9911796707
TMI Blog2012 (11) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... essing officer in making addition of Rs.28,80,000/- as alleged unsecured loans u/s.68 of the I.T. Act, 1961. 2. On the facts and in the circumstances of the case as well as law on the subject, the learned commissioner of the Income Tax (Appeals) has erred confirming the action of the assessing officer in disallowing of Rs.1,70,711/- as interest payment on unsecured loans. 3. It is therefore prayed that the above addition may please be deleted as learned members of the tribunal may deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of the hearing of the appeal." 3. The brief facts of the case till the assessment stage are noted by Ld. CIT(A) in para 3 of his order and for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter was confronted with the assessee and was asked to produce these cash creditors personally for examination. The assessee failed to produce any of the depositors/cash creditors. The AO therefore issued summons u/s 131 and deputed the Inspector for spot enquiries. The AO has stated that none attended in response to the summons. The Inspector reported that in most of the cases the persons were not available at the given address and in few cases the address given was that of the Income-tax Practitioners of these creditors. Hence the identity of the depositors/cash creditors could not be established. The AO therefore issued a show cause notice to the assessee to discharge its onus. For examining these depositors the AO gave two days full w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that all the deposits were repaid subsequently by a/c payee cheques and the relevant copy of the bank statement of the assessee for the period from 01.05.2006 to 31.03.2007 is available on pages 94-104 of the paper book. Reliance was placed on the following judicial pronouncements: a) DCIT Vs Rohini Builders 256 ITR 360 (Guj.) b) CIT Vs Pragati Cooperative bank Ltd. 278 ITR 170 (Guj.) 6. Ld. D.R. supported the orders of authorities below. 7. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below and the judgements cited by the Ld. A.R. of the assessee. We find that in respect of all the loan creditors, the evidence regarding filing of return of income has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the creditors by showing that the amount was received by the assessee by a/c payee cheques drawn from the bank account of the creditors and the assessee is not expected to prove the genuineness of cash deposited in the bank accounts of those creditors because under law, the assessee can be asked to prove the source of the credit in his books of accounts but not the source of the source as held buy Hon'ble Bombay High Court in the case of Orient Trading Company Vs CIT as reported in 49 ITR 723. It was also held that the genuineness of transaction is proved by the fact that the payment to the assessee as well as repayment of loan by the assessee to the depositors is made by a/c payee cheques and interest is also paid by the assessee to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that in the present case, the issue involved is squarely covered in favour of the assessee by the judgment of Hon'ble Gujarat high Court rendered in this case of Rohini builders (supra) and respectfully following the same, we hold that the addition made by the A.O. u/s 68 is not sustainable. Accordingly, ground No.1 of the assessee is allowed. 8. As per ground No.2 of the assessee, the issue involved is consequential because disallowance of interest was made because due to addition of unsecured loans u/s 68 of the Income tax Act, 1961, the A.O. also disallowed interest payment made by the assessee in respect of those unsecured loans. Since the addition on account of unsecured loans itself is deleted, the disallowance of interest cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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