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2016 (4) TMI 860 - AT - Income TaxReopening of assessment - Held that:- The proceedings u/s 147 were initiated after recording necessary reasons and after obtaining approval from the Additional CIT. The reasons were recorded on the basis of statement of Shri Kripa Shankar who accepted having indulged in the accommodation entry in respect of M/s. B.C. Purohit & Company by way of affidavit in which the names of Shri Sunil Verma and Smt. Anar Devi find mentioned. Thus the information received by the AO was based on department channel duly supported by affidavit of intermediary. In view thereof, the ground for reopening of assessment has been rightly rejected. Addition on account of gifts and commission paid - Held that:- The assessee was not provided an opportunity to cross examine the statement of Shri Kripa Shankar which is not in conformity with principles of natural justice. In view thereof, grounds relating to addition of ₹ 2,00,000/- and ₹ 1,000/- are set aside. Addition u/s 68 - Held that:- There was no reason for reopening of assessment in this behalf. The assessee has submitted confirmations along with names, address and PAN numbers of the creditors. In my considered view the assessee has discharged its initial onus to explain the cash credits relying on cases of CIT vs. Heeralal Chagan Lal (2002 (1) TMI 19 - RAJASTHAN High Court ). Addition under section 41(1) - Held that:- The liability in question remains outstanding in the books of the assessee merely because the postal notice came back unserved. It cannot reach an inference that assessee’s liability has shifted in terms of section 41(1). In view thereof, the addition made is deleted. Disallowance of interest - Held that:- It has not been disputed that assessee has income from shares and also trading of clothes. The interest has been paid on earlier liabilities during the course of business. Merely because there was a lull in the business which cannot be assumed that the payment of interest is not in the course of business. Therefore, the same is allowable under section 36.
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