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2018 (8) TMI 1776 - AT - Income TaxAddition u/s 68 - receipt of accommodation entries - search by the Investigation Wing - proof of identity of creditors - HELD THAT - Assessee had placed on record to prove the genuineness of the loan entries from the six creditors in the shape of i) PAN details of creditors ii) Constitution and address of the creditors iii) Particulars of income-tax returns filed by the creditors iv) Confirmatory letters given by the creditors v) Audited financial accounts (including balance sheets) of the creditors vi) Relevant bank statements of the creditors vii) Details of interest paid to the creditors and viii) Details of TDS deducted and paid. In this way the assessee has provided all possible documentary evidence to prove the identity of the creditors from whom the impugned loan was obtained. All the loans as were obtained were also repaid through the banking channel regarding this a duly notorised affidavit was filed by the assessee and the details of which are already contained in para no. 6.3.12 of the order of Ld. CIT(A). Even otherwise it is a settled law that once the assessee discharges its onus by proving the satisfactory nature of the loan transactions then the onus shift upon the AO and in his wisdom the AO has option of making inquiries from the alleged lenders - No reasons to interfere into or deviate from the findings recorded by the Ld.CIT(A). - Decided in favour of assessee.
Issues Involved:
1. Accommodation entries genuineness. 2. Interest on loans through accommodation entries. 3. Consideration of Supreme Court decisions. 4. Restoration of AO's order. Detailed Analysis: Issue 1: Accommodation Entries Genuineness The revenue challenged the Ld. CIT(A)'s decision, asserting that the accommodation entries in the names of Marvin Enterprises, Meenakshi Exports, Meenakshi Diamonds Pvt. Ltd., and Mukti Exports were genuine despite being proven as accommodation entries during a search by the Investigation Wing. The assessee provided comprehensive documentation to prove the genuineness of the loan entries, including PAN details, addresses, income-tax returns, confirmatory letters, audited financial accounts, bank statements, details of interest paid, and TDS deducted and paid. The Ld. CIT(A) concluded that the assessee had satisfactorily discharged the burden of proof, shifting the onus to the AO, who failed to make further inquiries or specify additional required materials. Consequently, the addition of Rs. 3,83,10,000 was deleted. Issue 2: Interest on Loans Through Accommodation Entries The revenue also contested the genuineness of the interest on the loans taken through accommodation entries. Since the loans were treated as genuine, the interest debited to the profit and loss account amounting to Rs. 21,30,894 was also considered legitimate. The Ld. CIT(A) deleted the disallowance of interest based on the same facts and legal position. Issue 3: Consideration of Supreme Court Decisions The revenue argued that the Ld. CIT(A) erred by not considering the Supreme Court decisions in Roshan Di Hatti vs. CIT, Kale Khan Mohammed Hanif vs. CIT, and Sreelekha Banerjee & Ors vs. CIT. However, the Ld. CIT(A) focused on the evidence provided by the assessee, which satisfactorily explained the loan transactions. The AO's failure to conduct further inquiries or provide additional requirements weakened the revenue's position. Issue 4: Restoration of AO's Order The revenue sought to set aside the Ld. CIT(A)'s order and restore the AO's decision. However, the Ld. CIT(A)'s findings were based on thorough documentation and the assessee's satisfactory discharge of the burden of proof. The AO's reliance on inadequate evidence and failure to make further inquiries led to the dismissal of the revenue's grounds. Conclusion: The appeal filed by the revenue was dismissed. The Ld. CIT(A)'s decision to treat the loans and the associated interest as genuine was upheld, as the assessee provided comprehensive evidence, and the AO failed to conduct further necessary inquiries. The revenue's grounds for challenging the Ld. CIT(A)'s order were found to be unsubstantiated, resulting in the dismissal of the appeal.
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