing officer and intentionally hide this important fact from your honor. This shows that the mind of Ld. A.O. is vitiated to such an extent that the has sent incorrect and incomplete remand report, thus defeating the very purpose of remand report called by your honor u/s 250(6) of the Income tax Act, 1961. Your honor is requested to kindly examine the information, documents and evidences submitted by the appellant during the assessment proceeding as well during appellate proceedings and give requisite relief as per the act.” 10. In light of above, it was submitted by the ld AR that the appellant completed his Civil Engineering in March 2017 and wanted to start new business. He took loan of Rs. 5.00 Crores from friend of his father, Sh. Gurinder Singh, a big Civil Contractor on 23.05.2017 by executing a loan agreement before the Notary Public on 23.05.2017 wherein an amount of of Rs. 5.00 Crores was taken on loan @ 12% interest, through banking channel. It was submitted that the said loan of Rs. 5.00 Crores was subsequently returned by the appellant in February 2018 as below:- a) Through DD of Rs. 30 Lacs dated 12.02.2018. (Interest) b) Through DD of Rs. 3 Crores dated 26.02.2018. c) Through DD of Rs. 2 Crores dated 27.02.2018. d) Through DD of Rs. 15 Lacs dated 27.02.2018. (Interest) 11. It was submitted that the interest of Rs. 45 Lacs was also paid by appellant to the lender for the period 23.05.2017 to 26.02.2018. The 16 necessary documents in this regard were submitted before the Assessing officer and also before the ld. CIT (A) and the details of these documents are mentioned at page 23-24 of ld CIT (A) order and the same are again placed on record as per details below: a) Copy of Loan Agreement (P.B. page 2-4). b) Copy of Bank Statement of Sh. Gurinder Singh (P.B. page 23-67). c) Copy of ITR of Sh. Gurinder Singh (P.B. page 6) (submitted before CIT (A)). d) Copy of Computation of Income of Sh. Gurinder Singh (P.B. page 7-22) (submitted before CIT (A)). e) Copies of DDs in favour of Sh. Gurinder Singh for return of loans to him by the appellant (P.B. page 68-71). f) Copy of Bank Statement of the appellant (P.B. page 72-77). 12. It was submitted that the Assessing Officer in its order at Page 2 Para 5 and 5.1 has stated as under:- \"Perusal of bank account statement of the assessee with HDFC bank account No.50100091716612 reveals that the assessee has shown a loan of Rs.5,00,00,000/- from one Shri Gurinder Singh on 23.05.2017. Shri Gurinder Singh is stated to be the friend of his father Shri Harivansh Garg In support of this unsecured loan, photocopy of a loan agreement dated 23.05.2017 has been furnished, which has been entered into between Shri Gurinder Singh, Shri latin Garg and Shri Harivansh Kumar (Father of Shri latin Garg). Perusal of the 1 para of the alleged loan agreement reveals that the assessee Shri latin Garg is engaged in business in Punjab. Whereas, during the course of search & seizure operation as well as during assessment proceedings, the assessee has claimed himself a student and has shown no business activities or business interest or shareholding in any business concern. Thus, the veracity of the alleged loan agreement is doubted ab-initio. Further, the assessee has failed to furnish the copy of ITR, Bank Account Statement, Balance Sheet etc. of Shri Gurinder Singh to substantiate the identity of the party, genuineness of the transaction and creditworthiness of the lender. Therefore, after considering all facts and circumstances of the case, it is held that the assessee has failed to substantiate the identity of the party, genuineness of the 17 transaction and creditworthiness of the lender and therefore, the amount of Rs.5,00,00,000/- credited in the bank account of the assessee on 23.05.2017 is held to be the unexplained investment of the assessee within the meaning of section 69 of the Act and the same is hereby added to the income of the assessee accordingly. Penalty proceedings u/s 271AAB(lA)(b) of the Act is hereby initiated on this issue.\" 13. It was submitted that the Ld. A.O. has tried to justify his illegal and wrong acts by writing frivolous and unwarranted allegations to vitiate the mind of appellate authority against the provisions of Income Tax Act, 1961 and principle of natural justice. The Ld. Assessing Officer and ld. CIT (A) have wrongly considered usage of the loan amount received from the lender during the year instead of verifying the sources and genuineness of the loan transaction for making addition u/s 69 of the Act. It was submitted that the appellant is neither beneficial owner nor beneficiary in the alleged benami transaction case, he gave the money on 23.05.2017 through banking channels to proprietorship concern of Sh. Sanjit Singh Randhawa and the same was received back by the appellant on 25.05.2017, meaning thereby no investment is made by the appellant in any of the said three partnership firms or sand mines. It was submitted that both the authorities blindly relied on the appraisal report of Investigation wing without application of own mind. Their mind was so much vitiated with the appraisal report that they did not bother to examine the sources and genuinity of loan transaction of Rs. 5.00 Crores before making additions and that too, by invoking