AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 680
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.... (AO) under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to the Assessment Year (AY) 2016-17. Facts of the case: 2. During the year under consideration, the assessee-company was engaged in the business of Non-Banking Finance Companies. The assessee company furnished its return of income for the A.Y. 2016-17 on 17.10.2016 disclosing a total income of Rs. 20,48,130/-. The case was selected for scrutiny and notices under sections 143(2) and 142(1) of the Act were issued to the assessee. The assessee filed required documents online. During the assessment proceedings, the AO observed that the assessee-company has taken unsecured loan amounting to Rs. 55,05,27,020/- and paid interest thereon amo....
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....ommotrade Pvt. Ltd. 25,31,638/- 3,68,00,000/- M/s.Gainwell Mercantiles Pvt. Ltd. 18,14,326/- 2,66,25,000/- Total 78,97,385/- 24,71,12,242/- 2.1. The AO further observed that these companies were declaring negligible income in their returns of income and tax deducted were claimed as refund. The AO also concluded that these are mere paper companies operated by entry operator for the purpose of providing accommodation entries. Relying on some judicial pronouncements and principle of preponderance of human probability, the AO added the peak credit as detailed above in the total income of the assessee u/s.68 of the Act and treated the interest paid to these parties totalling to Rs. 78,97,385/- as unexplained expenditur....
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....nt and statement of funds, etc. which duly establishes genuineness of transactions. The assessee also stated in his rejoinder that the AO has not recorded any adverse comment on the reply submitted. He further contented with the help of relevant documents that the company is in existence, and it has a capacity to advance unsecured loans. The assessee further stated that since some of these companies have changed their registered offices, notices remained unserved and furnished new addresses of these parties. The assessee also stated that the companies from whom the amounts were borrowed are separate identities and fully operational. The assessee also stated that the directors of these companies are residing at Ahmedabad, and they are shifti....
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....as genuineness of the transactions in subsequent years. 4. Aggrieved by the order of the Ld.CIT(A), the revenue is in appeal before us with following grounds of appeal: "a) In the facts and on the circumstances of the case, Ld.CIT(A) erred in directing to delete the addition of Rs. 3,68,00,000/- and Rs. 2,66,25,000/- on account of unexplained cash credit u/s 68 of the IT Act being bogus unsecured loan from M/s Aastha Commtrade Pvt. Ltd. and M/s Gainwell Mercantiles Pvt. Ltd. respectively. b) In the facts and on the circumstances of the case, Ld. CIT(A) erred in directing to delete the addition of Rs. 25,31,638/ and Rs. 18,14,326/- on account of unexplained expenditure u/s 69C of the IT Act being bogus interest claimed o....
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....Guj.), wherein it was held that where Department had accepted repayment of loan in subsequent year, no addition was to be made in current year on account of cash credit. The Ld.AR also stated that the interest is paid to the party after due compliance of provisions of TDS and, hence, no interest should be disallowed u/s 69C of the Act. 6.1. We have also reviewed the decision of Hon'ble Gujarat High Court in case of DCIT Vs. Rohini Builders 256 ITR 360, wherein the Hon'ble High Court decided that the assessee had discharged its initial onus by providing necessary evidence, and the Department failed to prove that the credits were non-genuine. It was held that mere non-compliance of summons by some creditors cannot be a ground to tr....