2021 (1) TMI 941 - ITAT MUMBAI

Additions u/s 68 - unsecured loan from the Director - HELD THAT:- Since the assessee has only submitted bank statement and return of income of the Director AO came to conclusion that assessee has not proved identity, credit worthiness and genuineness of the transaction. AO himself observed that this unsecured loan is from director of the company and all the transactions are through banking channel. Therefore, identity and credit worthiness is already proved considering the fact that these transactions were carried out throughout the year and it is accepted fact that Mr. Vivek Surana is director of the assessee’s company.

Genuineness of the transaction, there is no bar in the I. T. Act that assessee cannot deal or take unsecured loan from the director. Disallowance u/s 68 is far fetched and the loan transaction with Director cannot be termed as non-genuine. Therefore, we are inclined to accept the findings of Ld. CIT(A). Accordingly, ground no. 1 is dismissed.

Disallowance of trade creditors - assessee could not bring them to AO in person - HELD THAT:- We notice that these are trade creditors and also two directors accounts are involved. We considered the findings of the Ld CIT(A) carefully and found that trade creditors M/s Divya Jewels, M/s Jewel Diamond and M/s Kingstar has no business transaction during this assessment year and these are outstanding balances of previous assessment year. Since these are transactions of earlier AY and its settlements were made in the subsequent AY, in our view there is no scope for disallowance u/s 68. Therefore, we are inclined to accept the findings of Ld CIT(A).

With regard to M/s Renisha Impex and Varun Gems, it is noticed that these parties are having regular business transactions and without any findings on transactions with them as bogus or accommodation entries, there is no scope for AO to disallow these transactions. Therefore, we are inclined to accept the findings of Ld CIT(A).

With regard Mr Girish Agarwal and Poonam Agarwal, these are directors and their accounts shows regular salary payments and tax deductions. Since these are directors, there is issue of identity and genuineness issues. Accordingly, we are inclined to accept the findings of Ld CIT(A) and accordingly grounds raised by revenue is dismissed.

Bogus purchases - There is no findings by the AO that these are bogus transaction or findings from any other external agencies that these party is involved in providing accommodation entries to assessee. It is only presumption made by the AO simply because Kalash Enterprises is associated with the Rajendra Jain Group. Unless there is specific finding that these are bogus entries, AO cannot presume and disallow the same. Accordingly, we are inclined to accept the findings of Ld CIT(A). Accordingly, Ground raised by the revenue is dismissed. Appeal filed by the revenue is dismissed.