TaxTMI 
TaxTMI 
2021 (10) TMI 779
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fact that the Investigation Directorate of Kolkata had already proved that the lenders were only paper companies and accomadation entry providers ". 3. "Whether on the facts and circumstances of the case, and in law, the Ld.CIT(A) had erred in treating the unsecured loan of Rs. 1,69,00,000/- as genuine, notwithstanding the decision of the Hon'ble Calcutta High Court in the CIT(Central) -1, Kolkata vs. Maithan International (375 ITR, 123) that mere submission of confirmation letters from lenders cannot suffice to prove the creditworthiness of the lenders". 3. Facts in brief:- In this case, as stated by the Assessing Officer, the assessee is a builder and developer and was engaged in building a project called "Shalimar Fortleza". The assessee filed its return of income on 29th November 2014, declaring total income at Rs. 90,239. During the year under consideration, the assessee has received unsecured loans of Rs. 1,69,00,000 from four different parties. The Director of Investigation, Income Tax Department, Kolkata, found such unsecured loans obtained by the assessee as mere paper companies floated by a syndicate involved in providing accommodation entries of bogus lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the entity. 4) The Bank Statement of Lenders reflects substantial peak Balance at the time of granting loans to appellant company. 5) The AO has made baseless and unsubstantiated allegations about lenders being involved in investigations of Directorate of Investigation, Kolkatta for companies based in Mumbai and Chhattisgarh. 6) The AO sought to make independent Enquiries by issuing summons U/s. 131 to lenders based in chhattisgarh, which is against the provisions of law. 7) The AO issued summons u/s 131 discreetly and at the fag end of the assessment proceedings in the last week of December, which is also clear cut violation of natural Justice. 8) The fact that AO has acknowledged that summons were issued and served but not responded cannot be held against the appellant. Further, in cases where responses were received, the loans are still held to be unexplained for want of creditworthiness. 9) The enquires made by deputing Ward Inspector to verify address and existence of lender companies also favours the Appellant. The AO has unnecessarily raised issue of sparse furniture or employees in office of lender companies. 10....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons mentioned above, I have come to the conclusion that the nature and source of credit in the book of accounts of the appellant stands explained. Consequently, addition of Rs. 1,69,00,000/- as unexplained cash credit u/s 68 cannot be sustained. The grounds of appeal relating to the addition of Rs. 1,69,00,000/- is deleted and the appeal is Allowed. 4.2 In Ground No. 2 the appellant has challenged the addition made towards interest on the unsecured loans taken from all the 4 lenders to the tune of Rs. 13,63,294/-, and reduced from the expenses transferred to the Work in Progress. 4.2.1 As discussed in the preceding paragraphs, the loan amount of Rs. 1,69,00,000/- taken from all the above 4 lenders have been found to be genuine as it fulfilled all the requisite conditions laid down by law. In view of the findings above, the interest arising from the said loans cannot be faulted as being in the nature of unexplained expenditure. Further, Interest were paid to M/s Essar (India) Limited, M/s Rockon Enterprises, M/s East West Finvest P.Ltd and Purvi Finvest P.Ltd through account payee cheques, after deducting relevant applicable TDS and issue of TDS Certificates to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ingredients to justify the transaction under section 68 of the Act i.e., identity, creditworthiness and genuineness of the transactions. He submitted that from the records submitted before the authorities below, the assessee has clearly proved the identity and the relevant bank statement and financial statement clearly indicate that the parties who lent the money has sufficient balance in the books of account which proves that creditworthiness and genuineness were clearly established. He further submitted that the Assessing Officer has issued summons to the creditors which they have received at the fag end of the assessment proceedings. Further, he submitted that the assessee has re-paid the above advances in the subsequent assessment year itself. The assessee has rebutted / addressed all the findings of the Assessing Officer which was submitted before the learned CIT(A) and he brought to our notice Page-7 to 9 of the written submissions submitted before the learned CIT(A) in which the assessee rebutted clearly and further he relied on the case of ACIT v/s Premanand, ITA no.3514/Del./2014. He made an alternate plea that no cross-examination opportunity was given to the assessee. ....