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2023 (1) TMI 610 - AT - Income TaxDisallowance of fictitious losses - loss claimed by assessee which was treated as bogus in nature - allegation that the appellant created artificial transactions in the form of purchase and sale of silver to create fictitious losses - HELD THAT:- Sales shown by the M/s Paragati Traders to the appellant assessee has been duly accepted by the Revenue as genuine transaction. Before us no material brought on record by the DR to suggest that the said assessment order has been revised under any provision of the Act where genuineness of such sale has not been accepted. Likewise, the income declared by M/s Gayatri Trading Co who was alleged to be the part of circular transaction was also accepted by the Revenue with minor adjustment in amount of depreciation in the assessment order dated 29-11-2010. Considering the fact that the sale shown by the supplier (M/s Pargati Traaders) of impugned silver to the assessee and purchases shown by the customer (M/s Harshad Jeweller) has been accepted genuine in their respective assessment orders, we hold that the transaction of purchase of sale of silver the by the assessee are genuine transaction and in the process loss incurred by the assessee cannot be disallowed. Hence we hereby set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Thus, the ground of appeal of the assessee is allowed. Disallowances of interest expenses on account of diversion of interest bearing fund - HELD THAT:- Admittedly the own fund of the assessee exceeds the amount of loans and advances given to various parties. This fact can be verified from the submission made by the assessee before the authorities below. Accordingly, we are of the view that a presumption can be drawn to hold that the interest free advances has been given by the assessee out of his own interest free fund. Accordingly, the question of making the disallowance of interest expense does not arise. Hence, the ground of appeal of the assessee is hereby allowed.
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