the provisions of section 69 of the Income Tax Act which relates to unrecorded investments which is not applicable in the instant case. 14. It was submitted that the Ld. CIT(A) during the appellant proceedings sought remand report under Section 250(6) of the Income Tax Act from the Ld. AO to verify genuinity and source of said loan of Rs. 18 5.00 Crores and the A.O issued notice under Section 133(6) on 06.05.2022 to the Lender and called information u/s 133(6) directly from Sh. Gurinder Singh after the receipt of letter from CIT (A) u/s 250 (6) and the Lender submitted complete information asked u/s 133(6) but the Ld. A.O. intentionally hide this important fact in his remand report. It was submitted that the same shows that the mind of Ld. A.O. was vitiated to such an extent that he has sent incorrect and incomplete remand report. 15. It was submitted that the ld. CIT(A) sent copy of the written submission along with additional evidence filed with him to the Ld. A.O during remand proceedings. The ld AO did not bother to investigate any of the aforementioned documents submitted, as his mind was vitiated and with a predetermined mind set, he followed the dictates of third party without even applying his own mind, thereby passed the order wrongly stating that credits received in the bank account of appellant are unexplained investment. 16. It was submitted that the Ld. Assessing Officer in his order dated 31.12.2019 has made addition of Rs. 5,00,00,000/- on the plea that ITR, Bank Statement and Balance Sheet of Sh. Gurinder Singh (Lender) is not submitted. Further, the Ld. Assessing Officer in his remand report dated 07.09.2022 has tried to justify his wrong doing by taking into consideration wrong and irrelevant facts in paras 4.1,4.2 and 4.2.1 and it cannot be said with certainty as to which factor would have weighed with him for the purpose of arriving at the wrong belief that loan was taken from undisclosed sources and added it as unexplained credit. The Ld. Assessing Officer and the ld CIT (A) had acted on the irrelevant material and it is impossible to say to what extent their mind was affected by irrelevant material used by them in arriving at their findings and such a finding is 19 vitiated because of use of irrelevant material. The Ld. Assessing Officer and ld CIT (A) has not given any reason for not accepting the explanation and evidences offered by the appellant for the said loan. In support, reliance was placed on the judgment of Hon’ble Gujarat High Court in the Case of Sagar Enterprises Vs. ACIT (257 ITR 335 Guj), wherein the Hon’ble Court has held: \"It would not be possible to say with certainty as to which factor would have weighed with the officer concerned and once it is shown that an irrelevant fact has been taking into consideration, to what extent the decision is vitiated would be difficult\". 17. It was submitted that the Ld. Assessing Officer has wrongly doubted the credibility and capacity of Sh. Gurinder Singh (Lender). Sh. Gurinder Singh is \"A\" Class Government contractor and has submitted Income Tax Return by declaring taxable income of Rs. 51,20,33,100/-. Further, Sh. Gurinder Singh had bank balance of Rs. 30,96,42,345/- as on 01.04.2017, from which he had made payments on various dates during the period from 01.04.2017 to 23.05.2017 out of the opening bank Balance as on 01.04.2017, without introducing any fresh deposits/credits during 01.04.2017 to 23.05.2017 in the said Bank account. The aforesaid facts clearly establish that the lender (Sh. Gurinder Singh) was having capacity and credibility to advance Rs. 5.00 Crores to the appellant on 23.05.2017. The Lender, Shri. Gurinder Singh submitted documents to the Assessing Officer during remand proceedings which were also submitted as additional evidence to the CIT (A), though these documents were not discussed in the remand report by the Assessing officer but all the documents were provided to the Assessing officer by the Lender in response to Notice 133 (6) issued by the Assessing officer. The same documents were also submitted by the appellant before the CIT (A) during the appellate proceedings. 20 18. It was submitted that the Ld. CIT (A) in his order has upheld the aforesaid addition of Rs. 5.00 Crores. The ld CIT (A) has stated that the appellant in his reply has claimed that copy of agreement of loan executed with Sh. Gurinder Singh, copy of receipt his bank account and copies of draft showing return of said loan with interest to Sh. Gurinder Singh during the year were submitted with the Assessing officer during the assessment proceedings. The additional evidence filed by the appellant cannot be entertained as it has no relevance w.r.t Rule 46A and the appellant was moreover, not prevented by any sufficient cause to produce the same before the AO. The addition was made based on documentary evidence unearthed during search regarding unexplained investment. Thus, it was held that the appellant has failed to prove genuineness of said loan of Rs. 5.00 crores and has not submitted any cogent evidence to prove genuineness of said loan. Further, the purpose and nature of said loan is also not proved beyond doubt as this arrangement appears to be a colorable device. Thus, the addition of aforesaid loan of Rs. 5.00 crores made by the Assessing officer u/s 69 of the Act was upheld. 