TaxTMI 
TaxTMI 
2019 (7) TMI 1530
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....CIT(A) erred in al lowing of Rs. 5,69,250/- on account of interest expenditure which stemmed from such bogus unsecured loan. 3. The appe l lant pray s that the order of the CIT (Appeal s ) on the above grounds be set aside and that of the AO be restored. 4. The appel lant craves leave to amend or alter any ground or to submi t additional new ground which may be necessary." 2. Briefly stated, the assessee who is a civil contractor had filed his return of income for A.Y. 2011-12 on 28.09.2011, declaring a loss of (-) Rs. 8,43,431/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. Subsequently, on the basis of information received from the office of the Director of Income Tax (Inv.), Mumbai, that the assessee as a beneficiary had obtained accommodation entries from M/s Marvin Enterprises which was a group entity belonging to Shri Bhanwarlal Jain, an infamous accommodation entry provider, the case of the assessee was reopened under Sec. 147 of the Act. In compliance to the notice issued under Sec.148, the assessee requested that his original return of income may be treated as a return filed in compliance to the aforesa....
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....ve been raised from the said party viz. M/s Suman Exports in the preceding year i.e A.Y 2010-11, was added as an unexplained cash credit u/s 68 while framing the assessment for the said year. However, the A.O was not persuaded to subscribe to the claim of the assessee that he had raised genuine loans from the remaining two parties, viz. (i) M/s Minakshi Exports; and (ii) M/s Puspak Gems. It was observed by the A.O that the assessee had failed to produce the aforementioned parties for cross examination before him. Apart there from, it was noticed by the A.O that the said parties had also failed to comply with the summons issued to them under Sec.131, and had not appeared before him. The A.O holding a conviction that the affidavits of the aforesaid parties did not have any evidentiary value, thus declined to accept the genuineness of the loan transactions in the backdrop of the depositions made by the parties in the said affidavits. The A.O after dwelling at length on the facts that were unearthed in the course of the search proceedings conducted on Shri. Bhanwarlal Jain, an infamous accommodation entry provider, and taking cognizance of the facts that were admitted by him in his sta....
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....10-11 20,00,000/- Observing, that the assessee had not raised any fresh loan from M/s Suman Exports during the year under consideration, therefore, no adverse inference insofar the said party was concerned was drawn by the A.O in the hands of the assessee. In fact, it was observed by the A.O that a loan of Rs. 30 lac that was received by the assessee from M/s Suman Exports during the immediately preceding year viz. AY. 2010-11 was treated as an unexplained cash credit in the hands of the assessee while framing the assessment for the said preceding year. Accordingly, the A.O not finding favour with the claim of the assessee that he had raised genuine loans from the remaining two parties viz. (i). M/s Minakshi Exports : Rs. 50 lac; and (ii) M/s Puspak Gems : Rs. 20 lac, therefore, added the same as an unexplained cash credit in the hands of the assessee. As observed by us hereinabove, the interest paid by the assessee on the loans raised from all the aforementioned three parties, viz. (i) M/s Minakshi Exports; (ii) M/s Suman Exports; and (iii) M/s Puspak Gems, therein aggregating to Rs. 5,09,250/- was also disallowed by the A.O. 7. We have perused at length the orders of the....
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....ong with the complete addresses of the aforementioned lenders had substantiated the identity of the aforesaid parties. Insofar the genuineness of the loan transactions is concerned, we find, that the same stood duly substantiated from the fact that both the acceptances and repayments of the loans were made through banking channels. Apart there from, the fact that the aforesaid parties had duly responded to the notices issued to them under Sec. 133(6) and confirmed the respective loan transactions also adduces the genuineness of the said loan transactions. As regards the creditworthiness of the lenders, we find that the assessee by placing on record the copies of the bank statements of the creditors out of which the loans were advanced to the assessee, alongwith the copies of their Income Tax returns, balance sheets and capital accounts, had duly substantiated the same. Accordingly, in the backdrop of our aforesaid observations, we are of the considered view that now when the assessee had duly discharged the onus that was cast upon him, and had substantiated the "nature‟ and "source‟ of the aforesaid credits appearing in his books of accounts, therefore, there was no jus....