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2017 (2) TMI 737 - ITAT DELHI

2017 (2) TMI 737 - ITAT DELHI - TMI - Addition u/s 68 - CIT(A) allowed claim - Held that:- DR could not point out any infirmity in the order of the ld CIT(A), therefore in view of this we confirm the finding of the ld CIT(A) in deleting the addition u/s 68 after obtaining the proper details which proves the identity, creditworthiness and genuineness of the transactions. - Decided in favour of assessee. - Disallowance of interest expenditure - Held that:- A.O. has taken the view that the appe .....

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and unsecured loan Accordingly the contentions and the submission of the counsel of appellant has strong a acceptance. The A.O. has not considered the advance from customer and unsecured loan received by the appellant during the year which financed the source of the advances given. Thus disallowance need to be rejected - Decided in favour of assessee. - ITA No.1706/Del/2012, Cross Objection No.141/Del/2014 - Dated:- 31-1-2017 - SHRI H.S.SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNT .....

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CIT(A) has erred in law as well as facts in deleting the addition of ₹ 14200000/- made by the assessing officer u/s 68 of Act 1961 in respect of unsecured loans and advances as the assessee failed to prove the credit worthiness of the lender and genuineness of transaction. 3. On the facts and in the circumstances of the case, the ld CIT(A) has erred in law as well as facts in deleting the disallowance of interest of ₹ 1372277/- made by the Assessing Officer as the advances given by .....

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e Income Tax Act, 1961. 3. That the assessment order passed u/s 153C of the Act is liable to be quashed since the same has been passed by the ld AO on ad hoc basis. No incriminating documents in respect of assessee found from the possession of persons covered u/s 153A of the Act for the year under consideration. 4. We first take up the appeal fo the revenue where effectively ground No. 2 against the deletion of addition of ₹ 1.42 crores made by the AO u/s 68 by ld CIT(A). 5. The ground No. .....

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53C was issued on 25.02.2010. in response to that the assessee requested to consider the original return of income as return filed in compliance with that notice. Based on that an assessment was framed on 29.12.2010 determining total taxable income of ₹ 16041427/- against the return income of ₹ 469150/-. The two additions were made in the assessment (i) ₹ 1.42 cores on account of unsecured loan and (ii) ₹ 1372277/- on account of disallowance of interest. The assessee bein .....

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on was deleted. With respect to the disallowance interest he further submitted that the funds were taken by the assessee were tied up in debtors and stock. He relied upon the finding given by the ld CIT(A). He further submitted that in the present case both the additions were made on account of material which was not found during the course of search and therefore as such the additions cannot be made. 8. The ld DR relied upon the order of the ld Assessing Officer. 9. We have carefully considered .....

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al details were furnished before the ld CIT(A). On that basis the addition was deleted. The ld first appellate authority deleted the above addition holding as under:- 5. DETERMINATION:- I have examined the assessment order and the submissions given by the appellant and it is held as under: - 5.1 Undisclosed Income u/s 68 of the I.T Act, 1961 5.1.1. The addition made by the AO is on the basis that no information was filed by the appellant during the course of the assessment proceedings, whereas t .....

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ring course of assessment proceeding and prayed for admission of additional evidence under rule 46A of the I. Tax Rules, 1962. The confirmation letters with PAN and the jurisdiction of assessment. Copy of the ITR for the A/Y:2007-08,Bank Statement for the relevant period, Copy of the PAN card etc. in case of M/s. Manikaran Buildwefl Pvt. Ltd . MrAmrjeet Singh and M/s. Tonami Trading Co. for ₹ 11500000/- , ₹ 700000/- and ₹ 2000000/- respectively were attached with the above lett .....

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ated 12.1.2012 that the assessee filed only copy of account of M/s. Manikaran Buildwell (P) Ltd but no other supporting documents filed. A perusal of the reply of the A.O reveals that he has not given negative finding on the evidence adduced by the appellant. He stated that the furnishing of primary documents is not denied but the appellant did not give supporting document during the course of assessment proceedings. 5.1 2 For deciding the instant issue it is essential in the interest of justice .....

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onfirmations were filed, identity proved and all the transactions were through the banking channel. I have found that one of the confirmations as mentioned above is also available on assessment record of the AO. The creditworthiness and genuineness of the transaction with the lenders were not doubted. I am of the considered opinion that the appellant has discharged his onus and proved with documents, the Identity. Creditworthiness and genuineness of the transactions with the lenders The A O is n .....

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round No. 2 of the appeal of the revenue is dismissed. 11. Ground No. 3 of the appeal of the revenue is against deleting the disallowance of interest expenditure of ₹ 1372277/-. It was found by the ld Assessing Officer that assessee has paid interest of ₹ 2744557/- and have made advance to different individual of ₹ 40022398/-. Therefore, he disallowed the proportionate interest equivalent to 50% u/s 36(1)(iii) of the Act. The ld CIT(A) deleted the addition holding that the tota .....

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tal advance received during the year without interest of ₹ 40323252/- was ignored by him. The first appellate authority has considered the above arugment and has dealt with this issue as under:- 5.2 Disallowance of Claim of Interest -: 5.2.1. I have considered the submissions and the argument of the counsel of the appellant. The view taken by the A.O. is that the borrowed funds were of ₹ 19397329/- whereas the advance were amounting to ₹ 40022398/-, so a significant amount was .....

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that there was a direct nexus with the payment given as advance and its source Further the said source was out of the advance received from customers and the unsecured loans raised during the year The A.O has not established that the borrowed funds were not utilized for business purpose nor he brought on record any finding contrary to the submission of the Appellant. It is the duty and onus is on the AO and the same cannot be discharged, merely by doubts. Further, the submission of the appellan .....

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the borrowed funds for the purpose of the business and the advance given was more than the borrowed funds This cannot be a justified basis for disallowance of the interest claim in the light of the fresh advance received from the customers and the fresh unsecured loans. The total advance received and unsecured loans of ₹ 40323252/- in itself is sufficient evidence to established that the complete advance given of ₹ 40022398/- was financed through such advance and unsecured loan Accor .....

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