TMI Blog2015 (4) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the order passed by the Ld CIT(A) in AY 2008-09. We have earlier noticed that the assessing officer has followed his reasoning given in the assessment order passed for AY 2008-09 to make the addition of creditors u/s 68 of the Act in this year also. However, the Ld CIT(A) has considered the financial statements furnished by the assessee in respect of each of the creditors and has given a definite finding that the creditors have enough sources to advance the loan to the assessee. Thus, the Ld CIT(A) has held that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act. Hence, we do not find any reason to interfere with his order in AY 2009-10 also. Since the creditors are held to be genuine, the disallowance of interest made by the AO is also liable to be deleted. Accordingly we confirm the order of Ld CIT(A) on that issue also. - Decided against the revenue. - I.T.A. No.5066/Mum/2011, I.T.A. No.4992/Mum/2012 - - - Dated:- 31-3-2015 - S/Shri B.R.Baskaran And Sanjay Garg JJ. For the Appellant : Shri Goll Srinivas Rao For the Respondent : Shri R C Jain and Shri Ajay Daga ORDER Per B R Baskaran, AM: Both the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing conclusions:- 22.10 To put it simply, the creditors are providing accommodation for benefit and as there is scope to do so because of trading in diamonds and precious stones. When real substance of the whole gamut of transactions is looked into, it is clear that two persons are getting benefited in two different ways. On one side, the assessee can bring back his income from undisclosed sources in the form of loans. The assessee will debit interest and claim the same as expenditure and also deduct tax at source and issue a certificate accordingly. On the other side, the creditors will enable utilisation of their bank accounts and introduce the money, belonging to the assessee, in the midst of several other monetary transactions. Accordingly, transactions are structured, conveniently, and for mutual benefit. The benefit for the creditors is all there to be seen. Without investment, tax free interest is earned. 4. Based on the above conclusions, the AO held that the loans received from other creditors are also not genuine. Accordingly, the AO assessed loan creditors aggregating to ₹ 15.14 crores as income of the assessee u/s 68 of the Act. 5. In the appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasoning that the income declared by each of the creditors was lower and disproportionate to the loan amount given by them. It is pertinent to note that the assessing officer did not examine the financial statements like Balance Sheet of each of the creditor to find out the sources available with the each of the creditor in order to give loan to the assessee. Following observations made by Ld CIT(A) in AY 2008-09 brings out this fact:- 14 I have circumspected the entire spectrum of facts and circumstances of the case vis- -vis carefully considered the evidences on record and various judicial decisions over the issue. I find that Ld AO merely doubted the genuineness of credits without bringing on record any substantial piece of evidences contrary to the claim of the appellant. Further, I find that Ld AO has wrongly presumed that appellant has not discharged its onus cast upon it in furnishing required evidences of credits appearing in its books of account. Before coming to the individual reasoning given by the AO in the assessment order, here it is pertinent to mention that appellant has produced 4 cash creditors for their examination and Ld AO has examined them but could not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which vindicates his earlier view:- 14.3 Having regard to the above findings of the A.O the rival submissions of the appellant as contained in the written submission vide para 8 thereof partywise, I find clear that the A.O has merely disbelieved the credit ignoring the fact of complete discharge of primary onus which lay upon the appellant. Having regard to the papers placed in the Paper Book which was submitted in the course of appeal hearing referred to by the appellant in the written submissions, I am convinced that the appellant has fully discharged the primary onus which lay upon it. In the course of appeal hearing I had directed the appellant to furnish balance sheets etc. of the loan creditors numbering 13 in all. The appellant complied with the same submitted the Balance sheet etc, in respect of the 12 creditors, as the balance sheet etc of the remaining creditor was already placed in Paper book was before the A.O hence, there is no point of dispute that additional .. is taken on record. On going through the said balance sheets it is seen that the loans have been advanced by the above creditors out of the cash flow with them which mainly generated from reaslis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. However, the Ld CIT(A) held that the assessing officer has simply gone on extraneous considerations by making wild guesses unconnected with the application of sec. 68. Accordingly, the Ld CIT(A) deleted the assessment of creditors made u/s 68 of the Act. 13. Before us, even though the Ld D.R submitted that the Ld CIT(A) was not correct in deleting the addition, yet he could not controvert any of the findings given by the Ld CIT(A). As observed by us earlier, we notice that the assessee has discharged the initial burden of proof placed upon it u/s 68 of the Act by proving the credit worthiness of all the creditors. As pointed out by Ld CIT(A), the quantum of income declared in the income tax returns is not the sole factor that determine the credit worthiness. On examination of the Balance sheet filed by the creditors, the Ld CIT(A) has given a definite finding that all the creditors were having enough sources, either received through realisation of sundry debtors or through loans, for giving advance to the assessee. Before us, the Ld D.R could not controvert the above said findings given by Ld CIT(A). We notice that he assessing officer, as observed by the first appellate au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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