TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 661
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..../s 68 of the Act. 3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming disallowance of interest expenses of Rs.87,354/- on genuine loan of Rs.10,00,000/- even without pointing out under which section addition was made. 2. The Brief facts of the case are that, the assessee is a partner in firms which are engaged in the business of trading and resale industrial diamonds after assortment and mixing. The assessee has filed the return of income for the assessment year 2011-12 disclosing a total income of Rs.3,32,808/-. The Assessing Officer (A.O) has received information that the assessee has obtained the unsecured loan of Rs.10,00,000/- from M/s Maniprabha Pvt. Ltd and recorded the reasons for reopening of Assesseement at page 2 of the order as under: "The Deputy Commissioner of Income tax, Central Circl2-4, Surat vide letter dated 26.11.2015 has forwarded the information in respect of bogus sales, unsecured loans and accommodation entries by Rajendra Jain group, Sanjay Chaudhary group and Dharmichand jain group alongwith a list of beneficiaries of such accommodation entries. A search and seizure action was carried out on Mumbai based non gen....
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....PL is genuine as the identity of the loan creditor vide the account confirmation by the loan creditor. Its capacity to the loan is justified vis a vis the use of banking channels for taking the loan via RTGS. We therefore request you to kindly allot the claims of the interest by the assessee on the said loan of Maniprabha Impex P. Ltd. and consider the loan as genuine" 2.2 Whereas the Assessing Officer to test the genuineness of the loan transaction has issued notice u/s 133(6) of the Act on the loan creditor M/s Maniprabha Pvt. Ltd and the said notice returned un-served by the postal authorities with the remarks 'left'. Therefore, the Assessing Officer has issued show cause notice dated 27.09.2017 on the assessee to consider the loan transaction as sham and disallowance of interest on unsecured loan claimed by the assessee in the books of account. In reply to show cause notice, the assessee has filed reply dated 06.12.2017 referred at page 4 Para 8 of the order as under : "8. The assessee vide her reply dated 6.12.2017 stated as under: "Our client denies that she obtained a bogus loan entry from M/s maniprabha Impex P. Ltd in view of several supporting proofs including ba....
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....iled the submissions on unsecured loans and interest referred at page 7 Para 4.II of the order read as under : "II. Re: Ground - II: Objection against addition of Unsecured Loan as unexplained cash credit us 68~ Rs.10,00,000/- 1. The Ld. AO had confirmed at point No.9.7 on page 5 of impugned AO that the has received Loan Confirmation, copy of ITR, PAN, Bank Passbook etc. These evidences are sufficient to establish identity, creditworthiness and genuineness of transaction of Loan. 2. The assessee has filed all the details necessary in respect of this loan obtained from the party. The Loan interest has been paid through account payee cheques, confirmations from the creditor containing name, address, PAN details, date of receipt of the loan, mode of payment by the loan creditor has been furnished, IT of the creditor, ledger copy the creditors, bank statements of the creditor, acknowledgement of return were furnished and attached herewith as Annexure 3. We submit that the assessee has proved the identity of the party by furnishing loan confirmations with name, address, PAN and also acknowledgment of filing the return of Income, bank statement of party for the relevant year. The....
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....uch as conduit for others, providing accommodation etc. I never provided accommodation entries of Loans or advances. All the Loans or Advances given by us are genuine and given out of the business proceeds during the course of business. Therefore we submit that additions of Loans made in the appellant's case based on reported statements of DGIT (Inv.) which are retracted by the concerned parties cannot be sustained as has been held in various judicial rulings. 9. Our above submissions gets support from following Judicial Decisions. RELEVANT JUDICIAL DECISIONS: 10. The Hon'ble Supreme Court in the case of CIT v. Orissa Corporation Pvt. Ltd. (159 ITR 78) held that the assessee is required to prove (i) identity of the lender/party, (i) the genuineness of the transactions and (in) the credit worthiness of the lender/party. It is the case of the assessee that where the identity of the parties and their capacity is established, the initial burden which lies upon the Assessee can be said to have been discharged by the assessee. It will not, thereafter, be for the assessee to explain further how or in what circumstances the third party obtained money and how or why he came ....
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....ctive of the fact that the assessee has filed the details in respect of the loans and submitted the confirmation of the loan creditors along with other details. Further, the Ld. AR submitted that the assessee maintains the regular books of accounts and has obtained unsecured loan from genuine creditor. Whereas, the contentions raised by the assessee before the appellate authority that the confirmation of loan, bank statement of both the assessee and loan creditor, audited financial statements are filed to substantiate the genuineness, identity and creditworthiness of the loan creditor. Further, the assessee has paid interest to loan creditor and was confirmed by the parties. The Ld.AR supported the submissions on the disputed issues with the details and judicial decisions and prayed for allowing the appeal. Contra, the Ld. DR supported the order of the CIT(A). 5. We have heard the rival submissions and perused the material on record. The Ld. AR submitted that the Ld. CIT(A) erred in sustaining the addition u/s 68 of the Act in respect of unsecured loan and interest on loan. We find that before the Assessing Officer, the assessee has submitted information in respect of unsecured lo....