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2021 (4) TMI 989 - AT - Income TaxAddition of unexplained cash credit u/s 68 of the Act in respect of loans received by the assessee - second round of proceedings before this tribunal - In the first round, this tribunal had remanded the issue to the file of ld CIT-A for the reason that the loan confirmations that were filed by the assessee before the ld CITA in the paper book were not considered by the ld CIT-A - HELD THAT:- We find that the ledger extracts given by the assessee before the ld CITA itself contains the counter signature of the creditors duly confirming all the transactions together with their PAN. From the perusal of the ledger extracts, we find that there is a running account maintained by the assessee with these creditors and all the transactions are routed through regular banking channels in account payee cheques. One more excruciating fact to be noted here is that the assessee had paid interest on these loans after subjecting the same to due deduction of tax at source. We find that the lower authorities had duly granted deduction for the interest expenditure claimed on these loans by the assessee. Once the interest is accepted to be genuine , then how the principal component thereon could be disbelieved by the lower authorities. We are unable to comprehend and unable to persuade ourselves to accept to this act of the lower authorities. We find that the assessee had requested the ld AO to issue summons u/s 131 of the Act to those loan creditors to find out the truth, which was not acted upon by the ld AO - assessee had duly disclosed the identity of the creditors and genuineness of the transactions are very much evident from the ledger extracts itself as all the transactions are routed through regular banking channels and assessee had even paid interest on these loans. Due to existing disputes with the parties by the sister concerns of the assessee, the assessee could not procure the financial statements and income tax returns from the loan creditors to prove their creditworthiness. But there is no dispute that the assessee had indeed furnished the PAN of all the loan creditors. AO / ld CITA could have cross verified from the PAN of the creditors with the assessing officers of the creditors and ascertain the creditworthiness. In any case, all these 5 loan creditors had duly confirmed the transactions carried out with the assessee by way of counter signature in the ledger extracts. We find that no adverse inference was drawn on the said ledger extracts by the lower authorities. Loan borrowed from 20th Century Finance Corporation Ltd had been duly repaid during the assessment year under consideration itself by the assessee with interest. With regard to loans received from Sharda Castings Ltd, Mittal Ispat Ltd and Pondy Metal & Rolling Mill (P) Ltd, the assessee had repaid the loans in Asst Year 2000-2001 (i.e the immediately succeeding asst year) together with interest. We find that the ld AR before us had tried to produce certain documents connected with DSQ Software and 20th Century Finance Corporation Ltd (which was demerged later as TCFC Finance Ltd) to prove their creditworthiness. In our considered opinion, these documents are not required to be looked into at this stage as we have already held that the assessee had reasonable cause from not proving the creditworthiness of the creditors by producing the necessary documents due to ongoing legal suits and disputes pending with those creditors vis a vis the sister concern of the assessee. Moreover those disputes are money suits and obviously the loan creditors would not come forward to cooperate with the assessee by furnishing their financials In view of the aforesaid detailed observations, we are inclined to accept to the contentions of the assessee that the loans received from aforesaid 5 parties are genuine and not to be treated as unexplained cash credit u/s 68 of the Act in the peculiar facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee are allowed
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