19. It was submitted that the Ld. Assessing Officer called information u/s 133(6) from the lender on 06.05.2022 during the remand proceedings u/s 250(6) of the Act on the directions of ld CIT (A) and in this regard, the following documents were submitted and are placed on record: a) The lender submitted reply u/s 133(6) on 10.05.2022 with the Assessing officer (Copy at P.B. page no.1). b)The copy of our reply in response to remand report of the Assessing officer filed before the CIT (A) is placed at (P.B. page no. 78-82). c) It is submitted that assessee took loan of Rs. 5.00 Crore from Sh. Gurinder Singh on 23.05.2017 as per bank statement of Sh. Jatin Garg at (P. B. page no. 72) on 23.05.2017. The appellant returned the whole amount 21 along with interest in February 2018 as per bank statement of appellant at (P.B. page no.76-77). 20. It was submitted that no incriminating document was found or unearthed during the search regarding this loan/investment of Rs. 5.00 crores. It was submitted that the bank statement of lender shows opening balance in his bank account at Rs 30,96,42,345/- and during period from 01.04.2017 to 23.05.2017 (date of loan), no further deposits were made in the account of the lender except encashment of FDR during this period. The lender got its old FDR redeemed on 15.04.2017 amounting to Rs. 39,08,78,610/- which got credited into his same bank A/c from where loan was given to Appellant by Lender (PB Page No. 30) and thus, the creditworthiness of the lender is duly proved. 21. It was submitted that Assessing Officer and the Ld CIT (A) has upheld the addition of loan of Rs. 5.00 Crore by rejecting additional evidence in terms of ITR of the lender to prove sources and networth of the lender. The Ld. Assessing Officer has himself called all such information's/including bank statement and ITR from the lender vide notice u/s 133(6) on 06.05.222 and in response to that, the lender submitted complete details on 10.05.2022 as per (P.B. page 1) to the Ld. Assessing Officer. The Ld. Assessing Officer intentionally did not make mention of any such information called during the remand proceedings from the lender and the required details submitted by the lender during remand proceedings in remand report sent to the ld CIT (A). Further, the ITR or other documents of the lender submitted before first Appellate Authority cannot be termed as irrelevant r.w.t Rule 46(A) as per provision of the Act by the Assessing Officer and CIT (A), when this information was called by Assessing Officer himself during remand proceedings. Further, it is submitted that the lender 22 had filed his ITR on 27.11.2019, thus the appellant could not submit ITR of Lender before the Assessing Officer due to paucity of time. It was submitted that the additional evidence submitted by the appellant with the CIT (A) and also before the Assessing Officer by the lender cannot be rejected without any cogent reason or justification and it was requested to consider all the evidences submitted before A.O. and CIT (A) during any proceedings pertaining to assessment year 2018-19. Further, it is submitted that the additional evidence as copy of ITR of the lender goes into the root of the primary question in consideration and has a direct bearing on the case of the appellant. The Bench is requested to admit the same in the interest of substantial justice. The Hon'ble Apex Court in the case of Price Waterhouse Coopers Private Limited Vs. CIT 348 ITR 306 has held that to ensure complete justice between the parties and to uphold the principal of natural justice particularly the appellant's right of fair hearing, the relevant additional evidence should be admitted. Reliance was also placed on the decision of the Hon'ble Madras High Court in the case of Anaikar Trade and Estates (P) Ltd (No.2) vs. CIT 186 ITR 313 where the Hon’ble High Court has held as under: \"The Tribunal has discretion to allow the production of additional evidence under Rule 29 of the ITAT Rules, 1963 if the Tribunal requires any document to be produced or affidavit to be filed to enable it to pass orders or for any other substantial cause, it may allow the document to be produced. Even if there was a failure to produce the documents before the ITO and the A.A.C, the Tribunal has the jurisdiction in the interests of justice to allow the production of such vital documents.” 22. The ld CIT/DR was heard who has vehemently argued the matter and relied on the findings of the lower authorities which we have already taken note of and not been repeated for the sake of brevity. 