TMI Blog2019 (9) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. Therefore, we do not find any reason to disturb the order of the Ld. CIT(A) on this issue Sum representing the loans raised from two parties Daksh Diamond and Naman Export who were related to M/s. Bhanwarlal group, we observe that the assessee has filed all the evidences before the AO and the transactions were duly confirmed. The AO has only relied on the statement recorded during the course of search of Shri Bhanwarlal Jain under section 132(4) of the Act which also stood retracted by the said person and has no evidentiary value. In our opinion the Ld. CIT(A) has passed a very reasoned order citing various justifications and reasons for deleting the addition. Therefore we are inclined to uphold the order of ld CIT(A) by dismissing the ground no. 1 raised by the revenue. Addition u/s 36(1)(iii) - HELD THAT:- The facts in brief are that during the course of assessment proceedings no addition of ₹ 2,90,96,145/- was made under section 36(1)(iii) of the Act by the AO to the income of the assessee and therefore this ground is not arising out of the assessment order as pointed out by the Ld. A.R. and candidly admitted by the Ld. A.R. and therefore the same is dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured loan. 4. Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in disallowance of ₹ 4,87,52,408/- u/s14A. 5.The appellant prays that for these and other reasons it is submitted that the order of the Ld. CIT(A) on the above grounds be set aside and that of the A.O. be restored. 6. The appellant craves leave to amend add, amend or alter all or any of the grounds of appeal 3. The issue raised in 1st ground of appeal is against the deletion of addition of ₹ 14,32,00,000/- ₹ 2,50,00,000/- by Ld. CIT(A) as made by the AO on account of the unexplained cash credits under section 68 of the Act. 4. The facts in brief are that the assessee filed the return of income on 29.09.2012 declaring loss of ₹ 7,13,30,776/- under the normal provision of the Act while a book profit of ₹ 23,79,302/- was declared under section 115JB of the Act. The assessee e-filed its revised return of income on 31.03.2014 declaring loss of ₹ 8,52,55,660/- which was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4700000 6 Samrat Merchandise Pvt. Ltd 18500000 7 Shree Bhairav Star Jewels Pvt. Ltd 5000000 Total 9,97,00,000 6. The AO also added ₹ 4,35,00,000/- in respect of 4 parties to whom the notices remained unserved as per the detail as under: Sr.No. Name of the party Loan taken 1 Lakshika Diamond Pvt. Ltd. 35,00,000 2 Raikhabh Trading Pvt, Ltd. 2,00,00,000 3 Shree Bhairav Diamond Pvt. Ltd. 75,00,000 4 Shree Bhairav Gems 1,25,00,000 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. Even the said loans were duly recorded in their respective books of accounts and thus the creditworthiness of the lenders was duly proved. In respect of genuineness of the transactions, Ld. CIT(A) noted that the same were done through banking channel and there was no movement of cash. Even the lenders have demonstrated that they have balances in their bank accounts in the shape of sundry debtors as well as loans and advances and thus proved the genuineness of the transactions. The Ld. CIT(A) observed that when the notices issued by the AO under section 133(6) of the Act were duly complied by the parties accepting the loan transactions with the assessee, there is no justification in making the addition in the hands of the assessee. 10. In respect of the loans raised from two concerns aggregating to ₹ 2,50,00,000/- comprising ₹ 1,00,00,000/- from Daksh Diamond and ₹ 1,50,00,000/- from Naman Export, the Ld. CIT(A) observed that the assessee has filed all the necessary documents with AO and thus discharged the onus cast upon it by the statute and thus held that identities and creditworthiness of the lenders and genuineness of the transactions were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the remand proceedings. However, in para 2 of the remand report the AO has stated that additional evidences submitted by the assessee should not be admitted during the course of appellate proceedings as same were not given in the assessment proceedings. The Ld. D.R. therefore prayed that the addition of ₹ 4,35,00,000/- also needs to be confirmed by reversing order of Ld. CIT(A). As regards the addition of ₹ 2,50,00,000/- from two parties connected to M/s. Bhanwarlal Jain group, the Ld. D.R. submitted that it was admitted by the Shri Bhanwarlal Jain during the course of search that he and his associates were primarily engaged in the business of providing accommodation entries and therefore, the same should be sufficient basis for making the addition. The subsequent retraction of the said statement is immaterial and addition needs to be affirmed on this score only. 13. The Ld. A.R. vehemently opposed the arguments of the Ld. D.R. by submitting that the assessee has genuinely raised loans from various parties as stated hereinabove. Out of the total loans, ₹ 14,32,00,000/- were raised from 11 parties qua which the AO made addition on two grounds. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee from two parties M/s. Daksh Diamonds and Naman Exports, which was stated to be accommodation entries by the AO as these entities were related to Bhanwarlal Jain, the Ld. A.R. submitted that the AO has made the addition on hypothetical basis that Bhanwrlal Jain has given a statement on oath during search that he and his related concerns were engaged in providing accommodation entries and thus made the addition under section 68 as unexplained cash credit. The Ld. A.R. submitted that the Ld. CIT(A) has rightly deleted the addition by observing that no addition can be sustained which is made on the statement recorded during the course of search which is even retracted later on as this is against the instruction of CBDT circular No.14/1955 and instruction dated 10.03.2003 bearing No.F.No.286/2/2003-IT(INV) and various judicial pronouncements. The Ld. A.R. submitted that even the request of the assessee as made vide letter dated 26.03.2015 to the AO to provide copy of statement recorded of Shri Bhanwarlal Jain was rejected and also denied opportunity to cross examination. The ld AR contended that the assessee was denied opportunities to defend himself through lawful mean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, it was clearly observed by the Ld. CIT(A) that all the details comprising financial statements, PAN, ITRs, bank statements and confirmation of loan transactions were duly filed and even responses were received to the notices issued under section 133(6) of the Act by the AO. In our opinion, the Ld. CIT(A) has correctly passed the order deleting the said addition by taking into account various decisions of various judicial forums. So far as the addition of ₹ 4,35,00,000/- is concerned, though the notices could not be served under section 133(6) of the Act but assessee has filed the additional evidences pertaining to these parties during the course of appellate proceedings which were forwarded to the AO for verification and the AO filed remand report dated 21.06.2017. In the remand report, the AO only stated that these evidences should not be accepted primarily on the ground that these were not filed during the original assessment proceedings. However, Ld. CIT(A) has taken a very reasoned view after taking into account of the evidences on record and reply of the assessee filed in response to the remand report. Therefore, we do not find any reason to disturb the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enging the allowance of interest on these loans as this ground is consequential to ground No.1. 21. The issue raised in ground No.4 is against the deletion of disallowance of ₹ 4,87,52,408/- by Ld. CIT(A) as made by the AO under section 14A of the Act. 22. The facts in brief are that AO during the course of assessment proceedings observed that assessee has earned dividend income of ₹ 10,36,465/- and long term capital gain of ₹ 14,67,169/- which were claimed as exempt under section 10(34) and under section 10(38) of the Act respectively while disallowance made suo-moto was only ₹ 9,24,800/-. According to the AO, the disallowance has to be computed in terms of section 14A read with rule 8D and accordingly after issuing a show cause notice, the AO calculated the disallowance at ₹ 4,87,52,408/- comprising disallowance under rule 8D(2)(iii) only and after making the allowance for suo-moto disallowance of expenses of ₹ 9,24,800/-, a net addition of ₹ 4,78,27,608/- was made to the income of the assessee. 23. In the appellate proceedings, the Ld. CIT(A) partly allowed the appeal of the assessee on thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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