TMI Blog2017 (6) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the creditors and genuineness of the lenders seems to be doubted which becomes meaningless and absurd in the present case as the AO has allowed interest on the borrowed funds in the current years and also in the subsequent years and therefore the order of the ld.CIT(A) confirming the addition u/s 68 in respect of 31 creditors is not correct and cannot be sustained. - Decided in favour of assessee. - ITA No. 3292/Mum/2015 - - - Dated:- 31-3-2017 - Shri Mahavir Singh, JM And Shri Rajesh Kumar, AM Assessee by : Shri Rajeev Khandelwal Revenue by : Dr. Suman Ratnam ORDER Per Rajesh Kumar, A. M: By way of this appeal, the assessee is challenging the order dated 19.2.2015 passed by the ld.CIT (A)-2, Thane for the assessment year 2009- 10. 2. The issue raised in grounds of appeal no.1 and 2 is against the confirmation of addition of ₹ 1,28,00,000/- by the First Appellate Authority as made by the AO in the assessment order as unexplained cash credit under section 68 of the Income Tax Act, 1961(the Act) in respect of 31 parties. 3. Brief facts of the case are that the assessee a Developer filed e-return on 29.9.2009 declaring a total income of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers along with the IT returns etc and also directed to examine the remaining 25 loan creditors on the same lines as was done during the assessment proceedings in respect of 6 loan creditors. During the appellate proceedings, the ld.AR submitted before the FAA that the AO has not bothered to examine details submitted before the AO in the assessment proceedings, despite the fact that all the 25 creditors were assessed to tax in the same Range. Finally, the FAA after considering the submission of the appellant as reproduced in paras 6 and 7 of the appeal order dismissed the appeal of the assessee by observing and holding as under : 8.1 I have carefully considered the submissions of the appellant, the observations of the AO in the assessment order, case laws relied upon and the facts of the case. Therefore, I proceed to decide the appeal of the appellant. i) The unexplained cash credit u/s.68 of the Act can take place only when the appellant failed to prove the following: a) Identity b) Genuineness c) Creditworthiness ii) The AO has conducted inquiries in the cases of 6 loan creditors and found that they were not in a capacity to lend money, therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 12,000/-. Statement recorded u/s.131, shows that he was not aware of the entire transactions.. source of loan advanced not explained. 6. Saroj Vasant Bhimani 4,00,000 Cash were deposited before loan was advanced. Statement recorded u/s.131, shows that she was a cook earning only ₹ 3,000/- PM. Source of loan advanced not explained. 7 Prakash M Dholu 3,00,000 R/I of ₹ 1,42,866/- filed. Cash were deposited before loan was advanced. In this case, the cash were deposited in the third party accounts and cheques issued through P.M.Dholu. Loan transaction is not genuine. 8 Amrutlal S Patel R/I of ₹ 1,41,108/- filed, Cash were deposited before loan was advanced. In this case, the cash were deposited in the third party accounts and cheques issued through A. S. Patel 9 N.S. Chhabhaiya (HUF) 5,00,000 R/I of ₹ 1,44,587/- filed. Cash were deposited before loan was advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R/I of ₹ 1,55,458 filed/-: Cash were deposited before loan was advanced. In this case, the cash were deposited by third party and cheques issued through Amrutlal N Patel 19 Jayanti Bhimani 3,00,000 R/I of ₹ 1,39,542/- filed. Cash were deposited before loan was advanced. In this case, the cash were deposited in the third party accounts and cheques issued through Jayanti Bhimani 20. Nirmala M Limbani 2,50,000 R/I of ₹ 1,68,818/- filed. Cash were deposited before loan was advanced. In this case, the cash were deposited by the third party and cheques issued through Nirmala M Limbani 21. Ketan J Bhagat 4,00,000 R/I of ₹ 1,34,890/- filed. Cash were deposited before loan was advanced. In this case, the cash were deposited by the third party and cheques issued through Ketan J Bhagat 22 Damyanti M Pahuja 6,00,000 R/I of ₹ 1,76,160/- filed. Cash were de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,50,000 R/I of ₹ 1,78,790/- filed. Cash were deposited before loan was advanced. In this case, the cash were deposited by the third party and cheques issued through Shital Jitendra Patel to appellant. AO has carried out a complete investigation and has proved that these loan creditors do not have any creditworthiness and further established that, these loan creditors were providing accommodation entries, routing unaccounted money of the appellant. In view of the above stated facts, the addition made by the AO of ₹ 1,28,OO,OOO/- as unexplained cash credit u/s.68 of the IT.Act, is confirmed and the appeal of the appellant is rejected. 5. The ld.AR vehemently submitted before us that the order of the ld. CIT(A) is wrong and against the facts on record. The ld.AR argued that the assessee has borrowed money from 31 parties who happened to be employees of the assessee s sub-contractor who were having PAN, filing income tax returns, have bank accounts etc which were filed before the AO and the AO found that none of the information given by the assessee was either false or fabricated. The ld AR submitted that it was cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by dismissing the appeal of the assessee. 7. We have carefully considered the rival submissions of the parties, perused the material placed before us and also gone through the orders of authorities below and various case laws relied upon by the assessee. We find from the record that the money has been borrowed by the assessee during the year under consideration from 31 parties who were employed with the sub-contractor engaged by the assessee. It is also undisputed fact that the all these persons were assessed to income tax and filing income tax return every year which were available before the AO. However, the AO examined six persons only and accordingly made addition by forming the opinion that the loans taken by the assessee were non-genuine and bogus. It is also undisputed fact that the AO has allowed interest on these borrowings amounting to ₹ 7,78,282/- during the year. While making the addition of money borrowed from these parties as being bogus and non-genuine. Similar deduction in respect of interest on these unsecured loans was also allowed in the subsequent years. Now it is very strange that how the AO has accepted the transaction in part by allowing the int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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