23. We have heard the rival contentions and purused the material available on record. The transaction under consideration relates to credit entry of Rs 5 crores 23 on 23/05/2017 in the bank account maintained by the assessee with HDFC Bank. The assessee has explained that the said transaction is a loan transaction wherein an amount of Rs 5 Crores has been taken at 12% rate of interest from Shri Gurinder Singh as per the terms of the loan agreement executed on 23/05/2017. The AO has doubted the veracity of the loan agreement and has also held that the assessee has failed to furnish the copy of income tax return, bank account statement, balance Sheet etc. of Shri Gurinder Singh to substantiate the identity of the lender, genuineness of the transaction and creditworthiness of the lender and the amount of Rs. 5 Crores credited in the bank account of the assessee was held to be unexplained investment of the assessee within the meaning of Section 69 of the Act and the same was added to the income of the assessee and brought to tax. 24. We therefore find that the addition has been made by the AO relating to credit in the bank account of the assessee for the reason that the assessee has failed to discharge the necessary onus in terms of identity, creditworthiness of the lender and the genuineness of the loan transaction, however, for the purposes of making the addition, the AO has invoked the provisions of Section 69 of the Act. 25. On perusal of Section 69 of the Act, it provides that “Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.” The said provisions thus talks about unexplained investments made by the assessee and the sources of such unexplained investment and in Para 4 of the assessment order, the AO has recorded the assessee’s submission that he has 24 not made any investment during the year as also evident from the assessee’s written submission dated 21/10/2019 placed on record and further, there is no material which has been brought on record to substantiate that the assessee has made any investments during the year and which have remained unrecorded and the sources thereof have remained unexplained by the assessee. In light of the same, we find that the AO has wrongly invoked the provisions of Section 69 in the instant case. Even the ld CIT(A) has failed to appreciate the same and upheld the findings of the AO stating that the addition was made based on documentary evidence unearthed during search proceedings where the AO himself acknowledges the fact that the assessee has not made any investments at first place and even otherwise, without bringing on record the nature and contents of the documents, as so stated to be unearthed during the course of search. Thus, the findings of the AO and that of the ld CIT(A) in so far as unrecorded investments and invocation of provisions of section 69 is hereby set-aside. 26. At the same time, it is a settled legal proposition that merely invoking the wrong provisions of the Act is not sufficient enough to set-aside the findings of the AO where the facts and material on record support such findings. In this regard, as we have noted earlier, the AO has made the subject addition for the reason that the assessee has failed to discharge the necessary onus in terms of identity and creditworthiness of the lender and the genuineness of the loan transaction. In this regard, we find that during the assessment proceedings, the assessee as part of his submissions dated 21/10/2019 had placed on record copy of loan agreement with Shri Gurinder Singh whereby he has taken loan of Rs 5 Crores and which has been credited in his bank account on 23/05/2017, Shri Gurinder Singh’s details in terms of his address and PAN particulars, bank statement of Shri Gurinder Singh and copy of demand drafts in favour of Shri Gurinder Singh towards repayment of the whole of the loan amount (principal 25 and interest). Therefore, as far as the finding of the AO that the assessee failed to substantiate the identity of the lender is not borne out of the records as the assessee has duly placed on record the particulars of Shri Gurinder Singh in terms of his address and PAN particulars, the factum that the loan agreement has been personally signed by him and the source of the money so lend by him which has been transferred from the bank account operated and maintained by him with HDFC bank. Thus, as far as the identity of the lender is concerned, the assessee has discharged the necessary onus placed on him and the findings of the AO are not borne out of the records and the same are hereby set-aside. 27. In terms of the genuineness of the loan transaction, the assessee has placed on record a copy of loan agreement duly executed and notarized on 23/05/2017. As evident from the perusal of the loan agreement, it has all the relevant ingredients of a valid agreement in terms of identity of the lender and the borrower, the act of lending by the first party and borrowing by the other party, the amount of loan advanced, the period for which the loan has been advanced, rate of interest at which the loan has been advanced, the terms of repayment and the terms and conditions in case of failure to repay the loan amount and it has been signed and executed by both the parties in presence of a Guarantor and two witnesses and the agreement has been attested by a notary public. The AO has merely referred to the initial recital where it has been stated that the assessee is engaged in business in Punjab and questioned the said recital and has drawn an adverse inference and challenged the veracity of the loan agreement. In rebuttal, the ld AR has submitted that the assessee has completed civil engineering in march 2017 and wanted to start a new business and had taken the loan from his father’s friend, Shri Gurinder Singh. In our understanding, even where the AO had some doubts about the said recital, the same on a standalone without raising any adverse findings regarding the