2020 (2) TMI 885 - AT - Income Tax

Unexplained Unsecured Loans - Addition u/s 68 - consequential disallowance on account of interest paid on above Loans - HELD THAT:- Since all the confirmations from the depositors have been submitted, so there was no conclusion of any afterthought or make believe transactions. All the transactions are duly recorded in the regular books of accounts. Therefore, genuineness of those cannot be doubted. Even otherwise, Hon'ble jurisdictional Gujarat High Court in the case of DCIT Vs. Rohini Builders [2001 (3) TMI 9 - GUJARAT HIGH COURT] along with PAN and confirmation, then in that eventuality no additions are sustainable.

Even in the case of CIT Vs. Ranchhold Jivabhai Nakhava [2012 (5) TMI 186 - GUJARAT HIGH COURT] it has categorically been held that when once the initial onus has already been discharged by the assessee, then in that eventuality it was the duty of the ld.AO to ascertain from the ld.AO’s of those lendors, whether in the respective returns they have shown existence of such amount of money or not. The ld.AO in the present case has not carried out any such exercise as has been laid down by the Hon'ble Gujarat High Court in the case of CIT vs. Ranchhod Jivabhai Nakhava(supra).

Additions made by the ld.AO in the case of assessee are against the principles laid down u/s.68 - no addition could have been made by the ld.AO as in the present case the assessee has already discharged his initial onus. Therefore, the unsecured loan received by the assessee cannot be termed as unexplained. Thus, no addition on that account is sustainable.

Disallowance being 20% general labour wages, workers salaries and freight expenses of lumsum basis - only reason for making disallowances was that assessee was not maintaining any register and had only submitted self-made vouchers - HELD THAT:- We notice that in this particular year, there are less expenditure, then that occurred in the earlier years. Therefore, keeping in view of the above submissions, we are of the view that there is no justification of making any disallowance on account of expenses incurred by the assessee. When the assessee has substantiated the same by producing documents, therefore, we delete the addition/disallowance, accordingly Ground No.3 is allowed.