2018 (2) TMI 1161

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....h credit u/s 68 for unscecured loan though there is confirmation from lander ? [B] Whether on the facts and in the circumstances of the case and law, the ITAT is justified in confirming the addition of Rs. 3,66,041/made on account of interest paid on unsecured loans which is wrongly treated as unexplained cash credit u/s 68 ? " 2. The issues pertained to additions made by the Assessing Officer of two separate amounts of Rs. 20 lakhs and Rs. 3.66 lakhs (rounded off) under section 68 of the Income Tax Act, 1961 ('the Act' for short). The Commissioner (Appeals) also confirmed such additions, upon which, the issue reached the Tribunal. Tribunal by the impugned judgment, rejected the assessee's appeal making following observatio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he turnover leading to a tax payment of Rs. 1,96,138. The lender makes purchases of Rs. 123.04 crores in such diversified areas as cut and polished diamonds Rs. 73.15 crores), plywood and aluminum (Rs.11.72 crore), rough diamonds (Rs.4.36 crores), software (Rs.25.01 crores) and other items (Rs.8.79 crores), and sells these products too but all that the lender has spent on salaries is Rs. 2,26,000, on office expenses is Rs. 8,560, on office rent is Rs. 27,600 and on printing and stationary is Rs. 8,560. All this is simply not representative of what a genuine business would typically be. As regard Mohit International also, the story is no different. The bank statement, which is placed at pages 75 onwards, has the same theme of high transactio....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....en given their current whereabouts makes the story of genuine transactions even more unbelievable. It is also important to bear in mind the fact that lending for an interest @12% p.a. Without any security is not something which people do for rank outsiders. There has to be some close association to get such a kind of unsecured credit at such low rates. When I consider this situation, coupled with the fact that (I) the assessee has not been able to produce these lenders for verification and reasonably explain the complete circumstances in which these lenders, who were not even routinely engaged in the business of giving loans and advances, gave him unsecured loans on 12% p.a. Interest - which essentially is possible in situations of close re....