contents of the agreement which otherwise satisfy the requirement of a valid 26 agreement and without carry out any further enquiry or verification cannot result in a situation where the very existence of the loan agreement has been questioned/doubted especially, where the transaction so stated in the said loan agreement has been acted upon by both the parties whereby the money has been actually lent through the medium of cheque payment drawn on HDFC bank and the assessee has acknowledged the receipt thereof in his bank account. Where the AO had any doubts about such transaction, he could have called for further information from the assessee, or from the lender or could have asked for their personal appearance, however, there is nothing on record whereby the AO has initiated any such enquiry. There are independent witnesses to the loan agreement who could have been called by the AO but again, there is nothing on record whereby the AO has initiated any such enquiry and called these persons. It is further noted that the money has since been repaid by the assessee along with interest during the year itself and the details thereof were also submitted by the assessee during the course of assessment proceedings. We therefore find that as far as genuineness of the loan transaction is concerned, the assessee has discharged the necessary onus and the onus thus shift on the AO to bring any adverse material to disprove the same and there is nothing on record in absence of any enquiry/verification carried out by the AO. 28. In terms of creditworthiness of the lender is concerned, we find that the assessee had furnished a copy of the HDFC bank statement of Shri Gurinder Singh during the course of assessment proceedings and on perusal thereof, it is noted that an amount of Rs 5 crores was advanced to the assessee on 23/05/2017 and as on 22/05/2017, there was closing balance of Rs 7.64 Crores which was sufficient to lend Rs 5 Crores to the assessee. Further, it is noted that as on 01/04/2017, the beginning of the financial year, the lender had the bank balance of Rs 30.96 Crores in the said bank account and thereafter, there are 27 various credits and payments and at no time, the balance was lower than Rs 5 crores which was lend to the assessee. Therefore, the finding of the AO that the assessee has not furnished copy of the bank statement of Shri Gurinder Singh is not borne out of records and in any case, on perusal of the bank statement, it is evident that he has the requisite capacity and availability of funds at the relevant point in time to lend Rs 5 crores to the assessee. Further, Sh. Gurinder Singh has filed his Income Tax Return for A.Y 2017-18 on 27/11/2019 declaring total income of Rs. 51,20,33,100/- which corroborates his creditworthiness to lend the funds to the assessee and the factum of filing of such return of income on 27/11/2019 is on record of the Revenue and given that such return of income has been filed by Shri Gurinder Singh on 27/11/2019, the assessee couldn’t procure the same on or before the completion of the assessment proceedings on 31/12/2019 and the explanation of the assessee regarding paucity of time cannot be held unreasonable and the same was submitted by way of additional evidence before the ld CIT(A) to corroborate the explanation made earlier that the lender had the requisite creditworthiness to lend the funds to the assessee which already stand established through the bank statement and in that background, we see no justifiable reasons for ld CIT(A) not to consider the return of income so submitted. Further, it is noted that during the appellate proceedings, the ld CIT(A) also called for the remand report from the AO and in response to notice dated 6/05/2022 calling for the information u/s 133(6), Shri Gurinder Singh vide his submission dated 10/05/2022 has also submitted copy of his return of income along with other documents. 29. There is no adverse findings recorded by either AO or by the ld CIT(A) in respect of the documentation so submitted by the assessee and collected/verified directly by the AO from the lender and we are of the considered view that the assessee has discharged the necessary onus in terms of identity and creditworthiness of Shri Gurinder Singh and the 28 genuineness of the loan transaction and there is no legal and justifiable basis for addition so made by the AO and upheld by the ld CIT(A) and the same is hereby directed to be deleted and the matter is decided in favour of the assessee. In the result, the appeal of the assessee is allowed. 30. In view of the above, where we have decided the appeal so filed by the assessee, the stay application has become infructious and the same is thus dismissed. Order pronounced in the open Court on 12/02/2025. Sd/- Sd/- परेश म. जोशी \u0019व\u001bम \u001dसंह यादव (PARESH M. JOSHI) ( VIKRAM SINGH YADAV) \u0013या(यक सद$य / JUDICIAL MEMBER लेखा सद$य/ ACCOUNTANT MEMBER AG आदेश क\u001f \u001b\u000bत*ल+प अ,े+षत/ Copy of the order forwarded to : 1. अपीलाथ\u001a/ The Appellant 2. \u001b\u001cयथ\u001a/ The Respondent 3. आयकर आयु.त/ CIT 4. आयकर आयु.त (अपील)/ The CIT(A) 5. +वभागीय \u001b\u000bत\u000bन3ध, आयकर अपील$य आ3धकरण, च6डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड\u000f फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "