AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 780
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....ss of the loans. The Assessing Officer observed that an amount of Rs. 31,40,000 pertains to three directors and the remaining amount of loan of Rs. 1,20,55,000 pertains to other 32 persons. The Assessing Officer called the assessee to prove the genuineness of the transactions about 32 creditors. The Assessing Officer considered the explanation tendered by the assessee and rejected the same. The Assessing Officer gave benefit of doubt regarding three directors and one other person who had advanced the loans. The Assessing Officer was of the opinion that the creditworthiness of 28 creditors was not proved. He was of the view that the assessee failed to prove the creditworthiness of the creditors, the genuineness of the transactions, and also the identity of the 28 creditors of loans for different amounts aggregating to Rs. 73,15,000. Therefore, he disallowed the claim of the assessee and added the same to the total income of the assessee under section 68 of the Act as unexplained loan. Being aggrieved by the order of the Assessing Officer, the assessee contested the matter before the learned Commissioner of Income-tax (Appeals). 4. During the course of appellate proceeding before th....
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....ll the loan creditors for personal verification during the course of assessment proceedings ; (e) The income of one year cannot be the criteria to arrive at a deci sion that the creditworthiness of the lender was doubtful. Out of the 11 loans creditors, balance-sheet and capital accounts had been filed for 4 of them which proves that there are sufficient capital from which funds could be advanced. The Assessing Officer has ignored this fact ; (f) Regarding the balance 3 people, for whom no return of income had been filed but sufficient other documents have been provided to prove that loans had been advanced by them ; (g) All the above 16 lenders have permanent account number and confirmation and their addresses have been submitted at the stage of assessment. The assessee further stated that none of the loans was treated by the Assessing Officer as non-genuine. The assessee also filed details of the each creditor. 6. After considering the submissions of the assessee, the learned Commissioner of Income-tax (Appeals) gave part relief to the assessee. Aggrieved by the order of the learned Commissioner of Income-tax (Appeals) in confirming the addition of Rs. 17.60 lakhs, the as....
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.... loan creditors, the following evidences have been filed : (a) Confirmation ; (b) Copy of Income-tax return ; (c) Copy of computation of income ; (d) Copy of balance-sheet ; (e) Copy of bank statement and bank pass book ; and (f) Copy of ledger account. 11. It is further noted that there is no adverse material in the possession of the lower authorities to controvert the evidence filed by the assessee. The learned Commissioner of Income-tax (Appeals) has confirmed the addition on the ground that the assessee was not in a position to explain the source of income. In our view, once the transaction stands confirmed and the assessee has explained source of amount received in its possession, then the assessee cannot be compelled to explain the source in the hands of the creditors beyond a particular point. It is noted that overwhelming documentary evidences furnished by the assessee have not been properly examined by the lower authorities. Therefore, we are of the view that this issue needs fresh examination at the end of the Assessing Officer, therefore, we set aside the order of the learned Commissioner of Income-tax (Appeals) on this issue and restore the same to the file....
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....16. Before us, the learned counsel submitted that the disallowance has wrongly been made by the Assessing Officer on the ground that the assessee is involved in the printing magazines, procurement of raw material such as paper, ink, chemicals, etc, and during the year the company has started new business of decorative designing, styles. It was further submitted that the learned Commissioner of Income-tax (Appeals) has placed reliance upon the decision of the jurisdictional High Court in the case of CIT v. Jaypee Dyeing House [1999] 239 ITR 418 (Bom), which was rendered in different context. It was further submitted that subsequently, in another judgment the hon'ble Bombay High Court has properly considered the facts and thereafter decided the issue in favour of the assessee in the case of CIT v. Emptee Poly-yarn P. Ltd. [2008] 305 ITR 309 (Bom), wherein after considering the judgment of Jaypee Dyeing House (supra), it was held that process of designing, printing magazines waterproofing, etc., conducted in cotton fabrics, wooden fabrics and man-made fabrics, would amount to manufacture. Finally, reliance was placed on the decision of the hon'ble Delhi High Court in the case ....