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2016 (8) TMI 1007 - ITAT DELHI

2016 (8) TMI 1007 - ITAT DELHI - TMI - Addition u/s 68 - Held that:- The addition made on account of unsecured loans from loan creditors cannot be sustained and the consequential addition on account of interest paid to the loan creditors is also not sustainable. We may point out that during the arguments before us, the ld. DR could not controvert this fact that the assessee received all the impugned loans and returned the same during the same F.Y and interest was also paid thereon to the credito .....

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radeep Dinodia, CA, Shri R.K. Kapoor, CA For The Department : Shri P. DAM Kanunjna, Sr. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER This appeal by the Revenue and cross objection by the assessee are directed against the order of the CIT(A)-VII, New Delhi, dated 21/07/2010 for A.Y 2005-06 in first appeal No. 148/2007-08. 2. The revenue has raised the following grounds of appeal in its appeal: 1. The order of the learned CIT(Appeals) is erroneous & contrary to facts & law. 2. On the f .....

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The ld. CIT(A) also ignored the findings recorded by the A.O that the assessee received the money in question from the country operators. 3. The appellant craves leave to add, to alter, or amend any grounds of the appeal raised above at the time of the hearing . 3. The assessee has raised the following grounds in its cross objection: 1. That the learned Commissioner of Income Tax, (Appeals) grossly erred in law and on the facts of the appellant case in confirming the adhoc disallowance of ₹ .....

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ismissed. 5. The ld. DR contended that the ld CIT (A) erred in deleting the addition of RS. 50,00,000/- made by the A.O u/s 68 of the Incometax Act, 1961 being the unexplained cash credits and ₹ 2,58,220/- being the interest paid on these unexplained cash credits. The ld. DR further submitted that the ld. CIT(A) ignored the fact that the Ld. CIT (A) ignored the fact that the assessee did not discharge the onus of proving the creditworthiness of the credits and genuineness of the transactio .....

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ch were ignored by the AO, granted relief to the assessee and therefore, the impugned order may be upheld. 8. We have heard the arguments of both the sides and carefully perused the relevant material placed on record before us. We find that the ld. CIT(A) has granted relief to the assessee by observing and recording the following findings: 4.6 On these facts and circumstances of the case and in the light of the case laws mentioned above, it is observed that the assessee has duly discharged its o .....

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permanent account number(PAN) and income tax returns. It is also observed that all the 8 loan creditors or lenders are corporate assessees, incorporated under Indian Companies Act; genuineness has been proved by the fact that the transactions have taken place through banking channels which is reflected in the bank statements of the bank accounts of the respective loan creditors and the creditworthiness has been established through submission of their balance sheet and profit & loss account. .....

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s permanent account number (PAN), copy of Income tax return, balance sheet and profit & loss account, A.O. cannot be precluded from further investigation for the purpose of finding the genuineness of transaction and creditworthiness of the creditors. In the instant case, nothing of that sort has been undertaken by the A.O. It is also observed that the Assessing Officer could not point out any discrepancy in the evidences relied upon by the assessee. He has neither brought out any direct or i .....

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rification. This has not been done by the A.O. Further, what is the desired documentary evidence required to support the claim of the assessee as required by the A.O. is not coming out of the order of the A.O. Though, the loan creditors could not be examined by the AO, since they were existing on the file of the Income Tax Department and their income-tax details were made available to the AO, it was equally the duty of the AO to have taken steps to verify their assessment records and if necessar .....

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ring the year under consideration itself. 4.9 It has also been contended on behalf of the appellant that the Assessing Officer did not provide the copies of the statements of the person(s) recorded by the Investigation Wing of the Income Tax Department on the basis of which addition in respect of the loans fom the three parties, namely, Maestro Marketing and Advertising Pvt. Ltd, Rajkar Electrical and Electronics Ltd and SRB Merchandise Pvt. Ltd. has been made. It has also been contented that no .....

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xamination of the witness is must, before the A.O. relies on the statement of the witness for making addition. The assessee has the right to cross-examine if an assessing authority is relying on the testimony of a witness. The assessee is to be afforded an opportunity to cross-examine him as held in the case of CIT v. Eastern Commercial Enterprises, (1994) 210 ITR 103, 111 (Cal), wherein it was observed by the High Court of Calcutta that it is trite law that cross-examination is the sine qua non .....

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icer to collect materials to facilitate assessment even by private enquiry. But if he desires to use the materials so collected, the assessee must be informed of the materials and must be given an adequate opportunity of explaining it. Similar view was expressed in Dhakeswari Cotton Mills Ltd. v. CIT (1954) 26 ITR 775 (SC). Reliance is also placed on the decision of the jurisdictional High Court i.e. Delhi High Court in Commissioner of Income-tax Vs. Pradeep Kumar Gupta and Vijay Gupta(2008) 303 .....

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evidence against the assessee. 4.10 During the appellate proceedings the appellant was specifically directed in terms of Rule 46A(4) of the Income Tax Rules, 1962 to produce balance sheet for the relevant assessment year and income-tax details and PAN in order to establish the creditworthiness of the following three Loan Creditor Companies :- i) Maestro Marketing and Advertising Pvt.Ltd. Rs.5,00,000/- ii) Rajkar Electrical and Electronics Ltd. Rs.5,00,000/- iii) SRB Merchandise Pvt. Ltd. Rs.2,5 .....

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₹ 90.10 lacs and ₹ 1 crore respectively during financial year and (b) their permanent account number are AACCM 0826H and AABCR 4897G respectively. In respect of SRB Merchandise Pvt. Ltd the copies of assessment particulars including PAN and copy of acknowledgement of Income Tax Return of the loan creditors were furnished on behalf of the appellant, the perusal of which reveals that (a) its permanent account number is AABCS 6278E; (b)an amount of ₹ 250000/- has been received vi .....

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the same is directed to be deleted. The consequential addition on account of interest paid to the extent of ₹ 2,58,220/- to the loan creditors is also directed to be deleted. As a result, ground of appeal no. 2 is allowed In view of the above, when we logically analyse the rival contentions of both the sides, then, we clearly observe that the assessee had filed confirmation letters and detai ls such as PAN, copy of Income-tax Return, balance sheet and profit and loss account of the alleged .....

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