TMI Blog2012 (4) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order. In fact, these credit entries represented the assessee s own cash introduced in the business through Ganga Ram Group of cases who have already admitted that they are engaged in business of providing entries and earning income therefrom. 2. That the CIT(Appeals)-I, Agra has erred in law and on facts in deleting the disallowance of ₹ 10,54,199/- of interest claimed to have been paid to the above named creditors on unexplained credit entries. 3. That the CIT(Appeals)-I, Agra has erred in law and on facts in observing that it has not been shown that the depositors have ever admitted that they were engaged in the business of giving bogus entries or that they had given bogus entries to the assessee, ignoring the fact that the assessments of the depositors have been completed holding that they were engaged in entry business. They have admitted this fact and no appeal order has been filed by them against the assessment. 4. That the order of the CIT(Appeals)-1, Agra is bad in law and on fact because in allowing the assessee s appeal he has completely ignored the fact that it has vehemently been proved that the amounts introduced as credit entries were assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous creditors of the Ganga Ram Group, (ii) copy of the relevant bank statements of the creditors reflecting the debits on account of the impugned advances to the assessee and (iii) confirmation letters of the creditors containing complete details of the sources of the credits in their bank accounts prior to the impugned advances to the assessee. However, the AO did not accept the pleas of the assessee and treated the loans as unexplained cash credits in terms of section 68 of the Act and added the same to the returned income of the assessee as assessee s deemed income. The AO also disallowed corresponding interest of ₹ 10,54,199/- debited by the assessee in respect of the said loans. The AO also added ₹ 71,250/- @ 1.5% of the impugned loans as unexplained expenditure presumably incurred by the assessee for obtaining the impugned loan entries. 3. The assessee challenged the addition before the ld. CIT(A) and submitted that the deposits have been received by account payees cheques, the depositors are all assessed to income-tax. The depositors have confirmed giving of the loans to assessee and have also mentioned the source of money advanced as loan in their confirmatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e true that the transactions of lender party might have been found to be false but for making addition in the hands of the assessee, the nature of particular transaction in dispute is to be examined. It has not been established that the transaction of ₹ 1,00,000/- relating to loan given by Devi Sahai Vinod Kumar was held to be bogus in their case. Before the CIT(A), it was also clarified that the said loan was given by the said party to the assessee out of ₹ 1,71,000/- having been received from M/s. CR Foods India Pvt. Ltd. through cheque No.320629 dated 19.01.1998. Thus, even the source of the source was explained. In any case, the assessee had discharged the burden to prove the identity of the creditor, the genuineness of the transaction which was carried out through banking channel and the credit worthiness of the creditor. After the assessee had discharged the burden, it was for the department to have disproved these facts. The AO did not examine the assessee nor brought any material on record to prove specifically that the loan transaction of ₹ 1,00,000/- was fake or bogus. The amount of loan was subsequently repaid again through banking channel. In the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch was conducted in Ganga Ram Group of cases in which it was found that they are connected with providing bogus entries of loans against consideration which was admitted in their cases. It is, therefore, a case of systematic transfer of money transaction for consideration. The sources of credits have not been explained and the assessee used a conduit of Ganga Ram Agarwal for transfer of loans to the assessee. Therefore, ld. CIT(A) should not have deleted the addition. He has submitted that since the recipient, i.e., Ganga Ram Agarwal group had admitted the aforesaid modus operandi of transfer of money, therefore, the order of the ld. CIT(A) should be reversed. The ld. DR relied upon the order of ITAT, Jabalpur Bench in the case of Vishwanath Prasad Gupta, 129 ITD 95. 5. On the other hand, the ld. counsel for the assessee reiterated the submissions made before the ld. CIT(A) and submitted that all the depositors have explained their source of giving loan to the assessee. No cash have been deposited in their accounts and sufficient balances are available with them to give loan to the assessee. The confirmations of all the parties were filed alongwith their bank statements. The de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now well settled that where assessee requests the AO to issue summons to enforce attendance of the creditors to establish the genuineness and capacity of the creditors, it is duty of the AO to enforce attendance of the creditors by issuing summons. If the AO does not choose to issue summons and examine the creditors, he cannot subsequently treat the loans standing in the name of such creditors as non-genuine nor add the amount thereof to the assessee s income . Since the assessee produced sufficient evidence before the AO to prove the genuineness of the loans in the matter and the AO did not enforce attendance of the creditors for their examination on the request of the assessee, therefore, the AO cannot treat the credits as non-genuine in the matter. The ITAT, Agra Bench in the case of same assessee in the identical facts in assessment year 1997-98 and 1999-2000 dismissed the departmental appeals vide orders referred to above. No changes in the facts and circumstances of the case have been brought to our notice. Considering the above discussion, we do not find any merit in the appeal of the Revenue with regard to giving of loans to the assessee. The interest paid on the loans hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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