TMI Blog2016 (5) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... s to Nil as on 31.3.2009 in its books of accounts. Hence the assessee is entitled to claim the balances of these three parties as a trading loss u/s 28 of the Act. Thus we find lot of force in the alternative argument of the assessee that the non-recovery of the loan dues , according to Learned AO, should be allowed as a deduction as regular business loss from money lending activity , which in turn would only go to increase the business loss of the assessee for the year under appeal and the same would in turn be available for set off against the alleged income from other sources u/s 68 of the Act. Hence in any case, no addition could be made in the hands of the assessee - Decided in favour of assessee - ITA No. 683/Kol/2013 - - - Dated:- 8-4-2016 - Shri N.V. Vasudevan, Judicial Member, and Shri M. Balaganesh, Accountant Member For The Appellant : Shri S.K. Tulsiyan, FCA, ld. AR For The Respondent : Shri Rajendra Prasad, JCIT, ld.Sr.DR ORDER SHRI M.BALAGANESH, AM This appeal of the assessee arises out of the order of the learned CIT(A)-XX, Kolkata in appeal no. 280/CIT(A)-XX/Wd-34(3)/11-12/Kol dated 17-12-2012 against the order of assessment framed for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Learned AO to issue summons u/s 131 of the Act to those two parties for cross verification and for the verification of genuineness of the claim of assessee. This explanation did not hold water in the mind of the Learned AO and he held that the identity of the parties, creditworthiness of the parties and genuineness of transactions not proved by the assessee and accordingly brought the same to tax as unexplained cash credit u/s 68 of the Act. 4. On first appeal, the assessee reiterated the submissions made before the Learned AO. It was argued that the assessee had placed the last known address of the loan debtor as is available in its records to the Learned AO and therefore the discharge of onus has been duly done by it. It was argued that had the Learned AO issued summons u/s 131 of the Act to those parties, they could have furnished necessary evidences in this regard. It was alternatively argued by the assessee that admittedly, one of the business of assessee was money lending and the lending to these three parties were made in the ordinary course of its money lending business and they were remaining outstanding for more than 10 years. Either way, the assessee had duly cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this case the same relates to sundry debtors i.e. advance given by us to the parties in earlier years which has been received back. The creditworthiness of the Appellant who has advanced is proved, there is no credit entry in Appellant's Books but squared up debit entry and taxes have already been paid on debit entries. 5) That without prejudice to above the sundry debtors from whom money could not be realized after lapse of a decade, the same is to be treated as bad debts and the Business loss of bad debts amounting to ₹ 36,50,036/= may be set off against business profit for cash deposits for the equivalent amount and no addition in this Account is justifiable. 5. The Learned AR reiterated his arguments made before the Learned CIT(A). He prayed that alternatively the monies not recovered from these three parties should be allowed as bad debt or regular business loss as the assessee had duly removed the loan balances from the books of accounts of the assessee which amounts to effective write off of the same. He further argued that the Learned AO had not rejected the books of accounts of the assessee by pointing out certain deficiencies thereon. He placed rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no direct evidence to prove that the assessee had only routed its undisclosed monies in the form of realization from loan parties, by virtue of operation of deeming provisions of section 68 of the Act, the addition made by the Learned AO needs to be sustained. With regard to the decision relied upon by the Learned AR on the co-ordinate bench of this tribunal in the case of Sanjeev Kejriwal vs ITO in ITA No. 371/Kol/2010 dated 9.11.2012 , we find that the facts stated thereon are squarely distinguishable with regard to realization of monies from debtors. In that case, there was a clear finding given by the Learned CIT(A) that the monies received represent realization from debtors. Whereas, in the instant case, the entire dispute revolves on the fact of realization of monies from loan debtors. Hence reliance placed on the aforesaid decision does not advance the case of the assessee on this aspect. Hence the same would become taxable as income from other sources. 6.2. It is not in dispute that the assessee had shown these loan balances due from these three parties as loans and advances receivable in its balance sheet for more than 10 years. It is also not in dispute that one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not in dispute that the assessee had continued to carry on its money lending business. It is also not in dispute that the lending to these parties were made in the ordinary course of money lending business of the assessee. Since the assessee has claimed that the monies have been realized from these parties, it is estopped from proceeding against these parties from making any recoveries. It is also not in dispute that the assessee had brought the balances of these parties to Nil as on 31.3.2009 in its books of accounts. Hence the assessee is entitled to claim the balances of these three parties as a trading loss u/s 28 of the Act. In view of these facts and circumstances, we find lot of force in the alternative argument of the assessee that the non-recovery of the loan dues , according to Learned AO, should be allowed as a deduction as regular business loss from money lending activity , which in turn would only go to increase the business loss of the assessee for the year under appeal and the same would in turn be available for set off against the alleged income from other sources u/s 68 of the Act. Hence in any case, no addition could be made in the hands of the assessee in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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