TaxTMI 
TaxTMI 
2017 (2) TMI 1129
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....mitted that the Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in deleting the disallowance u/s.40{a)(ia) of the Act, in respect of interest expenses of Rs. 3,00,3487- paid without compliance to provision of Section 194A of the Act. . 4) The Ld. Commisjsioner of Income-tax (Appeals)-XV, Ahmedabad has erred in law and on facts jin admitting additional evidences in violation of Rule 46A. 5) On the facts and in the circumstances of the case, the Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad ought to have upheld the order of the Assessing Officer. : 2. Briefly stated facts of the case are that assessee is a partnership firm engaged in the business of building construction. Return of income for Asst. Year 2009-10 was filed on 23.07.2009 declaring total loss of Rs. 10,19,380/-. Case was selected for scrutiny assessment and notice u/s 143(2) of the Act followed by notice u/s 142(1) of the Act was issued along with detailed questionnaire. In response thereto necessary details were filed. During the Course of assessment proceedings, ld. Assessing Officer on verification of balance sheet observed that assessee has taken unsecured loans of Rs.....
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.... this issue are that out of the unsecured loans of Rs. 1,35,53,985/- ld. Assessing Officer called for details about the loans taken during the year which stood at Rs. 1,20,21,020/-. During the course of assessment proceedings as well as before ld. Commissioner of Income Tax(A) assessee in order to prove the identity, genuineness and creditworthiness submitted complete details containing the names, addresses, PANs, copies of bank statements, income-tax returns of cash creditors along with financial statement and confirmation of accounts. However, ld. Assessing Officer on the basis of his observation that most of the cash creditors have shown a meager income whereas they have given a substantial amount of loan to the assessee and on this basis framed a view that assessee has been unable to prove the creditworthiness of the loan creditors. In appeal before ld. Commissioner of Income Tax(A) action of ld. Assessing Officer was brushed aside by ld. Commissioner of Income Tax(A) following the judgment of Hon. Gujarat High Court in the case of DCIT vs. Rohini Builders 256 ITR 360 (Guj) and in the light of documents placed on record by the assessee held that once the contra accounts with co....
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.... Bhagwandas Santumal HUF 2,29,000/- 16. Indraben Dayaldas Miterani 3,35,000/- 17. Hassanand Gurumal HUF 1,97,000/- 18. Hemaben Virumal Miterani 19,70,000/- 19. Hassanand Gurumal 1,78,000/- 20. Balumal Thanwardas 1,50,000/- 21. Anilkumar Dayaldas HUF 1,10, 000/- 22. Veena Balumal 1,00,000/- 23. Balumal Thanwardas HUF 50,000/- 24. Amit Balumal 50,000/- Total 1,20,21,020/- 10. We further observe that during the course of assessment proceedings assessee gave names, addresses & PAN of all the 24 parties and copy of bank statements, income-tax return and confirmation account of 23 parties and for the remaining one assessee gave necessary documents before ld. Commissioner of Income Tax(A). The only reason for which ld. Assessing Officer was not convinced and the reply of assessee was that the income shown by the loan creditors was NIL or very less in comparison to loan given by them and ld. Assessing Officer's observation can be more clear with the help of the following chart:- Sl.No Name of the Unsecured loan persons Amount of loan given Return income for the A.Y. 2009-10 1. Jaya Arjandas Dam/a Rs. 3,00,000/- Not filed 2. Rukmanl ....
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....ed". In none of the case A.O. discussed or elaborated or made any independent inquiry. In almost every case, A.O. held so in a mechanical manner, despite of the facts that all of them given confirmation and PAN with details of their latest return filed. The appellant during the course of appellant proceedings apart from relying various case lows as discussed in earlier paras also relied on Hon'ble Gujarat High court recent judgment in the case of CIT v/s Ranchod Jivabhai Nakhava (Tax appeal No. 50 of 2011 judgment order dt. 20/03/12) (2012) 21 tax man. Com 159 (Gujarat) wherein Hon'ble Gujarat high court held (as per head notes) "Section 68 of the income tax Act, 1961-cash credits asstt. year 06-07 -whether once assessee has established that he was taken money by way of account payee cheques from lender who are all income tax assessee whose PAN have been disclosed initial burden u/s 68 is discharged and then, it is Assessing officer's duty to ascertain from Assessing officer of those lenders, whether in their respective returns they have shown existence of such amount of money and have farther shown that those amount of money had been lent to assessee - Held yes - whe....
