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2023 (3) TMI 907 - AT - Income TaxAddition u/s. 68 - addition of loan from two lenders reassessment orders in lender companies - CIT-A deleted the addition - HELD THAT:- CIT (A) has gave detailed reasoning for deleting the addition and further more clinching issue is reassessment of the lender companies where the monies received by them are accepted as genuine. When the source of money is accepted as compliant with provision of section 68 in absence of any further inquiry and findings the amount received by assessee form those companies cannot be held to be taxable in the hands of the assessee u/s 68. Thus, reassessment orders in lender companies accepting the money if at all received from companies operated by some unscrupulous persons, then money received by assessee cannot be held to non-genuine. In fact, that is the only allegation of AO, which is demolished by the reassessment orders of the lender companies. We therefore do not incline to interfere with the findings and reasoning of the ld. CIT(A) and uphold the order of ld. CIT(A). Disallowance of business loss - utilization of interest bearing funds for the purpose of business in order to claim the interest expenditure - AO held that assessee had not brought on record any evidence to show direct nexus of utilization of fund whereas in fact, he had used the funds for the purpose of investments in other concerns in which he is a partner and also for other assets - HELD THAT:- Since out of the overall interest bearing funds, certain funds were utilized for the purpose of business of the proprietorship concern of the assessee, to that extent, interest ought to be allowed u/s. 36(1)(iii) - We therefore do incline to interfere with the order of the ld. CIT(A) and the Corrigendum Order passed thereafter in granting relief to the assessee to the extent of Rs. 3,86,176/- on this issue u/s. 36(1)(iii) of the Act. Hence, the ground no. 3 of the revenue is dismissed. Assessment u/s 153C - additions made in the assessment order having any basis to incriminating material, if any - HELD THAT:- We find that the said issue is squarely covered by the decision of Sinhgad Technical Education Society Ltd. [2017 (8) TMI 1298 - SUPREME COURT] wherein it is held that there has to be incriminating material pertaining to the assessment year in question in order to make any addition or disallowance in an assessment made u/s. 153C of the Act. In light of the above background of facts and settled judicial precedent, we are of the considered view that no additions or disallowances can be made devoid of any incriminating material found during the search on a third person. Accordingly, the Cross objection filed by the assessee is allowed.
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