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2016 (10) TMI 1274 - AT - Income TaxUnexplained cash credit u/s. 68 - genuineness of the loan transaction as well could creditworthiness of the lender - HELD THAT:- Once tax-payer files the basic details such as name and address of creditor, PAN, income tax return, confirmation and bank statement, the initial onus gets discharged and if the Revenue doubts the identity and/or creditworthiness of the lender and/or genuineness of the transaction, the onus shifts back to the tax-payer to offer an explanation to the satisfaction of the AO as contemplated u/s 68 so that truth behind the smokescreen could have been unraveled by the AO. In the absence of the same, the AO has the powers to make additions to the income as unexplained cash credit u/s. 68 of the Act because the AO is both an investigator and adjudicator. Thus merely submission of the name and address of the lender, income tax returns, Balance Sheet/statement of affairs, bank statement of the lender is not sufficient as the AO is to be satisfied as to the identity and creditworthiness of creditor as well as to the genuineness of the transaction entered into with the creditor. As confessed / admitted by the partners of M/s Moxdiam in the statement recorded on oath u/s 131 of the Act that they are persons of meager financial means/resources and several bank accounts were opened by Moxdiam to provide accommodation bills and accommodation entries to various parties in lieu of commission income. Assessee had stated before us that the admission of the partners of the firm M/s Moxdiam is restricted to providing of accommodation bills for purchase and sale invoices of diamonds and it cannot be extended towards accommodation entries of the nature of loans’ as are extended by Moxdiam to the assessee. We are afraid that this contention of the assessee cannot be accepted as it is admitted by partners of Moxdiam that the firm is engaged in providing accommodation entries and accommodation bills in lieu of commission income and we cannot give a hyper technical restricted meaning to the words of the partners recorded in the statement as the partners clearly stated and meant that the firm M/s Moxdiam is engaged in activities of providing accommodation entries and accommodation bills to various parties and hair splitting by giving hyper technical restrictive meanings to the words recorded in the statement cannot be allowed as is referred to by the learned counsel for the assessee rather it is to be seen from the perspective of the admission of partners of Moxdiam wherein they have admitted/confessed that the firm Moxdiam is not doing any regular and genuine commercial and business dealings but is engaged in providing accommodation entries and accommodation bills in lieu of commission income, which also stood corroborated by the financial statements of Moxdiam which on perusal clearly reveals that there are no own funds invested by partners in Moxdiam as the capital invested by partners in Moxdiam seen along with their current account will reveal a deficit / debit figure. Additions made by the AO and sustained by learned CIT(A) are to be affirmed as we do not find any infirmity in the order of learned CIT(A) which we with due respect affirm with respect of raising of loan of ₹ 1.0 crore by the assessee from Moxdiam which is held to be income of the assessee as an unexplained cash credit u/s. 68 of the Act. Consequentially, interest of ₹ 93,000/- provided by the assessee on the said loan also cannot be held to be genuine interest and is ordered to be disallowed as deduction claimed by the assessee. - Decided against assessee.
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