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2022 (4) TMI 439 - AT - Income TaxAddition u/s. 68 - bogus loan creditors as the identity and creditworthiness of the loan creditors and genuineness of the transactions could not be proved by the appellant - assessee was primarily engaged in the business of advancing and taking loans/advances - HELD THAT:- The assessee have not only filed a details relating to identity such as their PAN numbers, Income Tax Return and confirmation etc. but has also given party-wise details of the transactions. The lower authorities did not point out any defect or error in the details and evidences given by the assessee. AO has relied upon the investigation carried out by him/through his Inspectors, whereas, the contention of the ld. AR has been that the said investigation report/enquiry report of Inspector cannot be relied upon without confronting the same to the assessee and without giving an opportunity to the assessee to cross-examine the concerned officer and rebut the said enquiry report. The assessee has also given explanation regarding the source of cash credit stating that the cash deposits was made from available cash in hand. The assessee used to first withdraw cash from Bank and then the excess cash withdrawal was deposited in the Bank A/c of the assessee. Thus, the source of the cash deposits was out of the amount withdrawn from the Bank as and when needed and the excess cash withdrawal was re-deposited in the Bank A/c. Neither AO nor CIT(A) has given any findings relating to any defect or discrepancy in respect of the above explanation and evidences furnished by the assessee. The entire order is based on certain enquiries conducted by Investigation Wing. When in his opinion the said money did not belong to the assessee then addition cannot be made in the hands of the assessee as his unexplained income. In view of this, we do not find justification on the part of the lower authorities in making the additions and confirmation made by the AO. Disallowance of interest expenditure - contention of assessee has been that it is the case of the assessee that the assessee is engaged in the business of taking and giving loan on interest and earned interest income - HELD THAT:- AO has taken into consideration the interest income shown by the assessee, however, has failed to given credit/interest expenditure, which in our view is not justified. In view of this, the additions made by the Assessing Officer in respect of disallowance of interest expenditure is not sustainable in the eyes of law and the same is ordered to be deleted. Appeal of the assessee stands allowed.
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