2023 (1) TMI 966 - AT - Income Tax
Unsecured loan raised u/s. 68 - addition made on the basis of said statement recorded at the back of the assessee - HELD THAT:- Loan taken by the assessee was also repaid. We note that even the assessment has been framed in the case of the lender and no addition was made on account of money lent to the assessee.
Shri Sharma, the director of M/s. Fair Plan Vincom Pvt. Ltd. has admitted in the statement recorded u/s. 131 of the Act that he has arranged accommodation entries on various dates to the assessee and charged commission in lieu of arranging accommodation entries for the assessee on commission basis. The said statement was retracted by Mr. Sharma vide affidavit dated 17.02.2017 wherein he has stated that during the course of his attendance before the DCIT, Circle-36, Kolkata his Chartered Accountant was asked to leave the office and he was asked to wait outside his chamber. He further stated that after 3/4 hours of waiting he was called and asked to sign in a statement which was already kept ready. We also note that Mr. Sharma retracted the statement by stating that the loan given to assessee was a genuine loan and no cash was ever given by the assessee in lieu of the said loan. Thereafter, he stated in reply to question Nos. 30 and 31 that loan was in fact given by M/s. Fair Plan Vincom Pvt. Ltd. to M/s. Super Iron Foundry.
Considering these facts, we are of the considered view that the addition made on the basis of said statement cannot be sustained. Further, we note that assessee was not allowed cross examination of Shri Sharma despite specific request from the assessee and the AO stated that on the date fixed for cross examination the said person did not turn up and the said cross examination could not happen but this in our opinion is not the excuse for not allowing the cross examination. Therefore, the addition made on the basis of statement of a person which was retracted subsequently without allowing cross examination is bad in law. We note that the assessee has furnished all the evidences before the authorities below but no defect or deficiencies pointed out except the statement of lender which was also withdrawn and retracted as stated above.
Thus as assessee has furnished all the evidences proving identity and creditworthiness of the investors and genuineness of the transactions but neither AO nor Ld. CIT(A) commented on these evidences filed by the assessee - we direct the AO to delete the addition - Decided in favour of assessee.