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2019 (2) TMI 282 - AT - Income TaxAddition u/s 68 - unsecured loan treated as unexplained fund - addition on the basis of the statement of Shri Bhanwarlal Jain Group without providing to the assessee an opportunity of cross examination - denial of natural justice - Held that:- The assessee has brought on record, PAN of the loan creditor and evidence of filing of Income Tax return. AO has also noted that notice u/s 133(6) was issued to the lender company and reply is also received. Hence, the assessee has established the identity of the loan creditor in question. In respect of creditworthiness of the said loan creditor, the assessee has brought on record, the audited balance Sheet of the said company, relevant bank statement and as per this balance sheet, the net worth of this company is ₹ 83.34 lacs and the loan amount in question is only ₹ 20 lacs. It has to be accepted that the creditworthiness of the said loan creditor is also established at least prima facie. Regarding genuineness of the transaction in question, the assessee has brought on record bank statement and loan confirmation to establish that the loan was received by account payee cheque and it was returned in the next year by account payee cheque. Hence, genuineness of the transaction in question is also established at least prima facie. AO has come to a different conclusion mainly . Hence, it is seen that except the statement of Shri Bhanwarlal Jain Group, there is no adverse material brought on record by the AO. No shortcoming is pointed out in various documents brought on record by the assessee to establish the identity and credit worthiness of the loan creditor and genuineness of the transaction as noted above. Since, the AO has not provided an opportunity of cross examination of Shri Bhanwarlal Jain Group, the adverse statements of that group cannot be used against the assessee. Case of KISHINCHAND CHELLARAM VERSUS COMMISSIONER OF INCOME-TAX, BOMBAY CITY II [1980 (9) TMI 3 - SUPREME COURT] to be followed. - Decided in favour of assessee.
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