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2016 (5) TMI 1082 - AT - Income TaxAddition u/s 68 - unsecured cash credit - Held that:- As observed that the assessee has raised loans of ₹ 45,50,000/- from various parties during the instant assessment year 1998-99 under appeal and one Shri Surendra Khandhar has given statement u/s 131 of the Act against the assessee that he has floated various firms to give accommodation loan entries to various persons which also included the assessee . The said statement of Sh.Surender Khandhar was recorded by the Revenue at the back of the assessee. The said Shri Surendra Khandhar has not been subjected to cross examination by the assessee and hence the statement of Shri Surendra Khandhar cannot be used against the assessee until and unless the cross examination of the said Shri Surendra Khandhar by the assessee takes place. We find that the Tribunal in the first round of litigation [2013 (9) TMI 1119 - ITAT MUMBAI], set aside the matter to the file of A.O. with a direction to re-verify the loan transactions as per provisions of the Act after affording opportunity to the assessee, the Tribunal also holding that since Sh Surender Khandhar could not be offered for cross examination by the assessee , his statement cannot be used against the assessee. The said Shri Surendra Khandhar did not appear before the Revenue also. The A.O. also failed to make verification and enquiries on merits with respect to the loan raised by the assessee. The assessee, on the other hand, produced the copies of promissory note/hundi as loan confirmations. In the immediately preceding assessment year 1997- 98, the Tribunal in the second round of litigation deleted the addition with a direction to the A.O. to verify the contentions of the assessee regarding repayment of loan With respect to additions made on account of interest on these loans, we find that the AO has made additions based on notional interest being paid/payable by the assessee on these loans, we did not find any basis/justification for the same as per the facts emanating from the records. This issue is also set-aside to the file of the AO to be decided based on merits after bringing on record cogent material/basis for the said interest to be brought to tax as income of the assessee. - Decided in favour of assessee for statistical purpose.
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