TMI Blog2006 (9) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... unsecured loans by admitting additional evidence in contravention of r. 46A of IT Rules, 1962". 2. Rival contentions have been heard and record perused. In the course of assessment under s. 143(3) of the Act, the AO observed that during the relevant previous year the assessee company has raised fresh unsecured loans amounting to Rs. 1,68,57,250. The assessee was asked vide notice under s. 142(1), dt.18th Aug., 2000to give names and addresses of the persons from whom fresh loans were raised. In its reply filed on 12th Oct., 2000 the assessee furnished a list of 19 persons from whom fresh loans of Rs. 1,26,27,250 were raised. The balance amount of Rs. 42,30,000 was given under the head "Kashipur a/c". The names and addresses of the persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased small scale industry set up with the aim to provide help and benefit to local people as well as to promote the agro-based industry sector. As the loans were taken at the time of establishing this project with the understanding to help them, provide employment benefits etc. and also to give them interest but if the company is not able to pay the interest then the shares equal to that amount shall be allotted to them. Since the assessee suffered huge losses as such was not able to make payments to them as such the people from whom the above loans were taken were subsequently allotted shares. That as regards to the above loans are concerned, the assessee company was prevented by the reasons beyond its control to procure necessary confirma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year the same persons who had made the deposit, have been allotted shares of the company. All this shows that these transactions are genuine. Having regard to all this, the addition made of Rs. 42,30,000 is deleted." 6. Aggrieved by the above order of the CIT(A), the Revenue is in further appeal before us wherein action of the CIT(A) in deleting the addition of Rs. 42,30,000 made by the AO under s. 68 in respect of unsecured loans by admitting additional evidence in contravention of r. 46A of IT Rules, 1962 was challenged. It was contended by the learned Departmental Representative that nothing was produced before the AO for discharging the initial burden cast on the assessee to establish the identity, genuineness and creditworthiness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors inclusive of the ration card of each person having complete details of names and address, etc. and affidavit of each person and the papers of agricultural lands which goes to the root to clearly explain the identity of persons beyond doubt and that creditworthiness was also established beyond doubt and the affidavit and its contents clearly establish that amount was given to the assessee company and this transaction was more than genuine. He has drawn our attention to the submissions made by the assessee before the CIT(A) as narrated at para 4.2, p. 3 of his appellate order, wherein CIT(A) has described the documents furnished before him and the factum of these papers having been sent to the AO for his comments. Learned Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO for his comments. However, the AO has not given favourable report but in his remand report, he has stated that these documents were not sufficient to prove the veracity of assessee's claim under s. 68 of the Act. So far as accepting the additional evidence by the CIT(A) are concerned, we do not find anything wrong in his action, since the same were sent by him to the AO for his comments. We also agree with the contentions of the learned Authorised Representative, Shri R.K. Sharma, that powers of the CIT(A) are coterminus with that of the AO and what the AO has failed to do the CIT(A) is competent to do, and no fault can be found on the part of CIT(A) for accepting the additional evidences as per provisions of r. 46A. However, this powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orthiness of the loan creditors before deleting the impugned addition. However, while deleting the addition, the CIT(A) has not given his finding with regard to the documents furnished before him so as to establish the identity of the loan creditors and their capacity to advance a particular amount of loan nor given any reasons or justification for rejecting the adverse comments of the AO. Without giving these findings, the deletion of the addition by the CIT(A) merely by stating that assessee has filed satisfactory evidence under r. 46A to prove the genuineness of the loans is not sufficient. The fact that alleged creditors were allotted shares by the assessee company in the next year, no doubt, strengthen the assessee's case to some exten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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