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....iness and genuineness of the loan creditor. In the course of proceedings before us, we examined two of the loan creditors namely Ranjana Suraj Bhojavani and Hemaben Virumal Miterani from whom loan of Rs. 28,00,000/- & Rs. 19,70,000/- respectively was taken during the year. These two amounts were the two highest amount among 24 loan creditors, with the help of ld. Authorised Representative we went through the confirmations a/c. bank statement, income-tax return and balance sheet of these two creditors and observed that no cash was deposited before the issue of cheque to the assessee and the transactions were entered through account payee cheques only wherein some funds came through third party into the account of loan creditor and thereafter account payee cheques of loan amount were given to the assessee. From the records of these two parties we were satisfied that assessee has substantial evidences to prove the identity, genuineness and creditworthiness as envisaged in the provisions of section 68 of the Act. We further observe that similar details of bank statement, income-tax return and financial statement along with confirmation were placed on record with respect to all other 22....
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....ssing Officer, without taking step for verification of the Income Tax Return of the creditors, took unnecessary step of further examining those creditors. If the Assessing Officers of those creditors are satisfied with the explanation given by the creditors as regards those transactions, the Assessing Officer in question has no justification to disbelieve the transactions reflected in the account of the creditors. In other words, the Assessing Officer had no authority to dispute the correctness of assessments of the creditors of the assessee when a co-ordinate Assessing Officer is satisfied with the transaction. We thus, find that in the case before us the Tribunal below rightly setaside the deletion made by the Assessing Officer, based on erroneous approach by wrongly shifting the burden again upon the assessee without verifying the Income Tax return of the creditors. The position, however^ would have been different if those creditors were not income tax assessees or if they had not disclosed those transactions in their income tax returns or if such returns were not accepted by their Assessing Officers.* 13. We further observe that Co-ordinate Bench in the case of ITO vs. Arih....
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....r any previous year and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the AO, satisfactory, the sum so credited may be charged to income tax as the income of the assessee of that previous year. No doubt, credit entries are available against the names of 13 persons in the books of assessee, therefore, he is supposed to explain the source of deposits in the books. Section 68 of the Act puts an obligation upon the assessee to prove identity of the creditor, his creditworthiness and genuineness of the transaction. In order to discharge the onus cast upon the assessee, he has filed names and address, PAN no., copy of bank account, copy of income tax return for the corresponding periods of the creditors. The l_d. First Appellate Authority has called for a remand report from the AO. Ld. CIT(A) has examined the facts of individual creditor in seriatim. Ld. CIT(A) on an analysis of the facts was not satisfied with regard to the creditworthiness as well as genuineness of the transaction qua four creditors and confirmed the additions. 6. The grievance of the revenue is that no discussion has been made as fa....
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....uiry was made in case of any other loan creditor, which could disprove the evidence placed by assessee. We therefore, find no reason to interfere with the order of ld. Commissioner of Income Tax(A) deleting the impugned addition on account of unexplained cash credit of Rs. 1,20,21,020/-. We accordingly, dismiss this ground of Revenue. 16. We now take up ground no.2 raised by Revenue against ld. Commissioner of Income Tax(A)'s order deleting the disallowance of Rs. 7,06,261/- made on account of interest expenses on cash credit of Rs. 1,20,21,020/-. As we have already decided adjudicating ground no.1 of Revenue wherein we have confirmed the order of ld. Commissioner of Income Tax(A) deleting the impugned addition u/s 68 of the Act at Rs. 1,20,21,020/- and as have accordingly held that assessee has proved the identity, genuineness and creditworthiness of the cash creditors. Therefore, the interest paid on such genuine loan creditors cannot be treated as non-genuine. Therefore, we are of the view that ld. Commissioner of Income Tax(A) has rightly deleted the impugned addition towards disallowance of interest of Rs. 7,06,621/- by observing that it has been paid to the genuine parties w....
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....rties to whom total interest of Rs. 3,00,348/- was paid. These 9 form 15G were submitted to ITO, TDS well within the statutory limit provided under the Act for filing form no.15G. It seems that ld. Assessing Officer could not lay his hands on these documents during assessment proceedings. We are of the view that as the assessee has filed form no.15G in the cases of 9 parties to whom interest of Rs. 3,00,348/- was paid there was no liability of deducting tax at source at assesse's behest and, therefore, ld. Commissioner of Income Tax(A) has rightly deleted the disallowance by observing as follows :- In respect of disallowance of interest of Rs. 3,00,348 made u/s 40(a)(ia) of the Act out of total disallowance of interest of Rs. 7,06,261 since it is contended that appellant has not deducted TDS out of it, I am inclined to accept the contention of the appellant that though no separate addition was made for the same but for such addition, appellant was not asked/show caused hence appellant was not given any opportunity to reply/explain its position. Considering the fact that appellant's books of accounts are audited and tax auditor has not mentioned any of such deficiency in tax au....