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2022 (9) TMI 1091 - AT - Income TaxAddition u/s 68 - unsecured loan shown under the head of trade payables - CIT(A) while deleting the addition has observed that the Assessing Officer has accepted the fact that no business has been conducted by the assessee as well as observed in the assessment order that there were hardly any bank balance or cash on hand in assessee’s account AND that the assessee informed that the rate of commission had been calculated @ 1% on total bank credits in the case of entry providers - HELD THAT:- AO has only referred to the credit in respect of letters issued under Section 133(6), letters which were returned back and the parties whose addresses were not provided by the assessee. This direction by the CIT(A) clearly has not given the picture as to on what basis the assessee is dealing with entry providers or giving accommodation entry. CIT(A) has also not taken cognisance of the evidences provided by the assessee and simplicitor directed the AO to calculate the commission income of the assessee @ 1% on total bank credit. Though the objection that the assessee has not conducted any business and there is hardly any bank balance or cash on hand, the CIT(A) has ignored the main aspect of trade payables which was shown by the assessee in his balance sheet. If the analogy of the CIT(A) is accepted then Balance Sheet determined by the assessee company itself will become nullity. CIT(A) was not correct in taking the said trade payables as accommodation entry and directing the Assessing Officer to calculate the commission income @ of 1% on total bank balance. In fact, the assessee has not given any confirmation from other parties whom the letters under Section 133(6) of the Act were issued. Thus ground no.1 of Revenue’s appeal is allowed. Disallowance u/s 14A - HELD THAT:- As it appears that there is no exempt income. The assessee has not derived any exempt income and, therefore, the Assessing Officer was not right in making disallowance under Section 14A of the Act. Ground no.3 is dismissed.
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